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How Covid-19 has affected South African households' financial wellness
Covid-19 erased seven years of economic progress as more than 1.4 million lost their jobs substantially weakening South African households' financial wellness. With the details of the results of this year's Momentum/Unisa Index is Jacolize Meiring, a Researcher at UNISA.
Fri, 03 Dec 2021 11:12:00 GMT
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AI Generated Summary
- The catastrophic impact of Covid-19 on South African households, erasing seven years of economic progress and resulting in significant job losses and weakened financial wellness.
- The prolonged economic recovery expected for South Africa, with household finances projected to take more than three years to return to pre-pandemic levels.
- The disproportionate impact of the crisis on women and youth in South Africa, emphasizing the need for financial education, empowerment, and early financial planning to secure a stable future.
The year 2020 proved to be a catastrophic one for South African households as Covid-19 wreaked havoc on the country's economy, erasing seven years' worth of progress. More than 1.4 million individuals lost their jobs, resulting in a substantial weakening of households' financial wellness. The details of this grim reality were revealed in this year's Momentum/Unisa Index, shared by Jacqueline Meiring, a researcher at Unisa.
Meiring described the current state of the South African consumer as an 'economic disaster,' emphasizing the significant impact of job losses and salary cuts on households' finances. She noted that the economy's recovery, especially in terms of household finances, is expected to take longer than three years. Various research studies have corroborated these findings, painting a bleak picture of the country's economic future.
One of the key points highlighted in the index is the alarmingly low employment rate in South Africa, where only 22 out of every 100 individuals had a job by the end of 2020. Meiring pointed out that the country's unemployment rate is among the highest globally, especially when considering discouraged work seekers who have stopped looking for employment. This high unemployment rate has compounded the economic challenges faced by consumers, impacting retail sales and hindering the recovery process.
Moreover, the index revealed that nearly 20% of households in South Africa have individuals with tertiary qualifications, indicating their potential for higher earning power. However, rebuilding to pre-pandemic levels will require significant time and effort. Meiring suggested that consumer financial vulnerability remains a pressing issue, with key informants predicting a recovery period of two to three years for household finances.
Meiring also highlighted the disproportionate impact of the crisis on women and youth in South Africa. The research indicated that women, particularly those in low-income households, were among the most financially vulnerable groups. Factors such as the gender pay gap and job losses during the pandemic have exacerbated their financial distress. To address this imbalance, Meiring emphasized the importance of women taking control of their financial futures, seeking financial education, and actively participating in household financial decisions.
On the other hand, the youth demographic, which represents 30% of the South African population, has the potential to secure a stable financial future by starting early and engaging in financial planning. By leveraging their youth and time, young individuals can set themselves up for long-term financial success.
In conclusion, the road to economic recovery for South African households is fraught with challenges, requiring a concerted effort from individuals, especially women and youth, to rebuild their financial stability. The insights from the Momentum/Unisa Index serve as a wake-up call for the country to address its economic disparities and empower its citizens to navigate these turbulent times effectively.
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