Government incompetence, which resulted in load-shedding, infrastructure collapse, and an unfriendly business environment, is causing widespread job cuts.
StatsSA’s latest South African GDP data revealed that the country’s economy shrank by 0.2% in the third quarter of 2023.
The lower GDP was expected as infrastructure collapse has prevented many businesses from operating optimally.
For example, the deterioration of Transnet’s rail corridors in the mining industry has forced miners to transport their minerals to South Africa’s ports via trucks.
However, the decline in the price of many minerals has become unviable for local miners, threatening their businesses.
Problems at South Africa’s ports are also putting the brakes on many exports and imports, hurting the economy.
It has become so bad that many miners use trucks to transport their products to Maputo in Mozambique to avoid using Transnet’s rail and port infrastructure.
Coal miners have begun issuing retrenchment notices to their staff, with analysts warning that up to 35,000 could be retrenched due to the collapse of Transnet.
Load-shedding has also continued unabated, causing tremendous challenges for most South African companies.
Electricity Minister Kgosientsho Ramokgopa previously said the impact of load-shedding could amount to as much as R1.6 trillion.
The South African Reserve Bank (SARB) is more conservative, estimating that load-shedding costs the economy around R899 million per day for stages 3 to 6.
While the exact impact of load-shedding on the economy is debatable, it is undisputed that it causes widespread job cuts.
Ramokgopa recently warned that over 800,000 South Africans stand to lose their jobs due to load-shedding.
Throw in water problems, crumbling road infrastructure, rampant crime and corruption, and political uncertainty, and it is easy to see why jobs are under threat.
Widespread job cuts in South Africa
Over the last few months, many reports emerged of widespread job cuts at large South African employers.
- In December, Steel producer ArcelorMittal announced a plan to cut 3,500 jobs in South Africa. It added that more retrenchments are on the cards as the country’s energy and logistics crises are making it almost impossible to operate profitably.
- In October, mining giant Anglo American announced that it had begun cutting jobs at its head office in South Africa. Around 181 jobs could be lost in this process.
- In October, platinum miner Sibanye-Stillwater announced that it would enter into Section 189 consultations to retrench over 4,000 workers amid the company’s restructuring.
- The National Union of Mineworkers (NUM) warned that close to 10,000 jobs could be lost by the end of January 2024 as mining companies begin to issue retrenchment notices amid declining commodity prices and an inability to export their produce.
- In November, Impala Platinum began offering voluntary job cuts to miners at its mines in South Africa as part of its measures to combat a steady decline in platinum group metals (PGM) prices.
- In May, Pick n Pay announced that it was slashing management jobs through a voluntary severance programme and Section 189 retrenchment process.
- In September, Glencore began a retrenchment process at its iMpunzi coal complex in Mpumalanga, which has 1,138 permanent employees.
- In November, MTN South Africa announced voluntary severance packages (VSP) and voluntary early retirement (VERP) to cut staff.
- The latest StatsSA employment data shows that over 200,000 domestic workers lost their jobs over the last three years, with no indication that the sector is on the path to recovery.
Many economists said the only way to resolve South Africa’s unemployment crisis is to grow the economy.
For that to happen, the government must fix crucial state-owned enterprises and implement business-friendly policies.
However, there is no political will to do that, especially not ahead of a general election where populist rhetoric wins votes.