Job losses soar, consumers can't cover their bills as Covid-19 lockdown bites

The number of South Africans who have lost their jobs has increased sharply since the beginning of April, according to newly released research from TransUnion.

Almost one in six (14%) people surveyed said in early May they had lost their jobs since the Covid-19 pandemic started — up from one in 10 (10%) reported in early April.

In addition, nearly four out of 10 (37%) of those affected said their work hours had been reduced — up from 32% reported in the first week of April.

The research on the financial impact of Covid-19 on consumers also showed that 82% of households reported their income was reduced as of early May, compared with 79% in early April.

“The pandemic is creating major economic and financial distress for consumers, with many jobs already being affected or at risk because of drastic demand shifts,” said Lee Naik, CEO of TransUnion Africa.

Mpumalanga is the most affected province when it comes to Covid-19 related unemployment, with job losses there increasing to 26% (up from 12% since the survey started in early April). TransUnion said this is potentially driven by the effects of the lockdown on the agricultural and mining industries, which are the largest industries in the province.

TransUnion’s research found that of those who have been financially affected, 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.

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 cellphone bill, and 32% will not be able to pay their credit card. 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%.

“With the majority of households under considerable pressure, we can only reiterate the importance of lenders and consumers having constructive conversations around ways to deal with these extraordinary circumstances,” said Naik.

Research in SA commenced the week of April 6 and the most recent research was conducted in the week of May 4.