Business Unity SA (Busa) has called for the Unemployment Insurance Fund (UIF) to be placed under immediate administration, citing systemic dysfunction and deep corruption.
Cosatu said it supports the call by business and it will seek an urgent meeting with the presidency and employment & labour minister Thulas Nxesi to ensure action is taken.
The UIF is intended to provide financial support to workers in the event of unemployment and is funded by a levy paid by employers and employees. The assets of the UIF, which are invested on its behalf by the Public Investment Corporation, amounted to R135bn at the end of March.
In a statement on Wednesday Busa CEO Cas Coovadia said UIF commissioner Teboho Maruping has failed to address the systemic issues and Nxesi has not responded positively to several Busa letters.
He called on Nxesi to act speedily to address the issues.
Coovadia said the “systemic dysfunction” at the UIF is putting workers at risk.
“Failure to address the systemic issues, including alleged corruption, will result in increased frustration among employers and employees, and in greater financial losses that could impact the sustainability of the fund. Busa supports the call by other business organisations and organised labour to have the UIF put under immediate administration.
“The ineptitude of the UIF to fulfil its promises has led to workplace disruption and had a negative impact on the employer-employee relationship. Of major concern is the fact that calls for the authorities to intervene have gone unheeded,” Coovadia said.
Questionable investments have put at risk billions of rand that should be allocated to workers in distress at a time when poor economic conditions are likely to lead to employees being placed on short-time or potentially laid off. “For impacted individuals, the safety net afforded by the UIF benefits scheme is not guaranteed,” Coovadia said.
TimesLIVE reported in September that Nxesi had ordered a judicial review of the UIF’s controversial award of a R5bn investment in a company, Thuja Capital, which at the time existed only on paper.
Coovadia noted that the UIF’s systemic dysfunction resulted in lengthy delays in application processes, including via online systems, receiving incorrect information and constant changes in requirements.
Payments, when finally processed, are typically received long after the period of lost earnings, providing little financial support when needed most.
Schemes such as the Covid-era Temporary Employer/ Employee Relief Scheme, Workers Affected by Unrest “and others designed to support affected individuals, while positive in their intention, remain to a significant extent ineffective as hundreds of thousands of applications remain unresolved”.
Coovadia said Busa had called for UIF systems to be modernised to identify and limit corrupt practices. This would require effective ICT systems with risk mitigation measures to deliver a simple, efficient and timeous service to enable workers to access funds when they were needed and not many months later — if at all.
“It is clear the management within the UIF is unwilling or unable to execute the mandate and has embarked on ill-considered systems, such as the eCompliance platform, which have failed and introduced risk into the business landscape, both for companies seeking assurance about the compliance of their providers and for the protection of workers.”
Coovadia stressed that the resolution of the systemic issues in the UIF architecture is critical.
Cosatu acting national spokesperson Matthew Parks said the federation is “deeply concerned by the continuous challenges workers experience when submitting their claims to the UIF, as well as continuous allegations and revelations of serious corruption surrounding some UIF investments”.
He called on President Cyril Ramaphosa to put the organisation under administration and for the Special Investigating Unit to investigate its investments.
“Workers struggle to submit their claims and receive their payments. There are perennial queues at UIF offices across the country, where workers wait in vain for days on end to have their claims processed,” Parks said in a statement.
“The issues range from an IT system that is routinely offline, to understaffed offices, overstretched employees, user-unfriendly and confusing forms and applications systems, as well as delinquent employers who pickpocket workers’ contributions and fail to hand them over to the UIF.”
Labour department spokesperson Teboho Thejane said the department remains “committed to working with all our stakeholders and social partners, including Busa in this instance, to address any concerns, and will continue to do so through the National Economic Development and Labour Council (Nedlac) as an appropriate forum.
“It is significant to follow correct protocols as outlined in the Nedlac guiding documents to do justice when addressing issues that [have] social imperatives.”
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