Nhlanhla Nene
Photo by: Reuters
Finance Minister Nhlanhla Nene would not immediately proceed with the implementation of the proposal to reduce the remuneration threshold against which contributions to the Unemployment Insurance Fund (UIF) are calculated, National Treasury said on Thursday.
This decision was taken after detailed engagements with the labour and business constituencies at the National Economic Development and Labour Council (Nedlac).
In his 2015 Budget, the Minister proposed to reduce the remuneration threshold against which contributions to the UIF are calculated from the current monthly amount of R14 872 to R1 000, for a period of one year.
The proposal was aimed at providing support to the economy by allowing workers and employers to keep and use about R15-billion, which would otherwise have gone to the UIF.
The UIF currently had an accumulated surplus of more than R72-billion, which was well in excess of yearly expenditure on benefits. The UIF proposal was also intended to reduce the rate of accumulation of this surplus.
However, during the consultations concerns were raised, including the need to implement the UIF Amendments Bill, which was tabled in 2014, to extend benefits to workers who contribute towards the fund and the need to speed up engagement over the broader social security reform process.
“After carefully considering all of these concerns, and taking into account the 44 public comments received, it became apparent that proceeding to implement the revised threshold as originally planned in the 2015 Budget could lead to unintended consequences,” Treasury said in a statement.
The Minister decided that the proposal would, therefore, not be implemented in the 2015/16 fiscal year, to allow more time for consultation at Nedlac and with other interested stakeholders.