Jobs bloodbath in South Africa

 ·10 May 2024

Several sectors in South Africa are facing mass job cuts, with weak economic growth expected to prevent any meaningful change in the country’s employment figures.

Although load shedding has been suspended in South Africa for over a month, South Africa’s economy is simply puttering along due to elevated inflation, 15-year high interest rates, crime and logistics constraints.

South Africa’s GDP growth is expected to improve from 0.6% in 2023 to between 1% and 1.5% in 2024 amid the easing of load shedding.

However, with the population growing at around 1.5%, South Africa is technically in a per-capita recession.

Maarten Ackerman, Chief Economist at Citadel, previously said that the economy isn’t producing enough goods and services to keep up with population growth, which is creating a greater need for social support while unemployment keeps increasing.

Despite several positive nowcast indicators in April, BankservAfrica said the growth rate expected for 2024 will be too low to make a meaningful dent in the unemployment rate, which stood at 32.1% in Q4 2023.


Mining

The mining sector, especially for those concerned with Platinum Group Metals (PGMs), has been severely impacted by dropping metal prices, with major players announcing thousands of job cuts in South Africa.

After recording a R37.9 billion loss in 2023 after taking an impairment against its US palladium mine, Sibanye Stillwater laid off 2,600 workers in February at its South Africa PGM operations.

However, the group later announced that it is entering into Section 189A to restructure its gold operations and Southern Africa region services functions, which could lead to 4,000 job cuts in South Africa.

In addition, Impala Platinum Holdings Limited (Implats) recently announced that it would restructure, which could affect 3,900 positions at its office and Impala Rustenburg, Impala Bafokeng and Marula operations.

“PGM pricing has declined sharply since the start of 2023, which together with persistent inflationary pressures on input costs has resulted in significant pressure on profitability and cashflow across the entire PGM sector, our operations included,” said Nico Muller, Implats CEO.

Implants had already cut 1,000 jobs in the second half of 2023.

Moreover, after its profits dropped from R49.2 billion in 2022 to R13 billion in 2023, Anglo American Platinum announced that it was looking to restructure, which could affect more than 4,300 jobs across its South African operations.

Last month, Capitec CEO Gerrie Fourie said earlier this week that retrenchments in the mining sector, unlike many other sectors of the economy, would likely increase, with it hit hard by commodity price pressures and the challenges at Transnet.

Source: Capitec

South African Post Office

The South African Post Office (SAPO) is also looking set to major job cuts.

SAPO is in a seriously difficult financial position as it struggles to keep up with couriers, with its losses amounting to over R19 billion as of September 2023.

To prevent mass job layoffs, the group’s Business Rescue Practitioners sought relief from the temporary employer/employee relief scheme (TERS), which would help pay employees for the next 12 months.

Although the post office withdrew its retrenchment notice in April amid this lifeline from TERS, the Single Adjudication Committee had not recommended the TERS relief funding application for SAPO.

Thus, 42% of the existing SAPO workforce is back on the chopping block, bringing the total staff down from 11,083 to 6,383.


Ster Kinekor

Despite exiting business rescue two years ago, Ster-Kinekor is also looking to retrench 32% of its 728 employees, with plans to close up to nine of its cinemas in Gauteng, KwaZulu-Natal, and the Western Cape.

The group said that it needs to undergo restructuring due to a difficult economic environment characterised by load shedding, customer financial constraints, and the impact of the Hollywood strikes. This led to far lower cinema attendance, further impacting revenue.

The Section 189(3) notice was issued to staff in February 2024, beginning the retrenchment process of 236 employees.


Vodacom

Vodacom is also looking to cut staff to help reduce costs.

The group expects to cut 80 people of its 5,400-strong workforce, with reductions felt at all levels of the company.

Vodacom South Africa said that it is implementing several cost-reduction measures to ensure sustainable operations and maintain financial resilience.


Read: New labour rules for South Africa – what you need to know

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