It’s national savings month, and we are awash with well-intentioned messages encouraging South Africans to save. But is the savings message realistic when many can’t meet their basic needs at the end of the month, writes Deon Nobrega.

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We’ve all seen the headlines lamenting rising inflation, petrol price increases, and the soaring cost of basic food items like cooking oil and bread. It’s the perfect storm facing employees struggling from one pay cheque to the next.

According to the South African Savings Institute (SASI), South Africa has one of the lowest household savings ratios in the world. In this economic climate, one can appreciate that many South Africans simply don’t have the ability to save, even if they wanted to.

Data from the Paymenow platform, which allows employees early access tp wages they’ve already earned, highlights the real pressure employees face just getting to work throughout the month. We’ve found that those applying are most often doing so to get money for transport.

A whopping 36.2% of those who apply for earned wage access through the Paymenow platform do so for transport. The second largest proportion – 19.8% – say they need access to their wages to buy food.

South Africans are really finding it hard to manage the escalating cost of living, with salaries not always keeping up with inflationary pressures. Employees are not accessing their earned wages to make extravagant purchases or to fund luxuries, they are doing so to afford the bare necessities and to get by until the next pay cheque lands.

Employees need to be assisted to regain their financial footing through responsible earned wage access, so they can make ends meet and eventually be in a better position to save. Without the option to access funds they have already earned, they risk falling into a vicious cycle of debt through unscrupulous loan sharks and high-interest payday loans.

Following the latest fuel price increase, headlines indicate that taxi associations are proposing fare adjustments of between 25% and 30%. Many commuters have taken to social media to say that most of their earnings already go to funding transport costs.

It would be an easy fix for employers to hand out increases to absorb the escalating cost of living, but the reality is that many businesses are also feeling the economic pinch, and it’s just not a viable option for many.

Employers can, however, empower their staff to better manage these hard times by offering the ability to improve their financial health while maintaining productivity. Where many South Africans are under crippling debt, financial literacy is crucial, as are alternatives to credit and loans, and flexibility and understanding from employers wherever possible.

We need to accept that financially stable employees are more productive employees. As a society, we need to help employees progress beyond a point of financial stress to one of financial resilience, where they are on a better footing, and saving becomes a real option.

Deon Nobrega is Paymenow CEO.

SOURCE:

OPINION | A job means nothing when you can’t afford to get to work | Fin24 (news24.com)