1 million jobs lost – and worse is still to come: economists

South Africa lost almost a million jobs in the second quarter of this year when the full lockdown was in place – and more retrenchments are likely, according to economists from the Bureau for Economic Research (BER).

The BER predicted in a market note on Monday (28 September) that 975,000 jobs were lost in the second quarter.

Stats SA will release the latest Quarterly Labour Force Survey (QLFS) on Tuesday (29 September). It will be the first official indication of job losses due to the lockdown which led to Stats SA collecting data via computer-assisted telephone interviews instead of face-to-face questions.

National Treasury and Bloomberg economists are also predicting a jobs bloodbath. In May, Treasury projected that between 690,000 and 1.79 million could have been lost under lockdown, while Bloomberg noted that the number could be over three times higher at 3 million jobs lost.

The Commission for Conciliation, Mediation and Arbitration (CCMA) recently said it noticed significantly higher activity with regard to retrenchments in May and June this year. Thousands of people have lost their jobs at major companies, including SAA, Comair, the Bidvest Group subsidiary, BidAir, Edcon and more.

Worse to come

Above the direct jobs lost under lockdown, the BER and other economists have warned that things are likely to get much worse as businesses continue to struggle through the recovery under lighter lockdowns.

The BER said Tuesday’s numbers also might not reflect the full extent of the damage because “workers may have given up looking for work due to a lack of opportunities amid (temporary) lockdown closures or fear of contracting the virus while searching for employment”.

It added  that these discouraged work seekers are not considered in the narrow unemployment rate, which is approaching 40%.

Bloomberg’s projections show that with a quick recovery, fewer jobs will be hit – but in the worst-case scenario, with slow economic recovery, over 7 million jobs could be lost as a result of the crisis.

However, the BER also noted that the opposite is also true of the data, and that workers – particularly informal workers – may have already returned to work again after the survey took place.

“In terms of the hit to employment, informal workers that were out of a job during April might have already started to work again if they were surveyed later in the quarter,” it said.

Unemployment rose by 1.0 percentage point to 30.1% in the first quarter of 2020 compared to the fourth quarter of 2019 to 344,000 people. South Africa’s GDP declined 16.4% from the first quarter to the second quarter.

The BER expects headline consumer inflation (CPI) will rise 0.2% month-on-month when the Stats SA releases the August data on Wednesday.

This means a 3.1% year-on-year increase, slightly lower than 3.2% recorded in July.

“In a low survey month, besides the 45c/litre rise in the diesel price (petrol was largely flat) in August, there is not much to drive the monthly CPI,” the BER said.

“However, of interest will be to see if there are more signs of the weaker currency so far in 2020 being reflected in a component such as vehicles. Also, while it may be too soon to show up in the August CPI, we need to watch for any pass-through to retail food prices from the sharp rise in domestic maize prices since the second half of July,” it said.

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1 million jobs lost – and worse is still to come: economists