Three Telkom unions accused the telephone monopoly on Tuesday of undermining the government’s mandate to create jobs and fight poverty by threatening to retrench workers and charging excessive call rates.
The unions told reporters in Johannesburg they refused to believe that the company — 37,8% owned by the state — is following ”the mandate of government” as claimed by Telkom’s management.
Dirk Hermann, speaking on behalf of Solidarity, the Communication Workers’ Union and the South African Communications Union, said if this were true, the company would be creating more jobs instead of reducing its workforce by 7 600 people in the next three years.
Hermann said the unions and the company are ”locked in a battle of ideas”.
Telkom seemingly believes the best way to make money for its shareholders is to fire staff. The unions think a better approach is to improve and expand services.
Referring to last week’s announcement of the belated coming of a rival for the landline monopoly, Hermann said Telkom cannot hope to tackle the second network operator by just cutting costs.
He is also concerned about the apparent ”shareholder fundamentalism” of Telkom’s management.
”This idea is embodied in Telkom’s previous annual report and in particular in the wording of the company’s strategic aim: ‘To increase shareholder value by increasing profit and cash flow’. By contrast, the trade unions want an approach that takes all stakeholders into account,” Hermann said.
He said these include the company’s staff and clients.
By focusing only on making money, Telkom is also reneging on its obligation under its licence and the Telecommunications Act to promote universal and affordable access to telecommunications services, with an emphasis on the rural poor.
Its approach also makes a mockery of claims that ”people are our most competitive asset”.
Hermann said Telkom’s premise is that technological progress and process changes make it possible to render the same service with fewer people.
”The trade unions feel that this is a reactive argument. Technology is allowed to dictate business strategy … We believe technological progress … will enable Telkom to do more with the same number of staff,” Hermann said.
Telkom ‘retards’ national economic growth
Dawie Roodt, chief economist of Efficient Group, presented a report to journalists showing that Telkom retards national economic growth through its high call charges and business model.
Roodt postulated that if Telkom increased its rates by the world average, instead of much more than that, interest rates as well as inflation would have been 1% lower than they are today.
Economic growth would have been 0,06% higher a year and about 67 000 jobs could have been created.
Roodt also showed two approaches to charging callers: that used in the United States where local calls are often free but are offset by high connection and subscription costs, and that of Telkom.
Telkom charges connection and subscription fees below the international average — based on purchase price parity — but substantially higher call rates.
As a result, many poor South Africans can afford to have a phone — but cannot use it.
This is why only 600 000 of the 2,85-million lines the company has rolled out in recent years are still in operation.
In South Africa telephone costs become higher the more one uses the utility, while in the US they become cheaper — thereby encouraging use and keeping bad debts down.
Roodt’s colleague, Charles Snyman, said while there is merit to the claim that Telkom is over-staffed, the planned retrenchments will make little difference to Telkom’s balance sheet.
”In terms of operating expenses as percentage of revenue, Telkom seems to be less efficient than its peers [Telestra Australia and Telecom New Zealand] by quite a margin … Although employee expenses contribute to the relatively high total expenses of Telkom, it is most certainly not the only errant entry in the income statement,” Snyman said.
Hermann said the report is not an exercise in Telkom-bashing, but brims with ”positive business ideas” such as:
- Reduce prices, particularly call charges;
- Offer innovative access options, like those used by the cellular networks;
- Reconnect the 2,1-million disconnected lines;
- Roll out ”broadband” access for internet and other users;
- Develop new ”e-services”;
- Retrain existing staff to take over outsourced work; and
- Limit employee reduction to natural attrition only.
The report was handed to Telkom on Saturday. The company has not yet responded.
A 60-day consultation period for the unions and the company to find alternatives to the retrenchments ends next Monday when the unions expect Telkom to implement unilaterally its retrenchment plans.
Union negotiators said on Tuesday indications are that Telkom will ignore the ”sound” business proposals the study contains.
Telkom said it noted ”with interest the suggestion in the unions’ report that the company should further reduce its labour expenses by some R1,2-billion”
It said the unions’ suggestion that Telkom could save jobs by growing the business rather than cutting expenses incorrectly assumed that growth areas in the telecommunication industry are as labour-intensive as those in which redundancies are taking place.
”Telkom is … growing its business in the areas of data, call centres and international switch-hubbing, but this growth could not possibly offset the redundancies in other areas of the business, which used to be more labour-intensive,” the company’s Amanda Singleton said.
She said Telkom takes great care in the design and implementation of alternatives to retrenchments.
”Telkom also invests a significant amount of resources in the training and development of its staff, thereby increasing their skills levels and market value substantially.”
But at the press briefing, one union negotiator grumbled that for a previous round of retrenchees this meant lessons in flower arranging. — Sapa