Minister Nxesi must defuse Ters ticking time bomb at the UIF

27 May 2020

The Unemployment Insurance Fund (UIF) has still not begun accepting Covid-19 Ters applications for May. This constitutes a ticking time bomb waiting to explode.

It means that millions of wage earners face the prospect of receiving no income for May until the middle of June at the very earliest.

When the benefit finally arrives, it will be too little too late. Employers and employees have bills to pay and families to feed right now. They cannot wait.

Economic justice delayed is justice denied.

The Democratic Alliance (DA) repeatedly called on the Department of Employment and Labour to explain why the website for May applications was taking so long to go live.

The UIF Commissioner, TebohoMaruping, told the Portfolio Committee on Employment and Labour last Wednesday that the online application system would be “going live on Friday (22 May)”. On Saturday I wrote to the UIF Commissioner, asking him the reason for the delay. He has still not responded.

On Monday, the DA called on the Minister of Employment and Labour, ThulasNxesi, to announce what was happening with the Covid-19 Ters benefit for the month of May. By and large, the Minister remains missing in action.

Yesterday, on social media, the UIF responded to me by saying that the “Department of Employment and Labour is in the process of finalizing payments for April, announcements for applications for May will be communicated in due course. We apologize for the inconvenience cause [sic]”.

For most wage earners reliant on the Covid-19 Ters benefit during lockdown, this is more than a mere inconvenience. It is a cause for desperation, depression, and in some instances, financial devastation.

Given the length of time it has taken the UIF to make April payments (many of which only occurred in May), and the constant, desperate struggle of employers and employees to get their pound of flesh from the Fund, the latest delays do not augur well.

A recent response to a parliamentary question revealed that while over 195 000 employers and 2.5 million employees had, by 21 May, received Covid-19 Ters benefits for April to the tune of R14 billion, many received no benefits.

Over 76 000 employers and 559 000 employees had claims worth R2.3 billion rejected either because they were not identified on the UIF system, or simply because the UIF decided not to pay.

We know from thousands of desperate employers and employees that many claims were turned down by the UIF without any explanation.

Before the last remaining vestiges of debris from April non-payments have been cleaned up, the UIF is about to see another bomb explode.

Even with the UIF’s promised 10-day payment turnaround time, most workers will have to wait until deep into June to get their Covid-19 Ters benefit for May. This is going to cause enormous hardship, suffering and anger. At a time of desperate financial struggle, the delay in unacceptable.

The DA calls on the trade union movement (which thus far has been eerily silent) to hold the Minister of Employment and Labour to account and to take up the fight on behalf of workers, whose interests they claim to represent. Workers’ frustration should be directed not at employers, who Minister Nxesi has attempted to scapegoat for the UIF’s failures, but at the Department of Employment and Labour itself.

The DA further calls on Minister Nxesi to clarify:

How much money is left in the UIF’s pot for the Covid-19 Ters benefit? Initially we were told that R40 billion had been set aside until the end of June to deal with claims resulting from the lockdown. The UIF is currently sitting on a total portfolio of about R135 billion, half of which lies in government bonds. When President Cyril Ramaphosa announced a R500 billion economic rescue package last month, he said that R100 billion would be set aside “for the protection of jobs and to create jobs”. It seems almost certain that he intended for this money to come from the UIF. However, if, as National Treasury has predicted, between 3 and 7 million people lose their jobs because of Covid-19, then there is going to be huge pressure on the UIF in the form of retrenchment benefit claims very soon. The UIF’s actuaries need to tell us how much money is available and how long it will last.

Whether the UIF has the capacity to process and pay Covid-19 Ters claims for the remainder of the phased lockdown? SARS is meant to be assisting the UIF to process and pay the Covid-19 Ters benefit. But there seems to be a mismarriage of information between the UIF and SARS. In April, some companies reported that up to two-thirds of their workforce did not benefit from the Covid-19 Ters scheme, even though every single worker was on the company’s payroll, the company was tax-compliant, and they were able to furnish all the necessary EMP201 declarations that had already been submitted to SARS. The role of SARS in assisting the UIF has become even more important now that, in terms of a new ministerial directive, individual employees can apply directly for the Ters benefit (and not only employers and bargaining councils as was the case previously). This runs the risk of placing an additional intolerable strain on the UIF.

Why so few foreign national workers seem to have been paid out by Ters? The Minister previously indicated that the UIF does not have a system to test and verify the authenticity of foreign nationals’ passport documents as they expire every two years. He claimed that the UIF had developed a control whereby all foreign passport numbers would be verified by the Department of Home Affairs through each relevant Embassy. This is a long and tortuous process and something needs to be done urgently to ensure that foreign national workers get their just desserts.

This afternoon, a meeting of Nedlac will take place to assess the UIF’s technical and financial capacity to continue to pay out Ters benefits in the long run. The Minister of Employment and Labour needs to come out of hiding and defuse the ticking Ters time bomb ahead of the meeting. Time is of the essence.

Issued by Michael Cardo,DA Shadow Minister for Employment and Labour, 27 May 2020