New retrenchment data shows the start of South Africa’s jobs bloodbath

The coronavirus pandemic and the extended lockdown has had a clear impact on South African companies, with various government bodies reporting an increase in retrenchment and insolvencies.

Presenting in a virtual parliamentary meeting on Tuesday (12 May), Companies And Intellectual Property Commission (CIPC) commissioner Rory Voller said that there had been an uptick in companies applying for business rescue.

Voller said that the CIPC has received a total of 140 business rescue applications since the start of the financial year, with 37 of these applications received during the lockdown period alone (March and April).

This includes a number of ‘larger’ companies such as Edcon, South African Express, Comair and Phumelelea Gaming. However, he noted that both and large and smaller businesses had been equally impacted by the crisis.

He added that the CIPC has relaxed its time frames around the business rescue process because of the difficulties around having to meet stakeholders and reduced staffing capacity.

In a separate parliamentary briefing, Labour and Employment minister Thulas Nxesi said that the country’s recent increase in retrenchment is likely just the ‘tip of the iceberg’.

Nxesi noted that the CCMA had received 17 applications for large-scale retrenchments in terms of section 189 of the Labour Relations Act and 151 smaller applications, BusinessDay reports.

CCMA national senior commissioner Marius Kotze told the committee that 1,669 cases were brought to the CCMA in April compared with 849 cases to date in May.

Treasury recently stated that as many as 7 million South Africans could become unemployed if large chunks of the economy remained closed for the remainder of the year.

It said that around 3 million jobs are at risk even if the pandemic is contained quickly, while a slow recovery could see 5 million job losses. A worst-case scenario would push the unemployment rate to over 50%, from its current rate of just under 30%.

Dondo Mogajane, the National Treasury’s director-general, warned last week that the country’s unemployment rate could reach as high as 40%.

Speaking to 702, he said that the economy could contract between 7% and 12% as a result of the impact of the coronavirus.

He said that unemployment could reach between 30% and 40% – “if things go the way they are”. He said that the tourism industry is on its knees, with travel agencies closing down.

Read: 3 new lockdown rules for South Africa including the opening of more small businesses – what you need to know

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New retrenchment data shows the start of South Africa’s jobs bloodbath