The plan by the national rail service operator, TransNamib, to retrench 340 employees in the coming weeks, does not require government approval, as this decision lies entirely in the hands of the authority’s board.
In fact, many of the retrenchments stem from TransNamib migrating from non-core business activities, which is a policy already approved two years ago in the strategic business plan.
Public enterprises minister Leon Jooste yesterday confirmed this arrangement while emphasising that the Integrated Strategic Business Plan, approved by Cabinet in 2018, stipulated moving away from non-core business activities to transform the transport parastatal into a profitable company.
“Further to this is the fact that this is an operational matter that fits under the authority of the board – and they, therefore, do not require shareholder approval for this,” Jooste clarified in response to New Era questions.
Upon learning about the impending retrenchments, the company’s representative union, the Namibia Transport and Allied Workers Union (Natau), said they are engaging with TransNamib’s management.
In this regard, the union said they will pronounce their position before the end of the week.
On its Twitter platform yesterday, TransNamib stated it is unfortunate that retrenchment information has been leaked to the media whilst only in its initial stages of planning.
“As an employer, we have a duty of care, especially towards our employees and have a responsibility to act within the Namibian legal framework. Thus, any company decision that affects our employees need to be in line with the Labour Act 11 of 2007,” reads the tweet.
“It is, thus, of the utmost importance that we engage all our stakeholders at the relevant stages of any process. All due processes are being followed and the relevant stakeholders will be engaged in a timely and constructive manner when more information becomes available.”
Last week, TransNamib CEO Johny Smith was quoted in a local newspaper stating the targeted employees include about 154 individuals nearing retirement as well as about 186 who are in non-core business units.
According to Smith, the retrenchment is expected to cost the company about N$44 million.
TransNamib’s integrated annual report for 2019/20 stated the company remained in a challenging financial position despite an improvement in its business operations.
The two main challenges remain its short-term cash flow position as well as limited capacity with respect to the number of locomotives serving its operations.
Furthermore, for the 2019/20 financial year, TransNamib’s revenue increased by N$20 million to N$542 million, whilst operating costs increased by N$72 million to N$885 million.
“Due to this, a loss of N$262 million was incurred during the period. Cash lost from operations was N$74 million. These trading results resulted in the company being in a worse position, compared to the previous financial period,” reads the report.
An operating loss of N$262 million (2019: N$66 million) was incurred.
This loss is at the back of a 4% (N$20 million) increase in revenue, a 74% (N$154 million) reduction in government grants, and a 9% (N$72 million) increase in operating costs.