Labour minister Thulas Nxesi. Picture: GCIS/.JAIRUS MMUTLE
Labour minister Thulas Nxesi. Picture: GCIS/.JAIRUS MMUTLE

Thousands of workers still waiting for payment from the government’s Covid-19 relief scheme will receive the money despite applications for the fund closing at the end of October, employment and labour minister Thulas Nxesi told the National Council of Provinces on Tuesday.

Nxesi said that as long as applications were in the system before the closing date, the Unemployment Insurance Fund (UIF), would continue to process them. But he said the fund could not continue receiving applications “indefinitely”.

The UIF said there are 451,488 undeclared employees whose claims are yet to be finalised and paid.

The Temporary Employer/Employee Relief Scheme (Ters) was introduced by the minister in March to help employers in distress provide wage benefits to employees via the UIF. It was initially to cover three months, from April to June, and was one of the main pillars of President Cyril Ramaphosa’s R500bn Covid-19 relief package aimed at shielding workers and protecting economic activity.

The scheme was then extended by the government from August 16 to mid-September.

Nxesi said the government had initially budgeted R40bn for the Ters benefit, but with the extension of the lockdown and the continued need for income support, it is projected that R60bn will be needed. 

To date, the UIF has paid out over R49bn in more than 11-million payments. Besides the Ters payments, the fund has also paid out R7.5bn in 1.3-million payments in normal UIF benefits.

Covid-19 has had a devastating effect on SA’s already weak economy. At least 2.2-million people have lost their jobs and GDP for 2020 is projected to plummet by about 8%.

“The question we need to answer is what the way forward is, when we have to deal with mass unemployment, because everyone has predicted the issue of retrenchments,” Nxesi said.

He said the government is closely monitoring the liquidity and sustainability of the UIF.

Nxesi said the government’s plans to mitigate large scale retrenchments are going to be outlined by President Cyril Ramaphosa in the economic recovery plan he is expected to release on Thursday.

The plan has been months in the making and widely deliberated on by the government, business and labour — under the auspices of the National Economic Development and Labour Council.

Nxesi said that in addition to stimulus there are plans for a mass employment programme to be included in the final draft of the recovery plan as the most significant measure of social support to the unemployed.

Fraudulent claims

Ters has been frequently hit by problems, key among which included huge backlogs and unauthorised payments, which left workers unable to access assistance after companies cut jobs or imposed pay reductions.

The auditor-general has since uncovered alleged fraud and irregularities in the system leading to the suspension of some UIF senior management.

Nxesi said work has started to resolve the issues raised by the auditor-general (AG). The AG is auditing all payments made from April to June — but the new controls put in place to avoid fraudulent or wrong payments were only implemented on September 21, after the Ters payments were suspended following the damning report.

This means the AG’s second report may identify the same findings as those prior to September 21, he said. However, a comprehensive audit action plan has been submitted to the AG.

While the Special Investigating Unit (SIU) is looking into allegations of fraudulent payments, Nxesi said the UIF has also started its own programme to “follow the money”, tracking every payment made by Ters.

Nxesi said more than R3.4bn of wrongful payments has already been recouped. He thanked those “honest, responsible” employers that returned overpayments after realising a mistake had been made.

“For others that returned overpayments — conscience is a wonderful thing, but it also helps if you know that the AG is looking into the payments, and that the SIU will be investigating,” he said. “Even as we address immediate issues, the department is looking ahead with a focus on improving security, efficiency and service to the public.”

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