The Unemployment Insurance Fund (UIF) cannot change its original mandate, which is to provide financial assistance to contributors who lose their jobs, said trade union Solidarity on Wednesday.
This followed a Portfolio Committee on Labour meeting, which heard public input on the Unemployment Insurance Fund Amendment Bill.
Solidarity Research Institute (SRI) senior economic researcher Paul Joubert stated that the proposed amendments stipulated that 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,” he explained.
Last year, the SRI indicated that the UIF had an investment portfolio of R94-billion. “The UIF consistently collects more than twice the amount needed to pay claims yearly, which means [that] the fund’s reserves keep on growing at the expense of the labour market,” said Joubert.
Solidarity last year also welcomed the Department of Finance’s proposal to lower UIF contributions from a maximum of R297.44/m to a maximum of R20/m – a measure that would have returned the UIF’s excess reserves to workers, according to the union.
Solidarity had been asking for such a reduction in contributions since 2012, as it believes the UIF constantly collects much more money than is needed to carry out its mandate. Solidarity also wanted to see Pravin Gordhan reintroduce this proposal in his upcoming budget speech.
“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,” explained Joubert.