Feeling the pinch?

2009-03-31 00:00

The South African economy has shrunk for the first time in a decade, Barack Obama says the United States economy is “very sick” and nearly two million Britons are out of work. The media is full of stories about the global recession, so what about the effect it is having locally? Evidence collected by The Witness seems to suggest that although many families are already feeling the pinch, the full impact of the crisis is still to come.

No families were willing to go on record, but several across the city have experienced drastic changes in lifestyle due to business failure, reduced working hours or salary cuts. Several others reported introducing cost-cutting measures like selling off assets, reducing entertainment and food budgets, cutting back on domestic help and trading in luxury motor vehicles for more economical models.

City debt counsellor Beatrice de Beer said the effects of the recession are clearly evident in her caseload, which has increased markedly as more people get into financial difficulty. She said the biggest problem among people who have money woes is absenteeism. A local manufacturing company, for example, has experienced a 62% increase. “Many people stay away from work the day after pay day to avoid their creditors, like money lenders, whom they know will come looking for them. This affects both weekly and monthly-paid employees. Among high-income earners, I have also seen an increase in the number of people being booked off work or even being hospitalised for stress.”

De Beer also said: “The number of people wanting to apply for a reduction in state school fees has doubled. We follow a set procedure on their behalf and fees are either reduced or written off completely, depending on the client’s financial position.” Another debt counsellor, Lee-Anne Compton of C F Training, said they have seen a definite increase in the number of people under administration who are defaulting on their payments, including school fees. “People skim off the school fees in order to pay other creditors — it’s often the last priority.”

The principal of a local primary school said the school’s management is noticing a definite impact on the payment of school fees as more parents struggle to meet their commitments. Both junior and senior schools reported an increase in the number of parents asking for more time to pay off school fees.

The midlands is known for its private schools, many of them historic and prestigious. Simon Lee, the communications manager of Isasa (Independent Schools Association of Southern Africa) believes that parents of pupils at these high-fee schools have been cushioned from the downturn’s impact so far, but this could change as South Africa feels the delayed effect of the global recession. “Schools in the United Kingdom and U.S. began to feel it some time ago. So far, only schools in the Eastern Cape have been visibly affected by the downturn in the local motor industry. However, all private schools had to think carefully about increasing fees and have had to limit this, which in turn affects their budgets,” he said.

The spokesman for a local state primary school said there has been a definite increase in the number of parents interested in moving their children from private schools and several have already done so. A senior school principal said they have not gained pupils from private schools, but they have experienced movement within the state school sector as pupils move to schools with lower fees. Several have left his school for this reason. He confirmed that applications for fee reductions and exemptions are an increasing daily occurrence, but said there is also an increased commitment among both parents and staff to fundraising.

The director of LifeLine, Debbie Harrison, said the organisation’s telephone and e-mail counselling services did not yet reveal any evidence of “downturn fallout” in family life. However, she said “this might be a good question [to ask] in a few months. We expect to have an increase in use of our free counselling services as people struggle to pay professional fees” [see box].

On the possible positive effects of the downturn, she said LifeLine has experienced an increase in interest in a parenting course it runs, “Raising happy children”. The course focuses on children’s entertainment that costs time rather than money as it deals with games and family interaction, helping parents to play and listen.

A spokesman for Famsa Pietermaritzburg (Family and Marriage Society) said the organisation’s workload has increased drastically in the last year as people affected by economic hardship ask for material assistance. On the recession’s effect on family relationships, she said: “Money matters have always been integral to many relationship difficulties which, although not necessarily caused by the recession, are certainly aggravated by the financial crunch.” She said the recession could have a detrimental and far-reaching impact on family life, including depression and anxiety in heads of households, stress and conflict between couples resulting in risky behaviour like substance abuse, gambling, infidelity and eventually marital breakdown. She encouraged families that feel anxious about the recession to address it positively through interactive discussions that include children.

One of the pastors at the New Covenant Fellowship (NCF) Church said the recession is affecting the majority of its multicultural membership, which is drawn from across the city and surrounding suburbs. Although he could not say how many members belong, approximately 2 000 people attend the church’s four Sunday services. “We have members who vary from rich to poor, and who work in a diverse range of sectors. Unemployment has definitely increased and many members who own their own businesses are struggling.” More members are also asking to see pastors and counsellors as people seek help to cope with the effects of the downturn. There has also been an increase in attendance, he said, as people previously unlikely to go to church search for comfort and confidence.

In its preaching, he said, the church is “preaching Jesus and making the Gospel relevant to the current context because God is not shaken by the economy. God is in control. We believe that in the recession, God is trying to get people’s attention. We see this as a ‘teachable moment’ as people who used to be hardened to faith and to God are falling on their knees and recognising their need for God.”

RECESSION SURVIVAL TIPS FOR FAMILIES

Here is advice for families coping with the economic downturn.

• Don’t make decisions in a panic.

• Getting drunk, yelling at your partner, blaming someone else or borrowing a lot of money will not help. Rather, get professional advice from an accredited advisor and consolidate if necessary.

• Denial and guilt solve nothing. If you are in a jam and feeling down, seek counselling. Once you have dealt with your own fears, your creative intelligence will move you forward.

• Get the whole family involved in reworking the family budget. If you are patient, children as young as 10 can understand the need to cut costs and compromise. They will willingly take on an extra task if they feel valued as an equally important member of the family and are part of the decision-making process.

• Draw up a strict budget and stick to it.

• As a family, explore creative ways to generate income.

• Instead of buying treats, give gifts of time and love.

• Instead of hiring labour, pay children to do chores.

• Saving money and saving the planet often run parallel: gardening, sewing, mending and repairing goods, using a bicycle, sharing a car, using less electricity, etc. are all good for saving money and the environment.

Sources: LifeLine and FAMSA Pietermaritzburg

TIPS FOR FRUGAL LIVING

A Chase Valley mother of three gives some tips on frugal living.

• Cut out entertainment that costs and do things that do not cost, such as walks, tennis, swimming, bike-riding and picnics.

• Buy cheaper brands, look out for advertised specials and buy in bulk when a product is significantly cheaper than normal.

• Stay away from shops as much as possible and avoid daily shopping by planning meals carefully and stocking up on staples like bread, milk and butter.

• Stop serving dessert and bake instead of buying cakes or biscuits.

• Use the car less by planning trips to cut down on petrol consumption.

• Grow your own vegetables.

• Switch the geyser on for certain times of the day only and set the thermostat at a lower maximum temperature; switch off lights when you leave a room and switch on outside lights only when you go to bed.

• Change to cheaper options for household insurance and telephone services e.g. Telkom offers a plan with a higher monthly rental but calls are free to landlines over weekends and after 7 pm.

• Consult a homeopath or a pharmacist instead of a doctor for common ailments.

HAS UNEMPLOYMENT INCREASED?

Although unable to provide statistics specific to this province, the Department of Labour said that it generally expects an increase in the number of people applying for unemployment assistance (UIF) at this time of year, because of the laying off of seasonal workers. However, in the last three months there has been a steady increase in applications for assistance from other sectors, particularly the mining and manufacturing sectors. The department usually pays out R250 million a month, but this figure has increased to R300 million. However, it was reluctant to attribute this R50-million increase to retrenchment caused by the global economic downturn.

Help lines

LifeLine and Rape Crisis Pietermaritzburg

• 033 342 4447 face-to-face counselling by appointment, Monday to Saturday

• 033 394 4444 24-hour telephone counselling

• 0861 322 322 LifeLine National Line

• E-mail counselling: chris@lifeonline.co.za

Famsa Pietermaritzburg

• Second floor, Gallwey House, Gallwey Lane

• Phone 033 342 4945

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