News Research

Construction forms part of Covid-fueled retrenchments – BeyondCOVID survey

Redflank director Lings Naidoo.
Lings Naidoo, director at Redflank and BeyondCOVID co-founder.

A new national survey on the impact of business during the Covid-19 pandemic highlights that over half (56%) of participants across all sectors are operating under their normal capacity. 76% has seen their revenues shrink and a quarter (23%) have shut down, temporarily or permanently. For just two in ten, business is as usual while only a fraction (2%) have grown in operations.

Five months since South Africa went into lockdown, the private sector has been far from smooth sailing. According to the findings of the new BeyondCOVID Business Survey conducted by specialist management consultancy Redflank, the survey conducted between the 7th of June and the 22nd of August shows that 76% of the over 1 800 participating companies have seen their revenues drop since March of this year.

The sectors most affected are accommodation and food services outlets (93%), construction (89%), arts, entertainment and recreation (87%), service providers such as hairdressers and beauty salons (86%), wholesale and retail (83%) and travel support services companies such as car hire ventures and travel agencies (81%).

56% of the survey’s participants are operating under reduced capacity and 23% have reported to have shut down. Lings Naidoo, Redflank director says that reassuringly, 83% of businesses that have closed expect to open again at some point: “Only 4% of all companies we received feedback from will remain closed. Most of these companies operate in the beauty, hospitality, food and agriculture sector”.

He notes that this research forms the backbone of the company’s BeyondCOVID Playbook. Recently launched, the eBook outlines tangible and workable strategies to help the private sector adapt and respond to the pandemic and how to mitigate its consequences.

When reviewing Covid-19 fueled retrenchments, accommodation and food services companies top the list. Naidoo explains that 68% of respondents in these sectors have had to let all, most or some of their employees go, followed by water, hair and beauty salons (62%), construction firms (61%) and entertainments, arts and recreation players (57%).

A key finding is that an employees’ value to their organisation no longer depends on working from an office: over half (51%) of these companies said they are dealing with the pandemic by having 20% or more of their employees working from home. This particularly concerns the financial and professional services industries, real estate and the media, information, communications, and technology sectors.

Interestingly, 44% of these companies say this could become a permanent set-up. It’s evident that the Covid-19 pandemic has accelerated the remote working trend, which is quickly evolving into a new way of life” Naidoo says, he adds that not all industries have that luxury, such as agriculture, construction, travel, and tourism.

Only 30% of respondents falling into these categories said they have more than 20% of their staff working from home. They also suffered most retrenchments, revenue losses, and cash flow declines.”

Moving beyond Covid-19, 36% of organisations are reworking their business strategies to overcome the implications of the pandemic. Others are working on enhancing their internal skills sets: “The assets organisations view as most critical to help recovery include enhanced customer services (64%), as well as improved financial (56%), marketing and sales (46%), people management (45%), and planning (44%),” says Naidoo.

An average of 20% of participants expect that the South African economy will take over a year to recover from the pandemic. Naidoo says that companies in the legal, accounting, finance and education sectors are most negative about the future with participants in mining, electricity, air-conditioning, water, and wastewater are the most optimistic.

The key findings snapshot:

  • 4% of businesses closed permanently.
  • 19% of businesses closed temporarily. Of these, 83% expect to reopen.
  • 20% of businesses are operating as usual.
  • 51% of businesses have 20% or more employees working from home. Financial services companies top this list at 84%.
  • 56% of companies are operating at below capacity.
  • 68% of accommodation and food services companies have had to retrench employees with 39% expecting further retrenchments.
  • 76% of businesses have seen their revenues drop. Accommodation and food services companies top this list at 93%.