Ramaphosa’s abrupt booze ban puts 1 million jobs at risk, says industry

By Xolisa Phillip, in Johannesburg
Posted on Wednesday, 15 July 2020 12:12

Virus Outbreak South Africa
A man walks in front of a closed alcohol shop in the township of Soweto outside of Johannesburg, South Africa, Monday, July 13, 2020,(AP Photo/Themba Hadebe)

President Cyril Ramaphosa’s ordering of the immediate halt to the sale, distribution and dispensing of alcohol could place as many as one million jobs in jeopardy, warns the industry.

Ramaphosa announced the decision Sunday night, at a time when South Africa’s COVID-19 infections have surged significantly. The country is now in the global top 10 with more than 280,000 confirmed coronavirus cases.

READ MORE Can South Africa stay one step ahead of the pandemic?

That has placed enormous pressure and strain on public and private healthcare resources.

Reversal of ban

The ban is a mitigation mechanism for the upsurge in alcohol-related trauma injuries and cases that spiked when the ban was lifted and sales resumed. The prohibition is expected to reduce the occurrence of these types of cases and free up resources for the fight against COVID-19 infections.

READ MORE Coronavirus: Distell boost from South Africa’s thirst for alcohol

However, the president’s decision – taken without consulting unions and industry stakeholders – has been met with shock and consternation.

The Food and Allied Workers Union (Fawu) and the South African Commercial, Catering and Allied Workers Union (Saccawu), whose members work in the alcohol value chain, said they are writing to trade, industry and competition minister Ebrahim Patel seeking an urgent audience with him about the matter.

In a joint statement, the National Liquor Traders Council, the South African Liquor Brandowners Association, the Beer Association of South Africa, Vinpro, the Liquor Traders Association of South Africa and manufacturers have expressed disappointment about the latest blanket ban on the sale of alcohol.

The industry and unions had a scheduled meeting with a cluster of ministries on 10 July.

However, this did not happen.

Instead, the president had an emergency meeting with his National Command Council to discuss the country’s escalating COVID-19 caseload, the unions’ officials told The Africa Report.

It was at the latter meeting – in the absence of industry stakeholders – where a resolution was reached to reintroduce an outright ban on the sale of liquor.

The industry found out Sunday night 12 July, when Ramaphosa addressed the nation.

Jobs on the line

“President … Ramaphosa’s decision … is deeply troubling. The industry shares … the government’s … concerns regarding the increase in COVID-19 infections and will continue to support efforts to curb this unprecedented health emergency,” the industry alcohol associations said in its statement.

  • “The liquor industry has a wide and deep value chain employing almost one million people across the country. The government’s decision has serious economic consequences, placing hundreds of thousands of livelihoods at risk.”
  • “The hardest hit will be the significant number of smaller retailers and taverners. The immediate enforcement of the ban will have other unintended consequences which include further job losses throughout the value chain,” warned the associations.

Fawu general secretary Mayoyo Mngomezulu and Saccawu official Michael Sikani know all too well about job losses.

“We have close to 20,000 employees in that industry. We are worried. We think the president should have at least consulted us,” Mngomezulu told The Africa Report on Monday.

President Ramaphosa’s announcement came as a shock, revealed Mngomezulu.

More than 660 employees at brewer SAB were retrenched earlier this year and last reported for duty on 31 May 2020.

Fawu was preparing to challenge that retrenchment process at the Commission for Conciliation, Mediation and Arbitration. But now feels as though the union’s case will be severely weakened by the latest development.

Business unusual

Furthermore, SAB has recently sent out a communiqué to staff proposing a 10% salary cut for 18 months. The company cited the prevailing operating challenges under COVID-19, according to Mngomezulu.

“The same hymn is being sung in other companies, like Distell, in terms of the hardship they are going to experience. You heard the industry … they talked about close to one million job losses in the value chain,” said Mngomezulu.

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“I am not going to be surprised if there will be [more] letters of section 189 notices being served to our employees,” he conceded, adding, “job shedding is going to come.”

Section 189 notices are issued in terms of the Labour Relations Act of South Africa, which enables companies to downsize their staff numbers for operational reasons.

Fawu represents workers at SAB, Distell, Heineken and United National Breweries.

Mngomezulu foresees an uphill battle ahead on various fronts. He is almost certain employers are going to respond harshly and that will be felt by workers.

Fawu is worried the outright ban on liquor sales will boost the illicit trade – something already being witnessed with tobacco.

When alcohol sales resumed, companies had a challenge meeting demand.

But now, the reintroduction of a ban means an abrupt halt to production. This will likely affect the fermentation of certain lines. In addition, the stock that was in tanks will have to be thrown away, said Mngomezulu.

Worse still, Fawu says the department of labour has failed to pay workers through the Unemployment Insurance Fund (UIF).

“More than one million workers have not received their UIF payments. Now he’s [President Ramaphosa] adding to the problem. The peak was expected because of winter,” Mngomezulu pointed out.

Dire times

As of Tuesday, Fawu will begin engaging with companies to see how best to survive under the circumstances. “It seems as though we are on our own – us and the companies.” Fawu also plans to write to minister Patel in order to try to understand what happened.

Saccawu will do the same, and raise the workers’ plight, Sikani said in an interview. The implications for workers in terms of salaries are dire, according to Sikani. “Remember, workers are recovering from the COVID-19 lockdown since 26 March to date. They were just about to start doing their normal work,” said Sikani. “Unfortunately, these circumstances … are pushing them back into a situation where they will not have [an] income.”

Saccawu represents workers in the point-of-sale aspect of the alcohol value chain. That would be at the retail and bottle store level.

Both Saccawu and Fawu plan to use a rescheduled meeting with the cluster of ministries, which is led by Patel on trading matters, to raise issues about the plight of workers.

More pain ahead

The irony of the timing is lost on Mngomezulu, who says July is salary negotiating season for workers. This process usually takes place through formal bargaining.

It tends to result in salary increases being implemented in September. This is an annual occurrence and an entrenched culture.

“But it appears there won’t be negotiations,” laments Mngomezulu.

Instead, Fawu is bracing for salary cuts even though it believes such a move will be akin to “cutting the whole bone.”

“Our employees are underpaid. They can’t survive and have nothing to save [under normal economic conditions]. Now, just imagine when you lose 10% of that [meagre pay],” concludes Mngomezulu.

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