by Xinhua writers Zodidi Mhlana, Bai Ge
JOHANNESBURG, Sept. 3 (Xinhua) -- South Africa is facing mounting concerns over a looming jobs crisis, after major companies announced plans to shed over 7,000 workers in total, with thousands more indirect jobs at risk -- a move government and labor unions warn the country cannot afford.
Successive job cuts have drawn grave concern from Minister of Employment and Labor Nomakhosazana Meth, who warned of the challenges posed by ongoing retrenchments.
According to a statement released Tuesday by the department, the closure of South Africa's largest steel producer, ArcelorMittal, is set to result in "an estimated 3,500 job losses and a further 100,000 jobs downstream."
Meanwhile, mining giant Glencore has recently begun a retrenchment process at its ferrochrome and vanadium operations in South Africa, citing power cuts, rising electricity costs, and broader economic pressures.
"This is very concerning. The country cannot afford a job bloodbath. These retrenchments are putting immense pressure on families and local economies. Companies are citing various operational challenges, but the scale of the layoffs is alarming," said Matthew Parks, parliamentary coordinator at the Congress of South African Trade Unions (COSATU), a main labor federation of South Africa.
A similar trend has surfaced in the automotive sector, where Ford Motor's South African unit has announced job cuts and tyre manufacturer Goodyear is shutting down its factory as part of a "realignment" of production capacity to current and expected market demand.
"Although the industries differ, both face severe economic pressure. Rising costs, import competition, and operational inefficiencies are forcing companies to downsize, which is why we are seeing job cuts across multiple sectors," Parks told Xinhua in a phone interview.
Some mining companies have blamed soaring electricity costs. Parks noted that electricity tariffs had risen by about 450 percent, putting pressure on businesses, and several smelters had already been forced to close.
Parks noted that besides workers, the entire supply chain is feeling the pinch of retrenchments.
"The impact is significant. Direct job losses are only part of the problem. Indirect effects on suppliers, contractors, and local communities multiply the impact. Without urgent intervention on electricity costs and other structural challenges, more sectors could follow this trend," Parks added.
Independent analyst Sandile Swana told Xinhua that South Africa should focus on providing cheaper and more abundant electricity to support struggling sectors and promote industrialization. He added that higher electricity prices were undermining the country's efforts to build an industrial base capable of sustaining smelters.
Sectors such as smelting were initially supported with cheaper electricity to encourage growth, but many are now closing and cutting jobs because they cannot keep up with rising costs, said Swana.
He stressed that for any economy to advance to the next stage of industrialization, electricity must be affordable and abundant. ■