It’s vital for our economy to save the 140,000 Edcon jobs

One of the many promises made by President Cyril Ramaphosa to the nation, after successfully wresting the presidency from the clutches of Jacob Zuma earlier this year, was that his administration would put job creation, especially for the youth, at the centre of the national agenda. Delivering his inaugural state of the nation address in February, Ramaphosa promised to introduce a basket of reforms to address unemployment.

As a start he would convene a jobs summit to help align the different efforts being made by all sectors of the economy. “The summit will look at what we need to do to ensure our economy grows and becomes more productive, that companies invest on a far greater scale, that workers are better equipped, and that our economic infrastructure is expanded. We will expect this summit to come up with practical solutions and initiatives that will be implemented immediately,” Ramaphosa said.

Eight months later, Ramaphosa opened the jobs summit, promising that the country would create 275,000 new jobs every year and that his administration would work to avoid mass retrenchments and job losses. These commitments were followed by him and his team crisscrossing the country and using every available opportunity to urge business in SA to place a moratorium on job cuts. This call was important and came after a couple of months of doom and gloom and a dismal second-quarter performance that led to almost every sector of the economy considering job cuts. The jobs summit brought hope, and the hard work by Ramaphosa and his team of advisers appeared to pay dividends. After the country slipped into a technical recession following the dismal second-quarter performance, it was remarkable that we have come out of the recession after just one quarter.

Last week, Stats SA announced that, after a 2.2% rise in GDP growth for the third quarter of the year, we had come out of the technical recession. This announcement came as South Africans were celebrating the epic petrol price drop in December after enduring eight months of fuel-hike pain. A further petrol price drop is expected in the first week of the new year.

But that celebration could be short-lived. The news, revealed on the front page of this newspaper today, that retail giant Edcon could file for liquidation as early as the beginning of the new year will send shivers down the spines of those who have been tasked, and have worked so hard, to turn this economy around. If Edcon, owners of Edgars, Jet and CNA, cannot be rescued, about 140,000 South Africans could lose their jobs. If this happens it would be the biggest jobs bloodbath SA has seen in decades and would be disastrous for the economy. But there is still hope that this can be averted. In a last-ditch bid to stave off liquidation, the company has come up with a turnaround plan. It includes approaching the country’s top retail landlords to ask for what it called a twoyear rental holiday in return for a 5% share in the business. Edcon is also seeking R2bn in emergency funding from its lenders and the state-owned Public Investment Corporation. It also plans to reduce the number of its stores.

Though the company has been in trouble for a while now, the clearest indication yet that the giant has crashed came in a letter it wrote to its 31 biggest landlords. In it, Edcon warns that, “outside of a further intervention, it is highly likely that Edcon will enter into a liquidation process. Given that Edcon employs 40,000 people directly and 100,000 indirectly, the shareholders believe that it is in the national interest of all South Africans to ensure that Edcon does not enter into a liquidation process.”

Though we don’t expect the government to spend our hard-earned tax rands on rescuing private companies in distress, we expect all its stakeholders, including the government and labour, to come together and do everything in their power to save those 140,000 jobs. The economy cannot afford this. Not at this time. Not in the future.

The economy cannot afford this. Not at this time. Not in the future