Hard times: When jobs disappear overnight

2008-12-05 00:00

Two weeks ago, staff at a small advertising agency in Durban arrived at work to be told they had an hour to clear their desks. During the same week, staff at a second-hand car dealership were given their marching orders and an estate agency placed a “for sale” sign on the pavement outside its own office.

It is one thing to face Christmas without a bonus, it is another to face the New Year without a job, said a young mother who was retrenched a month ago. She is just one of many with small children about to go to school — without knowing where the money to pay the fees will come from.

But this is just the tip of the iceberg. Up until now, small businesses have accounted for most lost jobs. Now big corporates are cutting back, putting staff on short time and even shutting shop way ahead of the traditional December 16 shutdown.

According to Luke Doig, senior manager of investments and economic services at Credit Guarantee Insurance Corporation of Africa, official employment numbers already show that the economy is shedding jobs fast — 74 000 between the second and third quarters of 2008, to be exact. In fact, a worst-case scenario would see a two percent drop in employment and translate into 600 000 jobs slashed.

In October, company and closed corporation closures rose by 21,7% year on year.

Doig said the largest contributors to the increase are in wholesale and retail and the catering and accommodation sectors, where liquidations rose from 70 in October 2007 and 65 in September 2008 to 113 this month.

He said closures in financial services increased from 126 in October 2007 to 150 in October 2008.

“Projected total liquidations of over 3 300 for 2008 would be the worst performance in three years, with our experience of advised overdue accounts leading us to expect ongoing deterioration into early 2010,” he said.

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