Consumer Wallet Update – Impact of more job losses

Following our forecast in April, we update our Consumer Wallet Outlook to take into account more pessimistic scenarios for the job market. We present scenarios for permanent job losses ranging from 750 000 to 2 million jobs, with 1.3 million temporary furloughs for six months.

Our revised Consumer Wallet forecast shows the total wage bill could contract by -4.0% y-y (with 750k job losses) to -11.7% y-y (with 2 million jobs lost). Temporary furloughs could result in R64bn lost wages, but the UIF TERS scheme and higher Social Grants provide some offset. Household funds available for retail and discretionary spend could contract by -3.8% y-y (with 750k job losses) to -11.0% y-y (at 2 million job losses). Even with the worst-case scenario though, households’ net surplus remains positive, which suggests that households may not have to rely on credit to cope through this difficult period.