The government’s jobs-saving programme, led by the Department of Labour’s Productivity SA, has been suspended as a result of funding shortages.

This follows Statistics SA’s grim announcement on Tuesday that 8.9-million people are unemployed or have given up looking for work, while struggling companies including in the mining and manufacturing sectors, continue to shed thousands of jobs.

Productivity SA had for a period of seven months failed to pay 20 service providers, which were appointed to carry out its Turnaround Solutions programme in a bid to save jobs.

The programme was designed to analyse distressed organisations in order to take practical steps aimed at reviving and restoring them to functional, profitable enterprises.

In an anonymous e-mail sent to Business Day, one of the service providers claimed its businesses were being driven into the ground as a result of not being paid by Productivity SA.

Productivity SA confirmed that due to its distressed financial position, it had not been able to settle its financial obligations to the service providers.

After no payments were made since November 2017, one payment had been made after some funding was released in June, it said.

Productivity SA’s mandate is to promote employment growth and productivity.

The Unemployment Insurance Fund (UIF) contributes most of its budget.

The lack of funding stems from a dispute Productivity SA has with the UIF, after the entity misspent money allocated for the Turnaround Solutions programme on other operational needs.

In 2015 it was found that Productivity SA had failed to fully account for R36m of funds provided by the UIF, which it still has to pay back.

Mothunye Mothiba, the CEO of Productivity SA, told Business Day that because the UIF had only released funds for the first quarter in 2017, the board had to make a call on the continuation of the programme. "For the year 2017-18, Productivity SA expected a budget of R78.72m to support 150 companies and save 7,500 jobs.

"However, we only received 25% of funding, R19.68m, which covers costs for quarter one that we managed to stretch into quarter two," Mothiba said.

It had received R6.4m from the UIF in June 2018, with an outstanding balance of R52.5m owed to Productivity SA.

UIF commissioner Teboho Maruping said several meetings had been held with Productivity SA to "iron out" the issues.

The UIF and Productivity SA had resolved some of the issues, leading to a payment of about R6m to Productivity SA.

"The teams are currently busy resolving an additional R2m to be paid to Productivity SA," Maruping said.

A parallel process was also being pursued to review the service level agreement between UIF and Productivity SA.

In March, the Department of Labour had to transfer R9.7m to help Productivity SA cover its operational costs as it battled to pay salaries and other expenses.

mahlakoanat@businesslive.co.za