Today's Labour News

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DenelBusinessLive reports that cash-strapped Denel, under intense pressure from lenders to improve governance, looks set to become the next state-owned entity after Eskom to undergo a management clean-up, starting with a new board.  

In December, the state-owned arms maker conceded it faced "severe liquidity challenges" and was forced to rely on government guarantees for emergency loans to pay salaries and suppliers.  Large bonuses and raises for executives, reputational damage from an aborted partnership with the notorious Gupta family and lenders refusing to refinance debt unless a credible board was chosen have been blamed for the cash crunch at Denel.  In 2017, the Denel board apparently approved salary increases of 16%-60% for top executives, while the average increase for other employees was 4%-7%.  The company said the executives’ salary increases were justified because it needed to safeguard "key capabilities" as it embarked on its growth phase that urgently required "creative solutions to get itself out of the liquidity problem".  Its employee-retention plan seemingly entailed a "benchmarking exercise" in which "severe discrepancies" were identified that the company had to tackle with affected employees.

  • Read this report by Stephan Hofstatter in full at BusinessLive

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