Unemployment to increase in South Africa, Ramaphosa warns

President Cyril Ramaphosa of South Africa has warned that the country would experience more job losses due to the effects of a shutdown to curb the spread of the coronavirus batters the economy.

South Africa has been hit hard by the deadly respiratory virus having affected over 97,000 persons forcing the country to take measures that will salvage the situation but have an impact on the economy.

Companies in the aviation, construction, entertainment and hospitality sectors have indicated plans to cut jobs because of heavy losses experienced in the past three months, Ramaphosa said Monday in his weekly newsletter. Small companies are being hard hit and some businesses are closing down permanently, he said.

South Africa’s unemployment rate for the first quarter, due Tuesday, is forecast to rise to 29.7%, according to a Bloomberg survey of economists.
That would be the highest level in the statistics agency’s current data series dating back to 2008.

Telkom SA SOC Ltd. and local Walmart Inc. unit Massmart Holdings Ltd. are among companies that announced plans to cut thousands of jobs even before the lockdown started on March 27.

“For a country which was already facing an unemployment crisis and weak economic growth, difficult decisions and difficult days lie ahead,” Ramaphosa said.

Africa’s most-industrialized economy could contract by 7% this year, according to central bank estimates. That would be the most since the Great Depression, when output fell by 6.2% in 1931, central bank data show. Finance Minister Tito Mboweni is due to table a revised national budget in parliament this week.[Bloomberg]