SA consumers battle to pay bills as job losses rise: TransUnion survey

A new survey by TransUnion shows that job losses are rising, with more than eight out of 10 consumers hurt financially and nine of out 10 concerned about their ability to pay their bills and loans.

Since the study's inception at the beginning of April to the week of May 25, the company said the number of consumers who have lost their jobs as a result of the Covid-19 pandemic continues to increase: 16% of respondents financially affected by the virus have lost their jobs, up from 10% in the first week of April.

“Consumers in the most vulnerable sectors of the economy have been the hardest hit,” it found. “The lockdown imposed since March 27 has negatively affected the incomes of 89% of consumers employed in the construction and restaurant or food services industries, and 88% in the retail industry.”

One in five (20%) reported that they had payment holiday arrangements with their lenders and service providers, with car loans, personal loans and credit cards being the top three categories.

“TransUnion’s research shows the proportion of consumers who are concerned about their ability to pay their current bills and loans has been steadily increasing, reaching 91% in week four, up just over three percentage points from week two.

“As a result, 35% of affected consumers are paying only a portion of their bills and loans, which likely reflects their desire to preserve cash flow. Rent and utility payments remain the two bills of most concern, with 41% of consumers concerned about their ability to pay their rent, and 40% their utilities.

“The amount that consumers expect to be short in paying bills in the near future has decreased by 6%, from R7,542.90 in week three to R7,098.40. To close this gap, many (38%) are borrowing heavily against their savings – up significantly, by eight percentage points, compared with the previous survey period,” reads the survey.

It also found that consumers are delaying major purchases too, with the top three items deferred being travel and holidays, home improvements and spending on education.

Apart from spending less on both entertainment and eating out, 24% of South Africans said they had cut back on retirement savings. 

The survey shows that customers are now more uncertain about the future of their finances than they were at the beginning of April.

Lee Naik, CEO of TransUnion Africa, noted the heavy toll taken on those in the construction, restaurant, food services and retail industries.

“Although the restrictions are starting to ease, the pandemic continues to create major economic and financial distress for the economy and consumers alike.

“By understanding consumers’ perceptions of how this crisis is affecting household finances, we aim to better inform consumer, business and government decisions at a time when information on the wider impact of the pandemic is still emerging,” Naik said.