Minister Nxesi must come clean on UIF imbroglio

Issued by Dr Michael Cardo MP – DA Shadow Minister for Employment and Labour
29 Jun 2020 in News

The Minister of Employment and Labour, Thulas Nxesi, must come clean on the reasons why the Unemployment Insurance Fund (UIF) has still not opened June applications for the Covid-19 Ters benefit.

There is clearly something desperately wrong at the UIF that goes beyond mere “systems glitches”.

The Fund’s tardiness in disbursing benefits, which is having a devastating impact on the livelihoods of millions of workers and their families, raises a critical question: Is the UIF running out of money?

Last week, it was revealed that R5.7 million in UIF funds, intended for hundreds of workers impacted by the national lockdown, was paid to a single person. The money was then rapidly disbursed to friends and business associates of the recipient over the course of five days.

This instance of fraud and money-laundering, which surely required the involvement of UIF officials to succeed, is probably only the tip of the iceberg.

Most public institutions in South Africa are regarded as a private piggy bank for venal officials, and it would be surprising if the UIF were any different.

So far, of the R40 billion that was set aside for the Covid-19 Ters benefit scheme for the months of April, May and June, the UIF has paid out roughly R26 billion. Many workers have still not received their payments for April. Only about R6 billion worth of benefits have been disbursed for May, compared to R20 billion for April.

Even taking into consideration the fact that more workers would have been allowed to go back to work on full pay as the lockdown eased, this suggests there are substantial backlogs at the UIF.

A recent reply to a parliamentary question indicated that – according to the UIF’s own actuaries – if the unemployment rate peaks at 41.4% (which is likely) and Covid-19 Ters benefits cost between R48- and R68 billion, then the UIF will become financially unsound and will have to borrow money. If the unemployment rate peaks at 53.7% (which is not impossible) and Covid-19 Ters benefits cost between R48- and R68 billion, then the UIF won’t be able to pay all claims when due.

The UIF is already struggling to pay Ters on time. Minister Nxesi needs to take the nation into his confidence, announce when the applications for June benefits will open, and be honest about whether the UIF can honour its obligations.

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