South Africa is bleeding jobs and Nelson Mandela Bay is not exempt, with hundreds of workers laid off as companies battle to keep their doors open.
With the economy in the doldrums, several companies have had to retrench staff while others have instituted measures such as placing workers on short time just to avoid shedding jobs.
The economy has also been dealt a blow by persistent power cuts in 2019, which has likely dented any further growth.
This comes after the economy failed to grow more than 1% in 2018.
The Reserve Bank’s leading business cycle indicator released in April suggests that any momentum in the sluggish economy has stalled.
The indicator is based on monthly movements in various economic indicators, such as interest rate spreads, new passenger vehicles sold and job advertisements.
And Bay businesses are feeling the pinch, with the Port Elizabeth office of PPC Cement South Africa starting a retrenchment process.
PPC Cement SA managing director Njombo Lekula said the process was still ongoing.
While the exact number of employees that could be affected was not yet finalised, Lekula said, it would be significant.
“We hope that the release of employees will be through natural attrition or through voluntary retrenchment.
“Some of our project managers are still completing projects so it’s difficult to say when exactly the matter will be finalised.
“In the interim, we have tried to upskill some of our employees to perform multiple tasks.
“There are also provisions in place to transfer multiskilled employees to our Western Cape facility.
“We hope the retrenchments don’t go beyond early retirement and natural attrition,” Lekula said.
Asked about the reason for starting the retrenchment process, Lekula said it was due to the state of the country’s economy and increased competition through the import of new products.
One of the first of the bigger companies to be hit with retrenchments in the Bay in 2019 was M Secure (formerly Metro Security) after the municipality cancelled its contract, resulting in more than 600 security staff losing their jobs.
In January, a leading Port Elizabeth construction and building company, Omega Civils (Pty) Ltd, was liquidated, leaving at least 150 employees without jobs.
Job losses are also likely to start piling up at the once-thriving Port Elizabeth Boardwalk Casino and Entertainment World, with a 20% downscale of its 652 employees approved by the Eastern Cape Gambling Board.
NBSM Trading owner Nokuthula Makhanya said 12 employees had to be let go in 2019.
The company, started in 2008, deals with construction and plumbing.
“I had to let people go. There’s no business and I don’t have enough money to pay salaries,” Makhanya said.
“Times are tough and there’s really no work for people. This all is very painful.”
SteelBest Manufacturing chief operating officer Clyde Erasmus said the company had started putting workers on short time in January.
This means employees only work and get paid for a specific number of hours a week.
“We had 42 employees we started short time and now are down to half of that,” he said.
“We never went through retrenchments as most of the people who left found work elsewhere.
“I am just happy they are able to put food on the table.”
He said the remaining employees were only paid for one day of work a week regardless of whether they pitched up or not.
“Every month it just became more difficult.
“We just can’t get out of the starting block.
“There have been lots of promises but the business just doesn’t come through.”
SteelBest Manufacturing, which launched in Port Elizabeth in April 2016 , deals with turnkey solutions for original equipment manufacturers.
Erasmus, who has not taken a salary since December, said the business climate in Nelson Mandela Bay was tough.
“We are trying to hold things together. The market is really tough,” he said.
“Everybody appears to be undercutting each other just to secure new work.
“We just have to keep going. “We must keep quoting and tendering. Something will eventually change.”
Engineering design firm AE Manufacturing manager Andrio Els said the company had also started short time recently.
“But each week it is different. It changes as the business comes in.”
Els said there was not enough business.
“It is just quiet,” he said. Businessman Hugo Alers, who represents 39 business owners and SMMEs, said some had closed down their companies due to the financial climate.
He could not provide a specific figure.
“People just don’t buy anymore and this has been attributed to the uncertain economic times and political uncertainty.
“People are just not spending because salaries have not gone up this year in line with
‘There’s no business and I don’t have enough money to pay salaries’
NBSM TRADING OWNER
inflation and therefore the spending power is less.
“Exports for smaller companies are nonexistent at the moment and conditions are unfavourable for smaller companies nowadays,” Alers said.
Marion Rupert, of GSS Port Elizabeth, confirmed the company was retrenching, but declined to comment further.
Nelson Mandela University economics department professor Ronney Ncwadi said the economic backbone of the metro was the manufacturing sector, specifically the automotive sector.
“At the moment, the global economy is growing slowly and the whole SA GDP [gross domestic product] is growing very slowly.
“Here, specifically in the metro, it is mainly a result of the power outages we’ve experienced and production costs are increasing way above revenue,” he said.
“[Businesses] are struggling to make profits and the outcome would be to retrench or work fewer hours than they would normally work.”
Ncwadi said early retirement was not a solution because it added to the problem as a lot of people entered the labour market late and did not build enough reserves to sustain themselves, thus relying on the government.
“We are going towards elections, which causes political uncertainty and doesn’t strengthen the rand, while at the same time oil prices have increased, leading to increased prices in SA, also creating under-recovery.”
He said companies and employees needed to be more efficient, maximise production and reduce waste.
Mandela Bay Business Chamber CEO Nomkhita Mona said she was not aware of retrenchments by any of the chamber’s members.
“However, we are always concerned about possible job losses as Nelson Mandela Bay is grappling with a high unemployment rate of 35.9%,” Mona said.