Employer-initiated financial wellness measures are gaining traction in companies across the globe. They no longer just form part of the employer’s moral obligations to its employees, they’ve become a necessity in the current economic climate.
The reality is South Africans are drowning in debt. According to the National Credit Regulator, almost 40% of people who were credit-active in December 2017, had impaired credit records, which means they defaulted on three or more payments. And, this scary figure excludes informal debt, as well as money owed to schools and municipalities, so the picture is really far worse than this.
When you consider that around 86% of South Africans are indebted, you start to visualise the real scale of the problem in South Africa. People are struggling to keep up with the rising cost of living and end up using credit to cover their day-to-day expenses. Overdrafts, credit cards and store cards, which are primarily used to pay for groceries, clothing and entertainment, make up around 65% of this debt. In contrast to borrowing to buy a home or fund a new business, both of which have wealth generating potential.
This problem extends beyond the lower income sector. 50% of respondents to the Sanlam Benchmark Survey said they had missed payments, or paid less than the minimum required payment, on their debts. 60% of them earned over R300 000 per year.
Financial problems have a snowball effect…
“Financial stress affects your overall quality of life. If you’re constantly worrying about how you’re going to get to work, feed your family and put a roof over their heads, your ability to concentrate at work, and make sound decisions, will be compromised,” explains Joanne Miller, Managing Director of InvestmentWise, an independent INSETA Accredited financial wellness training consultancy.
Joanne points out that employees with financial problems end up using company-time to deal with their personal issues and are absent from work two-to-three-fold more often. And when they are at work, they are not fully present or engaged as their attention and time is spent dealing with their financial stresses and concerns.
“The ultimate result is reduced productivity in the workplace which is further crippling businesses in an already limping economy,” she adds.
“It’s such a vicious cycle because affected employees miss out on bonuses and incentives due to their impeded performance at work. This is one of the key messages we drive in our financial wellness training workshops. It’s a win-win for employees and companies alike,” says Joanne.
Some of the other key messages covered in InvestmentWise’s practical INSETA accredited corporate training workshops, include:
• Practical skills to take control of your personal finances and live according to a budget,
• Establishing a thorough understanding of the true cost of debt,
• 5 Steps to reducing debt and start saving for the things that really matter,
• Insight into the process of debt-counselling,
• And, understanding future potential obstacles to financial wellness and how to overcome them…
Businesses have a lot to gain by tuning in to their employees’ needs for training, and investing in their upliftment in the form of financial wellness.