News : Worsening Outlook for Local ICT Jobs
Johannesburg, S. Africa, Jan 28, 2015 -- As the ICT sector comes off a bad year for retrenchments in 2014, labour unions and industry observers says the outlook for employment in the sector is even bleaker this year, as companies are expected to start shedding jobs towards the end of this quarter.
While no formal retrenchments have yet been announced, pundits warn people should not be lulled into a false sense of security. Telecoms operators are again expected to retrench the biggest numbers within the sector, as their revenues continue to come under pressure.
"We haven't heard anything yet, but rumours are rife that the next wave of retrenchments is coming," says South African Communication Workers Union president Michael Hare.
In total, it is estimated about 2 800 people were affected by labour-related issues in 2014. While not all of them may have lost their jobs, some have had to reapply for positions under new company structures, and yet others have had to take on different responsibilities as their job specifications have been altered.
Last year, Telkom saw the biggest number of retrenchments in the ICT sector, as part of a drive to trim costs and increase efficiencies by way of an organisation-wide restructuring process. At the conclusion of the first phase of restructuring, Telkom shed 302 management-level staff through voluntary severance packages and voluntary retirement packages – exceeding its stated target of 223 job cuts.
However, Hare says this year is likely to be even tougher for the fixed-line provider's employees. "We expect it to be worse this year. Last year, Telkom shed managerial positions, but this year we expect rank and file employees – those who can least afford to lose their jobs – to be affected. That is the logical step."
Towards the end of last year, MTN announced it is looking to axe more than 800 managerial positions as it seeks to cut costs, citing poor returns and sluggish growth as reasons for the intended retrenchments.
Similarly, Cell C also informed some of its employees last year they may face retrenchment, as the company has embarked on a restructuring process. The operator stated this may affect 190 of the company's 1 458 employees, and plans are to finalise this process by 31 January. However, according to reports, the operator has already slashed 300 positions.
Both processes are ongoing, and neither firm has yet given an update on expected job losses this year, but Hare is adamant this is coming. "The silence is deafening, but it's going to happen, it's just a matter of time," he says.
Meanwhile, Vodacom has stated its proposed acquisition of Neotel, currently under the spotlight at regulator hearings, will not result in retrenchments.
Marius Croucamp, Solidarity trade union's head of the communication sector, has also said 2014 was a very tough year in terms of downsizing within the ICT industry, and warns workers should brace themselves for even more retrenchments in the first quarter of this year.
Solidarity is concerned the Labour Relations Amendment Act will also have a negative impact on employment this year. The legislation, which came into effect on 1 January, dictates employers have to offer temporary employees, who have been in their employ for more than three months, the same benefits as permanent workers. This, says the union, will result in fewer people finding work and the contracts of temporary employees not being renewed after three months.
Solidarity deputy general secretary Johan Kruger explains government wants to use the new legislation to force employers to hire temporary workers permanently. "The amendment of section 198 has the opposite effect, however, as it discourages employers [from employing] temporary workers. Companies will increasingly subcontract services or scale down certain activities rather than employ temporary workers," he says.
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Kruger points out Telkom's decision to not renew the contracts of 480 temporary employees at its call centre last year is an example of the potential negative effect of the Labour Relations Amendment Act. He warns Telkom's move could be the beginning of a flood of similar actions by other employers. "Solidarity will make sure the contracts of its members who are employed on a temporary basis at companies will not be terminated prematurely or in an irregular manner as a result of the new legislation."
Meanwhile, independent analyst Spiwe Chireka points out telecoms companies have made no secret of the fact that more retrenchments are on the cards this year. "Telkom conducted voluntary retrenchments last year, but we know it is now working on cutting more jobs. MTN has retrenched and so has Cell C, but we can expect more from them too," she says.
Cell C is fighting Vodacom's proposed buyout of Neotel, and is also taking the Independent Communications Authority of SA on over last year's termination rate drop.
Chireka says telecoms operators in SA find themselves in a corner. "This is a market segment that has seen good growth for some time, but this has dropped off. It is logical that while we saw top management-level retrenchments last year, this year we will see retrenchments happening at levels below this."
Posted by Veronica Silva Cusi, news correspondent
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