Humbug, festivities and financial education

Posted on December 2, 2011


When I started researching the column this week I felt a bit like Scrooge in Charles Dickens’ A Christmas Carol. “Bah! Humbug” was his response to the looming festive season of supposed togetherness and happiness, of ubuntu amid snow and holly wreaths.

Given te dehpth of indebtedness into which many working class people seem certain to be be cast — mentioned here last week — this may be understandable. But there was so much more, and some of it was brought home on a very personal level.

Take the case of Mandla, a father of four who has worked as a deliveryman for 20 years. He started as a “casual” making deliveries on his bicycle until his employer agreed to union demands and he was given a full-time job.

Several years later, the company was taken over and he was given a retrenchment package negotiated with the unions. Within days he was contacted by the new management and offered the same delivery job, but covering a much wider area — if he had his own car.

The retrenchment package made this possible and so Mandla began more than a decade of daily, 60km-plus delivery rounds. He had lost touch with his union and was not given a contract, but he was grateful that he had a job, and his sole tool of trade: a car. With no medical aid, pension or provident fund, he had become one of the growing army of outsourced workers.

However, once he was made made aware of insurance for his car, he religiously paid his premiums over the past five years. In time, the bodywork of the vehicle showed signs of wear and tear, but the make meant that its engine parts are in high demand in the “chop shops” where stolen vehicles can be disassembled in under 20 minutes. However, he was careful, always locking the car and never away from it for more than a few minutes making deliveries.

Last week, that was enough time for a young man to open the door and hot wire the ignition. Mandla raced toward the car as the thief did a rapid U-turn and sped off.

The deliveryman was distraught. But then he recalled his insurance policy that guaranteed him a replacement vehicle for 30 days while he waited to be paid out for the loss that he thought — not understanding depreciation — would allow him to buy another vehicle.

The replacement car duly arrived in time to carry out his next day deliveries. But then the insurance assessor arrived and discovered that Mandla did not have an immobiliser fitted to his stolen car, a device the deliveryman thought was an optional extra.

It was not. He was given notice of 24 hours that the replacement car would be withdrawn — and there would be no payout. In any event, given the age of his stolen car, any payout would have been minimal.

It was also made clear to him that if he could no longer manage the deliveries, he was out of work. He was, apparently, not regarded as a worker, but as that much lauded creature, a self-employed entrepreneur, albeit one who only this week became fully aware of some of the thornier details of the economic system.

But Mandla’s case is not unique. Nor is it an example of some of the cases of rank exploitation that occur on a regular basis and that add fuel to the Cosatu demand to ban labour brokers.

Mandla is, in fact, fortunate. Having worked in the same areas for nearly two decades, news of his plight soon spread. He is able to continue his deliveries in a borrowed car, a local resident promised a R5 000 grant toward another vehicle and several of his customers pledged to look out for a suitable car.

It was a reaction to which one could hardly exclaim: “Bah! Humbug.” But the incident did once again underline one of the legacies of the apartheid past that has continued into many areas of our existing schooling system: the lack of financial education.

But it took an announcement this week by the management of Kumba Iron Ore to bring this issue to the fore. Hailed by the unions, Kumba announced a significant payout to employees under the company’s employee share ownership plan (Esop).

But the unions gave as much of a thumbs up to the fact that Kumba provided comprehensive financial training to both employees and their spouses. In so doing, they acknowledged their own shortfalls in this area.

Despite the fact that many unions have linked investment companies, there still exists considerable wariness about providing education about shares and stock exchanges. However, such education can contribute toward an awareness that commodity markets and share prices can be highly volatile and that minority shareholdings can often be little more than window dressing.

Kumba provides what could be a good example: most employees opted to swap their shares for cash, repeating a pattern that emerged in Britain 30 years ago during Margaret Thatcher’s shareholder democracy drive labelled “peoples’ capitalism”.

Cut-price shares made available to workers in companies such as British Gas initially — and significantly — broadened the shareholder base beyond 12 per cent of the population. But the proportion of shareholders fell back to precisely that figure within weeks of the shares becoming saleable.

This is the background to the call by the National Union of Mineworkers (NUM) for future Esops to go beyond the existing levels to ownership and control. The NUM wants majority holdings and control to be in the hands of mineworkers, most of whom happen to be black.

Underlying this is a renewed awareness of the need for education and training to individuals groups to help them avoid the pitfalls as they negotiate an increasingly difficult economic terrain. Not just the Mandlas of this world, but also the land claims beneficiaries and the legions of outsourced workers.

It hardly signals a new world dawning, but it is also most certainly not humbug.