South Africa: Employment and Labour On Unemployment Insurance Fund Creating Job Opportunities

Unemployment Insurance Fund at the forefront of job creation in tough economic times

The Unemployment Insurance Fund (UIF) has been at the forefront of creating jobs and preserving the ones already existing through investments made by the Public Investment Corporation (PIC) and the Fund’s Labour Activation Programmes (LAP).

In March 2017, the UIF and the Industrial Development Corporation (IDC) signed the Facility and Subscription Agreement to bring into effect a substantial investment of R 5 billion. The IDC has approved 41 qualifying transactions totalling R 2,304 billion of which R130 million was for companies in distress and relating to job preservation.

So far the investment has created and saved 8007 by 31 December 2021. Although this may seem like a drop in the ocean considering the unemployment rate increase of 7.6 per cent in the third quarter of 2021, what is important to note is that these jobs were created in the tough economic environment where the COVID-19 pandemic wreaked havoc on the South African economy, which led to companies claiming from the COVID-19 Temporary Employer / Employee Relief Scheme (COVID-19 TERS) to afford worker’s salaries, whiles others resorted to outright retrenchments to survive.

Through the COVID-19 TERS Relief Scheme, we have been able to save jobs and bring relief to more than 5 million workers and this was made possible by the investments we have with the PIC. Drawing cash from these investments to fund COVID-19 TERS has come at a cost as our investment declined by 24% from R151 billion to R115 billion by end of March 2021.

Contrary to some of the rumours, the UIF remains in a sound financial position. The Fund’s assets have increased from R 115 billion to R 124 billion by 31 December 2021, and this should enable us to pay future claims and cover our administrative costs.

Historically, the UIF has always been able to meet its financial obligations. For example, in the year ending 31 March 2021 UIF paid R17,1 billion from 918 916 approved claims. Currently, we continue paying COVID-19 TERS benefits, which we have exceeded by R 26 billion from the R 40 billion initially set aside when the relief scheme was launched in March 2020.

In addition, the Fund has set aside R 5, 8 billion to pay for re-assessment of normal UIF benefit claims submitted between 19 January 2017 to 31 December 2018. This step is taken because the Fund delayed implementing the 2016 Amendment Act due to operational challenges, which resulted in short payments of many beneficiaries who submitted claims during this period.

The support for small and medium enterprises is very critical as it is where most jobs are created. It is gratifying to note that 1 171 jobs were created from transactions concluded with Small and Medium Enterprises. Companies with women ownership make up 8 transactions that created and saved 835 jobs and 713 jobs respectively.

The UIF recognises that the transformation of the economy is fundamental to the success of South Africa. Through the IDC/UIF facility, 22 Black Industrialists owned businesses (ownership of > 50% or exercise influence in decision making) have been supported to the value of more than R1 billion and these deals have created 1 859 jobs. 17 start-ups were funded to the value of R1044 million creating 854 jobs.

Job creation, skills development and supporting entrepreneurship for the unemployed, especially the youth, received a major boost recently when the Minister of Employment and Labour, Thulas Nxesi, launched an employment initiative worth R551 million at the University of KwaZulu-Natal.

The employment initiative is conducted in partnership with the Fuze Institute for Humanitarian Praxis train 19 921 participants. The Minister emphasised the importance of working with the private sector and stakeholders in reducing and eventually eliminating unemployment because partnerships are key to creating jobs.

Addressing the launch, Nxesi said all efforts to create employment in South Africa should be strongly welcomed considering the high levels of unemployment in the country. Therefore, all UIF employment projects must be linked to employment creation because we do not want learners to idle at home upon completion of the employment initiatives.

The 19 921 participants comprising UIF contributors who lost their jobs and unemployed youth underwent employment initiatives in the following skills disciplines: 14 771 beneficiaries as Chief Food Handlers; 5000 beneficiaries in Enterprise Development (mixed farming); and 150 beneficiaries as Fibre Optic Technicians.

Already, the 14 771 beneficiaries have been employed by the Department of Education in KwaZulu-Natal after completing their employment initiatives.

The Department of Economic Development, Tourism and Environmental Affairs in KwaZulu-Natal has pledged to support the 5000 learners’ co-operatives by purchasing their farming produce while Link Africa has committed to employing the 150 beneficiaries as Fibre Optic Technicians upon completion of the employment initiative.

The Fund will continue all efforts within available resources to save and create jobs.


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