South Africa’s Catch 22

South Africa’s post office is cutting several hundred jobs, the second state-owned company in as many days to detail plans to lay off workers as the government looks to slash its wage bill. The state owned entity will pay voluntary severance packages to about 776 employees at the end of November, as part of a phased reorganization, company executives told parliament on Tuesday. A day earlier, cash-strapped South African Airways announced plans to cut 944 jobs. Finance Minister Tito Mboweni signaled last month he’s intent on lowering the government’s payroll costs, which consume 35% of national spending. The cuts are part of a plan to defend the nation’s last remaining investment-grade credit rating, which has a negative outlook. Labor unions have argued that their members shouldn’t have to contend with the fallout of years of mismanagement and alleged graft at state companies. With 29% of the workforce unemployed, those who do lose their jobs face an uphill battle to find new ones.

SOURCE: BLOOMBERG

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