Labour department to unbundle UIF and Compensation Fund

The department of employment & labour is unbundling the Unemployment Insurance Fund (UIF) and the Compensation Fund (CF) to make the two entities independent of the department. 

Newly appointed labour and employment minister Nomakhosazana Meth said this was to ensure that the UIF and CF were stabilised, modernised and repurposed. 

“After the architecture and diagnostic report on the CF and UIF ... the department in our effort of strengthening the UIF and CF is implementing the diagnostic assessment report and its recommendations,” said Meth. 

The minister was speaking in parliament on her department’s 2024/25 budget. The department was allocated R3.85bn for the current financial year.

Restructuring of the two funds, based on a PwC report published in September last year, envisages upgrading the IT systems, organisational restructuring, employing suitably skilled staff, retraining, improving service delivery, and a change in the work culture.

The proposal calls for the two funds — bedevilled by inefficiency and also the source of much frustration for business and customers — to be independent of the department and its bureaucracy.

PwC was commissioned to undertake an overview of the funds, and made recommendations in April 2022. 

“We look forward to the new structure of the Compensation Fund and the UIF. The funding will have to be restructured to ensure that these entities will be properly functioning in the future. We have seen failure and failed audits for over 10 years within these entities,” said the DA’s Michael Bagraim. 

Irregular expenditure

The IFP’s Siphosethu Ngcobo said the two funds should focus on strengthening internal controls and forensic capacity.

“We cannot afford a continuous repetition of the auditor-general’s reports on the funds being plagued by irregular and wasteful expenditure,” said Ngcobo. 

Meth said that in September the department would consider and approve the National Labour Migration Policy for parliament for consideration. The legislation proposes a cap in the private sector for the hiring of foreign nationals to curb SA’s unemployment crisis. 

“Unemployment in the context of our country is structural, deep-seated systemic and stubborn. That is why agencies such as Stats SA continue to share disturbing stats with us all. In its first quarter report of 2024, the working-age population expanded marginally, yet unemployment rose, pushing our national unemployment rate to 32.9%.

A sustainable solution for the crisis could not come from one department or the government alone.

“It is a societal challenge that requires a collective approach. We plan to lead the department in upping the ante, pertaining to co-ordination work of all job-creation initiatives, interventions, creativity and innovation ... in various government departments, spheres of government as well as public agencies,” said Meth.

With Linda Ensor

maekot@businesslive.co.za