How Covid has hit SA jobs - and it’s going to get ‘much worse’
Survey paints a grim picture of income and food insecurity, but it’s the tip of the iceberg, say economists
A national survey conducted six weeks into the lockdown shows more than 8% of respondents had lost their jobs while the number of people borrowing money from friends and family almost doubled.
Economists say these numbers are conservative and SA was only beginning to see the economic impact.
The Wave 2 survey by Stats SA aimed to measure the impact of the coronavirus on the employment, income and food insecurity.
It was done between April 26 and May 6, through 2,688 individuals 18 years and older. About half of them live in Gauteng.
Stats SA found that by week six of the lockdown about 8.1% of respondents had already lost their jobs or had to close their businesses.
Statistician-general Risenga Maluleke said the surveys were used to see how Covid-19 affected South Africans and would be used by the government to “inform their strategy going forward”.
The survey follows a Stats SA business impact survey covering April 14 to April 30, which found that nine in 10 businesses reported a reduced turnover.
An economics professor at the University of the Free State, Philippe Burger, said these figures were conservative and that the country should expect to lose between 1.5 million and 2 million jobs as a result of the virus.
Companies will try to hold on to their workforce for as long as possible ... but in the second month and onwards companies will be able to keep less and less of their workforce.Economics professor Philippe Burger
“Companies will try to hold on to their workforce for as long as possible. A month after lockdown ends, companies will still try to keep their employees and the impact will appear mild at first, but in the second month and onwards companies will be able to keep less and less of their workforce and it will decrease at a high rate.
“If we look at 2009, the economy shrunk by around 1.5% and the country lost around 850,000 jobs. Now [the number] will be much larger.
“We are looking at [a shrinkage] of between 6% and 16%. The impact will be quite severe. We can’t afford to lose any jobs but we expect around 40% of the workforce will be without work.
“But it will take a while before we can really measure the effect, so these numbers are conservative – it will be much worse.”
Cas Coovadia, CEO of Business Unity SA, also estimated that the economy would contract by a huge percentage, but said the government could stop some of the bleeding.
Speaking in a Business Day Dialogue webinar on Wednesday, he said that if the economy stayed on level 4 lockdown for much longer the economy could contract by 14.5% in 2020. He said the sooner we move to level 2, that contraction would fall to 10%.
It just does not make sense. We don’t believe there is a health reason for that any more.Cas Coovadia, Business Unity SA
“We are impressing on government the need to have a mindset that says open up the economy with a few exceptions, instead of having a phased opening of the economy with a long list of prescribed goods and products that you can purchase,” said Coovadia.
“It just does not make sense. We don’t believe there is a health reason for that any more.”
Despite the president’s announcement last week that the country would move to level 3 by June, businesses in SA are calling on the government to reopen the economy at a more rapid pace.
Meanwhile, a quarter of participants in the Wave 2 survey have seen their incomes reduced during lockdown. Of those who lost income, roughly half said it was because they either had to close down their business or the company they worked for had to shut.
Fewer people now receive an income from salaries and raises, with more people (1.2% of the respondents) looking to their savings, investments, loans and the Unemployment Insurance Fund (UIF) to support them.
A further 36.8% said they had relied on extended family members, friends and community members, while 14.6% had claimed from the UIF. The number of people borrowing money from friends, family or businesses went up from 1.7% before lockdown to 3.3% during lockdown.
Around 66.6% said the virus and the subsequent lockdown would affect their ability to meet their financial obligations, and most (74.9%) said they were coping by reducing their spending.
Those who did not reduce spending compensated for the loss of income through savings, loans from families and friends, and claiming from UIF.
Just over two-thirds of the respondents said they were most worried about the long-term impact the pandemic would have on their financial situation. Only 12.3% were concerned with the short-term effects, and just over 5% of the respondents owning small businesses reported receiving government relief funds.
In week six of lockdown the survey found that people who were experiencing hunger had almost doubled (from 4.3% to 7%), meaning loss of income was already being experienced by the poorest.