A bill currently before Parliament looks set to improve the lives of more South African workers if its proposed amendments are signed into law.
According to the Minister of Labour, Mildred Oliphant, the bill will go a long way towards alleviating poverty in South Africa.
The Unemployment Insurance Bill seeks to expand the list of workers currently benefiting from the Unemployment Insurance Fund (UIF) to include learners, seasonal workers and civil servants in terms of the Unemployment Insurance Act of 2001.
According to UIF commissioner Boas Seruwe the proposed changes are “trying to address the gaps pertaining to social security in South Africa, hence attempts to expand its list of beneficiaries”.
“On the coverage there were people who were excluded, such as public servants, contract workers and learners as well as short-term contract employees,” he said.
In terms of the bill, ordinary UIF payout benefits would be increased from the current ceiling of eight months to 12. The fund’s actuaries have estimated the cost of lengthening this benefit to 12 months will cost R2.8 billion, or 39% of the benefit payments of the 2014/15 financial year.
It also proposes that maternity benefits be increased to 66% of a claimant’s salary, up from the current sliding scale payments of between 38% and 60%. Miscarriage benefits will be equivalent to maternity benefits.
Moreover, it seeks to repeal the four-year restriction between claims by the same person.
There is also a provision in the bill that allows for the payment of benefits to contributors who lose part of their income due to reduced working times, while contributors may claim benefits if they have credits, regardless of whether they have claimed in that four-year cycle.
Part of the wide-ranging proposed amendments also include extended claim periods for deceased contributors, sick leave benefits and reducing the period of getting a day’s credit from six days to five within a four-year cycle.
In a further step to protect workers, the bill prohibits third party agents from charging the claimant a fee for acting on their behalf.
It further seeks to empower the board to appoint regional appeal committees for each region, as determined by the labour minister.
Seruwe said an important aspect of the bill was to give the minister the authority to improve benefits as and when the need arose through regulation, without having to go through Parliament.
“This means that she [Mildred Oliphant] can improve benefits from year to year,” said the commissioner.
A successful turnaround
Speaking after the tabling of the bill in February and March, Seruwe was upbeat about the turnaround in the way the fund was managed and its recent performance. Specifically, the commissioner highlighted the improvements in governance and revenue collection as key focus areas in the turnaround strategy.
“Equally important is to state that more effective controls were put in place to reduce fraud,” he said. “It is also worth mentioning that we brought new technology to the extent that for the first time we received a clean audit – which was a foretaste of things to come.”
He said the Unemployment Insurance Board and investment committee had put strategies in place to ensure better investments and that the strong financial position of the fund would offer South African workers better benefits.
The fund currently has R120 billion in accumulated reserves.
One of the fund’s key partnerships is with the Industrial Development Corporation (IDC), whose main objective is to create and retain the maximum number of sustainable jobs spread over all the industrial sectors and in each province.
The partnership with the IDC is based on a responsible investment strategy that seeks to generate both financial and sustainable value.
The partnership grew out of the 2008 economic crisis, during which the fund saw an increase in benefit claims due to large-scale retrenchments and companies being forced to shut down. The IDC approached the fund with a proposal to fund the IDC to assist companies in distress.
Christine Fourie, director of treasury, investments and actuarial services at the fund, said: “Both parties saw the need and benefit for a partnership to assist companies in distress. The benefits for the fund would mean job retention and job creation.”
The fund’s investment portfolio is held by the Public Investment Corporation (PIC), which is the fund’s investment manager.
Surplus UIF funds are transferred to the PIC to be invested in accordance with the fund’s social responsibility investment strategy.
These surplus funds are attained due to improved contribution-collection processes and returns from the investment portfolio.
The fund committed between 10% and 20% of its total investment portfolio’s strategic asset allocation towards developmental instruments.
Stemming the tide of job losses
The Department of Labour was one of the government departments that played a pivotal role in creating employment in the wake of the 2008/09 global financial crisis.
The Unemployment Insurance Act (Act No 63 of 2001) became operational on April 1 2002. The purpose of the act was to establish a fund to which employers and employees would contribute and from which employees who became unemployed, or their beneficiaries, as the case may be, could benefit. This was to mitigate the harmful economic and social effects of unemployment.
- Contributing to the Training Lay-Off Scheme by helping companies facing economic distress to cope with the crisis. Rather than employees being retrenched, they were retrained and re-employed by the companies they worked for.
- Working jointly with the mining sector in North West’s platinum belt by contributing to community housing development.
- Improving service delivery by introducing an online registration and claim-processing system.
It was instrumental in introducing labour market programmes that resulted in launching initiatives such as the Training Lay Off scheme, which are aimed at companies that are in financial distress and whose employees are facing possible retrenchment.
In terms of the scheme, employment is suspended under certain conditions for a worker or group of workers who are then sent on training. The employer gains through reduced payroll costs for six months or more. The company also benefits from the improved skills levels of its employers paid for by the UIF.
More than 90 companies, among them Mercedes-Benz SA and BMW SA, have benefited from the scheme since its inception.
Moreover, the scheme provides for unemployed workers to receive training to improve their prospects of future employment instead of receiving a payout.
The UIF has signed funding agreements with 15 technical vocational education and training colleges, while projects are also being conducted with various sector education and training authorities in the fields of media and communications, energy and water services, transport and engineering.
The training funding the UIF has made in the past is beginning to yield positive results. One such project is the funding partnership between the UIF and the Mining Qualifications Authority in which both parties contributed R90 million to train 1 000 learners to obtain mining-related qualifications as artisans.
The UIF contribution in the project was R45 million and 431 beneficiaries and 569 non-UIF beneficiaries were enrolled for the training. Six-hundred-and-sixty-seven of them completed the training and 400 of them have found work.
The UIF has also entered into four partnership projects with the Transport Education Training Authority in fields as diverse as scuba diving, professional driving, aviation mechanics and pilot training.
Commissioner Seruwe has called on workers to check if employers have registered them for UIF, adding that it could be devastating if they discovered at the tail end of their working life that this had not happened.
He said the UIF had every reason to be proud of its achievements and was in a good position to lend a helping hand to the millions of workers around South Africa.