President Cyril Ramaphosa has warned of widening job losses as the effects of a shutdown to curb the spread of the coronavirus batter the economy.
Companies in the aviation, construction, entertainment and hospitality sectors have indicated plans to cut jobs because of heavy losses experienced in the past three months, Ramaphosa said on Monday in his weekly newsletter. Small companies are being hard hit and some businesses are closing down permanently, he said.
South Africa’s unemployment rate for the first quarter, due on Tuesday, is forecast to rise to 29.7%, according to a Bloomberg survey of economists. That would be the highest level in the statistics agency’s current data series dating back to 2008. Telkom and Massmart are among companies that announced plans to cut thousands of jobs even before the lockdown started on 27 March.
“For a country which was already facing an unemployment crisis and weak economic growth, difficult decisions and difficult days lie ahead,” Ramaphosa said.
The economy could contract by 7% this year, according to central bank estimates. That would be the most since the Great Depression, when output fell by 6.2% in 1931, central bank data shows. Finance minister Tito Mboweni is due to table a revised national budget in parliament this week. — Reported by Felix Njini and Prinesha Naidoo, (c) 2020 Bloomberg.