UIF coffers ‘will weather next wave of job cuts’

2011-08-13 13:47

The economy is expected to shed nearly half a million jobs over the next 18 months, but the Unemployment Insurance Fund (UIF) believes it has enough cash to cushion the blow for retrenched workers.

UIF commissioner Boas Seruwe said: “We are in a good financial position and I am comfortable that we will be able to pay unemployment benefits to retrenched employees who are registered with us on our database.”

Seruwe made the bold ­­re-assurance after employment agency Adcorp said it expected the economy to cull a massive 468?192 jobs in the remaining months this year and next year.

If Adcorp’s prediction materialises, it will be a big blow to government’s efforts to create 5 million jobs in the next decade.

In the wake of the global recession which struck in 2008 the South African economy bled more than a million jobs.

In the second quarter of this year, companies laid off 174?000 workers, a clear reminder that the economy was still very fragile.

Adcorp labour market analyst Loane Sharp warned this week that the next wave of job losses could strain the UIF’s coffers.

He said: “The UIF will be under strain because it will be paying out more benefits, but there will be fewer people contributing to it.”

But Seruwe maintained the fund was flush and was currently paying out unemployment benefits to 700 000 people.

Last year, the UIF paid out R5 billion.

Seruwe said the fund provides unemployment insurance to 7.6 million people and revealed that it had set aside R39 billion for future claims.

He also revealed that the UIF had invested R56?billion with financial institutions and was receiving a monthly revenue of R1.3 billion from premiums paid by employed workers and returns on its investments.

“We have enough money to handle any future job losses without touching the R56 billion we have invested,” said Seruwe.

Sharp said South Africa would struggle to replace the jobs that it was shedding due to the country’s restrictive labour laws, which made it difficult for employers to hire more workers.

He said: “Workers are not delivering productivity, and businesses are forced to restructure their operations by replacing people with machines and new technologies.”

He predicted that South Africa would experience more strikes in the coming months over retrenchments as trade unions fought off plans by companies to cut staff and slash costs.

Sharp has already noted that the number of strikes this year was ahead of last year’s levels.

“Already, strikes are significantly ahead of 2010 levels on a year-to-date basis and, worryingly, 68% of strikes have been in the private sector. In previous years, strike actions were largely restricted to the public sector.

“The unrest and conflict associated with strikes in South Africa ranked eighth worst in the world in 2010, according to the World Economic Forum,” he said.

Sharp said the Labour Relations Act, introduced in 1995 by the ANC government, had failed to usher in a period of industrial peace as it was originally intended.

“Instead, this year South Africa will have nearly doubled the number of strikes or workdays lost due to strikes as was the case at the height of apartheid in the late 1980s,” he said.

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