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Some companies already in third round of retrenchments over past five months

Edward West
Published: 2009/06/19 06:27:32 AM

“We are seeing a disturbing rise in retrenchments,” she said. The facilitator for the training organisation, Celeste Allan, said retrenchments increased from December to January and had continued to rise ever since.

“Some companies have retrenched two and three times over the last five months. I would estimate many companies have cut staff by up to 25% and that is industry-wide, whether in transport, advertising, manufacturing, mines, IT and even environmental type businesses,” Allan said.

Richard Pike, CEO of training and recruitment group Adcorp Holdings said employment was a “bleak picture ”. But he had seen some innovation to preserve jobs, including factory stoppages or reduced work hours to clear inventory, using the time to up-skill staff and employing on a temporary basis rather than permanently.

Companies are compelled to report the number of those they retrench to the Department of Labour, but its spokeswoman Page Boikanyo said they did not have figures for retrenchments.

“But statistics from Stats SA show a disturbing picture of companies failing the fight to survive,” Van Wyk said.

Statistics SA had reported increases in company liquidations of 59,7% in the first quarter compared with the same period last year . Pike said as far as a turnaround was concerned, “the only consensus is that there is no consensus,” and when the formal economy did start recovering, it was likely to be muted compared with previous growth periods.
“My feeling is that the banks got us into this and it will be the banks that will get us out, once they start lending to consumers again. Consumers comprise 60% of the economy,” said Pike.

Allan said many companies had tried to adopt an optimistic view.

“But with no upswing materialising and conditions becoming more difficult we are seeing some companies losing the battle .” She said retrenchment caused productivity to drop and depression to rise in companies.

“It is getting to the stage where in companies that have had two or more rounds of retrenchments, the staff are now saying to management, ‘get this over and done with as quickly as possible’.”

She said even “good” staff were leaving retrenching companies.

L egislation imposed lengthy processes to retrench, but often companies were in crisis mode.

Some companies had panicked — “they think by cutting 10 heads they will recover but retrenchment is a sign that management have failed in their management duties and have not correctly assessed the environment for new opportunities which are still there”, said Allan.