Get ready for more retrenchments, warn experts

Expect the worst, experts warned ahead of the Statistics SA’s third quarter jobs survey’s release today. The previous report, on the first and second quarter, showed millions of South Africans moved from unemployed to economically inactive as a result of the hard lockdown, while 2.2 million people lost their jobs.

According to trade union federation Cosatu spokesperson Sizwe Pamla, many of their members who returned to work initially were expecting retrenchment, while others took pay cuts and shorter and less predictable employment terms to put food on the table.

“But since the economy reopened under Level 1, we did see more workers back at work.”

But even with the thousands back at work, some employers were already planning to retrench staff because of sluggish production levels in some sectors.

Economics professor Bonke Dumisa said the future looked bleak for the economy, with a lack of appropriate economic planning by the government.

“We expect the economy to get worse, because the recovery plan of President Cyril Ramaphosa, who spoke about creating 800 000 jobs, will only catch up in the next five years,” said Dumisa.

What could be expected over the next few months would be a slight improvement. He claimed the expected update by Health Minister Dr Zweli Mkhize would show the country was also not out of the woods in terms of the Covid-19 pandemic, indicating that the road to recovery would be uncomfortably long. Pamla expressed dissatisfaction with government’s attempts at saving the economy, which he called impractical.

“There is also a lot of bureaucratic bungling on the part of the government. They implemented an intervention in the form of a loan guarantee scheme for businesses in distress. But that scheme had a 70% rejection rate.”

Pamla said some credit requirements should have been bypassed for these guarantees to save a significant amount of jobs. Being an economy which was 60% dependant on consumer spending, it was inevitable that if the austerity measures were applied by government on its wage bill this year, lower spending by consumers would hit the economy hard, he said.

Some job losses, Pamla said, would come from employers who routinely used times of economic crisis to shave off its staff in favour of the widespread and gradual switch toward automation.

– simnikiweh@citizen.co.za

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