News in South Africa 24th August:

1. Vehicle industry slashing jobs:

Automakers from General Motors to Toyota are on a mission to phase out gasoline vehicles.

Vehicle industry slashing jobs
Image taken by: Kateryna Babaieva

And while a future full of clean, electric cars will help reduce harmful emissions and stunt climate change, it may spell disaster for the thousands of auto workers whose jobs will be rendered obsolete by new technologies and manufacturing processes. 

As one might surmise, workers who assemble gasoline engines, transmissions, exhaust systems, and the myriad of other parts not needed in electric vehicles will likely bear the brunt of the transition. Moreover, electric motors and batteries are much simpler than traditional powertrains, allowing carmakers to maintain the same production output with fewer workers

Both Ford and Volkswagen have estimated that electric cars require 30% less labour than conventional vehicles. The consulting firm AlixPartners reckons that 40% less labour goes into an EV’s motors and battery pack than an engine and transmission. 

The impact this epic shift will have on automotive employment isn’t fully understood yet. But industry watchers warn that the sector will lose jobs, and some automakers have already begun to trim their headcounts. 

“The industry is going through a transition unlike anything we’ve ever seen,” Brett Smith, director of technology at the Center for Automotive Research, told Insider. “There’s a pretty strong chance that there will be fewer people building these cars, fewer people building the parts to these cars, and that will create challenges in some automotive communities.”

In a September study, the Economic Policy Institute, a liberal think tank, said that the US could shed 75,000 auto jobs by 2030 if electric cars rise to 50% of domestic sales. (Today, they account for around 5%.) European automotive suppliers estimate that rapid electrification could cost them 275,000 jobs by 2040, even accounting for new positions that arise making EV parts.

To be sure, a flurry of activity in battery and motor production will offset the erosion of traditional automotive jobs to some degree, but not without massive upheaval.

White-collar jobs won’t be immune either. People who design systems for combustion vehicles will either need to be retrained so they can apply their skills to the next generation of EVs or face losing their jobs, said Tammy Madsen, a business professor at Santa Clara University.

These cuts are already underway: Ford in August confirmed plans to lay off roughly 3,000 salaried and contract employees, the Wall Street Journal and others reported, as part of a larger restructuring. 

2. Unemployment rate increases:

Economists say the marginal decrease in the country’s unemployment rate is not anything to celebrate, mainly as the improvement is due to technicalities, not actual job creation.

The improvement came as fewer people were deemed ‘not economically active’ and returning to employment.

South Africa’s unemployment rate dropped further in the second quarter of 2022, to 33,9%. 648 000 jobs were gained from April to June, according to Stats SA’s Quarterly Labour Force Survey (QLFS). The increase brings the total number of employed people in the country to 15.6 million.

However, the number of unemployed people increased by 132 000 in Q2, bringing that figure to eight million.

Unemployment had hit a new record high of 35.3% in the fourth quarter of 2021.

The expanded unemployment rate, which includes discouraged work seekers who have stopped looking for work, fell from 45.5% to 44.1%.

3. Rental growth continues upward:

PayProp has published its latest rental index for the second quarter of 2022, showing South Africa’s rental growth is continuing its upwards trend since April last year.

Over the second quarter, the group tracked rental growth of 2.5%, 2.6% and 2.7% in April, May and June, respectively.

Johette Smuts, the head of data analytics at PayProp South Africa, said: “Inflation, unfortunately, also continued to rise in the most recent quarter with CPI breaching the Reserve Bank’s target upper limit of 6% during May and June.”

What people are paying

For the first time since 2017, all nine provinces recorded year-on-year (YoY) rental growth.

PayProp also noted that various factors, including the recovery from the Covid-19 pandemic, house prices, housing shortages, development, short-term rental listings and the overall economic performance of the country, could affect rental growth rates.

  • National: (+2.6%), Data shows that nationally rents increased by 2.6% in the second quarter of the year while the average cost of rent increased by R193, reaching R7,971 per month. According to PayProp, this shows a clear upward trend.
  • Eastern Cape: (+4.4%), Rental growth in the Eastern Cape outperformed the national average in all but one of the last ten financial quarters said PayProp. Rents in the area have increased to R6,451 from R6,365 the year before.
  • Free State: (+1.9%), According to PayProp, rental growth in the Free State has rebounded, but overall performance remains weak. Despite the increase over the second quarter, it is still the second lowest country in terms of average rent at R6,328.
  • Gauteng: (+0.3%), The country’s economic hub is seeing some recovery with the first increase since the start of 2021; the increase, however, is the lowest of all nine provinces. Average rent increased to R8,319 in the second quarter of this year.
  • KwaZulu-Natal: (+3.0%), PayProp reported that the coastal province has been outperforming the national average for five consecutive quarters since Q2 2021. Average rents have increased to R8,443 from R8,200 the year before.
  • Limpopo: (+4.7%) Limpopo continues its winning streak by outperforming the national average every quarter since Q2 2021. Despite this, PayProp said that by looking at the overall trend, Limpopo’s rental growth might be levelling off. Rents in the province now average at R7,350.
  • Mpumalanga: (+5.2%), PayProp has recorded steep upward growth over the last year for Mpumalanga with above 3% increases each quarter. The second highest rental increase has seen rents in the area average R7,870.
  • North West: (+3.9%), The North West province saw a substantially higher increase when compared to the national average. The province has the cheapest rent on average at R5,468 in Q2 2022.
  • Northern Cape: (+9.0%), Marking the most significant increase across all nine provinces, the Northern Cape now has an average rent of R8,626. According to PayProp, this is up R715 from the year before. The province is the second most expensive to rent a house or apartment in South Africa.
  • Western Cape: (+3.0%), According to PayProp, the Western Cape reported an above national average increase in rental growth. The province remains the most expensive province for tenants in the country, with the average rent being R9,462.

4. New social grant regulations:

New regulations require beneficiaries of the R350 Social Relief of Distress (SRD) grant not to “unreasonably refuse” to accept employment or educational opportunities.

In addition to this, beneficiaries would have to confirm every three months whether they are still in need of the R350 grant.

If they fail to do so, the grant won’t be paid.

On Tuesday, details of several new regulations to manage the payment of the R350 grant were shared with the Select Committee on Health and Social Services.

The Department of Public Works and Infrastructure’s Expanded Public Works Programme provides poverty and income relief through temporary work for the unemployed.

Another new requirement inserted into the regulations requires applicants to confirm whether they still need the grant every three months.

“This is to enable Sassa to pick up changes to the applicant/beneficiary status, which may be missed through only data checks. It will encourage more active engagement between the applicant/beneficiary and Sassa using digital platforms. It defaults the client to ‘not requiring the grant’ if they do not re-engage every three months,” he said.

Earlier this month, Zulu made a final proposal to raise the means test for the SRD grant to R624 a month.

This means that anyone with a monthly income of more than R624 a month – which is the food poverty line – will not qualify for the grant. The maximum income level to qualify was set at R350 from 1 April, which caused large numbers of applicants to be disqualified.

The department’s deputy director-general, Brenda Sibeko, said it is proposing the grant be continued while legislative matters are ironed out.

5. Tax Ombud needs independence:

The Office of the Tax Ombud (OTO) has been part of the South African tax landscape for nine years and has grown in size and stature to counter the growing powers of the tax authority.

Despite several legislative changes the office is still not structurally independent from the South African Revenue Service (Sars), which it is mandated to oversee. This is something that deeply bothers Tax Ombud Judge Bernard Ngoepe.

“I am not happy with the mandate as it is. We are not allowed to investigate a systemic problem without the minister’s permission. I do not think that is correct.”

The Tax Ombud reviews and addresses any taxpayer complaint regarding a service, procedural or administrative matter arising from Sars’s application of tax legislation.

“I think it must be left to the good judgement of the Tax Ombud to decide to initiate a particular investigation. But no, we first have to get the minister’s permission so that we can investigate. That is wrong.”

Ngoepe’s term ends on 30 September, but his office has asked the minister of finance to extend it by two years.

In an interview with reporters reflecting on the role of the Tax Ombud, Ngoepe says there seems to be little appetite for greater independence of his office.

“I suspect, at least on the part of some people, that there is this perception that the Tax Ombud will unduly protect taxpayers or obstruct Sars from collecting as much money as it could. That is a fallacy.”

He adds: “Our task is not to shield people from paying tax. It is imperative for them to pay their tax, but they must be treated fairly.”

The number of complaints received by the OTO increased from just over 400 in 2013/14 to close to 3 000 in 2020/21.

Ngoepe says it is an “awkward and nonsensical form of governance” for his office to query the activities of Sars when Sars is the hand that feeds the office.

All information sourced from articles posted by: Business Insider, 702, BusinessTech, News24, and Moneyweb.

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