Public hearings on sugar tax to start ‘The industry’s decision to cut jobs has already been made’

TODAY sees the early parliamentary public hearings on the Rates and Monetary Bill that include the proposed sugary drinks tax, government and union leaders have raised concerns that industry might blame planned job cuts on the tax.

“The entire sugar industry is in decline and we’ve lost 15 000 jobs in the last few years,” said the Congress of South African Trade Union’s (Cosatu) Matthew Parks.

Parks said that while Cosatu was worried about any job losses resulting from a tax, there was also a “huge danger” that the industry may use the tax to its advantage.

Coca Cola International’s new chief executive, James Quincey, announced earlier this month that the company was planning to cut around 10 000 jobs globally.

Speaking to Health-e News yesterday, Treasury Deputy Director-General Ismail Momoniat said, however, that they didn’t want the industry to use the sugar sweetened beverage tax as a rationale to fire staff.

The Beverage Association of South Africa (BevSA) has claimed that up to 70 000 jobs are in danger; however, Momoniat said those claims were “scare tactics”.

The Treasury had previoulsy estimated that approximately 5 000 jobs would be at risk, but this was before the tax was reduced from 20% to around 11% on a can of Coke earlier this year.

BevSA’s estimates were also published before the tax was revised, but they still claim that 4 000 to 6 000 informal outlets would be closed as a result of the tax.

According to BevSA general manager Tshepo Marumule, these outlets make 17% of their revenue from the sale of sugary drinks.

“The total job losses would number around 24 000, in our view,” he said.

However, Momoniat said the “impact (on jobs) would not be very large”.

His department had conducted a socio-economic modelling study on the impact of the tax, which was currently being finalised.

“But there is a lot of misunderstanding around these modelling studies.

“They present scenarios based on assumptions and shouldn’t be taken as fact,” he said.

Former Tourism Minister Derek Hanekom, now a member of the parliamentary Standing Committee on Finance, said that one solution would be to increase the amount of sugar the country exported.

Hanekom said that the industry’s job loss claims were “exaggerated” and there were many ways to reduce the impact, particularly on small black farmers in Mpumalanga and KwaZuluNatal – about whom unions have raised concerns.

“Many farmers will be able to switch crops and, in environments where that is not possible, we should try facilitate more exportation,” he said.

Exports

Cosatu’s Parks agreed that higher exports should be encouraged and urged the government to ensure that these farmers were given access to international markets.

“We also need the government’s assistance to reduce sugar imports so that the local demand will be higher,” he said.

Professor Karen Hofman, from the University of the Witwatersrand’s School of Public Health, said the sugar industry’s claims amounted to “fake news”.

“Worldwide, the beverage industry’s plan is to cut jobs for all sorts of reasons, including streamlining their processes.

“That is why they are making these exaggerated claims now, ahead of time.

“They will blame local cuts on the tax but, in reality, it is a business decision based on profits that has already been made,” Hofman said.

Momoniat urged businesses to follow proper labour practices.

“We welcome the industry making drinks less sugary.

“But the question is: is it enough?”

– Health-e News.