Pandemic broke already crippled economy

Last year was not only one of the deadliest, but also one of the costliest years in the history of South Africa.

Covid-19 and the 300 days of lockdown that followed has cost SA millions in jobs, economic growth and tourists, while the alcohol and tobacco ban saw the country lose billions in lost revenue.

Unemployment in SA increased by 7.5 percentage points to 43.1% in the third quarter of last year, compared to the second quarter of the year, according to the results of the Quarterly Labour Force Survey issued by Statistics SA.

Unemployment increased substantially by 2.2 million (52.1%) to 6.5 million, compared to the second quarter of last year, leading to an increase of 2.8 million (15.1%) in the number of people in the labour force.

Formal sector employment increased by 242 000 (2.4%), informal sector employment by 176 000 (7.7%) and private households by 116 000 (11.5%). Employment in agriculture increased by 9 000 (1.1%).

Employment increased in all industries, except utilities and transport, while more jobs were gained in finance (200 000), community and social services (137 000) and private households (116 000).

Compared to the third quarter of 2019, employment contracted in all industries, except mining, where it remained unchanged in the third quarter of 2020. Most job losses were observed in trade (400 000), manufacturing (300 000), community and social services (298 000) and construction (259 000).

The SA economy was in peril even before the pandemic. With non-essential businesses forced to close down when the lockdown began, the table was set for economic carnage.

According to the World Bank Global Economic Prospects Report, the SA economy contracted by 7.8% during 2020. It is expected to recover by 3.3% this year and return to a “near potential pace” of 1.7% next year.

The World Bank also noted that output fell sharply in SA last year, with output estimated to have fallen by 7.8% and pointed out there was a possibility some mitigation measures will need to remain in place.

This is now a reality and economists are already downgrading their expectations for SA economic growth this year.

Small businesses suffered the most last year. Finfind and the department of small business development reported that 42.7% of small businesses in SA had closed due to the economic impact of the lockdown.

According to the Tourism Business Council of SA, the industry saw an estimated R68 billion loss in spend. After the lockdown started on 26 March last year, tourism stopped.

The SA Tourism report, The road to recovery, also states that Covid-19 hit the tourism sector particularly hard with almost no international tourists arriving and restricted internal movement for several months.

After the country moved from level 5 to level 1 and international borders were opened on 1 October, recovery has been very slow with total arrivals for October 91% lower than in October 2019.

The Beer Association of SA said the previous two alcohol bans had a devastating impact on the beer industry, with 7 400 job losses, R14.2 billion in lost sales revenue and 30% of breweries forced to shut. The government lost R7.4 billion in taxes and excise duties, and the third ban is expected to cause untold economic damage to the beer sector.