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MISHANDLING OF PERSONAL FINANCES

A major problem, or an opportunity for employers?

It’s that time of the year again when employees expect bonuses and some salary increases. Unfortunately, the economy being in the state that it is, some employees will be lucky to keep their jobs let alone get a bonus or an increase.

Whether the salary is R4000 or R30 000 per month, unfortunately, human nature being what it is, people are never satisfied.  The more people earn, the more they want. As we have seen in the metal, motor and petroleum industries, paying top rates is not a guarantee against wage disputes. There will always be pressure on even the best payers to increase their wages.

One issue which, in my opinion, is a major contributor to radical wage demands and conflict at the workplace is employee debt. Employers should not only ask whether their wages are competitive and conducive to good labour relations but also whether their employees are using the wages that they earn effectively.

Some employers might argue that what an employee does with his earnings is his own affair. That might well be true, but we still have an abnormal situation in South Africa. Far too many employees are ‘up to their necks’ in debt. They do not understand how the financial system works and they have no idea of the hidden costs involved in purchasing items on hire purchase. They also do not understand the implications of ignoring letters of demand. This has several serious implications for the employer.

First of all, the employee who has financial problems is likely to neglect his job.

This could result in poor performance due to the employee not concentrating on what he is doing. Some employees who are in debt, unbeknown to their employers take a second job in order to earn extra income. As a result, they do not get the necessary rest. This in turn can result in accidents and stress induced ill-health.

It can also result in absenteeism when the employee takes time off to work overtime at the second job or to avoid debt collectors. For example, an HR Officer employed by a national company was sent for a medical evaluation as a result of him taking an excessive amount of sick leave. The medical revealed that he was fit for work. When it was pointed out to him that most of his absences (all covered by a medical certificate) had occurred at month end, he confessed that he had had not really been ill.

He had had borrowed money from a loan shark but had been unable to repay his debt. After the loan shark had threatened him with serious injury, he had decided to absent himself at month end when he knew the loan shark’s ‘debt collectors’ would be looking for him! Finding a doctor to book him off ill had been easy!!

Personal debt can also result in dishonesty if the employee decides to steal from the employer or from the employer’s suppliers or customers. Employees who are in debt can be tempted to steal and if they steal just once, they are likely to steal again. If there is already a theft ring in the workplace, the employee who is in debt is more likely to be influenced to join the ring.

Getting back to wage negotiations, Wynand Pienaar and Manie Spoelstra in their book NEGOTIATION: Theories, Strategies & Skills talk about the ‘Risky Shift Syndrome’. They argue that if proposals are couched in negative terms, people are more likely to take risks and to act irresponsibly.

For example if people are given the choice between (a) ‘a sure loss of R3000’ or (b) ‘an 80% chance of losing R4000 with a 20 % chance of losing nothing’, most will chose (b).

If it is turned the other way around –  (a) ‘a sure gain of R3000’ or (b) ‘an 80% chance of gainingR4000 and a 20% chance of gaining nothing’, most will choose (a).

Research has shown that people prefer certainty. They would rather choose a safe option, but if they perceive that they are going to lose they are prepared to take bigger risks – ‘in for a penny, in for a pound’ as the English idiom goes.

If an influential group of employees are caught in a debt trap, they most likely to make radical demands and to strike as they have little to lose.

A shop steward once said to me “Black people cannot live without HP” (hire purchase). Unfortunately too many people (of all races and income levels) think like him. They live above their income, they don’t plan or budget and worst of all, they choose the wrong financiers and methods of raising finance.

Employers can make a positive contribution to our society and to the well-being of their employees by educating them in how to manage their personal finances. A number of service providers offer these courses which, if they are accredited, can be claimed against SDF levies.

Employees should also be cautioned about where they borrow money. Some loan companies like Private Sector Finance (Pty) Limited are legitimate and even offer training courses in financial planning for employees. A lot however, including big so-called reputable retail companies are not, and there are all the ‘sharks’ around the peripheries waiting to ‘gobble up’ the innocents.

Next wage negotiation, put financial training on the bargaining table. Your employees might well find it of more practical beneficial in the long term than an extra few rand in their wage packets!

BRUNO BRUNIQUEL

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