The UIF is not a 'money tree', says Nxesi as 'mass unemployment' looms

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Minister of Employment and Labour Thulas Nxesi.
Minister of Employment and Labour Thulas Nxesi.
GCIS
  • Employment and Labour Minister Thulas Nxesi has warned that the UIF fund does not have unlimited resources.
  • Since the start of the lockdown, over R49 billion has been disbursed in benefits in the form of over 11 million payments.
  • Nxesi delivered a ministerial briefing in the National Council of Provinces on Tuesday.

The Unemployment Insurance Fund (UIF) is not some "money tree" with unlimited resources.

That was the warning from Employment and Labour Minister Thulas Nxesi, who revealed on Tuesday that the UIF has around R50 billion available.

Nxesi delivered a ministerial briefing in the National Council of Provinces (NCOP) on the measures his department has taken to mitigate the Covid-19 pandemic.

Through the Covid-19 Temporary Employee Relief Scheme (TERS), over R49 billion had been disbursed in benefits in the form of over 11 million payments since the beginning of the lockdown.

READ | UIF coronavirus TERS payments to resume

Nxesi said R23 billion was disbursed in Gauteng, in five million payments, and R484 million was disbursed in the Northern Cape, in over 100 000 payments.

'Mass unemployment'

At the same time, R7.5 billion was disbursed in 1.3 million payments in normal UIF benefits.

READ HERE | SA won’t meet debt targets, says advisory panel appointed by Ramaphosa

Nxesi said plans were afoot to ensure the sustainability of the UIF fund.

"We have about R50 billion available. The question we need to answer now is what is the way forward when we have to deal with mass unemployment? This is a serious matter that the UIF board is looking at.

"It is difficult at this stage to determine all the retrenchments. But if the worst comes to the worst, we might see ourselves in the 2008 situation, where we would have to appeal to government," he said.

Nxesi said, while the UIF was repurposed, it also needed to build in the necessary financial controls.

"I said at the time, 'we don't start paying out benefits before controls are in place'.

"This led to initial delays, and complaints from employers that the conditions were too onerous – which, in turn, compromised UIF controls in the rush to get payments out to laid-off workers," he said.

READ | Ramaphosa calls joint sitting of Parliament for his economic recovery plan

He also said the UIF was aware of the fraud risks with TERS payments.

Nxesi said: 

I need to flag that, from the start, the UIF was wide awake to the risks of fraud with the new Covid benefit system – especially given the large sums involved. That is why the UIF developed a strategy to 'follow the money', and budgeted for a complete audit to account for every cent paid out. We made this very clear to the employers in our Nedlac engagement as well as in the directions that we issued. We said [to businesses]: we will support you and your workers, but when this is over, you will be audited.

In September, all Covid-19 TERS payments were put on hold after several allegations of corruption and complaints that employees were not receiving their monies.

Stopping the payments allowed the UIF to implement adequate controls and to mitigate the identified risks.

READ HERE | Nxesi suspends UIF commissioner and management after AG audit

During the first payment run on 21 September, and after the suspension of the TERS payments, errors were detected and the payments were rejected.

Some of these included the rejection of 193 applications after it was found the applicants were deceased persons.

Nxesi said 1 688 government employees, who applied for TERS were rejected. Also rejected were two applications from inmates and 1 968 applicants with invalid identification numbers.

ALSO READ | Medium-term budget won't be popular - SAA to be dealt with, warns Mboweni

"The holes are being plugged. The UIF has received the correct master data from the Department of Home Affairs, which is the latest data, so no deceased employee will be paid.

"The risk of inflated salaries by employers has also been corrected as the UIF now verifies with the latest declared salary.

"All under-age ID numbers have been blocked on the system," he said.


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