Several controversies in the new Unemployment Insurance Bill have disappointed the Congress of South African Trade Unions
Glenda Daniels
The new Unemployment Insurance Bill should become an Act next year in April. But while it proposes some progressive reforms, labour is unhappy that at present it excludes public service workers and society’s most vulnerable sector domestic and seasonal workers.
The Unemployment Insurance Fund (UIF) had all but dried up over the past five years, but the government has just injected R605-million into UIF coffers. The Congress of South African Trade Unions (Cosatu) says this could be used towards addressing the shortcomings in the Bill, namely the omission of public service, domestic and farm workers.
Cosatu says that while the Bill includes a sliding scale of benefits that will ensure lower-income earners get a higher proportion of UIF, and that maternity benefits are delinked from UIF, it is still not satisfied that the Bill goes far enough.
The government objects to Cosatu’s claims, saying it is not in principle opposed to including domestic and seasonal workers. The Department of Labour’s Julian Jacobs said after the Bill becomes an Act next year in April, it will take another 12 months before it will be able to have administrative systems in place to include domestic and farm workers.
But the major sticking point between labour and the government is over public service employees. The parties deadlocked over the inclusion of more than 500 000 public servants for UIF benefits. Cosatu argues that while not all 500 000 public service workers will qualify for the fund, the majority of workers earn sufficiently low wages to qualify for UIF. Cosatu is considering taking the matter to the Constitutional Court
While the labour portfolio committee supported Cosatu’s position to include public servants in the Bill, no agreement could be reached with the departments of finance and labour. Cosatu then proposed that public servants should be covered but the government be exempted from paying the employer contribution, since the government would itself be guaranteeing the fund. While the proposal won general support, it was not taken forward.
The federation is also unhappy that pregnant women will receive low-level benefits. In addition, seasonal and domestic workers will only benefit more than a year from now.
On the limitation of maternity benefits, the portfolio committee on labour felt that financial implications of a change of benefits need to be determined. This issue will also be investigated and a report will be tabled within nine months of the promulgation of the Act.
The controversy around maternity benefits hinges on the fact that it will be pegged on a sliding scale depending on the level of the contributor’s income a maximum of 60% for those earning R150 a month, and 30% for those earning R10 000 a month. Those receiving some maternity benefits from the employer would not be entitled to draw any maternity benefits from the UIF, if the employer maternity grant were equal to or greater than the benefit set out in the sliding scale.
In 1997 the tripartite alliance partners agreed that all women should be entitled to four months’ paid maternity leave, at a level substantially greater than the 45% previously provided by the UIF.
But the federation says the Bill is all-inclusive, which ”is critically important in the current context of high structural unemployment, where the UIF, together with the old age pension, is the main form of social security which working people rely on”.
The federation is also unhappy about the lack of financial guarantees for the fund and the failure of the government to table the contributions Bill.
Some of the problems and difficulties the labour department has experienced with the UIF, Minister of Labour Membathisi Mdladlana told Parliament this month, include that litigation procedures currently impose scant fines on employers who fail to make their contributions. In addition, he said, the costs entailed in taking a defaulting employer to court are very high. ”The current system”, Mdladlana said, ”of contribution collection and payroll declarations by employers is inadequate and requires a complete overhaul.”
He said that the use of contributor’s record cards as the only means of determining benefits payable to contributors has exposed the fund to potential abuse by both employers and employees.
The Bill, he said, would bestow on his department wide-ranging powers aimed at dealing with non-compliance, such as under-disclosure of employee earnings, working and drawing, non-payment and deliberate misrepresentations.
”These measures are deemed sufficient to bring an end to the scourge of employer and employee fraud and will enhance our capacity to identify and prosecute defaulters. These measures will also bring further enhancement to the controlled environment within which the fund has to operate,” Mdladlana said.
The Unemployment Insurance Bill was adopted this month as a social safety net against economic hardships for the unemployed. The Bill has now been referred to the National Council of Provinces. It will then be signed by the state president, who will also approve the promulgation date, which is expected to be April 1 next year.