This ILO study on “Labour unions and Financial Inclusion in South Africa” sought to understand the landscape of union facilitated financial inclusion and the role that labour unions can and are playing in providing access to financial services for their members.
South Africa serves as a good environment to understand how labour unions can facilitate financial inclusion given the labour union movement’s influence in the country’s socio-economic and political spheres and regulation that does not prohibit labour unions in facilitating access to financial services.
They facilitate access to a full spectrum of financial services (insurance, savings and credit) with limited provision of savings products. This study found that provision of financial services through Labour unions are largely demand-driven, with funeral insurance being the most dominant. Funeral insurance was offered by all labour unions surveyed in the study and this is largely due to the cultural significance attached to burials in South Africa. While unions cited over-indebtedness as a key concern, only one union facilitated access to a savings product – through a union owned savings cooperative.
Labour unions have played a substantial role in promoting access to financial services in South Africa. This is partly due to the unique regulatory and structural position of labour unions in South Africa; however, many challenges and opportunities faced by South African labour unions are shared with labour unions across the world. Labour unions that effectively deal with these challenges and harness these opportunities could play a significant role in improving financial inclusion.
The findings are based on a survey of 16 unions and meetings with various stakeholders.