Hi All
I have been spending the week doing a course and becoming familiar with the National Credit Act. It struck me again, as it has in the past, the effect it can have on a company when there is a high level of financial strain among its workforce. There are significant risks relating to fraud, stock shrinkage, resignations as employees leave to cash in their pensions. There can be higher absenteeism and, of course, lower productivity due to stressed and unhappy employees.
What is a responsible employer to do? Well a quick way to assess the extent of the problem is to see to what extent the salaries of employees are subject to emolument attachment or garnishee orders. Low income employees are likely to have been significantly effected by increasing costs of living and the anticipated increases to electricity prices with their knock on inflationary effect will continue to cause employees stress. One solution would be around consumer education. Low earning employees should be availed the opportunity to attend personal financial management courses which give them a good understanding of credit and debt as well as the content of their payslip and their salary deductions. They should be taught the nuts and bolts of credit transactions and their consumer rights as well as the various saving options and how they work.
Debt counselling is a new profession, which has come into being under the National Credit Act and is gaining acceptance and momentum. It may be prudent that companies develop a relationship with a debt counsellor to which it can refer employees, or even have one set up shop in house if there is sufficient need to justify such a step.
I anticipate that over the next couple of years, employee responsibility with regard to providing (non financial) support to over indebted employees is going to become a significant area of social responsibility and a great opportunity for for the social bottom line as the sustainability risks around over-indebted employees manifests.
It will be interesting to see how this plays out.
Until next time
Kind regards
Paul Ellis-Smith
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