This is how shrinking income during lockdown is affecting South Africans
A quarter of participants in a new survey by Stats SA have seen their incomes reduced during the nationwide lockdown, which is now into its eighth week.
For those who lost income, roughly half said it was because they either had to close their business down or the company they worked for had to shut due to the lockdown, BusinessLIVE reported.
The data, released on Wednesday, is from the second wave of a survey on the effect of Covid-19 on employment and income of South Africans, and gives some insight into the financial hit households have taken through the lockdown.
The near total halt in business activity, bar essential services, which was instituted to slow the spread of the coronavirus, is expected to see the economy shrink by anywhere between 5.4% and 16.7% in 2020.
Though President Cyril Ramaphosa announced last week that much of the country would move to level 3 lockdown by the end of May, the state is facing growing calls to reopen the economy at a more rapid pace.
Stats SA conducted the survey online through the agency's website, between April 29 and May 6, garnering 2,688 respondents. Most of the participants, almost 70%, were in paid employment before the lockdown, with a further 15.3% listed as self-employed.
For those who lost earnings, the majority, or almost 75%, said they had cut down on spending to cope, while just more than half have also accessed their savings, including money stored in stokvels.
A further 36.8% said they had relied on extended family members, friends and community members while 14.6% had claimed from the unemployment insurance fund (UIF).
According to Stats SA, 50.8% of respondents believed that Covid-19 and the national lockdown would have some sort of affect on their ability to cover their financial obligations.
“In total, 18.7% said the effect would be major, 18.2% indicated it would have a moderate affect and 13.9% believed it would have a minor affect on their ability to cover their financial obligations,” Stats SA said.
When it came to employment, almost nine in 10 of the respondents who were employed before the national lockdown remained in employment during the lockdown — though 8.1% reported losing their jobs or having to close their businesses and a further 1.4% “became unemployed”.
The survey underscores growing concerns about the ability of the economy to restart once the lockdown is lifted — as household incomes will have been whittled away, and consumer confidence remains weak. Household consumption accounts for roughly two thirds of GDP.
In the survey, 67.7% of respondents said they were more concerned about the potential long-term affect of the Covid-19 pandemic on their financial situation, compared to 12.3% of respondents who were more concerned about the possible short-term affect.
Big business has warned of the risk of moving too slowly in opening up the economy.
Speaking in a Business Day Dialogue webinar on Wednesday, CEO of Business Unity SA Cas Coovadia said that if the economy stayed in level 4 lockdown for much longer the economy could contract by 14.5% this year. The sooner SA moved to lockdown level 2, that contraction could fall to 10%, he said.
“We are impressing on government the need to have a mindset that says open up the economy with a few exceptions, instead of having a phased opening of the economy with a long list of prescribed goods and products that you can purchase,” said Coovadia.
“It just does not make sense. We don’t believe there is a health reason for that any more.”