SA braces for a hike in unemployment

Johannesburg – South Africa’s jobs crisis is expected to worsen should the predictions contained in the Beyond Covid Business Survey come to fruition.

Specialist management consultancy Redflank conducted the survey between July 2020 and March 2021, surveying nearly 4 500 companies, more than half of which were micro to small businesses.

The data show that 26% of small, medium and micro enterprises (SMMEs) report being forced to close their doors, 7% permanently, with forecasts that they expect to retrench about 1.2-million staff over the next six months.

The study further shows that small enterprises were at a higher risk of going belly up than their bigger counterparts and will need a cash injection of R1.1-trillion in relief funding if most are to survive. The data further show that businesses in the construction, accommodation and food, manufacturing, and information communications technology are the worst impacted.

BeyondCovid chairperson Fay Mukaddam said small businesses play a crucial role in job creation and growth because they have been identified as productive drivers of inclusive economic growth and development.

“In South Africa, the small business sector is a critical part of the national economy, with the government’s National Development Plan (NDP) 2030 looking to SMMEs as a major source of employment and stimulator of growth, reducing unemployment against a backdrop of a formal sector that continues shedding jobs,” said Mukaddam.

South Africa’s unemployment rate rose to 32.5% in the fourth quarter of 2020 from 30.8% in the previous period.

It was the highest jobless rate since quarterly data became available in 2008, with more people entering the labour market and actively looking for jobs. Still, the market is not creating sufficient jobs to absorb enough people of working age into employment.

Shawn Theunissen from Property Point said that while the environment for small businesses remains challenging, there was certainly enough scope for small and mediums enterprises (SMEs)to operate successfully.

“The data show us that SMEs are playing an increasingly important role in the South African economy and we believe that the focus for many businesses will be keeping the lights on as opposed to high growth in revenue and profits in this current sluggish economy,” said Theunissen.

President Cyril Ramaphosa last month urged the private sector to buy locally manufactured goods to reduce unemployment.

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