SABC plans to freeze pay for three years

• Despite reducing staff by 621, unprofitable public broadcaster tells MPs it expects further losses in 2021 and 2022

The unprofitable SABC, which has just gone through a retrenchment process, is planning to impose a pay freeze on its employees for the next three years to contain costs, SABC executives told members of parliament’s communications committee on Wednesday.

The unprofitable SABC, which has just gone through a retrenchment, is planning to impose a pay freeze on its employees for the next three years to contain costs.

This mirrors what the government plans to do with its public-sector employees to reduce the budget deficit though public-sector trade unions are vigorously contesting the plan.

By end-March, 621 employees had left the public broadcaster, 275 by retrenchment from redundant positions and 346 with voluntary severance packages, which cost R164m. The annual compensation of staff that left was R457m.

SABC executives told members of parliament’s communications committee on Wednesday night that the broadcaster will have covered the cost of the voluntary severance packages in the fifth month of the current financial year, and would then realise savings of R292m on salaries.

That, together with a pay freeze (excluding medical aid contribution increases), would translate into R600m in savings on the salary bill in the next three years. The salary bill is budgeted at R2.8bn for 2021/2022 reducing to R2.5bn in the following two years.

MPs were told that the SABC was expected to post further losses in 2021 and 2022 and to break even thereafter.

The pay freeze would be lifted once the broadcaster broke even, SABC CFO Yolande van Biljon said during a briefing on the SABC’s corporate plan.

A loss of R844m on revenue of R5bn is forecast for the 2020/2021 financial year and R603m for 2022.

But a profit of R150m is forecast for 2023 and R348m for 2024. Revenue is expected to grow 28% in 2021/2022, 17% in 2022/2023 and 13% in 2023/2024.

The broadcaster’s cash position is expected to deteriorate this year due to expected operating losses and planned capital expenditure.

Van Biljon said that in terms of the SABC’s turnaround plan many initiatives were envisaged to grow revenue.

For example, the SABC expects revenue from licence fees to grow 29% in 2022 through the investment in content and marketing and through enhanced collection methods. This will be tough to achieve considering that on average 75% of TV licence fees were not paid over the past three years.

This situation was made worse by the Covid-19 pandemic with more people under financial pressure. The undercollection of licence fees is a chronic challenge facing the SABC. DA MP Phumzile van Damme said that she believed that the SABC’s method of collection was not working. The SABC will also launch a drive to increase advertising revenue by 21% in 2021/2022.

But Van Biljon cautioned that there was a risk that this forecast growth might not materialise. The SABC has allocated R30m for coverage of the local government elections during which it is obliged to give political parties airtime. It has also acquired the rights to cover the Olympic Games, which are scheduled to take place from July 23 to August 8.

Discussions are under way with the government on the cost of the SABC fulfilling its mandate as a public broadcaster, which in the past three years has amounted to R4.8bn and is expected to total R5.7bn in the next three years.

The cost of the mandate includes all programming that the SABC is required to broadcast in terms of the regulations of the Independent Communications Authority of SA (Icasa) as well as in terms of its licensing conditions and editorial policies

TV licences and a grant from the government cover part of the cost of fulfilling its mandate with the rest being unfunded.

Communications minister Stella Ndabeni-Abrahams said engagements were going on within the government about the funding of the SABC’s unfunded mandate. The SABC had submitted proposals which were being reviewed by her department and the Treasury.