Employers can help
We’ve all felt that a little pay rise wouldn’t go amiss. Most of us don’t do much about it, but every so often a handful of people decide to speak out against their, in their opinion, low pay.
I followed last week’s strike avidly. In a radio interview, one woman described that she needs an 8.5% pay increase because her husband lost his job. She wrongly believes that because one member of the family is now in a poor financial position, the employer of the other family members should somehow compensate and make up for that lack.
The problem that the average civil servant experience is a simpler economic one. There is not enough money. They are overextended on salary and a 6% increases will not relieve the problem and they must push for an 8.5% increase. They strike until their demands are met, causing harm to the economy.
The civil servants are a peculiar group and their demands have more direct impact on the macro economy. They are paid from tax income; so now taxes are raised; then it becomes more expensive to run your business because of the higher tax burden and prices must increase. Your staff are affected by the higher prices of all products: and, they too demand a pay increase.
But fear not! Some employers are waking up. An intermediary for a large employer with 100 000 staff consulted with me last week on how to best do financial literacy and budget training for the employees of this client of theirs. They had identified that the largest drop in productivity in the workplace was due to financial pressures. Staff would sneak from the office to go and pay bills to prevent property repossession. They realised, or may have been advised by a productivity consultant, that unless they do something to alleviate the pressure of financial problems they will not succeed in increasing productivity.
What we saw is an exacerbation of this problem when people will insist on an 8.5% increase when inflation dictates only 6%.
All employers must take a hard look at their own staff position and realise how the positive results that flow out of financial training can help them to: can offer a lower % increase and have it accepted; not have the threat and accompanying turmoil of strikes when demands cannot be met; and, when less demands for personal loans and salary advances are made
All because their staffs are better able to manage and control their salaries and contain expenses. A good training course will get each delegate to work on his own budget, finding ways to make it balance, but mostly able to make expenses to fit the income.
It is more that a staff investment and becomes a long term economic decision when very simple mathematics are applied.
The extra 2.5% of a R60 000 per annum salary will cost the company an extra R1 500 per month this year and each year thereafter. A financial literacy course may cost the equivalent of one third this amount (or less), once off only. A repeat for some non-complying staff (after assessment) will still leave the employer with R500 in the pocket for that year and R1 500 each for every year thereafter.
Apart from being a smart employer you will also be more price competitive when you can have smaller increases accepted by staff, which will create greater profit; and, you will be doing the entire economy a huge favour in the long run. The higher salary increases will eventually run into higher inflation results; then increased interest to contain CPI and so on.
Strikes have a knock-on effect; when strikes in one sector may cause revolt in another. By not investing in financial literacy training for employees, we are doing them and our businesses, and in turn our economy a disservice.
Just like charity, good economy starts at home. Get the basics right and the rest will take care of themselves.
Deon Hattingh is a certified financial planner and trainer and coach on financial literacy, budget, debt management and wealth creation training and consulting…etc.….