“Denel is structurally and operationally inefficient,” says its chief executive Talib Sadik.
Wasteful expenditure, inability to create revenue and an annual loss of R1.96-billion for the financial year 2019-20 are some of the reasons why the state-owned arms manufacturer still struggles to pay its employees their full salaries.
Sadiq told parliament’s select committee on public enterprises that due to the “significant decline in productivity, Denel [was] unable to pay full salaries and statutory obligations.”
This has been an echo of the situation over the last few years.
He explained that some employees were paid a portion of their salaries, while the lowest-paid employees received full pay.
Meanwhile, Denel is still failing to comply with an August court order to pay its employees. The labour court instructed Denel to pay its employees “outstanding contractual and statutory obligations in full or be held personally liable”, after the United Association of South Africa and Solidarity took the arms manufacturer to court in June for its inability to pay employees between May and July.
Denel now faces another court case for contempt of court for not paying its employees full salaries. The court reserved judgment on 28 January.
Sadik told the select committee that “divisions with contracted productive workload have been able to recover, meet obligations and begin to repay outstanding employee salaries and statutory payments”.
But some divisions, such as Denel Land Systems, Denel Dynamics and Denel Vehicle Systems “continue to experience severe constraints”.