A body in charge of the government response to the Covid-19 pandemic will not extend its flagship wage protection scheme beyond mid-September, drawing a sharp rebuke from a business lobby group and unions.
The Covid Temporary Employer/Employee Relief Scheme (Ters) was introduced in March to help employers in distress provide wage benefits to employees via the Unemployment Insurance Fund. 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. The scheme was then extended by the government from August 16 to mid-September.
The decision not to extend the benefit was taken by the national coronavirus command council on Thursday despite negotiations in the National Economic Development and Labour Council (Nedlac) on a possible extension, according to a statement from Business 4 SA (B4SA), a lobby group formed in the wake of the Covid-19 outbreak to help the government with policy responses.
The move comes after the president made a commitment that the aid would be available until the end of the state of disaster, which has been extended to November 15.
The spokesperson for the presidency did not respond to requests for comment, while employment & labour minister Thulas Nxesi’s spokesperson said no comment would be forthcoming from the minister at this stage.
Labour and social partners in Nedlac have been trying for the past two months to persuade the government to extend the Ters benefit for October and November to provide a safety net for employees who are still not able to go back to work.
Cosatu and business have urged that the benefit be extended for those categories of workers who are restricted from working under level 1 of the lockdown regime for as long as the state of disaster continues. This would include vulnerable workers such as those over 60 years of age and those with co-morbidities.
Cosatu parliamentary co-ordinator Matthew Parks said it was an act of bad faith for the government to take a unilateral decision and he wants Nedlac partners to meet the presidency to discuss the issue. Parks said the UIF had estimated that the extension of the Ters benefit to a circumscribed category of workers would be about R3bn-4bn a month.
In a statement on Sunday, B4SA requested that Ramaphosa reverse “this ill-advised and irrational decision” to halt the Ters benefit.
“If government believes the remaining level 1 restrictions are necessary, Ters must be retained. The national coronavirus command council decision not to extend the Ters benefit, if left to stand, will have serious negative implications for employers and employees and the economy as a whole,” B4SA said.
“There are still a significant numbers of employees who are vulnerable and whose employers are unable to implement special measures to ensure their safe return to work, or who are unable to return to work on a full-time basis on account of the current government restrictions under the state of disaster.
“The bottom line is that the funds are employee and employer contributions, and there are liquid funds available to fund the benefit until the end of 2020. Further, one would expect that a portion of the remaining reserves would exist precisely to fund the kind of crisis we currently face.”
B4SA said the social partners in Nedlac and the UIF had been engaged in extensive investigations regarding the affordability of extending the benefits. These investigations indicated that there were sufficient liquid funds (R51bn), or assets that quickly be turned into cash, in the UIF to maintain benefits until the end of December.
“As at Thursday evening there was a consensus between the social partners and the UIF that every effort would be made to ensure that this is what would happen.”
B4SA said the social partners’ investigations found that the UIF has a significant amount of illiquid investments amounting to R59bn.
Nxesi told the National Council of Provinces early in October that it was projected that R60bn would be needed to fund the Ters benefit. By mid-October the UIF had paid out more than R49bn in more than 11-million payments for the benefit.
B4SA also questioned the role of the national coronavirus command council, noting that ordinarily decisions such as those related to the Ters benefit should be made by Nxesi and his director-general based on consultations with the other social partners.
“Unfortunately, as has been so often the case over the last seven months of the state of disaster, the minister and the director-general seem to be removed from the decision making.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.