A carpenter waits to sell cupboards to customers at his workshop in Soweto, Johannesburg. Picture: REUTERS/Siphiwe Sibeko
A carpenter waits to sell cupboards to customers at his workshop in Soweto, Johannesburg. Picture: REUTERS/Siphiwe Sibeko

After a rocky start, the Unemployment Insurance Fund (UIF) is working to dramatically increase its capacity to pay out conventional unemployment benefits as well as the temporary employer/employee relief scheme (Ters) aimed at mitigating the economic cataclysm induced by SA’s lockdown.

Ters allows companies and employees who contribute to UIF to apply for financial relief if they have been affected by the lockdown through company closures or salary cuts. If the application is successful, employees are eligible for income replacement on a sliding scale of 38%-60%, subject to a maximum monthly salary of R17,712 per employee.

The three-month scheme is set to run until the end of June.

Labour minister Thulas Nxesi said in a statement last week the UIF had paid out Ters benefits of R15bn to nearly 3-million workers for April. It’s a dramatic turnaround from early April, when the fund was swamped by benefit claims.

However, it hasn’t been enough to clear the backlog. According to a report on Moneyweb last week, UIF commissioner Teboho Maruping said the organisation is working flat out to finalise outstanding payments for April.

But there have been further hiccups — by May 27, the UIF was still not accepting applications for benefits for May. It started doing so only on May 28, the last working day of the month.

The organisation blamed the delay on a damage fibre-optic cable between its offices and those of the state information & technology agency, but at the same time appeared to be telling the National Economic Development & Labour Council that it was stress-testing its systems.

Cosatu parliamentary co-ordinator Matthew Parks believes “the main [glitch] is that employers were submitting applications incorrectly, in part due to the complicated process”.

Other problems relate to modernising the system — he says foreign nationals, for example, cannot be captured because the system is only able to accept SA ID numbers

The UIF’s Maruping, for his part, said in a statement last week that the UIF has already paid R100m to 23,000 foreign nationals.

Of the many interventions the UIF has made to deal with the deluge of applications, a huge increase in capacity was the most urgent. In a matter of a few weeks, it has increased the number of operators at its call centre from 27 to 600. It has also streamlined its application and processing procedures.

This has drawn praise from some quarters, including industrial conglomerate Bidvest.

Robert Legh, chair of law firm Bowmans and head of Business for SA’s labour workstream, agrees. “I have had no complaints of people being kicked out of the system in respect of May claims,” he says. “So everyone who has wanted to, has been able to file their claim.”

What has, however, become a major issue is compliance by employers.

“We had to deal with companies that hadn’t registered workers or paid UIF contributions that wanted to claim benefits, and others that, after being paid out, sat on the money and did not pass it on to workers,” Parks says.

He says the UIF has gone so far as to temporarily overlook noncompliance, as long as employers undertake to register their employees and pay outstanding UIF contributions.

A further concern, says Parks, is inclusion. “There are missing gaps, like artists and musicians and informal sector workers who are falling through the cracks,” he explains. “Virtually all 250,000 taxi drivers are not registered.”

In the meantime, Nxesi has issued a directive expanding the definition of those eligible for compensation to include workers whose employers have not registered them for UIF.

Legh believes two further challenges remain. “In the tourism and hospitality sector, if the lockdown continues beyond June there is no cover for these people,” he says. Given the trade

restrictions still facing these sectors — and uncertainty as to when they will return to full operations — this may require an extension of benefits for affected workers.

Second, he says, is that, under a specific health and safety directive, employees over the age of 60 and those with comorbidities are not supposed to go to workplaces, given their increased susceptibility to Covid-19. “But if they can’t work on an extended basis, there is not any cover for them under the current regime.”

On a practical level, Legh believes these people may prefer to be retrenched so they can access UIF benefits, rather than be subject to the “no work, no pay” principle.

As for other workers, it is hoped that operations will begin returning to normal — and fewer UIF claims will be required — as the economy ramps up under level 3 of the lockdown.