By Thusang Butale, BFTU Secretary General
Gaborone, 03rd February 2020
Botswana Federation of Trade Unions (BFTU) was less shocked but more disappointed by the news of looming retrenchments at the largest retail chain store, Choppies Enterprises Limited. The news about the impending retrenchment was reported on Friday by two weekly newspapers, Mmegi and Business Weekly and Review (BWR), respectively. In the WeekendPost, Choppies itself had an advertorial rebutting the BWR article’s “inaccuracies, misleading and malicious” content. In the same advert Choppies announced plans to restructure some of its operations and incorporate ‘modern technology’ in its operations as a way of improving efficiency and that “in the process some positions will be rendered redundant”, but not to the “dramatized scale” (of over 3,000 employees) as reported by BWR. More importantly the advert confirmed that the retail chain had a meeting with the Department of Labour and Social Security (DLSS) last Wednesday regarding redundancies of its employees, which is the essence of the newspaper articles.
Section 25 of Employment Act
In its advert Choppies did not provide a counter figure regarding the number of jobs to be made redundant. It is required by law, specifically Section 25 of the Employment Act, to forthwith give written notice to every employee likely to be affected and to the Commissioner of Labour, when an employer forms an intention to downsize its workforce. The number and categories of employees likely to be affected comes into question, as it is tied to the required justification for operational requirements (need for efficient operation), the requirement to give notice to employees and the mandatory selection principle of FILO/LIFO. It is clear from the advert that Choppies had already formed an intention to reduce the size of its workforce. It would be a violation of the said section if Choppies approached the DLSS before issuing notice to all its affected employees. Thus, even before starting the process, Choppies may be in breach and liable to a penalty, something the DLSS hopefully sensitised them to. Thus, while the BWR speculated, such speculation would be in the public interest and the duty of the media, though not necessarily accurate, for now, until Choppies provides accurate numbers and categories of employees in compliance with the dictates of Section 25.
As the BFTU we are worried the most by the implications of the job losses on the employees, their families and the economy in general. In 2016, it employed 7,366 people in about 84 stores, which was reduced to 6,895 by October the following year. However, Choppies remained the largest, single private sector employer in Botswana, ahead of Debswana which employed 6,300 and bigger than BCLs 5,000. These numbers excluded employees of the Holding company’s subsidiaries, Safresh Holdings, Choppies Distribution Centre, Amphora, Well done, Shoppers Paradise, Abbas, Roadtight, Blueberry, Rite Furn and Motopi, as well as sister companies linked to Choppies operations, such as Far Properties Limited. It had also affiliated Payless, Megasave and Supasave supermarkets in its buying group. During peak seasons such as Christmas period, Choppies relied on casuals. For instance, in 2015 Choppies hired 927 casuals. Several companies and individuals supply Choppies, mainly Bokomo, Senn Foods, Parmalat, Bolux Milling, Global Holdings, Kenzo Global and EML Botswana. Although Choppies reported it had no outsourcing contracts, it did engage several cleaning companies in its stores, in addition to brand monitoring staff who manage brands as part of supplier contracts. In numbers this is the full scale of direct and indirect job losses at Choppies stores, especially if loss-making stores are to be closed down.
The bulk of Choppies employees (81%) are industrial employees in the age ranges 20-34, mostly shelf packers, tellers and pricers. Most employees earn less than P2,000 per month, an overwhelming majority being JC or Form 5 holders. Choppies has also claimed to employ the highest number of people with disabilities in Botswana. This is the true picture of the social impact of retrenchments across the country.
Retrenchments and rising unemployment
The looming retrenchments coincide with recent release of unemployment statistics which showed an increase in unemployment by around 3%, ignoring the discouraged job seekers. This also comes after JC exam results showed a big increase in the number of students who will not be absorbed into Form 4. In a few weeks’ time we will receive Form 5 results, which are likely to follow the same trend of young people not absorbed in tertiary institutions. Adding to that the vocational training institutions have been experiencing operational problems barring them from absorbing students.
Since 2016 several companies have been on retrenchment gear, to which Choppies would be adding the cumulative socio-economic impact. The most notable being the closure of BCL mine, an experience still being felt by former mine workers and inhabitants of Phikwe and surrounding areas. The rippling effect of BCL closure was felt at Botswana Railways which also underwent downsizing. In the past three years there have been retrenchments at BPC,BMC, KBL,NDB, Air Botswana, Standard Chartered Bank, First National Bank, BHC, various diamond polishing companies and some retail stores.
We are not hopeful that the efficiency gains from introducing technologies would result in more jobs at Choppies. Technology could result in more jobs had Choppies been training its employees and positioning them for a high-tech operation. Ordinarily Choppies closure of stores would be good news to other retailers. However, only high skilled employees (about 20%) Choppies employees stand a good chance of moving to rivals.
Apart from the macro-economic effect of Choppies adding to an already bad employment outlook, the social impact of the impending retrenchments would also be huge. Retrenchment is always traumatising to those who will lose their jobs. Then comes the effect on dependants, such as people unable to support their families, children not going to school, ailing parents not getting medicine and siblings or other relatives who would otherwise suffer the indirect consequences. One thing is clear: the retrenchments would have significant effect on the economy and the poor in major villages. Part of the macro effect will be reduced spending power and increased poverty resulting from the unemployed relying on the employed given the absence of adequate social security.
Lastly, we wish to point out that Choppies retrenchments are more likely a result of organisational issues than the recent increase in the minimum wage as some people are trying to insinuate. As the BWR rightly analysed Choppies woes date back to its suspension from the stock exchanges in Botswana and South Africa, which slashed its share prices. Then it was found that the true picture of its performance was a huge loss rather than profitability as was wrongly reported by its previous auditors, KPMG. Thereafter there was infighting in its Board and with shareholders in Zimbabwe.
There was little, if any government support to stem the downward spiral.
At this time, employees tried to communicate their share of the effect but those who spoke out were dismissed en masse. Choppies did not allow its employees to unionise – it always found a way to either dismiss its employees who wished to unionise or blocked those trying to help them to do so, using the loopholes in the law. What we are seeing now are the cumulative results of all those developments since 2017. Unfortunately, the full impact is being absorbed by innocent workers, while shareholders will simply sell off their stakes.
In conclusion, as BFTU we are greatly worried what the impending retrenchments mean, not only for Choppies workers, but also for the economy given the size and significance of Choppies. We are concerned whether Choppies will follow the correct retrenchment procedure based on what transpired last week. We are also deeply concerned of the indirect social and psychological impact on dependants. Whether as a country we have learnt from what governance issues and Board infighting can do to a successful company like Choppies remains to be seen. We have also seen that a union-free, low wage company with a CEO pocketing about P1 million a month can still go down at the hands of directors.