Wellness Wednesday, financial wellness, saving, economy, South Africa, gig work, financial future, Ayanda Mvandaba, economic landscape Image: Unsplash
Chartered Accountant and the Founder of Drink Nil, Ayanda Mvandaba offers a candid look at how young people in South Africa are grappling with financial uncertainty. Shedding light on the challenges of gig work and the pressing issue of the savings gap, offering valuable insights into today’s economic landscape.
Sphe, a 24-year-old Capetonian, juggles multiple gigs to make ends meet. He drives for a ride-hailing app during peak hours, delivers food in the evenings, and occasionally picks up freelance graphic design projects. Like many young South Africans, Sphe embraces the flexibility and autonomy of the gig economy. But beneath the allure of being his own boss lies a harsh reality: future financial security is a constant struggle. As the gig economy expands its footprint across South Africa, many young people find themselves caught in a precarious balancing act between earning a living and securing their financial future.
This burgeoning workforce faces a unique set of challenges in bridging the "savings gap"—the chasm between their current savings and the resources needed for a stable and prosperous future. This generation often finds itself at a crossroads when it comes to doing work for passion, doing work to keep the lights on, or providing a buffer and closing the wage gap because as we know, the cost of living is growing far quicker than earnings and that the minimum wage is not necessarily a liveable wage in South Africa.
Young and old are finding themselves in positions where their day jobs no longer sustain them and with the COVID-19 pandemic, we saw the rise of remote working and flexibility. Not only are traditional day jobs not enough to sustain people, but saving and investing becomes a reach when people need to focus on school fees, rent, and fuel. When my parents were still working, there were always people selling Tupperware and Pres Les at their workplaces and would collect on payday. Now I see internal auditors, administrative clerks, and marketing professionals selling at their workplaces for extra income.
When people try their best to make ends meet, understandably there are priorities of which saving, potentially, is not one of them. In the context of South Africa, a savings gap for individuals refers to the difference between the amount of money they are currently saving and the amount they need to save to achieve their financial goals, for a rainy day, education, healthcare, or retirement. Increasingly, the gig economy has provided a solution because people are finding innovative ways to monetise their skills, resources and time. The gig economy is a labor market characterized by the “prevalence of short-term contracts or freelance work,” as opposed to permanent jobs.
Key aspects of the South African gig economy landscape according to the Labour Research Service, include that the gig economy is estimated to be growing at a rate of 10% annually, with a significant portion of this growth occurring in the service sectors.
The same survey notes that the majority of gig workers are under 30 years old, with a concentration in major urban centers. It is a scary fact that based on studies conducted by Standard Bank, a warning was issued by the bank in July 2024, that many South Africans earning over R25,000 struggle to build emergency cash savings. The bank attributed this trend mainly to the challenging economic climate and the increasing cost of living.
Perhaps a feature of the gig economy is understanding that we are all in sales and what we sell is time. The gig economy not only comes with diversified and additional income but with a level of autonomy on one’s time if you don’t find yourself burning the candle from both ends.
As much as the gig economy provides a bridge for many, it also can become a source of anxiety because it becomes difficult to budget properly because of the uncertainty of work and cash flow. The gig economy has implications for long-term financial planning and whether one works to “meet the budget” instead of budgeting within one's means. Irregularity of income often means compromises with healthcare and tax implications.
The gig economy's momentum is undeniable, whether fuelled by necessity or a desire for flexibility. It's a permanent fixture in the modern workforce.
By making informed choices, utilizing the right tools, and embracing adaptability, gig workers in South Africa can successfully navigate the gig economy's complexities and forge a secure financial path. The journey may be demanding, but the potential for success is immense.
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