subscribe: Daily Newsletter

 

Employers should encourage financial literacy

1 comment

South Africa has one of the worst savings rates in the world, according to statistics released by the South African Reserve Bank, which found that the country’s savings rate is only 15,4% of GDP – far below the desired rate of 25%.
As July marks South Africa’s National Savings Month, ManpowerGroup South Africa’s managing director, Lyndy van den Barselaar, says businesses should be looking at how they can assist their employees with becoming financially literate.
“South African employers should definitely integrate financial education and training into their employee relations strategies. This becomes even more prudent as the country has just moved into a recession,” she says.
Statistics compiled by debt management firm, Debt Rescue (2016) show that South African consumers owe the bulk of their monthly salaries to creditors. Only about 23% of South Africans have funds available at the end of the month, while the other 77% are left flat broke with no hope of saving any money.
More than 11-million of South Africa’s credit active consumers are described as over-indebted.
Individuals with a low degree of financial literacy tend to borrow more, accumulate less wealth, and pay more in fees related to financial products. “Dealing with financial stress and worries about debt has been known to cause depression, anxiety and even lead to suicide in extreme cases. Employers should be taking this seriously – as employees are the most important assets to any business,” says van den Barselaar.
She encourages businesses to build financial literacy education and training of some sort into their employee relations strategies. “Becoming financially literate means understanding the basics around how to manage your income and expenses, handle debt responsibly, save and invest, and prepare for the unexpected. The more informed and prepared employees are, the more financially fit they will become.
“This is increasingly important in today’s turbulent economic times, where future financial freedom is not guaranteed – even for those who currently invest in pension or retirement funds,” she says.
Some of the methods by which organisations can provide education and training on financial literacy include voluntary classes, newsletters, emails, workbooks, online resources, courses, or even consultations by third parties – such as an organisation or individual who operates within the financial services space.
“Not only will this bode well for the employer as their workforce will be financially literate and on the path to financial security and freedom; it will also bode well for each of the employees – and therefore for the economy at large,” explains van den Barselaar.
“Employees who feel valued and cared for are more likely to be loyal to their organisations, more committed to their jobs and experience more job satisfaction. Additionally, if they are free of financial stress and anxiety, they will be able to perform at their best.”
By taking the lead in helping their employees learn to make better financial decisions, employers are playing a bigger role in building awareness around financial wellness, retirement, savings and investment planning. With a large number of young people entering the workplace, the South African youth could form good saving and spending habits early in their lives, which correlates to positive behaviour in young adulthood and beyond.
“It is essential for South African employers to contribute to the creation of a financially literate workforce, not only during Savings month but throughout the year,” concludes van den Barselaar.

  • I couldn’t agree more. Well said. It’s high time!