You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App
Join our mailing list to receive top business news every weekday morning.

10 ways lockdown has decimated household finances

40% of consumers only have enough savings to last a month….
Image: Moneyweb

Results from the 2020 Covid-19 special report of the Old Mutual Savings and Investment Monitor are horrifying.

This is arguably as one would expect in a country where a study last week revealed as many as 3 million jobs were lost between February and April. Sampling for the monitor was done between May 29 and June 23 and included around 1 500 consumers with an income of at least R5 000 per month.

1. Seven out of 10 households earning less

Sixty-eight percent of households reported worsening household income, with 32% seeing a slight reduction, a further 32% noting a big reduction and 4% where no one in the household is earning an income at all. In the R5 000-R19 999 income band, 74% of households are earning less.

On a personal level, 57% of people have seen their income negatively affected.

This includes 26% who are earning a “bit less” (either through a salary reduction or reduced hours), 23% who have seen a “very significant” impact and 8% who are not earning at all.

2. “Devastating” knock for 41% of low-income workers

More than four out of 10 workers earning between R5 000 and R9 999 per month have seen their incomes drop by between half and 74.9% from what they were earning in February. This is not surprising, especially given the entire hospitality sector is in ICU and the retail and manufacturing sectors (aside from essential goods) only reopened in June. Many of these low-income jobs are in these kinds of sectors and some employees have simply not returned to work.

Higher income earners have been noticeably more insulated.

Source: Old Mutual Savings and Investment Monitor

3. Nearly two thirds of those 50+ say their financial situation is worse

Among those older than 50, 63% report a worsening financial situation. Part of this, says Old Mutual, “would no doubt be due to increased anxiety as regards loss of value in retirement savings”. A shock such as the Covid-19 pandemic will have magnified the JSE’s underperformance for much of the past decade.

On the whole, 48% of consumers believe that they are worse off financially than last year. Again, this number is higher among low-income earners (54%).

4. Only one in three doing ‘all right’ or ‘comfortable’

The barometer has, since 2014, asked South Africans how they feel they are “getting by”. The results point to an increased struggle over the past six years, with a stark deterioration among those earning R20 000 or more per month.

Source: Old Mutual Savings and Investment Monitor

5. 40% only have enough savings to last a month

The extent to which the lockdown has impacted household savings is clear when one considers the amount of available funds consumers say they have. Four in 10 have enough money only to last a month or less, up dramatically from 28% in 2019. Again, the deterioration over the past year among those earning more than R20 000 per month is marked.

Source: Old Mutual Savings and Investment Monitor

6. Sharp increase in personal loans

There has been a significant increase in personal loans, with those having taken a loan from a financial institution more than doubling to 43%. Only 34% of those with loans from a financial institution say they are meeting the repayments comfortably, with a further one in three saying they are “struggling but managing for now”.

A further third are starting to fall behind (22%) or no longer able to make repayments at all (10%).

Source: Old Mutual Savings and Investment Monitor

7. Roughly a third of consumers have requested payment holidays

Approximately four in 10 people have explored or applied for debt relief for personal loans, whether from financial institutions (38%), micro lenders or mashonisas (40%) or friends/family (41%). This is followed by 35% of those with home loans asking for payment holidays on their mortgages, 29% of credit card holders requesting a break, and 22% of store card customers seeking relief. In most categories, between 50% and 60% of those who applied have been granted relief. Between 18% and 29% did not, with the remainder saying they are still waiting.

8. More than half of South Africans have dipped into savings to cope

The monitor says 52% have dipped into their savings to make ends meet, more than double the 23% from last year. Most other coping mechanisms have also seen sizeable increases. The numbers are more pronounced for those earning less than R20 000 per month. For example, nearly half (47%) of those consumers have fallen behind on store (read: clothing) account payments, versus 42% overall.

2019 2020
Dipped into savings to make ends meet 23% 52%
Fallen behind on store card payments* 32% 42%
Fallen behind on credit card payments* 15% 36%
Fallen behind on household bills 24% 37%
Fallen behind on rent or home loan repayments 7% 26%

*excludes those without accounts

9. Consumers are cutting back on (almost) everything

This year, researchers asked South Africans how they expect their spending across categories to change, even when lockdown restrictions end. Rebasing the results to exclude those who don’t currently spend in a category (e.g. non-smokers) reveals startling results on where people will be spending less:

  • 68% (less) on eating out/entertainment expenses
  • 64% on takeaways
  • 60% on holiday and travel
  • 49% on hair and beauty
  • 48% on clothing and shoes
  • 48% on cigarettes
  • 47% on home improvement
  • 40% on domestic worker/gardener
  • 25% on DSTV subscription
  • 25% on food and groceries

10. Only one in three is confident about the economy

34% of consumers say they have confidence in the economy, a significant decline from the 44% last year (this figure was 56% in 2015, the first year of the barometer).

Source: Old Mutual Savings and Investment Monitor

AUTHOR PROFILE

Get full access to 's financial insights and support quality journalism.

Only R63 per month or R630 per year. You can cancel at any time.

COMMENTS   31

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

With lockdown governments all over the world caused more problems than they solved. And the guidance of the medical scientists and WHO is to blame for this. History will not be kind on them for the massive mistake they have made.

Yes. This is the world of big, interventionist govt that people said they wanted.

Surely the News Media with their over sensationalism should be considered a major contributor to this as well?

@Serious – I think the primary issue here is not News Media – but Social Media.
Where every Tom, Dick and Harry/Sally with a smartphone thinks they are the latest in Investigative Journalists/Photographers. When many of the previous versions of “Flu’s” blew into town nobody was any the wiser. Enter 2019 and Faceless, Instawobble, Twatter etc have all contributed to B/S being sprouted forth.
The same is happening in Political field of Disinformation and using the Herd mentality we currently have in so called clever people!!!

Such a surprise! how could this happen? And this is just the beginning of what has been totally predictable and widely predicted from the get go. And the irrefutable evidence shows that the insane lockdown has been totally unwarranted, everywhere:

Article:Lockdown Deaths, not Covid Deaths:
https://www.ukcolumn.org/article/lockdown-deaths-not-covid-deaths

100% spot-on ChrisStoffel.

Even back in March 27, when Cyril announced the famed economic lockdown….I certain Bible verse came to mind:

“FATHER, FORGIVE THEM, FOR THEY DON’T KNOW WHAT THEY ARE DOING” (…to the economy).

And now…..THIS ONGOING MESS!! Completely expected.

The advent of the national lockdown has caused a catastrophic descent of disequilibrium upon our economy. There is now an over-supply of labour(sold by households) and diminished demand for goods/services(sold by firms).
The translation is to the effect of a decline of the cost of labour thus making a lot of citizens poorer. When a household cannot sell its labour, there exists no remuneration to secure survival(a living) and death will be the result.

This is an elementary teaching for economists, and somehow synonymous to a Phd in mathematics for politicians. Government of South Africa, Let the economists heal the economy and politicians heal the … … no just sit back, observe and learn. Your kind of labour is DEFINITELY not needed.

I am prepared to sacrifice tax money to pay politicians to sit in a corner and do nothing. Say nothing. Touch nothing. Sleep and eat and just do nothing.

We make no demands of.minimum qualifications on politicans — no minimim education, criminal records, minimum age and above all no insistence that they have work experience outside politics first.
So we end up with a kakistocracy.

Thanks Hilton.

Horrific numbers. Do you have 10 ways to save and maybe 10 ways to do a side hustle?

1. Netflix and DSTV allows multiple login from different locations. We have 5 household sharing 1 netflix
2…….

Netflix and DSTV are contributors to the daily drumbeat of endless indoctrination that pushes the progressive leftist narrative…cancel them and buy some peace…

Coronavirus or no Coronavirus, the old adages still apply: Don’t live above your means and save for both rainy days and your retirement. One should start saving/investing from one’s first paycheck (eg. the pocket money earned from cutting the neighbour’s grass), and make saving/investing a life-long habit. Throughout my earning history I’ve saved 60% of my net earnings through self-discipline and not keeping up with the Jones’s. It is of course a very unpopular thing to do in a Jones’s neighbourhood, but guess who benefits in the long run?

I have two additions to the very good aspects you note. You are in a third world country. Spend to get an internationally recognised qualification (ideally a foreign passport) and always count your savings in USD or Euro’s, maybe other first world money but not the local stuff. It will all catch up in the end.

Slowly it becomes clearer that we are not adequate as individuals. Somehow we have to tap into our collective as a human race on earth to navigate this new normal. It matters not how well off you are at this present moment, we are all interconnected and we need to extend a helping hand to the valnurable among us… The final outcome of this, which the next generations will read about in history archives. The rich and the poor will survive this phase… The middle, that is the working class will be decimated. The poor will survive because they always do, they get by with little or nothing. The rich have means to swim through. The working-class with pretence of wealth and propensity of poorness have no chance in hell… we need world governments to responsibly help their nations. We are together in the same pot.

Any help from any government is money the citizen pays to himself via a politician and a government official. The citizen pays R100 in taxes. The politician takes R20, the official takes R30, a BEE scheme takes R20, they pay a social grant of R10, another official steals R15 and the government comes to your aid with R5 that is left of your money.

Stuff the government man. Help yourself directly.

True Sensei. I’m one of the 3 million tax payers keeping the sinking ship afingfloat, Socialism = they want your money, but not your job. And when the money runs out, they’ll still blame you, the tax payer. Rather sit on their deriers, demand, breed and burn….and get!

Where are all those people who where saying saving lives is more important than the economy? These idiots have caused a generation long depression with millions who will die, while covid has killed the absolutely shocking number of 5000 people.

It appears that we have the leadership we deserve.

Correction. We have no leadership at all. Just corrupt thieving arrogant stupid politicians & friends ruining the country.

A friend who opted for 3mth payment “holiday” on some finance deal tells me the bank called him the other day and offered a further 2mth extension.

Be interesting to see how these rehashed bank deals are reported going forward? And how does the credit ratings companies score it?

Of course the bank wants to lend more money to people who have assets to back them with. Many people think that the banks are being helpful in tough times. Forget it, the bank is not your friend, it’s a voracious, merciless business. They will make more money by being “understanding and helpful” because late interest charges and additional fees will be accumulating. Compounding interest. And if you fail to meet your obligations they have no compunction to seize your assets or sell them for peanuts. This is why they have to spend billions on advertising trying to convince you how benevolent and friendly they are. A truism, the more heavily something is advertised the less likely it is to be in your best interests.

How many public servants have lost their comfortable jobs?
Asking for a devastated tax paying private sector.

Never mind Lost their jobs : Just take a 40pct Paycut all round !!
Utterly useless Overpaid Civil Service (read ANC Voter ) :
SladeC (new contributer ? ).

Not a single government employee (deployed cadre …cough) has been retrenched, or taken a 1% pay cut

I often times think of that Benjamin Franklin quote

“Those who would give up Essential Liberty, to purchase a little Temporary Safety, deserve neither Liberty nor Safety”

..we allowed our Governments to take away our freedom, because they “knew” what where best for our safety – and we followed along!

I have only one comment for every article on Moneyweb today.

How do you employ or reemploy the almost 50% unemployed if there is no reliable source of power?

Answers on a postcard addressed to Messrs T.Mboweni & P. Gordhan…

With an addendum:

How do you deal with the outbreak of urban violence as a consequence of the above?

Give them all free tickets and start a new Airline !!

Point 8…”dipping into savings”….yup, count me in! 🙁

Yet, I was able to buy two sets of BRAND NEW SHOES (from ShoeCity) in the under R300 mark. ‘Mancini’ brand…made in China (off course!)

One set of casual mens shoes was R299, and now even which 33% discount….get a different pair for R199. Could not resist! Acceptable quality (almost like Vans or Converse in appearance).

I fear I’m becoming a real cheapskate, courtesy of Covid-19 (…or rather, courtesy of govt’s absurd lockdown rules). By the way, the toes are not open…

And without China’s cheap production, we won’t be able to own ‘stuff’ anymore 😉

Its easy for Government to pontificate in relative comfort from their monthly cheque, plush offices and comfy high backed leather chairs, its easy to glibly mention in passing that, Oh yes, some people are going to lose their jobs, or Oh Yes, some businesses won’t reopen.
Of course it is, its not their business or their job, its irrelevant to them.
So let’s look at my business, before lockdown I employed 43 people, that was everyone from me all the way down.
Now I employ 26 people and sadly all of those I had to retrenchment were unskilled staff who supported a family and extended family.
Did I take this decision lightly, of course not,I was happy to pay them for a month, at a push two months, but sooner or later if my revenue stream is interrupted,it has to stop.

But, one day this will be over, and then the government will be begging businesses to employ staff due to massive unemployment,….well, I have a long memory,..sorry chaps!!

When you go into business you don’t for helping others, you benefit yourself. If times are tough you cut back, you are not a charity…

south africa was in recession long before lockdown already due to corruption,saa,eskom,gupthas,scams,pyramid schemes,crime,cigarette mafia,etc…..they missed the commodities boom.Way too much materialism spending to mercs,bmw,gucci,mcd,dominos,…etc

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
INSIDERGOLD
ONLY R63pm

Moneyweb's premium subscription gives you access to insights and tools to take charge of your investments, while supporting quality journalism.
Choose a yearly subscription at R630pa - SAVE R126

Get instant access to all our tools and content. Monthly subscription can be cancelled at any time.
NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: