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SABC defends possible retrenchments, saying it needs to reduce its salary bill by R700m

25 June 2020 - 07:20 By ANDISIWE MAKINANA
The public broadcaster told parliament that it needed to reduce its wage bill by R700m or it would have to go back to the state to beg for more money.
The public broadcaster told parliament that it needed to reduce its wage bill by R700m or it would have to go back to the state to beg for more money.
Image: Robbie Tshabalala

SABC bosses have defended the decision to reduce the broadcaster's headcount saying this was one of the preconditions imposed on the organisation by the government to attain the bailout it received last year.

The public broadcaster also told parliament that it needed to reduce its wage bill by R700m or it would have to go back to the state to beg for more money.

The broadcaster is also set to have a 400% increase in losses due to Covid-19. Its revenue is down by 30% or R2bn and if the situation does not change, it is likely to be faced with liquidity and insolvency challenges and potentially again, technical insolvency.

SABC officials were appearing before the National Assembly's portfolio committee on communications on Wednesday evening to update the committee about the implementation of its turnaround strategy and other matters.

MPs were largely interested in hearing more about recent media reports that the SABC had started a process to retrench about 600 of its employees with a few warning that they would not support the retrenchment of staff.

Deputy minister of communications Pinky Kekana also told the meeting that government would not allow retrenchments at the SABC. “We are very clear to the issue of retrenchments that we are not going to support it,” she said in her opening remarks.

But SABC COO Ian Plaatjies said in reducing staff members, the SABC was merely executing a strategy that had been developed by the National Treasury's Government Technical Advisory Centre (GTAC), and which had been commissioned by communications minister Stella Ndabeni-Abrahams.

It is important to remember that the recommendation of staff reduction in terms of costs has been made from that, and it's included in our turnaround plan, it's not something new.

“We are not executing on a strategy that we have developed, this is a strategy that was developed by GTAC. We are executing on a compliance issue that has been given to us by the National Treasury. This is a precondition for the bailout that we have received, that we should engage in staff reductions,” said Plaatjies.

He said nobody wanted to be associated with “the right decision” especially if it is unpopular. “Unfortunately that is where we find ourselves as an organisation,” he said.

Plaatjies said the corporation's Section 189 process was only scheduled to start on July 1. So far, they have not determined the criteria to be followed in reducing the headcount because the process has not started.

He said the process will be done with the unions in a “very humane” manner.

The SABC turnaround strategy was approved in September 2019 and the corporation received R2.1bn of the R3.2bn it was promised by the government in October.

The remaining amount was only transferred at the end of March 2020, parliament heard on Tuesday.

The bailout funds were meant to pay for debt, trade, content and capital investment and not for payroll or operational expenditure.

SABC group CEO Madoda Mxakwe told MPs that the public broadcaster needed to reduce its salary costs by R700m.

Mxakwe said for every R1 the SABC generates in revenue, they spend 40 cents on salaries.

Mxakwe said despite all the SABC's cost-cutting efforts, employee compensation was still extremely high and the forecast for this year was that they are going to pay over R200m every month for both permanent employees and freelancers.

“What is required for us to ensure that we can break even is a R700m reduction in employee compensation,” he said.

“If we are not doing what we have to do in terms of headcount reduction and eventually to get the required R700m, we would have to get back to government to give us some more money, particularly when it comes to the cost of employee compensation,” he said.

“The SABC cannot afford the monthly bill that is huge. If we are told not to go ahead with this process, there needs to be a commitment from government to give us at least R1bn towards the salary bill,” he added.

The SABC is spending only 23% on content acquisition which is its core business and on which it should be spending more to enhance its revenue generation activities.

He said the task of turning the SABC around meant a need to take difficult decisions to avoid its collapse.

Mxakwe said in terms of the analysis they have done,  the potential retrenchments would not just affect low level employees, but would be across the board.

The SABC has 409 managers out of a staff complement of 3,000, he said.

“So we are looking across the board to make sure that we can streamline the structures of our business.”

Some MPs proposed that the SABC conduct a skills audit before embarking on a retrenchment process, but the broadcaster said it had already completed the first phase of such an audit and the second phase was scheduled to be finalised by the end of this month.