Thousands of South Africans will be facing salary cuts due to the continued lockdown, and businesses struggling to generate income.
Nomaxabiso* was very happy when she finally got a job earlier this year, but it seems her struggles are far from over. Nomaxabiso is facing a salary cut as her employer is simply not making enough money to pay employees their full salaries. The 36-year-old Nomaxabiso works as an admin clerk at a mining company. She lives in a two-bedroom flat in Midrand which she rents. In April she could only afford to pay half her rent. “I have been unemployed for such a very long time, I did not see this one coming. In the past two months, I had not saved much because I also had to help my family back home in the Eastern Cape.
“Things are so difficult, I don’t know what my landlord will say when I pay a portion of my rent this month,” the worried Nomaxabiso said.
After a salary reduction of 25% she is left with less than R10,000 a month which she must stretch to cover all expenses, food and any unforeseen expenses. “My rent is R7,500 and I paid R3,500 for my rent last month with the hope that I will get the UIF this month and be able to at least pay the full rent. I am lucky because my landlord has been so understanding, I just don’t want him to feel that I am taking advantage of him. I usually send R2,000 home for groceries and spend R1,500 on my groceries plus R700 for transport. With the salary I got last month, I could not even buy decent groceries for myself and I only managed to send R1,000 home.”
In addition to this, the company she works for have still not received any news with regards to the business relief fund they have applied for.
Sadly, Nomaxabiso is one of millions of people facing salary cuts as companies battle to survive. The coronavirus pandemic has led to the closure of hundreds of businesses across all industries.
Unathi*, a 37-year-old contract worker, said she has not been paid at all since the country went on lockdown. “I am still waiting for my UIF. I have not been able to pay rent, children’s school fees and some of my accounts. I am lucky because I still had my two children’s grant, that is how I was able to buy food. The payment of the UIF is taking long and the company said they were claiming on our behalf,” she explains.
A restaurant manager, said the last time they got paid was in March: “In April a friend helped me with money to buy food. I did not pay rent but I showed my landlord the letter I got from work stating that I will not have any source of income,” she said, adding that she was also waiting for UIF to make a payment.
Janine O’Riley and Tanya Tose, a reward specialist and a tax remuneration specialist respectively, said that the Covid-19 outbreak has propelled countries around the world to implement very strict measures to combat the pandemic. O’Riley said the economic impact was a massive blow to the already struggling economy of SA.
“While salary cuts and reduced working hours are realities many South Africans are facing currently, another mechanism employers can implement is to allow employees to identify what their suitable blend between cash and benefits are, based on their individual needs. This involves offering employees the opportunity to make certain changes regarding their benefits versus cash portion of their overall remuneration package. Employers need to be innovative to optimally utilise flexible benefits according to employees personal and financial requirements,” she said.
This empowers employees to exercise the choice on how to structure their package according to their personal and financial requirements. O’Riley concluded saying that employers are faced with a very unique situation the require a sharp and tactful approach to balance the payment of employee salaries, looking after the individual employee needs and keeping the business alive.