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It is no secret that the longer the government extends the closure, the worse the impact on the economy and employment. While companies fear closures due to the uncertainty of the duration of the blockade, they also cannot guarantee that the spread of Covid-19 in their operations will be prevented.
As the government is pressured to speed up the process of reopening the economy, there are also incidents in which some retailers have had to close stores after detecting Covid-19 infections, despite having strict regulations to limit the movement of people.
Woolworths, Pick n Pay and Checkers supermarkets have reported incidents in which staff tested positive for Covid-19 and had to close stores for a thorough cleaning, News24 reported.
More recently, 46 people in factories owned by the fishing company I&J tested positive for Covid-19, Netwerk24 reported.
Commerce and Industry Minister Ebrahim Patel has emphasized that the government is taking a risk-adjusted approach to reopen the economy. He said the government has led with a health response, to contain the spread of the virus. “If we have a rapid spread of the virus in society, it would have a direct effect on the economy,” he said.
Although Patel has said that the blockade would affect SA’s economy in a “profound and significant” way, it has been criticized for minimizing the estimated impact it would have on growth. In a statement released Tuesday night, the Commerce and Industry Department defended the minister and said he had consistently warned about the damage Covid-19 would have to the economy.
‘Cascading Negative Effects’
“The Department would also like to place on record that Minister Patel recognizes the very significant impact of the pandemic and the blockade on the economy,” DTI said.
The shutdown has dealt a blow to an already weak economy, with estimates that it will contract more than 5% this year. The worst-case scenario for the Treasury projects a contraction of 16.1% and seven million job losses.
In a meeting with 100 CEOs organized by Business Leadership South Africa, Patel warned that both companies and workers would be affected by the pandemic.
Some companies already expect to close their purchases in mid-July, and 54% of companies express concern about their ability to increase revenue, according to Stats SA.
“The situation is even more serious, since the economic effect of a prolonged blockade will be geometric, not linear, that is, it will cause an increase in the negative effects in cascade as households and businesses run out of savings and accumulate debt The collapse gets bigger as it feeds on itself, “Investec chief economist Annabel Bishop warned in a report on the impact of Covid-19 on the economy.
“The longer the severe blockade persists, the faster the number of business failures will increase. This also applies to unemployment,” he added.
But the South African Chamber of Commerce and Industry (SACCI) does not believe the government has moved slowly, it simply has not been managing the process “optimally,” according to CEO Alan Mukoki.
Test, test, test
Mukoki believes that the government should have invested more money in the tests, rather than having people sitting at home, relying on the benefits of the FIU. He explained that the tests should focus on those who return to work. “Evidence is supposed to be the centerpiece of corporate reincorporation.”
South Africa could work to test 2.3 million people per month, which is not currently happening. In this way, the government can ensure that those who re-enter the workplace are negative and are not put at risk. He explained that testing should be implemented across all value chains, rather than on a sector-by-sector basis.
For example, the government should focus on testing for companies and others in their value chains, including transportation, in a particular area and making sure people are negative before they can start working again. Mukoki said SACCI had not yet received comments from the government on its proposal, but that the chamber will soon meet with Minister Patel and Minister of Labor Nxesi, among others.
Mukoki criticized the government’s tiered tiered model for not “making sense.”
“They have levels, but on what do they base their decisions? We cannot support things that do not make scientific sense,” he said. Moving from one level with higher restrictions to another with fewer restrictions did not explain how the government intends to mitigate the impact of the pandemic, Mukoki said. He said it made more sense for the negative results to work again and for the economy to work again.
Make sense
The CEO of the South African National Employees Association, Gerhard Papenfus, also criticized the government for having regulations that make no sense.
Papenfus said Neasa was advising companies to comply with government regulations in order to operate, but said the administrative process was onerous.
“I think business will be ready, but the government will have to act together in all of this. You cannot build the economy on so many rules, regulations and requirements.”
“People go to work to really work and not just fill out forms to enter a workplace,” he said.
Papenfus said the infection curve was increasing, as expected, and that the blockade was intended to prepare the government to equip medical services to deal with growing infections once the economy reopens.
When asked if extending the blockade would help reduce the risk of infection, Papenfus said there was no other option than to reopen the economy because the risk of infection was maintained independently. “We don’t have a choice, we have to open up the economy,” he said.
Responsible companies would do their best to comply with government measures to prevent the spread of Covid-19, but had no control over what employees do after work, Papenfus said.
