Livelihoods and lives on the table

Fuel sales are down 80% but new lockdown regulations allow fuel refineries to operate at full capacity.
Fuel sales are down 80% but new lockdown regulations allow fuel refineries to operate at full capacity.

As SA embarks on the second phase of its 35-day lockdown, industries and economists are counting the mounting cost to the real economy — and looking at how much of it could and should be safely reopened, during and after the lockdown.

The numbers highlight, too, how urgent the need is to put policies in place to prevent even strong companies from failing during the shutdown, and to save livelihoods at the same time as saving lives.

The presidency should have data on how bad the impact of a long lockdown would be — it surveyed sectors, asking them to estimate how many firms would shut and jobs be lost in the scenarios that the lockdown lasts three weeks, five weeks and eight weeks.

It also asked what proportion of the workforce could work safely and/or remotely and what safeguards could be put in place.

But though business and the government have been in extensive talks in recent weeks over a sectoral approach to lifting the lockdown, there is little sign of a coherent overall approach.

And although everyone agrees saving lives is the priority, a variety of indicators suggest how catastrophic the socioeconomic impact of a prolonged shutdown would be.

Fuel sales are down 80% because nobody is travelling. Electricity demand is down by a third. An index of the transactions going through the banking system was already down in March and will fall more steeply in April.

Companies and households might have managed to survive for the first three weeks of economic paralysis, but many may not make it through the next round.

Nor is the economy going to go back to anything like normal in two weeks’ time.

With the latest models showing the current lockdown could simply push the peak of SA’s Covid-19 infections out to September, chances are that economic activity will have to be constrained in some form for at least the next three to six months.

The impact on an economy that was already in recession will keep multiplying — especially in a global economy that the International Monetary Fund now expects will shrink by 3% in 2020.

“Downside risks still dominate as weakness begets more weakness,” Absa economist Peter Worthington said in a report last week.

Since the lockdown extension, he and others have revised their forecasts sharply downwards, with SA’s economy expected to contract by more than 6% this year, and possibly closer to 10%.

Most vulnerable are the small and medium enterprises, which account for an estimated 6.6 million jobs.

About 60% said they could survive a 21-day lockdown; almost 30% said they could not survive another month if the lockdown was extended. Within three months as many as three quarters could go bust.

Larger employers are more robust, but the cost of longer shutdowns is also being counted in sectors that are SA’s largest export earners, and among its largest formal sector employers.

Mining, which directly accounts for about a third of SA’s exports and about 450,000 jobs (and half of all Transnet’s business), is one of the few sectors where there has been some production, in coal mines supplying Eskom and some other opencast mining.

The mining industry has been in talks with mineral & energy resources minister Gwede Mantashe and with organised labour over the past couple of weeks on how it can ramp up production, during and after the lockdown, with rigorous safeguards and testing in place.

Those talks have succeeded — as reflected in Thursday’s government announcement on new lockdown extension rules.

Less lucky are the motor manufacturers, who have also been having talks with the government and have yet to secure a reopening of the industry, even under stringent conditions.

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Unpacking SA's coronavirus numbers. Produced and edited by Luke Charter

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