NOMPU SIZIBA: The National Coronavirus Command Council has decided that the payments under the Covid-19 UIF Temporary Employer Employee Relief Scheme, or Ters, will not be extended beyond the September 15, 2020 cut-off point. This is despite the fact that the country is not yet back to normal. The national state of disaster was extended to the middle of November, with not all sectors of the economy up and running again, as was the case before the declaration of the national state of disaster in March. Labour and business are said to be highly disappointed, following talks at Nedlac, which were looking at the possibility of extending the benefit.
Well, to get their reaction on this decision. I’m joined on the line by Robert Leigh, the chair of the labour workstream at Business for South Africa, or B4SA. Thanks very much, Robert, for joining us. So, despite recently having had meetings at Nedlac on the very issue of the UIF Ters scheme, the National Coronavirus Command Council’s decision to halt the scheme post September 15 has come as quite a big shock to both business and labour, we understand. Was this not mentioned as a possibility in discussions last week?
ROBERT LEIGH: No. We’ve been discussing this topic for the last three or four weeks, and business and labour have had their own actuaries involved. The UIF fund has had its own actuaries involved. The discussion has been a complex one, but certainly as of Thursday evening we thought there was consensus that this would be extended three months until the end of the year.
NOMPU SIZIBA: Doesn’t this decision by the Coronavirus Command Council go against President Ramaphosa also indicating that the UIF Ters scheme support would continue at least for the duration of the national disaster period, which we know ends in the middle of November?
ROBERT LEIGH: It’s in direct contradiction to the commitment that the President made, and it’s actually in direct contradiction to the terms of the direction under which this benefit is paid.
NOMPU SIZIBA: Now, why is it so important that the government continues to extend this benefit to those who need it?
ROBERT LEIGH: There are still a large number of people who are not able to return to work in the ordinary course. You’ve got people who are over 60, you’ve got people with comorbidities, and there are a number of industries where the businesses are still locked down, or partially closed. We don’t know exactly how many people are in that category, but there are probably a few hundred thousand people who are in that category.
The importance of the whole scheme was that it was designed to ensure that employers didn’t close their businesses, or they didn’t permanently retrench employees. And, in the absence of the benefits, the logical step that employers should take probably, if they can’t afford to keep going, is to retrench employees. That’s undesirable, and it also triggers the liability for a further UIF benefit, which is actually a much higher benefit ultimately, in terms of rand, for the claims.
NOMPU SIZIBA: Now, what about the cost of this support? We know that the UIF does have reserves, but it will obviously need to be prudent in the extent to which it taps on those reserves.
ROBERT LEIGH: Yes. We’re not suggesting any degree of recklessness. We think there are R51 billion in liquid assets; we think that it would cost R3-4 billion a month to extend this for another few months. That doesn’t mean that the fund will not be without stresses and strains, but we’re in a one-in-a-hundred-year crisis here. And these are workers’ funds. They’re not government funds. Government often forgets that it’s actually not its money. It’s workers’ money, and it’s funded by worker and employer contributions. The government needs to step in, and it needs to reverse this decision.
NOMPU SIZIBA: Do you feel that this latest action has been a breach of trust by government in its new forged partnership with business and labour?
ROBERT LEIGH: We are very surprised by the decision, but the President in particular has been encouraging social compacting and we’ve largely run the social compacting process since the benefit was first designed in March. So it is a bit of a bolt from the blue for us. We haven’t had the benefit of a direct explanation from government. The other Nedlac meeting is tomorrow, and hopefully we’ll get some clarity there. But it was very surprising to us.
NOMPU SIZIBA: Yes. In the interim, aside from Nedlac – obviously it’s a very important meeting point for all the various stakeholders – what other ways are you hoping to communicate with the president perhaps to get this matter expedited?
ROBERT LEIGH: Well, we have made a direct appeal to the president in our statement, and we will also work through our negotiating teams. We have a negotiating team which deals with the presidency on the Economic Recovery Plan, and we’ve got different lines of contact to the presidency. We will endeavour to negotiate a reversal of this. Labour has got other options, obviously. I don’t know whether you’ve seen the Cosatu statement, pretty powerful stuff.
My other concern, other than them creating the burden of four UIF plans, is the pretty adverse effect on industrial relations. People are working in very tough environments. Even the benefit on its own is not a huge amount of money, but to some people it’s the difference between staying afloat in March.
NOMPU SIZIBA: Yes, absolutely. And then, just aside, just looking at the bigger picture of what’s happening in the economy right now, there is an expectation that we’re going to see quite a substantial increase in the Q3 GDP number but, overall for the year, we’re going to see a contraction in GDP.
What is the sentiment now? Now that we’re at Level 1 of the lockdown, we’re seeing Coronavirus cases picking up somewhat. But we’ve still got a really good recovery rate of some 90%. Across the waters we’re seeing that there’s a massive resurgence of Coronavirus cases. What is the sentiment among business currently, given all that’s happening, given what came out of the mid-term budget, and also the President releasing that Economic Recovery Plan?
ROBERT LEIGH: Look, I would venture to say that business confidence is cautiously positive. The message out of the MTBPS is pretty stark. It essentially requires government to do a whole lot of things. We’ve worked up this Economic Recovery Plan with government – it looks a bit like a long shopping list of plans. Certainly the economy is picking up, but there are a number of areas of the economy which are not: tourism, airlines and so on. Those are issues that really need to be looked at very carefully.
NOMPU SIZIBA: Indeed.
ROBERT LEIGH: If tourists can come into South Africa on a 72-hour test, why wouldn’t we encourage them to do that?
NOMPU SIZIBA: Yes, there’s a lot at stake, especially with the tourism sector right now. That was Robert Leigh, the chair of the labour workstream at Business for South Africa.