Mass retrenchments continue in South Africa

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Republic of South Africa has been rocked by news of mass retrenchments over the last three months as businesses continue to feel the effects of a weak economy and the coronavirus pandemic.


Data published by Statistics South Africa last week shows that 2.2 million jobs in the second quarter of the year, leaving just 14.4 million employed people in both the formal and informal sectors.

Since June, a number of large South African companies have indicated that they plan to make retrenchments including:

  • Leisure and entertainment group Sun International has warned of 2,300 layoffs;
  • Industrials group Bidvest said 1,200 jobs could be affected by the sale of its car-rental unit;
  • Barloworld has warned of retrenchments that could affect 3,750 workers;
  • Mobile operator Cell C  expects to close 128 retail stores around the country, putting 546 positions at risk.

Commenting on the job losses, Business Leadership South Africa (BLSA) chief executive Busi Mavuso said that StatsSA’s figures point to a growing unemployment crisis in the country which has been compounded by the pandemic.

“We have always had an unemployment crisis. Our lowest unemployment rate was in 2008 when it fell to 22%, a figure that would still be considered a crisis in many other countries. However you look at it, our economy simply doesn’t employ enough people,” she said.

“We can use social grants to limit the poverty this causes, but we cannot substitute for bad policy that leads to unemployment in the first place.”

Nedbank economists Busisiwe Radebe and Nicky Weimar said in a research note, that the latest labour figures make forecasting future employment figures challenging.

This is because doing so would require knowledge of how many of the non-economically active group would once again enter the labour force.

“The numbers however also signal how difficult the economic recovery will be, with so many having completely just dropped out of the labour force,” Nedbank said.

“The chances of a V-shaped recovery are probably out of reach and the South African economy will need some form of further stimulus.

“The Reserve Bank, by keeping rates on the hold, have signalled that they have done as much as they can for the recovery, therefore other more structural changes will have to take place to put the South African economy a better footing.”




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