Where am I? Fin24.com > Personal Finance > My Business

Jobs massacre at small firms

Aug 14 2009 08:21 Jan de Lange

Johannesburg - The economic crisis has resulted in a massacre among small businesses, the drivers of job creation.

Labour cuts have increased dramatically since May last year and more than 4 899 companies retrenched employees in the year to January.

These are among the alarming figures Professor Haroon Bhorat, one of the country's foremost labour economists, has produced on the effect of the recession on the labour market. It also seems that training budgets in smaller companies have been completely suspended and spending is strictly reserved for core business operations.

The number of companies cutting jobs in the financial sector has risen by 52% and those in the retail sector 34%.

He is particularly concerned about the possible loss of skills in the retrenchment process.

More than half of the company liquidations in the past year involved small firms. This was particularly bad in the building industry, where 85% of liquidations were of small businesses, and in the financial sector 43% were of small firms.

In the five years preceding the crisis the economy had reversed the 1990s' rising unemployment trend. An average growth rate of 4% a year from 2000 had risen by an average 2.5 annual increase in employment.

"Lower growth rates and their effect on the future long-term prospects for hiring are extremely concerning," Bhorat declared.

- Sake24.com

For more business news in Afrikaans, go to Sake24.com.

Share this page

Add your comment

(No bad language or hate speech, please)

Comments Order

Realist
Aug 14 2009 15:05 Report this comment

All is not lost SA ... rates came down!

Old Nick
Aug 14 2009 14:58 Report this comment

A few years ago while at the helm of a small business in fin. trouble, I took the novel approach of raising our problems with the staff. I revealed the full extent of our troubles, and gave them the choice of whether I should retrench or reduce wages for a few months and keep everyone on board. I was delighted when they chose the salary reduction option. 6 months later I could reinstate full salaries and repaid lost wages over the next year. Thought this might help. It really is tough.

very tightly belted
Aug 14 2009 13:57 Report this comment

My little SME has not had a single order or enquiry for a month. But I must still cover all indirect costs of overheads and salaries. It is like falling off a cliff without knowing where the bottom is. I thought it was because of strike season that the larger companies who are my regular customers have delayed needing my services but now feel that business environment is going to get a lot worse before it improves. 0.5% reduction in the overdraft rate has very little effect on cashflow.

oh boy
Aug 14 2009 12:31 Report this comment

Score one or the ANC, their ledgislation, lack of timing and thought combined with the economic slow-down has given them good results it seems. Again the labour laws are now so unfair to companies and employers that they will not re-employ quickly. And who can blame them...given the choice I would avoid African labour like the plague and use capital instead. That way there are no strikes or demands to deal with. Pity ANC does exactly the wrong thing for economic growth...time will tell.

Nasdaq7
Aug 14 2009 12:31 Report this comment

Bob why don't you start up a business. Feel what it feels to be the boss. To look after other people. Take on the responsibility of paying salaries. Keeping the customers and your staff and the banks and investors and your family happy. It is a big job. Few start with cash - they very often put their home up as collateral - so if the business fails, they have no house. We know 1/5 small businesses survive 7 years, so why don't you take a shot at that and feel what it feels to be the boss?

griet
Aug 14 2009 12:13 Report this comment

Being the owner of a small business is no walk in the park. Many employees unfortunately do not understand that their salaries do not fall from the sky. Look at the bus- and taxi strike in Cape Town: the taxi strike lasted one day, the bus drivers' strike is still on. The difference: Taxi drivers are in essence self employed, the bus drivers think money just appears magically every month.

Wayne
Aug 14 2009 12:01 Report this comment

Bob, I feel sorry for you as you clearly do NOT know what you are talking about. Small businesses need constant in-flow of revenues for cash flow, in order to sustain the business. Bob, may I ask, do you have your own business?

Eduard
Aug 14 2009 11:20 Report this comment

Firstly, Bob, if you are trying to get a reaction, well done. The people that comment on these blogs have been severely affected by this crisis. I too am a SME owner and am taking huge strain. My thought and prayers are with all of these newly unemployed as well as the owners of these struggling companies.


Your name
Email
Comment	(500 characters remaining)
	Please enter the text below(Case sensitive)


If you can see the following field, please ignore it, as it is used to verify that you are human.

	Disclaimer Fin24.com encourages freedom of speech and the expression of diverse views. The views of users published on Fin24.com are therefore their own and do not represent the views of Fin24.com. All posts are monitored by Fin24.com's editors and grossly derogatory posts will be deleted. The Fin24.com editorial team will delete your comment should you post abusive comments, use vulgar language or make discriminatory observations.