Measuring debt and helping rehabilitationS&T partner Ross Jennings managed a fast turn-around project for Mongi Mali Solutions, in which S&T measured levels of debt, the impact it has on workers, and how to help tackle the problem.
Researching indebtedness among formal sector workers
Mongi Mali Solutions, a company that is independent of any financial services, are involved in the development of a employee debt rehabilitation strategy for an Eskom Power Station. In their multi-pronged approach to combat employee debt including research, awareness, education and debt counselling, one of the first steps in this exercise was to conduct a survey among the employees. Mongi Mali Solutions contracted Strategy & Tactics to undertake this survey.
The objective of the survey was to gather as much information as possible on the financial situation of workers, with emphasis on the various types and levels of debt they may be servicing. To develop our understanding of the situation of workers, we explored their general attitudes to life and money.
The graph shows the preoccupation that many respondents have with money and their financial situation. While the majority of workers seemed happy with their life, a far larger proportion spent a lot of time worrying about money. Furthermore, half of all workers interviewed said that all they seem to do is struggle to get money to pay those that they owe.
Our survey sought to establish what proportion of workers' gross salaries is being deducted to service debt and including hire purchase policies. We found that the majority of workers had more than two thirds of their gross salary deducted before they even start paying for food, rent and so on - in fact, the mean proportion of gross salary deducted for all workers was 72%! Furthermore, those workers who earned less money had higher proportionate deductions.
Reasons behind these deductions varied - however, we found high levels of borrowing from micro-lenders as well as large numbers of hire purchase agreements for furniture, electrical appliances and so on. These loans and contracts (underpinned by exorbitant interest rates) were often not fully understood by workers.
The findings are being used to tailor the education and training initiatives that Mongi Mali Solutions are currently developing and customising - importantly, while our survey reflected the real need for a debt rehabilitation strategy, it also found workers to be very receptive toward such a strategy and its intended initiatives.
Mongi Mali Solutions offers customised employee debt rehabilitation programmes in government departments, parastatal and private sector workplaces and can be contacted on 011 646 0954