The social partners in the National Economic Development and Labour Council (Nedlac) are thrashing out a plan to provide income support for workers who will be laid off in those economic sectors that will have to close over the next two weeks under level 4 of the Covid-19 lockdown, employment & labour minister Thulas Nxesi announced on Tuesday.
At a media briefing on the latest Covid-19 regulations he said that the Unemployment Insurance Fund (UIF), which disbursed about R60bn under the Temporary Employer/Employee Relief Scheme (Ters) in supporting workers during the hard lockdown in 2020, had sufficient funds to provide this support over the next two weeks. A meeting of Nedlac is scheduled to take place later this week to discuss the matter.
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. Between April and March 31 2021 payments were made to 267,000 employers and 5.4-million employees at a cost of R58.7bn.
“In response to the level 4 lockdown the UIF management has been locked in discussions with the actuaries to find the surplus monies to address the new conditions,” Nxesi said. He cautioned that the UIF, which is funded by a levy paid by employers and employees, has a duty to safeguard its funds to cover the normal benefits it provides to contributing members in case of their retrenchment or unemployment.
“We believe that the UIF will be able to afford to support laid off workers in sectors which have been closed by government over the 14-day lockdown,” the minister said, citing the alcohol industry as example.
Sectors of the economy that will be closed under the level 4 lockdown announced by Ramaphosa on Sunday night include restaurants insofar as sit-down meals are concerned, liquor outlets, taverns, bars and conferencing facilities, as well as theatres, gyms, galleries and cinemas. The on-site and off-site consumption of alcohol is prohibited as are social gatherings.
Nxesi said the UIF had improved its systems to prevent the fraud that plagued Ters last year and saw employers claiming benefits for their workers and not paying them over. Seven audit firms are investigating this.
UIF spokesperson Makhosonke Buthelezi noted that the UIF had an unaudited surplus of R39.2bn as at March 31 2021, about R54bn less than a year before.
Cosatu parliamentary liaison officer and the federation’s representative on Nedlac Matthew Parks said the UIF had undertaken at last week’s meeting to do the actuarial number-crunching to determine what funds were available and the likely number of workers involved.
Cosatu has consistently supported the principle that if the government closes down or restricts sectors of the economy for lockdown, the UIF has to provide income support for workers who cannot work.
Parks said the UIF had agreed a few weeks ago to financially support vulnerable workers such as those older than 60 years or those who have comorbidities who cannot work from home.
“With the additional restrictions from Monday we are saying that we need to give support to those sectors like the liquor, hospitality, tourism, sports events and other sectors that cannot operate at all. We think there are sufficient funds in the UIF for this and it has to be done,” Parks said. “We also don’t know if the lockdown restrictions will remain in place after two weeks — they could be extended like happened previously.”
Parks did not think the same large amount of money would be required as in 2020’s level 5 lockdown and the much stricter level 4 restrictions which only allowed about 30% of the workforce to work. This time a much smaller pool of workers would be affected.
In October and November 2020 the cost of the Ters benefit to the UIF was averaging about R2bn a month, and Parks said he estimated that this time it would cost the entity between R1bn-R2bn, which is “easily affordable”.
He also urged the Treasury to come to the party by offering some form of immediate tax relief to the companies affected by the lockdown. Banks and insurance companies should give loan and premium payment holidays.
Nxesi told the media briefing his department would continue to conduct inspections to ensure the enforcement of health protocols in the workplace. A target of nearly 100,000 workplace inspections had been set for 2021.
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