Increase in tax and electricity prices closing window for job creation

Winter is coming – and it’s going to be a cold one for Tshwane small businesses, especially liquor stores and pubs.

This as they will have to cope with petrol and electricity price increases as well as an increase in minimum wages in the following months.

“All these economic factors, combined with alcohol tax increases, do not paint a hopeful picture for the survival of businesses such as ours,” said Pretoria-based Rafters pub co-owner Arlin Williamson.

“As a business, we are still paddling through the waters trying to recover from several alcohol bans. These new changes are just pulling us backwards,” she said.

“Maybe we could survive the alcohol tax, but the electricity hike and fuel levy will be quite heavy.

“When we are hit by loadshedding, we usually depend on the generator to keep us going. But how will we be able to keep the lights on with the increase in the fuel now? We cannot run the business in the dark.”

Williamson said as much as she would like to remain positive about business economic recovery, she anticipated this winter to be a cold one for businesses.

“I initially thought that it would take us two years to recover, but with all these added expenses I anticipate it will take close to five years. We also believe that consumers will not have much money to spend as people are losing their jobs by the day.”

Williamson said she felt things would have been better without an electricity hike.

Louis liquor store owner Jean Victor believed that the increase in alcohol tax would not have much impact on the business compared to the minimum wage increase.

Last month, the government announced a 4.4% increase in minimum wages, amounting to R21.69 per hour from R20.76.

“I have no issue with people getting better pay. I am all for that even though my employees are getting more than the previous minimum wage. But with the varying increases per worker, all of these combined will see the salary bill increasing up to 40%.”

Victor said the increases would make it almost impossible for many businesses to recover.

“The harsh reality of this is that we won’t be able to create any new jobs.

“There was this guy who was sleeping in the streets for six years. I helped him start a car wash business, and now he can provide for his family. But the chances of being able to do something like this to create new jobs are now very slim.”

According to Statistics SA, the unemployment rate in the last quarter of 2020 now stood at 32.4%.

Grafters Tavern owner Mirla Carstens said with businesses feeling the pressure, consumers could expect prices in the sector to increase.

“The electricity hike is ridiculous, but if we do not pay they will cut us off; so we have no choice but to. All these changes will see profit margins drop.

“We will have to increase liquor prices and change our menus to survive. As for consumers, I expect them to spend less as everything goes up, including electricity for their houses.”

Carstens said she hoped there would not be an alcohol ban during the Easter holidays to avoid businesses taking loans to survive.

Economic and political analyst Zamikhaya Maseti said consumers would take the brunt of the changes in the increasingly grim economic landscape.

“Usually when corporations are feeling a strain, they find a way of shifting this burden to the consumers by increasing prices.

“When it comes to the electricity matter, small businesses will be most affected. Their profit margins are dropping daily and they are finding it hard to survive as expenses are increasing.”

He said fuel increases would be tough for many people to handle.

“It will affect the working class who survive on small budget as taxi fares will increase and people will struggle to get to work. Municipalities need to work on improving public transport infrastructure system to be more accessible to all.”

Maseti said the implications of the lockdown would continue to surface as more people lose jobs.

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