Doreen Zamuee
It is no secret that the Namibian economy is experiencing and will continue to experience increased inflationary pressures. This is accompanied by anticipated price hikes for housing, utilities, food, and non-alcoholic beverages, as well as a consistent decline in the value of the Namibia dollar.
Today’s firms must balance the impact that rising inflation rates have had on their profit margins while also considering the basic necessities of their workforce.
A direct cash infusion into the already high salary bill on which most businesses spend more than 50% of their revenue was traditionally the traditional solution to employee financial woes. This article’s goal is to persuade businesses to think about other options for raising employee net income (cash in the bank) without having to increase the already substantial salary budget.
Equity sharing
The provision of equity shares, as some private corporations have started doing, is a known method of raising employees’ net income, which for purposes of this article means expanding the pie.
When a corporation offers its employees equity shares, it’s either as a reward for good work or sold at a set, frequently discounted, price. Research shows that companies that offer shares to employees have lower staff turnover rates, greater retention and overall performance. This is however a longer-term investment for the employee who is able to invest for the future.
The advantage of this option is that of tax exemptions offered on the payment of dividends at the end of each financial period. This is unfortunately not a tangible option for non-privately owned entities.
Balancing the cost of living: accommodation
Namibian human capital initiatives need to include the urgent finding of ways to offset inflation by increasing the net income employees could remain with, without increasing the wage bill. A proposal would be to take a look at the employee’s immediate needs and find ways to assist them in these areas.
Currently, accommodation is the biggest expense for the majority of employees.
With such vast acreage and a population of just over two million, Namibia has one of the most overvalued real estate markets in the world. Companies could help by entering into an agreement with financial institutions to provide loans for real estate at lower interest rates. The rates may be advantageous for both the firm and the respective bank. The company would gain because more money would wind up in employees’ pockets without having any impact on the wage bill.
Prime -1 interest rate reduction might put at least N$500 in the employee’s pocket. The benefit for the external stakeholder could be an increase in clients with millions gained through compounded interest. Free advertising on the company platforms may even be considered if the interest rate is low enough.
Consider also an agreement with a developing firm where those who cannot afford to purchase houses through the bank, could enter into an agreement that allows them to ‘Rent-to-Own’. The basic model allows for a tenant to enter into an agreement for rental property directly from the developer and cut out the interest enforced on lower earning income clients by banks. This, if properly facilitated, could offer security and long term employment (retention) with the institution and allow for ultimate ownership of property. Liability can be clearly communicated in the documents.
Agreements with pharmacies
Pharmacies flexibility in setting up profit margins allows for negotiations with institutions on the price for medicine. Companies with a great staff complement can use these numbers to their advantage, where employees can benefit from purchasing medicine at a reduced rate simply by presenting their medical aid and staff card. These agreements could be highly beneficial, particularly for those employees who suffer from chronic ailments.
The pharmacy as a business will benefit from the numbers that enter its doors. The overall result would be money remaining in an employee’s pocket. The same could be applied to health service providers such as GPs, specialists etc.
Agreements with insurance providers
At present, many Namibians are paying high amounts of money for insurance that they do not use. OUTsurance offers a package called the OUTBonus, which is paid out to claim free clients over a period of time. The proposal is that companies could approach Insurance service providers to offer employees reduced rates and barter for advertising space on employer platforms when the insurance companies have new products. One such benefit, which would be a huge incentive was an OUTBonus model. The ultimate result: money in employees’ pockets.
Day care and after care facilities
Childrearing is another aspect that cuts deep into the net income of young parents. Company time is often spent fetching children from school and taking them to aftercare facilities. Further, parents spend large amounts of money paying for these facilities on a monthly basis.
Providing a daycare facility provides savings in two areas: fuel spent transporting young ones from one place to another, and ensuring that employees are back at work on time. Actually, employees rest during the lunch hour, which does not happen as they are too busy fending off traffic and figuring out shortest routes to ensure their destination is reached.
There is research that argues both for and against this idea. The latter being that parents, particularly nursing mothers end up spending the bulk of their time in the daycare which reduces their productivity. Well, compare that with an employee who has to drive twenty kilometres to nurse and rush back to work. That is time lost as well. One could at least manage such a mother, or father, better if they are on the facility.
Further, this benefit could also serve as a resource mobilising initiative. Parents are already paying large sums of money to have their children in daycare, so why not redirect those funds from their salaries? The payment is guaranteed before the salary is released to the bank. Secondly, academic institutions such as the International University of Management could allow their final year students to offer tutorship as part of the experience required.
In conclusion, the article’s goal was to show that it was possible to ‘pay’ an employee without raising the business’ wage costs. If properly carried out, the methods presented here have the potential to raise the amount of money the employee will have to work with.