Educor, the owner of Damelin, City Varsity and Intec colleges, is planning to cut 752 people from its workforce, almost half its permanent staff.
This will swell the ranks of SA’s unemployed, with about 9,000 retrenchments already proposed in 2020 from a range of large companies, including Sibanye-Stillwater, Telkom, Massmart, Aspen and Glencore.
On Wednesday, AB InBev’s South African Breweries confirmed reports that it would also cut up to 500 workers.
An internal memo, seen by Business Day, dated February 7, sent to Educor’s 1,552 permanent employees said the higher education group was "materially affected" by the poor economy, which was leading to fewer enrolments and a growing number of students not paying fees.
Retrenchments are expected to commence at about March 7.
Student numbers fall
New student numbers were down one-fifth compared with 2019, which in turn had 20% fewer students than in 2018, the letter read.
"Despite increased austerity measures, expenses remain high due to inflationary and operational pressures," the group, which cut 126 positions in 2019, said in the memo.
The privately owned Educor, whose brands include Lyceum colleges and Central Technical College, did not respond to requests for comment.
The group’s sales budget is 48% lower than the past year, according to its communication to staff, while employee costs made up 35% of all expenses.
Educor, which vies with JSE-listed companies Curro Holdings and AdvTech, told staff it would meet them this week to discuss alternatives to layoffs, including proposals for severance packages. Staff have also been told to write motivational essays arguing why they should not be retrenched.
The layoffs come as consumers battle high personal debt levels – which stand at about 70% of disposable income – and job losses across almost every industry from banking to retail.
Figures released this week by Stats SA show the unemployment rate in the last three months of 2019 remained at a record high of 29.1%, although in previous years the Christmas season usually provided a temporary job boost.
Including all those who have given up looking for work,
the unemployment rate is 38.7% of the adult population, or 10.4-million jobless people.
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