JOHANNESBURG - TRADE union the United Associations of South Africa (Uasa) got cold comfort from Public Enterprises Minister Pravin Gordhan’s admission in his Budget vote speech that state arms and ammunitions manufacturer Denel owed its workers more that R500 million.
The union, which has a writ on Denel assets pending the parastatal’s liquidity declaration, has been sent from pillar to post by government departments in an effort to secure salaries owed to its members since May last year.
Uasa section manager Rick Grobler told Business Report yesterday it was mildly comforting that interactions between state institutions, the parastatal and unions would be under way.
“Everyone seems to be in agreement of the importance of Denel, and mention was made of a confirmed order book, but it cannot be executed without funding, yet there is no commitment to provide the required funding to the state-owned enterprises at this stage and it is clearly evident that Denel cannot trade itself out of its current predicament,” Grobler said.
The government’s economic reconstruction and recovery plan (ERRP) identifies the defence and aerospace industry as key to economic growth, particularly in localisation and exports. In support of the ERRP, a defence and aerospace master plan has been completed.
Earlier this month, the union held engagements with Denel and parastatals, but there was a lack of tangible outcomes.
“We appreciate the time taken and set aside to engage with us. We did not get any answer that would solve the current predicament, but did receive a commitment from the Department of Public Enterprises to discuss possible funding with other state departments,” he said.
Gordhan confirmed to Parliament that Denel was in financial difficulties and had operational difficulties.
“It has been a difficult year for Denel. It has a confirmed order book of R11 billion, but it is unable to secure the necessary capital and the support of suppliers to execute the contracts,” he said.
Denel continues to make losses after recording a R1.6bn loss in the 2019/20 financial year.
The company has made a total loss of R4.4bn in the past four years.
Grobler said the union had been taking the lack of payments in various fora: the Labour Court, Nedlac, the Department of Employment and Labour, the Department of Mineral Resources, the Ministry of Public Enterprises and the parliamentary portfolio committee.
“It is clear that all these actions indicate that the non-payment of employees is regarded as extremely serious and of grave concern for us,” he said.
The next court date regarding the contempt of court action was for Denel to demonstrate to the court that it had complied with the previous court order. If Denel succeeded in convincing the court, the unions would then have to initiate fresh proceedings on the other outstanding monies.
Denel has been at loggerheads with its employees since last year when it failed to pay staff members their full salaries.
“It is highly regrettable that Denel last paid full salaries in May 2020. The current amount owing to employees is about R500m. The business has subsequently experienced a loss of critical skills to both domestic and foreign companies,” said Gordhan.
BUSINESS REPORT