November 7, 2018 / 3:29 PM / 2 years ago

Major South African union opposes state arms firm stake sale

JOHANNESBURG (Reuters) - The National Union of Metalworkers of South Africa (NUMSA) is opposed to the government selling a stake in struggling state-run arms firm Denel and will fight attempts to force through salary cuts, the union said on Wednesday.

Denel, which makes weapons, missiles and armoured vehicles for the South African armed forces and clients in Africa, the Gulf and Europe, is battling to stay afloat after reporting a 1.7 billion rand ($121 million) loss.

South African President Cyril Ramaphosa has made shoring up ailing state firms a priority and said last week that Denel was “ripe” for joint venture partnerships after Saudi Arabia offered to take a stake in the weapons manufacturer.

Unions are an important support base for the ruling African National Congress (ANC), so Ramaphosa must tread carefully before next year’s parliamentary election.

“When you bring in an equity partner, there is always a likelihood that there will be jobs lost, so we as NUMSA are opposed to any form of privatisation,” said NUMSA regional secretary Jerry Morulane.

“We also reject salary cuts for ordinary workers at Denel. They should find other ways to guarantee the future of the company,” Morulane added.

NUMSA and another union, Solidarity, account for roughly half of Denel’s workforce of 4,000 people.

Earlier this week Solidarity rejected a proposal to cut Denel salaries by around 20 percent from the end of November but said it thought selling an equity stake was the only way to save the company.

Denel is one of a handful of South African state firms that became embroiled in corruption scandals involving the Guptas, a trio of brothers with close ties to scandal-plagued former president Jacob Zuma.

Zuma and the Guptas deny wrongdoing. Their relationship is part of the focus of a graft inquiry backed by Ramaphosa.

($1 = 13.9935 rand)

Reporting by Alexander Winning; Editing by Joe Brock

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