Thursday | 16 April | 2020
By Reon Janse van Rensburg
Various economists and experts have already warned that the Covid-19 pandemic will have catastrophic consequences for the country’s economy and for various businesses.
Independent economist Mike Schüssler estimates that due to the pandemic up to 1,6 million jobs could be lost in the formal sector and a further 1,5 million in the informal sector. At the end of December 2019 10,2 million people were employed in the formal sector but Schüssler expects that, after a month of the national lockdown 1,67 million jobs could be lost by the end of the second quarter.
Further job losses cannot be ruled out because the lockdown was not limited to the initial three weeks but has been extended by another two weeks so far.
Solidarity fully supports the fight against the Covid-19 pandemic and strives to minimise the effects of the virus. However, government’s ban on the provision of non-essential services and the manufacturing of non-essential goods has an extremely negative impact on the economy and on job security in the country. South Africa is a country of workers that not only keep the economy going but the vast majority of workers also depend on a daily income to sustain them.
Since the announcement of the lockdown measures government has made announcements and made funds available to assist employers and employees during this period. However, Solidarity found that there were uncertainties about the specifications set for small, micro and medium enterprises to qualify for aid and to claim such aid. Government’s intention to make the granting of crisis funding subject to black economic empowerment led Solidarity to lodge a complaint against government with the South African Human Rights Commission (SAHRC) on 25 March. Subsequently, Solidarity also served an urgent application on the Presidency and on various other ministries. The case is scheduled to be heard in the Northern Gauteng High Court on 28 April.
Flip Buys, chairperson of the Solidarity Movement, addressed a letter to the President and the relevant ministers containing comprehensive proposals on the suspension of the national lockdown. A memorandum was also sent to the President and the relevant ministers outlining Solidarity’s support for a new form of lockdown that would be a balance of health and economic considerations.
Solidarity’s proposed code of good practice and measures to ensure healthy and sound jobs during and after the Covid-19 pandemic were carefully compiled to take into account economic and health aspects.
Solidarity has compiled a list of aid that is offered by government and private institutions. The list will be updated on an ongoing basis.
Financial interventions that are offered during the Covid-19 pandemic:
- Employment Tax Incentive (ETI)
A tax subsidy of up to R500 per month for employers has been instituted over the next four months in respect of employees earning less than R6 500 per month. The South African Revenue Service (SARS) undertook to accelerate the twice a year refund to a monthly refund.
- The Compensation Fund
Employees who are infected with the coronavirus as a result of exposure at the workplace (at home, as well as in the usual workplace) are compensated by the Compensation Fund. Use the following link for more details on the Compensation Fund – http://www.labour.gov.za/Contacts/Pages/Contacts-CF.aspx
3.The banking sector
The Department of Trade, Industry and Competition approved regulations that apply to the banking sector that make provision for various exemptions that will allow banks to work together for the benefit of small businesses, consumers and other businesses in distress.
Currently, the banks offer a variety of debt payment solutions. Contact your bank for more details.
4. Department of Small Business Development
The Department of Small Business Development has made R500 million available to SMMES that are currently in operation. Applications from small to medium-sized enterprises that need assistance during the Covid-19 pandemic can be registered here: https://smmesa.gov.za./
5. Support to the informal sector
A safety net is currently being developed to support people in the informal sector. Further announcements are expected soon.
6. The Industrial Development Corporation (IDC)
The IDC and the Department of Trade, Industry and Competition allocated R3 billion to support businesses during the Covid-19 pandemic. Go to https://www.idc.co.za/ for more information.
7. Government’s Solidarity Fund
This fund is a fund established by government and should not be confused with the Solidarity Movement’s initiatives. The Solidarity Movement created its own crisis fund, more details of which are available on www.krisisfonds.co.za
Government’s Solidarity Fund was established following a call on all South Africans from Pres Ramaphosa to help the country in its battle against the Covid-19 pandemic and its impact on the economy. The Rupert and Oppenheimer families got the fund off the ground, donating R1 billion each to the fund. Meanwhile, businessman Patrice Motsepe as well as Mary Oppenheimer also donated R1 billion each. The fund will be used primarily to help government in the battle against Covid-19 and to help the economy, businesses and individuals to stay afloat.
8. The UIF’s National Disaster Benefit
The Unemployment Insurance Fund (UIF) allocated R30 billion to address Covid-19 related job losses, to support job retention and to deal with reduced time claims.
9. PAYE and provisional tax on corporate income
SMEs with a turnover of less than R50 million may defer 20% of their prospective pay-as-you-earn (PAYE) liabilities over the next four months and may defer a portion of their provisional corporate income tax payments without penalties or interest over the next six months.
10.Payment of SASSA grants (SASSA)
The South African Social Services Agency (SASSA) has decided to stagger the payment of Sassa grants to protect people with disabilities and the aged from the month end rush at payment outlets and therefore these beneficiaries will receive their grants before others. For more information, go to – https://www.sassa.gov.za/newsroom/Documents/SASSA%20Media%20Statement%20-%2008-04-2020.pdf
11. South African Future Trust (SAFT)
SAFT is an independent trust set up by Nicky and Jonathan Oppenheimer in partnership with the government and the private sector. The immediate purpose is to extend financial assistance to employees of small, medium, and micro-sized enterprises (SMMEs) who are at risk of losing their jobs or will suffer a loss of income because of Covid-19. The assistance takes the form of interest-free loans to SMME employees.
SMME employers apply for the scheme via their preferred partner bank and the bank disburses funds to the employees that qualify for the assistance. The employees themselves carry no liability and do not have to repay the money. The company repays the loan within five years, interest free. The bank partners are Standard Bank, FNB, Absa and Nedbank. For more information go to https://opp-gen.com/saft/
12. Relief Fund for tourism SMMEs
The Department of Tourism made R200 million available to assist SMMEs in the tourism and hospitality sector. This sector is currently under major pressure as a result of the national and international travel ban. For more information go to https://www.tourism.gov.za/CurrentProjects/Tourism_Relief_Fund_for_SMMEs/Pages/Tourism_Relief_Fumade nd_for_SMMEs.aspx
13. Temporary Employer/Employee Relief Scheme (TERS)
The Department of Labour recently announced that employers that have to close their businesses and cannot pay their employees can apply for this benefit. Send an e-mail to email@example.com for more details.
14. VAT exemption on imported essential goods
As a result of the measures taken under the Disaster Management Act No. 57 of 2002 “essential goods” as defined in regulation R398 in the Government Gazette no 43148 of 25 March 2020 (as per paragraph A of Annexure B), will be subject to a further and complete rebate of import duty (pursuant to Item 412.11 / 00.00 / 01.00 of Schedule 1 of the Value Added Tax Act No 89 of 1991 and rebate item 412.11 of Schedule 4 of the Customs and Excise Act No 91 of 1964). This exemption applies only to certain imported goods.
For more information please visit https://www.sars.gov.za/Media/Pages/CoronaVirus.aspx
15. Claims to the Unemployment Insurance Fund (UIF)
Where a contributor (an employee contributing to the UIF) has been quarantined for 14 days, or has been quarantined for more than 14 days in special circumstances, the employee will be covered under Part C of the Unemployment Insurance Act, as amended, and will thus qualify for illness benefits. Contributors can also claim when their working hours are reduced. To find out when you can claim from the UIF visit https://www.ufiling.co.za/
However, if your employer puts you on unpaid leave, or if you are temporarily retrenched, or if a company can only afford to pay you salary only in part you can receive a special payment from the Covid-19 Temporary Relief Scheme, also known as the TERS scheme.
If you are not sure whether you are registered for UIF, it would be best to contact your employer. If you are not registered for it, you can contact the Department of Labour or the UIF directly.
* All information was correct at the time of publication.