The Covid-19 pandemic is creating major economic and financial distress for consumers across the globe, and many jobs in the South African economy are already being impacted or at risk due to drastic demand shifts.
TransUnion, a consumer credit reporting agency conducted research to better understand consumers’ perceptions and expectations for how this rapidly evolving situation is affecting their financial situation and subsequent ability to pay bills.
TransUnion conducted an online survey of 1 100 adults in South Africa, on 1-3 November.
Despite the relaxing of lockdown restrictions, 79% of South Africans continue to be financially impacted by Covid-19.
This is up two percentage points from October, but lower than the highest level (84%) experienced in June.
Only 11% of consumers indicated that their household finances are going as planned through 2020, while 65% say their finances are worse than planned.
Concern among consumers about their ability to pay bills and loans remains high at 85%, with 29% expecting to run into a shortfall within one month (+3 percentage points).
- How much is your budget shortfall?
On average, R7424 is the amount consumers, who were impacted, expect they will be short when paying bills or loans.
Affected consumers expect they will not be able to pay their bills or loans in eight weeks.
Worryingly, South Africans are still cashing out investments and retirement savings to maintain cash flow through the crisis, with 42% of respondents indicating this is how they will pay current bills and loans.
However, mense do remain positive about the future. When asked about their expectations going forward, 69% of impacted consumers indicate they are optimistic, 14% neither optimistic nor pessimistic, and 17% pessimistic about the future.
- What has changed in your household budget during the Covid-19 pandemic?
TransUnion’s data shows that most South Africans have cut back on discretionary spending, with the highest proportion (43%) cancelling existing memberships or subscriptions to save costs.
Reducing retirement contributions, severance package payouts and additional use of credit are some of the other popular ways South Africans are trying to make up for the shortfall.
The pandemic has created additional complexity for employer considerations during the festive season, particularly at the cusp of what seems to be the dreaded “second wave”, says law firm Cliffe Dekker Hofmeyr.
The firm said that many employees have exhausted their annual leave due to Covid-19-related company closures or in instances where their sick leave was used up.
This also raises questions as to whether employees are entitled to take unpaid leave for holiday purposes where their annual leave is exhausted.
Below, Cliffe Dekker Hofmeyr outlines five of the key issues that workers and employers should know about over the December leave period:
- Can employees be forced to take their annual leave over December?
An employer is entitled to stipulate that annual leave must be taken to coincide with company closures over the December period.
Where employees have exhausted their annual leave during the course of the year, the December closure or “shutdown” period may be treated as unpaid leave.
- Can an employer cancel the traditional December leave “shutdown” to make up for lost days during the national lockdown?
This is dependant on company policy and any contractual terms to this effect.
“The prospect of doing so is possible but may be subject to agreement. Also, employers should have regard to any agreements put in place earlier in 2020 when the lockdown was first implemented in respect of the December “shutdown”.
- Is an employer obliged to agree to cancel an employee’s annual leave on the basis that their pre-booked holiday has been cancelled due to Covid-19?
“Unless specifically stated in terms of a contract of employment, HR policy or a collective agreement, an employer is not obliged to cancel an employee’s annual leave owing to the cancellation of their pre-booked holiday, whether related to Covid-19 or otherwise.”
- Is an employee entitled to unpaid leave for holiday purposes where they have exhausted their annual leave due to Covid-19 and national lockdowns?
There are no provisions contained in the Basic Conditions of Employment Act (BCEA) which entitle an employee to unpaid leave, Cliffe Dekker Hofmeyr said.
Unpaid leave is only referred to in the BCEA with reference to what an employer is entitled to do when an employee’s sick leave or annual leave has been exhausted.
Unpaid leave is generally a measure of last resort and is only to be used in exceptional circumstances.
An employee is not entitled to demand to be placed on unpaid leave during the holiday season, albeit that the employee may have exhausted their annual leave owing to reasons related to Covid-19, said Cliffe Dekker Hofmeyr said.
“However, having regard to the difficulties presented to all employees in 2020, it is advisable that where an employee wishes to take unpaid leave that an employer seriously consider this especially as 2021 is uncertain. A period of rest is important.”
We have over the year discussed the issue of mental health. There were novel approaches to the utilisation of leave designed in 2020, such as a “leave banks” (which were shared by employees by agreement).
“Employers, employees and unions should think out the box to meet operational requirements to ensure that the workforce which returns in 2021 is able to meet the challenges of the continued pandemic and difficult global economy.”
- How does an employer manage potential abuse of sick leave over the holiday season?
Employers must ensure that sick leave is closely monitored and where applicable, that employees produce the requisite medical certificates from registered medical practitioners, said Cliffe Dekker Hofmeyr.
“Employers may also wish to send out communication to employees ahead of the holiday season reminding employees that abuse of sick leave is a disciplinary offence and will be dealt with in terms of the employers’ disciplinary code and procedure.
“The production of fraudulent medical certificates is also a criminal offence.
“There is authority for the prosecution of employees who have relied upon fraudulent medical certificates.”
*Moeshfieka Botha is Head of Research and Consumer Education at National Debt Advisors.
For more debt and personal finance information visit www.nationaldebtadvisors.co.za