More than 9,000 people across a variety of sectors are facing retrenchment just two months into 2020.
This comes on the back of increased business insolvencies in Q4 2019 as South African companies struggle to stay afloat due to a weaker economy and the impact of load shedding.
These insolvencies and subsequent job cuts are expected to continue in 2020 as South Africa experiences a protracted growth slowdown, says credit insurance company Euler Hermes.
“2021 will mark the fourth consecutive year of below 1% real GDP growth. Domestic demand is unlikely to sustain growth, in a context of a high tax burden, a 30% rate of unemployment as well as downward pressures on wages.
“Low growth has driven deterioration in payment behaviour with business insolvencies up by +6% in 2019 and expected to increase by +4% in 2020,” it said.
The public sector also isn’t safe from job cuts, with South African Airways, Eskom and other state-owned enterprises also likely to announce retrenchments in the coming months.
Below BusinessTech looked at the companies that have already announced job cuts in 2020, and the number of people which will likely be impacted.
Telkom – 3,000 employees affected
In January, Telkom informed trade unions and staff that it could cut up to 3,000 of its more than 15,000 employees as it struggles with declining performance in fixed voice and data services.
The company said that it is grappling with organisational and operational inefficiencies linked to fixed voice and data services, which require more staff to install, maintain and market.
“Telkom will continue to consult with the unions, and it is our hope that through considered engagement with the unions, we will come to a mutually beneficial solution,” a spokesperson said.
“Out of respect for our employees, we will share information once we have engaged further with our employees and unions.”
While the official number stands at 3,000 employees affected, the Federation of Unions of South Africa (FEDUSA) has highlighted that overall job cuts at Telkom in 2020 could be around 6,000 jobs.
Samancor – 3,037 employees affected
Mining company Samancor Chrome said it could cut close to 2,500 jobs in response to weak chrome prices and power supply problems.
It told unions it would hold talks over 2,438 potential job cuts at its Eastern Chrome and Western Chrome mines. It needed to cut costs and was facing increased power tariffs and problems with electricity supply, the letter stated.
The warning follows a separate notification about 599 potential job cuts at its smelting operations and corporate offices and highlights how the struggles of state power utility Eskom are dragging on the economy.
Dion Wired/Massmart – 1,440 employees affected
Massmart started consulting with unions about store closures and jobs cuts in January as it battles to recover from an earnings slump.
The group said it nows plan is to shutter the 23-store Dion-Wired chain of hi-tech appliance shops and 11 Masscash wholesale outlets, with 1,440 employees potentially affected by the process.
Massmart currently employers approximately 12,000 employees across its group which includes brands such as Makro, Game, Builder’s Warehouse and others.
DionWired sales have come under pressure as low consumer confidence has affected sales of high price-ticket electronic items.
Declining customer traffic into major shopping malls where some larger Dion Wired stores are based, has also impacted sales.
Sibanye-Stillwater – 1,142 employees affected
In January Sibanye-Stillwater reported that 1 142 employees have been retrenched following Section 189 restructuring at its Marikana operation.
This was well below the initial anticipated retrenchment figure of 5,270 jobs.
“We are pleased with the outcome of the consultations with stakeholders, which despite the necessary closure of some end of life shafts, resulted in the preservation of a number of jobs,” said CEO Neil Froneman.
“This will result in a more sustainable business which will secure employment for the majority of the Marikana workforce for a much longer period.
Glencore – 665 employees affected
Glencore issued section 189 notices to 665 employees in January as it struggles to keep its Rustenburg Smelter operational.
The group has cited the high cost of electricity and an increase in the carbon tax and logistics costs as some of the reasons it needs to downsize.
Aspen – 219 employees affected
Aspen Pharmacare said it plans to cut up to 219 jobs at its Port Elizabeth and East London plants as it seeks to remain globally competitive.
Aspen is the continent’s biggest drugmaker and has spent the last year disposing of noncore assets to manage its debt burden, which it cut from R53.5 billion in December 2018 to R38.9 billion by the end of June.