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SAA strike builds a case for doing away with SOEs

An entity that creates such economic, political and social strife cannot be good for the nation.

When it gives in to the wage demands tabled by the union – it’s a matter of time and percentage – South Africa Airways (SAA) will have dealt itself a devastating blow.

Against the backdrop of the airline’s economic crisis, wage negotiations were always going to be defined by a government that is on the back foot. And the National Union of Metalworkers of South Africa (Numsa) was always going to come out with guns blazing, as it does in any negotiation. A combination of these two factors added to the hastening of the collapse of wage talks.

Furthermore, the trend of deadlocked wage negotiations has come to define SAA and the unions that organise within it. Even under different management and unions, negotiations have collapsed and led to strike action.

Has there been a time when the relationships between SAA, different public enterprises ministers and various unions were not filled with mistrust? Back in 2010 to 2012, the South African Transport and Allied Workers Union (Satawu) was at the height of its growth. Tensions increased shortly after, when the National Transport Movement – formed by former Satawu leaders – entered the fray, and the antagonistic battles rage on.

Read: Next Africa: Ramaphosa takes on the unions

There are three reasons the national airline continues to be highly contested ground for different groups.

1. Rivalry

First, the politics of unions. Their attempts to attract new members means wage demands are used as tools to outdo their rivals. This is analogous to what is happening in the mining industry, particularly the platinum sector.

Admittedly, political dynamics are not limited to unions. SAA itself is a hotbed for interventions by the state. Often, these actions are informed by the vested interests of the political elite who have a lot to lose or gain, financially and politically.

Moreover, the financial crisis has provided leverage that opposition parties can use against the ruling party. Correctly so, as the airline remains money-consuming and always wanting more. It is one of the many state-owned enterprises (SOEs) that has to be regularly bailed out.

This is another example of a public spending that is meant to be for the greater good, yet in reality it is throwing money at a problem that remains unfixed.

The other political explanation relates to the personalities of the leaders involved, from the state to the unions. On the one hand, Numsa has been the biggest critic of government’s handling of various SOEs. The union has never hidden its aversion to Public Enterprises Minister Pravin Gordhan in his engagements with Eskom, and have consistently called for him to fired.

On the other hand, Finance Minister Tito Mboweni has never held back his views about the unsustainability of state bailouts for SOEs. In his Medium-Term Budget Policy Statement speech he made it clear that SAA is unable to generate the income that it needs to sustain its operations. It is this lack of income and accountability that is adding to the calls for the national carrier to be privatised.

In this context, you can already see how talks between these individuals leans towards a circle of personality clashes since none of them is likely to back down. Add the Economic Freedom Fighters (EFF) and its dynamics with the two ministers – it has indicated that it will support the workers should the strike continue – and you have a political tinderbox that’s ready to go off.

2. Political opportunity

Second, the country’s stagnated economy and the crisis within SAA has created an opportunity for unions to advance their political interests. In particular, the importance of the airline business to the country has given unions the upper hand.

A strike that shuts down airports and grounds flights for a day or two has serious financial implications for the economy. Moreover, as this is happening just as the holidays season is about to begin, the subsequent effects will not be limited just to the airline industry but also the hospitality and tourism sectors.

In these pivotal times, the state’s propensity for repression is limited as any strong action can lead to outright clashes between workers and the police, and can lead to further mobilisation and protests around all airports.

3. Worker patience is wearing thin

Third, workers are tired of seeing politicians and SOE executives floating around and living on golden clouds while calling on them to tighten their belts because the economy is bad. And I might add that, as a taxpayer, it irks me to see part of my hard-earned money being used to bail out SAA while no one has ever been held accountable for its crisis. This goes for the rest of the SOEs too, where management, advising consulting companies and tenderpreneurs are paid millions.

In a society where workers spend most of their income on transport and basic food, to have SOEs that burn through cash and ask for more is insulting to ordinary citizens and workers.

Why shouldn’t they ask for more wages, when the state has made it clear that it always bail out SOEs because they provide a public service for the public good – aren’t these public services made possible because of the labour?

These things matter

The interplay of political, economic and social factors in the SAA strike speaks to the broader issues of the country, and of SOEs. All three factors matter, and unless they are tackled, the chances of any progress or prosperity remain precarious.

Bailing out the numerous loss-making, deep-in-debt and mismanaged SOEs will not turn them into vehicles of social transformation for greater good.

The SAA strike might be just the push over the cliff the state needs to convince it to do away with SOEs. They have been turned parasitic business that take more than they give while benefitting few.

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Was this strike called after a secret ballot as now required? Does anyone know?

Must be one of the only entities on the planet that loses less money when their staff on strike !

You think it does? The only thing they are saving on is fuel. Everything else will be paid back. And more as they have to pay other airlines to take their passengers

Was this a verified fact? Or some braai wisdom?

Dysfunctionally Orientated Objectivity Syndrome or DOOS, for short.

Braai wisdom it is.

The sooner these previously profitable, now bankrupt SOE’s are sold off the better our economy would be. Sorry for the job losses, but that’s the consequence of unionised greed. These SOE’s were just vehicles to plunder and to enrich the cadres who were appointed to suck them dry.

As soon as I up-voted your comment I was struck by the thought of all those thousands of South Africans who have worked at SAA over the years, especially those years when it was a place where people took pride in working there,made the best of it, competed for superiority in a very competitive space and was in fact ranked among the best airlines in the world….how sad it must be for them to watch all of this going down….

The government are in the majority by a huge margin, yet, they are weak and unable to perform decisively and effectively because they are in an alliance with trade unions who, although are in the minority, have the labour power to call the shots, and where the government is positioned because of their alliances with the unions, become ineffective. They are also weak because they have huge numbers of useless people appointed because of family connections or as a reward for being a cadre in the past. Not because of abilities to get the job done.

Our country’s labour laws need immediate and drastic overhaul, the tripartheid alliances must be cancelled, the cabinet reduced to less than half its size and then Ramaphosa will be in a position to act decisively and affectively. Right now he is weak and the Unions are taking advantage without him even realising it.

State Owned Enterprises are just huge businesses. If they cannot operate safely and cost effectively, then eliminate them by selling off the sections that do work to private enterprise and scrap the rest. And do it at high speed. Procrastination under any guise is failure itself. This way you eliminated the drain on the economy. Further, get rid of all useless and redundant ministers, particularly those who are in control of (and think they personally own the) loss making SOE’s, reduce the cabinet considerably, and appoint previously known successful businessmen who can do the job properly. The cabinet is a place for strong effective personal, not friends and family who are weak and spineless.

Mostly good article but the author missed a few points.

“Why shouldn’t they ask for more wages…” – because their company is bankrupt and the country is sick of bailing them out. You are begging to be unemployed by striking for more, when you already get way more than what you contribute to society.

“aren’t these public services made possible because of the labour?” Uhhh, no. It is made possible by hard working people paying taxes. Those same people are saying enough now!

Please DO NOT close SA Airways. I beg you!

As a privileged white person, there are times I make use of SAA….and I financially benefit by flying a subsidized airline.
Every time I board a SAA plane I share a scornful thought in the sense that the cost to fly my fat ass around, govt has to allocate money from other essential state programs meant to uplift the poor.

Bugger the poor….keep SAA in the air! The suffering majority remain happy ANC supporters…hence I have not an iota of guilt for the poor. The poor is meant to suffer….that’s how it works. The poor pays part of my airline ticket every time, bhwa-ha-ha.

When I step aboard any SAA plane, I feel the snub ‘wealth effect’…..yeah baby, a great feeling that the sacrifice of the poor has made my flight possible yet again 🙂

(…and I’m having ‘reverse psychology’ fun…)

I get the joke Mike, I really do. But to admit to flying SAA? That’s just not even funny.

I am not sure I agree with your implied point here. SAA might be subsidized, but there is no benefit passed on to me. SAA is by for the most expensive of all the available domestic options for travel, IMO. Might be some of the less common routes can be argued as subsidized benefits, but not the major ones.

And I would really struggle to do business in Africa – based in South Africa, were it not for SAA

I concur with you.
If SAA fails and falls, there will be other airlines flying in their place as quick as you can blink.

Not to mention their food is the worst. Every time I fly to Cape Town on SAA, I always end up with a dry roll containing a slice of wet sandwich ham. Comair far outshines them.

If you like subsidies for the rich to travel, you can always travel on Gautrain.

The joke stops been funny when he has to explain it.

@Anything, our resident troll: I have noticed that your comments are typically one-liners intended to belittle and offend other commentators, or pointing out typos (while often making mistakes yourself).
The joke stops being (not “been”) funny when he has to explain it.
You are most welcome.

In clean and functional governments SOEs work and they are not abused but in corrupt ANC County they are abused for corruption reasons and party political patronage and they can bring down the sovereign.

Who in their right mind would book an SAA ticket more than week in advance?

This strike, however resolved is going to be incredibly bad for business

And where is the leadership? The great Jamnadas Pravin Gordhan is silent. This is not how the Party taught him in the 1960s. The workers must revolt against the capitalists not the Party!

He is absolutely clueless on how to manage this as he was destroying the country as Zumas henchman from 2009 to 2014 as Finance Minister.

I also suspect that SAA is a test case-break the unions here and government may be able to employ a decent CEO at Eskom and retrench 50% of the staff there. Unions-be careful!!

You know the minister is not supposed to interfere in the running of the SOEs right? Do you not understand the basics. They have a CEO and board for operational matters. How do you not know this?

The SAA strike might be just the push over the cliff the state needs to convince it to do away with SOEs.

The author of this article clearly doesn’t understand the ANC.

Pravin Gordhan will step in and offer them 8% and Tito will come with another bailout. The unions all know this, and so do the taxpayers by now.

The only way to end this nonsense is to do the bailouts from the PIC.

Then you pit the workers against themselves.

The SOE failures are the one thing in SA that the ANC cannot blame on apartheid, WMC, white people or Jan van Riebeeck. They took profitable/viable businesses and drove them into the ground. To close them down or sell them off would mean having to admit failure. The ANC never admits that it has failed.

Except that public-sector pension funds are mostly defined-benefit. If their funding level drops below 90% the taxpayer has to make good the shortfall. (Perhaps the endgame will be that only public sector employees “earn” enough to pay tax, but that’s a few years off still).

no stats are confirmed but just this morning i got this info from a client:
qantas: 252 aircraft; 32500 employees; 129 employees per aircraft
british airways: 238 aircraft; 36 832 employees; 154 employees per aircraft
saa: 58 aircraft; 55 500 employees; 957 employees per aircraft

If the above is 100% correct, saa, based on british airways info, should have had only 8932 employees in total or 7482 based on qantas iso 55 500 employees.

Let’s one think immediately of cadre employment

That email has been circulating since 2004. Please tell your clients to up their professionalism and to stop sending you memes.

I double checked these figures and it looks like SAA had just over 10,000 employees in the 2017 fin year. Even with this figure there is still room to cut when looking at the other airline stats. And this doesn’t take into account the massive corruption which has also occurred at SAA.

Of interest. I checked on Wikipedia. Quantas had 313 aircraft and staff complement of 30,248 (2018 figures). This is 97 persons per aircraft. They made net profits after tax of A$853m and A$980m in 2017, 2018 respectively.
SAA has 10,071 staff and 64 aircraft (figures for 2018 and include Mango, etc.) This is 157 persons per aircraft. And losses run into billions of rands!!
Obviously something is seriously wrong here.

Spot on Gismho – these numbers tell the whole story

The public sector labour pool is a huge ball and chain for SA, and are not going to receive a lot of sympathy from the country. In SAA’s case though, I feel really, really sorry for the staff. I am a frequent traveler on multiple airlines, and I have always held our national carrier in high regard. The staff are efficient and thoroughly professional. It really isn’t their fault the same cannot be said for the management and board members.

Just shut it down or sell it if it can be sold. If the government does not do something to deal with the constant bailouts of SOE’s the taxpayers (and that is all of us) are going to continue to face ever increasing taxes to fund this lunacy.

What is not stressed is the advantage of the unions in using intimidation, assaults and even murder to further their strike objectives, in that most staff want to work but fear keeps them away.
Goverment, ideally, should not be run by union sympathisers.

The senior management of SOE`s (as well as the politicians) should not give in to the demands of the unions, who are holding the country at ransom. Fact is that these SOE`s have to many employees who earn to
much. Bailouts are unsustainable as the SOE`s are unprofitable and a luxury that the country can ill afford. No jobs, no work, no pay.

The ANC is desperately clinging to SAA being losing it would mean having to admit publicly that their corruption and ineptitude has destroyed value in SA. That and SAA is a convenient free ride for the parliamentary parasites.

Of course they’ll never admit publicly that their corruption and ineptitude has destroyed value in SA!

They will blame the whites; the west; Jan VR; apartheid; agents of foreign powers; illegal aliens; the DA; racists; blah blah. And they will get away with it.

Striking for an increase double the CPI rate in an economy which is virtually in recession and striking against job losses in a company which is hopelessly insolvent is just pure genius by the unions. They are sealing their fate with their own stupidity. Who is going to cave in first, Govt or the unions ?

CPI is an index. You are looking for the term ‘Consumer Inflation’. Genius. And no, they are not asking for double.

Inb4 you assuming that I am defending the demands.

Its time to buy a private jet.

sure bud. Braai time is over.

Stop adding Nothing , Anything : becoming somewhat boring now !!

yeah because making a comment about buying a private jet is reaaaaally adding a lot hey boet.

Wages of striking workers don’t need to be paid . SAA loses about R9 M day judging by last years loss .
The problem with SAA is you can’t get to the financial truth half the time …….so braai logic does run wild a
bit !

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