LABOUR: Is There A Niehaus Among You?
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South Africans were stunned by the recent scandal surrounding ANC activist and former chief party spokesperson, Carl Niehaus, who admitted to forging signatures of government officials to secure a loan to cover his substantial debt, incurred in maintaining a ‘high flyer’ lifestyle. The scandal has had significant political ramifications for the ANC just months before the next election.
"While this incident is particularly shocking since it involves one of the country’s leading political figures, it also serves to highlight the fact that the impact of the current economic situation on South Africans is widespread on every economic level," says Martin Mc Laughlin, Director - Western Cape of Interface, an employee finance benefit schemes company which provides personal financial training, advice, support and services to the employees of some of the leading corporates in South Africa. "We have witnessed firsthand how the economic crisis has affected our clients’ employees - from entry level right up to senior management."
Over 2 million garnishee orders issued means that two in every six staff members are struggling to pay their accounts, while a national Income-to-Debt Ratio of 82% means that for every R100 employees earn, R82 is spent on debt repayments. This equates to an employee working three weeks of every month just to service their debt repayments. Personal bankruptcies are up 51% year-on-year, 7000 cars being repossessed each month, thousands of homes being put up for auction and more than 50% of tenants are not meeting their rent payments on time. It is expected that the number of South Africans undergoing debt counselling will increase five times in the next few months.
And, as the Niehaus scandal clearly shows, it is not uneducated or uninformed employees who are facing massive financial problems. Following 11 interest rate hikes since mid-2006 and inflation that has risen faster than most salaries, even those who have tried to manage their finances carefully have found that the cost of living has accelerated beyond their income. Individual employees on all levels, including top management, find themselves in serious financial dire straits, often with disbelief and a sense of shame and anxiety.
"We have seen a huge increase in debt related issues from employees who are literally about to lose everything they own and have worked so hard for," says Mc Laughlin. "The anxiety caused by financial stress has a massive impact on employee morale, on-the-job time utilisation, decision-making and health, and the result is that employers face reduced productivity, increased absenteeism and increased staff turnover, as well as the increased risk that a company’s reputation might be tainted by the actions of desperate employees engaging in fraudulent or criminal activities."
For these reasons, it is in a company’s interest to take a proactive approach to empower its employees to take control of their finances in these tough economic times. Indeed, many of the biggest corporates in the country, including Deloitte, Discovery, Shell, Dimension Data, Anglo Research, Astra Zeneca, Softline Pastel, Vodacom, and KPMG, have implemented employee financial assistance programmes.
"Progressive employers, whether large corporations or small businesses, can assist their employees through cost-effective employee financial assistance programmes such as Interface’s solution, encompassing an eight-week financial wellness programme covering important aspects such as financial planning, budgeting and debt management, to name just a few. The training is supported by on-site consultations offering financial solutions, support and advice and complemented by ongoing email and SMS support.
"Employees do not have to lose their valued possessions such as their homes and cars, and employers do not have to bear the negative consequences of a workforce preoccupied with personal financial problems – help is at hand. By assisting their employees in these tough economic times, companies can reap the benefits of loyal, motivated and focused employees who are in control of their personal finances, without intimate involvement in each employee’s personal affairs," concludes Mc Laughlin.
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