A task team comprising Denel management, the board and labour representatives are set to meet on Friday to look at a union demand for an above-inflation wage increase at the embattled state-owned manufacturer.
This after Denel and officials from the National Union of Metalworkers of SA (Numsa) met in Centurion, Tshwane, on Wednesday, regarding the implementation of a 7% wage increase.
Numsa Hlanganani regional secretary Jerry Morulane said earlier this year that Denel executives approved a 7% wage increase and communicated that decision to employees.
“However, the board intervened and reversed the decision, and they unilaterally implemented a 4% increase for the 2025/26 financial year instead,” Morulane said.
“Numsa members have rejected the 4% proposal because the last time workers received an increase was in 2019.”
Denel is among state-owned enterprises (SOEs) hollowed out and repurposed to serve the narrow and selfish interests of the politically connected during the state capture years.
It is also among 27 SOEs that racked up R69.3bn in irregular expenditure over the past five years, and R163m in fruitless and wasteful expenditure during the same period.
In his budget speech in May, finance minister Enoch Godongwana allocated R59.7bn to defence and state security. Denel had been undergoing a turnaround plan that includes recapitalisation, having received R3.4bn in the past for it.
Morulane said Denel acting board chair Gloria Serobe explained at the Wednesday meeting the arms manufacturer could not afford to implement the 7% wage increase as it would be “unsustainable in the long term”. She said the entity could afford to implement a 4% increase.
“After extensive negotiations, it was agreed by all parties that a task-team or ‘war room’ would be established to find a sustainable way to fund the increase.
“The task team has been established to look at the practicality of the successful implementation of the corporate plan, which will in turn assist in funding the increase demanded by workers. The task team will meet on June 27 to map a way forward.”
Denel did not immediately respond to a request for comment.
The wage issue comes as unions have been demanding above-inflation wage increases at SOEs.
The United National Transport Union (Untu) and rival union the SA Transport and Allied Workers Union (Satawu) signed a multiterm wage agreement for increases of 6% each year over a three-year period with Transnet last week.
Untu and Satawu last week rejected a 3% wage offer from the Passenger Rail Agency of SA (Prasa), calling it disgraceful and an insult to workers. SA’s inflation rate edged up from March’s 2.7% to 2.8% in April.
Satawu and Untu’s consolidated wage demands include a 15% across-the-board wage increase. The unions are also demanding a R3,000 housing subsidy, a standby allowance of R50 an hour, a night shift allowance of R10 an hour, a moratorium on retrenchments and a medical aid subsidy with the employer contributing 70%.
The National Treasury had not responded to questions about its role in wage talks within the SOEs, among others, by the time of publication.
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