Sunday Times writes that a jobs bloodbath is set to see the unemployment rate soar, with millions of jobs on the line as SA sinks into probable economic depression. The Covid-19 pandemic has seen two ratings downgrades and disruption of the fiscus, with GDP expected to contract 10%.
The result, warned SA Chamber of Commerce and Industry CEO Alan Mukoki, was that jobs would be sacrificed so businesses could stay afloat: “Employers have cash-flow problems. Some lucky businesses will make it through this, but it will be at the cost of their workforce.”
According to Mukoki, the prospect of having the unemployment rate climb to 50% is not an exaggeration. He went on to comment: “What we are seeing is that businesses will not borrow money and get into debt to pay staff when they can simply be laid off and made the burden of the Unemployment Insurance Fund. Most staff are not indispensable, so you can get rid of them and maintain the business when it needs to be reactivated in six months’ time, or whenever the economy can reopen properly.”
Retailer Edcon filed an application for business rescue last week, placing the livelihoods of 34 000 temporary and permanent employees on the chopping block.
Wendy Alberts of the Restaurants Association of SA noted that the industry had been one of the hardest hit by the lockdown and commented: “I look at restaurants opening in level 4 and it’s financial suicide to attempt what they are doing, but they are just trying to get back at it so they can pay their staff.”
The first wave of lockdown job cuts follows a flood of retrenchments earlier in the year caused by an economy that was struggling even before Covid-19 hit. By February, a collective 9 000 job cuts had been announced by companies such as ArcelorMittal SA, Samancor, Glencore, Massmart, Telkom, Sibanye and pharmaceutical giant Aspen.