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Employee financial stress

by | Jun 13, 2022 | Personal Finance

Overwhelming debt affecting economy as 1 in 5 employees suffer dire financial stress.

With unemployment and inflation rates at an all-time high, the South African economic climate is in absolute tatters. This environment of increased poverty and a skyrocketing cost of living has placed unbearable financial pressure on employees.

As a result, many employees have found themselves drowning in the debt spiral, with atleast 75% of their salaries going to debt repayments. This state of over-indebtedness often has detrimental effects on people’s mental health, no less their ability to concentrate and be productive at their work.

The mental health effects could play themselves out through a myriad of things, including depression, anxiety, coupled with a spate of unwise and rash decisions. As a result, the brain is always in a state of emergency with continuous adrenaline and cortisol release (the stress hormone) negatively impacting people’s well-being.

They might then resort to damaging sources of dopamine (hormone which affects movement, memory, and pleasurable reward and motivation) to try and contest the adrenaline rush, including drug use, alcohol abuse, or excessive food intake. Other dopamine-pursuing-indulgences may involve impulse purchases, spending sprees, and eventually buyer’s remorse, before the long and stressful wait until payday.

Still, some people might opt for Payday loans or other forms of ‘easy credit’ with high interest rate as well as other detrimental financial decisions like taking out loans to cover existing debt. Although these would be done in an effort to try and remedy their financial situation, through such behaviour, consumers would only end up falling into a debt trap that is nearly impossible to escape.

A recent survey titled the Floatpays State of Employee Wellbeing Barometer 2022, revealed that almost 75% of employees rated their level of financial stress as medium to high. As a result, South Africa lost about 128 million days which accounted for R38 billion, or approximately 2% of the country’s domestic product in productivity due to financial stress.

The survey which included South African workers representing a broad demographic in terms of monthly household income, age, ethnicity, gender, and province, showed that one in five employee respondents reported high levels of financial stress.

In this scenario then, with overwhelming worries about losing their assets, getting their electricity cut off, or paying school fees, employees can’t possibly concentrate on their work, recollect tasks, or address/resolve any problems.

As Founder and Debt Counsellor at National Debt Advisors Sebastien Alexanderson notes, addressing your debt issue not only improves your physical health, but can significantly improve a country’s economy as more and more people take control finances.

Reduced debt means less stress, restored self-esteem, financial independence, and improved personal relationships. Employees are able to better concentrate on the task at hand, learn faster, and improve their cognitive functions.

“Essentially, everyone, even if you have a tiny amount of debt, must efficiently manage their debt. When your debt is small and manageable, all you have to do is make sure you stay up to date with your payments and ensure your debt does not spiral out of hand.

 “However, when your debt becomes overwhelming, the National Credit Act has outlined provisions for over-indebted consumers to seek assistance for their debt issue. Through the legal and regulated process of debt counselling outlined in the NCA, you can have your monthly debt instalments reduced to a single affordable payment, leaving you with enough money to cover your monthly household expenses,” said Alexanderson.

Contact NDA today, let us work through this debt issue together.

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