Public health researchers have challenged the SA Canegrowers’ claim that the government’s introduction of a tax on sugary drinks triggered the loss of more than 16,000 jobs, saying their analysis of Stats SA’s regular labour force surveys found no evidence for this at all.
Instead, their research concluded the drop in employment recorded after the health promotion levy was introduced was associated with Covid-19.
SA introduced the health promotion levy in April 2018 in a bid to curb the consumption of sugar-sweetened beverages, which raise the risk of obesity and chronic diseases such as diabetes and high blood pressure. Implementation of the tax met fierce resistance from beverage producers, sugar cane growers and related players, which have continued to lobby against it.
The tax was initially set at 2.1c per gram of sugar per 100ml, with the first 4g tax-free. Finance minister Enoch Godongwana said in his February budget that it would be increased next year.
Last week, SA Canegrowers said the tax had suppressed the market for locally produced sugar and warned that next year’s planned increase in the health promotion levy would lead to further job losses.
In response, the Healthy Living Alliance released a study from the Medical Research Council/Wits Centre for Health Economics and Decision Science (Priceless SA) that analysed Stats SA’s quarterly labour force survey and found no association between job losses and the introduction of the health promotion levy.
“To say the health promotion levy is responsible for a decline in employment is grossly untrue,” said Priceless SA senior health economist Chengetai Dare, the study’s lead author. The research has been released online as a preprint and has not yet been peer-reviewed.
Their findings were consistent with research on the effect of sugar taxes on employment in other countries such as Peru, Mexico and Chile, said Dare.
“We looked at all the sectors that comprise the sugar industry — agriculture, manufacturing, transport, wholesale and retail. In all those subsectors we found no impact at all,” said Dare.
“We controlled for other variables, including Covid-19 and found it was Covid-19 that impact[ed] employment levels and not the health promotion levy alleged by the sugar industry.”
SA Canegrowers CEO Thomas Funke said the organisation stood by the figure of 16,000 job losses, which came from an independent study commissioned by the National Economic Development and Labour Council (Nedlac) released in November 2020.
The study considered employment trends in 2017-19 and found more than 9,700 jobs had been shed on sugar cane farms after the health promotion levy was implemented.
SA Canegrowers conducts annual surveys among its members and reached a similar conclusion, said Funke.
There had been a “step change” in employment on sugar cane farms following the implementation of the sugar tax, with the loss of about 10,000 jobs, said Funke. “It caused a massive drop-off in the prices paid to sugar farmers.” Farmers had been forced to export sugar at lower prices due to the fall in demand from local buyers, he said.
The Sugar Association estimated the tax led to a 250,000-tonne reduction in domestic sales volumes, which translated into a loss of R1.25bn, he said.
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