Another 1.3 Million Unemployed
The pandemic hit countries around the world hard. Businesses and individuals faced a sudden loss of income for weeks or even months as governments around the world introduced lockdowns to try to slow the spread of the Covid-19 virus and spread out desperate patients rushing to medical care facilities to get help. The economic fallout was predictably bad.
Debtors, who were already not great at repaying debts, became even worse since they had massively reduced income or had lost their income. This lead to a knock on where businesses could not pay staff and suppliers who then in turn could not pay the people they owed funds to. Landlords found tenants were unable to pay full rentals and the banks had to offer millions of people different deals to help them retain their properties.
In South Africa, as the lockdown began (between April and June – the initial Lockdown Period) 2.2 million people lost their jobs. Over time, as lockdown restrictions eased, +- 900 000 unemployed people were slowly able to get old jobs back or find new jobs.
By the end of the year, 1.3 million people, out of those roughly 2.2 million, had remained unemployed. They joined the 16.6 million other already unemployed people in SA.
By the end of the year, 1.3 million people… had remained unemployed’
SA now has it’s highest unemployment rate, sitting at 32.5%. This puts SA’s unemployment rate in the Top 3 of countries around the world*, and possibly in the Top 2.
Although different countries report in different ways and figures vary over time the reality does not change that SA is one of the most unemployed places in the world.
Challenges for Social Services & Credit Providers
Social services, such as pension funds operate similar to pyramid schemes in that they need new taxpayers to enter the market to start to pay funds into the pot for those who have been paying for years and now start claiming to claim. When unemployment is high this presents challenges, particularly if new, younger people are not getting employed when they leave school.
Young people leaving school currently really struggle to find employment. Those who study further statistically struggle for even longer to enter the job market, with many people leaving schooling taking up to 5 years to become employed. Those who do study further are then financially crippled for years, possibly decades as they try to repay student loans.
‘we should expect the challenge with unemployment to continue to deteriorate’
In the midst of the Pandemic, we should expect the challenge with unemployment to continue to deteriorate and added pressure to mount on the economy. Historically, periods of time such as this, in the past (like the build-up to World War Two) have given rise to extreme political and social change. A prime example can be found a little further North in Zimbabwe were big plans for land restitution went awry and caused severe economic fallout due to poor execution and follow through.
Credit providers too rely on new clients to give money too to help them keep profitable. When young people can’t find work these credit providers can’t keep feeding new credit into the market and onto their books. This places a lot of pressure on them and they are forced to try and compete with fellow credit providers for market share among a shrinking market. When combined with tighter government regulation about who they can loan to and how much this makes things even more complex. Since credit use drives many economies this can be a scary thing with hard to predict outcomes.
If you are one of those who lost employment or are feeling the pinch of the global recession and pandemic then consider talking to a professional Debt Counsellor about ways to drastically cut spending and how you might be able to restructure your debt repayments each month to better deal with your changed circumstances.
* Out of those countries who bother to or have the means to report such figures. For example, Zimbabwe is estimated to have 80% unemployment but official figures are not reported.