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Employee Financial Wellbeing Linked to Profitability
by PNG Business News - March 15, 2021
Did you know that employee ‘money worries’ associated with poor financial wellbeing can negatively impact business profitability? Financial literacy training is a relatively easy and cost-effective solution to improving employee financial wellbeing and thus mitigating the negative effects of ‘financially stressed’ staff. Helping your employees access responsible loan products – some of which are now available in PNG via new and ethical personal lending start-ups – also has a role to play in their financial wellbeing.
The effects of financial stress and poor financial wellbeing on employees can be as great as physical sickness. Many employees admit that they spend several hours each week dealing with financial issues while at work. A 2020 survey by PwC revealed ‘money worries’ to be the biggest cause of employee stress and that the stress is a major distraction at work. It is estimated that over 80 percent of the PNG workforce is experiencing some level of financial stress.
How Does Poor Employee Financial Wellbeing Impact Business Profitability?
Financial wellbeing is closely linked to financial stress. It is estimated that employee financial stress is costing Australian businesses $31.1 billion annually. Whilst specific data does not exist for PNG businesses, we estimate it to be high. We also know that financial stress takes a toll on employees’ health—both mentally and physically – as well as on business health.
Employee financial stress contributes to increased absenteeism, lower quality work output, decreased productivity, increased staff turnover and associated recruitment and training costs, as well as even workplace theft. Studies show that employee financial stress is costing businesses up to 19% of their payroll costs! A financially stressed workforce is therefore bad for the bottom line.
What exactly is financial wellbeing?
Financial Literacy Australia defines financial wellbeing as when you are:
- able to meet expenses and have some money left over;
- in control of your finances; and
- feeling financially secure, now and in the future.
Financial literacy, that is, a personal’s ability to understand and effectively use various financial skills such as saving, budgeting, investing and responsible borrowing, underpins financial wellbeing.
The business solution
Financial literacy is key to reducing financial stress and improving financial wellbeing. Providing employees with financial literacy education is also part of being a socially responsible employer as well as an employer of choice.
Significantly – and especially in PNG’s current economic climate – equipping staff with the right skills to understand and competently manage their personal finances will also impact positively on your bottom line.
Solomon islands business – financial literacy success story
In neighbouring Solomon Islands, food manufacturing company SolTuna (one of the country’s largest employers) significantly cut staff absenteeism and consequently improved productivity, increased revenue, and cut costs largely via a financial literacy program.
Prior to receiving financial literacy education many staff were taking days off work because they couldn’t adequately manage their pay to last them from one pay cycle to the next. Absentee staff were raising additional money in other ways such as selling produce at local markets in order to make ends meet. On fortnightly paydays, many workers would head to the bank or the market instead of the workplace when their pay checks are deposited to do some much-needed shopping or pay off creditors.
Overall, the program was considered a great success by not just SolTuna but also by its employees.
Additional ways to improve employee financial wellbeing
There are other ways in which employers can facilitate the financial wellbeing of their employees in addition to providing them with financial literacy education.
- A good benefits package is a must. Performance incentives in the shape of bonuses, and clarity about pay bands are a great starting point.
- Offer competitive salaries. This one might sound obvious—and expensive—but, it is worth the effort.
- Give employees time off (or flexible work schedules) to allow them to put their finances in order – be it visiting the bank to set up internet banking or to pay out a high interest loan.
- Incorporate financial advisers in to your broader wellness or employee assistance program.
- Assist employees with their tax returns.
- Even understanding payslips can be complex for some employees—helping employees to understand their payslips can reduce the burden of stress.
- Encourage (and better still, facilitate) responsible borrowing – especially personal lending which in PNG, can attract interest rates of up to 50 percent per fortnight!
Facilitating responsible borrowing
Access to affordable credit is a right not available to the majority of PNG employees. As such, and in combination with poor financial literacy, staff often turn to unethical ‘pay-day street lenders’. Street lenders typically charge extremely high interest rates (up to 1000 percent per annum) and often ‘over lend’ exacerbating and perpetuating unsustainable debt burdens.
Many PNG businesses offer in-house employee loans to mitigate the risks posed by unethical pay day lenders. However, the administrative burden of managing loan books can be high. An alternative is now available via personal lending start up – Savi Moni.
Responsible lender offers financial literacy education
Newcomer to the PNG Lending market, Savi Moni’s personal loan solution was developed to help corporate sector employees take control of their finances and enjoy financial wellbeing whilst simultaneously reducing the negative business impact of financially stressed employees.
“We want to give employers and employees a beneficial staff lending solution that incorporates financial literacy to help avoid future financial stress” says Founder, Nick Keane. Born and bred in PNG and with several in-country business experiences, Nick understands the problems that staff loans cause for businesses as well as the financial stress generated for many PNG households. He is passionate about creating an improved sustainable solution.
Financial literacy education is a central component of the Savi Moni loan product, with a PNG specific formal ‘family money management’ workplace training, delivered by Australian Business Volunteers (ABV) available to interested employers. The training has been developed specifically to suit the PNG context and to help families strengthen skills in planning and saving for the future, as well as seeking advice about money and finance.
Savi Moni’s financial literacy education offers a gender inclusive approach, encouraging men and women from family groups to participate collaboratively. In addition, Savi Moni offers ‘Moni Savi’ - a range of free resources and tools on their website, targeting for both employers and employees to help improve financial literacy and reduce financial stress.
Improved financial literacy in combination with responsible borrowing contributes significantly to employee financial wellbeing and helps mitigate the negative business impacts of a financially stressed workforce. There is a clear business and social case for supporting employees’ financial wellbeing and for partnering with responsible personal lending services such as Savi Moni – which has financial literacy education firmly embedded in its loan products. To learn more: www.savimonipng.com.
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PNG Business News - June 15, 2021
PNG Vanilla Company Partners Expo2020 Team
Dr. Nancy Irwin (left) with the Deputy Commissioner General for Expo2020 and Head of the PNG Expo2020 Secretariat, Mrs. Jacinta Warakai-Manua began the partnership to tell the PNG Vanilla story in Dubai, by exchanging ideas in Port Moresby last week. A vanilla production and export company is partnering with the PNG Expo2020 Team to promote their products in the Dubai World Exposition that starts in October this year. KAMAPIM, a company working with landowners in the Madang and Morobe Provinces produces top quality vanilla beans and is already exporting to the EU market. The Managing Director of the company Dr. Nancy Irwin, met with the PNG Commissioner General to Expo2020 Ambassador Joshua Kalinoe and his Deputy Mrs. Jacinta Warakai-Manua in Port Moresby last week to firm up the arrangements. Dr. Irwin said Kamapim (pidgin for develop and to improve) concentrates its efforts in producing the best quality bean for the international market through quality assurance production methods. “PNG farmers can grow anything, they have instinctive ability to grow well any crops. When I first started the project, the quality of the beans were poor, full of fungus due to lack of processing knowledge. We saw huge potential of the organically grown beans and started working with landowners through a cooperative production and marketing structure to improve quality” “The company provide extension services to farmers and buy the beans directly, ensuring farmers are paid a fair price for their efforts”, she said. Dr Irwin said the beans are tested internationally and are consistently classed as the top-quality A grade level. “While PNG has a good perception of growing environment friendly organic vanilla beans, the challenge is for the relevant Government authorities to work with farmers to improve quality. I believe the cooperative production methods applied by our company, Kamapim, could be used nationally as one of the models to improve quality for the export market as well as to maximize revenue gain for farmers”, Dr. Irwin said. She said the company is looking forward to partnering with the PNG Expo2020 Team to tell the PNG story and to connect with niche importers in Dubai and the Arab world in general. Dr. Irwin said the company would promote its products in specially branded PNG Expo2020 containers to create visibility for the country as well as to preserve quality at the company’s cost.
PNG Business News - June 15, 2021
PNGEITI Praises Open Dialogue to Reopen Porgera Mine
The PNG Extractive Industries Transparency Initiative (PNGEITI) has praised the open stakeholder dialogue culminating in reaching consensus to re-open the Pogera Mine in Enga. Parties in April this year sanctioned a “Framework Agreement for the New Pogera Project” which spells out the roadmap to reopen the mine. Mark Bristow, CEO and President of Barrick Gold last week explained key elements of “Framework Agreement for the New Pogera Project” at a public forum at the Piam Oval in Pogera witnessed by PNG Prime Minister James Marape, landowners and other leaders. In the new agreement, PNG stakeholders will together own a 51 % equity stake in the mine while Barrick Niguini Limited (BNL), a joint venture company in which Barrick and Zijin Mining Group each own 50% will hold 49 %. BNL will remain the mine operator. At the end of the first ten year period, the PNG stakeholders will have the option to purchase BNL’s 49 % PNGEITI Head of Secretariat Lucas Alkan remarked that the open discussion throughout the negotiation process on the part of the mine operating lead, Government and landowners has culminated in this agreement signed happily by all parties. “We at the PNGEITI congratulate the Government and the project lead Barrick Gold and other stakeholders for reaching a consensus decision to reopen the mine. “Pogera has been an economic powerhouse for many years and people in the country have been waiting for the outcome. “We commend the Prime Minister, the President and CEO of Barrick Gold Mr. Mark Bristow for the leadership in ensuring that the negotiations were done in the transparent and open manner. “PNG Extractive Industries Transparency highly encourages such openness in the negotiating process for resources benefits and importantly the responsibilities that each stakeholder must take on to ensure smooth flow of proceeds. “We look forward to working with the Government and the project operator in the areas of transparency and accountability to help derive best value for all stakeholders. PNGEITI commitment to reporting on developments in the mining and petroleum space is becoming stronger with new reporting dimensions taking shape as we making progress in promoting transparency and accountability in the PNG mining and petroleum industry” Mr. Alkan said.
PNG Business News - June 14, 2021
BPNG Goes For Review
Treasurer Ian Ling-Stuckey has revealed the terms of reference for a review of the Bank of PNG, as well as the members of the review panel. Former Chief Secretary Robert Igara will lead the study, which was planned in the Supplementary Budget for 2020. Former central bank governor Sir Wilson Kamit and Australian professor Dr Stephen Howes are the two members. “These very eminent people, all of whom have detailed experience of the PNG financial system and reform, will be working to a term of reference approved recently by the NEC,” Ling-Stuckey said. “It is the first review of the central bank and the Central Banking Act 2002 since Sir Mekere Morauta’s financial system reforms when he was prime minister from 1999 to 2002. “Much has changed since then, and the effects of the coronavirus pandemic, along with substantial technological advances, have made the need for a review even more urgent. “The aim is to modernise the bank and the legislation in line with international developments, and make it more responsive to prevailing circumstances while preserving its independence.” The study is scheduled to be finished in time for Parliament's November session. “An independent advisory group was also established by the late Sir Mekere when looking at the changes that led to the Central Banking Act 2000,” he said. “Igara, currently the University of Papua New Guinea chancellor, was chief secretary at the time, and Sir Wilson was the governor of the Central Bank. “Prof Howes, head of the Development Policy Centre at the Australian National University, has long been involved in PNG research and advice and consultation, particularly in relation to national development.” Reference: The National (8 June 2021). “BPNG going for review”.