Founder Insights ·

SMEs can’t afford benefits?

Here’s why that logic is costing us more than we think.

A worried looking employee

I remember the feeling vividly. After the interview, once the conversation got more serious, that question would inevitably come: "Do you offer any benefits?" And every time, I’d feel a knot in my stomach. In the startup world, especially in South Africa, the answer is often a sheepish no—or a vague reference to leave days and maybe flexible hours.

After more than a decade working as a founder and C-level executive in fast-paced, resource-constrained environments, I’ve come to understand why this happens. But I’ve also seen—and felt—the consequences. This article is a call for us to rethink the way we approach employee benefits in South African small businesses. Not from a place of pressure or perfection, but from a place of possibility. Because the current status quo is harming our people and our businesses more than we realise.

Why Most SMEs Don’t Offer Benefits (And Why That’s Understandable)

South African SMEs employ nearly 40% of the country’s workforce. And yet, most of them do not offer any formal employee benefits beyond statutory leave and UIF contributions. Why? From firsthand experience, and backed by research, it boils down to three core reasons:

  • Cost: Budgets are razor-thin. Covering medical aid, retirement, or wellness initiatives often feels like a luxury you can’t afford.
  • Admin burden: Without a dedicated HR team, implementing and managing benefits feels overwhelming.
  • Lack of tailored solutions: Big benefit providers typically cater to large corporates, leaving SMEs feeling unseen.

Even when you want to do something for your team, the process feels hard. One person wants retirement, another wants gym. Gen Z wants mental health cover; older team members want life insurance. Sometimes, employees even say, "I’d rather just take the money." So you think: maybe it's better to let them handle it themselves. I did the same.

But Here’s What Actually Happens When We Leave It Up to Employees

The consequences of this hands-off approach are not neutral—they are scary.

When people are left to manage their own retirement, medical aid, and wellness, most do nothing. Not because they don’t care, but because life is expensive, they’re unsure what the right choices are, and good financial habits don’t come naturally.

The Real Cost to Your Business

Here’s what happens to your company when you don’t offer even basic benefit support:

  • Productivity drops: Financial stress leads to distraction, absenteeism, and burnout.
  • Innovation slows: People struggling with anxiety or untreated illness are not bringing their best thinking.
  • Retention suffers: People leave to seek stability elsewhere.

When you’re a small business or a startup, the impact of one disengaged team member is massive. Thriving people build thriving businesses. But when people are struggling, the business struggles too.

So What Can We Do?

You don’t need to break the bank to make a difference. Even if you can’t contribute financially, you can facilitate. Start by:

  • Offering group access to medical aid or savings plans—even if they're 100% employee-paid.
  • Setting up automatic deductions so that money for retirement, emergency savings, or insurance is ring-fenced before it hits their pockets.
  • Creating a culture of financial literacy and wellness through short talks, webinars, or resource sharing.

Studies show that the simple act of facilitating structured saving can transform employees’ financial health. By being the bridge, you help your employees form better habits. And once they start, momentum builds.

A Bigger Question: Why Isn’t This Mandatory?

In many countries, basic employee benefits are mandatory. Why not in South Africa? Should they be? Should we at least consider a minimum level of employer-facilitated contributions, even if not funded by the employer?

Rethinking Responsibility: Who Can Spark Change?

  • To SME founders and leaders: You don’t have to be perfect. But start somewhere. Facilitate. Make it easy for your team to make smart decisions.
  • To government and regulators: Can we incentivise or mandate basic access? Can we design schemes SMEs can realistically adopt?
  • To benefit providers: Design products for the 40% of workers employed in small businesses.

Let’s challenge the idea that offering benefits is only for corporates. Let’s make it part of what it means to build a responsible, future-focused business—no matter your size.

I’d love to hear your thoughts. Have you faced similar challenges as an SME leader or employee? What has worked for you (or not) when it comes to implementing benefits? Should South Africa consider a mandatory minimum for benefits facilitation?

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