COVID-19’s impact on South African businesses and employees

The global spread of coronavirus disease 2019 (COVID-19) has resulted in unprecedented disruption to our daily lives, on both personal and professional fronts. “Governments and health authorities are doing everything they can to curtail the spread of this virus,” says Nonkululeko Pitje, Discovery’s Head of Employee Health Solutions.

“The South African government has ordered a three-week closure of all non-essential businesses from midnight on 26 March 2020 to try and ‘flatten the curve’”.

Enhanced containment measures are now in place in South Africa to curb the spread of the COVID 19 virus. Though much-needed, these containment measures have brought massive disruption to education, working arrangements, child care, healthcare, travel plans, everyday living and business operations, with broader effects on economic growth that are a real cause for concern,” Pitje adds.

Toolkit developed for employers

“Every employer needs to understand the COVID-19 virus and its potential impact on business and society,” says Pitje.

“We have developed several COVID-19 Employer Toolkits to share relevant information on how businesses keep employees informed on how to stay protected and prevent the spread of infection.”

COVID-19’s effects on your business

• Businesses that rely on people visiting their premises and gathering in large crowds, such as restaurants, theatres and sporting venues, are shutting down completely for at least three weeks. It is not a case of reduced turnover, but no turnover at all.
• Global and local travel bans have hit the travel and tourism sector hard, and affected revenues significantly. These bans mean that many business trips, business meetings and conferences will be cancelled or postponed.
• In the manufacturing sector, orders and sales of non-essential products have come to a halt. This will definitely have a huge effect on businesses in the first two quarters of 2020, and possibly also have a knock-on effect throughout the year. The future is uncertain and only time will tell.
• The cost of creating remote working options could be expensive.
• There could also be legal costs to change work contracts of employees to accommodate the unprecedented regulations.
• Interruptions to the supply chain and reduced sales are inevitable. This is because when entering a period of enhanced containment, people will have to stay at home and non-essential businesses will have to close.
• The government has put in measures to assist small businesses and their employees.

In the long run, reduced turnover could lead to staff retrenchments, and businesses might have to dig deep into their reserves or go into debt to keep going. Where a business closes its doors for several weeks, there are still ongoing costs such as rent and salaries that require settling, even though there is no income. Some businesses are bound to bounce back more easily than others. But not all businesses can absorb these costs easily – for some smaller businesses, a couple of months with no income could mean the end of the road.

Many businesses have insurance for events such as fire, theft and legal claims, but do not have the added cover against the fallout from a global pandemic.

State offers assistance to business in distress

In his 23 March 2020 address to the nation, President Ramaphosa said:

“We are in consultation on a proposal for a special dispensation for companies that are in distress because of COVID-19. Through this proposal employees will receive wage payment through the Temporary Employee Relief Scheme, which will enable companies to pay employees directly during this period and avoid retrenchment.”

He added that:

• Any employee who falls ill through exposure at their workplace will receive payment through the Temporary Employee Relief Scheme.
• Commercial banks are exempt from certain provisions of the Competition Act to enable them to develop common approaches to debt relief, and other necessary measures.
• Many large companies that are currently closed have to accept their responsibility to pay workers affected. Larger businesses in particular need to take care of their workers during this period.
• In the event that it becomes necessary, government will use reserves within the UIF (Unemployment Insurance Fund) system to extend support to those workers in SMEs (small- and medium-sized enterprises) and other vulnerable firms who face loss of income and whose companies are unable to provide support. Details will be available within the next few days.
• Government is assisting businesses that may be in distress in various way (detailed in the address).

COVID-19’s possible effects on employees

• Employees who work in non-essential businesses will have to stay at home for three weeks.
• Remote work or working from home has become a reality for many people who do office work. There are many sectors, such as manufacturing and construction, where this is not possible.
• Parents will have to look after their children full time, while attempting to work from home. South African schools will close for more than a month from 18 March 2020 to 16 April 2020, at the very least.
• In businesses where employees are still coming to work, they might also have to take time off to care for other family members if they become ill. In addition, they themselves might become ill, especially if they get exposed to the COVID-19 virus in the course of their work. For example, many healthcare workers are at risk.
• The spread of this virus may force companies to make permanent changes to their sick leave regulations, as well as the provisions they make for family responsibility leave.
• Right now, the world is in crisis mode and provisions are being made on an ad hoc (informal) basis, but in the long term, companies may have to review their paid and unpaid leave policies. As a business owner, in the future, the last thing you want is people coming to work sick, because they have no leave or sick leave. This will put everyone at risk.
• Stress levels may become high among employees in sectors that are still operational, as employees will probably be working very long hours during this global pandemic. They might also have to fill in for colleagues who are ill or in self-isolation. Also, with people confined to their home environment, they may not have easy access to their usual stress-relieving mechanisms, such as going out to the movies, restaurants, gyms, sports matches and shopping malls.
• Stress related to financial and job security is widespread and inevitable. Many people will lose their jobs if businesses cannot survive the effects of the stay-at-home period or of containment measures overall.

COVID-19’s possible effects on the workplace

• There will be more far more virtual meetings and communication by email rather than by means of face-to-face meetings.
• Labour-intensive businesses that produce non-essential goods, and where people work in close proximity to one another, will shut down for at least three weeks.
• All service-related businesses and social venues, such as restaurants and places of entertainment, will shut down, at least until 16 April 2020.
• In workplaces which continue to operate, management will have to make information available to employees in order to reduce the chances of COVID-19 transmissions between employees. Visible signs (downloadable here) must be in easy-to-spot places to remind people of measures such as regular hand washing for at least 20 seconds.
• There might be a need to employ additional cleaning staff to clean communal high-traffic areas, such as lifts, kitchens, bathrooms and meeting rooms, on a regular basis.
• If absenteeism increases among staff, this will increase work pressure on those employees who take on their work.
• Even essential businesses still in operation will cancel all work-related gatherings, workshops and work-related travel.

“As COVID-19 continues to impact daily life, it’s more important than ever that business owners and their employees are able to think outside the box and present solutions to the challenges at hand,” adds Pitje.

“We must be adaptable and analyse our business to see where we might reduce our expenses, and where we might innovate to offer new products or services that are relevant in the long-term. We must also support our employees to understand how to stay healthy as well as in their efforts to work remotely as their productivity will sustain our business into the long-term.”

• Read President Cyril Ramaphosa’s full statement on the COVID-19 containment measures.