South African economic trends and workplace mental health: Employer-employee responsibilities

May 1st, 2024

Picture source: Getty/iStock

By Kyle Bester and Prof Nombulelo Mabeka

The economy from a global perspective has undergone multiple shifts, this includes the apparent change brought on by the COVID-19 pandemic. The World Bank states ‘Weak structural growth and the COVID-19 pandemic have exacerbated socio-economic challenges. South Africa has recovered its pre-pandemic GDP but not its employment level’ (The World Bank ‘The World Bank in South Africa’ (, accessed on 12-10-2023)). The World Bank further states that ‘poverty was an estimated 62,6% in 2022 based on the upper-middle-income country poverty line’ (The World Bank (op cit)).

These changes in the economy have seen developments in a variety of sectors, such as information and communications technology and other industries. While the change in these sectors demand adaptability, the notions of change and control require attention. Income is considered to be important for those seeking health promotion goods and services. However, with reduced levels of income and economic insecurity, those with lower incomes may not necessarily be able to access services and goods. Therefore, those on lower incomes may experience a loss of control or security (R Thompson, E Igelström, AK Purba, M Shimonovich, H Thomson, Prof G McCartney, A Reeves, Prof A Leyland, A Pearce, and Prof SV Katikireddi ‘How do income changes impact on mental health and wellbeing for working-age adults? A systematic review and meta-analysis’ (2022) 7(6) The Lancet e515). When one continues with the argument of control, one should not omit the aspects of predictability and security. Employment signifies these two aspects, however, the economic challenges as a result of the COVID-19 pandemic have given way to job-insecurity (E el Khawli, A Keller, M Agostini, B Gützkow, J Kreienkamp, NP Leander and S Scheibe ‘The rise and fall of job insecurity during a pandemic: The role of habitual coping’ (2022) 139 Journal of Vocational Behavior).

It is argued that job insecurity is one of the most pervasive psychological challenges experienced by employees and their employers (S Yu, N Wu, S Liu and X Gong ‘Job Insecurity and Employees’ Extra-Role Behavior: Moderated Mediation Model of Negative Emotion and Workplace Friendship’ (2021) 12 Frontiers in Psychology). While it is not exactly clear how wealth impacts mental health, there is evidence to suggest that lower-income individuals may be more affected. This is due to the lack of accessibility to goods and services that can help improve their mental health. This is made worse by the current economic trends, which have led to cost-cutting measures, retrenchments, and increased workload, all of which can have a negative impact on employee well-being. On the other hand, organisations that invest in employee well-being and mental health can benefit from increased productivity and better overall output. Ignoring mental health can have significant consequences for organisations, as the costs of mental health issues are estimated to be up to R200 billion annually for the South African economy (Biz Community ‘Global trends are forcing an evolution in workplace wellbeing’ (, accessed 5-12-2023)).

It appears that the challenges in the current economic trends may lead to mental health consequences. The construction of ‘people with disabilities’ in s 1 of the Employment Equity Act 55 of 1998 infers that the meaning of mental health falls within the ambit of disability. The interpretation of this provision denotes that mental health tacitly falls within the listed grounds in terms of s 6 of the Employment Equity Act. It is believed that one’s socio-economic context has an impact on mental health and overall well-being (T Ristikari, M Merikukka and M Hakovirta ‘Timing and duration of social assistance receipt during childhood on early adult outcomes’ (2018) 9 Longitudinal and Life Course Studies 312).

Furthermore, prolonged economic hardship may also result in increased levels of stress and substance use. Adding to this notion of economic hardship, extended periods of poverty in children may also lead to increased challenges with mental health (M Bask, P Haapakorva, M Gissler and T Ristikari ‘Growing up in economic hardship: The relationship between childhood social assistance recipiency and early adulthood obstacles’ (2020) International Journal of Social Welfare 130).

According to BusinessTech during the period of 2020, South Africans experienced a surge in retrenchments (BusinessTech ‘Big increase in retrenchments across South Africa’ (, accessed 4-12-2023)).

The question one needs to pose is what about those that are employed and are experiencing the crippling consequences of rising interest rates and inflation? The authors of this article shift the discussion to the impact on employees in organisations to briefly indicate the mental health consequences of the current trends in the economy. Moreover, it is argued that those who remained employed throughout the pandemic had been neglected in terms of well-being and mental health. When companies consider measures, such as wage reduction and increased workload due to economic insecurity, employee mental health and well-being are often overlooked.

The consequence of economic insecurity may have adverse consequences on employees in organisational contexts. It has been shown that while economic insecurity contributes towards the mortality rates, it is more strongly associated with somatic symptoms of shortness of breath, fatigue, hypertension, and weakness (South Africa Federation for Mental Health ‘The impact of economic insecurity on mental health’ (, accessed 27-11-2023)). Furthermore, the following consequences might be experienced as a result of economic insecurity among employees –

  • reduction in job satisfaction;
  • increased levels of stress and anxiety; and
  • increase in feelings of insecurity and incoherence.

These outcomes of economic insecurity may impact overall well-being and productivity and can lead to decreasing levels of organisational performance (S Wood and C Ogbonnaya ‘High-Involvement Management, Economic Recession, Well-Being, and Organizational Performance’ (2018) 44 Journal of Management 3070). The impact of economic insecurity may have significant implications for organisations because it may also impact on the annual turnover rate among employers (A Gutiérrez-Banegas, E Olivera Pérez, E Bastida Escamilla and M Castillo Soto ‘Factors of job satisfaction during an economic crisis. A systematic review’ (2022) 26(2) Revista Científica ‘Visión de Futuro’ 22).

Meyer suggests that poverty resulting from a bad economic status, affects employees in the workplace (DF Meyer ‘An analysis of the short and long-run effects of economic growth on employment in South Africa’ (2017) 9(1) International Journal of Economics and Finance Studies 177). In addition, Meyer asserts that poverty can lead to poor work performance in the workplace. There appears to be a growing trend in the number of employees whose mental health is affected by the current trend of the economy.

Magwegwe indicates that the current economic status results in depression and this may consequently affect the employee’s performance (Dr F Magwegwe ‘The Economic Cost of South Africa’s Mental Health Crisis’ (, accessed on 17-10-2023)). Dr Magwegwe further argues that there is ‘presenteeism’ (where employees are present at work but performing below standard due to mental health issues) caused by financial stress. Other authors, such as Fraser assert that the repo rates increase may lead to retrenchments and cash flow problems on the employer (L Fraser ‘More rate hikes could lead to retrenchments in South Africa’ (, accessed on 11-1-2023)).   

Balaram argues that employers should be more empathetic and balance the needs in business (S Balaram ‘Mental health and the workplace: The role of the employer’ 2020 (Sept) DR 9). This according to Balaram, will support mental health in the workplace. When employees are supported, there is more productivity. Some of these employees are breadwinners who provide for their children and families. More importantly, they provide a roof over the head of their families and children. The current constant repo rates increase, which has tripled in the last two years causes mental health problems to these employees. Most employees are homeowners who feel the pain more, and this causes mental health issues in the workplace. 

When employees are affected by mental health issues, the employer also feels the pinch because the employers experience high rate of absenteeism and presenteeism, as indicated by Magwegwe. This in return impacts on the performance of the employees. The employer’s productivity is also reduced, and some businesses fail to deliver to their clients. This also affects cash flow in the business, which often results in retrenchments of the affected employees. Resultantly, the impact of the current trends in the economy on mental health of employees has a huge effect in business.

The courts are bombarded with cases of dismissals on the grounds of incapacity due to mental health issues. The case that shows the correct approach followed by the courts is that of Independent Municipal and Allied Trade Union obo Strydom v Witzenburg Municipality and Others [2012] 7 BLLR 660 (LAC). The Labour Appeal Court (LAC) in this case had to deal with the dismissal based on incapacity due to depression because the employee was on sick leave for eight months.

The court concluded that the employer should have reasonably accommodated the employee. In 2021, the same LAC in the case of Legal Aid South Africa v Jansen 2021 (1) SA 245 (LAC) held that ‘employers have a duty to deal with it sympathetically and should investigate it fully and consider reasonable accommodation and alternatives short of dismissal’. This decision is a reiteration of what the LAC said in the Strydom case. The Constitutional Court (CC) in the recent case of Makana People’s Centre v Minister of Health and Others 2023 (5) SA 1 (CC) at para 108 looked at a holistic meaning of mental health by considering relevant statutes and international instruments. The CC averred that mental health issues must be addressed in a very cautious manner and the latter should be more preventative as opposed curative. Ndou concurs with the courts’ decision that employees who have mental health problems should be reasonably accommodated (M Ndou ‘Mental illness, harassment and labour laws: Some thoughts on harassment by employees suffering from mental illness’ (2020) 41 Obiter 538).

The authors are particularly concerned about the constant repo rates increases that hinder the productivity in the workplace because employees’ financial stress often results in mental health issues. It is for this reason that the authors call for the application of a different approach to incapacity cases that relate to mental health, exacerbated by the current trends in the South African economy. This argument is based on the observation of the conduct of the Reserve Bank. It appears that the Reserve Bank does not intend to reduce the repo rates any time soon. Therefore, employers are urged to be sympathetic towards employees who suffer from mental health issues stemming from the current trends in the South African economy. We submit that there may also be a need to adjust the workload of those employees who are severely affected by the current trends in the economy to reasonably accommodate them.

Employers may also argue, in return, that they are also affected because they must reduce costs. We submit that employers may also have to adjust the working hours to prevent dismissals based on incapacity that stem from mental health issues induced by the economic trends, particularly the constant repo rates increase. For example, some employees may be asked to work half days or alternate days accordingly to save jobs. This argument is based on the fact that there are some scarce skills that employers cannot afford to lose due to the nature of their business. Some strategies that have proven effective include

  • offering flexible work hours;
  • more remote work opportunities; and
  • free counselling services to promote employee well-being and mental health.

It is our view that the flexibility that is suggested in this article will save many jobs and it will increase productivity regardless of the current trends in the economy that impact on both employers and employees. Lastly, we submit that there will be more harmony in the workplace when the suggestions are implemented by employers.


Kyle Bester BPsych (Honours Equivalent) (Pearson Institute of Higher Education) MA Research Psychology (UWC) DMill (Stellenbosch University) is a Senior Lecturer and Research Psychologist in the Department of Psychology at the University of South Africa. Prof Nombulelo Mabeka LLD (UNISA) LLM (UWC) LLB (UWC) is an Associate Professor in the Department of Jurisprudence at the University of South Africa. 

This article was first published in De Rebus in 2024 (May) DR 22.


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