Govt under pressure to pay UIF money to workers affected by coronavirus crisis

Security Guards march from Church Square to Tshwane House against outsourcing and job losses on July 17, 2017. (Gallo Images / Alet Pretorius)
Security Guards march from Church Square to Tshwane House against outsourcing and job losses on July 17, 2017. (Gallo Images / Alet Pretorius)

Cosatu and the nation’s main business lobby are pushing the government to find a way to utilise an unemployment fund with assets of about R180 billion to fight the effects of the coronavirus outbreak.

The Congress of South African Trade Unions and Business Unity South Africa, or Busa, told the government at a meeting on Monday that it must find ways to use the Unemployment Insurance Fund to finance temporary layoffs and other methods of supporting companies whose finances have been hit, representatives of both organisations said.

While South Africa has had only 62 confirmed cases of the virus, the number is expected to grow and the government has imposed travel bans, school closures and other restrictions to slow its spread. The rand and stock prices have plunged.

The outbreak comes at a time when South Africa is already in recession and its state-owned companies, including the crucial national power utility, are deep in debt. That gives the country little fiscal room to bail out struggling industries.

“Much more needs to be done,” said Matthew Parks, Cosatu’s parliamentary coordinator. In addition to the UIF, other state organizations such as the Industrial Development Corp. and the Development Bank of Southern Africa should assist, he said.

Reprioritize Spending

Using the UIF in the fight against the virus could leave thousands of workers, who faced unemployment even before the disease became a pandemic, without any safety net. South African companies this year announced plans to cut more than 10,000 jobs by the start of March.

Parks also suggested that the Public Investment Corporation, the R2.13 trillion fund manager that oversees the pensions of state workers and the UIF, should be tapped. Private banks should consider loan holidays for struggling consumers, he said.

All employed South Africans and employers pay into the UIF, and regulations would need to be altered to allow it to be used in the manner suggested, the organisations said. The government’s contingency reserve, about R5 billion, can also be used, said Martin Kingston, vice chairman of Busa.

Business representatives argued for the government to re-prioritize its spending away from non-essential state companies, such as the bankrupt national airline, said people familiar with the talks. The state should focus on health-care and supporting crucial institutions such as power company Eskom and state rail and ports company Transnet, they said.

More meetings are planned soon and action from the government is expected, they said. Monday’s meeting was attended by a number of cabinet ministers.

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