No clarity yet on size of UIF benefit for layoffs
As the government braces for the huge economic fallout expected from the Covid-19 pandemic, it has said that it is not yet sure how far the new disaster Unemployment Insurance Fund (UIF) benefit will go, and is still crunching the numbers.
The UIF is the key mechanism through which the government will provide income support to employees either temporarily or permanently laid off.
In addition to the normal UIF benefit for those who are unemployed or ill and have exhausted their paid sick leave, the fund will pay workers through a national disaster benefit on the UIF sliding scale at a level not less than the minimum wage.
The sliding scale for normal UIF benefits usually results in an employee receiving just less than half their salary for 12 months. With the minimum wage as the floor, employees who are laid off will receive R3,500 a month.
The temporary employer/ employee scheme of the fund will also enable businesses to stay open while employees are shifted off the payroll at about 50% of their wage.
However, administration of the fund is notoriously poor with long delays between applying for benefits and receiving them.
Speaking at a briefing in Pretoria on Tuesday, labour & employment minister Thulas Nxesi said employers and bargaining councils will be used to distribute new UIF benefits.
Nxesi said the government will not put a number on the table as to the size of the national disaster benefit as it might unfairly raise expectations.
“We do not want to talk about figures. We can’t announce something that we cannot fulfil. Our actuaries are busy looking at the numbers.”
The UIF was expected at the time of the February budget to have R3.6bn in surplus contributions over the next three years. In addition, it also had about R60bn in investments with the Public Investment Corporation. Both these numbers are out of date as contributions to the fund will now change significantly and investments will have diminished considerably.
The biggest policy gap remains the informal sector, also the most vulnerable during a national shutdown. Only contributors to the fund who are, or have been, in formal employment will be able to access the UIF benefit. The UIF Act specifies that the fund can be used only to provide unemployment benefits.
Nxesi repeated President Cyril Ramaphosa’s statement on Monday evening that work is under way to find a mechanism or safety net to support informal sector workers. These might include shelters for the homeless and facilities for selfisolation when people are unable to do so at home.