R1.2bn for jobs

2010-02-27 10:10

IN the face of mounting claims for unemployment benefits, the Unemployment Insurance Fund (UIF) has decided to invest R1.2 billion in the Industrial Development Corporation (IDC) to help keep people in jobs.

UIF commissioner Boas Seruwe said his board was of the view that “the more people we put back to work, the better for us”.

“We would like to see the money go to funding small enterprises, but we are not going to dictate to the IDC. It’s their terrain. They have a number of good labour-absorbing programmes on the go,” he said.

The UIF, though, won’t be handing over any cash to the IDC. It plans to buy a low-yield bond to be issued by the development financer.

“It’s part of our broader investment strategy for social development,” Seruwe said on Friday.

“The UIF is at the forefront of protecting workers during this economic crisis. The previous year severely tested the strength of UIF as a social safety net, and I think that the UIF has succeeded.

“Even though our labour centres experienced extremely high volumes of applications, all claims were processed and paid.

“The fund has made financial ­contributions to actively prevent unemployment through the training layoff schemes, as well as ­supporting the IDC to stimulate ­employment-creation activities,” Seruwe said.

Economist Mike Schussler said the move was laudable but the UIF had to balance its “good intentions” with the need to earn returns for the working public.

“It’s a good move, but they need to ensure a bit of return,” he said.

“Under current economic conditions the UIF is going to be saddled with a lot more claims from a lot more people for a much longer ­period of time.”

Schussler estimated that about 5 000 work opportunities could be created at a cost of R20?000 per job.

“In a food production environment a few more than 5 000 jobs could be created.

“However, in the other sectors where there will be a need for an ­extra desk and a computer or tools and machinery, I would say 5 000 jobs are achievable.”

Seruwe said the fund remained strong, with a surplus, even though it had experienced an increase in claims from unemployed workers.

Improved collections and increased compliance by employers had contributed to the sound financial situation.

He expected the fund to have paid R5.6 billion in benefits by the end of next month.

“Looking at the claim pattern, the construction, mining, wholesale and trade and the manufacturing sectors are the ones which are shedding jobs,” he said.

These sectors together accounted for 60% of all benefit payouts.

One of the challenges facing the UIF was employers who collected ­insurance money but failed to pay it over to the fund.

“We have started to clamp down on offenders and recoveries are up to 64% compared to the previous year,” Seruwe said.

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