Business for SA urges urgent opening of economy to avoid jobs bloodbath
The quicker the economy reopens, with health and safety precautions in place, the less severe the damage to growth and employment, B4SA says
Business for SA (B4SA) called for an urgent reopening of SA's economy as it warned that as many as 4-million jobs could be lost due to the Covid-19 crisis, with economic activity taking three to five years before returning to pre-crisis levels.
The grouping, formed to support government's efforts to deal with the health, labour and economic impact of the outbreak, said economic modelling showed that GDP could shrink between 10% and 17% in 2020, depending on the length and severity of the lockdown.
It estimates that between 1-million and 4-million jobs could be lost, with economic activity only reaching pre-lockdown levels in three to five years time. Even before the Covid-19 outbreak closed down most of the economy, SA was struggling with an unemployment rate of nearly 30%.
B4SA, which brings together Business Unity SA (Busa) and the Black Business Council, has urged the government to move as quickly as possible through the various stages of the lockdown, putting in place a “risk-adjusted” approach that will enable most of the economy to reopen. The quicker the economy reopens, with health and safety precautions in place, the less severe the damage to growth and employment, it says.
At a briefing on Wednesday Busa vice-president Martin Kingston said: “Unfortunately, we anticipate the SA GDP will contract between 10% and 17% this year, despite the stimulus that has been announced and we also see that between 1-million and 4-million jobs in formal and informal sector, unless we arrest the economic decline as quickly possible.”
Kingston described the economic outlook as one of a depression because “the recession is going to be much deeper and will endure for much longer than we thought”.
The presentation came as other reports underlined the economic and human cost of the health crisis, which has kept the economy virtually closed for six weeks. A Human Sciences Research Council survey showed a jump in prevalence of hunger, while IHS Markit SA data showed private-sector activity nosedived in April.
B4SA anticipates that the epidemic will peak in late August and September and that over the next weeks and months, infections and mortalities will rise enormously.
However, both “lives and livelihoods” need to be preserved, it argues, which requires reopening the economy with workplace safety protocols and personal protective equipment in place, a ban on social gatherings and the provision of safe public transport for employees.
Stavros Nicolaou, who heads the group’s health workstream, said that the objective of the lockdown had been to prepare the health services for what lay ahead.
“We are certainly in a better position now than we were to save lives,” he said.
Kingston said business was “forcefully” engaging with government on the level 4 regulations, advocating strongly, for instance, for all e-commerce to be reopened.
“We have no visibility on the time frame for level 4 and we think it is possible that there can be adjustments within levels. That is the discussion we are having with the government now so that we can migrate to level 1 as quickly as possible,” he said.