Employment & labour minister Thulas Nxesi is planning to draw on the surplus funds in the Unemployment Insurance Fund (UIF) and the Compensation Fund for job creation projects.
According to media reports he wants to spend R15bn before the end of the financial year in March 2024 to create 2-million jobs. This smells strongly of a bid to win votes for the ANC in the midst of an unemployment crisis which is only set to worsen with the effect on the economy of the port and logistics crisis and continued load-shedding. Thousands of jobs in the mining industry are on the line.
Fortunately, Nxesi has rejected as “nonsense” the timeline of these reports, saying that the R15bn job creation project which still has to go through the required approval processes will span several years. Even so, it will still have a positive spin-off for the ANC’s election campaign, enabling it to claim that it is doing its utmost to tackle the unemployment crisis.
Questions can legitimately be asked why, if the crisis has persisted for years, the minister is suddenly deciding now to embark on job creation schemes, especially given his concession before a parliamentary committee earlier in the week that his department has failed to meet its job creation targets.
Nxesi noted in a question and answer session in the National Assembly this week that other plans such as business turnaround and recovery plans, workplace readiness and skills development plans are also under discussion to supplement the labour activation programmes already undertaken by the UIF.
The UIF’s surplus funds have been used before in a situation of crisis. During the Covid-19 pandemic about R65bn was spent on the temporary employer/employee relief scheme to assist businesses and workers put out of work. They are also the target for suspect schemes such as the R5bn job creation scheme with Thuja Capital, which has been suspended.
Care has to be taken with the use of the UIF surplus funds, which are built up with equal contributions by employers and employees who expect that they will derive benefit from them when they become unemployed. The same goes for the Compensation Fund, which is financed by employers and pays out compensation to workers injured or made sick at work.
Both funds are in a parlous state with business and Cosatu complaining about the inefficiency and system collapse of the UIF, which results in workers having to wait months for payments. PwC has been contracted to undertake a multiyear restructuring of both funds.
A sound alternative to job creation schemes was made by Good MP Brett Herron who suggested a contribution holiday for employers and employees. The surpluses were after all built up by contributions in excess of what is required. A contribution holiday, he said, would stimulate the economy.
The government does perhaps have a role to play in job creation and job preservation schemes. The irony, however, is that ideally it is the private sector that should be creating jobs while the government’s role is to create an enabling environment for it to do so. It is the failure of the government to create this environment that necessitates government-funded job creation programmes, the success of which is debatable.
The surpluses of the UIF and Compensation Fund need to be protected against politically motivated raids.
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