South Africa’s lockdown reality – Salary cuts, retrenchments, and lost bonuses

The COVID-19 lockdown has triggered a sharp drop in economic activity in South Africa that has forced many companies to cut salaries and retrench employees.

According to the recent National Income Dynamics Coronavirus Rapid Mobile Survey report, approximately three million people have lost their jobs over the lockdown period.

This represents an 18% decline in employment, from 17 million people employed in February to 14 million people employed in April 2020.

A recent Organisation for Economic Co-operation and Development (OECD) report painted an equally concerning picture for the South African economy.

The OECD highlighted that the 2020 recession follows almost a decade of modest growth in South Africa.

Persistent electricity shortages, rising government debt, and policy uncertainty will continue to hold back investment and underscore low growth.

“The economy is set to recover only progressively from the coronavirus recession as sectors reopen,” the OECD said.

The OECD said that the government’s relief plan will mitigate the fall in household consumption, but investment, which has been declining over the past two years, will fall to a record low level.

The impact of the lockdown and economic downturn on South African businesses have been severe, especially in the travel, tourism, restaurant, and entertainment industries.

This left many businesses with no choice other than cut salaries, retrench staff, and stop all bonuses to remain sustainable.

The lack of job security, financial uncertainty, and the changing work environment are also taking their toll on employees.

Werksmans Attorneys director Jaques van Wyk said employees may well experience depression, anxiety, and stress during the lockdown.

What IT professionals think about salary cuts, retrenchments, and lost bonuses

To get insight into salary cuts, retrenchments, and lost bonuses among South African IT professionals, MyBroadband launched a lockdown survey.

The survey was completed by 5,288 respondents who were predominantly IT professionals, executives, and employees in the ICT industry.

A few prominent findings from the survey include:

  • Most employees prefer salary cuts for all employees instead of limited retrenchments.
  • Job security is far more important than salaries and bonuses.
  • If a company has additional money, salary increases are preferred over bonuses.
  • The biggest concerns of employees during the lockdown are losing their job and additional work stress.
  • Most respondents said the lockdown rules should be relaxed to increase economic activity.

The tables below provide an overview of the results of the MyBroadband employee lockdown survey and the demographic breakdown of the respondents.

Respondent Demographics
Number of responses 5,288
Full-time employee 94%
Part-time employee 6%
C-level executive or director 6%
Management 31%
Professional 42%
General staff 18%
Entry level 2%
Salary and job cuts
Were there retrenchments at your company because of COVID-19 and the lockdown?
Answer Percentage
Yes 22%
No 78%
Were there salary cuts at your company because of COVID-19?
Answer Percentage
Yes 42%
No 58%
Which of the options would you prefer if your company needs to cut costs?
Answer Percentage
Cut the salary of all staff members, but no retrenchments 63%
Retrench some staff, but no salary cuts 13%
A combination of retrenchments and salary cuts 24%
Which option regarding salary and job security do you prefer?
Answer Percentage
Taking a salary cut now and have a guaranteed job next year 91%
Earning a full salary now but possibly losing your job this year 9%
Which of the options would you prefer in terms of a bonus and salary increase?
Answer Percentage
A full bonus, but no salary increase 18%
A full salary increase, but no bonus 45%
A small salary increase, and a small bonus 37%
Which of the options would you prefer in terms of a bonus?
Answer Percentage
A guaranteed bonus of one month’s salary 40%
The chance to get twice your salary based on company performance, but nothing if targets are missed 32%
Indifferent to these two options 28%
What is your biggest concern about your job?
Answer Percentage
Losing your job 55%
Getting a big salary cut 9%
Losing your annual bonus 6%
Increased work pressure because of the lockdown 29%
Which option do you think is the best for South Africa?
Answer Percentage
Increase the lockdown rules to save more lives 12%
Keep the lockdown rules as they are 14%
Relax the lockdown rules to increase economic activity 74%

Now read: Salary cuts and retrenchments at South African tech companies – What employees say

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South Africa’s lockdown reality – Salary cuts, retrenchments, and lost bonuses