New evidence provides a detailed picture of the extraordinary economic fallout from the Covid-19 pandemic. All regions lost about a fifth of their jobs between February-April, although the cities began to show signs of recovery with the easing of the lockdown to level 3. Half of all adults in rural areas were unemployed by June, compared with a third in the metros. So the crisis has amplified pre-existing disparities between cities and rural areas.
Prof Ivan Turok, National Research Foundation research professor at the University of the Free State (UFS) and distinguished research fellow at the Human Sciences Research Council (HSRC), and Justin Visagie, a research specialist with the HSRC, analysed the impact of the crisis on different locations in a research report (Visagie & Turok 2020).
The main conclusion is that government responses need to be targeted more carefully to the distinctive challenges and opportunities of different places. A uniform, nationwide approach that treats places equally will not narrow (or even maintain) the gaps between them, just as the blanket lockdown reflex had adverse unintended consequences for jobs and livelihoods.
According to the authors, the crisis has also enlarged the chasm between suburbs, townships and informal settlements within cities. More than a third of all shack dwellers (36%) lost their jobs between February and April, compared with a quarter (24%) in the townships and one in seven (14%) in the suburbs. These effects are unprecedented.
Government grants have helped to ameliorate hardship in poor communities, but the premature withdrawal of temporary relief schemes would be a serious setback for people who have come to rely on these resources following the collapse of jobs, such as unemployed men.
In February 2020, the proportion of adults in paid employment in the metros was 57%. In smaller cities and towns, it was 46% and in rural areas 42%. This was a big gap, reflecting the relatively fragile local economies outside the large cities.
Similar differences existed within urban areas. The proportion of adults living in the suburbs who were in paid employment was 58%. In the townships, it was 51% and in peri-urban areas, it was 45%.
These employment disparities were partly offset by cash transfers to alleviate poverty among children and pensioners. Social grants were the main source of income for more than half of rural households and were also important in townships and informal settlements, although not to the same extent as in rural areas.
Despite the social grants, households in rural areas were still far more likely to run out of money to buy food than in the cities.
How did the lockdown affect jobs?
The hard lockdown haemorrhaged jobs and incomes everywhere. However, the effects were worse in some places than in others. Shack dwellers were particularly vulnerable to the level 5 lockdown and restrictions on the informal enterprise. This magnified pre-existing divides between suburbs, townships and informal settlements within cities.
There appears to have been a slight recovery in the suburbs between April-June, mostly as a result of furloughed workers being brought back onto the payroll. Few new jobs were created. Other areas showed fewer signs of bouncing back.
Overall, the economic crisis has hit poor urban communities much harder than the suburbs, resulting in a rate of unemployment in June of 42-43% in townships and informal settlements compared with 24% in the suburbs. The collapse poses a massive challenge for recovery and requires the government to mobilise resources from the whole of society.