SARFED PREDICTS MASSIVE JOB LOSSES

MBABANE – SARFED foresees a job bloodbath next year due to the effects of COVID-19.

SARFED is the Southern Africa Research Foundation for Economic Development.  According to Regional Co-ordinator George Choongwa, one of the worst outcomes of COVID-19 would be that of massive job losses in 2021, especially in the private sector. He said this would be caused by the sharp reduction in economic activities for the country. 

“While some of the businesses were already grappling with various challenges before the advent of COVID-19, the pandemic has worsened the situation, threatening their survival. Most of them have opted for either completely shutting down or scaling down in general, leaving many employees without any source of income. 

“This trend of negative outcome has affected all three levels of the economy. The negative effect might not be felt at once, but gradually, all pointing to the misfortune of the employees as they were at the bottom of the social pyramid,” said Choongwa. 

Support

Choongwa shared that the International Labour Organisation (ILO) September 2020 report shows that global labour income was estimated to have declined by 10.7 per cent in the first three quarters of 2020, compared with the same period in 2019. This figure excludes income support provided through government measures. 

“This figure is likely to double for African countries due to the already existing high rate of unemployment of which Eswatini was at about 28 per cent.”

Based on the report of the World Bank, 2020,  SARFED said it was estimating a decline in gross domestic product (GDP) per capita of three per cent in most African countries including Eswatini. 

“This will increase the number of Emaswati living below the international poverty line of US$1.90 (2011 PPP) and cause it to proportionally go up. 

Downturn

“If the pandemic measures drag on for much longer, the downturn is prolonged or becomes even more severe; considerably more than half will become poorer. This is because, based on the analysis of WorldBank reports that on a general African scale that a five per cent decline in GDP per capita could lead to poverty rates last seen in 2011, or send 50 million sub-Saharan Africans into poverty,” shared Choongwa.

According to SARFED, implications of massive job loss include reduction of buying power which will be as a result of reduced disposable income and reduction in government revenue from taxes both corporate and income tax. This might result in the country experiencing market failure.

 Other implications include increase on urban poverty and high level of social disorder which might bring about higher levels of crime, especially gender-based violence because most bread winners might not be able to support their family livelihood. 

“Inflation rate has been rising with an average of two per cent per year since 2019 when it was about 2.5 percent and then it was reported to have been about four per cent in 2020. 

Demand

“Therefore, in the short run, inflation rate is likely to rise sharply due to increasing levels of uncertainty and as well as demand push factors caused by higher demand due to  higher consumption of the festival seasons where induced consumption is expected to have  been high,” said SARFED. 

Interventions suggested by SARFED included government developing a more sustainable and resilient partnership with civil and development organisations so as to come up with a need-based approach for sustainable development. 

“Engage in sustainable human capital development activities in all sectors of the economy.

“Review social security policy so as to make it more sustainable than need based ones which has been in operation before the crisis,” said Choongwa.

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