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This sector in South Africa just lost 250,000 jobs – here’s why it’s a big deal

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Increasing job losses and the overall negative impact on the economy of the nationwide lockdown has seen South Africa’s ’s expanded unemployment rate accelerate to 42% for the second quarter of 2020.

The latest Quarterly Labour Force Survey Quarter 2: 2020 results show that a shocking 2.2 million jobs were shed in the country during this period.

One of the groups hid hardest by the lockdown are domestic workers, with 259,000 losing their jobs over the period – a year-on-year decrease of 25.1%.

This means that the number of active domestic workers in the county has decreased from just over a million at the start of 2020, to 745,000 as at the end of June.

Industry experts believe that these latest figures are likely to invoke further job insecurity within informal sectors, including domestic workers who are particularly struggling as they contend with notably fewer wage opportunities than during pre-lockdown conditions.

Earlier this month Stats SA also revealed that GDP fell by just over 16.4% between the first quarter and second quarter of 2020, resulting in an annualised growth rate of -51%.

In a recently broadcast interview, former statistician-general Pali Lehohla said that the government needs to come up with a sustainable way of addressing South Africa’s unemployment crisis.

“If you look at the State of the Nation Address at the beginning of the year, the president said that there will be 200,000 jobs created per year. That gives you only 2 million jobs in 10 years.

“Now at the time of coronavirus, the question is: what is the promise and what is the basis for that promise? What is the evidence around that promise and what is the roadmap to execute that promise?” said Lehohla.

Similar concerns are also being raised in the private sector, as well as fears of rising poverty levels and the limited means of low-income workers to support themselves.

“There’s no denying the need for a swift and focused frontline response to limit the spread of the virus, and assist those who are affected and impacted. But we cannot afford to lose sight of the reality that poverty is a pandemic in and of itself that will exist long after Covid-19 is eradicated,” said Neil Robinson, CEO of 100% not-for-profit social enterprise Relate.

“Since the beginning of lockdown, we have seen people – in many cases family breadwinners – lose their only sources of income or have their salaries cut by employers also trying to survive.

“A large component of South Africa’s population were already living in dire circumstances prior to the arrival of the pandemic, and that situation has been exacerbated significantly, leaving us with an even bigger burden going forward.”

The SweepSouth report on Pay and Working Conditions for Domestic Work in South Africa, shows that “underemployment” among domestic workers peaked during the lockdown.

A total of 80% of respondents reported working fewer than eight hours per day, with 74% earning less than R2,500 per month – up significantly from the pre-lockdown figure of 37%. The report attributes this to a tightening of belts in middle class households, so offering fewer hours and/or working opportunities to domestic workers in order to increase affordability.

Commenting on the latest national unemployment figures, SweepSouth co-founder and CEO Aisha Pandor said: “Sadly, these statistics are unsurprising, given the economic downturn with which South Africa is grappling.

“Although these figures represent unemployment in the formal sector, they signal decreasing disposable income among economically active South Africans, which will undoubtedly have a detrimental knock-on effect in the informal sector.”

SweepSouth’s annual survey, she added, has highlighted the dire financial straits that the majority of domestic workers find themselves in as a consequence of Covid-19 and the related lockdowns. “Many domestic workers are the sole providers for their families.

“The increase in the unemployment rate in the formal sectors will quickly filter down and push more vulnerable South African residents into poverty,” Pandor said.

SweepSouth’s annual survey found that workers with five financial dependants rose from 12% in 2019 to 17% this year, while those with six or more dependants climbed from 14% to 20%.

Drop in earnings, worsening debt

The reported drop in earnings by domestic workers is likely to have a domino effect in respect of pre-existing debt among South Africans too, as an increasing number of households are forced to reduce spending while facing mounting debt.

SweepSouth’s report indicates that low-income households are forced to take on further debt when they cannot reduce spending any further. It concludes that 70% of domestic workers surveyed are in debt, providing incontrovertible evidence of the plight of domestic workers in the country.

Almost all the respondents (90%) also said they were the family’s primary breadwinner (up from 80%), while 73% said they were single parents.

“Our survey shows that the vast majority of respondents are desperate to return to work in order to earn a consistent living and be able to feed themselves and their families, as well as meet their living costs on the most basic level.

“However, if potential employers become increasingly scarce, and existing employers are forced to cut costs, we could see a worsening economic crisis among low-income employees in the very near future,” Pandor said.

Source: BusinessTech


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