The Unemployment Insurance Fund (UIF) would be able to afford the R15.8bn extra cost of extending the Covid-19 wage protection scheme for workers to mid-March but not beyond that date, acting UIF commissioner Marsha Bronkhorst stressed in parliament on Friday.
The Congress of SA Trade Unions strongly believes the benefit under the Temporary Employer/Employee Relief Scheme (Ters) should continue for as long as the national state of disaster and the restriction on business activities are in force. The federation, along with business, has fought hard in the National Economic Development and Labour Council (Nedlac) for the two extensions of the benefit that have been granted.
The UIF previously resisted an extension of the Ters on the grounds that this would undermine its future ability to pay statutory benefits for loss of work.
Since March 27 2020 Ters payments have cost the UIF R58.3bn with 13.7-million payments made to workers and 1.2-million employers having applied for the relief until its previous expiry date of October 15 2020.
President Cyril Ramaphosa announced in his state of the nation address in February that the Ters would be extended to March 15. This will help workers in those sectors whose business activities have been affected by the lockdown restrictions such as tourism, liquor, hospitality, conferencing events and activities in related value chains. Workers with co-morbidities and those older than 60 who cannot be reasonably accommodated at work will also be covered.
Those affected by short-time work, shift rotations, temporary layoffs and other operational measures related to current economic conditions, but who do not work in the specified sectors, will be able to claim relief through the short-time benefit provided for in the UIF Act.
Two new payment periods will be covered, the first from October 16 to December 31 2020 and the second from January 1 to March 15 2021, with applications opening for the first period on March 1.
Bronkhorst said in reply to a question by DA labour spokesperson Michael Cardo during a meeting of parliament’s employment and labour committee that on April 1, 2020 the UIF had assets of R150.7bn which had been reduced to R90.5bn by December 31 last year.
“At this stage the UIF has enough resources and enough assets to pay the projected increase of statutory or ordinary benefits as well as the extension of Ters up to March 15. But we should really note that we cannot continue extending Ters. The UIF’s pocket is the same as any individual’s or organisation’s — we can’t extend and pay more than we generate in terms of income,” Bronkhorst said.
In his question, Cardo noted that the R58.3bn and the R15.8bn amounted to almost R75bn, nearly double the sum of R40bn initially anticipated to be paid under the Ters scheme.
He said that employment & labour minister Thulas Nxesi had said in reply to a question last year about the UIF’s long-term sustainability that the fund’s actuaries had presented the department with four scenarios. The first was where the unemployment rate peaked at about 41% and Ters cost R48bn; the second where unemployment was at 41% and the Ters benefit cost R68bn; the third with unemployment at 53% and the Ters cost R48bn; and the fourth with unemployment at 53% and the Ters cost R68bn.
“What was said at the time was that [with] the first scenario the UIF would become financially unsound but would still be able to pay claims. In the third scenario the UIF would not be able to pay all claims on time and would have to implement measures to prioritise payments, and in the fourth scenario the fund would be in dire straits and would have to reduce benefits,” Cardo said.
He wanted to know what the effect would be for the fund’s long-term sustainability with the total cost of Ters heading towards R75bn and the expanded definition of unemployment at about 42%. However, Bronkhorst did not expand on the calculations that the fund’s actuaries have made.
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