South African companies cutting salaries during the lockdown

Large South African employers have announced drastic measures to cope with the coronavirus lockdown in South Africa, which include salary cuts and 4-day work weeks.

The 21-day lockdown, announced by President Cyril Ramaphosa two weeks ago, is now in full swing – with many businesses forced to close their doors during this period.

South Africans are only allowed to leave their homes to buy food and medicine, to seek medical attention, and to collect a social grant.

All local and international flights have been cancelled, local travel is prohibited, and restaurants and many shops are closed.

South Africa’s economy has essentially been shut down for the lockdown, which has a big impact on businesses around the country.

This impact is now starting to show. Multiple large companies have informed their staff they must prepare for salary cuts and other drastic measures.

Edcon

Edcon CEO Grant Pattison recently informed their suppliers they will not be able to pay them.

He said the company, which operates Edgars and Jet, only has enough money to pay salaries and is facing a trading slump after the lockdown was announced.

Like-for-like sales have dropped 45% and March revenue will be R400 million below the retailer’s forecasts.

He added that they may not be able to re-open after the national shutdown.

Pattison said Edcon may need to consider a form of bankruptcy and will hold talks with the government about any possible state assistance.

ArcelorMittal South Africa

ArcelorMittal South Africa recently said its offices and operations across the country have been closed during the lockdown.

The company said the lockdown will result in further challenges over and above the effects of an already-struggling economy, and the impact of COVID-19 globally.

To address these challenges, ArcelorMittal South Africa implemented temporary interventions, including cutting spending on non-critical goods and services.

It has also announced short time and salary reductions for all employees with effect from April 2020 – for a likely period of three months.

These measures are in addition to the reduction of sub-contractors and the reconfiguration of the company’s operating model, which started earlier this year.

EOH

EOH CEO Stephen Van Coller recently unveiled a list of stringent measures to dramatically cut costs and manage liquidity at the company.

In a letter to staff, Van Coller said their key focus is to manage the business in an environment where they can expect a substantial drop in revenue.

Van Coller said a review of all fixed-term and consultant contracts will take place, while they could potentially do away with most reimbursive travel, overtime, and standby.

The company is also considering moving their salary pay date from 25 April to 30 April, which will then remain at the last day of the month until stated otherwise.

Another measure is to implement short time, which is a 4-day work week, for a period of two months with immediate effect. This also means a salary cut of around 20%.

Employees who continue to operate for the full five days to serve clients will also be subject to the proposed salary cut.

Pam Golding

Pam Golding Properties has announced it will implement salary cuts and reduced working hours to address the impact of the coronavirus lockdown.

The company has also suspended pension fund contributions and it has applied for Unemployment Insurance Fund Disaster Relief.

The impact of the shutdown is hitting estate agents particularly hard. Apart from not being able to show houses to clients, the Deeds Office is closed – which prevents properties from being transferred.

Pam Golding CEO Andrew Golding informed staff that working hours will be reduced by 30% in April and salaries will be adjusted accordingly.

Now read: Drastic measures at EOH – Salary cuts and a 4-day workweek

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South African companies cutting salaries during the lockdown