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Strike adds to pressure on job-creating SMEs - CEO

Sep 27 2017 13:55
Carin Smith

Cape Town - The national strike on Wednesday is adding to the negative pressure on South Africa's small and medium enterprise (SME) sector, according to Karl Westvig, CEO of Retail Capital.

"With the disruptions in transport, staff are finding it difficult to get to work and business owners are struggling to remain open and service their customers or even to produce their goods," he said.

In his view, the bigger impact is "the relentless negative sentiment" around the economy and the political upheavals currently being experienced.  

"The small business owners are very sensitive to political disruptions, and consumers are also holding back through restricted buying power," Westvig told Fin24.

"We’ve recently experienced a technical recession, gross domestic product forecasts have been revised down and as retail capital, we are seeing retailers and restaurants with up to 30% decreases in turnover in the corresponding periods."

He pointed out that the recession is not over for the retail sector, especially for SME retailers.

“The South African Reserve Bank had an opportunity for some relief, but chose to keep rates steady at the last monetary policy committee meeting. The strike is only exacerbating the negative pressures on the sector," said Westvig.  

"SMEs are crying out for good news and hopefully the strike can have the positive impact of some political stability and stable policy formulation.”

Grave concern

The SBI business chamber (formerly known as the AHi) said on Wednesday it supports all legal forms of opposition and protest against state capture.

"Workers are exercising their constitutional right to strike against a matter of grave concern to all South Africans and we are, therefore, compelled to declare our support, but we must also emphasise that these actions are painful to our members in a very difficult economic environment," the SBI said.

"We are not yet in a position to estimate damage to property, if any, nor losses in revenue and productivity caused by the absence of staff. What we can say without fear of contradiction is that whatever those losses were, they are vastly overshadowed by the crippling damage done to our country by endemic corruption and the looting of the fiscus."

The SBI said 9 million South Africans have no jobs.

"That is the true crisis in our country. We are in desperate need of a government freeing up the economy so that we, the business sector of SA, can create jobs, put food back on the table and children back in the classrooms," the SBI said.

Negative knock-on effect

On Wednesday Janine Myburgh, president of the Cape Chamber, told Fin24 that the strike's macroeconomic impact is difficult to quantify.

"The strike disadvantages businesses with downtime - and with a low growth forecast for the country, this is the last thing we need. Also, whenever there is an impending march people are afraid to come into the city, causing a negative knock-on effect further disrupting business. Essentially some organisations lose a day’s business," she explained.
"However, we understand that we have an unacceptable level of state capture corruption, and if today’s message is heard, I hope it will have some effect on a practice that is eroding the very soul of our country."
She said the chamber was not aware of any violent incidences at the time of responding to Fin24.

"However, this is a legal strike and we expect that the necessary marshalling and law enforcement will be present," she said.

On Tuesday, ahead of the strike, the chamber said that, although it fully endorses the motive of the strike to protest corruption and state capture, it does not believe that taking to the streets with mass strike action would make an appreciable difference.

"A strike is disruptive and damaging to an already fragile economy and puts further strain on the low rate of employment," the chamber said in a statement.

"It is the working class who suffer in a national strike as many may lose their day’s wages. Those are the people we should protect the most."

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