Positive signs for domestic workers in South Africa – but there’s just one problem

 ·10 Mar 2024

While there are positive signs for domestic workers in South Africa, the financial stresses on the middle class still put the sector at risk of households having to cut back on spending – which includes domestic help.

Eighty20’s latest Credit Stress Report for the fourth quarter of 2023 unpacks the credit behaviour of four consumer segments that comprise 78% of all credit active South Africans and 92% of all loan value.

Interestingly, Eighty20 noted a significant improvement within the credit sector as the percentage of loans in arrears decreased by a whole percentage point in Q4.

Additionally, although the report highlighted the credit-active population continued to grow by 2.3% year-on-year, the proportion with more than one loan in default decreased for the second quarter in a row.

These trends were consistent among the all-female low-income group, which it dubs “Mothers of the Nation,” of which South Africa’s 876,000 employed domestic workers fall into this category.

Domestic workers are also part of a segment that showed the lowest debt-to-net income ratio after students and scholars – well below the average of 47%.

Another positive is that the latest data from Statistics South Africa showed the sector has managed to recover about half the lost jobs after the Covid-19 pandemic caused South Africa to bleed a quarter of a million domestic worker jobs.

The data showed 17,000 workers found employment in the sector over the last three months of 2023 – 13,000 more workers employed in the sector compared to Q4 2022.

Overall, 2023 saw about 79,000 domestic worker jobs recovered from the year’s start of 797,000 employed.

The bad news

While the overall job results and direction are positive for domestics when looking at the numbers in the shorter term, the reality is that the 876,000 workers employed in the sector are still a long way away from the 1 million domestic workers who were employed before the pandemic.

Following the onset of the pandemic and the government’s lockdown interventions, Stats SA’s data showed that the sector had lost 250,000 jobs in the first half of the year.

Since then, only around 125,000 of these jobs have been recovered – a 50% recovery rate. The remaining 125,000 jobs are still lost, and total employment is still close to 20% lower than pre-pandemic levels.

Additionally, while there are positives in Eighty20’s report overall, it warns South Africans are still financially strained – with the middle class especially in a very deep hole.

Debt levels are the highest for the Middle Class, at 79% of income going to instalments (up by nearly 28% in just over two years), followed by the Heavy Hitters (the wealthiest top 5%) at just over 61%.

This means that households in South Africa that are most likely to hire domestic workers have little room to take on more costs, and there appears to be no relief on the horizon.

Interest rates are only forecast for cuts in the latter half of the year, while the Treasury is expected to find new ways to wring tax revenues from the tax base in February.

Domestic worker jobs are inextricably tied to the economic prospects for private households and the performance of the broader economy in South Africa.

When exceptionally tough economic times hit – as has been the case for the last three or four years – households clamp down and tighten their belts, and luxuries like domestic help are often some of the first expenses to go.

Read: Warning for households that employ domestic workers in South Africa

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