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31 Jul 2020

Financial Crises! Help Employees take charge of their Personal Finances

As an employer you might well be concerned about your employee’s ability to navigate their finances through the financial storm that Covid-19 had brought about. A valid concern as various formal studies in the period 1996-2018 indicate a correlation between personal financial problems and workplace behaviour and productivity.

Personal finance difficulty can affect all aspects of a person’s life, from relationships to hobbies and straight through to the workplace. A formal study by the Society of Human Resource Managers indicated a whopping 83% percent of HR managers confirming that personal financial problems had a large impact on employees ability to focus on work, including ability to perform; productivity; absenteeism and tardiness; employee morale; overall health; and relationships with other employees.

The COVID 19 pandemic pushed the world into a global economic recession. The Global Economic Growth forecasted on 3,3% in January are now predicted to come in somewhere between -0.9-2,2%.

For South Africa it does not look different. The instability of the SA Economy has been crippled to a point of downgrade to sub-investment grade at Ba1- (Moodies) and BB- (S&P, 30 April 2020) and our economic growth forecast by the Minister of Finance in Feb 2020 of 0,9% has now been adapted to a projected negative growth forecast of 7%.

The recent Ministerial Budget Review shows a massive plunge in the health of government finances, with a fiscal deficit of -14.6% of GDP and gross debt as % of GDP of 81.8 projected for this fiscal year, versus the previous projections of a fiscal deficit of -6.8% of GDP and debt at 65.6% of GDP for 2020/21.

This has a severe impact on business in SA. Keeping people employed will be a challenge to many employers. What we can expect to see in business in general is no or very low bonuses, low annual salary raises (if any!), in many instances pay cuts, job loss and retrenchments.

Stats SA released a Report called Business impact survey of the COVID-19 pandemic in South Africa released end of May 2020, reflecting on the impact of the Covid-19 on SA Businesses. Here are some key results:

The majority of responding businesses (89,6%) reported that business turnover was below the normal range.

  • 47,9% indicated temporary closure or paused trading activity.
  • 36,4% reported the laying-off of staff in the short term.
  • 45,6% expected their workforce size to decrease.
  • 50,4% of the workforce were unable to meet business demands.

It is true, that households will have to learn a strict discipline in managing Personal Finance during these strenuous times. Now’s the time to make choices that will help us not only to endure, but to strengthen our foundation for future success.

With uncertainty greeting us every day, it can feel near impossible to plan for the future. But now, more than ever, is the time to sharpen our focus and take disciplined, proactive steps planning and managing finances and health. Emerge from this crisis stronger than ever by making positive choices to act.

Helping workers overcome personal financial challenges helps both the employer and the employee. Since 80% of employee learning takes place while at work, it makes sense for employers to offer a financial wellness program to their team. It’s a win-win for both parties. The worker learns how to get rid of financial stress, and the company gains a productive, more focused team member.

Offering this solution may be easier than you think!
Peritum now offer an e-learning course aimed at employees, from operational to management level, who wish to obtain advice and guidelines on how to live effectively and disciplined with whatever means of income are available. The course provides an easy to follow, step-by-step practical approach to managing personal finance effectively and responsibly during times of economic crises. It provides guidance on practical questions such as ‘ how do I prioritize debt?’; ‘should I cancel my insurance?’; ‘what do I do if my expenses exceeds my income?’ or for pro-active planners: ‘should I keep my investments?’ and ‘what is a healthy budget allocation?’.

Interested? Speak to us now. marketing@peritumagri.com