Non-extension of Ters: UIF must account to Parliament

25 January 2021

Reports that the Unemployment Insurance Fund (UIF) has decided not to extend the Temporary Employer-Employee Relief (Ters) scheme will come as a severe blow to cash-strapped workers in sectors of the economy hobbled by the adjusted level 3 lockdown.

This is especially true for the tourism, hospitality and liquor industries.

The UIF’s about-turn on the extension, after weeks of seemingly positive talks at Nedlac, is apparently informed by a report compiled by the Fund’s actuaries.

I have therefore written to the chair of the Portfolio Committee on Employment and Labour, Mary-Ann LindelwaDunja, asking for the report to be tabled before the committee. The committee needs to be briefed urgently by the UIF on both the financial sustainability of the Fund and how it intends to assist tens of thousands of workers who are unable to earn their full income – or in some cases, any income – because of the lockdown restrictions.

The DA maintains that for as long as the government prevents people from participating in the economy, it has a duty to mitigate the devastating economic impact with financial assistance. It is a matter of principle. The ANC claims to be a social democratic party, but it is all too ready to abandon the principles upon which functional social democracies rest.

In recent days, some UIF officials have suggested that employees affected by the current lockdown could apply for ordinary UIF benefits, which would be paid out subject to the individual worker’s available UIF credits. This is a bad idea. It risks prematurely depleting workers’ credits and leaving them high-and-dry in the event of retrenchment. It also means that the minimum payment made under the Ters scheme would no longer be applicable.

So far, the UIF had disbursed roughly R56 billion in Ters benefits for the period from the end of March to 15 October 2020. We know there is still money in the UIF pot. A written reply to a DA parliamentary question last year indicated that the UIF was sitting on a total investment portfolio of R114 billion as at 31 March, with R60 billion in liquid assets and R54 billion in illiquid assets. By most accounts, it would cost between R2 billion and R3 billion per month to extended the Ters scheme under the current lockdown restrictions.

The UIF’s funds belong not to the government, but to the employers and employees who have contributed them.

The UIF needs to be open and transparent about its reasons for not extending the Ters scheme. And it must come with a viable proposal to support desperate workers. That is why the DA is asking for the UIF to account to Parliament post-haste.

Issued by Michael Cardo,DA Shadow Minister for Employment and Labour, 25 January 2021