Covid-19: ‘Unemployment benefits will not be extended to the informal sector’

Unemployment Insurance Fund (UIF) benefits will not be extended to cover workers in the informal sector in the wake of the national lockdown declared to curb the spread of the coronavirus.

This is according to Employment and Labour Minister Thulas Nxesi, who announced that a new national disaster benefit will be launched through the UIF by his department to mitigate the effect of the lockdown on workers’ pockets.

“The issue of the informal sector, the workers who are not registered with the UIF or the Compensation Fund, how will they be assisted? Unfortunately, from our side we [are not] able to deal with this matter, because it is beyond this particular legislation,” Nxesi said at an interministerial press briefing on Tuesday.

According to Statistics South Africa’s most recent quarterly labour force survey, there were almost three million workers in the informal sector at the end of 2019. This is almost 18% of the total employed workforce in the country.

On Tuesday, Nxesi said these workers will be assisted through the safety net announced by President Cyril Ramaphosa on Monday night


“This is still a work in progress,” Nxesi said.

The minister provided more details on how the UIF will be used to help workers at companies that will have to shut down during the 21-day national shutdown. 

Emergency personnel, health workers, the army and police, and companies involved in production of food and medicine will be declared essential service workers and will be exempt from the lockdown.

Millions of claims

Nxesi noted that “millions of workers that are going to be claiming from the UIF”. This means that the claims system will have to be decentralised.

To do this, the department has decided to advance the money to companies and bargaining councils to allow them to pay those employees, Nxesi said. There will be strict audits “after the big storm, so there is no abuse of the money”.

These benefits will be calculated on a scale, and will not be less than the R3 500 minimum wage.

“The administrative capacity we have at the moment never anticipated these huge numbers, which are likely to come,” Nxesi said. “But if the companies come to the party, the bargaining councils come to the party, we think that we will be able to deal with that influx.”

The Temporary Employee Relief Scheme — which is funded by the UIF to assist distressed companies through subsidies — will be “expanded and expedited”, Nxesi said. Companies will be able to draw from benefits through this scheme, provided they embark on turnaround programmes overseen by the Commission for Conciliation, Mediation and Arbitration.

Workers with employers that are not UIF compliant cannot be “punished” because of this, Nxesi said.

The minister would not be drawn on the exact amount in benefits workers and companies will be allowed to claim. “We cannot just pronounce figures and raise expectations and then we cannot fulfil that later on [if] we find that it is too expensive.”

He said the department’s actuaries are “crunching the figures” and meeting with all the National Economic Development and Labour Council (Nedlac) stakeholders to determine the UIF’s capacity to effect these payouts.

A dedicated line will be launched for workers and employees seeking information about these interventions, Nxesi said.

“As a department and Nedlac, we have reminded the parties of their responsibility in terms of the Occupational Health and Safety Act, in terms of them taking all measures to protect the health of their employees,” he said.

More details about the national disaster benefit are expected to be announced on Wednesday.

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Sarah Smit
Sarah Smit
Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law.

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