Load shedding could be the death knell for job creation efforts in South Africa and could possibly increase the rate of unemployment back above the 35 percent mark as small businesses were forced to close shop during ongoing power cuts.
This comes as Eskom yesterday said it would implement Stage 3 load shedding today and tomorrow due to deteriorating generation capacity.
However, the struggling power utility said load shedding would be eased to lower levels throughout the week as some units return to service.
South Africa’s unemployment rate currently stands at a staggering 34.5 percent, the highest rate of joblessness in the world.
Daniel Goldberg, co-founder and chief executive of Bridgement, a fintech credit provider to small businesses, said yesterday that load shedding was significantly affecting small businesses that had the capacity to solve employment problems.
Goldberg cited a McKinsey study that showed that SMEs in South Africa represented more than 98 percent of businesses across the country, and employed between 50 and 60 percent of the workforce across all sectors.
“We're facing record levels of unemployment, which has disastrous implications for the national economic outlook and puts further strain on public money and institutions,” Goldberg said.
“The impact of load shedding has long been documented since the outages began more than a decade ago.
“Rising fuel prices, even prior to the Ukraine crisis, have not only dramatically increased running costs and company expenditures, but also emphasised the issues surrounding our rail and transport networks, and their importance to business,” he said.
This comes as President Cyril Ramaphosa is set to announce a comprehensive set of actions to achieve much faster progress in tackling the intensified load shedding, which worsened to Stage 6 last month.
Workers’ unions came out strongly yesterday to demand immediate action by the government to solve the ongoing energy crisis.
Trade union Solidarity yesterday petitioned Parliament on the power generation crisis, following its recently published report proposing large-scale private power generation as a solution to load shedding.
In its petition, Solidarity demanded, among other things, that all regulatory or legislative obstacles to unlimited private power generation be removed as a matter of urgency.
“It is obvious that Eskom does not have the capacity to supply the country’s current energy needs and it will certainly not be able to meet future energy needs,” said Connie Mulder, head of the Solidarity Research Institute (SRI).
“This loss of energy security is leading to a decline in investment on an ongoing basis and it is contributing to record unemployment levels and anaemic economic growth.”
Trade union UASA welcomed the energy emergency announcement to be made by Ramaphosa,
UASA spokesperson Abigail Moyo said it was high time that concrete steps were implemented to tackle the country’s power outages.
“The nation has been patient for years, grasping at straws each time promises were made and, sadly, broken,” Moyo said.
“The first load shedding occurred over a decade ago. After this, the situation was simply allowed to get out of hand until an irate nation was subjected to up to six hours of power cuts per day – driving businesses to ruin, causing higher unemployment and financial trouble.”
BUSINESS REPORT