Government to use UIF to ease coronavirus burden
• Distressed companies to receive a period of reprieve from contributions to help avoid lay-offs
As the threat of a deep recession hangs over the SA economy, the government has offered its first measure of relief in response to the looming Covid-19 crisis, saying it will use the Unemployment Insurance Fund (UIF) to ease the burden on employees and employers.
This has been made possible by the UIF’s R1bn surplus, which enabled it to expand benefits from 8 to 12 months in 2018.
Employment & labour minister Thulas Nxesi told Nedlac’s executive committee on Monday that distressed companies will receive a period of reprieve from UIF contributions and will be helped to avoid lay-offs through the Temporary Employer/Employee Relief Scheme. The scheme, formerly known as the Training Layoff scheme, suspends the employment relationship and pays workers 75% of their salary to receive training for up to six months.
Employees of companies that have closed shop for a short time as a precautionary measure will be able to use the short-term UIF benefit, usually meant to provide support for additional sick leave when employees have exhausted their statutory allowance. If an employee has to be self-quarantined for 14 days, such leave will be recognised as special leave, Nxesi said.
Employers are required to provide protective equipment and put in place systems to mitigate the threat of the outbreak.
Covid-19 has whipped around the world since it emerged in China three months ago, battering financial markets, disrupting trade and travel, and prompting a growing number of countries to impose increasingly tight restrictions to try to slow transmission.
Treasury teams hope by Thursday to present a plan on government additional spending requirements to deal with the outbreak. The Treasury has about R400m immediately available in the National Disaster Fund and after April 1 will be able to access the 2021/2022 budget, including disaster funds and a
contingency reserve of R5bn.
Transport minister Fikile Mbalula said the travel bans announced by President Cyril Ramaphosa on Sunday will come into force on Wednesday, and regulations will be gazetted to give aviation entities the authority to prevent or decline authorisation for aircraft to land at the country’s 11 airports.
The list of high-risk countries from which foreign travellers are banned has been extended to include France and Switzerland. Italy, Iran, South Korea, Spain, Germany, the US, the UK and China were named on Sunday by Ramaphosa.
A degree of calm returned to local markets as US stocks gained in early trade after the government and central bank intensified their stimulus efforts.
The JSE’s all share index posted its biggest increase since late 2018, though it is still down 27% for 2020 so far. The rand was up 0.5% at R16.6293/$.
Bond markets still showed signs of stress with the 10-year yield, which moves inversely to prices, at 10.75%, up from 9.19% a week ago.
The Reserve Bank is due to finish a three-day policy meeting on Thursday, with markets pricing in a 50-basis point cut in the repo rate to support an economy that slipped into a recession in the fourth quarter, and probably reflecting a sharp downward revision in its inflation outlook.
Michelle Wohlberg, fixed income analyst at Rand Merchant Bank said: “The markets are expecting the SARB to likely do something drastic on Thursday.”
By Tuesday, Covid-19 had sickened 185,067 people in 155 countries and regions, with Italy the hardest hit after China, with close to 28,000 cases, according to the Johns Hopkins Tracker.
While most cases of the respiratory disease are mild, it causes severe illness in up to 15% of patients and has already led to more than 7,300 deaths worldwide.
The number of cases of Covid-19 in SA stood at 62 on Monday, and is relatively small compared to many hard-hit countries, but the figure has soared since the first cases were announced on March 5, prompting Ramaphosa to declare a national disaster; order the closure of schools; and impose stringent restrictions on travel and mass gatherings. He has cancelled a planned meeting with commissioners from the AU, which he chairs, to focus on Covid-19 in SA.
So far all the confirmed cases have been imported but the government has grown increasingly concerned about the looming threat of local transmission, and the potentially devastating effect of Covid-19 if it spreads rapidly in poor communities.
Health minister Zweli Mkhize said on Monday that two further suspected cases of Covid-19, believed to be due to local transmission, were awaiting validation by the National Health Laboratory Service, but by Tuesday evening, he had provided no further details.
The sweeping measures announced by Ramaphosa on Sunday, the most aggressive yet imposed in Africa, have heightened public awareness of the threat posed by the virus, triggering panic buying and soaring demand for testing.
Retailers scrambled on Tuesday to replenish shelves stripped bare of toilet paper and nonperishable food items and pleaded with shoppers to stop stockpiling, while private hospitals appealed to healthy people with no symptoms to stop seeking Covid-19 tests, saying they are preventing more urgent cases from getting care.
Health authorities are urgently tracing contacts, and in Gauteng the health department obtained an urgent court order to track down family members who had tested positive for Covid-19 but refused to be quarantined in hospital.
Government departments, public institutions, and the private sector have rapidly moved to cancel or postpone large gatherings. Parliament will for the first time since the advent of democracy close its doors to the public, higher education institutions are to go into early recess on Wednesday, although courts will continue to sit.
JSE-listed Aspen Pharmacare said it plans to alter its production schedules to ensure supplies of critical medicines, including those used for chronic conditions. Aspen CEO Stephen Saad said the company had “a lot” of stock. Its supply chain was “robust” and had been bolstered by the gradual return to work of people in China, from where it sources some of its active pharmaceutical ingredients.
185,067 the number of people in 155 countries and territories who had been sickened by the coronavirus by Tuesday. Italy is the hardest hit after China, with close to 28,000 cases, according to the Johns Hopkins Tracker