UIF: Minister Nxesi must chart a way forward

Issued by Dr Michael Cardo MP – DA Shadow Minister of Employment and Labour
09 Nov 2020 in News

Written replies to a number of parliamentary questions posed by the Democratic Alliance (DA) reveal that the Unemployment Insurance Fund (UIF) is in a seemingly precarious state. The Covid-19 TERS scheme has been plagued by fraud. The future of the TERS benefit hangs in the balance. The UIF’s investment portfolio is shrinking.

The Minister of Employment and Labour, Thulas Nxesi, needs to come out of hiding, engage with the public and urgently chart a way forward for the beleaguered organisation.

One of the Minister’s replies indicates that between 1 April and 30 September 2020, the UIF paid R120 million in fraudulent claims to individuals who were not entitled to the TERS benefit. This amount includes R88 million to individuals receiving a State old-age grant, R30 million to people with invalid identity numbers, R441 000 to dead people and R129 000 to prisoners. It excludes over R41 million paid to 9 000 government officials who received their full salaries during the lockdown and who were not entitled to the TERS benefit.

This widespread fraud, enabled by poor financial controls at the UIF, is still under investigation by the Auditor-General. As a precautionary measure, five senior officials from the UIF were placed on suspension at the beginning of September at a combined monthly cost of R450 551.39 according to a written reply.

The officials are Tebogo Maruping (Unemployment insurance Commissioner), Fezeka Puzi (UIF Chief Financial officer), Judith Kumbi (Chief Director Operations), Maria Ramashaba (Director: Supply Chain Management) and Nompumemlelo Mconywa (Chief Director: Labour Activation Programme).

Yet while members of the UIF’s top brass are sitting at home on full pay, tens of thousands of workers – many of them in the tourism and hospitality sectors – face financial ruin as we enter the festive season. This is because the National Corona Command Council (NCCC) has apparently unilaterally decided not to extend the TERS benefit. This, despite the fact that the national State of Disaster for Covid-19 has been extended to 15 November and that many workers are not able to work for full pay under Level 1 of lockdown.

Many workers rely on the TERS benefit to make ends meet. It is sickening that government employees illegally creamed off the TERS scheme and that ordinary workers will suffer as a consequence. It also seems unjust that senior officials suspended from the UIF are sitting pretty at home on full pay while so many workers are penniless and hopeless.

We know that the UIF has disbursed around R51 billion in TERS payments so far and that if it honours all valid claims currently in the system it will be liable for another R10 billion.

Another written reply to a DA question suggests that the UIF was sitting on a total investment portfolio of R114 billion as at 31 March, with R60 billion in liquid assets and R54 billion in illiquid assets.

It is not clear whether the UIF will be financially sustainable in the long term given the expected increase in unemployed South Africans (more than 2 million of whom lost their jobs in the second quarter) applying for ordinary UIF benefits.

As a matter of urgency, Minister Nxesi must communicate with the public on the future of the TERS benefit, the long-term financial sustainability of the UIF and what consequences there will be for government officials (and UIF officials in particular) who have been party to defrauding the UIF.

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