Calls for UIF to be placed under administration
Business Unity South Africa (BUSA) has lamented inefficiencies and governance failures at the Unemployment Insurance Fund (UIF), which have left it “failing in its primary function—paying unemployment benefits.”
BUSA said that, consequently, the UIF “must be placed under administration, with immediate effect.”
The UIF was established to mitigate the effects of unemployment. It raises funds through employer contributions of 2% of the value of each worker’s salary per month.
It offers short-term financial assistance to qualifying workers who are unemployed, sick, on leave (maternity, parental, adoption, or commissioning parental), or dependents of deceased contributors may also be eligible for benefits.
However, the fund has been plagued with issues.
In a statement on 6 December 2024, BUSA CEO designate Khulekani Mathe said that “the operational inefficiencies and governance failures of the UIF are letting down hundreds of thousands of workers, many of whom are now facing a festive season without any income.”
Jonathan Goldberg, the BUSA Labour Market Chamber Convenor at Nedlac, highlighted that it has been almost exactly a year since the initial calls by organised business and labour for the UIF to be placed under administration.
“Despite promises of a major overhaul by the new Minister of Employment and Labour, Makhosazana Meth, nothing has changed,” said Goldberg.
The Labour Market Chamber Convenor stated that claimants often wait months or even years for benefit payouts due to inefficiencies at the UIF.
BUSA bemoaned multi-billion rand labour activation programmes “of dubious origin and impact”, which occur “while the UIF continues to deny benefits to workers who contribute to the fund.”
One notable and controversial contract came into the spotlight when the Pretoria High Court invalidated an agreement between the UIF and Mthunzi Mdwaba’s company on May 28, 2024.
The contract would have given the UIF a 19% stake in Thuja’s investments for R5 billion from its coffers.
This would have included a R1 billion investment into an unnamed bank and insurance company, with the remaining R4 billion being split between R2.5 billion for unemployed individuals in South Africa to start businesses and R1.5 billion for providing loans to businesses.
However, Times Live’s investigation discovered that the Department of Employment and Labour and UIF planned to invest in the Thuja Capital Fund despite the company’s lack of premises, website, or track record.
The court ruled that the multi-billion-rand contract, which promised to create over 25,000 jobs, was invalid and set aside.
“The weak operations and lack of governance, accountability and transparency underlines the necessity for active oversight of the UIF, from organised business and labour, who represent the funders and beneficiaries of the fund,” said BUSA.
“Advisory boards at the UIF do not work, as the risks they highlight and their recommendations are simply ignored,” the group added.
Sanelisiwe Jantjies, BUSA’s acting director for social policy, highlighted several points concerning South Africa’s unemployment situation in 2024 that necessitate urgent UIF intervention:
- 500,000 more people became unemployed in the first half of 2024 (Statistics South Africa).
- Tens of thousands of workers saw significant income losses due to reduced hours from supply chain issues and a weakened economy but received no UIF assistance.
- The CCMA Temporary Employer/Employee Relief Scheme (TERS) program was designed to help companies access UIF and SETA funds to support workers during business turnarounds. However, the program’s slow processing speed meant most applicants were already laid off or businesses closed before receiving assistance.
- Despite a budget increase to R400 million, accessing TERS funds remained difficult due to administrative issues within the UIF.
Last year, the Special Investigating Unit (SIU) announced that around R100 million was to be recovered from bogus TERS claims.
Jantjies said that “strained economic conditions and the resulting reduced work time and job losses demand a well-functioning, easily accessible insurance scheme for impacted workers.”
“The UIF, in its current and proposed forms, is not that.”
BUSA said that “it is time for the UIF to finally be put under administration – to rescue workers and companies from its weak governance and maladministration.”
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