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South Africans’ free-spending ways are hobbling the economy’s ability to create jobs, Trevor Manuel , minister in the Presidency responsible for national planning, said on Thursday.

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“There is also a telltale sign in the low household savings level because there is clearly no cushion to deal with emergencies, save to borrow — frequently at ‘emergency rates’…Mr Manuel said South Africa was a “nation of highly indebted families…The last release by the Reserve Bank indicates that household indebtedness is at 75,9% of disposable income. Of course, if we disaggregate this ratio, we will establish that the middle classes are in way above 100% — all of next year’s earnings are already spent,” he said.

“There is this staggering number of 18,84-million ‘credit active people’ in South Africa. This is a number substantially higher than the total number of formally employed people. Of these 18,84-million, a staggering 8,8-million, or 46,7%, have impaired credits,” said Mr Manuel.  He added the bulk of people who found themselves in debt counselling were there because of consumption — as opposed to investment — spending.