Yet Another "National Shutdown" Threat!?

19 Apr 2023

The country’s struggling businesses and consumers could be forced to deal with yet another shock if reports warning of a national shutdown by truck drivers on 30 April should prove correct.

Discontented local drivers have repeatedly voiced their frustrations with the government over the employment of foreigners in the profession. As a result of failing trade infrastructure, especially the country’s railway networks, businesses have increasingly been forced to rely on road freight to move materials and goods. The consequence of this is that any disruption of major economic road arteries, such as the N3 connecting Gauteng and KwaZulu- Natal, has deeply damaging ripple effects throughout supply and value chains across the country.

An additional risk is that criminal elements could seek to exploit the grievances of local drivers to disrupt normal economic activity and entrench themselves further.

Gavin Kelly, CEO of the Road Freight Association (RFA), which represents employers in the road and freight logistics sector, said truck operators were “tired” of the protests in the sector as it was mostly compliant operators that bear the brunt. Kelly said if the logistics supply chain was disrupted, “it’s billions of rand we lose in a day, and we don’t know what sort of violence would erupt.” The police would have to keep a close eye to thwart any possible repeat of the violence experienced in previous protests in the sector.

This comes against the backdrop of already gloomy business confidence, measured at 36 points in Q1 2023, with values below 50 marking low confidence. The sentiment of manufacturers nosedived to 17 (from 26 in Q4 2022), while that of retailers dropped sharply from 42 to 34.

~ Sources: Centre for Risk Analysis; Business Live.

WARNINGS OF CRIME LINKED TO LOAD SHEDDING

International Risk Agencies International SOS and Dragonfly SIAS are reiterating the warning to anticipate disruption and increased criminal activity during scheduled power outages.

On 16 April Eskom announced that stage six (third-highest level on an eight-tier scale) load shedding will continue until further notice. The announcement means that customers could experience power outages lasting up to eight hours per day. Temporary disruption to cellular and internet services is possible during load-shedding periods. There is also an increased risk of vehicle and residential robberies as well as cable theft and vandalism of substations in affected areas.

Advice

We refer to our advice in previous Executive Brief issues “If you have not already done so, our advice to clients is to work with us to update your emergency plans and response procedures taking into consideration the knock-on effect of load shedding. Alternative sources of back-up power to safety and security infrastructure are a non-negotiable.”

EMPLOYMENT EQUITY RATCHETED UP

On April 12th, President Cyril Ramaphosa signed the Employment Equity Amendment Act into law, which grants the Minister of Employment and Labour increased discretion to establish strict racial targets in economic sectors, occupational levels, sub-sectors, or regions based on any relevant factor.

This amendment replaces the previous responsibility of employers to determine demographic transformation in the workplace with the Minister's powers to intervene and establish specific targets.

Failure to comply with these targets will result in exclusion from contracting with the State. Unfortunately, this amendment further contributes to South Africa's unappealing labour regulation regime, which may cause businesses to reduce their exposure to South African labour. Employers with 50 or fewer employees are exempt from complying with employment equity targets, which may hinder workforce growth. These consequences are unfavourable in the context of South Africa's growing unemployment crisis.

According to the IMF’s World Economic Outlook unemployment forecasts for 2023, South Africa is projected to see the highest jobless rate globally. As the most industrialized nation on the continent, unemployment is estimated to hit 35.6% in 2023. (Source)