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‘Get the economy back to work,’ plead experts

With many industries still not back at work, the picture for employees and workers for the rest of 2020 is rather bleak. Picture: Aurelien Romain on Unsplash

By Gerry Pieterse

Dawie Roodt, chief economist at the Efficient Group has said he expected the number of unemployed workers who were at risk of losing their jobs to rise from one million to two million between now and the end of the year.

The largest survey since the lockdown began, conducted by the Human Sciences Research Council, with almost 20,000 respondents, found that almost a quarter had no money to buy food.

The shortfall in revenue collections as a result of economic fallout from the Covid-19 lockdown will hurt an already ailing economy. Picture: Kelly Sikkema on Unsplash

Roodt said the combination of an expected multibillion-rand revenue collection shortfall and the Covid-19 economic meltdown spells trouble for the state’s ability to sustain society and should be seen as a ticking time bomb.

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The unemployment rate could go as high as a record 50%. This meant a smaller tax pool and less revenue for development and social programmes such as education, health and social grants, he said.

Index slumped

The SA Chamber of Commerce and Industry’s business confidence index slumped to 77.8 in April from 89.9 in March.

“This is the lowest level ever for the SACCI BCI since its inception in 1985, and the second-sharpest month-on-month decline,” it said in a report.

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Neil Roets, CEO of one of the largest debt counselling companies in SA, Debt Rescue, said it was imperative to get the economy back to work – albeit in a safe and healthy environment.

“We can see clearly from the spiralling number of applications from consumers who want to be placed under debt review just how dire the situation has become,” Roets said.

“We fully understand and agree that social distancing has to be maintained and even tightened to save lives but there is no sugar-coating the fact that consumers are heading for disaster.”

Many businesses remain shut, some will never reopen due to the financial impact of the past few months. Picture: Tom Masat on Unsplash

With the publication in the Government Gazette of the latest lockdown regulations, the government has reaffirmed its commitment to the process of debt counselling to assist the millions of deeply indebted consumers to get back on their feet.

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Roets said the fact that the process of debt review remained as an essential legal service throughout all stages of the lockdown showed the government’s commitment to the process.

“None of the pipe dreams of debt forgiveness or payment holidays are going to offer any meaningful debt relief, leaving debt counselling as the only legally-binding means of offering real relief to South Africans,” Roets said.

Pipe-dream

“The processes and procedures around debt counselling have been in place for more than a decade now and are a tried and tested method of helping consumers to hold on to their possessions while servicing their outstanding debts in smaller amounts over a longer period of time,” he said.

Roets said any hopes of additional financial assistance from either the state or the private sector was a “pipe-dream”.

South Africans are not alone… the coronavirus and its economic fallout has damaged global markets and put major dents in international trade. Picture: Tyler Casey

“Aside from the relief offered by the Unemployment Insurance Fund (UIF) to workers who have not been paid, or not been paid in full, there are no such packages in the pipeline.

“At the very most, financial institutions may give consumers in good standing a longer payment period in which to settle their debts,” Roets said.

He said it was vital that consumers use whatever spare cash they had to pay off high-interest-bearing loans as well as credit and store cards as soon as possible.

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“The reduced fuel price is exactly such an opportunity. These savings should be used to repay existing debt, not ratchet up more high interest-bearing debt.”

He said almost half of all consumers were three months or more behind in their repayments.

“With gross consumer debt at about R2.8-trillion (2018/19 Stats SA), it is clear that South Africans are in for a very rough ride,” Roets said. – Issued by Mediaservices

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