Joburg protects employees from loan sharks


By City of Joburg by Councillor Leah Knott

The City of Johannesburg has put in place protection measures for employees who have fallen victim to unscrupulous loan sharks. We recently discovered that some employees were going home with absolutely no salary due to excessive and questionable loan deductions, while others were taking home less than a quarter of their nett salary. 


Close to 4 000 City employees are affected by these deductions, which total nearly R16 million every month. The law states that no more than 25% of your salary can be legally deducted, and we have halted any deductions which exceed the 25% threshold in order to protect our employees. 


We know that the lockdown led to severe financial pressure on many Johannesburg families, who either lost breadwinners or were faced with seriously reduced household incomes. Sadly, many had to resort to unsecured lending to make ends meet, often taking out loans to cover existing loans. Many people fell into this debt trap, and in the City over 2 000 employees engaged our Employee Assistance Programme seeking counselling for depression, addiction, and family problems due to financial stress. 


We suspect that many of these loan sharks are guilty of reckless lending, and we will be reporting them to the National Credit Regulator as well as Micro Finance Regulatory Council. It is evident that no affordability assessment or feasibility was ever undertaken in most cases to ensure that employees were able to cope with the unsecured loans offered. We cannot sit back and allow our employees to be exploited like this. 


We will increase our offers of financial literacy training and other forms of counselling to support our employees and will ensure that they are not placed in situations that could put them at risk within the workplace. While this doesn’t immediately solve the debt trap that many employees have landed themselves in, we can at least ensure that they can expect a decent salary. At the end of the day, no employer can expect their employees to deliver quality services when they are under so much stress and anxiety. 


Under the leadership of the Executive Mayor, Cllr Mpho Phalatse, we are committed to making Johannesburg a caring and well-run city, and this starts with our employees. I would like to encourage all those experiencing financial stress to confide in your managers and seek assistance from the Employee Assistance Programme who can be contacted on 011 407 6577. 

Article Tags

Loan Sharks

illegal

Economy

Cancel

    Most Read