Business calls for quick move to level 2
• B4SA executive Kingston says SA needs to accelerate economic activity as a matter of urgency
Business has proposed SA move quickly to open virtually the entire economy, the latest sign of souring sentiment in boardrooms over a national lockdown that threatens cascading corporate failures.
“We need to accelerate economic activity as a matter of urgency,” Martin Kingston, an executive member of Business for SA (B4SA), which was formed in the wake of the Covid-19 outbreak to assist the government with policy responses, told Business Day on Sunday.
“The only way we can make a difference on people’s livelihoods is for us to move to level 2 as quickly as possible.”
In a presentation on Friday at the National Economic Development and Labour Council, a body that aims to promote consensus between government, labour and business, B4SA called for a swift move to level 2, which would remove restrictions on virtually all sectors, including retail, construction, mining as well as domestic air travel and car rental services.
The move could save more than half of the formal jobs that would be lost at level 4 — in which about 1.5-million workers returned with some industries running at 50% capacity — and limit the drop in GDP in 2020 to 10.3%. It previously said the economy could shrink as much as 17%.
The proposal came as reports emerged at the weekend that some members of a committee tasked with advising health minister Zweli Mkhize on the response to the health crisis were no longer backing government’s lockdown, saying it is not backed by science .
President Cyril Ramaphosa, who was at the meeting, which included labour federation Cosatu, has promised another partial reopening of the
economy to level 3 at the end of the month. But B4SA has proposed much quicker easing, saying a move from level 4 in May to level 2 the next month for the remainder of the year would cushion the blow on the economy.
As part of business proposals, which Kingston said had a “receptive ear”, companies promised to implement a set of practices to minimise transmission, including ensuring workplaces had protective gear, supporting employees with safe public transport and checking employees for symptoms.
Cosatu, which has previously called for the country to ease restrictions to level 3 as soon as possible, said the extended lockdown would diminish the state’s capacity to continue to fight the virus and deplete reserves aimed at softening the economic effect on businesses and workers.
“Without any revenue coming in what we are doing is not sustainable. What we cannot afford to do is to ignore the implications of an extended lockdown on our capacity to continue to fight the virus going forward,” said Sizwe Pamla, spokesperson for Cosatu.
On Sunday, the SA Chamber of Commerce and Industry (Sacci), which represents about 20,000 businesses, said the lockdown levels, which are adjusted mainly based on the rates of infection, did not make sense.
The government should rather focus on mobilising resources to test all those that need to go back to work, instead of using scarce resources to test the broader community, it said.
Those that do not need to go to work or school should be kept under lockdown, Alan Mukoki, the CEO of Sacci, said on Sunday. “We are struggling to understand the science. The testing should have the objective of opening up the economy,” Mukoki said.
“No one knows how long the pandemic will be with us for, but what we know is that we are facing economic collapse. So in dealing with the health crisis, we should avoid aggravating the economic collapse.
“People who need to go back to work should be tested accurately and allowed to go to work,” Mukoki said.
He warned that under the current approach, the government would soon run out of funds and fail to honour its debt obligations. Ratings agency S&P has said pandemic-related pressures would have “significant adverse implications for SA’s already deficient growth and fiscal outcomes”.
The Treasury has forecast that SA could lose as much as 7-million jobs, which will push unemployment to more than 50% from the current rate of about 30%.
20,000 the number of businesses represented by the South African Chamber of Commerce and Industry
BUSINESS HAS PROPOSED SA MOVE QUICKLY TO OPEN VIRTUALLY THE ENTIRE ECONOMY, THE LATEST SIGN OF SOURING SENTIMENT IN BOARDROOMS