South Africa’s jobs horror show

South Africa is facing a jobs bloodbath following the nationwide lockdown caused by the Covid-19 pandemic, with new data from the Commission for Conciliation, Mediation and Arbitration (CCMA) pointing to a tough fight ahead for workers to hold onto their livelihoods.

The CCMA said that it received over 16,500 referrals relating to issues between workers and employers in June. While the most common complaints relate to unfair dismissal due to misconduct, at least 1,800 of these deal with retrenchments.

The Mail & Guardian reported that in these 1,800 cases, as many as 100,000 employees are in the firing line – though the CCMA’s track record shows that a significant portion of these jobs are likely to be saved.

The sheer number of retrenchment cases set to be heard by the CCMA highlights the dire situation for employment in South Africa. Notably, the number of referrals is up significantly from the April-May period, where 28,000 employees were affected.

Stats SA recently published its latest Quarterly Labour Force Survey for the first quarter of the year (to the end of March), reporting that the country’s unemployment rate increased by one percentage point to 30.1%.

This reflects data from before the nationwide lockdown came into full effect, with the move happening at the tail-end of the quarter (27 March).

Minister of Employment and Labour Thulas Nxesi has warned that massive job losses are coming.

In a presentation earlier in June, Nxesi produced four ‘mass job loss’ scenarios for the country, which projected that the unemployment rate could peak anywhere between 41% and 54% as a result of the lockdown.

The latest data from Stats SA shows that South Africa’s labour force is around 23.5 million people, 7 million of whom are unemployed.

Taking Nxesi’s projections into account, this translates to approximately 2.5 million to 5.6 million more people entering the ranks of the unemployed in South Africa at peak (9.5 million to 12.6 million people unemployed). In a worst-case scenario, the country could see 7 million people lose their jobs.

Projections from other sources, such as National Treasury, Nedbank and analysts place a wide range on possible job losses in the nearer term, from 700,000 to 2 million.

Jobs bloodbath

The Mail & Guardian reports that the CCMA’s data reflects around 100,000 jobs.

The retail sector is hardest hit, with 23,000 jobs on the line, followed by the private transport sector (15,000 jobs) and the hotel and tourism sector (11,000 jobs).

This is already widely represented in the large number of retrenchment processes underway at many companies in South Africa.

Edcon Group, which entered business rescue during the lockdown, has moved to retrench all 22,000 workers under its employ. Barloworld announced that 2,500 jobs were being cut.

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

Sasol, Cell C, the SABC and even the South African Football Association have also moved to retrench workers in the wake of the lockdown.

But even beyond the retrenchment processes that are already in place is the looming threat of job cuts down the line. Several surveys, reports and analyses show that most business sectors are under severe pressure, and that job cuts are coming.

Architecture firms have pointed to 3,400 jobs on the line over the next few months, while hotels, lodges and B&Bs have also had to make cuts to survive.

Stats SA’s latest business data shows that retrenchments are still part of the plan for many businesses, while jobs portals show a massive drop in hiring activity in the country.

Inevitable

While the government has appealed to businesses to use retrenchment as a last resort, both Nxesi and president Cyril Ramaphosa have acknowledged that job losses are inevitable.

In a weekly letter published earlier in June, the president said that the country needs to be realistic about its prospects concerning job retention and economic growth.

Companies were hard-hit by the lockdown, and drastic measures needed to be put in place to secure revenues and sustain operations. Job cuts were an inevitable consequence of this, despite temporary government support.

The trend is not unique to South Africa, Ramaphosa noted.

He noted that Italy, the UK, the US, Germany, India, China and nearly every country that had imposed some form of lockdown have recorded job losses or hours of workers reduced.

“For a country such as ours, which was already facing an unemployment crisis and weak economic growth, difficult decisions and difficult days lie ahead,” Ramaphosa said.

“We would urge that the difficult decisions to be taken are taken with care and with due regard to balancing the sustainability of companies and the livelihoods of workers. It is important that whatever is done is underpinned by ensuring a just transition to all concerned.”


Read: These graphs show how businesses have suffered during lockdown in South Africa – including layoffs and possible closures

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South Africa’s jobs horror show