Economy and covid-19
South Africa’s economy experienced challenges in 2019. Several factors contributed to the recession, including load shedding and the bailout of state entities (ESKOM and SAA). The gross domestic product (GDP) fell by 1.4% in the fourth quarter of 2019 and the unemployment rate was 29.1% in the same period.
In 2020, the economy contracted significantly during the covid-19 lockdown measures. GDP dropped by just over 16% in the first and second quarters of 2020, giving an annualized growth of -51%. Spending plummeted by 49.8% due to the closure of establishments like retail stores, hotels and restaurants. The unemployment rate increased by 2.3 percentage points to 42.0% in the second quarter of 2020, compared to 30.1% in the previous quarter. The slump in GDP put us in a severe recession from which Statistics South Africa says might take time to recover from.
Workers and covid-19
Workers suffered socially and economically. Some workers lost their lives to covid-19 in the course of duty. Other workers lost their family members, jobs, income and social engagement. Workers in traditionally low-wage sectors like hospitality, catering, construction, entertainment, informal economy and domestic work, were especially hit-hard by the lockdown measures. Many workers stayed at home and did not get paid during the lockdown or had their salaries cut. Many of the employees who worked remotely said they forked out for resources like data, electricity and stationery from their pockets. By working remotely, some workers also lost or forfeited benefits like food, attendance, transport allowances. Workers are having to deal with a myriad of challenges after the re-opening of the economy, such as ensuring that bosses are consistent about implementing the covid-19 guidelines for occupational safety and health.
The rising inflation saw a reduction in wages and reneging on negotiated increases via collective agreements. The cost of the average household food basket increased from R3 856.34 in October 2020 to R4 018.22 in November 2020, according to the Pietermaritzburg Economic and Justice and Dignity. And there’s every indication that this trend will keep an upward trajectory in December and January 2021.
Government response to covid-19
The South Africa government implemented several interventions to alleviate suffering and distress caused by the pandemic, through providing care, prevention and detection services, and support. The measures included an independently-administered Solidarity Fund, UIF COVID-19 Temporary Employer/Employee Relief Scheme (TERS), tax relief and a loan guaranteed scheme, in partnership with big banks. The National Empowerment Fund made loans available to black-owned businesses to manufacture and supply a range of medical products to support the essential healthcare sector.
Eligible workers can make covid-related claims to the Compensation Fund. As of 28 September 2020, 7 966 claims had been made under COIDA. 57% of the filed claims to the Compensation Fund were by women workers. Overall workers received over R5 billion in COIDA benefits, but the fund is yet to adjudicate all the submitted claims.
The interventions benefited workers, businesses and ordinary citizens, albeit the various challenges encountered in implementation. For example, the Department of Labour and Employment said the UIF picked up duplicates and errors in applications, mainly employers who did not put the correct banking details for employees.
There were also allegations of corruption involving officials who asked for bribes to dispense temporary social grants, and companies or people claiming TERS benefits on behalf of unknowing or deceased employees. The government set-up an emergency procurement regulation and there are ongoing investigations into covid-related corruption.
Regarding the abrupt cancellation of the UIF covid-19 TERS in October, unions have said the real owners of the UIF – the workers – weren’t consulted in the decisionmaking. COSATU was particularly vocal about the move by the national coronavirus command council.
The UIF and the Compensation Fund could face additional challenges if the pandemic continues. And workers who rely on the mechanisms will suffer.
Trade unions and covid-19
Business as usual for trade unions went out of the window in 2020. Unions had to alter how they delivered value to their members and signed-up new ones. Union officials worked from home during the lockdown dealing with issues ranging from non-payment of UIF-TERS and retrenchments to non-compliance with covid-19 Occupational safety and health guidelines by some companies.
The Conciliation Commission for Mediation and Arbitration (CCMA) handled thousands of retrenchment and unfair dismissal cases. From 1 April to 31 May alone, the CCMA received about 23 532 referrals affecting 43 867 nationally.
In 2021, unions will focus on defending their members from retrenchments and recruiting new members. Based on the wage agreements that the LRS collected in 2020, the highest wage percentage increase was 8% and the lowest at 3.8%. Some bargaining councils and companies suspended salary or wage increases claiming financial distress associated with the covid-19 pandemic. Employers will offer minimal percentage increases equal to the inflation rate or lower during wage negotiations. Unions will need to utilise research to verify claims of financial distress by companies. They will also need to continue developing strategies for responding to the new demands in the labour market.
