Pressure will mount on household savings — Treasury

THE low saving rate by households will worsen as unemployment continues to rise, according to Ismail Momoniat‚ the deputy directorgeneral of tax and finance at the Treasury.

Speaking at the launch of the SA Savings Institute’s Savings Month Campaign on Thursday, Momoniat said the impact of an economy that is in negative growth territory and rising unemployment would exert further pressure on saving.

“The more people who do not have jobs‚ the less people are going to save. People without jobs will not save‚” Momoniat said.

His comment came as personal finance experts bemoaned SA’s poor savings culture.

“The household savings‚ when we take it as an aggregate‚ is always around zero.

“And linked to that when you have low growth and increasing unemployment means that when people do not have jobs, they are not going to save‚” he said.

He said another stumbling block was that people who were unemployed tend to get into debt.

“And even those who work tend to look after their extended family members and their spending will be high.

“This does not mean that a particular individual can’t save.

“We are targeting people with a job, but it does not help if they have to find money to access basic ser- vices like healthcare and school‚” said Momoniat.

He added that it “was shameful that after 20 years we have not succeeded in getting high quality education at all our schools‚ and we have a situation where people are travelling long distances to access the education”.

“All of these failings we see mean the individual is taking more and more responsibility. We need good quality education and lack of that means people cannot do their numbers correctly.

“We have a situation where conspicuous consumerism is what people want and they want it now.

“In our society many people have gotten rich too quickly and it’s sending the wrong message. You need to ensure you are not taking needless risk‚” he said.

The Savings Institute, an independent nonprofit organisation dedicated to developing a robust culture of saving in South Africa, was launched in April 2001.