State-owned defence industrial group Denel confirmed on Tuesday that it will pay its staff only 85% of their salaries for this month. “Due to ongoing liquidity challenges we are now faced with unfortunate reality that the company is not in a position to fulfil the 100% salary obligation,” stated Denel Group CEO Danie du Toit.

He assured that the group’s management was working hard to make sure that employees would receive the remaining 15% of their salaries as quickly as possible. He further affirmed that the management was committed to fulfilling the company’s contractual obligations to its staff.

“The Shareholder [the government], the Board and management are continuously working to find sustainable solutions to the liquidity crisis facing Denel,” stated the group in its press release. “Government is cognisant of the fact that Denel is highly leveraged and in need of additional liquidity to rebuild the business.”

Trade union Solidarity also issued a statement on Tuesday, in reaction to the news from Denel. It said that the union had learnt of the news “with shock”. It pointed out that, in December last year, Denel had committed itself to informing its employees by the 15th of each month whether or not it would be able to pay their salaries for that month.

“We are concerned that this tendency has now started again because there was an expectation that the non-payment of salaries was something of the past,” highlighted Solidarity deputy general secretary Johan Botha. “The impact on employees and their families is a big concern and leads to unnecessary pressure and stress.”

Given the state of the economy is currently “challenging”, he asserted that the situation was “very traumatic” for Denel staff, as they did not know if they would get paid in July. “We request Denel to be more cautious with the communication of sensitive information which has a direct impact on the lives of their employees.”