COSATU welcomes Treasury’s UIF Contributions Holiday Cancellation

5 May 2015

The Congress of South African Trade Unions is strongly opposed Treasury’s initial proposal to provide a Unemployment Insurance Fund [UIF] contributions holiday for the 2015/16 tax year. 

Our opposition was based upon the following fundamental issues:

- UIF contributions are workers’ hard earned wages. Treasury had not consulted workers on what to do with their UIF surplus. The surplus is not Treasury’s private investment fund. Workers need to be consulted on and agree to such critical matters.

- It is scandalous not to use the UIF surplus to reduce South Africa’s ticking time bomb of a 34% unemployment level.

- The Department of Labour had failed to retable the 2014 UIF Amendment Bill in Parliament after the 2014 elections as it was required to doing. This Bill would significantly expand access to the UIF by workers.

- Ways should be sought on how to expand access to the UIF and not to waste the opportunity of utilising the surplus funds to support job creation projects.

- Tax reforms should not be done in the absence of the Judge Davis tax reform proposals nor government’s comprehensive social security discussion paper. 

Whilst we understand Treasury’s motive for allowing a one year UIF contributions holiday to offset the negative economic effects of the personal income tax and electricity and fuel tax increases as well as the decrease in state expenditure. 

This was the wrong approach. 

Income tax increases for lower and middle income workers should not have been increased in the first place. 

Fuel and electricity prices which hit the poor the hardest should not have been increased at all. 

The contributions holiday would on average have only amounted to a R40 rebate per person. It can be used much more effectively cumalatively as a R15 billion injection for job creation.

We do appreciate and strongly welcome Treasury’s efforts to engage COSATU and NEDLAC, albeit ex post facto after the budget speech. 

We also appreciate and welcome government’s subsequent agreement to COSATU’s demand for the UIF contributions holiday to be cancelled and for engagements on what to do with the surplus to continue at NEDLAC as a matter of urgency. 

We hope that this is a sign of change on the part of Treasury and that they will in future engage workers on such critical matters. 

This is what we expect and demand from a government led by our trusted ally, the ANC.

We welcome Government’s agreement to COSATU’s demands for Government to:

- Table the 2014 UIF Amendment Bill at Parliament as a matter of urgency. 

This Bill will significantly expand workers’ access to the UIF. UIF benefits will increase from 8 to 12 months. Pregnant women, who had miscarriages will be covered. 

Maternity leave benefits will be increased. Reduced and short time workers will be included. These will be huge achievements which will benefit 1000s of workers. This Bill must be tabled at Parliament and passed without delay.

- Discuss how to further expand access to the UIF.

Discussion will need to take place at NEDLAC upon how to further increase access to the UIF after the 2014 UIF Bill is passed by Parliament. We cannot continue to have a R15 billion UIF surplus whilst we have a 34% unemployment level. Informal sector workers, workers, who are forced to resign from their work because of victimization etc. and the long term unemployed need to be covered as well.

- Release its long awaited discussion paper on a comprehensive social security. 

This will then allow for a proper debate upon what type of social security system is needed for South Africa. Piecemeal reforms merely serve to complicate this and create unnecessary mistrust. 

These discussions must be linked to the expected tax reform proposals from Judge Davis’ team.

Lastly, we note government’s silence on COSATU’s main proposal to use the UIF surplus to support economic stimulus and job creation. 

UIF funds were utilized to do so with success through the IDC in 2008. 

This should be done again. 

We cannot accept a surplus in the face of 34% unemployment. 

Now that Treasury has agreed to cancel the contributions holiday, it must now agree to COSATU’s demand that the surplus funds be used to support job creation projects. 

This must be done as a matter of urgency. 

We will not accept any refusal to do so in this regard.

COSATU will continue to push to ensure these fundamental commitments happen.

Statement issued by Matthew Parks, COSATU Parliamentary Office, May 5 2015