The company then resorted to retrenching all its staff (with the exception of the CEO) in the name of ‘restructuring’. This was apparently approved by the Minister of Works despite a warning by the Ministry of Labour that the legal requirements had not been met. NAC staff were given the opportunity to re-apply for their jobs, without any guarantees that they will be rehired or that their employment conditions would be maintained once rehired, and consequently several staff members were re-employed at conditions that were significantly worse than the original ones. Several weeks before, Namibia’s Labour Commissioner had already pointed out that such practices were not in line with the letter and spirit of the labour law but the NAC seemed unperturbed and went ahead with its ‘restructuring’.
There is no doubt that the NAC (and before that it was Agribank and the National Housing Enterprise) set a very bad precedent that many companies might want to follow. As a state-owned enterprise it should have dealt with labour matters in an exemplary manner and explored solutions within the framework of existing laws. Media reports suggest that the NAC had hugely increased salaries in recent years so that they were above the ‘market-related’ salary levels paid in Namibia.
Proponents of the NAC ‘restructuring’ thus argued that the salary bill had become unsustainable and that drastic steps had to be taken. The fundamental question, however is: who agreed on the salary packages and why was the company’s financial situation not taken into account during salary negotiations over the years?
There is no doubt that these questions will to be answered by the NAC management and the board of directors who are supposed to oversee the company’s operations. When management negotiates with the recognised union, it surely must have a mandate from its board and base its offer on the available company finances. If not, management has clearly acted outside its mandate and should have been taken to task by the board of directors. Another possibility is that the board of directors acted negligently and did not perform their oversight function. The reportedly inflated salaries should have been detected long ago but it seems that neither management nor the board acted until the crisis erupted.
It seems that those responsible for the crisis, (NAC management and the board of directors) were then looking for a solution that placed the burden on the NAC staff, namely mass retrenchments cloaked as ‘restructuring’. To make matters worse, media reports suggest that the NAC paid N$7 million for less than five months’ work by a consultant advising on the ‘restructuring’. This constitutes the worst kind of labour practice and fails to hold those accountable who created the crisis in the first place.
There is no doubt that the Namibian Labour Act allows for restructuring and even retrenchments are permitted as a last resort. However, before taking this drastic step, employers are supposed to negotiate with the staff concerned and their recognised trade union how retrenchments could possibly be avoided or at least be minimised. Such negotiations should include the consideration of possible alternatives.
This is perhaps the most astonishing aspect of the NAC saga as the recognised union, the Namibia Public Workers Union (Napwu) signed a memorandum of agreement on 7 March 2012 which gave the NAC a free hand to terminate the employment of all staff and to selectively re-hire them as the NAC deemed fit. The Napwu leaders who signed this agreement must explain whose mandate they were following when signing the deal. It is hardly surprising that NAC employees are up in arms and question in whose interest the Napwu leaders acted.
The NAC case thus points to a lack of union accountability but also to severe governance problems at the state-owned enterprise. It seems that both the board and management did not perform their duties as expected and now staff members have to pay the price in the form of retrenchments or reduced salaries and benefits. This does not only violate the sense of justice but could also set a very bad precedent. The time has come to hold the real NAC culprits accountable, as well as those union leaders who operate outside their mandate and betray the trust of their members.
* Herbert Jauch is a labour researcher and educator, based in Windhoek.