NIDS-CRAM SURVEY: SECOND WAVE

Post-Covid economy resembles a post-war landscape as joblessness climbs to highest ever

By Ferial Haffajee 30 September 2020

People queue at the Department of Labour to claim money from the unemployment insurance fund on May 04, 2020 in Cape Town, South Africa. (Photo: Gallo Images/Nardus Engelbrecht)

‘Help. Job needed’: New survey reveals high jobs cost of the lockdown.

By June, the Covid-19 economy resembled that of a post-civil war country with unprecedented levels of hunger and joblessness, particularly in rural South Africa and particularly among women.

“We only see these sorts of changes and economic shocks as a result of civil war,” says Nic Spaull, the principal investigator for the NIDS-CRAM survey which has released its second wave of research on 30 September.  The NIDS-CRAM study is a nationally representative survey of the employment and welfare impacts of the pandemic.   

The 2.8-million jobs lost in the first wave of results in April did not bounce back by June even as the Covid-19 lockdown eased and more of the economy opened up, taking unemployment to lows not seen before. It is likely that, at an expanded level, joblessness is now at over 50% with youth unemployment probably at 70%.

Figure 1: Labour market transitions February-April-June 2020.

Such a high joblessness rate, especially among young people is leading to a humanitarian crisis, says Spaull. Researchers had expected a bleak picture as they started to tally the economic costs of South Africa’s hard lockdown but not this bleak. 

“We are reporting here on the changes from Lockdown Level 5 in April to Level 3 in June. No one was expecting all the jobs to come back but we were expecting at least some uptick as we started to ease out of lockdown. “Unfortunately for people that were retrenched that doesn’t seem to be the case,” says Spaull. 

The research also reveals a second layer of job losses: Half of furloughed workers (those with employment but without pay) got their jobs back but not all of them and not as many as expected. “Maintaining some employment relationship appears to have been crucial for recovering employment after the lockdown. However, this was less true for those who were ‘temporarily laid off’ in April compared those who were on ‘paid leave’.  While most individuals who were placed on paid leave had returned to work by June, less than half of those who were temporarily laid off returned to work, with about 40% falling into non-employment,” says Ronak Jain of Harvard University who compiled the employment paper with three fellow researchers.

Figure 3: Percentage net loss in employment between February and June 2020 by sub-group.

The number of furloughed workers is 1.4 million people which amounts to about 600,000 people who lost jobs in this category.

Fewer people hungry but still too many without food

There are few silver linings in the research but there was an improvement in the story of hunger that the first wave revealed.

“Hunger has come down by 27% for adults and children – it’s the big positive story from the research,” says Spaull.  By June, the people who told researchers they could not put food on the table had declined by almost a third compared to the truly bleak picture from the hard lockdown Level 5 impacts. 

Figure 10: Household and child hunger, and money for food, Wave 1 and Wave 2 (95% confidence intervals). Source: Bridgman et al., 2020)

“About 20% fewer households ran out of money to buy food in June compared to April, yet this measure of food insecurity is still at least twice as high as in 2016,” says Spaull.  In Wave 1, almost one in two respondents said their households had run out of money to buy food and this declined to 37% of those surveyed.

It’s still insanely high in a middle-income country and this statistic alone is an X-ray revealing how the economic story of South Africa for 2020 is likely to be that of deepening inequality.

A key factor driving hunger among children was that when schools were shut down, so were feeding schemes that are key to keeping young people fed and healthy.  “Only 25% of respondents indicated that a child received a school meal in the last seven days, compared to 80% pre-Covid,” says the research report. This despite the fact that feeding schemes were meant to be operational – as per court order to the Minister of Basic Education. While the latest GDP figures showed that agriculture was a sector which held up well, hunger in rural South Africa was deeper than in the towns and peri-urban areas. 

Spaull says this may be because of the exodus out of the cities to rural areas ahead of lockdown. A reason that chronic hunger began to abate was that the relief measures, like the UIF’s temporary employment relief scheme and the Covid-19 grant took effect.

The relief of distress

The Covid-19 social relief of distress grant of R350 per month had a halting start because of administrative problems, but when it got working, it worked well. 

“The grant has brought millions of previously unreached individuals into the system, and application for and receipt of the grant have been relatively pro-poor,” report Timothy Kohler and Haroon Bhorat of UCT. The poorest households received the highest number of grants (which is how it should be) but the report also notes downward social mobility where Covid-19 has pushed people down the class ladder. 

One of the better gains of the democratic era is that people have been lifted from extreme poverty through a mixture of social support, better primary healthcare and employment equity policies. But Covid-19 may have reversed these gains, creating a landscape that once again looks like an apartheid schema of deep cleavages of race and class with black rural poverty. 

Riding in Covid’s slipstream have been other impacts – the researchers report a doubling of anxiety and depression rates as well as a widening access gap between wealthy and poor children to early childhood development centres (creches or pre-schools).

Figure 13: Distribution of personal receipt of the special COVID-19 SRD grant across the household income distribution, June 2020.

“This (the impact of additional grants) raises a huge policy conundrum,” says Spaull.  “The new Covid grant has covered a previously uncovered group of unemployed young men. What will happen come October when this new grant is meant to expire? It’s critical to extend these grants to stave off hunger. But the longer you leave that door open, the harder it is to shut. Treasury is acutely aware of this.”  Pre-Covid, South Africa paid 18 million grants a month to about 12-million beneficiaries (some people and households receive more than one) and there are now four million more grants being paid. “There seems to be a restructuring of the labour market with a shrinking centre and a growing periphery – the employed who have jobs and income, and the unemployed who have grants. Covid is amplifying the best and worst features of our society; a really successful grant system that was steadily expanding anyway and now has a huge leap forward, and an economy that has always struggled to absorb labour and has now shed millions of jobs. It has exacerbated all our inequalities,” says Spaull. 

The Big Four inequalities that have never properly been bridged by freedom are wider than before – that is the inequalities of race, gender, geography and education.

“From February to June 2020, workers who were poor, rural, female, unskilled and less educated have experienced the largest declines in employment,” the report finds. 

And only one in four workers reported they could work from home, usually the best-skilled city-dwellers. The numbers of waged respondents who said they did not have the option of working from home was 76%, while the highest rates of reported ability to work from home were seen among white respondents (79%), those with post-matric qualifications (40%) and older workers (those aged 50 to 59 years old). 

The lowest rates of those able to work from home were for black Africans (16%), those with matric or less (15%) and those living on farms or in traditional areas. The ability to work from home signals the highest likelihood of continued employment and skill, probably in the most resilient parts of the economy. And what the numbers reveal is that is too small a part of the labour market leading to higher not lower inequality. Various studies show that South Africa has among the highest Gini Coefficients, the global measure of inequality, in the world.   

The day the bottom fell out of South Africa – a triple pandemic has hit us

“South Africa has always struggled to create jobs. Between 2009 and 2019 there were about 2.4 million new jobs created as the economy grew. Has a decade of progress been wiped out in the space of six months?” asks Spaull.

Where does hope lie? Spaull says that Wave 3 of the research should show if the easing of the economy to Level 1 will lead to any of those jobs returning and whether the expansion of grants may have further eased hunger and slowed downward social mobility. 

The big question he says we must ask is how to restart the economy and how to create jobs, and not to lockdown again. “We must never do a lockdown again – the costs are too high. The problem is that we never saw the lockdown as a short-term measure to prepare the health system but treated it as a way to stop infections.  

“There were literally millions of jobs lost and there are literally millions of people going hungry.” DM

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  • It is baffling with all this data combined with the low death rate that there are still any restrictions in place at all. Surely it is obvious that masks are also playing a role in inhibiting people’s social activities such as traveling, shopping and eating out. Meanwhile media continues to fuel the fear which keeps many people from getting out there and contributing to economic growth. Such a pity that the government chose to ignore Panda’s sensible and accurate predictions as well as the letter written by the doctors all those months ago published in daily maverick. Common sense it seems is not that common.

    • If we stop wearing masks (as you seem to be suggesting) and simply go back to life as it was pre-covid, we will see a huge surge in infections and many more deaths. I know a doctor who has treated covid patients who have died…you don’t want to be one of those patients. Your attitude is also incredibly callous towards those thousands of families who have lost loved ones in this pandemic.

      The reality is that this pandemic is not going away and we have to learn to live with it as well as rebuild the economy.

      • Dear Carol,
        The effectiveness of masks has advocates and opponents; each will find good reasons and reviews to prove their opinion. Those in favour of masks will say that it is better to minimise any exposure to the virus and show reports of their effectiveness. Those opposing masks can show proof of their ineffectiveness, and anyway, increasing exposure to SARS-CoV-2 will allow the body to develop beneficial resistance to infection.
        When we look at statistics, we see that the introduction of compulsory mask-wearing or its removal has no discernible impact on mortality rate trends, and we see that masks barely help contain the spread, counter to our intuitive belief. You would think that any mask would prevent virus spread by an infectious patient, but also there have been no measurable effects shown on the trends. Masks are effective protection against bacteria which are giants when compared to viruses, about 200x larger than the .060 to .140 nanometers of the SARS-CoV-2. An incorrectly fitted mask will be ½ as effective, while some surgical and cloth masks may only filter 75% of the virus. Additionally, the mask does not destroy the virus, only trap it on the mask until it deteriorates. The jury is still out on masks.

      • Quite the opposite of callous Carol – I have had a pit in my stomach from day 1 of lock down knowing full well the suffering that this would cause the majority of the population of our country and their pets. The pandemic has never really arrived, let’s be honest, however the misery of homelessness, hunger, violence, crime and abuse of women and children is escalating at a rate that doesn’t bear thinking about. The masks are nothing but another pollutant that will ultimately land up in the sea killing more wild life along with all the PPE and plastic sanitizer bottles. If you want to wear one that is your choice but forcing the entire population from little to old is the most unsustainable, insane practice. It is neither useful nor healthy mentally, emotionally or physically. At best, for the really fearful, possibly a useful placebo. Yes people have died and its been scary but people do die all the time and we manage our risks because that’s what humans do. The tragedy of this year was many of them died alone and in fear. My 90 year old dad was very sick and refused this option in favour of staying in his own bed. Thankfully pulled through like many other elderly people as well as many with co morbidities and joined the 99.97% of the population who will survive this so called pandemic. Last year diabetes killed 90 000 South Africans. Perhaps you would like to ban sugar and fast foods? May save more lives than cloth masks. It would certainly be far more useful if we heard about the benefits of exercise and healthy living every time we turned on the radio rather than the surging numbers of asymptomatic people testing positive for corona virus plus out of context death rates seemingly with the sole purpose of spreading fear.

  • The anxiety, discomfort and inhibited communication when wearing and seeing others in masks are one of the most significant obstacles to normalcy. When the Centers for Disease Control and Prevention accepted SARS-CoV-2 viral shedding as against only droplet spreading, on April 3, 2020, it recommended that the public wear cloth face coverings in areas with high rates of community transmission. This guidance was without any proven new information about the effectiveness of masks in preventing infection spread except the feeling that they must help. We don’t know how much masks have reduced the spreading by the infectious, but it led governments to introduce compulsory facial masking no matter the rates of community transmission. It appears that politicians and medical experts have been incapable of determining what high or low areas are rates of community transmission, so they have forced everyone to wear a mask everywhere. South Africa’s transmission is way down; we are approaching summer where the virus spreads less. With 1/2 the country out of work, how stupid do you have to be not to see the cost to the people of mask and other restrictions?

  • Very interesting research exactly as predicted by PANDA. Why did the government and their researchers ignore the PANDA reports? I can understand them ignoring the first report, but as it became increasingly obvious with the 20/20 vision of hindsight, that the PANDA predictions were far more accurate than those of the government advisory team, they should have been consulted. Was it professional ego’s or was there another darker agenda? If so what? It is easy to control people using fear. Globally governments have used the virus to create fear, but at what cost? Globally congestive blood vessel diseases, cancers, respiratory illness, malaria, and diabetes kill about 40m people each year. (Source- WHO) Covid has killed just over one million but the collateral damage will no doubt far exceed that number and will last long after Covid has past. The biggest killer in the world is congestive blood vessel-related diseases like heart disease and stroke, killing about 18m people a year. If the money and effort spent on Covid had instead been spent educating people about the benefits of a good diet and exercise, I’m confident the number of lives saved would be far greater, their quality of life would be better, and it would have long-lasting benefits. Unfortunately, nations around the world don’t appear to be much good at electing “quality people” to run their affairs.

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