Economic Recovery, Support and Livelihoods: engagement with business chambers and unions
Adhoc Committee on Covid-19 (WCPP)
26 August 2020
Chairperson: Ms M Wenger (DA)
Video: AD HOC COMMITTEE ON COVID-19, 26 AUGUST 2020, 13:00
The Committee held a virtual meeting to hear presentations from several business organisations in the Western Cape about the impact of COVID-19 on their members.
The Federation of Unions of South Africa said members were suffering from mental stress and physical exhaustion. Health workers and other frontline workers were particularly affected. South Africa’s unemployment crisis had been a cause for alarm for some time. The Covid-19 pandemic, which could cause the country’s gross domestic product to contract by 7.2 per cent in 2020, would deepen the crisis.
The Committee heard from the Black Business Chamber that grassroots businesses had suffered a massive reduction in revenue. Some businesses were struggling to return to normal operations after the lockdown and some had not been able to reopen.
Representatives of other organisations raised concerns about slow administrative processes in accessing Covid-19 relief funding.
Concerns were raised about the decimation of the tourism industry. In the agricultural sector, the Covid-19 lockdown and regulations had significantly affected the wine value chain. Lost revenue amounted to R7.5 billion over 14 weeks. There were 300 million litres of surplus stock and a global glut of wine. Job losses were 25 000 and 80 wineries and 350 producers had been lost. Government intervention was needed for recovery.
The Committee heard that there had been minimal Covid-19 infections in the building industry due to well managed site protocols. However, there were challenges in the transportation of workers to sites and in the availability and increased cost of personal protective equipment.
Questions by Committee Members focused on difficulties businesses had in obtaining relief funding.
The Chairperson welcomed the delegation and Committee Members to the virtual meeting. The rules of engagement were explained. All microphones were to be muted and video cameras turned off at the start of the meeting to improve the quality of the online connection. The agenda for the day was explained; the question and answer session would occur after all the presentations had been made.
Ms Riefdah Ajam, General Secretary, Federation of Unions of South Africa (FEDUSA), said the pandemic had subjected members to mental stress, fear and physical exhaustion. Healthcare workers were under pressure to resign because their families feared losing them. Nurses were saying that they took an oath to serve and not an oath to die at work. The stigma associated with Covid-19 had resulted in nurses being refused some services offered by the public, simply because they were working in hotspot hospitals and clinics. Frontline personnel in the public sector sacrificed their safety by loyally reporting for duty, while private sector members faced the hardships of salary cuts where remote working could not be carried out.
The Covid-19 pandemic, which could cause the country’s gross domestic product to contract by 7.2 percent in 2020, would deepen the country’s unemployment crisis. More than 1 800 retrenchment cases had been referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) during the nationwide lockdown. More than 14 000 private transport workers could lose their jobs. More than 10 000 jobs could be lost in the hotel industry. The retail sector was hardest hit, with 23 000 jobs on the line. Thirty-six percent of businesses had indicated that they were not confident they had the financial resources to continue operating throughout the Covid-19 pandemic.
FEDUSA had taken initiatives to enhance safety measures for members where they had reported glaring deficiencies and to distribute masks throughout the Western Cape. Relations with the Unemployment Insurance Fund had been enhanced and there were memorandums of understanding on facilitating payments.
Among the concerns FEDUSA wished to raise about the response to the pandemic was the toll on women and children living in abusive homes. The federation was appealing to the government to ratify the International Labour Organisation's C190 convention on violence and harassment in the workplace. Other concerns were the effectiveness of the current legislative landscape and control systems for the payment of grants to beneficiaries. Also of concern was the impact of alcohol consumption on the healthcare system.
FEDUSA made several recommendations: it said the Western Cape government had not played an effective role in communities. COVID awareness campaigns in communities should be made more effective through a sustained education and training campaign. Procurement of masks and sanitisers should be via a centralised system that minimized the risks of corruption. Critical healthcare posts should be filled.
Fedusa called for a social compact for the Western Cape which provided for:
Greater and inclusive collaboration with all social partners;
Unconditional commitment to saving jobs and facilitating economic recovery;
A domestic tourism drive, still strictly observing all safety protocols;
Short, medium and long term strategies to rebuild the good economic standing of the province;
Sectoral interventions in the areas of hospitality, tourism and aviation transport;
Clear deliverables, outcomes and time frames documented in a progressive action matrix;
The appointment of a project manager to drive the economic recovery process
Black Business Chamber presentation
Mr Sizwe Ngqame, President, Black Business Chamber (BBC), said the BBC represented grassroots, emerging and medium businesses around the country. He told the committee that grassroots businesses had suffered a massive reduction in revenue. Businesses were struggling to return to normal operations and some had closed. Skewed procurement policies disadvantaged emerging entrepreneurs.
Plein Chamber presentation
Mr Sean Achim, Chairman of the Plein Chamber, also known as the Mitchell’s Plain Chamber of Commerce and Industry, said the chamber had been formally established in 2016 to focus on the local economic development needs of the whole of Mitchell’s Plain. He said the “upsides of a downward spiral” were that grants were paid out, families were being fed and staff had been employed to assist with food distribution.
Outlining the areas where Covid 19 had the greatest impact, he said the tourism industry had been decimated. Slow payment and administrative processes affected all sectors. Early childhood development (ECD) centres were struggling.
Agri Western Cape presentation
Mr Jannie Strydom, CEO, Agri Western Cape, said the lockdown and Covid-19 regulations had significantly affected the wine value chain. The ban on domestic alcohol sales was the biggest contributor to an estimated total revenue loss of more than R3 billion. He said bridging finance was a huge challenge for businesses in the agriculture sector. More than 50 percent had indicated they did that they do not have sufficient facilities in place to cover the short-term challenges.
Other concerns were trade restrictions, a lack of profitability, global recession and the slow recovery of tourism. Another was rural safety. The socio-economic impact of unemployment and crime posed a huge challenge. There was a need for a constant and affordable energy supply.
On the way forward, Mr Strydom said the importance of the agricultural sector should be recognised. New marketing channels should be developed, there should be inclusive growth within the sector and food security should be maintained.
Mr Rico Basson, Managing Director, Vinpro, said there had been significant disruptions in the South African wine industry over the past 20 weeks. Lost revenue amounted to R7.5 billion over 14 weeks. There were 300 million litres of surplus stock and a global glut of wine. Job losses were 25 000 and 80 wineries and 350 producers have been lost. There had been a 64 percent drop in tourism. An urgent financial dispensation was needed for recovery. There was a prospect of major structural decline aggravated by a collapse in producer prices due to excess supply. It would take several years to restore a decline in production hectares. The wine industry was highly labour intensive. Wine grapes had limited alternative commercial applications. Brand SA would lose equity internationally if South Africa’s wine tourism offering deteriorated.
Government intervention was required to stabilise the value chain in partnership with industry
Master Builders Association, Western Cape presentation
Mr Deon Bester, Health and Safety Manager, Master Builders and Allied Trades Association, Western Cape, said the association had assisted members with the implementation of health and safety protocols. There had been minimal reports of Covid-19 infections. Well managed site protocols were in place. Entry to building sites was strictly controlled, there was strict monitoring of the use of masks and close contact was avoided where possible.
There were challenges in the transportation of workers to sites and in the availability and increased cost of personal protective equipment. Other challenges were in getting employees to understand the seriousness of the situation and subcontractors who relied on main contractors to monitor their employees. Infrastructure projects and government spending should be fast tracked to provide a steady flow of work to the industry.
Ms D Baartman (DA) said the Covid-19 regulations had had tragic impacts on businesses of all sizes. The closure of title deeds offices had resulted in businesses having to obtain bridging finance or close their doors. She posed several questions about the payment of relief funds. How had businesses been affected by payments, or lack thereof had? Did the chambers represented at the meeting know of any tour guides having already been paid out from the National Tourism Relief Fund? Some of the relief funds were actually more loans than anything else. She had spoken to two businesses in Cape Town who had not wished to apply for relief funding as they feared they would not be able to pay it back or that it would impact on the future sustainability of their business.
Posing the question to all organisations present, she wanted to know many of the payments or rather lack thereof had affected businesses and whether the Chambers had received any complaints of more than one month of payments not being paid out. Unsure regarding whether the any of the Chambers represented tourism businesses specifically, she wanted to find out if they knew of any tour guides having been paid out already from the National Tourism Relief Fund as the Committee had not received any information as yet regarding that. With South Africa falling victims to load-shedding once again, an impact analysis of the load-shedding on businesses during the Covid-19 period was requested. Lastly, she wanted to know whether the people the Chambers, organizations and unions represented had applied for some of the National Relief Funds which were actually more loans than anything else. She had personally spoken to two businesses within Cape Town who had not wished to apply for the relief fund as the relief was nothing more than a loan and they feared they would not be able to pay it back or it that it would impact on the future sustainability of their business.
Ms N Nkondlo (ANC) asked what percentage of the Western Cape Master Builders Association’s 400 members were small contractors. She asked how many companies had been paid by the Unemployment Insurance Fund and whether any payments were outstanding. Had any of the organisations’ members actually received tourism relief funds?
Mr B Herron (GOOD) asked about the impact of the Temporary Employer and Employee Relief Scheme (TERS) on saving jobs. Had any of the organisations’ members complained about the suspension of the TERS payments which seemed to impact on people who had applied for June? What had the impact been and how had they addressed it? He asked Vinpro whether it was engaging with the government about their funding programmes. They had indicated that they were looking for a total of R484 million in funding. Did that comprise the Tourism Supply Fund and the Wine Tourism Campaign Fund? He asked why the Master Builders Association had made the comment that 64 companies had struggled to process their TERS applications. From what he had seen, the process was not that difficult when companies had their affairs in order.
Mr F Christians (ACDP) wanted to know what was meant by the statement that the Western Cape government had not been effective in its role in communities. The comment had been raised several times that when it came to the securing of personal protective equipment, many businesses had either been side-lined or had not been given the relevant information to acquire tenders. Had they requested information and who had they spoken to? He said the safety of farmers and farm workers was still a big problem.
Ms Renee Andrew, Treasurer General, Black Business Chamber, said they had approached spaza shops to see how they could assist them in cooperation with the Small Enterprise Development Agency (SEDA) and the Small Enterprise Finance Agency (SEFA). The biggest challenge their communities had was in complying with requirements for obtaining financing. The banks had been very specific that if businesses were reasonably well managed they would qualify for funding. Many of their members in the construction sector were not able to obtain finance. Because the sector closed in December and reopened late in January, a three-month bank statement would not look favourable. A survey had been done to see where the problem lay in accessing funds. The chamber had been receiving assistance from SEFA in compiling a report. The aim was to have at least 1 000 applicants on a database by the end of the financial year.
Mr Igshaan Carstens, Chairman of the Strandbay Business Development Forum, an affiliate of the Plein Chamber, said a problem for building contractors was a long and tedious process to have building plans approved. The local planning office had been moved from Mitchells Plain to Khayelitsha, which made it even more challenging for them. It should be brought back to Mitchells Plain because there were more contractors there than in Khayelitsha. Small businesses had challenges in complying with regulations. Most were non-compliant. They wanted to be involved in discussions about how the local community could become involved in projects which would uplift the community economically and improve their businesses.
Ms K Jacobs, a committee member of the Plein Chamber’s ECD Forum, said ECD centres had struggled to obtain TERS funds due to a lack of technological knowledge and resources. While some had received payments in the first week of June, many had not received payments for June, July and August. Only 30 percent of ECD centres in the Western Cape received subsidies from the Department of Social Development. Staff at the remaining 70 percent received their salaries by way of school fees only. That had led to many educators not receiving their salaries. They were in great need financially and serious intervention was needed.
On the issue of tourism relief funds, Mr Achim said the Plein Chamber had suffered a setback when the person championing that cause had passed away, leaving a void which needed to be filled. Before the lockdown they had been considering the establishment of a tourism office in the Mitchells Plain area. They would be open to any conversations about government assistance for such an office. On the impact of load shedding, he said it made it difficult to move to online working. On relief funding for small businesses, he said trying to recover through loans was irresponsible as it ultimately placed people in more debt when they should have just tightened their belts. What would help small businesses get out the situation they were currently in was for large businesses to do what they were supposed to do and allocate 66 percent of their business to small black owned businesses. That had not been happening.
Ms Des Paterson, Office Manager, Master Builders Association, said that bargaining councils in the construction industry applied for UIF funds on behalf of the industry. A single application had been made on behalf of their members. Unfortunately, the process fell apart and a rejection file had been set out to the employer bodies instead of going back to the bargaining council. It had caused a lot of drama for the industry. Approximately 20 percent of their employees had not received payments for April and May. Approximately 27 percent had not received payments for June. She had been working with the red tape reduction unit to try and unlock some of those issues. However, it had been very difficult to find answers.
Mr Bester said the Western Cape Master Builders Association had approximately 400 members of which 70 percent were contractors. Of these, ten percent were deemed to be larger contractors. The association had introduced a six-month training programme in conjunction with the University of the Western Cape. The programme was aimed at teaching people entrepreneurial skills and how to manage their businesses. There were 30 people on the programme.
Mr Basson said only about ten percent of the wine producers had made use of the National Relief Fund because of the loan component.
On tourism relief funds, Ms Marisah Nieuwoudt, Wine Tourism Manager, Vinpro, said some wineries had been paid while others were facing challenges regarding payments. The national Department of Tourism had established that, while there had been delays in paying some tour guides, more than 4 000 had been paid to date. There were two sources of funding. The first was Tourism Supply Support Funding which was a marketing campaign. The second was the Tourism Recovery Fund. They had also applied for funding from the provincial government. She believed that there was a perception at national level that tourism in the Western Cape did really well and therefore the province needed less support than other provinces. Vinpro believed they ought to at least flag their needs with the provincial government in the event that the funding allocation did not occur at the national level.
Ms Ajam said the provincial government had not been playing an effective role in the province and in communities. It had not provided financial help for NGOs who were distributing food. She said everyone knew what had happened to the money which had been set aside for Covid-19. People had to dig into their own resources for help. All the government had been doing was taking all the fame and glory.
Mr Strydom said protocols on the Covid screening of seasonal farm workers had been designed in conjunction with the Department of Agriculture. Unfortunately, they had heard of incidents where screening had not been done correctly. They were continuously advising their members on screening. The safety of all the people in rural areas was of great concern to Agri Western Cape. The Department of Agriculture was currently engaged in a rural safety baseline survey covering the previous two years in order to develop a strategy on safety and crime issues.
The Chairperson stated that the Committee had three sets of minutes to consider and adopt. However, this would stand over to the next meeting. The delegates and Members were thanked for their attendance and participation.
The meeting was adjourned.
Wenger, Ms MM
Allen, Mr R
America, Mr D
Baartman, Ms DM
Bosman, Mr G
Botha, Ms L
Christians, Mr F
Dugmore, Mr C
Herron, Mr BN
Lekker, Ms P
Mackenzie, Mr R
Marais, Mr PJ
Mitchell, Mr D
Nkondlo, Ms ND
Philander, Ms W
Van der Westhuizen, Mr AP
Windvogel, Ms R
Xego, Mr M
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