Concern in South Africa as job losses pile up

New data published by TransUnion shows that South Africans continue to lose their jobs because of the the effect of the Covid-19 pandemic, and lockdown in the country.

The credit reporting agency said on Thursday (21 May) that the number of consumers who have lost their jobs has increased sharply since the beginning of April – from 10% in week one to 14% in week three, citing an updated poll.

This online survey of 1,005 adults in South Africa was conducted on 4 – 11 May, 2020, by TransUnion in partnership with third-party research provider Qualtrics Research-Services.

“Among impacted consumers, job loss as a result of the Covid-19 pandemic has increased significantly since the survey started, with millennials most affected,” it said.

Millennials – those born between 1980 and 1994 – appear to be the most affected, representing 16% of impacted consumers that indicated in week three that they have lost their jobs, which was up from 11% in week two.

The proportion of consumers who have had reductions in their work hours due to the pandemic has increased significantly, to 37% of impacted consumers from 32% when the survey started, TransUnion said.

How is your current household income being impacted?

“The pandemic is creating major economic and financial distress for consumers, with many jobs in the South African economy already being impacted or at risk due to drastic demand shifts,” said Lee Naik, chief executive officer of TransUnion Africa.

“Our ongoing research aims to better understand consumers’ perceptions and expectations for how this rapidly evolving situation is affecting their financial situation and subsequent ability to pay their bills. The insights in this report aim to better inform consumer, business and government decisions at a time when information on consumer impact is still emerging.”

Mpumalanga remains the most impacted province when it comes to Covid-19 related unemployment, with job loss in the province increasing to 26% (up from 12% since the survey started in South Africa in early April).

This is potentially driven by the effects of the lockdown on the agricultural and mining industry, which are the largest industries in the province, TransUnion said.

The research found that of those who have been financially impacted, the amount that consumers expect to be short in making payment obligations in the near future has increased by R500 to R7,500 since the first week of April.

What bills and loans are you concerned about your ability to pay?

Nearly two-thirds (64%) of these consumers reported that household budget changes during the pandemic involved cutting back on discretionary spending.

Forty percent have cancelled subscriptions or memberships, and just under one third (32%) have cancelled or reduced digital services (like wireless, satellite services and internet) due to household budget constraints.

There has been a significant increase in consumers turning to payment holidays provided by loan providers as lender communication has intensified.

Overall, 44% of all consumers who are concerned about paying their bills report that they will not be able to make their rent payment, 39% will not be able to pay their personal loan, 37% will not be able to pay their cell phone bill, and 32% will not be able to pay their credit card, TransUnion said.

All of these bill types were unchanged between the April and May surveys with the exception of personal loans, which increased from 33% to 39%.

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