Mail and Guardian reporter
WHILE the number of organisations offering car allowances to employees continues to increase, changes to perks tax introduced last year have resulted in many employees preferring a company-provided vehicle.
This was one of the most startling trends to emerge from leading human resource consultancy, FSA-Contact’s seventh annual car survey.
Published in July, the survey included 121 organisations of all sizes, representing the entire spectrum of economic activity in South Africa.
According to Kris Crawford, head of FSA-Contact’s surveys division, the number of organisations offering car allowances increased by 26 percent in 1994, while the trend towards offering both a company car and a car allowance appears to have bottomed out.
Almost three-quarters (74 percent) of the organisations surveyed have car allowance schemes in operation; 26 percent have car allowance schemes only, and 48 percent have both company car and car allowance schemes. At the same time, five percent fewer companies are offering a company- provided car scheme only.
“This is in line with the trend that has emerged over the last seven years where the incidence of company-provided car schemes only has fallen from over 60 percent in 1988 to 25 percent in 1994,” Crawford says.
However, the 10 percent increase in the PAYE payable on car allowances introduced last year has resulted in many employees having cash flow problems. Indeed, 22 percent of respondents indicated that their employees now want to convert to a company-provided car in order to overcome this problem.
Other findings in the survey were:
* Continuing excessive car price escalation continues to put pressure on companies to reassess their decisions about their car policies.
* Organisations are offering more perk vehicles to all levels of staff — probably due to a better cash flow as a result of the end of the recession.
* A larger proportion of companies are using a benchmark price of car instead of benchmark type of car as a method of allocating vehicles to contain escalating costs.
* Many organisations are implementing a kilometre limit in the car allowance.