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Extended lockdown crippling, killing city businesses

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Businesses in the city face closure if lockdown is extended.

THE NATIONAL lockdown, and subsequent extension, has crippled many businesses in Kimberley, many of which have been forced to cut the salaries of their staff or place them on unpaid leave for the duration of the lockdown.

The CEO of the Northern Cape Chamber of Commerce and Industry, Sharon Steyn, said on Thursday that the lockdown, which resulted in all businesses except those offering essential services closing their doors for business, has been very hard.

“The effect of the lockdown is being felt by all businesses, but especially small businesses,” she said, “and many have indicated that if the lockdown is extended further, they will have to close.

“Opportunities for relief were available but most of these have now been closed and business owners have indicated that they don’t know how they are going to cope going forward. They literally don’t have the money to pay staff or rent. Some of them have indicated that they might have managed for the initial 21 days but with the extension of the lockdown, they are really taking strain.”

She added that some business owners were using their personal capital in an attempt to keep their businesses afloat and pay staff where they can. “But they will not be able to sustain this for very long if there is no money coming in.” Others have placed staff on unpaid leave.

Steyn pointed out that it was a sad reality that many people would lose their jobs, adding to the growing unemployment numbers. “Unfortunately we might end up with a situation where more people are going to die from starvation than from the coronavirus.”

Her sentiments were echoed by the president of Nocci, Hendrik Wessels, who pointed out that even before the lockdown, local businesses were struggling in the economic environment. “The lockdown has worsened this situation.”

Wessels said that while there were a lot of initiatives set up by the government, the problem was that, with the exception of the UIF fund, these had to be paid back in the future. “Businesses might be able to survive once the lockdown is lifted but they will feel the effects in six months’ time when they have to start paying back these initiatives.”

“Businesses that are smart and are able to adapt might be able to weather the storm but tourist-oriented businesses can do nothing if there are no tourists coming into the Province or country.”

Several local firms have already informed staff that they face salary cuts at the end of this month, by as much as 50% in some instances, while other staff have been temporarily laid off for the duration of the lockdown.

Kimberley Ekapa Mining (KEM-JV) said this week that while the company is doing everything in its power to be able to restart mining operations as soon as possible after the end of the national lockdown, the fact that there is no production currently means that there is no revenue being generated.

According to a letter sent to employees, the company has temporarily laid off employees for the duration of the lockdown.

All employees who are still working now on care and maintenance duty, as well as others currently working, will have their salaries cut by a third.

The CEO for the Ekapa Group, Jahn Hohne, said that for the company to survive the extended lockdown and to later restart its operations, which, he added, was the full intention of the board and its shareholders, severe preservation of its limited available cash had to be effected for the several months leading up to the first post-virus diamond tender sale.

“This will entail the implementation of a smart restart business model that will allow the company to survive the lockdown and market impact. In a business where the labour cost is half of the operating costs, it is obvious that salaries and wages will have to be carefully considered for the successful short- and medium-term survival of the company. We are therefore in consultation with the unions to find solutions for the people still working now, and for those who depend on the survival of the company to have a job to come back to,” said Hohne.

He added that executives and senior management of the company will take a voluntary 33.33% reduction of salary, which will be used in a recovery fund.

“Different options are being considered and discussed with employees and trade unions representing them regarding the employees working on care and maintenance.”

Hohne stated that the company had applied to the Covid-19 Temporary Employee/Employer Relief Scheme for UIF payment for all those employees who have been temporarily laid off.

“Our biggest responsibility remains to support the efforts of the national government to flatten the coronavirus infection curve. In the meantime, we are fighting with our backs against the wall for the survival of the company that so many depend on for their livelihood.

“As for so many other companies worldwide, an unprecedented team effort including all of our people has never been more important than now. We thank each employee, those at work and those who cannot work now, for their collaboration to protect our people and company as far as we can against the impact of the global crisis,” Hohne said.

Mineral Resources and Energy Minister Gwede Mantashe said on Thursday that the mining sector will be allowed to gradually return to operation. He said the department would allow a situation of phasing in the recall of workers to work in mines and deal with the ramping-up of productivity in those mines.

The National Employers Association of South Africa (Neasa) meanwhile pointed out on Wednesday that the Covid-19 Temporary Employee/Employer Relief Scheme (TERS) funding process was proving to be a constant source of frustration for employers.

Businesses who can’t afford to pay full salaries during the lockdown can apply for TERS through the UIF.

“The process has been marred by incorrect information, incomprehensible instructions and a failure by the Department of Employment and Labour (DEL) in terms of service delivery,” Neasa said in a letter to its members.

“The DEL has also issued e-mail correspondence stating that, due to the high volume of applications received via mail, the system is not able to verify if the documents are in the correct format. Employers are therefore advised to confirm that the format is correct and resubmit the application.

“The department has now launched an online application portal for employers to utilise, apparently over and above the e-mail process.”

The association indicated that it had addressed a letter to the Minister of Employment and Labour to resolve the issues with the application process as a matter of extreme urgency.

According to reports, by Wednesday last week, some 27 000 companies had applied for the coronavirus benefit which will be paid out by the UIF.. Payments were expected to start this week.