Change and retrenchment : an overview of the causes, process and effects in South Africa

Abstract

Retrenchment and unemployment has become a general concern for many South Africans, especially in the age of globalization. This phenomenon, however, is not unique to South Africa. Technological advancement in communication and travel, amongst other things, has made the world a smaller place. Limited resources will continue to become scarcer and scarcer, the world's population explosion has reached critical levels and thanks to contributions by medical science, mortality rates are much, much lower. The effect of job losses on employees and the community are extreme and in this respect, Swanepoel et al. (2000:833), best describe the extent of this by comparing retrenchment to economic capital punishment. He states that dismissals due to operational requirements are deemed to be deserving of special treatment and that special compassion is called for on the part of employer. Bendix (2000:229) adds that retrenchment is among the most serious and unfortunate undertakings of a company, as it not only affect the employee concerned and his family, but the society as a whole. Business has become highly competitive and the principle of "survival of the fittest" is a sure fact in today's world of trade. Finnemore & van Rensburg, (2000:542) stated that organisational mortality rates would increase in the emerging world . We can therefore safely assume that this will have a concomitant effect on staffing levels. Reducing employment costs in the form of retrenchments in order to sustain profitability has become a growing phenomenon. Mergers, acquisitions, joint ventures and take-overs are some of the characteristics of the global age and the reviewing of employment levels as a consequence of globalization is receiving more and more attention. Optimal manpower strategy in any business should therefore always reflect the possibility of retrenchments and redundancies. Does this actually happen? And what do business and government do to prevent this from happening or to minimise it? Or are South Africans too inwardly focussed on transformation to do the right thing for the right reason at the right time? We cannot see into the future, and although the most modern forecasting and planning techniques are available, an accurate prediction of future events remains debatable. The tragic events on September 11, 2001 at the World Trade Centre and the effects on the world economy bear testimony to this. Do business and government have contingency plans in place to effectively manage the profound effects of such incidents? The establishment of human rights, an occurrence vastly differentiating the modern age from former times, has lead to the establishment of a new set of guidelines for human interaction and the roles they play in business. The labour relations arena is no different. The profound changes after the 1994 elections heralded a new era for South Africa; resulting in a different approach to managing labour relations. Has South African business adapted to these changes in time or not, or does the pre-apartheid paradigm linger on? Do we have the inherent ability to manage change to such an extent that we can balance sustainable growth with the need to create employment for future generations? The changes in the world, the impact on South Africa and the associated social changes as phenomena will be interpolated with the need for retrenchment in chapter 3. Bendix (2001 :387) argues that previously it was deemed the right of the employer to change the workforce by enlarging or reducing it to suit the production and economic cycles with a view to business rationale. In Bezuidenhout et al. (1998:243), this view is upheld. The new Labour Relations Act (Act 66 of 1995) has changed the emphasis to a new growing focus on employee rights, especially the right to job security. In a 2 sense, this is a positive move towards sound labour relations, especially in a country with high unemployment figures where the social impact of retrenchments may very well lead to the demise of communities totally dependant on that particular employer. Bond (1998) indicated the terrible effects of mass retrenchments by referring to the town of Welkom in the Free State as struggling for economic survival in the aftermath of mass retrenchments following a fall in the gold price. It goes on to say that approximately 50 000 employees in the gold mining industry found themselves unemployed and that the town of Welkom was fighting the economic decline that could turn it into a ghost town. A lay-off of this magnitude affected unemployment to a great extent and further added to the troubling crime rate.