Denel has informed workers at its two divisions it is unable to pay staff salaries for this month, an untenable situation that trade union Solidarity and the National Union of Metalworkers of South Africa (Numsa) said is deeply concerning, as the state-owned arms manufacturer received almost R2bn in a government bailout.
Denel is among state-owned entities (SOEs) hollowed out and repurposed to serve the 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 period.
In his budget speech in May 2025, 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.
Denel management informed employees at Denel Dynamics and Denel Pretoria Metal Pressings (PMP) this week it lacks the “financial resources to pay January salaries, which were due on the 23rd”.
“This announcement has left workers distressed, anxious and uncertain about how they will provide for their families,” said Irvin Jim, general secretary of Numsa.
“Once again, workers are being forced to carry the burden of Denel’s leadership failures. Numsa strongly condemns Denel’s executives for allowing the company to reach this point while workers remain the first to suffer the consequences of mismanagement and instability,” he said.
“Since 2024, Numsa and other unions have participated in efforts to stabilise Denel, including serving on a task team mandated to develop a turnaround strategy to resolve the entity’s persistent financial crisis.”
This vacuum in leadership has only been worsened by Denel’s operational and financial challenges.
— Irvin Jim, general secretary of Numsa
Jim said the task team produced a turnaround plan estimated to cost R120m, which the board approved.
“As part of the task team, Numsa made concrete proposals, including suggestions for how Denel can recapitalise itself. However, the executives ignored our suggestions. This is why we reject any excuses from the management because they have solutions but they are not implementing them.”
The continued absence of a permanent board has deepened governance instability and undermined accountability, Jim said.
“This vacuum in leadership has only been worsened by Denel’s operational and financial challenges. Denel has already received R1.8bn in bailout funding from the National Treasury intended to reignite production, pay salaries and settle outstanding debts. This amount forms part of a broader R3.4bn allocation, subject to certain conditions being met. Prior to this, Denel received R992m in working capital support,” Jim said.
Numsa called on Denel to urgently engage the Treasury to secure the necessary funding to ensure workers’ salaries were paid in full and on time.
Solidarity’s Derek Mans said: “The situation is unacceptable and deeply alarming, particularly in light of the far-reaching intervention measures introduced less than a year ago to stabilise Denel’s operations.”
He said less than a year after the R120m turnaround plan had been approved, Denel PMP reportedly experienced four explosions, raising concerns about operational control, safety management and maintenance; employees at Denel PMP and Denel Dynamics have been informed that salaries cannot be paid; and there is no visible accountability for the failure to implement an approved and funded turnaround strategy.
“The growing salary crisis, now affecting more than one division, underscores a systemic governance and leadership failure at the group level. This is further aggravated by the continued absence of a permanent Denel board, despite expectations that the appointment process would have been completed by December 2025. Solidarity has long warned that Denel cannot be stabilised through interim leadership structures, fragmented accountability and crisis-driven decision-making,” Mans said.
Solidarity called for the appointment of a new, permanent board with appropriate expertise in the defence industry, engineering, finance and project execution; consequence management for the non-implementation of board-approved strategies and serious consideration of public–private partnerships to restore sustainability, protect strategic capabilities and secure jobs.
“Employees cannot continue to pay the price for governance paralysis and leadership vacuums. Denel’s strategic role and the livelihoods of its employees require decisive leadership, accountability and immediate intervention,” Mans said, adding the union will continue to pursue all available avenues to protect its members and to hold those responsible accountable.
Cosatu parliamentary co-ordinator Matthew Parks said: “This is completely unacceptable, a violation of our labour laws and must be condemned in the strongest possible terms. This disgraceful failure to pay workers their meagre salaries cannot be tolerated.
“Denel has the potential to be turned around. It has an impressive order book from countries around the world. But it requires competent management, including a board.”
Parks said support for Denel from the defence force and police, “as well as other state security arms and the private security industry must be ramped up as local procurement is the most important path for nurturing a domestic industry”.
Denel spokesperson Pam Malinda did not immediately respond to a request for comment.
Update: January 22 2026
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