More than half of South African consumers (55%) say their household income remained negatively impacted by the Covid-19 pandemic towards the end of 2021.

According to research conducted by TransUnion in November, this number was the lowest in the year, down from 61% in August and 62% in March – but unemployment levels remain a major barrier to financial freedom.

The main reasons household incomes decreased were a result of job loss, reduced salary and work hours. One in three (34%) surveyed consumers said someone in their household had lost their jobs, while a similar number (32%) said someone in their household had their salary reduced.

In all, 28% had work hours cut in the previous month, at a time when South Africa recorded its highest unemployment rate of 34,9%.

Lower-income consumers (households earning less than R50 000 per annum) were hardest hit, with nearly four in 10 (38%) indicating someone in their household lost their job in October 2021.

TransUnion’s ongoing Consumer Pulse study showed that of consumers who said their household income is currently impacted, 85% remained ‘highly concerned’ about their ability to pay their bills and loans.

Among those with these bills and loans, unsecured credit remains their top worry, with the main items consumers cannot pay being personal loans (29%), mashonisa (informal and/or unregistered credit providers) loans (28%), private student loans (24%), and retail and clothing store accounts (21%).

“While we’re seeing a slight improvement in the number of people financially negatively impacted by Covid-19, the study highlights the fact that many South Africans remain under pressure,” says Weihan Sun, director of financial services research and consulting at TransUnion Africa.

“November brought with it changed circumstances following months of lockdown, including municipal elections, increased freedom of movement, as well as increased load shedding. For many consumers, the economic recovery is slow and arduous and will undoubtedly have many more bumps along the way.”

Only 5% of consumers said their household income had fully recovered after being impacted by the pandemic. And, while 58% of consumers were hopeful their household income would recover, 42% were less optimistic.

An underlying fear of credit

The study showed a lingering wariness of credit. While eight in 10 (79%) households considered access to credit ‘important or moderately important’, only a third (34%) believed they currently had sufficient access to credit.

Nearly half (47%) of consumers whose household income was impacted during the pandemic said they had considered applying for credit, but ultimately decided against doing so.

The major reasons for this were fear of being declined due to the current status of their income/employment (35%) and the cost of new credit being too high (34%).

Targets for digital fraud

Of consumers who were aware of a digital fraud attempt targeted at them, four in 10 (40%) said they came from third-party seller scams on legitimate online retail websites, and one in four (26%) said they had been targeted through an unemployment scam.

Consumers impacted financially by the pandemic saw higher occurrences of fraud, with 42% citing third-party seller scams and 30% an unemployment scam.

Sun believes it is ‘critical’ that consumers should keep tabs on their credit reports, both to stay on top of their financial health and to guard against fraud.