Court-ordered deductions from South African workers’ wages to repay debt to creditors should be banned, former AngloGold Ashanti Ltd. Chief Executive Officer Bobby Godsell said.
“The extender of credit should do his own work in collecting,” Godsell, who is also chairman of Business Leadership South Africa, said in an interview in Johannesburg. “I do not think it’s in principle the job of the employer to collect somebody else’s credit, deducted at the source.”
High levels of debt among workers was a reason behind the violent strike at Lonmin Plc’s Marikana mine in August 2012, according to the government. So-called garnishee orders compel employers to deduct debt payments from workers’ paychecks before wages are paid, often resulting in a smaller take-home amount.
It is possible that a worker with a gross earnings of 10,000 rand ($980) a month takes home only 2,000 rand or 3,000 rand because of these deductions, said Godsell, who served as CEO of AngloGold from 2004 to 2007.
“It’s the person who extends the credit who should be thinking about the amount of credit extended, how it’s going to be repaid and who is responsible for the repayment,” Godsell said today. “They should not become a sort of privileged creditor of the payroll.”