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ESWATINI BEVERAGES PLANS 10% SALARY CUTS

27/05/2020 00:58:00 BY NTOMBI MHLONGO

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MBABANE - Tough times call for tough decisions! Having suffered immensely due to COVID-19 and in an effort to save jobs, the Eswatini Beverages Limited (EBL) has proposed to cut salaries of all its employees by 10 per cent for the next 18 months.

The company, which is part of global giant brewer Anheuser-Busch InBev (AB InBev) family, is one of the country’s most affected companies due to the coronavirus pandemic after government implemented the COVID-19 regulations, which banned the production and wholesale of alcoholic beverages.

Liquor is among non-essential products that government decided to suspend, especially its production and distribution.
In our sister publication, The Times Sunday, the company revealed that about 224 000 bottles of beer in its warehouse would be destroyed due to the ongoing lockdown, which was effected as part of measures to fight the spread of COVID-19.
The publication reported that the booze, according to calculations where each unit of bottle was charged at E17, was worth over E3.8 million.

Expired

It was gathered that the bottles that had expired included Sibebe Premium Lager, Castle, Hansa, Castle Lite, Castle Milk Stout, Black Label and Lion Lager.

Worth noting is that the Swaziland Consumer Association, through its Chairman Bongani ‘Bhanyaza’ Mdluli, made it known in our sister publication that such a scenario could have dire consequences for the company.

Mdluli said there was need for government to consider that companies had risk policies that, if applied, could lead to job losses as the businesses might be forced to retrench staff.

Indeed, EBL has confirmed that it has made a proposal to its employees to effect the salary cuts.
EBL Head of Legal and Corporate Affairs Mpumelelo Makhubu confirmed the latest developments, but mentioned that at the moment the issue was at a proposal stage.

“(The) COVID-19 trading environment has proved to be one of the most challenging times in collective memory. As such, many businesses have had to take various measures to ensure their viability. At EBL, we had to stop all new production effective April 27, 2020, and sales effective April 16, 2020. The regulations issued have effectively shut down our entire beer business and broader value chain,” said Makhubu when responding to a questionnaire sent by this publication.

Makhubu said in order to protect the company’s long-term viability, it was considering a temporary 10 per cent salary cut across all of its employees from July 1, 2020 until December 31, 2021.
He said it was important to note that this was meant to save jobs.

“Additionally, as we investigate various measures to manage our financial constraints, we are also considering freezes to increases and benefits as well as other cost-cutting measures that directly affect our employees. This decision was not taken lightly.

“We empathise with the hardships that this will create for many of our colleagues. However, we fundamentally believe that – in light of the shutdown and prohibition placed on our business – this is the best course of action to help preserve the employment and wellbeing of our entire Eswatini team,” said Makhubu.

Assisted

When asked on how the company had assisted the country in the COVID-19 fight, he stated that during this period, the purpose of bringing people together for a better world had never been more relevant.

As such, he said the company had adapted its view on togetherness, in light of COVID-19 and responded to the needs of the country through donating to the National Emergency Response Committee, and installing water station units for hand washing in five high density rural towns in the country.

“We are also looking at other avenues for supporting the nation during this challenging period, and encourage other companies to continue supporting the national efforts against this pandemic,” he emphasised.

Options

It should be noted that following the negative effects of the coronavirus on most companies, government, through the Ministry of Labour and Social Security, issued labour options to consider as a means to mitigate the effects of loss of earnings by employees during the lockdown or during the entire period of the national emergency.
In the recommendations, it was stated that no employer should consider retrenching any of their employees within the declared period of the lockdown.

It was stated that any employer who was ordinarily planning to retrench staff during the period of the national emergency on the basis of prior arranged and/or on-going standard restructuring processes, should fully comply with the provisions of the Employment Act, No.5 of 1980.

The news of the pay cuts is a disappointment to the employees as they have been enjoying salaries and benefits which came about in 2018 after an agreement where all wage and salary rates were increased by 6.5 per cent across the board.
The increase came as a result of a collective agreement which was entered into by the Swazi Economic Improvement Workers Union and EBL, a deal which was agreed upon on August 8, 2018.

According to the bargaining unit, which included conditions of service and salary increment, there was also to be an increase in certain allowances.

This was to include ration or food allowance which was increased to E30.
EBL is the leading beverages company in Eswatini.

It manufactures, markets, sells and distributes a range of the world’s giant company AB InBev beer brands.
Recently, AB InBev warned that some of its biggest three beer brands were bearing the brunt of a collapse in sales caused by COVID-19.

Shutdown

Reuters reported that as demand evaporated amid a global shutdown of bars and restaurants, AB InBev and rivals Heineken NV and Carlsberg A/S were racing to find ways to cut costs to reduce the effect on profit.

It was stated that so far AB InBev’s more expensive products suffered less, but that longer-term, as the pain from a pandemic-induced recession spreads from blue-collar to white-collar workers, that could also harm the collection of niche premium labels that AB InBev has built up in past years.

Furthermore, the company issued a statement to the effect that the impact of the pandemic had already been demonstrated by the company’s global volumes in April 2020, which decreased by approximately 32 per cent, mainly due to the closure of the on-trade segment in most markets and government restrictions on some of their operations.

Insurance

In an interview with labour consultant Musa Hlophe, he stated that the scenario that the EBL employees and others were faced with was as a result of the failure by unions and government to implement a workers’ insurance fund.

“We have a parastatal like the Eswatini National Provident Fund (ENPF) in the country. So many employers have millions there. Employers, unions and government should have long engaged Parliament to finalise the fund I am talking about,” he said.

Hlophe mentioned that an employer who was now taking a short-cut to save employees’ jobs should be blamed for not having long engaged government to finalise the issue of the fund.

“We must remember that COVID-19 is not here to take away the rights of employees. Neither government or employers have seen the urgency to explore the fund route,” he said.

Meanwhile, the office of the minister of Labour and Social Security said it would give an update on all COVID-19 issues affecting employers and employees at a press briefing that will be held soon.