KZN tackles payday blues

2012-07-04 00:00

HOW does a government employee earning a decent wage end up with only R1,36 at the end of the month after a multitude of deductions?

Speaking at the first conference of the KwaZulu-Natal Financial Literacy Association held in Pietermaritzburg yesterday, Premier Zweli Mkhize shared a story of how he encountered a government employee in Ulundi who was faced with this dilemma.

While at the end of the day the buck stops with the employees — who should learn how to be more prudent when managing their money — the KZN government is taking steps to ensure that more people in the province become financially literate.

Government departments in KZN have about 200 000 employees, Finance MEC Ina Cronjé told The Witness yesterday.

“Through research conducted by the HR section of the Office of the Premier we have learnt that this [over-indebtedness] is a major problem among government employees. We have thus launched big programmes to reach government employees at all levels of government, not just at the bottom level.”

Cronjé helped to establish the Financial Literacy Association in January 2011.

She said the public service training academy and the office of the premier had launched various initiatives aimed at assisting government employees.

The government believed that in certain cases there was a link between employees who are in dire financial straits and corrupt activities.

The inability to properly manage one’s finances is a national problem, stressed the keynote speaker, Finance Minister Pravin Gordhan.

He said a study by the Financial Services Board (FSB) undertaken last year showed that 44% of survey respondents experienced income shortfalls in the past year.

Almost half of the respondents found it difficult to pay their monthly bills. More than half borrowed from family and friends to make ends meet, while more than a third found it difficult to pay for food every month.

Gordhan said while short-term over-indulgence is a cause for concern, South Africans are also guilty of failing to save for the future — particularly when it came to retirement. He said almost half of the respondents planned to rely on a government grant upon retirement.

The government wanted to see about two-thirds of South Africans making their own provisions for retirement, he added.

Gordhan said the complexity of financial products coupled with a lack of financial literacy skills made it difficult for consumers to ask critical questions of their service and product providers.

He praised Mkhize and Cronjé for their innovative leadership in hosting the first conference of the association, adding that this model should be rolled out in other provinces.

“This kind of partnership [between the government and private sector] is the kind of partnership we need in South Africa. It’s the kind of spirit that should inspire all South Africans,” said Gordhan.

He urged financial services companies and banks to be mindful of the social and economic impact of their products, which are sometimes sold to relatively financially illiterate consumers.

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