South African Airways employees have been on strike for much of the past week. Management and unions have just reached an agreement, though if you ask me it’s not much of an agreement at all…
South African Airways’ Planned Restructuring
South African Airways has been in a terrible financial situation for years, with seemingly no end in sight to their struggles. Last week the airline announced a radical restructuring, which would see the airline laying off nearly 1,000 of their 5,000+ workers.
As much as job cuts suck, this was most definitely a needed measure, given how inefficient the airline is.
Largely I blame the government of South Africa for these issues, because they’ve very much kept the airline in limbo. They’ve funded them just enough to keep them alive in their current state, but not enough to actually allow them to make any changes. They’re set up to fail.
Why South African Airways Employees Went On Strike
Last week the South African Cabin Crew Association (SACCA) and the National Union of Metalworkers of South Africa (NUMSA) called for industrial action. This seemed to be for two reasons:
- They wanted a pay increase of up to 8%, while management offered “only” a 5.9% pay increase, subject to the availability of funds from lenders
- They didn’t want any layoffs
SAA & Unions Come To An Agreement
South African Airways and the unions have come to an agreement that will see the end of strikes:
- Employees will receive a 5.9% pay increase, retroactive to April 2019 (the retroactive amount will be payable with the April 2020 payroll)
- There will be no layoffs
The pay increase as such isn’t the big issue here, but to me the serious problem is the lack of layoffs. The company simply isn’t efficient with how many employees it currently has, and no one is being done a favor by keeping around that many people.
While this resolution solves the immediate problem of the airline not being able to operate, it doesn’t do much beyond that, as South African Airways fights day by day to stay alive.
As part of this agreement, management and employees will also establish a “task team” to cut costs, described as follows:
The main objective of the Task team will be to identify and consider cost saving initiatives, inter alia, insourcing and contracts. Should the Task Team be able to realise savings, a percentage of the after-tax savings may be ring-fenced and paid to employees in the Bargaining Unit. The Task Team will discuss and agree on a formula for such payment.
As SAA’s Acting CEO, Zuks Ramasia, describes the deal:
“SAA is equally pleased that the National Transport Movement (NTM) also signed SAA’s wage agreement earlier today.
We are proud of SAA employees’ sacrifices by supporting the airline in these difficult times.
This deal, particularly the fact that we offered a 5.9% salary increase amidst grave financial challenges, is to recognise the company’s employees for the important contributions they make to the overall success of the company, economic development, and inbound and outbound tourism.”
It’s good to see that strikes at South African Airways are done for now, though this seems to me like an unrealistic deal. We’ll see where the airline gets the money for the retroactive pay in April, not to mention how they’ll turn themselves around without laying off at least part of their workforce.
What do you make of this SAA deal between management and the unions?