A home loan at one of SA’s biggest banks, a daughter in preschool, a dependent parent. That is at stake for one worker at ArcelorMittal’s long steel plant in Vereeniging, trudging from the plant to a taxi rank, 900m away along the bustling main road.
“We could arrive at work tomorrow and be told it’s our last day, and with an outstanding home loan at FNB, I’m uncertain how I’ll manage to pay it. I also don’t know if I’ll still have a job by the end of the year,” he said.
Dressed in ArcelorMittal’s navy embroidered overalls, with beads of sweat glistening on his face, the worker, who wished to remain anonymous for privacy and fear of reprisal, is one of thousands under the threat of retrenchments that spell as much an economic uncertainty as it does a potential upheaval of life as they know it.
The workers are caught in the crossfire of larger economic forces and corporate decisions, underlining one of President Cyril Ramaphosa’s biggest challenges: putting millions of people into jobs with faster economic growth and coherent industrial policies. For banks such as Capitec, the biggest clientele of which is a vast blue-collar workforce, it heightens the risk of defaults.
ArcelorMittal pulled the plug on its long-steel businesses last month, resulting in about 3,500 job losses and a potential cascade of small business closures affecting an estimated 80,000 other jobs. The decision, driven by lack of commercial logic in keeping the businesses running, will add more people to the ranks of the unemployed in a country in which one in 10 has no job.
Worse still, the 3,500 workers are dependent on ArcelorMittal, making the closure of both plants even more devastating. Their training is specialised to ArcelorMittal’s operations and this lack of versatile skills may force them to accept lower-paying jobs, less stable jobs, or worse, lead to prolonged unemployment.
“It’s going to affect everyone, including subcontractors, as the company winds down because it’s part of a long value chain. Even if employees find new jobs it will take time due to the high unemployment rate and the benefits won’t be the same, particularly in terms of medical aid and housing allowance. Amsa is one of the best in the engineering sector,” said Kabelo Ramokathali, regional secretary of National Union of Metalworkers of SA, in an interview with Business Day.
Ramokathali, who has the front row seat to these developments, describes how workers in Vanderbijlpark head to their jobs each day, gripped by the fear that jobs may disappear in the coming months.
Some workers from the Vereeniging plant in Vanderbijlpark have relocated and now live in nearby areas, such as Sebokeng, to be closer to their workplace. These areas are connected to the industrial hub of Vanderbijlpark by a series of power lines.
The once steady rhythm of Sebokeng township has been replaced by growing uncertainty as the area, long known for its metal, energy, and construction industries, faces an unsettling and unpredictable future.
Another flame-retardant-clad employee for subcontractor TMS International, which provides on-site industrial services, stands with his uniform worn thin and torn, with holes that reveal the rough conditions of working around steel machinery.
“I worked for another contractor last year, but due to downsizing, I was retrenched. I’ve only been able to find a job this year and many people are scared and uncertain about what’s coming,” he said.
Last month, ArcelorMittal told shareholders that its efforts alongside the government to avert the closure of mills had failed, leaving it with no option but to pull the plug this month. But the Sunday Times reported on Sunday, citing unnamed people, that the company was seeking a R3.1bn rescue package from the Industrial Development Corporation to save its long-steel plants.
Tebogo Makube, acting director-general of industrial development at the trade, industry & competition department, confirmed in the publications that talks to rescue the plants were ongoing, but did not divulge the details.
“We met even [last week] with the company. For the government, the issue is not about the commercial aspect, it is more about the public interest consideration — the jobs, the capacity in the country to manufacture the products, because if we don’t manufacture that will have other economic consequences in terms of the balance of payments and trade balance issues.”
Azar Jammine, chief economist at Econometrix, said that while the loss of 3,500 jobs could be harmful, the potential impact on an additional 80,000 jobs in Newcastle was particularly alarming, especially since the town’s economy heavily relies on steel production.
“You can’t overlook the impact of 80,000 job losses, especially on companies like Capitec and the banking sector that services clients that would be affected by the job losses from Amsa. While 3,500 might seem like a small number compared to their credit book worth millions, when it reaches 80,000, it becomes a much more significant issue,” Jammine said.
Capitec, an unsecured lender to blue-collar workers, is closely watching the situation.
“We proactively monitor major employers as part of our standard credit risk management procedures to stay ahead of potential financial impacts on our clients. Our priority is to provide support with tailored financial options to each client based on their individual profile,” said Wilhelm Koster, head of retail credit at Capitec Bank.
Koster said the bank was committed to easing financial stress via credit restructuring and retrenchment cover on life insurance policies, ensuring up to 24 months of instalment protection for affected clients.
.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.