Business In The News South Africa

Industry to blame sugar tax for global job cuts?

CAPE TOWN, May 30 – Parliamentary public hearings on the Rates and Monetary Bill which includes the proposed sugary drinks tax are set to resume on Wednesday, with government and union leaders continuing to raise concerns that industry might blame planned job cuts on the tax.

“The entire sugar industry is in decline and we’ve lost 15,000 jobs in the last few years,” said the Congress of South African Trade Union’s (Cosatu) Matthew Parks.

Parks said that while Cosatu was worried about any job losses resulting from a tax, there was also a “huge danger” that industry may use the tax to their advantage.

“It’s a global crisis and a real minefield. We want the government and business to work together with us to find creative solutions to the job crisis,” he said.

Coca Cola International’s new CEO, James Quincey, announced earlier this month that the company was planning to cut around 10,000 jobs globally due to outsourcing and technological advancements.

Treasury Deputy Director General Ismail Momoniat, said on Tuesday: “We don’t want industry to use the sugar sweetened beverage tax as rationale to fire staff.”

The Beverage Association of South Africa (BevSA) has claimed that up to 70,000 jobs are in danger. But Momoniat said these claims amounted to “scare tactics”.

Previously, Treasury had estimated that approximately 5,000 jobs would be at risk – but this was before the tax was reduced from 20 to around 11 percent on a can of Coke earlier this
year.

BevSA’s estimates were also published before the tax was revised but they still claim that 4,000 to 6,000 informal outlets will be closed as a result of the tax.

According to BevSA general manager, Tshepo Marumule, these outlets make 17 percent of their revenue from the sale of sugary drinks.

“The total job losses across the industry and value chain will number around 24,000 jobs in our view,” he said.

But Momoniat argued that the “impact [on jobs] will not be very large”. His department has conducted a socio-economic modelling study on the impact of the tax which was currently being finalised.

“But there is a lot of misunderstanding around these modelling studies. They present scenarios based on assumptions and shouldn’t be taken as fact,” he said.

Former Tourism Minister Derek Hanekom, now a member of the parliamentary Standing Committee on Finance, said that one solution would be to increase the amount of sugar the country exports.

He said that the industry’s job loss claims were “exaggerated” and there were many ways to reduce the impact, particularly on small black farmers in Mpumalanga and KwaZulu-Natal – about whom unions have raised concerns.

“Many farmers will be able to switch crops and, in environments where that is not possible, we should try facilitate more exportation,” he said.

Cosatu’s Parks agreed that higher exports should be encouraged and urged government to ensure that these farmers be given access to international markets. “We also need the government’s assistance to reduce sugar imports so that the local demand will be higher.

Last month, it was reported that job cuts were made as a result of a sugar tax in the United States city of Philadelphia. But the city’s Mayoral office claimed industry was using the tax
as a scapegoat.

Professor Karen Hofman, from the University of the Witwatersrand’s School of Public Health, said that the sugar industry’s claims amounted to “fake news”.

“Worldwide, the beverage industry’s plan is to cut jobs for all sorts of reasons including streamlining their processes. That is why they are making these exaggerated claims now, ahead of time. They will blame local cuts on the tax but, in reality, it is a business decision based on profits that has already been made.”

Momoniat urged businesses to follow proper labour practices in the future and that using the tax as a scapegoat was “one thing to look out for”.

BevSA said the industry had committed to reducing the sugar content in their products by 15 percent by 2018 and planned to extend lower sugar and sugar-free products.

Said Momoniat: “We welcome the industry making drinks less sugary. But the question is: is it enough?”

ANA-Health-e News

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