South Africa’s jobs bloodbath continues

 ·18 Jun 2020

Chemicals and energy company Sasol says it will begin a consultation period with its workforce in terms of section 189 of the Labour Relations Act as it considers retrenchments as part of a new restructuring process.

Sasol said in a trading update on Thursday (18 June), that it plans to ‘look beyond the near-term measures’ and position its business for sustained profitability in a low oil price environment.

“The new strategy will focus on Sasol’s core portfolios of chemicals and energy. A focused and robust review of the business, and the associated workforce structures, is underway and a detailed update will be provided to stakeholders alongside the full-year results,” it said.

The company employs more than 30,000 people, the bulk of whom are based in South Africa.

Sasol joins a growing list of companies who have been crippled by the country’s lockdown, implemented in late March, to prevent the spread of Covid-19, which has already claimed the lives more than 1,600 people to date.

South Africa’s aviation sector has been particularly hard hit in recent months, with the likes of SAA, Comair, and Bidvest Group subsidiary, BidAir all reportedly announcing retrenchments.

This week, retailer Edcon said it has sent Section 189 retrenchment notices to 22,000 workers, meaning that the positions of everyone employed by the retailer are on the line.

Edcon, which owns retailers Edgars and Jet, currently employs approximately 17,000 people on a full-time basis and about 5,000 seasonal workers.

“As part of the business rescue process which started in early May, we commenced engagements with various interested parties who continue to look at the business with a view to making a binding offer to the business rescue practitioners for all or parts of the business or assets of the company,” Edcon’s business rescue practitioners said.

“As we cannot predict which parts, of Edcon will be successfully sold, it is therefore prudent to start consultations with all employees in terms of the labour relations act. Should an offer be received, accepted and implemented, for those parts of the business, the employees in the business or parts of the business that will be sold will be treated in terms of the Labour Relations Act.”

At the start of June, National Treasury warned of a jobs bloodbath in South Africa, putting a number to the potential damage that the Covid-19 will do to the country’s rate of employment in 2020.

The Treasury manages national economic policy, prepares the South African government’s annual budget and manages the government’s finances. It forecasts that the impact of the virus, and resulting lockdown period, could lead to job losses of between 690,000 and 1.79 million.

Nedbank meanwhile, forecasts that 1.6 million jobs will be shed in the country in 2020, with the bulk of the jobs lost in the first half of the year.

Finance minister, Tito Mboweni, is expected to deliver a ‘Special Adjustment Budget’ on Wednesday, next week.

“This is an extraordinary event, precipitated by the effect of the Covid-19 outbreak that has caused so many deaths and ravaged great parts of the economy,” said Bernard Sacks, tax partner at financial services group, Mazars.

“As a result of the lockdown, certain sectors of the economy have still not been able to recommence any operations, while others have only been able to recommence to a limited extent. Emergency funds have had to be found and additional borrowings sought to support relief measures.

“These factors have resulted in the need to adjust the figures previously tabled in the February Budget Speech.”

Sacks said that the difficulties faced by minister Mboweni are now immeasurably greater.

Read: South Africa’s R200 billion coronavirus loan scheme isn’t working – here’s what happened

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