3 ways South Africans companies plan to deal with the coronavirus pandemic – including job cuts

Nearly three quarters (72%) of businesses in South Africa are looking at cost-saving measures around pay and recruitment to help survive the impact of Covid-19, new research from global advisory firm Willis Towers Watson shows.

When these firms were asked about the options they were considering to save money:

• 48% said that they are looking at an outright hiring freeze;
• 41% said that they would be stopping bonuses;
• 24% said that they would be making selective redundancies.

The survey of 412 organisations showed that almost six out of 10 firms (57%) are not going to award any pay rises this year because of the pandemic.

However, 43% have budgeted for pay increases and are still planning to implement them, although those rises will generally be smaller.

Asked about any changes to their holiday policies, the majority (78%) of respondents said normal leave policy arrangements would remain in place, unaffected by the lockdown.

“Businesses are under intense pressure and are looking for ways to survive the pandemic and to protect their staff. Pay freezes are never popular but it could mean the difference between someone keeping their job or losing it,” said Melanie Trollip, director of the Talent and Reward team at Willis Towers Watson South Africa.

“The beginning of 2020 saw a surge in job-shedding across the economy, and many firms have now called a complete halt to hiring new staff. That will darken the outlook of a jobs market that was struggling even before Covid-19, with unemployment already at an alarmingly high level of 29%.

“Encouragingly, four out of 10 businesses are pressing ahead with pay rises, but the amount they are offering is now around 1 to 1.5% lower than it would have been without the pandemic,” she said.

“Once South Africa emerges from lockdown, businesses will face a very weak global and domestic economy, and we think there will be some longer-lasting changes around pay inequality.

“The gap between what executives and average workers get paid is likely to narrow as pay and bonuses come under pressure and scrutiny.”

Working from home

The survey by Willis Towers Watson also looked at trends around working from home.

It showed that even prior to lockdown, flexible working was a feature of many businesses, as half (52%) of companies said they already had a policy that allows some people to work from home.

The need to stay away from the office wherever possible has driven the uptake of working at home, but not everyone is able to do so, the data shows.

A third (33%) of businesses said 75% or more of their staff were able to work from home.

To help their staff cope with lockdown, majority (79%) of firms said they would be willing to cover the direct costs of homeworking, such as a laptop and broadband.

“Working from home was already growing in popularity, but Covid-19 has forced it to become the new norm,” Trollip said.

“That behaviour will not be unpicked once the lockdown ends and businesses will expand their options around working from home.”

Read: The checklist every South African business should see before heading back to work after lockdown