SAPO to save R17m per month after rentrenching hundreds of employees

Salaries and perks drain over 70 percent of the SA Post Office's total revenue.

Business Day recently reported that the South African Post Office (SAPO) will retrench 776 employees who have accepted severance packages and will depart from the state-run entity by the end of November. Employees were invited to apply for the package in October with a total of 2 839 employees requesting quotations for the amount that would be pad to them should they decide to leave the company. Those who opted in will now receive a combined total of  R204 million in benefits, was below the SAPOs target of R320 million.

The move, which the SAPO has said will result in savings of R17 million a month, comes after the latest annual report for the 2018/2019 financial year revealed it recorded a R1.1 billion loss, which was R95 million more than the previous year’s loss. 

Salaries and perks drain over 70 percent of the SA Post Office’s total revenue, which has led the SA Post Office to determine that its current model is unsustainable. The SAPO is currently without a CFO and CEO (after Mark Barnes’s recent resignation) and employs about 23 000 people and operates more than 2400 postal branches around the country and reducing staff costs appears to be key to turning the business around. 

“In addition to the possible retrenchments, the contract it signed with the SA Social Security Agency for the payment of social grants to approximately 11-million beneficiaries, would go a long way towards putting it on sound financial footing,” reads the Business Day article.

“Furthermore, the reduction of labour related costs such as overtime and extended hours, will reduce the expenditure on employees. Subject to negotiations with organised labour, some functions could be outsourced.”