The Unemployment Insurance Fund (UIF) has entered into a multi-million rand deal with the South African Post Office (SAPO) that could help stave off the immediate loss of thousands of jobs at the state-owned entity.
Through the Temporary Employer-Employee Relief Scheme (TERS), the UIF will inject over R381 million into SAPO over a six-month period.
While the move has been welcomed by some labour unions, an economist is doubtful that it will have any significant long-term impact on improving the fortunes of the Post Office.
Employment and Labour Minister Nomakhosazana Meth said the implementation of the signed agreement between SAPO and the UIF was aimed at preserving nearly 6,000 jobs and was a “bold and necessary step to protect workers and restore confidence in public institutions.”
The UIF and SAPO have formally entered into a Memorandum of Agreement (MOA), marking the establishment of a strategic partnership between the two entities. “The TERS programme is not just a financial mechanism; it is a strategic tool to stabilise employment, support economic recovery, and ensure that no worker is left behind,” Meth said.
The minister explained that the funding will be disbursed in monthly tranches through a dedicated TERS bank account, with strict governance, auditing, and compliance measures in place. SAPO is required to submit regular reports, maintain transparent accounting records, and implement a detailed turnaround strategy.
Earlier this month, the chairperson of the Portfolio Committee on Communications and Digital Technologies, Khusela Diko, described the approval of six months of income support for the Post Office as “a much-needed lifeline that the state is both morally and duty-bound to extend.” According to reports, this latest round of income support brings the total amount of government bailouts for SAPO to approximately R9.8 billion since 2014.
Zwelinzima Vavi of the South African Federation of Trade Unions (Saftu) said that while the trade union federation supported the funding move, it was a short-term measure. “We need a permanent solution.”
He stated that they have written to the president about the matter and how it could be better handled but have not heard back. In the letter, Saftu argued that SAPO has improved and should be provided with more substantial support from the government.
“Since entering business rescue, SAPO has registered progress. Between June 2023 and June 2024, SAPO has turned its net asset value from a negative R7.9 billion to R840 million, bringing it into solvency. Furthermore, SAPO has since seen operations improve — reducing backlogs in its mail centre and completing data centre migration.
“However, despite these recorded partial successes, the Treasury appears to have turned against the government’s commitment to save this vital service to the poor with an additional R3.8 billion to complete the business rescue process.”
Vavi said Saftu believed that SAPO has a Universal Service Obligation mandate; therefore, it must be saved and retained in public hands. If its liquidation were a reality, the consequences would be devastating for the working class, particularly those in rural areas, he concluded.
The Congress of South African Trade Unions (Cosatu) also welcomed the agreement. It explained that the funds would cover 75% of the wages of SAPO’s 6,027 employees over the next six months while the entity undertakes its turnaround plans.
“While this relief comes after much anguish and extreme hardship imposed on SAPO’s staff by its management, it will provide badly needed comfort. It is critical that SAPO be given the full support it needs to effect its turnaround and ensure that it is firmly set on a path to recovery and sustainability,” said the trade union federation.
Cosatu added that the remaining balance of the previously committed R3.8 billion injection from the National Treasury also must be provided to SAPO to enable it to settle debts and outstanding payments.
“As provided for in the SAPO Amendment Act, the Post Office’s turnaround plans need to include, with the support of key departments, the establishment of a one-stop shop where citizens can apply for a variety of government services, e.g., identity documents, social grants, educational or SMME financing, etc. Equally critical is SAPO’s entry into the lucrative courier sector, as relying upon its historic business model is clearly not sustainable given the rapid advent of the fourth industrial revolution.
“The current challenges hindering the turnaround of the Postbank also need to be tackled, as its successful rollout as a state bank targeting historically redlined communities will be a further boost to SAPO given their symbiotic relationship and shared infrastructure. The government must lead from the front and utilise SAPO and the Postbank as their service providers for postal and courier services, rolling out civic, social grant, and other services to the public, as well as banking needs. This would provide SAPO and Postbank with the badly needed liquidity they require to survive and thrive,” it concluded.
However, economist Dawie Roodt is not convinced of SAPO’s continued survival. “The UIF is allowed to invest its surplus funds, but I doubt they are allowed to take this kind of risk. This money will not change anything; it will go to salaries and will help to kick the can down the road for a few months. We should be honest that the Post Office is dead; it is so far behind on its debt, it’s bankrupt. If there is something still left, they should sell it,” said Roodt.
THE MERCURY
