(Photo: Christin Hume/Unsplash.)
“I can’t possibly drive my own vehicle to that work appointment which is so far away. Yes, I know I can claim this fuel expense back, but then I don’t get it until the end of the month. I simply can’t afford it.”
This is one of the situations that an employer had to defuse recently when an employee who felt the economic pressure of higher oil and food prices due to the ongoing conflict in the Middle East expressed his frustration.
It shows how the effects of geopolitical uncertainty reverberate into the workplace and directly affect workers’ daily lives.
Aadil Patel, a director of Cliffe, Dekker Hofmeyr (CDH), said on an online conversation about this issue that there is a lot of flexibility at employers’ disposal in relation to what they can do to relieve pressure on staff.
How can workers be accommodated?
People can work from home again like during the covid-19 pandemic and the lockdown period. They can take compulsory leave, use a compressed working week (fewer days in the office but the same hours) or employers can give temporary fuel allowances.
Patel said that all these possibilities must, however, be contained in a well-defined policy. For example, remote work must be carefully managed to avoid a similar situation when many employees were reluctant to return to the office post-covid-19.
Temporary help such as a fuel, food or transport allowance should also be carefully structured so that it does not become permanent increases to employees’ total cost package.
After the global financial crisis of 2008 and the covid-19 pandemic, employers realize that large-scale layoffs are not necessarily the solution. Patel explained that the costs of layoffs and severance packages are becoming more expensive and if the economic pressure is temporary in nature, rehiring workers can be very expensive if business operations recover quickly.
Consumers feel hoër oil price on the pocket
According to figures from the Automobile Association (AA), in March it cost around R970 to fill a car with a 48 liter petrol tank at around R20 per litre. Today, at more than R26 per litre, this visit to the petrol station will cost you almost R1 273. It is 31% more expensive.
Discovery Insure analyzed the transactions of more than 200,000 customers who are part of fuel rewards programs and the data shows that these motorists bought an average of 35% less fuel in April. The number of trips decreased by 10% and the distances people travel by 9%.
(Photo: OkayDeer)
Also read: Fuel shock: SA’ers already drive 35% less
Data from the Pietermaritzburg Economic Justice and Dignity Group shows that the average household food basket was 2.3% more expensive in April at R5 452.09, compared to March.
According to Patel, the pressure on employees is increasing as many people live further from their workplaces because housing closer to major business centers is simply too expensive.
He referred to an American investigation which shows that some workers commute up to 90 minutes daily just to get to work. This is something that many South Africans can identify with.
This puts increasing pressure on employers to come up with creative and supportive plans.
Oil price shock affects inflation
Annabel Bishop, Chief Economist of Investec, explained during the online discussion that the current conflict in the Middle East is mainly an oil price shock, rather than something similar to the global financial crisis in 2008.
There is no question of a systemic collapse of financial markets. People do feel a short, sharp impact on the oil supply side, but not a long-lasting, deep economic impact that results in recessions, she explained.
Although according to her, South Africa is not currently headed for a recession, the immediate impact is already being felt at the fuel pumps, with these higher prices putting pressure on inflation and household spending.
In this sense, she also does not foresee immediate interest rate increases. The Reserve Bank’s monetary policy committee takes the next interest rate decision on 28 May.
(Photo: Nathan Dumlao
/Unsplash.)
Money in your pocket on payday matters
Tanya Tosen, a compensation specialist from Tax Consulting South Africa, recently wrote that employees are becoming increasingly sensitive to even small changes in their net income and what they go home with at the end of the month.
She mentioned the example of workers who change jobs for R1 000 more per month in their pocket.
“This is no longer just an employee problem, but a business risk for companies that want to attract and retain rare talent. Employers can respond to this by building more flexibility into compensation packages and benefits that staff can adjust according to their needs,” she said.
‘Well-being is also important’
DebtBusters’ index on the stress experienced by consumers regarding their financial affairs shows that last year 70% of the approximately 27,000 respondents indicated they were under financial pressure. Although this is slightly lower than the previous year, 91% of these respondents indicated that it affects their family life, and 73% said that it has an effect on their work and health.
According to Patel, helping employees is not only about economic pressure, but also about the obligation employers have to look after employees’ well-being in the midst of challenging circumstances beyond their control.
