UIF must focus on original objective – Solidarity
Trade union Solidarity said today that the Unemployment Insurance Fund (UIF) cannot change its original mandate, which is to provide financial assistance to contributors who lose their jobs. This follows after the Portfolio Committee on Labour today heard public input on the Unemployment Insurance Fund Amendment Bill.
According to Paul Joubert, senior economic researcher at the Solidarity Research Institute (SRI), the proposed amendments provide that the surplus funds at the UIF’s disposal could be made available to fund other schemes for “vulnerable workers”.
“The UIF cannot use the money in its accumulated reserves for any purpose that pleases it – the money was contributed by employees specifically for unemployment insurance. Just because a growing surplus exists, the money cannot suddenly be used for other purposes. In addition, the vague wording of the proposed amendments will open the door to large-scale corruption and squandering of money,” Joubert explained.
“In 2015 the SRI indicated that the UIF had an investment portfolio of R94 billion. Moreover, the UIF consistently collects more than twice the amount needed to pay claims annually, which means the fund’s reserves keep on growing at the expense of the labour market,” Joubert said.
In 2015, Solidarity welcomed the Department of Finance’s proposal to lower UIF contributions from a maximum of R297,44 per month to a maximum of R20 per month. “This measure would have returned the UIF’s excess reserves to workers. Solidarity has been asking for such a reduction in contributions since 2012, as the UIF constantly collects much more money than is needed to carry out its mandate. Solidarity would also like to see Pravin Gordhan reintroduce this proposal in his upcoming budget speech,” Joubert said.
“Apart from the fact that the lowering of UIF contributions would mean more money in employees’ pockets, a reduction would have a positive effect on employment. Employers would be able to use the money saved in this way to employ more employees or to avert retrenchments,” Joubert explained.
In 2013, when the bill that is currently under discussion, was introduced for the first time, Solidarity submitted written comments on it.
Statement issued by Paul Joubert, Senior economic researcher: Solidarity Research Institute, 3 February 2016
