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After having met with the management of state-owned entity Denel, trade union Solidarity today expressed its shock at and concern over the possible non-payment of workers’ December pay by the company. The trade union warned that the non-payment of salaries could lead to major instability and labour unrest, which could put a further damper on the economy.

According to Solidarity’s Deputy General Secretary Deon Reyneke, the company’s current financial woes could be ascribed to poor management and poor planning. “This is yet another telling example of a state-owned entity that is suffering severe losses as a result of mismanagement while its workforce – and the entire South Africa for that matter – have to suffer the consequences,” Reyneke said.

Reyneke stated that the company was in a serious financial fix, which is cause for grave concern. “The company is still short of around R130 million just to make its December salary payments. This is in addition to the huge amounts of debt which its creditors are now demanding,” Reyneke explained.

Reyneke furthermore said that Denel had meanwhile applied to the Treasury to obtain a guarantee for around R850 million to enable it to obtain a loan to get some relief. “Apart from the workers who would be hardest hit the taxpayer may well also have to foot the bill yet again for the mismanagement as is the case at so many other state entities in South Africa,” Reyneke said.

Reyneke also revealed that Solidarity had declared a dispute with the company after it had come to light that Denel had squandered money which forms part of employees’ cost packages and which it ought to have ring-fenced on behalf of its employees in order to pay their thirteenth cheques. “Not only could Denel employees go without pay this month but the company, without having obtained the necessary permission to do so, has also exhausted the money workers have paid themselves to receive a thirteenth cheque. That is unheard of,” Reyneke said.

Reyneke said that Solidarity is now engaged in persistent talks with Denel’s management on behalf of its members. “Solidarity will not hesitate to do the necessary should Denel not fulfil its contractual obligations towards its employees,” Reyneke warned.

Earlier this year, Solidarity published a report on the disturbing state of state-owned companies. Click here to peruse the report.

Issued by Solidarity