Retrenchments ‘inevitable’ as economy struggles
Updated | By Sinethemba Madolo
Efficient group economist Dawie Roodt says the growing number of retrenchments is simply due to the struggling South African economy.
Roodt says the effect of the slow-growing economy is a rise in retrenchments, which in turn leads to higher unemployment.
Roodt says to merely sustain the current employment numbers, the economy would have to grow by 3%.
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"The South African economy is currently growing roughly at about 1% per year - in fact, it is less than that but let’s call it 1% per year - at the same time the South African population is growing at approximately 1.7% per year, additionally there's some productivity improvement as well.
"So the reality if we want to stay where we are we need to grow the economy at least 2% and if we want to reduce the employment we need to grow the economy at least 3 or 4%."
Roodt says some of the reasons for slow growth include policy uncertainty, disruptive civil servants and no confidence in the economy due to political instability.
Roodt predicts more retrenchments will follow.
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