Microlenders to blame for wage demands

[Dave S]

Cash is king! One can only be free if you have no debt, morally or financially.

+1, or at least have enough cash to cover any debt you may have

[Dave S]

Problem with the borrowing of cash from anywhere, micro or macro lenders, is that the people borrowing this cash are often in need just to buy food as their salaries are too low to support them, and the "vicious circle" trap is "the more you borrow, the more you need to pay back, the more money you need, the more you need to borrow".

If one looks at the world in general, there is "x" amount of income available, the high income of one person is offset by the low income of another, and so on. If everyone was earning a "living wage", then nobody would have any luxuries and massive corporations would tumble. The balance of nature (albeit, man-made), there has to be poor people and there has to be rich people, it's just the ratios are becoming corrupted by massive population growth, world-wide.

[IanF]

The saddest thing I have seen is a lady buying groceries in front of me in the queue and asking for that to be put on budget.
BJ the sooner you can get out of the the money sucking lawyers clutches the better. If I was you I would have a look at the in duplum rule and enforce that if you have paid back more than twice your debt. But the definition of debt for that rule is not easy to interpret to me.

[bjsteyn]

The saddest thing I have seen is a lady buying groceries in front of me in the queue and asking for that to be put on budget.
BJ the sooner you can get out of the the money sucking lawyers clutches the better. If I was you I would have a look at the in duplum rule and enforce that if you have paid back more than twice your debt. But the definition of debt for that rule is not easy to interpret to me.

I am going this weekend to fnb, to see if they can move the account back to them and away from the lawyers, and just deduct it from my bank account monthly. I have no idee how much of what i am owing is interest and how much is from the actual loan money.

If i understand the dumplum rule correctly, then the unpaid interest on the money i ow, can not be more than twice what i loaned. My total outstanding is R20000 so it is not even more than what i loaned, so even if all of it was interest dumplum would not apply to me. :-(

[ians]

I got into a habit of always keeping my suppliers aware of my intentions and up to date with what was going on. I found they will let you ride out any cash flow issue you have for example or if you have a bad paying customer. IF I say I am going to pay on the 15th then I pay on that date, if I cant for some reason I make them aware days in advance.

It worked well until recently when one of the suppliers was bought out by someone else, I paid R30 000 as I promised on the Friday afternoon, Monday morning I went in to buy more stuff I was told my account was on hold, I battled for a month or 2 to scratch the money together to complete the project, got paid the full amount and paid all outstanding debts, except 1, that was last year in October, they are still trying to get the balance of the money out of me. The money is sitting in a savings account while they sort out all the legal stuff. Their lawyer sent me a whole lot of warning threatening letters, I am busy negotiating a settlement figue less the lawyers fees and less than the original figue.

My point...stick to your word and communicate with people it makes life so much more pleasant.

[bjsteyn]

Question on the dumplum rule: If some of the capital was paid off, is dumplum calculated on the new capital still owing or on the original loan value?

[IanF]

Hi BJ my reading (I am not a lawyer ) is that it cannot exceed the capital amount of the original claim. So I would say the amount that the loan was handed over for to the lawyers which will include interest to that date.

I hope the more learned guys correct this if I am wrong.

[Dave A]

In duplum is based on the capital value owed at the time of default. Essentially the total value of collection costs and interest charges raised against the debtor after default may not exceed that capital value.

Personally I think it should apply to interest only as was the case under the old Usury Act, but that's the way things stand currently under the National Credit Act.

[david2677]

Mirco lenders quench the drinking addicts and its a double blow to ones pocket. Very seldom employees borrow with a genuine cause, in the event of a genuine cause then they approach the employer and how often does one have such requests not from perverts

[IanF]

I have one staff member with a garnishee order, and the time for me to declare the debt satisfied (by virtue of in duplum) is drawing close. It's going to be interesting moment, I'm sure.

Dave any feedback on the in duplum declaration?

[Dave A]

As she needed to clear her credit record, she settled the entire outstanding a couple of months ago and got the attorney who got the garnishee order to rescind the judgement. That ended the chance to test the waters.

[Miro Bagrov]

I think that the problem is the 'slave' attitude towards labour in SA.

Many employers try to keep their workers dependent on them by keeping salaries as low as possible (encouraging the need to borrow), the need to return the interest keeps the worker glued to the boss' titty or else he will be in trouble.

If the boss earns 20 000pm, he pays 2000 for labour ave. If he earns R60 000pm he pays R6000pm for labour (don't make me take out proof, because I have it). So unless the boss makes 100 000, there is no way for the worker to get 10 000 salary....
Workers are not seen as partners in production (who share in earnings), they are seen as residual waste on disposal of used up material (and are paid accordingly). Do you know how many workers owe wages to the boss in loans and early payments?

The worker, btw, has a duty to fight for his financial independence from the boss and from the need to borrow. He has to see past the 'easy' and find an escape to the trap. Most of them just jump into the trap.

Now, how can micro-lenders be more at fault than employers. Or how can the boss be more guilty than the worker for having no discipline?

[IanF]

The worker, btw, has a duty to fight for his financial independence from the boss and from the need to borrow. He has to see past the 'easy' and find an escape to the trap. Most of them just jump into the trap.

Now, how can micro-lenders be more at fault than employers. Or how can the boss be more guilty than the worker for having no discipline?

Hi Miro
This is a lot more complex than blaming the boss or the workers, but from what I see the microlenders are taking advantage of the workers lack of financial savvy.
Then the workers also take advantage when they can. I had a case the other day where I promised some booklets by close of business there was a lot of finishing work, but come home time the job was left half done and when I asked why I just got a blank stare. I then had to finish the job which only took another 15 minutes so the promise could be kept.
Now for next year I will try and change working times back to a 4:30 finish time. I agreed to letting them finish at 10 to 4 so they could get the early transport home with no drop in salary. There is a lack of team effort that I see even here which then gets a them and us situation.
Anyway we all need to work together but it is hard to get to that situation.
Micro lenders have seen the gap and exploited it but a lot needs to be done so that the them and us changes to the team.

[Miro Bagrov]

Hi Miro
This is a lot more complex than blaming the boss or the workers, but from what I see the microlenders are taking advantage of the workers lack of financial savvy.

Absolutely!

My prediction is: There will be a rise in debt defaults in both micro-lenders and banks in the near future

[adrianh]

Hi Miro
This is a lot more complex than blaming the boss or the workers, but from what I see the microlenders are taking advantage of the workers lack of financial savvy.
Then the workers also take advantage when they can. I had a case the other day where I promised some booklets by close of business there was a lot of finishing work, but come home time the job was left half done and when I asked why I just got a blank stare. I then had to finish the job which only took another 15 minutes so the promise could be kept.
Now for next year I will try and change working times back to a 4:30 finish time. I agreed to letting them finish at 10 to 4 so they could get the early transport home with no drop in salary. There is a lack of team effort that I see even here which then gets a them and us situation.
Anyway we all need to work together but it is hard to get to that situation.
Micro lenders have seen the gap and exploited it but a lot needs to be done so that the them and us changes to the team.

There is a young white guy that pops in the shop now and again. He lives nearby is always complaining about not being able to find work. I decided to let him join me as he is decent and quite intelligent. He works for couple of days and I don't need him one day. He complains to my wife that if he doesn't work then they don't eat. (this got up my nose because he had only worked for me for 3 days - what did they do then - trying to make us feel guilty is not a way to earn my sympathy) Anyhow, I let him work the day. He works the Thursday and then asks to have Friday off to get his ID. (I found this strange too because the government offices are walking distance from the shop and it doesn't take the whole day - I can vouch for it because I went to do my passport two moths ago) So Saturday comes and he works from 10am. 13H00 he asks if he can go home early.... Right, so lets get this straight, the guy doesn't have work, wants to get paid, wants me to feel guilty yet wants to work when it suits him. I have plenty of work and I can keep him occupied for 16 hours a day should he want it (I have said so on numerous occasions). I paid him, dropped him off and carried on working on my own. Bottom line, I'll give him a miss.

The problem in this country is the "I work for money, if you want loyalty get a dog" attitude. Very few people take responsibility for the bigger picture within the business, they care only about getting an hourly rate and going home when the hour is up. Most of my staff see the bigger picture because their salaries are directly tied to productivity. Its this simple, if we don't deliver then we don't get paid (me included) we do share whatever money is available at the end of the month. They understand that I do not get paid first, they get paid first and that we are all in the same boat. They work hard and put in as much effort as I do because we have all battled together for months. I suppose that is the other side of working at home, they get to see that I do not live like a king but that my family and I are no different to theirs.

Ok, the problem with labour is that they do not see the bigger picture in business, they do not see that if their part of the puzzle is not completed then no money comes in. Labour seem to think that the bosses simply sit back in their big leather chairs and exploit them. How do you get labour to see the bigger picture, maybe the trick is to paint the picture on a canvas small enough for them to wrap their minds around. It doesn't help to speak to labour in terms of large numbers, they do not understand (like saying I need to clear R100K to pay all expenses in the month) maybe one should show them where each cent goes, how the R5 paid for the work they do pays their own salary, how anther R5 pays the electricity etc.

Maybe the fault does lie with employers to a degree in that the employers do not paint the larger picture on a canvas small enough for them to grasp (small does not mean naïve or stupid, but rather in a manner suited to their own frame of reference) In analogy, I am sure that they could relate to the idea that the business is just as if their wife is baking cup cakes and selling them to keep the family going. If she fails to buy the ingredients there are no sales and no money, if she sells them below cost she loses money, if she just leaves them unfinished etc.. The point is that us as employers need to decomplicate the picture to such a degree that a seven year old can understand the implications of their actions.

My view regarding labour in this country remains unchanged: 99% of the locals that I have come across seem to feel that that the world owe them and that it is the employers privilege to employ them.