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Telkom SA works it out with unions

July 25, 2013 • Mobile and Telecoms, Southern Africa

Developments in the wage dispute between Telkom South Africa and its staff, involving the Communication Workers Union (CWU), the South African Communications Union (SACU) and Solidarity, have taken a new turn with the announcement that a three-year labour agreement has been brokered between the parties.

In May 2013 it was reported that CWU had rejected an increased offer from Telkom SA for 6% across the board, whilst CWU was seeking an 11.5% increase and Solidarity an 8.8% increase.

On Wednesday 25 July 2013 Telkom SA announced a three-year labour agreement with the majority union, the Communication Workers Union (CWU). The agreement addresses the annual general salary increases for its bargaining unit staff as well as issues of past salary disparities.

SACU has indicated their intention to sign the agreement. It has requested time to conclude the balloting process that is currently underway. It is envisaged that SACU will sign the agreement early next week.

The multi-year agreement signed today will assist the company on its journey to restoring financial health and ensuring long-term sustainability by eliminating uncertainties over labour costs for the next three years. It will also allow the company to focus on managing its costs and vigorously attend to productivity challenges.

In order to offset the effect of increased remuneration levels on its financial position, the Company requires a huge improvement in productivity levels. The parties will engage in an inclusive process of determining specific productivity initiatives and interventions.

On average this settlement will increase the human capital costs by 6.8% over the next three years. The agreement, effective for a three-year period from 1 April 2013 to 31 March 2016, also provides for an accelerated process to address salary disparities. Telkom is determined to avoid unfair income differentials. The Agreement allows the Company to pursue its objective of an equitable remuneration system by adhering to the principle of “equal pay for work of equal economic value”, in line with the Employment Equity Act.

The agreement stipulates that, for the next three years:

•             The general salary increase will be based on 6% of the market’s 50th percentile as per employee functional area

•             Those employees below the 50th percentile of the market will receive an additional amount added to their total package

•             All employees below the 75th percentile of the market will receive an increase on their total package

•             All employees above the 75th percentile of the market on 31 March 2013 will receive a monthly pensionable once-off amount (no increase in their total package)

•             The standby allowance will increase by 6%

Telkom SA has undertaken to further engage organised labour if the Consumer Price Index (CPI) moves above 7,5% and remains at that level for a minimum period of six consecutive months during the effective period of this agreement.

Telkom SA has also undertaken to conduct external salary benchmarking and share the results with the trade unions prior to implementing salary increases in the second and third year. Depending on whether the market 50th percentile reduces or increases, the status quo will either remain or revised values will be applied.

Increases for bargaining unit staff and all adjustments will be effective from 1 April 2013 and backdated accordingly.

Sipho Maseko, Telkom’s Group CEO says, “We are extremely pleased to have reached a negotiated settlement with organised labour as we value the welfare of all our employees. Our partnership with labour has proved that we have managed to agree on what is beneficial to the employees as well as the sustainability of the company. Despite difficult current economic realities, Telkom together with organised labour, have utilised the process of substantive negotiations to collaboratively address critical issues within the context of the Group’s sustainability.

“At a time when Telkom is refocusing its strategic imperatives in order to ensure cost effectiveness and the sustainability  of its business, it is commendable that all parties went into the substantive negotiation process fully cognisant of the challenges being faced  and the teamwork that is required to overcome  these ,” concluded Maseko.

Staff Writer

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