New data shows big spike in retrenchments after lockdown in South Africa

Insurance company Liberty has published its claim statistics for 2020, showing a significant increase in retrenchment and mortality claims following the beginning of the Covid-19 pandemic and hard lockdown in April.

The data shows that retrenchment claims peaked between August and October in 2020 on the back of a lag effect from the start of lockdown.

During these three months, retrenchment claims peaked at over 60 per month, compared to just over 10 per month during January and February in the same year, showing the effects of the economic contraction at the start of the pandemic.

“This trend was expected given the harsh realities and subsequent impact on jobs because of the pandemic. The most impacted regions were, not surprisingly, the main economic hubs of Gauteng, the Western Cape and KZN,” said Kresantha Pillay, head of Liberty’s Lifestyle Protector solution.

Liberty’s client base largely reflects those in the middle- to upper-income bracket, with the retrenchment data proving that no income segment in South Africa was spared the ill effects of the Covid-19 pandemic and lockdown.

The second wave of infections, which hit after the peak covered by the Liberty data,  led to net job losses with significant labour market churn, according to the latest National Income Dynamics Coronavirus Rapid Mobile Survey (NIDS-CRAM).

The study showed that between October 2020 and January 2021 the percentage of employed adults (18-64 years) in the NIDS-CRAM cross-sectional sample declined from 55% to 52%. This was mirrored by drops of a similar magnitude of two to three percentage points across all age groups.

Between October 2020 and January 2021 there was still significant churning in the labour market with about one-fifth of those employed in October not employed in January, and about a fifth of those not employed in October finding work in January.

Rates of job finding among the non-employed were similar across age groups, while job loss was strongly and negatively correlated with age.

Comparing outcomes for youth (18-24), prime-age adults (25-40) and middle-aged adults (41-55) it is clear that the youth were most affected by job losses.

Job loss for the youth was more than double (-31%) job losses for middle-aged adults (-13%) and also much higher than for prime-age adults (-19%).

Mortality claims

Liberty saw a similar increase in mortality claims, and between June and September 2020 a spike of 200% above normal levels was reported.

R575 million was paid out to cover confirmed Covid-related death and health-related claims, of which death was the leading cause. Covid-19 related funeral claims peaked during the first wave with most claims coming from the Eastern Cape, Gauteng and the Free State.

“These Covid-related claim statistics are based on available medical data during the pandemic,” said Nalen Naidoo, Liberty’s divisional executive for retail risk propositions.

“Because of the variability in official medical reporting of Covid deaths, attributing some natural causes claims to Covid was a challenge for us, and we estimate that we paid out much more than the R575 million.”

Despite the pandemic, in terms of impairment and death claims from Liberty’s Lifestyle Protector products, death and impairment by cancer and leukaemia was the top reason for claims, representing 27%.

This was followed by cardiac and cardio-vascular-related causes, comprising 20% of all claims. These top two causes are unchanged from 2019.

A breakdown in terms of gender showed similarities in terms of claims. Cancer and leukaemia remained the leading cause of impairment and death, but cardiac and cardio-vascular-related causes played a higher relative role for men than women.

Liberty’s statistics show that in terms of cancer, prostate cancer is still the leading cause of claims among men, while for women, it is breast cancer.

“Cancer remains a major cause for claims and this has been a trend over the years. The prevalence of particular types of cancer in South African society remain evident,” says Liberty’s chief medical officer Dr Dominique Stott.

Long-term impact 

Psychiatrist Dr Ingrid Williamson said that the long-term effects of Covid-19 are being recognised as a growing problem.

Many of those hospitalised for Covid-19 are not able to return to their former level of functioning and require ongoing health care, she said.

Findings from patients showed that 34% had been diagnosed with neurological or psychiatric symptoms within six months of their acute infection, of which 12.8% were diagnosed for the first time with such a disorder, mostly depression and anxiety.

These disorders are significantly more common in Covid-19 patients in comparison to groups of people who have recovered from flu and other respiratory conditions.

“Due to the debilitating nature of this disease, specific psychiatric disorders post Covid-19 symptoms such as depression, anxiety, PTSD, dementia and psychosis have been a real phenomenon, and this has an impact on the wellbeing of a lot of people,” Williamson said.

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New data shows big spike in retrenchments after lockdown in South Africa