The businesses hardest hit by liquidations in South Africa right now

 ·4 Jul 2021

Statistics South Africa has published its latest report on liquidations and insolvencies, pointing to a significant increase in liquidations since the start of the year.

Liquidation refers to the winding-up of the affairs of a company or close corporation when liabilities exceed assets and it can be resolved by voluntary action or by an order of the court.

The data shows that the total number of liquidations recorded decreased by 2.1% in May 2021 compared with May 2020, with a total of 191 liquidations reported over the course of the month.

However, the total number of liquidations increased by 37.5% in the first five months of 2021 compared with the first five months of 2020.

When comparing quarterly liquidations on an annual basis, the number of liquidations increased by 66.2%.

The below table highlights the business categories which reported the most liquidations for the first five months of 2021.

Of all sectors, financing, insurance, real estate, business services (278 liquidations), trade, catering, and accommodation (187) and community services (58) were the hardest hit.

This aligns with Statistics South Africa’s Quarterly Employment Survey (QES) for Q1 2021, published this week, which shows that the country’s businesses and job market have been decimated by Covid-19 and associated locdkowns.

Total household-surveyed employment decreased slightly in the first quarter of 2021 and was still 1.4 million below that of a year earlier.

The number of unemployed persons remained almost unchanged at just over 7.2 million in the first quarter of 2021, while the number of discouraged work-seekers increased significantly.

In addition, the ‘other not economically active’ population increased notably as lockdown restrictions still impeded job-searching activity.

As a result, the official unemployment rate increased marginally from 32.5% in the fourth quarter of 2020 to a new record high of 32.6% in the first quarter of 2021.

The expanded unemployment rate, which includes the discouraged work seekers and those who did not search for work due to other reasons, increased from 42.6% to 43.2% over the same period.

Read: South Africa’s jobs bloodbath continues – these are the workers most affected

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