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Durban - KwaZulu-Natal government employees have more than R24 million deducted from their monthly salaries to pay off their private debts before they see a cent of their money.
The bulk is by order of the court - and it includes interest.
Close to R13m is taken because of Emolument Attachment Orders (commonly known as Garnishee orders). According to figures for July, government employees faced 26 044 such orders.
Some have to pay off several EAOs every month, with one man notching up a record 10 EAOs.
Money owed to the SA Revenue Service (Sars) has meant another 4 640 Garnishee orders, totalling R5.2m. Child maintenance involves a further 5 165 orders and R3.3m, and state debt (money that has to be repaid for a variety of reasons, such as negligently damaging a government vehicle) accounts for 767 orders and almost R200 000.
Another R2.6m is deducted via 4 218 administration court orders (issued at the request of creditors to, among other things, wind up a debtor’s estate to settle bills).
Unlike the private sector, government employees are not allowed to have “negative” salaries and have to be left with a “comfortable amount” come pay day.
“But most of the time, this is not the only debt they have,” said a spokesman for the KZN Financial Literacy Association in the office of the MEC for Finance, Ina Cronje.
“You don’t know what other orders they have signed… what they might owe to micro lenders and loan sharks,” he said.
Indebtedness affected employees at all salary levels, the spokesman said. But people who could not manage their own budgets were not involved in any government budgeting as these employees had to undergo credit checks before being employed.
People who are in debt are easily tempted “to be involved in corrupt practices and this makes our efforts to fight fraud and corruption difficult”, Cronje said.
And those who were heavily in debt were not fully work fit and motivated to be productive, she said.
“It can affect their health, resulting in stress, a negative state of mind and high absenteeism.”
Spiralling personal debt problems were not just restricted to government employees however. The private sector was also affected and there were reports of loan sharks waiting at factory gates to get their dues, the spokesman for the KZN Financial Literacy Association said. The Association includes 100 members ranging from various government departments, to NGOs and banks.
Now, in a bid to prevent government workers falling into the festive spending debt trap, the provincial treasury, the office of the premier and the KZN Financial Literacy Association have come up with a plan to help them stay out of trouble.
A special Government Employees Festive Spending summit is being held in Ulundi today for 300 people from all provincial departments and at all salary levels. KZN is the first province to initiate a programme to help employees with financial education.
The summit follows workshops on EAOs for employee wellness practitioners and human resource employees who play a supporting role in deducting the money from salaries. The training by the National Credit Regulator and Justice College was such a success that it was decided that relevant employees at all levels should also benefit.
The spokesman for the KZN Financial Literacy Association said that as well as the high number of indebted government employees, there was also a high incidence of fraudulent EAOs.
These were instituted by lawyers, acting for lenders, who took shortcuts to get money from debtors, when the order to deduct money should come from the courts, not via lawyers.
A national task team, headed by Credit Ombudsman Manie van Schalkwyk, has now been established to investigate current practices and establish a code of conduct to address concerns about the EAOs.
Mzwandile Gumede, the human resource senior general manager at the office of the premier, told the gathering in Ulundi that debt was not a crime.
“Everyone in every income bracket is at risk. However, it has to be addressed and it can also be prevented by proper financial planning and advice,” he said.
Cronje said that employees who were not in debt must be helped to stay out of debt and avoid EAOs at all cost.
“Our mission through financial literacy is to ensure that people know how to use money wisely and that they don’t live a life of misery as a result of indebtedness,” she said.
Meanwhile, the National Credit Regulator is also urging consumers to start budgeting and planning wisely for the forthcoming festive season.
The Credit Bureau Monitor for the quarter ending June, 2013, showed that there were 20.21 million credit active consumers of which 10.52 million were in good standing, while 9.69 million had impaired records (they had an account/s which was/were three or more payments or months in arrears, or had an adverse listing, a judgment or an administration order).