Employment & labour minister Thulas Nxesi has admitted that Covid-19 exposed the government’s “inadequate capacity” in the disbursement of relief funding meant to support workers and employers during the lockdown.
The Temporary Employer/Employee Relief Scheme (Ters) was established by Nxesi in March 2020 to cushion those in formal employment expected to lose their income due to the pandemic.
It was one of the main pillars of the R500bn social and economic support package for SA announced by President Cyril Ramaphosa in April 2020.
The scheme started paying benefits from April 2020 and up to March 31 2021 payments had been made to 267,000 employers and 5.4-million individual employees, “at a cost of R58.7bn”, the minister said on Friday.
He was speaking during a webinar to share the department’s interventions aimed at mitigating the coronavirus’ effect on the labour market.
Nxesi said the payment of Ters benefits by the Unemployment Insurance Fund (UIF) quickly became the “target” of fraud and corruption. “We were, therefore, grateful to the office of the auditor-general for their assistance in analysing systemic weaknesses, requiring strengthened controls, and to the SIU [Special Investigating Unit] for investigating possible fraud and corruption,” he said.
The department announced this week that the officials suspended over alleged irregularities in the disbursement of Ters benefits were back at work after their suspensions were lifted.
In September 2020 UIF commissioner Teboho Maruping, CFO Fezeka Puzi and COO Judith Kumbi were placed on suspension with full pay, pending a forensic investigation by the SIU.
This followed a probe into the Ters by the late auditor-general Kimi Makwetu, who uncovered alleged fraud and irregularities in the system including the overpayments of more than R84m to 1,183 applicants and underpayments of R251m to 1,700 applicants, along with the invalid rejection of beneficiaries, fraud and double-dipping.
Other problems included payments to people below the legal age of employment, and those who were deceased, working for the government or in prison.
Some claimants, who did not qualify, such as those already receiving social grants or student funds from the National Student Financial Aid Scheme, were also incorrectly paid.
“We were also protected against fraud and corruption by the UIF’s ‘Follow the Money’ strategy to audit all employers that received Covid-19 Ters funding,” said Nxesi.
“The auditors verified payments of R16bn and traced R228m that was fraudulently claimed by employers. Of the 121 employers that have already been handed to the Hawks via the presidential fusion centre, 16 have appeared in court.”
The minister said Covid-19 had resulted in a huge disruption to the economy, which declined 7% in 2020, resulting in the loss of 1-million jobs.
“The first quarter unemployment rate for 2021 rose by 0.1% to 32.6%, though less than the 33.4% predicted by economists. The figures are stabilising, but remain unacceptably high,” he said.
Business Unity SA vice-president Martin Kingston said there was no doubt that “the pandemic provided an opportunity for all stakeholders to reset SA’s social and development path”.
What was required was “ruthless prioritisation and committed leadership to ensure that we can implement the economic reconstruction and recovery plan” with urgency. The government needed to put an end to private and public sector corruption, he said.
“The department has played an absolutely critical role ... in catalysing and unblocking the challenges where they have existed.”
Kingston commended the department for its “outstanding work” in the disbursement of Ters benefits.
Economist Duma Gqubule said the R500bn stimulus package was not enough to deal with the socioeconomic challenges spawned by Covid-19. “The response from the fiscal side was very little, we should have had a more aggressive response to address the crisis.”
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