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BCHC: In order to reboot the economy, government, business and trade unions must work together

Written by Bradley Conradie

Early in March 2020, South Africans became acutely aware of the global pandemic, Covid-19, when the first infection was confirmed. The corona virus had crossed our borders and was no longer some disease that other countries had to deal with. At the time, many did not appreciate the impact that the virus would have on our lives and livelihoods.Towards the end of March 2020, President Ramaphosa declared the pandemic a national disaster and announced that there would be a nationwide lockdown for 21 days to curb the spread of the virus. The lockdown continues at great expense to business owners and the economy.

As most employees are not being paid during the lockdown there is an understandable desire to return to work as soon as possible. Unfortunately, for many employees, there will be no jobs to return to as these would have been decimated by the restrictions imposed by the lockdown. This will apply to employees across industries and irrespective of their level of education and the level of their positions. National Treasury’s own prediction is that as many as seven million people may lose their jobs. While the President has made an impassioned plea to businesses to take care of their employees, the reality is that most businesses will not be able to adhere to this request.

Even when we finally reach the stage that the lockdown is completely lifted, consumer demand will be low as a result of job losses and a more conservative approach to spending. It is tragic that in many instances successful businesses which have been built up over a long period of time will be destroyed by the lockdown measures. The situation for businesses that were already in distress prior to the lockdown is probably more dire and their chances of avoiding retrenchments or closure even more slim.

It is not however only financially distressed businesses which we need to be concerned about from a retrenchment point of view. All businesses will need to assess their pre-Covid-19 business model. In so doing, many will decide, rightly or wrongly, that they are overstaffed or that their staff structure must change which may lead to certain positions or entire departments being declared redundant.

Going into the lockdown the South African economy was already stagnant with miniscule growth forecasts. The ability of businesses to retain employees, let alone to create employment, will be severely constrained as the economy contracts even further. The problem will be compounded by employers who use Covid-19 as a justification to dismiss employees where the operational requirements of the business do not justify it. This may be done purely in pursuit of improved profits or to get rid of “troublesome” employees and will only perpetuate the unemployment problem. This type of opportunism is also going to manifest itself in the form of salary cuts, which are not a common practice in South Africa.  It is very seldom in retrenchment exercises that salary cuts are proposed as an alternative. Employers seem to prefer a clean break rather than retaining employees in their positions at a lower salary. However, as a result of the lockdown, many businesses have already proposed salary cuts to their employees as an alternative to retrenchment. Some of them have been consistent and have asked all levels of employees, including executives, to take salary cuts. Of course some employers have only asked lower paid employees to agree to salary cuts in order to save their jobs.

Employees find themselves in a strange place. On the one hand they are intended beneficiaries of government’s strategy to save as many lives as possible and on the other hand they are the victims of that same strategy as their jobs and livelihoods are decimated in the process. Going forward, government cannot save them, given the current and future constraints on the economy.  Business will not save them as it is not in the nature of business to retain jobs which cannot be justified from an economic point of view.  It is naïve to think that businesses will behave in an altruistic way to save jobs for the greater good. Our only hope is if government, business and trade unions appreciate that the time has come to work together in order to ensure the survival of the economy, rather than holding onto outdated policies, ideologies and business philosophies.

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