Workers are facing a bleak future, with scores of companies saying they plan to retrench more than a million workers due to Covid-19.
New research from the BeyondCOVID Business Survey paints a sad picture one year after the Covid-19 pandemic hit the country, with 26% of small and medium businesses (SMMEs) reporting being forced to close down for now and 7% permanently.
Specialist management consultancy Redflank conducted the survey between July 2020 and March 2021, surveying nearly 4 500 companies of which more than half were micro to small businesses. Other worrying statistics from the survey are:
- Small businesses are 26 times more likely to close than their corporates
- Small businesses will require R1.1trillion in relief funding to have any hope of staying open over the next 12 months
- 21% of businesses polled are closed, although 64% of them expect to reopen
- 54% of businesses said they were currently operating below capacity
- 41% of businesses are planning to retrench staff over the next six months
- Construction, accommodation, food, manufacturing and ICT felt the biggest impact
- The public sector, healthcare and financial services experienced the smallest impacted
- A third of businesses need funding over a period of six months to continue trading over the next year
- Businesses expect recovery to pre-Covid-19 levels to take six months longer now, a total of 3.5 years, compared to a projection of three years at the onset of the pandemic
- 5% of businesses are cash-positive, compared to 2% at the start of the pandemic
- The number of businesses with staff working from home has dropped from 74% in July 2020 to 57%, while 61% are willing to let staff work from home post-pandemic
- The ICT, financial services and real estate sectors have the most people working from home
- The agriculture, transportation and construction sectors have the least people working from home
- 44% of corporates indicate that they have returned to “business as usual” mode this year, but only 29% of SMMEs will.
Accommodation and food, the arts, entertainment and recreation, water and waste management, construction and education suffered the most negative impact from the pandemic. The corporate agricultural and construction sectors are improving, but SMMEs in these sectors are still struggling.
The problem is that SMMEs play a crucial role in job creation and growth and have been identified as productive drivers of inclusive economic growth and development. “The small business sector is a critical part of the national economy. Government’s National Development Plan 2030 views SMMEs as a major source of employment and stimulator of growth, reducing unemployment against a backdrop of a formal sector that continues to shed jobs,” says Fay Mukaddam, chairperson of BeyondCOVID.
BeyondCOVID plans to use its business networks within the private sector and government to leverage funding and investments, commercial and otherwise to help SMMEs and organise them into SMME Collectives supported by BeyondCOVID’s networks, services and technology to reduce the risk and help them become more resilient.