UIF rescues Productivity SA from dire straits once again
The Unemployment Insurance Fund (UIF) has stepped in to rescue Productivity SA once again, after the labour department agency failed to pay service providers for its turnaround solutions programme for more than seven months.
The UIF gives short-term relief to workers when they become unemployed or are unable to work because of maternity, adoption leave or illness. It is the biggest financial contributor to Productivity SA.
Productivity SA was established in 2014 with a mandate to promote employment growth and productivity, thereby contributing to SA’s socio-economic development and competitiveness. The entity is managed under the Public Finance Management Act.
The UIF, which had withheld its conditional grant to the agency after funds were not used for the turnaround solutions programme as allocated, paid R6.4m to Productivity SA in June to settle its debts to the service providers.
Productivity SA is likely to be mentioned among the government’s job retention tools during this week’s jobs summit that will look at ways to stimulate the economy and create jobs.
But its performance has been dismal, with its recently released annual report indicating its funding shortfall was affecting key operations.
"We were able to achieve 18 [64%] of the 28 KPIs [key performance indicators] set for the year, with poor performance in the turnaround solutions programme and corporate service, mainly due to funding challenges," Productivity SA CEO Mothunye Mothiba wrote in the annual report.
The programme, which is the department’s flagship initiative for job retention, collapsed due to the funding shortages since the UIF pulled out.
The turnaround solutions programme is meant to provide support to enterprises facing economic distress and initiatives or schemes aimed at minimising retrenchment and job losses.
As a result of misallocating funds, the agency still owes the UIF R36m. The department of labour transferred R9.7m to help Productivity SA cover its operational costs in March following threats it would have to retrench staff to stay afloat.
The service providers who were owed for carrying out the turnaround solutions programme complained in a confidential letter to Business Day that some of their businesses were forced to fold due to the nonpayment.