People queue to apply for Unemployment Insurance Fund benefits. Picture: GALLO IMAGES/NARDUS ENGELBRECHT
People queue to apply for Unemployment Insurance Fund benefits. Picture: GALLO IMAGES/NARDUS ENGELBRECHT

Extraordinary circumstances require extraordinary measures with the caveat that they are affordable.

The R500bn relief package announced by President Cyril Ramaphosa in April was one such extraordinary measure, as was the extension of the R350-a-month special grant to help the unemployed cope with the devastation caused by the Covid-19 lockdown.

Another extraordinary measure would be the extension of the temporary employer/employee relief scheme (Ters) beyond its September 15 termination date for as long as the state of disaster lasts.

The Ters benefit paid by the Unemployment Insurance Fund (UIF) provided a form of wage protection for workers of businesses in distress. Business and labour want payment of the benefit to be extended to at least mid-November when the state of disaster is set to expire and preferably to end-December.

SA is now under level one of the risk-adjusted strategy to control the pandemic and while most businesses can operate normally there are many, particularly in the tourism, hospitality and liquor sectors, which cannot.

Business and labour justifiably argue that if the government is to impose a state of disaster it is only right that it assist those workers who are prevented from earning a living by this measure. These include vulnerable workers such as those over 60 years of age and those with co-morbidities.

The national coronavirus command council, the body charged with the government’s response to the Covid-19 pandemic, decided last week that the Ters benefit would not be extended despite a commitment by the president that it would. Minister in the presidency Jackson Mthembu confirmed this stance at a post-cabinet media briefing on Thursday when he said the government would not deviate from its timeline.

The question of whether the benefit should be extended or not is essentially one of affordability. The UIF has opposed the extension of the benefit on the grounds that it needs to protect its funds to be able to provide unemployment benefits for the large number of workers who have already been and are likely in future to be retrenched.

Business and labour believe it is overestimating these future liabilities, but if the UIF’s view is based on a sound actuarial analysis of its assets and liabilities, then it will have to be taken seriously as a legitimate concern. The pressing needs of the present as articulated by business and labour, however justified, have to be weighed against the projected needs of the future and it is only actuaries who can provide this answer. It is estimated that an extension of the Ters benefit to the end of 2020 would cost about R12bn.

Business and labour believe that the UIF has more than enough funds at its disposal to meet its obligations, having R51bn in liquid assets and R59bn in illiquid assets. By last week the UIF had paid out R51bn in Ters benefits to just more than 1-million companies that applied, disbursing more than 11.5-million payments. This has been a huge and much-needed injection into the economy.

Business and labour argue that if the UIF were to help distressed businesses retain workers now there will be fewer unemployed workers for the UIF to support in future.

Another issue which has roused their ire is the bungled nature of the announcement that there would be no extension while they were in the midst of negotiations at the National Economic Development and Labour Council. The matter should have been handled more sensitively.

Business for SA, the lobby group established to assist the government with its coronavirus response, has questioned the role of the national coronavirus command council in making the decision, noting that ordinarily decisions such as those related to the Ters benefit should be made by labour & employment minister Thulas Nxesi and his director-general based on consultations with the other social partners. Nxesi has been remarkably silent on an issue over which he has jurisdiction.

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.