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Economists warn people to brace for salary cuts across the board

Researcher at the Institute for Economic Justice, Busi Sibeko, says there should then be better alignment between economic growth and employment.

Spending money consumer

CAPE TOWN - With many companies now issuing retrenchment notices economists are warning salary cuts across the board are also on the horizon for South Africa's workforce post COVID-19.

Yesterday, a panel of experts discussed the winners and losers in the pandemic, and what's to come after government's stimulus is package.

President Cyril Ramaphosa last month announced R500 billion in relief to keep the country's economy afloat during the war against the global pandemic.

Wits University's Professor Michael Sachs says while new sectors can emerge, there are vast swathes of formal sector employment that will not exist by January.

“I think in the first instance we are going to be dealing with a much poorer society so the adjustment for that means lower wages for all South Africans.”

Researcher at the Institute for Economic Justice, Busi Sibeko, says there should then be better alignment between economic growth and employment.

“We need to target spending and we need to undo the harm caused by austerity.”

Economist Duma Gqubule, stresses the importance of navigating the current economy to the one envisaged after COVID-19.

“The current form of stabilisation could be anything from 12 to 30 marks. We need to get the current situation right.”

Gqubule says the Unemployment Insurance Fund should also be repurposed to provide proper income replacement.

(Edited by Refilwe Pitjeng)