Thousands of people will lose their jobs between now and Christmas and many more jobs will be on the line in the New Year as the economy suffers the effects of the global economic turmoil.
Job losses have been widespread in several of the country's major industries - manufacturing, mining, retailing and wholesaling - which have been particularly hard hit by a slowdown in consumer spending and which have had to retrench workers to contain costs.
"We are now two-and-half years into a downturn in the growth in spending. Things are likely to get worse before they get better," said Tony Twine, a senior economist at Econometrix.
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Twine said consumers would have to wait until April for the prospect of an interest-rate drop. Tough times were likely to continue until June.
| 'Things are likely to get worse before they get better' |
The biggest job losses have been in mining, in which, according to Statistics South Africa, there was a loss of 32 000 jobs in the third quarter of this year.
This figure is likely to increase following the announcement by the third-biggest producer of platinum, Lonmin, that it is considering retrenching 16 000 workers.
An announcement by Lonmin on the fate of the workers, many of them miners, is expected on Tuesday. The company has confirmed that there has been a steep decline in the demand for its platinum, which has been aggravated by a sharp drop in car production and sales of new cars.
Brand Pretorius, the chief executive of McCarthy, said car sales were down by 35 percent last month, forcing 100 dealerships to close and the 1 600 motor industry franchise operators to scale down operations.
"We created capacity for growth by investing millions of rands in new facilities but now find ourselves sitting with surplus capacity, that is why so many of us are suffering," he said.
He said the McCarthy group, which has 7 500 employees, expected that number to drop by 300 by the end of the year.
"All the other vehicle dealerships are in a similar position. It is very sad and unfortunate, but what is happening is due to the dramatic changes in new vehicle sales, which have resulted in huge losses.
"Market conditions in new and used vehicles are looking very bleak, it is a tough time for us all," he said.
Industry experts estimate that the closure of 100 new-car dealerships has put at least 3 500 people out of work. About 150 used-car dealerships have collapsed, taking with them about 1 500 jobs.
Ford SA is in negotiations with unions to shed 800 manufacturing jobs and more than 500 employees of General Motors SA are facing the prospect of retrenchment. General Motors in the US is seeking a multi-billion dollar bailout from the government.
Norman Lamprecht, a spokesperson for the National Automobile Manufacturers' Association, said employment in the industry declined marginally during the third quarter of this year, principally because of further "operational adjustments" at assembly plants.
He said employment in motor manufacturing was stable only because exports in the current financial year were 100 000 units more than last year, and the real concern was the poor performance at dealerships, where sales were declining.
Banking has also been hit by retrenchments, with Absa and First National Bank cutting down on staff following the dramatic decline in home loans granted since the beginning of the year because of high interest rates and the failure of consumers to meet the stringent new criteria required by the National Credit Act.
House and car repossessions are increasing. Up to 6 000 vehicles a month are now being repossessed and auctioned.
"[Job losses] are happening before the the full force of the economic conditions is felt, so this only the beginning," said Patrick Craven, the spokesperson for Cosatu.
Craven said there was no "quick-fix solution" but there should be a concerted effort by the government and business to save jobs. Craven said the government had not given any indication of a bailout package for the economy or of a stimulus that would head off the crisis and the slide downwards.
Mike Schussler, the economist for T-Sec, said the last labour force survey revealed that the number of people drawing payments from the Unemployment Insurance Fund had increased and that employment was shrinking.
He said that manufacturing, mining, retailing and wholesaling were in recession and that the country was in the first quarter of a strong slowdown.
"It is bad news for the labour market - but it will hit us worse next year," he said.
Iraj Abedian, a Johannesburg economist, said: "Now that job losses have started, we are likely to see open season on lay-offs."
- This article was originally published on page 1 of Sunday Independent on November 16, 2008
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