The impact of lockdown on employment at the V&A Waterfront - - PowerPoint PPT Presentation

The impact of lockdown on employment at the V&A Waterfront

Preliminary results of a snap survey of V&A tenants during the third week of lockdown

Andrew Donaldson & Grant Smith SALDRU and GMTplus.co.za 20 April 2020

Highlights

• A rapid response survey of tenants of the V&A Waterfront in mid-April provides early

evidence of the impact of lockdown on firms in the retail and tourism-related sector

• Most responses were collected before the lockdown extension
• Almost all companies report that revenue and output in April 2020 will be close to zero
• Companies of all sizes report significant numbers of temporary lay-offs already in April
• Lay-offs expected to exceed 25% of employment if the lockdown extends to mid-May
• If the lockdown continues with the same regulations, 40% of firms face risk of

permanent closure

• Loosening of regulations on delivery to clients and trade in non-essential goods, subject

to social distancing protocols, would significantly reduce impact on employment and business survival

• Most companies indicate need for temporary income support, especially for retaining

unskilled workers.

• About 30% of companies have registered for the UIF’s TERS benefit; others report that

they are not eligible or have had difficulties in registering

16 18 42 52 36 72

20 40 60 80

Number of companies Other Services Tourism Other Retail Food & beverage retail Clothing Retail

n=236; 0 companies could not be categorised

Industry Category

7 14 14 48 79 74

20 40 60 80

Number of companies 251+ 101-250 51-100 16-50 6-15 1-5

n=236; 0 companies could not be categorised

Number of companies by number of employees.

Survey details

• Online survey of tenants of the V&A Waterfront: 7-17 April 2020
• 85% of responses collected before announcement of lockdown extension on 9 April
• 236 companies responded, employing 9 259 workers (about 40% of total Waterfront employment)
• 210 companies provide no “essential services”
• 14 companies had 50% or less of operations classified as essential
• 12 companies had 51 - 100% of operations classified as essential
• Sample mainly covers retail and tourism-related companies
• Many smaller companies (less than 15 employees).
• Also in this survey are advisory services (e.g. engineering, marketing), shipbuilding, logistics, etc.

Number of employees

Tourism/Hotels Food Beverage

Survey details

• Though there are more small companies, large firms account for most employees
• Clothing, food and beverages and other retail activities account for over two-thirds of

employees covered in this survey

241 699 1395 1058 2116 3750

1,000 2,000 3,000 4,000 1-5 6-15 16-50 51-100 101-250 251+

n=236 companies

Total number of workers in each company size category

232 718 1332 2628 2169 2180

500 1,000 1,500 2,000 2,500 Number of workers Other Services Tourism Other Retail Food & beverage retail Clothing Retail

n=236 companies

Total number of workers in each industry category

Tourism/Hotels Food and Beverage

Composition of workforce

• Wide range of occupations represented:
• High proportion of maintenance and skilled workers
• Relatively large share of upper management, mainly accounted for by owner-managed

small firms

16 16 28 15 24

10 20 30

Percent of total workforce Upper management Middle managers Skilled (not managers( Administrative Maintenance

Percentage of total workforce across all 236 companies in sample

Type of workers: Estimated share of workforce (for companies in this sample).

% % % % %

% % % %

Skilled (not managers)

Revenue under extreme pressure

• 70% of companies expect over 75% fewer customers in April 2020 than a year ago
• Tourists are estimated to be 80% or more of the clientele of many firms
• Companies providing essential services also expect fewer customers
• Many companies expect no revenue in April 2020
• Output is similarly expected to be substantially lower than a year ago
• Of the 22 companies expecting to maintain or grow output, 15 have 15 or fewer employees and

also expect revenue to be at least 31% lower than a year ago

1 2 1 1 1 2 2 10 10 15 17 36 138

50 100 150

Number of companies Greater by 41-50% Same as April 2019 Lower by 7-8% Lower by 11-15% Lower by 20-25% Lower by 26-30% Lower by 31-40% Lower by 41-50% Lower by 51-60% Lower by 61-70% Lower by 71-80% Lower by 81-90% Lower by 91-100%

n=236

Expected difference in revenue April 2020 vs. April 2019

3 1 18 2 3 3 3 3 3 10 9 9 18 34 117

50 100 150

Number of companies Greater by 41-50% Greater by 31-40% Same as April 2019 Lower by 1-2% Lower by 11-15% Lower by 16-20% Lower by 20-25% Lower by 26-30% Lower by 31-40% Lower by 41-50% Lower by 51-60% Lower by 61-70% Lower by 71-80% Lower by 81-90% Lower by 91-100%

n=236

Expected difference in output April 2020 vs. April 2019

The employment shock is already large

At the time of completing the survey:

• 1 497 workers (16%) had been temporarily laid off, from 91 companies
• 866 laid off from companies with 51 or more employers, 631 from smaller companies
• 302 workers (3%) had been permanently laid off, from 54 companies.
• Most permanent lay-offs from small companies

26 75 65 140 122 416 50 285 39 551 30

200 400 600 1-5 6-15 16-50 51-100 101-250 251+ Number of temporary & permanent layoffs by company size Permanent lay offs Temporary lay offs

The employment shock is already large

• Employees in smaller companies are more likely to have lost their jobs
• Temporary lay-offs affect over 20% of the workforce in all except very large firms

11 31 9 20 9 30 5 27 2 26 1

10 20 30 1-5 6-15 16-50 51-100 101-250 251+ Temporary & permanent layoffs as a percentage

• f total workers in each company size

Permanent lay offs Temporary lay offs % % % % % % % % % % % % % % % %

The employment shock is already large

• Employment losses are higher in hospitality and tourism related companies, and in the food

& beverage sector, than in other retail and service industries

• “Other” companies (n=16) have the highest rate of layoffs.
• Service firms have the lowest rate of layoffs - these include advisory firms, engineering,

marketing and logistics

41 3 7 1 30 5 6 2 27 5 10 3

10 20 30 40 % of total workers in this industry Other Services Tourism Other Retail Food & beverage retail Clothing Retail Temporary & permanent layoffs as a percentage

• f total workers in each industry category

Permanent lay offs Temporary lay offs

96 6 53 6 395 71 148 48 587 103 218 68

200 400 600 Number of workers laid off. Other Services Tourism Other Retail Food & beverage retail Clothing Retail Number of temporary & permanent layoffs by industry category Permanent lay offs Temporary lay offs % % % % % % % % % % % %

Tourism/Hotels Food and Beverage Tourism/Hotels Food and Beverage

Unemployment will increase if lockdown continues

• Firms were asked about the impact on employment if lockdown continues to 16 May 2020, with the

same regulations:

• An expected 2 546 workers (27%) will be temporarily or permanently laid off
• Hospitality and tourism related and food & beverage companies expect to lay off the greatest

share of their workforces

81 131 586 315 849 583

200 400 600 800 Number of workers. Other Services Tourism Other Retail Food & beverage retail Clothing Retail Expected number of temporary & permanent layoffs in each industry category if lockdown continues to 16 May under same conditions

35 18 44 12 39 27

10 20 30 40 % of industry category workforce. Other Services Tourism Other Retail Food & beverage retail Clothing Retail Percentage of workforce expected to be temporarily or permanently laid off in each industry category if lockdown continues to 16 May 2020 under same conditions

% % % % % %

Tourism/Hotels Food and Beverage Tourism/Hotels Food and Beverage

40 % of companies at risk of closing

• If lockdown continues to 16 May 2020, with the same regulations:
• 93 companies (40% ) think it is likely that they will close
• Companies with 100 or fewer employees are more likely to close
• Nearly half of very small companies (1-5 employees) and those with 16-50 employees think it

is likely that they will close permanently

• Companies across all industries in this survey think they are at risk of needing to close permanently.

21 36 50 34 46

10 20 30 40 50 % of companies of this size 251+ 101-250 51-100 16-50 6-15 1-5 Percentage of companies of each size who think it is likely or very likely that they will need to close permanently if lockdown continues to 16 May with same regulations.

% % % %

% % % % % %

% 31 33 36 42 47 39

10 20 30 40 50 % of companies in this industry Other Services Tourism Other Retail Food & beverage retail Clothing Retail Percentage of companies in each industry who think it is likely or very likely that they will need to close permanently if lockdown continues to 16 May with same regulations. % % % %

% % % % % %

% %

Tourism/Hotels Food and Beverage

For now, companies are doing what they can to keep employees and stay in business

• 23% of companies have changed their business practices to produce more of certain goods
• Nearly all companies (94%) have implemented wage or work-hour flexibility, or both

90 13 118 15

50 100 150

Number of companies No, working less hours. No, working same hours. Yes, working less hours. Yes, working same hours.

n=236

Are any of your employees taking lower wages during the lockdown?

“Prior to lockdown I sold to tourists, that is gone. I am making fabric masks for an NGO and trying to get funding to help my workers. Income will be low but a little goes a long way.” – Clothing retailer.

Suggested changes to regulations

Companies were asked whether changes to regulations would improve their prospects of staying in business and paying all of their employees, while maintaining appropriate social distancing protocols. Responses included:

• Allowing delivery to clients – indicated by 65% of clothing retailers
• Allowing customers to visit the V&A Waterfront and buy non-essentials
• Clothing retailers (67%), other retailers (73%), and food and beverage companies (61%).
• Allowing people to dine at restaurants, subject to Department of Health guidelines
• 92% of food and beverage companies

Many companies indicated need for temporary income support:

• Contributing 25% of the wage bill for unskilled workers would improve prospects of

company survival and retaining employment

• Food and beverage businesses (75%), clothing retailers (65%)

UIF Temporary Employees Relief Scheme (TERS)

• About 30% of companies have registered employees for TERS
• Many companies had not yet tried to register with TERS, were not eligible or reported

difficulties in registering

• 60% of companies said that government contributing 25% to their wage bill for unskilled

labour would improve or greatly improve their prospects of remaining in business

16 31 27 30 62 70

20 40 60 80

Number of companies Documentation too long to do Don't understand how to No replies to emails/calls Not eligible for TERS Not yet tried Yes

n=236

Has your company been able to register any of your employees for the Temporary Employer-Employee Relief Scheme (TERS)?

Acknowledgements This survey has been made possible by the support and efforts of:

• David Green, Rory Williams and the executive leadership of the V&A Waterfront
• Senior managers of 236 respondent companies
• Survey design and implementation: Grant Smith and GMT+

(www.gmtplus.co.za)

• Data analysis: SALDRU (Southern Africa Labour and Development Research

Unit), UCT – Andrew Donaldson, Grant Smith and Aidan Horn

• Follow up of respondents: Emma Whitelaw and Samantha Culligan