Consumers battle to pay bills as job losses rise

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.

The consumer credit reporting agency said the number of consumers who had lost their jobs as a result of the Covid-19 pandemic and associated lockdown continued to increase.

In the first week of April, when the survey started, 10% of respondents financially affected by the pandemic had lost their jobs.

In the week starting May 25‚ when it concluded, that number had risen to 16%.

“Consumers in the most vulnerable sectors of the economy have been the hardest hit‚” TransUnion said.

“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 respondents (20%) reported they had made 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.

“Many people (38% of respondents) are borrowing against their savings — up significantly‚ by eight percentage points‚ compared with the previous survey period‚” the survey said.

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

Apart from spending less on entertainment‚ 24% of South Africans said they had cut back on retirement savings.

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

TransUnion Africa CEO Lee Naik noted the heavy toll taken on people working 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,” Naik said.

“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.”—