‘Illogical’ alcohol ban is decimating jobs
SA is the only country whose Covid-19 lockdown regulations include a blanket ban on all liquor sales, and the job losses directly attributable to this action are considerable. The most conservative estimates suggest that they comfortably exceed the total number of jobs that the state has been at pains to preserve though its decades-long refusal to abandon or otherwise dispose of the failing state-owned enterprises. The wine industry contributes R7.5bn in excise and an estimated R9bn in foreign earnings. Export losses so far exceed R1bn.
THOSE WEALTHY ENOUGH TO HAVE STORED ADEQUATE SUPPLIES AHEAD OF THE LOCKDOWN ARE FREE TO CONSUME ALCOHOL AT WILL
SA is the only country whose Covid-19 lockdown regulations include a blanket ban on all liquor sales, and the job losses directly attributable to this action are considerable.
The most conservative estimates suggest that they comfortably exceed the total number of jobs that the state has been at pains to preserve though its decades-long refusal to abandon or otherwise dispose of the failing state-owned enterprises (SOEs).
While most countries have imposed restrictions on the public consumption of liquor, off-consumption trade for home use has continued, either through retail stores or online trading platforms.
It is difficult to discern the logic behind SA’s ban on offconsumption sales. If people are eating meals at home, it is largely irrelevant whether they consume alcohol.
As the Gauteng Liquor Forum pointed out in its letter to the presidency on April 18, those wealthy enough to have stored adequate supplies ahead of the lockdown are free to consume alcohol at will. Those in more constrained circumstances are being penalised, and the businesses that supply them are being driven to bankruptcy.
For the wine industry the problem has been compounded by the state’s refusal to allow wine to be exported during the lockdown. In a media release dated April 16, transport minister Fikile Mbalula explained the decision: “Concern was raised about the unintended consequences of allowing transportation of wines in the light of the fact that movement of alcohol remained prohibited.
“These include the criminality that has reared its ugly head in the form of burglaries and theft of alcohol ... In a nutshell, we are no longer allowing movement of wines.”
In other words, because the ban on domestic liquor sales has increased the value to criminals of export stock in transit, the foreign currency benefit of exports, as well as the continued employment of those generating them, must be sacrificed on the altar of incompetent policing. Instead of providing safe passage for export containers from winery to port, or requiring the industry to contract with private security firms, the state’s draconian response has been to reimpose the ban on exports.
In a sector where at least two-thirds of the trade is conducted by unlicensed operators, it is difficult to quantify the number of people who have lost their income as a result of the outright ban on all liquor sales. We know there are 50,000-60,000 licensed outlets and it is widely estimated there are 110,000120,000 unlicensed traders.
Some of these job losses are inevitable in the face of the easily defended decision to close all on-consumption outlets. But allowing off-consumption sales, including for the informal sector, would save a percentage of those jobs. At a most conservative estimate, if every one of the more than 100,000 unlicensed outlets were able to retain a single employee to supply and service this trade, then 100,000 people who are at present unemployed would have work.
The continued ban on wine exports has produced an inevitable attrition among the 40,000 workers employed on grape farms and in wineries.
Rico Basson, CEO of VinPro, the producers’ representative organisation, sees the job losses exceeding 10,000 over time, a number that could be reversed or reduced by the simple expedient of reopening the conduit of wine exports.
The wine industry contributes R7.5bn in excise and an estimated R9bn in foreign earnings. Export losses so far exceed R1bn. Given the lead times involved in getting goods to market, even if the ban were to be lifted immediately an estimated R3bn in industry revenue would be lost in 2020.
The cost to the country is considerably greater. The liquor industry contributes 4.3% of GDP. A decade ago SA Breweries revealed that its taxes, excise and the wage bill of its employees brought in 1.7% of total tax revenues. The illicit sector — home brews, skokiaan and ales
— which had an estimated 25% share of the total trade before lockdown has flourished. The sector pays no excise, so its sales are achieved at the expense of the taxman.
Failing and bloated SOEs account for about 100,000 jobs and cost the fiscus — in largely avoidable losses — about R48bn annually (the average over the 2016-2018 period). A decision to permit off-consumption liquor sales would save a greater number of jobs and bring food to the tables of more than half a million jobless South Africans.