Workers asking for salary advances to cover transport costs

A local fintech company, Paymenow, which allows employees to access salary advances, says more users are now requesting early access to cover work travelling costs.

Statistics gathered by the Stellenbosch-based wage access platform – which facilitates payments of portions of salaries to workers ahead of payday – show that those workers who have requested payments have done so mainly to cover their transport costs.

SA’s delapidated public transport system

Global petroleum supply has been affected by Russia’s invasion of Ukraine, with the price of petrol expected to approach R24 per litre in April.

South Africa’s public transport system leaves much to be desired in terms of cheaper commute between work and home.

The country’s insufficient and vandalised rail infrastructure has not only left workers with few options, it is also the stumbling block to South Africa’s low-performing coal exports.

ALSO READ: European countries likely to look to South Africa and Columbia for coal exports

Taxis unlikely to lower transport costs

Majority of the country’s workers depend on taxis to commute between work and home.

According to Transaction Capital, which finances minibus taxi fleets around the country, taxi fares have increased by more than 9% per year since 2013, outstripping salary growth over the same period by some distance. 

In January this year, employees that signed up with Paymenow requested advances to cover transport costs to work 46% of the time, in comparison, to 23% of payments that were used for food.

The jumps in the petrol price are particularly noticeable when we break down payment data by reasons for the advances,” said Paymenow co-founder and CEO Deon Nobrega.

Nobrega said this trend continued through February and March, indicating that workers were spending between 48% and 45% of advances on transport costs, respectively. 

“Historically, not being able to meet transport costs has been a key driver of employee absenteeism and churn in South Africa,” says Nobrega.

“The majority of those are blue-collar workers who are financially vulnerable,” he added.

Relief for taxi commuters is unlikely, as the industry is under pressure to recover from Covid-19 lockdowns.

Gyrating oil prices leave end-users vulnerable

Government is yet to announce measures to help consumers cope. 

Meanwhile, countries such as Brazil, Japan, South Korea and India have all announced domestic fuel tax cuts and subsidy increases to maintain affordable price levels. 

While South Africa did protect consumers from a petrol price jump in 2018, the seemingly protracted time frame of the Russia-Ukraine conflict looks set to test the country’s balance sheet as global fuel price hikes drive consumer inflation.

“Ultimately, South African workers will not be able to cover all their basic costs if input prices continue to drive inflation in the prices of basic goods. 

“In a country with a poor savings rate and an economy under pressure, those without early access to their wages stand the greatest chance of falling into a debt trap and potentially losing their jobs as a result,” said Nobrega.

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