Ramaphosa warns of job losses: ‘We have to be realistic about our prospects’

 ·22 Jun 2020

President Cyril Ramaphosa says that South Africa faces a difficult road ahead following the outbreak of Covid-19, and has called for the country’s citizens to be realistic about future prospects – especially about the time it will take for the economy to recover.

The president said in his weekly open letter to the public, that the economy is now ‘in the throes of the anticipated fallout from this global crisis’ and that the predictions of businesses shutting down and jobs being lost are materialising.

“Last week, a number of companies announced plans to retrench staff. From aviation to construction, from entertainment and leisure to hospitality, companies have indicated their intention to retrench staff because of heavy losses incurred over the past three months.

“In other cases, businesses are closing permanently. Small businesses whose turnover has been wiped out will be even harder hit.”

Ramaphosa pointed out that South Africa is not alone in this regard and that a number of countries are now facing a ‘job loss tsunami’.

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.”

Playing catch-up

As part of his government’s plans to get back on track, Ramaphosa noted that a number of measures have been put in place to protect local businesses during the lockdown in the form of loans, tax relief, debt restructuring, extended credit lines and retail rental exemptions.

He added that temporary social assistance to poor households is gathering pace and is providing vital relief.

However, the president said that these measures can only go so far.

This week the minister of finance, Tito Mboweni will table a revised national budget in Parliament. “Revenue has plummeted and difficult decisions will be made in the coming weeks and months as we seek to reprioritise our programmes, manage public spending and scale back on projects where necessary,” the president said.

As more economic activity resumes, struggling businesses will be ‘playing catch-up’ to recoup lost productivity and revenue for some time to come, he said.

“As much as we seek to protect current jobs, we also need to create new ones, and attract new, greater levels of investment. It is imperative that we open avenues for self-employment and entrepreneurship, especially for young people.”

Good news 

While a number of companies continue to cut jobs, Ramaphosa welcomed the news that a number of companies are creating jobs.

“The announcement last week by Amazon that it is on a drive to hire up to 3,000 South Africans for a variety of positions is a welcome signal, as is the announcement that a local energy storage company Metair has secured a number of contracts from the Ford Motor Company, and that the pan-African cloud and data solutions entity Africa Data Centres has acquired a hi-tech data centre in Johannesburg,” he said.

He added that a number of infrastructure projects in water, transportation, energy, digital infrastructure, human settlements and agriculture will be showcased at this week’s inaugural Sustainable Infrastructure Development Symposium of South Africa.

“This infrastructure investment forms an integral part of our recovery effort,” he said.

“This will be bolstered by the reduction of interest rates by the South African Reserve Bank, support extended to businesses during the pandemic and regulatory relief for the financial sector, among others.”

Read: Amazon announces 3,000 new work-from-home jobs in South Africa – here’s what you need to apply

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