Workers crippled by high transport costs

Data shows workers requesting advance payments to cover commuting costs.

According to Transaction Capital, which finances minibus taxi fleets around the country, taxi fares have increased by more than nine percent per year since 2013. This outstrips growth in salaries over the same period by some distance.

For an industry with overhead costs such as vehicle finance, lockdowns related to Covid-19 have placed pressure on taxi operators to increase profitability now that restrictions have eased, meaning stable or decreasing fares are highly unlikely.

Statistics gathered by earned wage access platform Paymenow show that those workers who have requested payments have done so mainly to cover their transport costs.

“Taking on debt simply to cover monthly living costs is the first step to being trapped by the unreasonably high interest rates associated with loan sharks. Earned wage access as a concept is designed to prevent this by allowing workers to draw portions of their earnings throughout the payment cycle to meet everyday needs or deal with financial emergencies,” says Deon Nobrega, Paymenow’s co-founder and CEO.

“The jumps in the petrol price are particularly noticeable when we break down payment data by reasons for the advances.”

In January this year, employees signed up with Paymenow who were requesting advances were trying to cover commuting costs to work 46 percent of the time. By comparison, only 23 percent of disbursed payments were used for food.

“This trend continued through February and March, where workers were spending 48 percent and 45 percent of advances on transport costs, respectively. Historically, not being able to meet transport costs has been a key driver of employee absenteeism and churn in South Africa, where the majority of those in our economy who have a formal job are blue-collar workers and financially vulnerable,” adds Deon.