Tribunal raps insurers over job losses
The Competition Tribunal rebuked insurance giants Metropolitan and Momentum for a lack of clarity over potential job losses resulting from the proposed merger between the two.
THE Competition Tribunal yesterday rebuked insurance giants Metropolitan and Momentum for a lack of clarity over potential job losses resulting from the proposed merger between the two, leading to a lengthy discussion that lasted most of the day.
The hearing, which was initially expected to run from 10am to 1pm, dragged on for about six hours as the tribunal searched for clarity on the exact details of the proposed job cuts. The tribunal criticised the two companies, who plan to merge into JSE-listed MMI, for the lack of clarity in their documentation detailing their proposed merger. A merger would create a company with an embedded value of R30bn.
“What does it mean that the parties will investigate opportunities for supporting the employees? What does this mean and can you enforce it? What’s the likelihood of reskilled people getting employment?” tribunal chairman Norman Manoim asked.
While the deal has received shareholder approval, there has been opposition from the National Education and Allied Health Workers Union (Nehawu). Last week the union said it feared the loss of more than 1000 jobs as a result of the deal.
The exact number of potential job losses was a major point of contention at the hearing in Pretoria. During the six hours of discussions, the exact number of potential job losses at the two companies changed, falling from 1000 to between 300 and 500 based on the companies’ detailing of alleviation measures.
The tribunal had requested that conditions be placed on mitigating the effect of these job losses. These would be along the lines of training workers that were unskilled or semiskilled, for employment elsewhere.
When the tribunal asked Momentum CEO Nicolaas Kruger, who was representing both companies, why his group had failed to describe an accurate number of potential jobs lost, he replied it had come from “estimates”. This was partly because it was difficult to ascertain the exact magnitude of cost cutting that the companies would have to undergo. He said part of the reason for the estimations, particularly on the effects on staff, was the parties needed to avoid colluding before they had become one entity.
The tribunal also asked Mr Kruger if he had done any study into the social effect of retrenchments on workers’ families, bearing in mind that South Africans were highly indebted , and the economy was “not creating any jobs”. Mr Kruger said no such research had been done but if the merger went ahead, MMI would work to ensure that retrenchments would be capped at 1000 over next year and 2012.
He said just more than R5m would be available for the training of unskilled and semiskilled employees who lost their jobs through any merger.
Nehawu advocate David Unterhalter said if the merger was to take place, MMI had to weigh the new levels of efficiency it would achieve against whether or not job losses could be justified. Mr Unterhalter wanted clear details of how the job losses would be mitigated. “The endeavours which will be made to assist those who lose jobs are too vague and uncertain,” he said.
The companies expect the merger to save them as much as R750m. The hearing was adjourned until today at 9am
Source - Bussinessday.co.za
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