When the money really matters
Malaysians are more worried about their finances these days, and the stress has affected the job performance of most of working Malaysians, says a survey.
AS the Covid-19 pandemic continues its grip on our lives and livelihoods, many Malaysians are worried about their money.
To top it off, such anxiety over their finances has led to poorer job performance by most Malaysian workers, according to a survey.
More than half (65%) of Malaysian working adults reported that financial stress has affected their job performance, says a study by the Credit Counselling and Debt Management Agency (AKPK).
The findings, made available to Sunday Star, also show that bad financial well-being led to poor mental health among workers.
“A domino effect occurs when a worker’s worried state of mind affects their job performance,” explains AKPK chief executive officer Azaddin Ngah Tasir.
Such findings on the link between financial stress and job productivity is consistent with a survey by Pricewaterhousecoopers in 2017 that showed 48% of employees with personal financial stress will have distractions in performing their work.
In AKPK’S “Money and Mental Well-being” study conducted last year, a total of 3,115 working adults aged between 18 and 60 took part in the survey to examine how financial stress affected mental health.
Such respondents were from three main employment sectors – public, private and self-employed.
The results showed that financial stress spiked by 35% since the pandemic began in 2020.
The high cost of living is the most common factor of financial stress, followed by low income and low savings.
“As expected, those who have savings cope better in managing financial stress,” says Azaddin.
Nearly half, or 41%, of respondents say that financial stress has affected their mental well-being.
“The most vulnerable group consists of those with the least amount of savings,” he says, adding that self-employed Malaysians were also deeply affected.
Those aged between 30 and 39 have the highest financial stress scores compared to other age groups.
Young workers, aged 29 and below, were more stressed by low salaries and overspending.
Interestingly, government employees in the survey seemed to have better mental health compared with other workers.
“Civil servants had higher mental well-being scores than those who are in the private sector and self-employed,” Azaddin points out.
In addition, men experienced greater financial stress than women.
“Women cope with financial stress better than men.
“If men are more stressed by high debt burden, women are more worried about overspending,” Azaddin adds.
However, nearly half of working Malaysians are not very confident in handling issues, with 46% saying they are not sure of their own ability to cope with financial stress.
“Like mental health cases, those with financial struggles seek help only when it’s too late.
“Even more worrying, financial stress caused by the Covid-19 pandemic is closely related to mental health issues,” he highlights.
Easing financial woes
To alleviate financial stress, the AKPK urges Malaysian workers to increase their financial knowledge through its existing services and other agencies to learn about cash flow, credit and risk management.
“The public should also develop good financial behaviour such as preparing a financial plan, saving, and practising prudent spending,” says the agency, set up by Bank Negara Malaysia.
It also calls on employers to play their role, as they need to be mindful of workers in the present pandemic.
“Employers are urged to promote mental health at the workplace by introducing financial well-being programmes to their employees.
“This can be done by collaborating with financial education professionals such as AKPK to increase awareness of the impact of financial stress on mental well-being.
“Bosses can encourage employees to save by making automatic salary deductions, or running a savings campaign,” the AKPK suggests.
Employers should also provide access to mental health support through partnerships with mental health professionals.
Those with financial difficulties can also seek help from the AKPK through its three main services – financial education, financial advisory and its Debt Management Programme (DMP).
For those who face challenges in paying off their debts, the DMP helps consumers to develop a personalised debt repayment plan in consultation with their financial services provider.
All these services are free and offered to both individuals and SMES.
For more information, the public can go to AKPK’S website at akpk. org.my or its services link, services. akpk.org.my.
Meanwhile, some Malaysians say the tough times are stretching their current resources.
A former employee in a retail company who wishes to be known only as Kamal, 29, lost his job as his employer wanted to cut costs.
“They told me my performance wasn’t up to mark but everybody knows that the company is facing bad times,” he says.
Since he was retrenched, Kamal has been working as a food delivery rider to make ends meet for the
past three months.
“Sometimes, my work is very busy which is good. But at times, I struggle to meet my daily target,” he says.
It is tough because Kamal has loans to pay and does not have much savings.
Thankfully, he managed to secure a permanent job in another company but work will only begin when the Covid-19 situation improves.
“Until then, I have to be careful in my job as I frequently deal with many people daily.
“I follow standard operating procedures strictly as I don’t want anything untoward to happen,” adds Kamal.
For company manager Stephanie Wong, 37, slower business is hampering the company’s earnings and this has affected the workers.
“For now, we are thankful to have jobs and a steady monthly income.
“But many of us are anxious because there have been cost cutting measures,” she says.
She adds that some of her friends have resorted to adjusting their lifestyles such as by taking up freelance jobs to generate a side income.
For emotional support, the public can call Befrienders at 03-7627 2929 (24-hour helpline) or go to befrienders.org.my/centre-inmalaysia for a full list of numbers nationwide and operating hours, or e-mail sam@befrienders.org.my.
“As expected, those who have savings cope better in managing financial stress.” azaddin ngah tasir
Prof Yeah says.
A third factor that could have contributed to the decline in bankruptcies in 2020 is the time lag between financial distress and bankruptcies.
“Typically, creditors would seek to exhaust all means of recovering the debt from the borrower before they resort to bankruptcy filing,” he explains.
It was also reported that there were fewer compulsory winding-up petitions filed against companies too, from 1,966 in 2019 to 1,190 in 2020 and 192 as of April 2021.
Prof Yeah says another indicator of financial distress is non-performing loans (NPLS) – or bank loans which are subject to late repayment or are unlikely to be fully repaid by the borrower.
“The total NPLS in June 2021 amounted to Rm30.2bil, a 16.2% rise from a year ago.
“The gradual upward trend is a sign of more financial distress especially when the extended loan moratorium period ends.
“Nevertheless, the current low NPL level and adequate loan loss provisioning by the banks suggest that the banking system is well placed to accommodate a surge in loan delinquencies,” he adds.
Unfortunately, the longer the lockdowns are in place, the slimmer the recovery hopes of the hard-hit businesses, Prof Yeah points out.
“This is due to the depletion of working capital, reserves and possibly shedding of core staff.
“Even when the pandemic subsides to allow for more businesses to reopen, the enterprises may not have sufficient working capital to resume operations unless they have access to new equity capital or borrowings.
“We may therefore experience a rise in company winding-ups, foreclosures and bankruptcies,” Prof Yeah says.
He urges the government to roll out a national strategy to facilitate business rehabilitation especially for sectors that are severely impacted.
“The strategy could involve increasing the resources of the debt workout unit coordinated by Bank Negara Malaysia to rescue the firms that have strong recovery prospects,” he says.
Ambank Group chief economist Dr Anthony Dass says bankruptcy and winding-up cases have been declining since 2018.
“This is despite the pandemic that inflicted the overall economy, which shrank by 5.7% in 2020, the worst contraction since the 1997 Asian Financial Crisis,” he says.
He adds that the filing of bankruptcies has also been slowed down by the closure of courts and insolvency offices in 2020 due to the movement control order.
While the loan repayment moratorium announced in July can be applied for by individuals, SMES and micro enterprises, it is not a blanket moratorium.
“This repayment assistance is not open to borrowers who have been overdue in their payments for more than 90 days or those undergoing bankruptcy or winding-up proceedings.
“What can happen going forward is that those who are not eligible for the moratorium are likely to fall into the bankruptcy category if their outstanding balance is more than RM100,000.
“Those who are below the RM100,000 debt threshold are not under bankruptcy but would fall into the ‘financial black list’,” he explains.
This group will struggle to seek financing and are likely to resort to borrowing from money lenders, thus falling into another vicious cycle.
Dass says the number of winding up cases may increase in future, especially when stimulus measures start to ease.
“This is in particular with the end of the moratorium.
“Recovery processes by financial institutions are expected to pick up.
“Courts and insolvency offices will start operating as usual. At the moment, the restrictive measures have slowed down these activities,” he points out.
To support companies and help them avoid winding up, Dass urges the government to help those that are seeking working capital to keep their businesses afloat and, in turn, help save jobs for working Malaysians.