- Employers have encountered challenges accessing the Covid-19 relief temporary employer-employee relief scheme funds.
- Other employers are accused of not passing on funds to employees or of trying to defraud the Unemployment Insurance Fund.
- In the midst of financial constraints and operational challenges, the long line of people needing assistance only gets longer.
Nobody doubted Minister of Labour and Employment, Thulas Nxesi, when he told Parliament in May that the Unemployment Insurance Fund would come under serious strain as the Covid-19 pandemic and national lockdown restrictions continued in South Africa.
With unemployment above 30% and expected to increase as the economy struggles with a lack of demand that has seen inflation fall to 2005 levels, the stress on the fund is only set to increase.
However, the employees that have been laid off are not the only people that the UIF must take care of during this pandemic. When President Cyril Ramaphosa announced government’s stimulus package to support SA through the lockdown in April, he said the fund would also cover for salaries of those employees that could not work during much of the lockdown phase of the economy.
However, employers have encountered challenges accessing the Covid-19 temporary employer-employee relief scheme (TERS) funds, while others are being investigated for attempting to defraud the UIF. Meanwhile, the line of people needing assistance from UIF only gets longer.
Nxesi warned that unemployment benefits were limited, and that a long-term issue the state must deal with is employment insecurity. Nxesi said he expected that the state could end up playing a central role in supporting South Africans through these economic difficulties going forward.
According to Stats SA’s report on the youth in the South African labour market released this past Wednesday, there are 16.4 million workers in the country. However, only eight million working South Africans contribute to the UIF, according to the fund’s database.
The UIF usually pays out sums of money to employees who contribute to the fund once they have lost their jobs. However, the fund has had to kick into action with funding protections for businesses affected by Covid-19 and the national lockdown so they can continue paying salaries whilst closed.
From 17 June, the UIF’s Covid-19 TERS received 456 698 valid applications out of 462 248, representing 4 447 722 employees out of 5 736 339, with R27.1 billion to be paid to the valid applications.
Adjusted mandate
Deputy minister of Labour and Employment Boitumelo Moloi told Parliament on Friday afternoon that repurposing the UIF to meet a temporary but new mandate of assisting working employees during the lockdown was a huge undertaking.
“Three months to the announcement of the national state of disaster, there has been a massive effort from the UIF to support workers, even those who have not been laid off,” said Moloi.
Moloi said the department worked with the National Economic Development and Labour Council to align the UIF’s operations with the current needs of South Africa’s vulnerable workers.
“We needed to rapidly put in place policy and direction which would build UIF and beneficiaries to access these benefits. These were developed this through NEDLAC and this has been conveyed to Cabinet,” Moloi said.
She said the Covid-19 benefits needed new policies, as the UIF only paid benefits to laid off workers before the pandemic. She said bargaining councils helped the department reach sectors and employees that they did not have access to before.
“The UIF is not some money tree with unlimited resources. As we work on the fund and gear it to assist more workers, we have to consider its financial stability for the future,” she said.
Security and fraud
UIF commissioner Teboho Marupeng told Parliament’s Standing Committee on Public Accounts on Friday that UIF’s risk anti-corruption and integrity management unit received 75 reported cases of possible fraud among the claims which were made by employers during the pandemic.
Marupeng said said 31 companies have been assessed in terms of “Follow The Money” principle, a system the UIF designed to monitor compliance to the Covid-19 TERS by employers.
He said the UIF was working closely with the Hawks to conclude the investigations into possible instances of fraud.
Congress of South African Trade Unions parliamentary liaison officer Matthew Parks said the fund must name and shame all offending employers as well as get the National Prosecuting Authority must get involved in their current cases.
In May, Director-General of Employment and Labour Thobile Lamati said the department had set an overall target of 25% reduction in irregular expenditure in the financial year from the baseline. This would mean a R3.4 million reduction in irregular expenditure and a R4.4 million reduction in fruitless and wasteful expenditure.
Extending assistance
Marupeng said as a result of some employers failing to pass on the Covid-19 TERS funds to their employees, the UIF has moved to pay funds directly to some affected employees. He said 154 972 of 10 473 were paid directly to the tune of R695 184 081.
Marupeng said the UIF paid a total of R128 904 782 to 35 374 domestic workers and R534 530 553 to 114 059 foreign nationals working for 28 509 employers.
“UIF processes all applications received, including foreign nationals who are Contributors to the UIF foreign nationals have to be verified through Department of Home Affairs and also the South African Revenue Service,” Marupeng said.
In May, Nxesi said state must “come into the centre and deal with employment insecurity”, adding that government could do this by ramping up public employment and formalising public employment programs that are labour-intensive as opposed to putting everything to tender.
Leave no worker behind
Parks said the UIF shouldered a disproportionate load of providing protections to millions of workers while banks and insurance companies have been found wanting.
“We are engaging with the UIF to provide further coverage for those who can’t go back to work, including those in their sixties, those with a core morbidity and workers in parts of the economy that cannot reopen due to restrictions,” Parks said.
Parks said even though the UIF went from disbursing R17 million a day on average before Covid-19 to R700 million a day on average during the pandemic, South African workers needed more of its support as the pandemic continued and retrenchments ensued.
“A small amount of South Africa’s workers contributing to the UIF, so everyone must contribute. We are trying to push for an extension of the three months of TERS cover until at least the restricted employees can go back to work,” he said.
He said he expected the R40 billion commitment that was originally placed would be exceeded and may reach R50 billion, as the UIF could not afford to leave any worker behind.
