The Unemployment State of Affairs – Worst is Yet to Come
South Africa, like many countries globally is under lockdown due to the coronavirus (Covid-19) pandemic. And although the Presidency has since announced that many of the stringent (and at times bizarre) restrictions will be eased – to allow for more economic activity to take place, the immediate impact of this pandemic and subsequent lockdown are already being felt.
As South Africans continue to debate and discuss the implications of the lockdown – with differing opinions on whether the economy should be fully opened and lockdown end completely vs the calls for an extension and continuing of the lockdown (as more positive covid-19 cases are recorded), It is clear that what ever decision/s are taken in the coming weeks – the severe consequences are yet to come.
Even before the lockdown, the unemployment rate stood at an alarming 29.1% – which according to Statistics South Africa, it is the highest unemployment rate in 11 years. (source: Stat SA Q3 2019 Quarterly Labour force Survey)
As things stand, many economists, business bodies and even the National Treasury are forecasting a bleak outlook for the economy and are warning of impending – and significant job losses. To put it bluntly, they are anticipating a jobs bloodbath. As business confidence drops, and businesses continue to shut down in numbers, while others opt for the business rescue route, inevitably, many people are going to lose their jobs, thus adding more numbers to an unemployment rate that was already disturbing.
Considering National Treasury’s own projections (‘a worst-case scenario’), that 7 million people could lose their jobs and that the unemployment rate could increase to as much as 50% due to this pandemic, we should all be very worried.
Not long ago – 2018 to be exact, President Cyril Ramaphosa and government hosted a jobs summit (that involved the public and private sector, and many other organisations), with a promise that it would focus on job creation, address, as well as ‘fight’ the staggering unemployment rate – particularly youth unemployment. However, evidently, that promise has now been reduced to nothing more than a pipe dream.
While others may be quick to liken our situation to other countries – who too are seeing unemployment numbers rise, as well as, negative economic outlooks – with growing fears of a potential global economic recession, it should be noted that unlike other countries, South Africa was already in desperate need for economic growth. Our economy contracted by 1.4% in the fourth quarter of 2019 (Statistic SA), plunging us into recession. Not forgetting that Fitch, Moody’s and S&P have downgraded South Africa further into junk status, and the outlook remains negative.
Low economic growth, little economic activity, increasing debt levels, rising unemployment and joblessness, growing frustration and anxiety, persistent uncertainty… a ticking time bomb?!
Can you confidently say that you believe that government can mitigate the severe impact of covid-19 on impending job losses, and economic growth, when they struggled to do it pre-pandemic and lockdown?
Can we afford a further decline?
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