As the Republic of South Africa, we would like to extend our appreciation to the Saudi Presidency for its judicious leadership under these trying times. The present crisis is unprecedented and has definitively taken all countries by great surprise. Nobody would have predicted only six months ago that global supply chains would be disrupted as they are right now. The economic fallout from all of this is yet to be determined.Nonetheless, the knock-on effect continues to impact supply (production of goods and services) as well as demand (consumption and investment). Small, middle and relatively large businesses face challenges from all angles, irrespective of sectors they operate. Many businesses are confronted with rapidly declining revenues, which means that they can’t retain services of employees and, at worst, could permanently close.
Nonetheless, the knock-on effect continues to impact supply (production of goods and services) as well as demand (consumption and investment). Small, middle and relatively large businesses face challenges from all angles, irrespective of sectors they operate. Many businesses are confronted with rapidly declining revenues, which means that they can’t retain services of employees and, at worst, could permanently close.
The recently published IMF’s World Economic Outlook for April 2020 indicates that many countries already "face a multi-layered crisis comprising a health shock, domestic economic disruptions, plummeting external demand, capital flow reversals, and a collapse in commodity prices. Risks of a worse outcome predominate." We all have therefore have valid reasons to be afraid and to fear the worst possible outcomes for our respective countries and regions. The world is under siege which urgently needs joint approach and unity in purpose.
Estimates suggest that over 30 percent of the global population is under lockdown (which includes quarantines and other social distancing measures) means that they cannot leave their homes and are unable to move within and outside their countries. In SA, we decided on an initial 21 days of lockdown to ensure that the virus doesn’t spread. With infections steadily climbing, Honourable President Cyril Ramaphosa extended the lockdown by a further two weeks until 30 April for now, depending on whether the curve flattens or not.
Unavoidably, labour markets within countries and globally are on a downward spiral and workers cannot go to work and or to carry out their jobs. The ILO estimates that 81% of the global workforce of 3.3 billion people have had their workplace fully or partly closed. It also predicts that 6.7% of working hours (about 195 million full-time workers) could be lost during the second quarter of 2020 due to the outbreak.
An unknown number of workers and their families could be affected by Covid-19 directly or indirectly, which could create long-term labour market instability for many months, if not years, to come. Infections and deaths suggest that the character of the workplace as we know it today could be undergoing massive transformational changes, and economies too will be impacted as result. Consequently and in agreement with the ILO, labour market institutions and policies including income protection, social coverage plus access to healthcare and of course social dialogue mechanisms and what they cover will need to be re-adapted to this new reality.
Clearly, we have a serious crisis in our hands. And the difficult environment tests our resolve. The last ILC unanimously adopted the Centenary Declaration for the Future of Work which calls for a human-centered agenda as we chart into untested waters of the workplace of the future. Truly-speaking, none of us expected it to arrive so soon. Looking at the manner in which countries have generally approached the pandemic, it looks like we are not at all ready to work together and in unison to fulfill the objectives of the Centenary Declaration.
The Republic of South Africa, therefore, pleads with fellow G-20 member countries to contribute to solutions that aim to save the global labour market and to ameliorate coronavirus effects on workers and economies. Some parts of the world, including our continent Africa, are yet to feel devastation that other countries have experienced and what others are struggling to deal with. Reality is that as individual countries we lack resources to save lives and our economies.
In SA, for example, the government has established a Solidarity Fund that is funded by individual voluntary contributions from all sectors of society. The Fund has managed to raise just over 2 Billion Rands, which will be used to support initiatives in the health and other sectors.
There are many initiatives that the government has initiated to forestall worst economic outcomes as well as to cushion jobs and enterprises from the Covid-19 impact. The South African Reserve Bank (SARB) reduced interest rates by an unprecedented 200 basis points in a very short space to support the real economy as well as went further to provide the much needed liquidity to the financial system
President Ramaphosa further announced a stimulus package that aims to provide economic and social relief for our country to the tune of R500 billion, or 10% of the national GDP. In broad, this amount will be divided in the following manner:
These measures will enable our Department to also provide much needed financial assistance to employers through the Unemployment Insurance Fund (UIF) so that they can be able to cover workers’ salaries. We are excited that we will also play a part in the protection and creation of jobs as our country battles the impact of the pandemic.
But as the crisis deepens, we accept that our local resources and capacities are extremely limited, and that more still needs to be done. Already experiencing high unemployment and economic recession, among the youth, the Reserve Bank forecasts that the South African economy could contract by between 2% and 4% in the upcoming months and that is well below the IMF global estimate of 5.8%. As many as 300,000 jobs could be lost. Workers and businesses are facing unmatched catastrophe.
The social impact emanating from this situation could undermine peace and stability not just in our country but in other parts of the continent. Recovery from the present will require serious effort. Multilateral platforms such as the G-20 can assist countries facing the twin health and funding to overcome the effects of the pandemic. In as much as much as this ministerial meeting is on labour and employment, it needs to concern itself beyond this mandate and help to look for solutions that will alleviate pressures on health care systems in our various countries.
It is therefore worth mentioning that President Ramaphosa is the present chair of the African Union and through his initial endeavors the continent has reached out to other parts of the world for assistance. As difficult as it is for everyone, African people sincerely appreciate the support that is forthcoming from institutions, countries and individuals. The nature of assistance required is in the form of financial resources and non-financial resources such as protective gear and ventilators.
In conclusion, the Republic of South Africa unreservedly supports the Draft G20 Statement and would therefore request the Saudi Presidency to circulate it as widely as possible as a demonstration of our commitment to assisting and dealing with challenges in the global labour market in these pernicious times which create uncertainty and great instability to human life.
© 2019 - The South African Department of Employment & Labour