BUSA CALLS FOR THE UNEMPLOYMENT FUND TO BE PUT UNDER ADMINISTRATION

On 5 December 2024, Business Unity South Africa (BUSA) issued the following notice in the financial media, articulating the ongoing frustrations experienced by the public as well as organisations that interact with the Unemployment Insurance Fund, and calling for the Fund to be put under administration.
The notice follows.

BUSINESS CALLS FOR THE UIF TO RETURN TO ITS PRIMARY MANDATE AS CONTRIBUTORS STRUGGLE TO ACCESS UI BENEFITS.

Johannesburg, Thursday 05 December 2024 ― The operational inefficiencies and governance failures of the Unemployment Insurance Fund (UIF) are letting down hundreds of thousands of workers, many of whom are facing a bleak festive season without income. The UIF is failing in its primary function and should be placed under administration with immediate effect, overseen by a highly skilled and experienced individual akin to a bank curator.

BUSA has been calling for the UIF to return to its primary mandate, but little to no progress has been made for some time. The dysfunctionality of the UIF has emerged as a matter of extreme concern and urgency. Since our last public call to place the fund under administration, business and beneficiaries have yet to see significant progress in the administration of benefits related to their contributions.

Sanelisiwe Jantjies, BUSA’s acting director for social policy, commented: “According to StatsSA, half a million more people joined the ranks of the unemployed in the first six months of 2024. This does not account for the tens of thousands who, while still employed, have suffered significantly reduced work hours due to supply chain challenges and weakened economic conditions.

As we approach the festive season, these workers, along with their employers, have a valid expectation that in times of financial distress, they will be able to make a claim against this insurance. The recent addition of new types of leave for employees, to be paid by the UIF, further burdens a system that is already operationally weak. Unfortunately, the UIF’s inefficiencies have left these workers in a dire situation, unable to cushion the blow or address the historical backlog, despite multiple commitments to reform the fund.”

She added, “The current Reduced Work Time (RWT) benefits, a critical financial safety net for contributors facing reduced hours and associated loss of earnings, do not assist the majority of those affected. Workers could lose up to two-thirds of their usual earnings and still not receive any assistance. Many employers and employees are experiencing significant frustration and questioning the purpose of their contributions.”

The CCMA TERS programme was established to avoid mass retrenchments and is supposed to enable access to funds from the UIF and SETAs to support workers during business turnaround periods. This programme had the potential to avert job losses, yet the slow pace of processing means that most applicants are already retrenched, and businesses have closed before receiving any results. Given this reality, it is difficult to celebrate the recent announcement of an increase in the CCMA TERS budget to R400 million when it cannot be accessed due to the administrative issues within the UIF.

Jonathan Goldberg, the BUSA Labour Market Chamber Convenor at Nedlac, lamented that the inefficiencies within the UIF are well documented, with numerous stories from frustrated claimants who are often shuffled from pillar to post, waiting months and sometimes even years to receive their benefit payouts.

He noted, “This year, inefficiencies were compounded by a legal wrangle, resulting in the online systems uFiling and the UIF App being offline for several weeks, further frustrating applicants who were left in the dark about their claim status or forced to spend precious time and money standing in long queues at the labour centres.”

He added, “It is now almost exactly a year since the initial calls by organised business and organised labour for the UIF to be placed under administration. Despite time being afforded to the new Minister on the back of promises for major overhauls, nothing has changed. Workers and their employers remain frustrated by the inefficiencies and lack of support during times of need.

The mandate of the UIF is simple: it collects contributions from employers and workers, and during times of financial distress or lack of earnings (unemployment, maternity, illness, or reduced hours), eligible contributors can apply to receive financial assistance in the form of a small benefit.

Reports indicate that R26 billion has been allocated to labour activation programmes of dubious origin and impact, while the UIF continues to disappoint workers in need. The funds should go to employees during times of need, as they are the ones who contribute to these programmes. The lack of accountability and transparency in this process further underscores the necessity for improved governance with active oversight from organised business and organised labour (representing both funders and beneficiaries).

The current and proposed board structures as advisory are unacceptable, as risks highlighted and recommendations made by nominated representatives are simply not heeded. The strained economic conditions, coupled with the transitions that various industries are undergoing, demand a well-functioning, easily accessible insurance scheme for impacted workers. The UIF, in its current and proposed forms, is not that.

It is time for the UIF to finally be put under administration to ensure its rescue.

ENDS
Khulekani Mathe
CEO Designate