“Food for thought”

During the covid 19 pandemic, FIDIC has been running a series of webinars and one of the recurring themes is the impact of the pandemic on the construction industry, the challenges it will present after the lockdown and what the new NORMAL will look like for the industry. On 20 May 2020 FIDIC ran a webinar dealing with this issue and I highly recommend that you watch it.

Of particular significance for South Africa is what response should government have not only for the construction industry but the economy as a whole. It is clear that there is a need for economic stimulus given the severe economic challenges that we face in South Africa. In an article on money web dated 5 May 2020,[1] David Metelerkamp, a senior economist is quoted as saying “not only is the Covid-19 pandemic going to be the worst crisis since World War II, it is now widely expected to be the worst economic crisis/recession since the Great Depression of the late 1920s.” Furthermore the article states that between 120,000 and 140,000 jobs may be lost in the industry and that “In terms of these scenarios[2], activity levels in the construction industry will, at best, decline by 14.5% in 2020 and by 27.7% in the worst case scenario.”

I read at the same time an interesting article by GG Alcock dealing with the effect of the pandemic on the informal economy. It’s a good read. What was of interest to me the purpose of this article was that for various reasons, the lockdown is at an end in informal sector. I quote the author when he writes 

“On the township side, there is a huge informal business sector outlined in some detail in my book Kasinomic Revolution. In brief, there are around 100,000 spazas, 50,000 kasi fast food outlets, 500,000 table top & roving hawkers, 50,000 hair salons, 100,000 muti sellers, not to mention taverns, caterers, taxi owners and drivers, builders, electricians, kasi bakeries, etc etc.  And many of these employ three to five staff, who also feel the impact. Not to mention more than R30 billion in spaza and backroom rental incomes to township homes.

Kasi businesses are saying they have no choice and are returning to work en masse. Members of my township network said that “township and informal businesses are at level 1 and suburbs and cities at level 4”. I have pictures to prove this from the survey: upholsterers out on the street, hair salons open, shisanyamas operating from backyards and selling through the front fence, car washes open and so on. On weekends, yard parties are becoming common. 

This sector doesn’t just want the lockdown to end, they have ended it, they have no choice.

You might ask what have the construction industry and the informal economy got in common. Simply this; no choice. The informal sector has in effect ended the lockdown because they had no choice. Because it is easier to regulate the construction industry and not the informal sector, the construction industry is required to continue to adhere to the lock down regulations because it too has no choice. What is clear is that government must provide the industry with the economic stimulus that it must have in order to avoid loss of jobs and the shrinking of the sector.

NB: Please note that this article is for informational purposes only and not for the purpose of providing legal advice. Should you require more information on this topic or any issue arising out of this please contact The Construction Platform on 011-234 2125 or enquiries@allardyce.co.za

[1] https://www.moneyweb.co.za/news/industry/covid-19-impact-on-construction-sector-will-be-catastrophic

[2] “Metelerkamp has outlined three scenarios for the industry based on Industry Insight’s belief that the sector will likely return to work on May 14, two weeks after the initial five-week lockdown period, and operate only at 50% capacity for the first few months at a minimum”

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