Prepare for 200,000 more job losses if SA returns to lockdown level 3 – business lobby

A move to lockdown level 3 from mid-November and December could result in 200,000 more job losses and a 10.6% decline in GDP, says B4SA (Photo by Gallo Images / Dino Lloyd)

• If we move to lockdown level 3, amid fears of a second wave of Covid-19 infections, SA’s economy could cut 200,000 more jobs.
• B4SA estimates that it would take until 2024 for formal employment levels to return to pre-Covid employment levels, if the right steps are taken.
• The government must provide the certainty that there will not be another tough blockade to restore and increase the confidence of investors and consumers.

Another tough lockdown would be detrimental to South Africa’s economy, a shift to the Level 3 lockdown in particular would lead to 200,000 more job losses, Business for South Africa warned.

The business lobby group, which represents the majority of SA companies that partnered in its response to Covid-19, issued a statement on Tuesday asking for certainty that the government would not implement another lockdown amid fears of a second. wave of Covid-19 infections.

In the second quarter, 2.2 million jobs were eliminated as a result of the hard lockdown (lockdown level 5) that lasted for five weeks. Economists expect these employment figures to recover during the third quarter, coinciding with the relaxation of the lockdown restrictions.

The South African economy is expected to contract between 7% and 13% this year, its worst performance in 90 years.

B4SA warned that bankruptcies of small and medium-sized companies, which rose from 4% last year to 6.5%, could reach more than 10%, this as credit extensions and tax breaks expire.

“If the nine provinces remain at alert level 1, the lowest alert level, B4SA estimates a 9.3% decrease in GDP by 2020,” the statement read. This figure takes into account the fiscal and monetary policy interventions, as well as the benefit of the Temporary Employee Assistance Plan.

One of its downside scenarios, which sees SA moving toward lockdown level 3 from mid-November and December, sees another 200,000 job losses and a 10.6% decline in GDP for the year.

“We estimate that the loss of formal jobs has already reached 1.4-1.6 million, with one million more lost in the informal sector, and that it will take until 2024 for formal employment levels to return to the level of employment prior to Covid assuming turning the economy onto a path of sustainable inclusive growth, “said B4SA Steering Committee Chairman Martin Kingston.

“South Africa cannot afford the loss of additional jobs and the aggravated economic hardship,” he added.

B4SA said that the certainty that there will be no other hard lockdown would help restore and boost investor and consumer confidence.

B4SA has suggested that instead of a strict lockdown, the government implement sector-specific interventions. For example, all industries must remain operational unless specifically identified as “exceptionally high risk.”

Other measures include limiting the number of people in social and religious gatherings and possibly reintroducing an extended curfew. “Re-introducing cigarette or alcohol bans should be avoided due to their significant adverse economic effects,” said B4SA. Appropriate behavior and safety protocols must also be applied to mass public transport.

Kingston said: