Looming SA jobs catastrophe due to lockdown calls for urgent reforms – IRR
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JOHANNESBURG - The mounting strain on South African businesses due to a lockdown imposed to curb the spread of Covid-19 -- a move the central bank says could cost at least 370,000 jobs and see 1,600 businesses go under -- requires urgent government action, the Institute of Race Relations said on Wednesday.
Last week’s spike in United States unemployment claims to a staggering 6.6 million should serve as a warning to South Africa, which entered the pandemic on a much worse economic footing, IRR analyst and researcher Nicholas Babaya said.
President Cyril Ramaphosa ordered a 21-day lockdown ending April 16, during which only essential services are allowed to operate, to try and rein in Covid-19 infections in South Africa which now has 1,749 confirmed cases with 13 deaths.
Anxiety among employers and employees across the country was heightened by speculation that the lockdown could be extended, at potentially much greater economic cost, the IRR's Babaya said.
South Africa's unemployment rate currently stands at nearly 30 percent of the labour force, and the government has promoted small businesses as key to creating jobs, but these are likely to be hardest hit by the lockdown.
The IRR said to save lives and livelihoods, the government should, among other measures, do away with the concept of “essential services” and allow any business to trade if doing so posed no serious public health risk, reform labour regulations to "price workers into jobs" and cut wasteful public sector spending.
"South Africa entered the pandemic in a far weaker condition than most other countries. Even without the 21-day lockdown, the country would be in a precarious economic position," Babaya said.
"But the lockdown has sharply intensified the strain, and there is a risk that if economic pressures are not addressed, non-compliance with isolation measures will grow as people, driven by desperation, ignore or disobey them."
"If measures intended to prevent the spread of the virus end up tipping South Africa into an economic depression, with millions thrown out of work, such measures will likely prove to be no solution at all," he added.