VAT hike scrapped – but the real silent tax on business is still being paid

The National Treasury may have backtracked on the planned VAT hike after mounting pressure, but South African businesses would be mistaken to think another compounding threat to their margins has passed.

Andrew Cook

According to Andrew Cook, founder of employee engagement platform HeadsUp, companies are still quietly haemorrhaging far more through a different kind of tax – one that’s not debated in Parliament, doesn’t make front-page news, but continues to drain productivity and profitability every day: burnout and disengagement. And the numbers are striking.

“Businesses were rightly concerned about the VAT increase,” says Cook. “But many are already bleeding far more than that through disengaged employees. Burnout isn’t just a wellness issue anymore – it’s a financial one.”

Recent data from HeadsUp shows that companies failing to track workforce sentiment in real time often experience silent productivity leaks in the form of unplanned absenteeism, presenteeism, and quiet quitting – all of which remain largely invisible until it's too late.

Cook explains that organisations using real-time engagement tools have reported an average 13% drop in attrition and 15% reduction in unplanned absenteeism. “If you’re not measuring emotional investment the way you measure revenue or tax exposure, you’re being blind to a massive risk – but also an opportunity,” he adds.

Silent losses with loud consequences
The cost of replacing a single disengaged employee can reach up to eight times their monthly salary, not to mention the toll on remaining teams, customer experience, and innovation pipelines. With StatsSA’s latest QES-report finding formal sector employees earn on average R28 231 per month, replacement costs can be huge.

“In economic terms, disengagement is a compounding tax,” says Cook. “It quietly erodes output, slows decision-making, and triggers a domino effect of inefficiencies. And unlike VAT, it doesn’t need Parliament’s approval to take effect – it’s already happening inside your company.”

From reactive to resilient
Cook urges South African companies to adopt smarter engagement approaches, especially during volatile times. Instead of relying on static annual surveys, which are often outdated before analysis begins, leading employers are shifting to short, more frequent check-ins – offering real-time visibility into employee wellbeing.

“Leaders need to understand that sentiment is a strategic data point,” says Cook. “And in a high-cost economy, ignoring it is simply not an option.”