An unemployment “bloodbath” is looming as it is inevitable that millions of South Africans will be laid off as the job supply and demand in the country is altered during the lockdown and as companies let people go – and then don’t hire replacements as they realise they can do nearly the same with less people.
The lockdown has caused a slump in the economy with thousands applying to the Unemployment Insurance Fund (UIF) to claim an income due to being permanently or temporarily laid off.
According to the Career Junction Index (CJI), which gives an analysis on supply and demand in the online job market, there was a notable decrease in jobs in April, which was the country’s first full calendar month of lockdown.
This was particularly evident in the architecture and engineering, sales and cleaning and maintenance and repair sectors. April saw fewer job opportunities for jobseekers, but hiring activity remained relatively stable in the information and communication technology sector.
While demand for professionals in building and construction, marketing, as well as admin, office and support sectors remained stable in January and February, hiring activity dropped during March and April.
“During April, demand for labour decreased by 36%, while job search activity decreased by 41%,” the CJI found.
“Due to hefty economic restrictions during the Level 5 lockdown, as well as extended school and various public holidays, diminished recruitment activity was evident during April. As a result, recruitment of skilled and highly skilled labour is increasingly challenging due to high levels of uncertainty in the current economic climate.”
National Treasury director-general Dondo Mogajane earlier this month said South Africa’s unemployment rate could go up to 40% due to the lockdown measures.
Economist Mike Schussler said South Africa should expect to shed between 4 and 5 million jobs in the near future. Currently, about 2.5 million people have been permanently or temporarily laid off since the lockdown.
“We are in the middle phase now and are probably going to lose around 4 to 5 million jobs, at least. Around half of that will be permanent while the other half is temporary,” he said.
South Africa was on day 53 of its lockdown, one of the longest worldwide. This will affect the country’s already stretched economy over a much longer period of time, Schussler said.
“We have one of the longest lockdowns, which has stopped the economy. Even Wuhan, the virus epicentre in China, did only a six-week lockdown.
“It will take half a decade to get us back where we were last year. There will be a twice as big shrinkage of the GDP because of the lockdown,” Schussler said.
But while big companies who were scaling down were assisted by government, it was small businesses and informal workers who would bear the brunt.
Labour lawyer Alexia Vosloode Witt said business owners such as hairdressers and gardeners might have to find other means of income in the future.
“Small businesses will see major job losses and that will have a lasting impact for many months to come as employers will be slow to reemploy.
“Unless government changes regulations, people will have to find other ways to offer their services, but it will be challenging because customers will first need to repay their debts before considering going to a hairdresser, for example,” she said.
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