File Picture: Lalinka Mahote/African News Agency (ANA)
File Picture: Lalinka Mahote/African News Agency (ANA)

Fears mount over continued retrenchments

By Edward West Time of article published Feb 18, 2020

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CAPE TOWN - The list of announced plans to retrench in 2020, both in the private and public sectors, has grown rapidly and an anticipated small uptick in the economy is unlikely to slow its trajectory.

Among the list of larger companies to have announced retrenchment plans this year are:

  • ArcelorMittal SA (400)
  • Educor (752)
  • Eskom (voluntary separation packages for “non-core”staff)
  • Telkom (3000)
  • Massmart (1440)
  • Aspen (219)
  • Samancor (2500)
  • Glencore (605)
  • SAB (500)
  • Tongaat-Hulett (400).

Added to this is the unremitting pace of company liquidations, which lead to job losses.

Statistics SA data shows liquidations increased by 11percent to 1079, while close corporation liquidations increased by 10.3percent to 963 between 2018 and 2019.

A recent Global Insolvency Report predicted that liquidations were expected to increase by a further 4 percent in 2020.

The latest Labour Force Survey results from StatsSA show unemployment stayed at 29.1percent in the last quarter of 2019, the highest level in 10 years, after 108000 jobs were lost in the year.

FNB property and household sector strategist and economist John Loos said the upward trend in retrenchments was likely to continue as retrenchments lag the economy, and current job cuts were the cumulative result of the stagnant or low growing economy since 2012.

He said this means that even if the economy grows marginally by 1percent in 2020, as forecast by FNB, compared with only 0.3percent growth last year, the current trend of retrenchments was likely to continue for now.

He said the country was in the longest structural decline since the last one that lasted from the 1970s to the early 1900s - and there was no indication yet that the economy was turning around meaningfully.

Cosatu spokesperson Sizwe Pamla said the rate of retrenchments was a big worry for the union federation and that was why it had begun working towards finding solutions itself to the problems, as it had done with the recent proposal that government pension funds be used to assist in getting Eskom functioning properly again.

He said job losses in mining were essentially related to ongoing mechanisation. Job cuts were now prevalent in other sectors, due to the Fourth Industrial Revolution, which was a global phenomenon, slowing demand, because people “have no more wages to spend” and the impact of load shedding on the economy, he said.

In addition, many of the big companies in South Africa had “international tentacles”, which meant that any job losses that might arise from new technology or other business changes globally were automatically transmitted to the South African operations.

“We felt we cannot wait for the government to find solutions anymore. The government must do what it must do. We are working to build a social compact across all sectors and ideologies to find solutions (to get the economy growing again),” he said.


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