In order to help Johannesburg city employees with loan sharks, the city decided to help employees after it discovered that some employees were victims of unscrupulous loan sharks.
In a statement on Tuesday, September 27, the city said some employees were going home without pay due to excessive and questionable loan deductions.
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“Nearly 4,000 City employees are affected by these deductions, which total nearly R16 million each month. The law states that no more than 25% of your salary can be legally deducted, and we have ended all deductions that exceed the 25% threshold to protect our employees,” the statement read.
The city added that it is aware that some people have fallen into this post-lockdown debt trap which has had severe financial strains on their livelihoods.
“More than 2,000 employees have used our employee assistance program for advice on depression, substance abuse and family issues due to financial stress.
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The city said it suspected a number of these loan sharks were guilty of reckless lending and would report them to the national credit regulator as well as the Microfinance Regulatory Council.
According to the statement, it is evident that no affordability or feasibility assessments were ever undertaken in most cases to ensure employees were able to meet the unsecured loans offered. “We cannot sit back and allow our employees to be exploited like this.”
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The City plans to increase its offerings of financial literacy training and other forms of counseling to support its employees and will ensure that they are not placed in situations that could put them at risk in the workplace.
“While this won’t immediately solve the debt trap that many employees have found themselves in, we can at least make sure they can expect a living wage. Ultimately, no employer can expect their employees to provide quality service while under such stress and anxiety,” the City’s statement concludes.
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