Mboweni's budget speech: More job losses to occur.
24 June 2020
Written by Sphe J Hadebe
View pictures in App save up to 80% data.
THE Minister of Finance, Tito Mboweni, delivered a special supplementary speech on Wednesday and this comes with new measurements that South Africa has to follow.
The pandemic Covid 19 hit South Africa's economy hard, and this has resulted in many job losses. Mboweni mentioned that unemployment is our greatest challenge. Despite interventions but unemployment remains a major challenge.
Minister Tito Mboweni said even with the Unemployment Insurance Fund and the R100 billion multi-year economic support package to save jobs, unemployment will remain the biggest economic challenge for South Africa in the year ahead. As of Mid- June , the UIF has provided R23 billion in Covid 19 relief to over 4,7 million workers who have been affected by the pandemic Covid 19 lockdown.
"The figures from yesterday show that unemployment is our single greatest challenge. The economic support package sets aside R100 billion for a multi-year, comprehensive response to our jobs emergency. The President’s job creation and protection initiative will be rolled out over the medium-term," said Mboweni during his budget speech.
It is noted that most companies have retrenched their employees and other companies are shutting down. This is effective in both the private and public sector. Another cause is the budget deficit that is being encountered by these companies. This already was happening before the lockdown.
Earlier on this year, South African Airways retrenched it staff at the King Shaka International airport as SAA flights in Durban were shut down. This resulted in lot of job losses in this sector. The Public enterprise ministry had refused to save the already drowning SAA with bailout as the Treasury claimed that SAA had received a lot of money in bailout, yet it continues to be a sinking ship.
The public broadcaster, SABC, also reported to be retrenching about 600 workers as they are also facing financial challenges.
With the epidemic covid 19, the situation worsened as lot of sectors got affected and resulted in more job losses.
The observers expect the economic fallout from the covid 19 pandemic and the subsequent national lockdown to hammer job loss for the rest of the year.
A survey that was conducted in May showed that about 14 % people reported to have lost their jobs. This is an increase to the survey that was done in April whereby it was discovered that 10 % of people had lost their jobs and that was when the lockdown had started in March. The percentage of job losses from April to May increased by 4 % and the experts says the worse is about to come. More jobs will be lost as South Africa is in junk status already.
In his speech, Mboweni said as of mid-June, the UIF has provided R23 billion in Covid-19 relief to over 4.7 million workers affected by the pandemic thanks to a huge upgrade and repurposing of the UIF system to deal with the increase in mostly online applications, and to build in protections against fraud.
"We thank all involved for the upgrade, there were many individuals from the private and NGO sector who volunteered their time to assist the UIF. There are still challenges but we are confident that the team is working tirelessly to iron them out," Mboweni said.
South Africa's unemployment rate has reached 30,1 % , an increase of one percentage point in the first three months of this year.
The figures from yesterday show that unemployment is our single greatest challenge. The Economic Support Package sets aside R100 billion for a multi-year, comprehensive response to our jobs emergency. The president's job creation and protection initiative will be rolled out over the medium-term.
"It will include a repurposed public employment programme and a Presidential Youth Employment Intervention. In this year, an amount of R6.1bn is already allocated, and a further R19.6 billion has been set aside mainly for this purpose," said Mboweni.
In his speech on Wednesday, Mboweni stated that the government intends to borrow about US $7 billion ( R118 billion) from international institutions to support the pandemic response.
On Monday, Ramaphosa wrote in his journal that tough decisions have to be made this week. He mentioned that out of R500 billion from the solidarity fund, the government is now left with R200 billion. This means that stringent measures have to be taken to save the economy. A possibility of reversing some programs that have been stipulated by the government and thoroughly manage the budget set out for public, could be the measures that the government will take.
Mboweni warned Municipalities that there will be no budget to be issued for unnecessary costs and he urged them to review their budgets. Recently, municipalities tabled out their budget for 2020/2021 and Mboweni has notified them to make changes in it.
The Minister mentioned out that this supplementary budget sets out a roadmap to stabilise debt, by improving our spending patterns and creating foundation for economic revival.
Mboweni added by saying "This year, out of every rand that we pay in tax, 21 cents goes to paying the interest on our past debts.
"This indebtedness condemns us to ever higher interest rates. If we reduce debt, we will reduce interest rates for everyone and we will unleash investment and growth."
Tough times South Africa faces ahead.