Economic analysis of indebtedness among workers in formal employment in UMzinyathi District

Abstract

During the last decade consumer indebtedness has increased substantially in South Africa. After the recession in 2008, there has also been a great decline in savings among households in South Africa which formal workers are of no exception in a trend usually associated with low income households. Despite great improvement of remunerations in formal employment sector, employees continue to be drown in debt and it has been reported that South Africans are still continuing to sink under debt. In the light of these developments, the study sought to analyse indebtedness among formally employed workers in the UMzinyathi District in the province of KwaZulu Natal in South Africa. The methodology used was cross-sectional survey design with a sample population of 150 respondents that were selected based on random sampling by the use of probability proportional to size sample technique. A self-administered questionnaire was used to collect the data, which was processed and analyzed using the Statistical Package for Social Sciences (SPSS V16). The findings of the study revealed that majority of workers (78%) in formal employment hold tertiary educational qualifications, (78%) are in an age group regarded as youthful and (88%) work on a permanent basis. Results showed that there has been significant improvement in saving behaviour that was shown by the correlation between the saving behaviour and net income with the aid of Pearson chi-square under the asymptotic significant value of 0.004, but that has little influence on formally employed workers' borrowing behaviour as majority (85%) of the respondents still have credits to repay. The study also found that few respondents (6%) are over-indebted, but there is alarming rate of workers heading towards over-indebtedness. The findings have wider implications on credit usage in future. Some recommendations have been made and discussed and future research suggested.