Employment and Labour Minister Thulas Nxesi told Parliament
on Wednesday that his department was working on additional job creation strategies
to assist employees and companies impacted by the coronavirus pandemic, as
unemployment levels are expected to rise.
This is in addition to existing job protection and
unemployment insurance mechanisms, he said.
Nxesi told Parliament’s portfolio committee on labour and
employment that while the Unemployment Insurance Fund and the Compensation Fund
were going to be under “very serious strain” for some time, the economic
impact of the coronavirus pandemic had prompted the department to consider
investing aggressively in job creation.
Minister Tito Mboweni is expected to be ready to table an “emergency”
budget, which will make provision for Covid-19 relief efforts, by 24 June. President
Cyril Ramaphosa previously announced that R500 billion in fiscal support would
be directed towards coronavirus relief efforts.
‘Not all companies will make it’
Nxesi said on Wednesday that while the department had thus
far been caught between an expected budget revision by National Treasury and
the middle of the pandemic, it had still managed to assist more than 2.5 million
workers received the benefit to the value of more than R3 billion.
“As the pandemic continues, not all companies will make
it out. Jobs will be lost and the demand for the UIF protections will increase.
So, these are the realities faced by the UIF as we begin to get things
moving in the economy,” said Nxesi.
Labour and Employment director general Thobile Lamati told parliamentarians
that changes to legislation have allowed the department to invest, not only in
job retention, but in job creation.
“We are currently busy sharpening our instruments and
tools to respond to a lot of companies that will be distressed. Our normal
mechanisms are there to respond to issues like retrenchments.
“We also have a social impact fund which is aimed at
assisting in the retaining of jobs by helping companies that are struggling,”
UIF Commissioner Teboho Maruping said the fund would look to
have 10% of the monies budgeted set aside by March 2025 for “more decent
jobs” to be created.
He said the estimated amount would be revised depending on
the number of people who may become unemployed and need to make claims.
At present, Maruping said the fund was still committed to
investing aggressively towards to creation of jobs through its schemes.
“Unemployment Insurance Fund Assets Under Management
Funds will be set aside for funding employment creation schemes. The fund has
budgeted R7.6 billion for next three years,” said Maruping.
Maruping said the UIF wanted to increase the number of newly
registered employers protected by the fund to 79 000 by the 2022-23
financial year and 900 000 employees by the 2022-23 financial year.
The UIF holds R71 billion in government bonds and there
have reportedly been concerns that it may have to sell bonds if there is an
unmanageable spike in unemployment as a result of the pandemic.
According to Maruping, targets may have to be reviewed to
meet the needs of the economy. He added that the UIF was looking to offset
likely reductions or stagnation in allocations from Treasury by broadening its
options for funds.
“We have been asking actuaries to look at our portfolio
and advise where we can advise our investment strategy. We are having a
marathon of meetings just to look at our investment position and possible
strategies,” he said.
Vuyo Mafata said the Compensation Fund budgeted R4.1 billion
for the payment of benefits for the current financial year.
It is also working on processing claims faster, and wants to
progress from having 85% of claims adjudicated within 20 working days in the
2020-21 financial year to having 90% of claims received adjudicated within 10
working days by the 2022-23 financial year.
Mafata said the Compensation Fund wanted to progress from
having 4% of its assets allocated to black asset managers through the Public
Investment Corporation to 12% of assets under management allocated to black
asset managers by 2022-23.
He said the Compensation Fund is looking to have 95% of
requests for pre-authorisation of specialised medical intervention finalised
within 10 days of receipt, while 90% are currently finalised within this time.