Artwell Dlamini and Sure Kamhunga
13 November 2008
Johannesburg — SEVERAL South African companies have started to shed staff - something analysts say is evidence that the financial crisis is spreading from the US to the rest of the world.
Economists warn of tougher times ahead. The export sector too is vulnerable - even the mining sector will not be exempt.
Falling global demand is evident in plummeting commodity prices and this has forced SA's miners to revise production targets. Some have even notified trade unions that they intend cutting their workforce to survive the downturn.
Sanlam economist Arthur Kamp says the future is not rosy.
"I think we could expect more private sector job cuts as a result of the downturn , particularly in the manufacturing and mining sectors," he says.
"This shows that we are not immune to the global financial crisis in any way. It also shows the impact of successive interest rate increases since 2006 on the economy," he says.
Sectors such as mining, metals and engineering, chemicals, and vehicle manufacturing have already cut 11013 workers, spokesman for Solidarity Jaco Kleynhans says.
Isaac Matsehego, economist at Nedbank, says the rate of retrenchment seems to have increased "quite significantly".
The sudden drop in commodity prices is threatening to spark a wave of retrenchments in the mining industry.
This week, Canada-based uranium miner Uranium One said it was seeking to retrench 1013 workers.
Other mining houses such as Simmer & Jack and Lonmin plan to cut staff as softer demand for their minerals, especially platinum, takes hold.
The retail sector - particularly car dealerships and estate agents - is also under serious pressure because of the slowdown in consumer spending.
Consumers are reeling from a cocktail of higher inflation, higher interest rates and the associated higher costs of debt, Matsehego says.
For thousands of workers this will translate into a bleak festive season.
The future of workers who have so far escaped retrenchment is still uncertain.
Kleynhans says the union "fears that there will be an increase in retrenchments and general job losses" within the next year.
"It is difficult to look too far ahead, but we are preparing for the wors t," Kleynhans says.
Congress of South African Trade Unions president Sdumo Dlamini estimates that about 20000 workers face possible retrenchment .
"We expect the worst," he says.
This week, the National Union of Metalworkers of SA (Numsa) said the "job bloodbath" threatened workers in vehicle manufacturing. It said that General Motors SA (GMSA) intended to cut 2000 employees before year-end .
GMSA and its fellow car manufacturers are cutting costs and scaling back production because of the decline in vehicle sales in SA. Even new vehicle exports, which have remained robust this year, are expected to lose momentum next year because of the global economic crisis.
The National Association of Automobile Manufacturers of SA says it expects overall new vehicle exports next year to drop 10% - 15%.
In the past two months, companies across all sectors have informed unions of their intention to retrench workers in a bid to keep costs under control.
"They have identified reducing the workforce as one of these cost-saving measures," says Kleynhans.
He says that companies are facing increases in production costs -- including the costs of electricity, transport and fuel.
Dlamini says companies are busy negotiating voluntary severance packages or retrenchment with unions.
"Negotiations are ongoing," he says.
"Our approach is not to negotiate retrenchment of workers. Our focus is on how best can we save jobs."
SA shed 71000 jobs in the third quarter, according to Statistics SA.
Apart from retrenchments, job losses also result when corporate employment contracts are not renewed.
Kleynhans says Mittal has not renewed about 2000 contracts, while Murray & Roberts failed to renew about 1600.
He says another figure that is difficult to gauge, and that contributes to SA's job losses, is the jobs that are lost when companies fail to fill vacancies .
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