The price of petrol in South Africa is expected to approach R24 per litre in April, as global petroleum supply is affected by Russia’s invasion of Ukraine.
The average price of petrol around the world over the last year was R26.15 per litre, but this is no consolation for local workers whose buying power has been whittled away in a low-growth economy
According to Transaction Capital, which finances minibus taxi fleets around the country, taxi fares have increased by more than 9% per year since 2013. This outstrips growth in salaries over the same period by some distance.
Statistics gathered by earned wage access platform Paymenow – which facilitates payments of portions of salaries to workers ahead of payday – show that those workers who have requested payments have done so mainly to cover their transport costs.
Paymenow was created to prevent workers falling into the debt trap created by unsecured loans, says Deon Nobrega, Paymenow’s co-founder and CEO. “Taking on debt simply to cover monthly living costs is the first step to being trapped by the unreasonably high interest rates associated with loan sharks.
“Earned wage access as a concept is designed to prevent this by allowing workers to draw portions of their earnings throughout the payment cycle to meet everyday needs or deal with financial emergencies.”
In January this year, employees signed up with Paymenow requesting advances were trying to cover commuting costs to work 46% of the time. By comparison, only 23% of disbursed payments were used for food.
“This trend continued through February and March, where workers were spending 48% and 45% of advances on transport costs, respectively,” says Nobrega. “Historically, not being able to meet transport costs has been a key driver of employee absenteeism and churn in South Africa, where the majority of those in our economy who have a formal job are blue-collar workers and financially vulnerable.”