Labour and Employment Minister Thulas Nxesi has disclosed that the Unemployment Insurance Fund (UIF) has recoup millions of rands paid out illegally earlier this year.
This is after the minister sent out a stern warning to companies that made illegal claims to the Temporary Employer/Employee Relief Scheme (TERS) during the lockdown.
“At least R3.4 billion of wrongful payments has already been recouped, and my thanks to the many honest and responsible employers who returned overpayments after realising that a mistake had been made.”
Nxesi was briefing the National Council of Provinces on measures to mitigate the impact of Covid-19 on the country’s labour force on Tuesday.
He said the UIF had R50 billion available.
Covid-19 has had a devastating effect on South Africa’s already weak economy. At least 2.2 million people have lost their jobs and GDP for this year is projected to shrink by about 8%.
“The question we need to answer is what the way forward is, when we have to deal with mass unemployment, because everyone has predicted the issue of retrenchments,” Nxesi said.
He said government was closely monitoring the liquidity and sustainability of the UIF.
Nxesi said that as part of efforts to clean systems at the UIF and the compensation fund, they use design new systems to prevent fraud even beyond the pandemic. He added they had also appointed forensic auditors to investigate fraud cases.
They had managed to put an end to fraudulent activities such as double-dipping by employers.
TERS was introduced in March to help employers in distress provide wages to employees through the UIF. It was initially to cover three months, from April to June. It was one of the main pillars of President Cyril Ramaphosa’s R500 billion Covid-19 relief package aimed at shielding workers and protecting economic activity.
TERS faced problems, including backlogs and unauthorised payments, which left workers unable to access assistance after companies cut jobs or reduced wages.
However, on Tuesday Nxesi said that his department had taken steps to cover for the problems in TERS and unemployment benefits pay-outs resulting from the lockdown job losses.
He said that millions of workers still waiting for payments from government’s Covid-19 relief scheme would receive the money despite applications for the fund closing at the end of this month.
Nxesi said that as long as applications were in the system before the closing date, the UIF would process them. But he said the fund could not continue receiving applications “indefinitely”.
“I said at the time, we don’t start paying out benefits before controls. This led to initial delays and complaints from employers that the conditions are onerous, which in turn compromised the UIF controls in the rush to get payments to the workers,” he said.
The minister also detailed how much government had distributed in the provinces.
“In Gauteng, R23 billion was disbursed in 5 million payments, in the Northern Cape, R484 million was disbursed in more than 1 000 payments and in all other provinces, they’re falling in between.
To date, the UIF has paid out more than R49 billion in more than 11 million payments. Besides the TERS payments, the fund had also paid out R7.5 billion in 1.3 million payments in normal UIF benefits.”
Nxesi said government’s plans to mitigate large-scale retrenchments would be outlined by Ramaphosa in the economic recovery plan on Thursday.