The trade union Solidarity has welcomed the concern expressed by President Thabo Mbeki over big companies that retrench workers to increase their profits.
Spokesperson Dirk Hermann said it was a hopeful sign that Mbeki noticed the seriousness of the problem.
“Thousands of our members at Iscor may soon be retrenched in order for the company to improve its profits and therefore please its shareholders.”
Mbeki on Wednesday said inappropriate rewards for top management were a concern in both the private and public sectors, but the government had no intention of intervening.
Replying to a question in the National Assembly from National Action MP Cassie Aucamp, the president said: “Government has neither the power nor the intention to intervene in this matter. One of the key interventions would be to ensure that corporate governance is sound as recommended in the successive King commissions.
“Shareholders and other stakeholders must be vigilant and should work vigorously for the implementation of sound corporate governance systems.
“The level of remuneration among high-level private sector managers is currently being debated aggressively internationally. It is therefore not an exclusive South African challenge.”
Hermann added that the union also welcomed the president’s commitment to the advancement of business ethics.
“We would have liked to see the president accepting a clearer approach to solving the problem. The six executive directors of Iscor this year received a 55% salary increase as well as an increase of 68% in grants. Their total income increased from R6-million in previous years to R38-million in 2003,” he said.
This includes the more than R15-million profit from the sale of shares.
He continued that it was glaringly obvious that shareholder fundamentalism was the order of the day at Iscor.
In a statement Solidarity claimed that the problem was not limited to Iscor.
“Shareholder fundamentalism is common in South Africa today. An increasing number of companies are retrenching workers in an effort to increase the value of shares and wealth. This is to the detriment of interested parties like personnel, suppliers and the community as a whole.”
Iscor is said to be planning to retrench between 1Â 700 and 3Â 600 workers. — I-Net Bridge