PROVIDING unemployment cover for people who resign and those who work in the informal sector, as recommended by the National Economic Development and Labour Council (Nedlac), is fraught with problems.
The Unemployment Insurance Fund (UIF) has an accumulated surplus of about R120bn and benefits have been extended to make use of it.
A bill before the National Council of Provinces aims to extend unemployment benefits to 12 months from eight months, provide cover for scholars undergoing training and public servants, and increase maternity benefits.
UIF commissioner Boas Seruwe has in the past supported widening the net of beneficiaries and said the fund had resources for it.
Labour Department chief director of labour market policy, Thembinkosi Mkalipi, said in a briefing to MPs that Nedlac — in particular the labour constituency — had requested that informal and self-employed workers be provided with unemployment insurance, as well as those who resigned and had no alternative employment.
The department is not keen to adopt these proposals immediately, without first investigating their cost implications and Nedlac has mandated it to evaluate them 18 months after the promulgation of the bill. This time has lapsed because of delays in Parliament dealing with the bill, and Nedlac has agreed the department should begin looking into the proposals.
Mkalipi said including the informal sector and the self-employed would place strain on the fund and raises the problem of defining when a person in the informal sector became unemployed.
Providing for paternity leave — another Nedlac proposal — would be affordable if the informal sector was not included within the ambit of the fund, he said.
Covering those who resigned would have cost implications and there was the possibility that benefit payments would exceed income if this was introduced. The income replacement rate might have to be lowered if this proposal was adopted, Mkalipi said.
The department was reluctant to create an incentive for people to leave their jobs to access benefits.
An actuarial assessment of the proposal read it could be implemented but would have a significant effect on the fund and should be phased in over time.
Director-general Thobile Lamati said the department did not want to "run into trouble by extending benefits only to remove them later when the fund could not afford them". Those working in the informal sector were vulnerable and the government wanted to extend social protection to them.
DA MP Michael Bagraim opposed benefits being extended to the informal sector, and warned it would be "incredibly dangerous" as there was no accurate assessment of the number of people involved.
GLUM: Unemployed people queue for UIF payments. Picture: SUNDAY TIMES
PROVIDING unemployment cover for people who resign and those who work in the informal sector, as recommended by the National Economic Development and Labour Council (Nedlac), is fraught with problems.
The Unemployment Insurance Fund (UIF) has an accumulated surplus of about R120bn and benefits have been extended to make use of it.
A bill before the National Council of Provinces aims to extend unemployment benefits to 12 months from eight months, provide cover for scholars undergoing training and public servants, and increase maternity benefits.
UIF commissioner Boas Seruwe has in the past supported widening the net of beneficiaries and said the fund had resources for it.
Labour Department chief director of labour market policy, Thembinkosi Mkalipi, said in a briefing to MPs that Nedlac — in particular the labour constituency — had requested that informal and self-employed workers be provided with unemployment insurance, as well as those who resigned and had no alternative employment.
The department is not keen to adopt these proposals immediately, without first investigating their cost implications and Nedlac has mandated it to evaluate them 18 months after the promulgation of the bill. This time has lapsed because of delays in Parliament dealing with the bill, and Nedlac has agreed the department should begin looking into the proposals.
Mkalipi said including the informal sector and the self-employed would place strain on the fund and raises the problem of defining when a person in the informal sector became unemployed.
Providing for paternity leave — another Nedlac proposal — would be affordable if the informal sector was not included within the ambit of the fund, he said.
Covering those who resigned would have cost implications and there was the possibility that benefit payments would exceed income if this was introduced. The income replacement rate might have to be lowered if this proposal was adopted, Mkalipi said.
The department was reluctant to create an incentive for people to leave their jobs to access benefits.
An actuarial assessment of the proposal read it could be implemented but would have a significant effect on the fund and should be phased in over time.
Director-general Thobile Lamati said the department did not want to "run into trouble by extending benefits only to remove them later when the fund could not afford them". Those working in the informal sector were vulnerable and the government wanted to extend social protection to them.
DA MP Michael Bagraim opposed benefits being extended to the informal sector, and warned it would be "incredibly dangerous" as there was no accurate assessment of the number of people involved.
