The big South African companies cutting salaries due to lockdown

Many established South African companies have announced measures to prevent job losses as the coronavirus pandemic – and the national lockdown – strangles business operations.

Organisations have confirmed initiatives including salary cuts and 4-day work weeks to mitigate the effects of the virus on their ability to keep staff employed.

President Cyril Ramaphosa has also announced that he and all his ministers will receive a large salary cut for the next three months.

The president, the deputy president, and cabinet ministers will all take a one-third salary cut.

To provide an overview of the current situation, we looked at the actions some of the best-known companies in South Africa are being forced to take.

ArcelorMittal

ArcelorMittal South Africa has closed its offices and operations across the country during the lockdown.

The company has also cut spending on non-critical goods and services.

It further announced short-time and salary reductions for all employees with effect from April 2020.

According to a Sunday World report, a letter sent to employees stated that pay will be cut by between 40% and 45%, effective for at least three months starting in April.

Edcon

Edgars, CNA, and Jet operator Edcon recently notified suppliers that it would not be able to pay them.

Edcon only had enough money to pay salaries and said it would suffer a trading slump during the lockdown.

Worryingly, the company already expected to lose R800 million over the course of the original 21-day lockdown, with the majority of Edcon’s 1,100 stores closed.

Edcon added that it may need to consider a form of bankruptcy and will approach the government about any possible assistance.

EOH Holdings

EOH has announced several drastic measures to ensure the company would remain sustainable during the coronavirus outbreak.

The executive committee will take a salary reduction of 25%, while a 20% pay reduction across the board was also proposed, with the exception of those earning less than approximately R250,000 per year.

Other measures in this regard include a review of all fixed-term and consultant contracts, and reassessing the retirement policy for those over 65 years old..

Mail and Guardian

The Mail & Guardian told CNBC Africa that a decline in advertising has compounded existing financial troubles at the publication.

About 70% of the newspaper’s revenue comes from advertising, while 20% is generated from its live events. The latter cannot take place due to the lockdown restrictions.

“Suddenly we were inundated with cancellations en masse by advertisers, which had an immediate impact on our bottom line,” said the company.

“The month of March is usually relied upon to make up the shortfall for the first quarter of the year, the fact that we weren’t able to do that has put us in immediate peril.

The newspaper is struggling to meet its commitments, including salaries.

Management is currently in negotiation with staff over compromises, including packages and salary cuts.

Independent Media

Independent News Media and its affiliate Africa News Agency jointly announced they would cut salaries due to the impact of the coronavirus pandemic.

The companies blamed declining advertising and circulation revenue for the cuts.

According to a letter sent to employees, salaries will be slashed by up to 45%, with the highest earners taking the biggest pay cuts.

“Our payroll bill is one of our highest expenditures. Unfortunately, we are left with no alternative but to take the extreme measure of applying a salary reduction,” stated the letter.

Pam Golding

Estate agents such as Pam Golding Properties are heavily impacted by the lockdown.

This is because they are not only unable to show houses during this time, but cannot transfer properties due to the Deeds Office being closed.

Pam Golding Properties told staff it would cut salaries and reduce working hours by 30% in April to address the effects of the lockdown.

SA Rugby

The suspension of the Super Rugby series and uncertainty around upcoming Springbok games weigh heavily on SA Rugby’s books.

The Springboks’ first three tests as reigning World Cup Champions in June and the Rugby Championship matches, which are set to take place in August, are in doubt.

The Daily Maverick reported that SA Rugby stands to lose close to R200 million due to the lockdown and is expected to announce pay cuts for staff.

This will include wage reductions for 45 nationally-contracted players.

It quoted a “high-profile individual” on SA Rugby’s payroll who said he was happy to take a salary cut.

Woolworths

The Woolworths Group announced pay cuts for its CEO, board directors, and senior executive managers in a trading update on Monday.

This will see them forego 30% of their fees and salaries over the next three months.

“The savings arising from this will be used to provide additional financial support to staff who find themselves in extreme hardship as a result of the current crisis,” Woolworths said.

The company said the majority of its food outlets remain open during the lockdown.

Now read: 100,000 South African businesses at risk of closing permanently – Economist

Latest news

Partner Content

Show comments

Recommended

Share this article
The big South African companies cutting salaries due to lockdown