A bleak 2021 lies ahead with 'the economy in crisis'

Michael Bagraim writes that he predicts more retrenchments to occur during 2021 as the economy in crisis. Picture: Leon Lestrade/African News Agency(ANA).

Michael Bagraim writes that he predicts more retrenchments to occur during 2021 as the economy in crisis. Picture: Leon Lestrade/African News Agency(ANA).

Published Jan 14, 2021

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by Michael Bagraim

Welcome back to the workplace if you are one of the very fortunate few who still have a job this year.

A report by Fin Find reported a massive closure rate among small businesses. Almost 50% of small businesses failed during the first five months of the harsh lockdown - meaning 60% of full-time and almost 80% of part-time jobs were lost.

The small business sector is what we turn to for job-creation globally. Emergency UIF payments were supposed to help the small business community but unfortunately this was dysfunctional. The Department of Employment and Labour did nothing to help small to medium enterprises.

In previous columns I predicted mass retrenchments over the lockdown and thereafter. Unfortunately, I can predict more retrenchments during 2021. The economy in crisis.

None of our government's economic recovery plans have translated into job-creation. In an interesting Constitutional Court ruling handed down in October 2020, the justices said that if an employer experienced economic difficulties then they may propose employment contracts with less favourable conditions in order to avoid retrenchment. Should employees refuse they would be subsequently retrenched for operational requirements.

I send out a specific plea to the workforce to rather consider these alternative conditions. A lesser job is better than no job. I understand the trade unions have bitterly fought this concept. However, in these trying times a lesser job is better than no job.

Over and above this, the National Minimum Wage Commission has recommended an increase despite warnings from the business community and studies showing that our economy will have negative growth this year.

Many employees had to borrow money to survive 2020. These loans are now due and payable. Many of our workforce went to the informal loan sharks who are now pressurising them to pay back loans immediately. This pressure leaves many individuals to rather accept the “voluntary retrenchment package”.

It is recommended that they rather approach their management about a solution where the employer could negotiate the pay-back of the loan over a period of time. The incredibly sad experience I have seen over and over is that employees jump to accept voluntary packages in order to repay loans.

This temporary reprieve is in fact devastating in the medium and long term. Thousands of employees in South Africa have cashed in their pension or provident funds in order to survive the lockdown. If the employee is either forced into a retrenchment or finds that there’s no choice other than accepting the package, then, like I’ve said before, this package must be very carefully negotiated.

Most employers are willing to discuss increased notice pay, enhanced severance pay and other benefits such as the retention of the work computer, laptop and mobile telephone. Others have been able to negotiate a longer period to remain on the medical aid and the pension or provident fund and some have been able to retain various other assets used in the production of their work.

We should all spare a thought for the part-time commissioners of the CCMA (arbitrators) who have been working there for many years and who have put their life and souls into their jobs. They were given no work and therefore no income for three months during the lockdown and have been told to stand aside and do no work for December, January and possibly February 2021.

This is due to no fault of the CCMA but due to the fact that the budget from the fiscus has been cut by the first R100 million. Over the next few years these budget cuts will hollow out the institution that we know as the Commission for Conciliation, Mediation and Arbitration.

The CCMA ensures that all labour rights are protected. If there are fewer commissioners, this protection will be reduced radically. The trade union movement has demanded of the minister of Employment and Labour that these commissioners be re-engaged as soon as possible.

It will be a difficult year but it has to be tackled with positivity and an eye on the future.

** The views expressed here are not necessarily those of Independent Media.

Cape Argus

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