Financial pressure is by no means only the ‘poor’s’ problem

For many South African employees, the fear that debt grows faster than income or that an unexpected expense could derail everything does not remain at home. It follows them to work and affects their focus, productivity and well-being.

So warns the South African Rewards Association (Sara), which says the financial burden on employees is heavier than in years. Rising fuel prices, higher electricity costs and global tensions pushing up the cost of living are putting households under increasing pressure.

According to Lindiwe Sebesho, a member of Sara’s executive committee, employees experience financial pressure at various levels, despite certain positive aspects in the recent budget speech.

Many households are struggling because debt repayments are eating up a large part of their income, food prices continue to rise, interest rates on mortgages and car loans remain stubbornly high and utility bills are getting higher and higher. The situation is further aggravated by income uncertainty due to unemployment, slow salary increases and restructuring at companies.

However, financial pressure no longer only affects low-income households, says Sebesho. Bank data shows that many people – of all income groups – either need to use their overdraft facility by payday, or are effectively out of money. Even high income earners have to borrow money to support themselves and their families.

“Financial stress is not just a personal problem; it is a business risk. When employees are distracted by money worries, their focus, engagement and performance at work is affected. Organizations must realize that it is essential to support employees through this pressure in order to maintain productivity and staff retention,” she says.

Archive photo for illustration purposes only. (Photo: Unsplash)

Sara also warns that the pressure will increase further. South Africans were again hit with a fuel price increase in March and from 1 April higher fuel levies – and an expected enormous increase in the general price of fuel – will push up the cost of transport and goods further.

Eskom tariffs will also rise by almost 9%, while the rise in municipal electricity costs will follow in July. Food prices are also likely to trend higher, because they are linked to transport and production costs.

“For the employee who drives 40 km to work every day, these are not abstract realities; they are the difference between being able to go to work or not,” says Sebesho.

Financial stress also starts to show in the workplace.

Employees may take sick leave because they do not have money to get to work; they are disengaged during meetings while trying to decide which debit order should be deferred; or they produce poorer work due to sleepless nights over debt and expenses. Employers are also seeing more emoluments garnishment orders on salaries, repeated requests for salary advances, more absenteeism and higher staff turnover.

“This is the human cost of sustained financial pressure without support,” warns Sebesho.

Employers can help by paying fair wages, facilitating financial training, allowing access to already earned wages before payday, and offering counseling or even flexible work arrangements. This can help reduce absenteeism and prevent employees from using high-interest loans.

“Supporting employees with financial stress is a wise business decision. Staff turnover, lost productivity and administrative risks from uncontrolled debt collection carry a high cost.

“Organizations that act now will protect their profits and strengthen their reputation as an employer,” she says.