Lockdown purge: Survey sees one other 1.2 million layoffs as Covid-19 batters small companies
The BeyondCOVID Business Survey shows again that more SMEs had closed by the fourth quarter of 2020 than in the first months of the lockdown.
- Non-profit BeyondCOVID has released the results of its second survey on the impact of the pandemic on businesses.
- A year later, compared to the first few months of the lockdown, more small, medium and micro enterprises (SMEs) had to close their doors.
- Struggling companies expect to lay off a total of 1.2 million workers over the next six months.
Initially, it should only take three weeks. South Africans never thought the country would remain in a state of emergency for a full year.
While authorities tried everything to contain the spread of the Covid-19 virus by moving South Africa back and forth at various lockdown stages, the impact of these stop-start decisions on small, medium-sized and micro-enterprises (SMEs) became more severe than that Year the lockdown continued.
According to the BeyondCOVID Business Survey published on Thursday, more SMBs reported business closings by the fourth quarter of 2020 than in the second quarter, when the restrictions associated with the lock had only been in place for a few months.
The survey, conducted between July 2020 and March 2021, interviewed 4,377 companies.
Redflank, the specialist management consultancy that released the first part of the BeyondCOVID Business Survey five months after the lockdown, said 26% of SMEs will be forced to close their doors by the fourth quarter of 2020, compared with 23% in the second quarter. While some of them expected to reopen later, 7% closed permanently.
By March 2021, 21% of the companies surveyed were closed, although 64% said they expected to reopen. With more than half of the companies that responded to the survey operating at reduced capacity, they expect to lay off a total of 1.2 million workers over the next six months.
“We had [already] During this lockdown, unemployment began to grow, but related to it, some employers say they are still struggling, “said Matungoe Chidi, director of boutique consultancy Mzabalazo.
According to Chidi, 37% of companies still in business said they would need funding to keep them working for at least six months. Redflank estimated that the SMME funding to keep it going is R 1.1 trillion.
Companies also expect the recovery to pre-Covid-19 levels will now take much longer – 3.5 years compared to three years when the survey was conducted at the start of the pandemic.
But there is good news. The proportion of businesses that have returned to business as usual has increased slightly to 21%, compared to 20% when the lockdown began. Most are large companies with 44% going back to normal, compared with only 17% of SMEs.