Cape Town - Minister of Finance Nhlanhla Nene is seeking public comment on a proposal for a temporary reduction in employers and employees’ contributions to the Unemployment Insurance Fund (UIF) while keeping benefits unchanged, the finance ministry said in a statement on Wednesday.
In his National Budget Speech, Nene proposed lowering the remuneration threshold against which the contributions are calculated from the current monthly amount of R14 872 to R1 000.
"Given the challenging economic environment that has led to downward revisions in economic growth, a reduction in unemployment insurance contributions will provide significant support to households and employers," the finance ministry said.
Nene seeks to implement the reduction on April 1 2015, to be reconsidered for the next fiscal year shortly before April 1 2016. If it comes into effect, both employers and employees will be required to pay a maximum of R10 each per month, down from the current maximum of R148.72.
The Unemployment Insurance Contributions Act of 2002 enables the minister of finance to adjust the contributions made by employers and employees, while the Unemployment Insurance Act of 2001 enables the minister of labour to adjust benefits.
According to the finance ministry, the proposal will provide the economy with a much-needed boost and put about R15bn back into the pockets of workers and employers.
"The contributions reduction would draw down on the UIF’s accumulated surplus which currently stands at more than R72bn. Because this intervention will draw down on the accumulated surplus, it will stimulate the economy without requiring national government to issue additional debt," said the ministry.
The public is invited to submit comments by March 20. Nene will also consult with social partners within Nedlac. The ministry gives the assurance that all comments received, including any proposals from the consultation process within Nedlac, will be considered before a decision is made.
You can submit your comments to:
• email: firstname.lastname@example.org
• fax: 086 741 8648; or
• by hand: co the Chief Directorate: Legislation National Treasury
Old Reserve Bank Building