It is clear the government is not going to change its mind — despite concerns raised by business and labour — on extending its wage protection scheme for the millions of workers who have been affected by the Covid-19 lockdown.
Earlier this week, Business For SA (B4SA), a lobby group formed in the wake of the Covid-19 outbreak to help the government with policy responses, raised concern that the national coronavirus command council had taken a unilateral decision not to extend the scheme.
But since then there has been no formal communication from the council, the labour department or the Unemployment Insurance Fund (UIF) on whether this is the case or the reasons for the decision.
However, minister in the presidency Jackson Mthembu gave an indication that it is the case when he said the cabinet, which met this week, had not discussed the national coronavirus command council decision, and the government would be sticking to its timeline.
The Temporary Employer/Employee Relief Scheme (Ters), which formed part of President Cyril Ramaphosa’s R500bn Covid-19 relief package, was meant to run for three months from April to June, but because the lockdown continued, it was extended from August 16 to mid-September.
The scheme was introduced to help employers in distress provide wage benefits to employees via the UIF. The lockdown has however been extended twice since September. Partners at the National Economic Development and Labour Council (Nedlac) have been trying to get the government to extend the scheme, but this has been an uphill battle.
Those close to the process have complained that though they have been trying for more than two weeks to discuss the need for an extension of Ters it is impossible to get a meeting with employment & labour minister Thulas Nxesi, who gazettes regulations relating to Ters.
One of the issues raised about extending the benefit is that of the sustainability and liquidity of the UIF which has already paid out more than R51bn to distressed workers. Business and labour argue it should be able to afford the benefit at least until the end of the year. It has been estimated that it would cost R3b-R4bn a month, a total of R12bn, if extended to December.
There has been no clear answer yet with regard to the value of the UIF’s investment portfolio. It is important to note, however, that the government does not contribute money to the UIF. It is entirely funded through contributions by workers and employers. While it is accepted that the UIF does not have unlimited funds, not extending the Ters benefit could have a negative knock-on effect on the fund and the economy.
Some categories of workers, especially in the tourism sector and liquor industry, are still restricted from working under level 1 lockdown restrictions, or have to work shorter hours, which means a cut in their salaries. It is also unlikely that the national state of disaster will be lifted any time soon as SA anticipates a second wave of the coronavirus.
With the restrictions continuing, it remains to be seen if affected businesses will be able to continue paying their workers. If they knew they had the cushioning of the Ters benefit for a bit longer it could save businesses and jobs, instead of adding to already high unemployment numbers.
If more workers are retrenched in the next few months there will be more normal UIF claims, which means the fund will have to pay these and will lose contributions. Also, the loss of jobs means there will be less money going into the economy.
So would it not be better to save existing jobs, rather than having to deal with more unemployed people looking for work? Continuing to help distressed workers should form part of the government’s economic recovery plan.
There is a legal question about this issue. Lawyers close to the process point out that the current directive, which is still in force, makes it clear that Ters would remain in place for as long as the national state of disaster is in operation, or until the employment & labour minister withdraws it.
None of this has happened, which means workers have a vested right to the benefit, a right that cannot be taken away retrospectively. In the meantime, business and labour are tearing their hair out trying to ensure something is done.
What is needed is clarity, an explanation and action, otherwise the government runs the risk of again appearing dysfunctional and with no real plan to turn things around.
• Quintal is political editor.
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