The small, medium, and micro enterprises (SMME) sector in South Africa experienced a job bloodbath during the first five months of lockdown, with 60% of full-time jobs lost.
This is one of the findings of Finfind’s South African SMME COVID-19 Impact Report, which shed light on how businesses coped during the lockdown.
The study was done in partnership with the Department of Small Business Development, Business Leadership SA, the Banking Association South Africa, the JSE, and SAICA.
According to the report, 42.7% of SMMEs closed during the extended lockdown in South Africa.
The sectors hardest hit by the lockdown and with the most closures were construction, food and beverage, and hospitality.
The sectors with the highest percentage of businesses that remained open were retail and wholesale, IT, and business consulting.
The majority of the businesses that closed generated little profit, had debt and few or no cash reserves.
This left them unable to weather the negative financial impact of the lockdown.
SMME job losses during lockdown
The report further showed an immediate loss of jobs once lockdown was implemented on 27 March.
There was a loss of 60% of full-time jobs in the SMME sector. 68% of these came from businesses that closed during lockdown, and the remaining 32% from businesses that survived lockdown.
During the lockdown 76.8% of part-time jobs were lost, 54.4% of casual jobs, and 41.4% of consultant jobs.
The impact on the gig economy was also significant with a decrease in employment opportunities for casual workers of 53.5%.
It is interesting to note that business owners prioritised paying staff overpaying themselves. 53.1% of owners received no salary during lockdown.
“SMME owners pay their staff and their key expenses – especially their suppliers – first and only pay themselves later once cashflow permits,” the report states.
The DA said these figures should serve as a warning against the devastating impact that hard lockdowns have on the small business community.
“Small business owners and their employees are the backbone of a strong and prosperous economy and are a crucial part of any attempt made at economic recovery,” the DA said.