Reforming UIF as wolves at the door slaver over its surplus
Money must be used to tackle joblessness, insists fund head
Unemployment Insurance Fund commissioner Teboho Maruping says he is relying on his minister to hold the line against unwelcome incursions by the government into the UIF’s R133-billion surplus.
The political head of the UIF is Labour Minister Mildred Oliphant.
With government coffers empty, the National Treasury is under growing pressure to find money wherever it can to plug debt chasms in the public sector and fund President Jacob Zuma’s free education and nuclear dreams.
There is persistent talk that the Treasury might, should or could tap into the UIF’s cash mountain.
“I am trusting my minister,” says Maruping.
“In my discussions with her she is quite clear what she wants to do. She will engage the parties as necessary.”
He says he made the position of the UIF quite clear when Judge Jonathan Heher, who chaired the Heher commission on higher education fees, suggested that the government leverage the UIF surplus.
“I appeared before his commission to explain what these surplus funds are used for.”
First, he says, they’re for employers and employees.
“As with any insurance company, you can’t take people’s insurance money and use it for anything else. That’s not how insurance works. You use it for the people who are paying their contributions monthly.
“There is a need for us to understand why the UIF exists, and to not lose sight of that.”
He says the surplus is already being used to benefit the economy but this needs to be done in a carefully calculated way or the money will run out.
This is always a very real threat, he says,“if you look at what happened in 2008, and the downgrades that are happening now”.
Some 51% of the surplus is invested in government bonds, he says.
The UIF is sensitive to “expectations” that it will use its surplus to stimulate the economy, he says.
This is already happening.
Instead of just paying out those who are retrenched, it is investing in job creation and retraining with the Industrial Development Corporation — to which it has given R10billion — state-owned enterprises and the private sector.
The UIF is investing in digital networking, renewable energy and the ocean economy, all of which offer job opportunities.
“The skills required are not complicated. These are areas where we want to introduce more and more people and train them.”
The UIF’s role has been too reactive, he says. Its surplus, which the PIC manages on its behalf, has been invested in the economy but has not been used “to deal with some of the ills being experienced by people on the ground”, he says.
“This has not really worked for the economy. It has not made a change. Now we need to turn things around.”
At the same time, care needs to be taken that the surplus doesn’t run out.
While its investments are focused on driving socioeconomic development, return on investment is crucial.
“It’s a serious balancing act we have to contend with at UIF. You have to use the surplus for social and economic development, but you can’t just let the surplus suddenly drop, because then you’re not going to be able to meet your financial dues when you have to.”
These dues are going to get increasingly onerous, what with growing unemployment and retrenchments, and amendments to the Unemployment Insurance Act that will significantly increase benefits, the period for which they’re payable and the number of people entitled to receive them.
“For the next 10 years we’ll be able to survive, provided the numbers remain the same.” Which, of course, they won’t.
If the number of unemployed people grows significantly, “it will start eating at the surplus, which will start dwindling”, he says.
“These are the things you can’t be ignorant about when you start talking about tapping into the funds of the UIF.”
Is this his answer to anyone in the government or the Treasury who may have such ideas?
“Yes. They must create their own surplus.” Maruping, 46, grew up in Soweto and has a master’s in information and knowledge management from Stellenbosch University.
He arrived at the UIF via a leadership programme at the Gordon Institute of Business Science, a project management diploma at Damelin, stints as a team manager at Telkom, an operations manager at Absa, Standard Bank and Nedbank, and as a part-time lecturer in knowledge management and strategy analysis at the Tshwane University of Technology.
He became acting commissioner in 2014. When he became commissioner in January this year he gave himself five years “at the most” to provide South Africa with “a worldclass UIF system”.
Judging by a recent survey replete with complaints about long queues, ignorant staff, bungled handling of claims and late or nonpayments, he still has a long way to go. He doesn’t try to refute the complaints. “They’re true.”
But he believes his three-pronged strategy will do the trick. It involves plans to convert the UIF’s 126 labour centres — which are little more than “post offices”, he admits — into one-stop processing centres. He also intends to make the claims system paperless and provide free Wi-Fi at processing centres across the country, which will enable people to put in claims and upload their details online via their cellphones.
The catch is that it all hinges on an effective IT system, which he concedes “we do not have yet”.
What should give hope to the battleweary, though, is that he has been “mapping out areas of partnership and collaboration” with South Africa’s most innovative and successful bank, Capitec, and a draft partnership agreement has been drawn up for his legal team to look at.
“There is a lot for us to learn from them,” he says.
Yes please.
You can’t take people’s insurance money and use it for anything else. That’s not how insurance works. Teboho Maruping Unemployment Insurance Fund commissioner