Sugar tax: Job losses lower than industry’s projections

Sugar tax: Job losses lower than industry’s projectionsSugar drink. Credit: Taku/Flickr

There are concerns that the beverage industry could be using the sugar tax as a ‘smokescreen’ to justify already-planned job cuts.

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A spoonful of sugar. Credit: Gunilla G/flickr.

National Treasury’s highly anticipated new socio-economic study on the impact of the sugar tax suggests that job losses could be about 16 times lower than the numbers projected by the beverage industry.

The results of the study were presented at a briefing of the Standing Committee on Finance and the Portfolio Committee on Health in Parliament on Wednesday.

Reformulation needed to save jobs

It projects that job losses across the entire value chain could be as low as 1 475 but this is dependent on if the industry aggressively reformulates their products to contain roughly 35 percent less sugar.

Industry body, the Beverage Association of South Africa (BevSA) has publically committed to reformulate sugary drinks in the country to contain 15 percent less sugar by 2018. But the National Treasury suggests that, in the interests of saving jobs, a more aggressive formation strategy should be pursued.

At the end of May BevSA told Health-e News that they anticipate job losses in the region of 24 000.

But advocacy organisation Healthy Living Alliance’s Tracey Malawana said that industry could be using the tax as a “smokescreen” to justify already-planned job cuts. Healthy Living Alliance or Heala is an alliance of organisations advocating for the implementation of the sugary drinks tax.

Congress of South African Trade Union’s (Cosatu) Matthew Parks said that the entire sugar industry is in decline and 15 000 jobs have already been lost in the last few years.

Ball in the beverage industry’s court

On Wednesday Parks told members of parliament (MPs) that currently the local manufacturing industry sources 85 percent of its sugar from inside the country. He said, to protect jobs, 100 percent of sugar should be sourced locally and the tariff on imported sugar should be increased to facilitate this.

In addition, last month Coca Cola International’s new CEO, James Quincey announced that the company is planning to cut jobs globally due to outsourcing and technological advancements.

Health-e News approached BevSA to comment on these allegations and gave the Association two days to respond but they declined.

“This report affirms the tax as an instrument for reducing our consumption of sugary drinks and we are confident that our MPs will get this message,” said Malawana. “It also puts the ball firmly in the court of the beverage industry. Let them prove the sincerity of their concern about jobs by moving forward rapidly with reformulation and the production of lower sugar alternatives for the public.”

An edited version of this story was first published on Health24.com