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Labour Minister warns of UIF collapse over virus benefits

Almost R53bn has been dispensed to more than 4.7m people so far.
Employment and Labor Minister Thulas Nxesi. Image: Bloomberg

South Africa’s Employment and Labour Minister Thulas Nxesi has warned that the state-run Unemployment Insurance Fund could collapse if it is forced to again extend special benefits to workers who’ve lost income as a result of the coronavirus pandemic.

The government initially committed R40 billion from the fund, which is financed using workers’ monthly contributions, to subsidise the special benefits for three months. The relief, which was given to those whose employers couldn’t afford to pay them or who were forced to take leave, was subsequently extended by a further four months until mid-October. Almost R53 billion has been dispensed to more than 4.7 million people so far.

Read: UIF’s Ters paid out R161m in irregular payments

While there have been reports that the UIF has R140 billion available that could be used to further extend the so-called Temporary Employer-Employee Relief Scheme, much of the money is tied up in investments such as bonds, property and equities, and can’t be easily accessed, according to Nxesi. The fund will also need money to pay out regular unemployment claims to more than 1.5 million people in the near future, he said in an interview.

“If we blow this money on this temporary scheme, what will happen to the ordinary beneficiaries who have put their money into it?” he said. “We cannot collapse this fund.”

The Congress of South African Trade Unions, the country’s largest labor group and a close ally of the ruling African National Congress, earlier this month called for payments to workers in industries that remain adversely affected by virus-related curbs to be extended by a further two months. It noted that the fund has about 60 billion rand in liquid assets that could be utilised.

“It is far cheaper to invest in saving jobs and companies by extending TERS than to allow thousands of companies to close and retrench millions of workers,” Cosatu said. It conceded that the fund couldn’t provide ongoing support for workers, and called for “a combined package of relief in the form of stimulus, tax relief, and debt relief.”

Cosatu has been at loggerheads with the government over its decision to renege on a three-year pay deal agreed in 2018 by denying civil servants raises this year — a dispute that is now before the courts. The federation has also objected to plans to freeze state workers’ pay for the next three years — a measure the National Treasury has said is necessary to bring burgeoning state debt under control.

Nxesi, whose department oversees the protection of labor rights, said he is closely monitoring negotiations with the unions, which are handled by the Department of Public Service and Administration.

“My view is that there is a need for a social compact across government to say how are we going to deal with the issue of a salary increment versus the job losses we are seeing,” he said.

The minister also said his department is busy drafting a national employment policy that will aim at dealing with an influx of undocumented foreign nationals, some of whom are exploited by local employers.

“We are looking at the sectors where we can implement quotas for local workers” to be employed as well as safeguard the rights of foreign workers who are legally in the country, he said.

© 2020 Bloomberg

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Honorable Minister

It is your job to make sure UIF does not collapse under whatever circumstances. You have to do what has to be done to make sure it does not collapse.

The UIF is not a spaza shop. It is a social security instrument which if you let it collapse will cause serious damage to everyone in South Africa.

Call me.

PS Please supply details of the ‘investments such as bonds, property and equities’ which ‘can’t be easily accessed’, and why they’re deemed appropriate for a fund of this sort. Before we draw the conclusion that that the PIC has dumped a lot of its rubbish here waiting to be marked to market. Property ?

There is no proof that that “tied-up” money even exists at this time. Just about as plausible as a firepool.

Haw many current state employees and dead people in the UIF benefits payments?

ANC mess up is going to bring the whole country down.

Too late. This is Africa. Corrupt ANC and supporters do not care about country or its people.Its only concern is to stay in power and feed at the trough.

It seems to me that anything this government touches turn to dust, they have to be the most unintelligent collective known to man. Have they recovered any funds from any of the beneficiaries of grand corruption dished out to RSA citizens and companies
I see a tax revolt coming

…it maybe one is happening

It goes without saying ANC Ministers circumvent taxes

I think many are avoiding it where they can. Small project companies will discount on no invoice

The money tree is suffering a drought!

Glad someone woke up; but the feeding frenzy will not listen to you Minister. Ask Tito whether CR and co. listened to him regarding SAA and tacking the bloated public sector’s wage bill. Nada; zilch.

Chop the money tree and print more money using the wood. Problem solved; ask the honorable Ms Nomvula ; she will agree with this.

I have full confidence in Minister Firepool.

What can go wrong, go wrong, go wrong…..

Hands up if you think Mr Nxesi will manage the situation.
“Much of the money is tied up in investments” is that code for it has gone to luthuli house investment corp.

A few months ago Luthuli House could not pay salaries and all is fine now? Coincidence that wholesale PPE corruption as well as SAA, Land Bank, RAF and now UIF running short of money? Yeah right.

The problem of course is that the unions own the government. The ANC is terrified of losing votes so rather bankrupt the country than lose a vote. When the government favours a small proportion of the population to the detriment of the many then there is no hope.

The companies that are drawing TERS will likely keep doing so as it means they have to pay their employees less and thereby can pocket the difference. This needs to be nipped in the bud. UIF should be reserved for those who have no employment whatsoever, given how this is our money that we have contributed in the time that we were employed.

This morning there’s even a report in one of the newspapers of UIF fund money being used towards Eskom debt!
Clearly government is in a fix; at this rate one wonders if it’s still prudent that employers pay UIF contributions of staff to the fund directly – maybe some lawyer trust account to safeguard the contributions is becoming necessary…

The ANC – the gift that just keeps on giving

Guess what Minister the Bourgeoisie Class are coming for you.

Prepare them a nice cake, the $1.90 a day you gave them is like a drop of blood for a shark. <-:-^–<

So much for the Facts Scientific Facts of the Lock Downs, the irony is that the Scientific facts are shows why the lock downs did not work and what the efforts are going against real Scientific facts.

But hey go bail out another SOE for a few more billion ZAR and tell Bourgeoisie they will not receive more money.

Hands up, who believes this man? This fund has always been intended and under the auspices of unemployment insurance and as such, for everybody whom contributed to this it. I personally have been asking some Parliamentarians (including the DA) for an actuarial evaluation of this fund, which has fallen on deaf ears. Unemployment has been a crisis in SA for years and all of a sudden because the Government called a halt to the economy, it justified them to raid this cookie jar. Had this money been gainfully invested in job creation opportunities prior to Covid (nog ‘n storie vir ‘n ander dag) this economy would have been in much better shape. It will be worth looking at the justification for the build up of this fund and how and who benefited from the bank statements. How did the Guptas et al not know about this fund?

Has there been any form of success or achievement that the ANC has ever managed to bring about, I certainly can’t see one, anyone else!?

They gave many people (ANC voters) money for free. You can never ever go back to normal. Stop the free money and see what happens. Eish

It would be interesting if audit/review firms are required to conduct a compliance review where clients drew TERS and that directors reports require a specifically worded declaration by the directors. I have heard of situations that worked out whereby:
Company largely operated as normal
All employees received what they would have between TERS and company portions.

So basically business as usual except the UIF subsidized the company’s payroll!

The SAICA calculator ( https://www.accountancysa.org.za/covid-19/uif/ ) seemed to indicate:
Normal salary was 15,000pm
If paid nothing by company : TERS is 5781. So total pay 5781
If paid 9219 by company : TERS is 5781. So total pay is 15000
If paid 12000 by company : TERS is 2500 so total pay is 15000

It cannot be that the intention with TERS was ever that people that receive normal pay have a third of that pay come from UIF! The TERS amount should have been reduced by any amount paid by the company.

Remember : TERS benefits are tax-free in hands of workers (and obviously not a company tax deduction).

So calculate the PAYE tax loss of worker at the upper hand receiving their last R7k tax-free

Double hit :
UIF fund depleted
SARS lost tax

Nice for the company as it saved the R7k expense per worker per month.

Surely that cannot be how this works out????

Correction

If paid 12500 by company : TERS is 2500 so total pay is 15000

Labour Minister…create labour / jobs.

Solidariteit, mostly a white union, has done more in the last two years to help society than what the ANC did in 25 years

No, the UIF is like a “firepool” – don’t you remember? it is bottomless…

The ANC manages it, it can only collapse. Once the ANC is involved the writing is on the wall.

End of comments.

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