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3 minute read
3 Nov 2021
12:24 pm

REPORT: More than a million jobs lost to load shedding


At least 350,000 potential jobs may be lost in 2021.

Photo: iStock

The ongoing power cuts in South Africa are expected to result in the shedding of at least 350,000 jobs, despite projections of 3.9% economic growth for 2021.

This is according to a research report by accounting firm PwC, which notes that the return of load shedding in the fourth quarter, after 11 weeks of no power cuts, undermines economic growth.

Load shedding in South Africa

Domestic challenges

The report adds that although the global economic environment is favourable for trade-dependent South Africa, domestic challenges such as the ongoing power cuts continue to cloud scenarios for the remainder of the year.

“Unexpected power station breakdowns, delays in returning to service some other units under maintenance – and the quicker than expected depletion of emergency systems resulted in nearly 15,000MW of capacity being out of action – that was nearly half of the power utility’s coal-powered fleet,” PwC said.

“Overall, we expect load shedding to reduce 2021 GDP [gross domestic product] growth by three percentage points and cost the country 350,000 in potential jobs.”

Economic hit

Chief economist at Economists, Mike Schüssler, says South Africa has lost well over a million jobs already due to load shedding.

“Think of all the businesses that didn’t start up and businesses that have closed down, the mines that haven’t expanded because there’s no power, and the extra refinery that we were going to have in Coega that didn’t come,” he says.

“There [are also] thousands of small farms that didn’t make it and had to consolidate. That meant job losses.”

Schüssler adds that the service industry that probably uses the most electricity is the telecommunications sector – and if users can’t use their cellphone, then those service providers can’t make money.

“The mining and manufacturing guys are [also] in real dire straits when there’s no power. I will say that we might lose another few tens of thousands of other jobs in the next few months if we don’t get rid of load shedding. We already have close to 12 million people unemployed.”

ALSO READ: IEC powering through load shedding to finalise results from local elections

Investors lost

Schüssler says the electricity issues have also had a negative impact when it comes to attracting investors, further injuring economic growth.

“Are you going to open a call centre in a country where your costs of opening one are going to be higher because you are going to need generators and [power] backup a lot more than in other countries? You have to think of that.

“This is not even about how cheap or how expensive your labour is. You cannot be productive in a modern economy if there’s no electricity,” says Schüssler.

“Our electricity prices are all of a sudden sky-rocketing, making the cost of doing business [or running] a factory or a mine in South Africa a lot more expensive.”

He adds that it is “quite clear” that the country has lost millions of jobs and “trillions of rands over these 14 years” because of the electricity situation.

ALSO READ: ‘We can’t just throw money at load shedding,’ says Eskom COO as power cuts return

This article first appeared on Moneyweb and was republished with permission. Read the original article here.

Palesa Mofokeng is a Moneyweb intern.