EDITORIAL: UIF’s broken rainy day umbrellas

It’s always a measure of the frustration business feels about the unresponsiveness of the government that it has to issue a media statement about its concerns as a last resort. 

This is extremely disappointing as it seemed that the collaboration between business and the government had been strengthened by the creation of three joint workstreams to deal with energy, logistical constraints and crime. The collaboration, which is bearing fruit, heralded better co-operation in other areas as well. 

The latest cry of frustration by business came this week from Business Unity SA (Busa) over the dysfunctional state of the all-important Unemployment Insurance Fund (UIF), which is supposed to provide financial support to workers in the event of permanent or temporary unemployment. 

It is not doing its job, which means that the billions that employers and workers have set aside — at the end of March the UIF had invested assets of R135bn — as a form of insurance for a rainy day is not being distributed to its intended beneficiaries. 

As a result of what Busa calls “systemic dysfunction” application processes are delayed for long periods and payments are not being made for months, leaving workers destitute. This situation is likely to worsen as economic conditions deteriorate and workers are retrenched, a threat that looms large in the mining industry in particular. 

Hundreds of thousands of applications for the Covid-19 temporary employer/employee relief scheme and the Workers Affected by Unrest scheme established after the July riots remain unresolved and extensive corruption by UIF officials is also suspected. 

Labour shares business’s concerns, with Cosatu supporting Busa’s call for the UIF to be placed under administration immediately. The issues Cosatu points out range from an IT system that is routinely offline, to understaffed offices, overstretched employees, user-unfriendly and confusing forms and applications systems as well as delinquent employers “who pickpocket workers’ contributions and fail to hand them over to the UIF”. 

The federation has questioned the integrity of what it calls a “get rich quick scheme”, the R5bn investment by the UIF in Thuja Capital Fund, which is under scrutiny by employment & labour minister Thulas Nxesi. 

The IT system of the UIF, a critical institution, needs to be modernised to ensure efficient and timeous service delivery and the current management, which is failing to perform, must be replaced.  

Busa CEO Cas Coovadia said a major concern is that business’s calls for the authorities to intervene have gone unheeded. Engagements at Nedlac have been on for three years with no progress being made and Nxesi has not responded positively to Busa’s letters. 

This is unacceptable. Business is a key stakeholder and should have the ear of the government at all times. The lame response by the department of employment & labour that Nedlac is the correct forum for business to raise its concerns ignores the fact that it has already attempted to use this forum. 

Nxesi needs to take urgent action to put the UIF on a sound and functional footing, failing which President Cyril Ramaphosa should intervene.