Calls to place UIF under administration

Cosatu called on the government last month to urgently deal with the allegations of serious corruption and wasteful expenditure at the social security centre. Picture: Simphiwe Mbokazi/African News Agency (ANA)

Cosatu called on the government last month to urgently deal with the allegations of serious corruption and wasteful expenditure at the social security centre. Picture: Simphiwe Mbokazi/African News Agency (ANA)

Published Dec 4, 2022


Organised labour has been lashing out at the Department of Employment and Labour, calling its Unemployment Insurance Fund (UIF) “a slush fund for corrupt elements” inside and outside the state.

Last month, Cosatu called on the government to urgently deal with the allegations of serious corruption and wasteful expenditure at the social security centre.

Recent media reports have highlighted possible inflated prices, open corruption, and dubious courses costing millions of rand, which Cosatu said they found “deeply alarming”.

“These reports come after the UIF was found not good enough by the Auditor-General of South Africa (AGSA) because of inefficient systems and susceptibilities to both internal and external looting,” the union federation said. This was over two years ago.

This is more depressing considering that the relief given to workers during the Covid-19 lockdown and KwaZulu-Natal riots was not only capped due to limited funding, but some workers have not received their payments due to inefficient ICT systems. The payment of usual UIF claims is also proving to be a problem.

Cosatu said that the government was unconcerned and unresponsive to UIF issues because it did not even contribute to the fund, which also calls into question its legitimacy to be a caretaker of workers’ funds.

The federation has now called on the president to put the UIF under administration with certain conditions to protect the institution against further looting.

Jan Mahlangu, retirement funds co-ordinator and member of the UIF board, said these were big sums of money, which should be paid to deserving workers who had no replacement income.

“Workers should not have to spend days on end queueing to receive their money due to inefficient systems,” he said.

Mahlangu said civil servants were meant to be contributing to the fund, ever since the UIF Act was amended in 2017 to allow them to claim from the fund too, but the National Treasury was pushing back on complying with that legislation.

This makes no sense, he argues, as the act was amended precisely so that civil servants — who are the biggest workforce in the country — are covered.

“It is also in the spirit of social security reform, which is the talk of the town, and also indicates some form of solidarity.

“But even though civil servants aren’t contributing to the fund, they have no hesitation in leaning on it,” Mahlangu said.

In November last year, the Special Investigating Unit (SIU) identified at least 6 000 employees in 24 government departments that were receiving payments from the UIF Temporary Employer-Employee Relief Scheme (TERS), yet none of them have been arrested.

The private perpetrators have been less lucky. The fund reported the arrest of 16 suspects who were accused of swindling TERS of R2.2 million at the end of November. The suspects were apprehended in Gauteng and North West by the Hawks.

In a similar arrest in June in Durban, the fund said it had recovered more than R900 million of TERS funds that had been fraudulently claimed by private companies.

But at the beginning of November, the Standing Committee on Public Accounts (Scopa) demanded an explanation on why the fund has failed to table its 2020/21 and 2022 annual reports, which makes it non-compliant with the Public Finance Management Act. The act states that all annual reports must be submitted to Parliament at the end of September each year.

Kgabo Komape of the AG’s office confirmed that the UIF had not submitted their financial statements for the 2021/22 financial year. “So we have not done the audit, per se,” he told Scopa. “There has not been an audit yet for the year they are speaking to.”

UIF Commissioner Teboho Maruping said apart from the late submission of annual financial statements, a few other issues were troubling them, including the negative reports on investments, delays in implementing the follow-the-money project with respect to TERS, liquidity, poor customer experience and the UIF’s public image.

“We have made progress with irregular expenditure. All the irregular expenditure has now been finalised and we have already started the process of consequence management,” said Maruping.

The Department of Employment and Labour is yet to respond to Business Report on the current stance of finalising the annual report, and whether it has submitted its monthly report to Scopa, as requested on November 1.

Theuns du Buisson, an economic researcher at trade union Solidarity, told Business Report that “nothing more can be done until the annual reports are presented. We should be at the point of charging the people responsible on this matter, but you need the latest information to initiate a formal process.”

He said the labour movement was compiling a list of all labour-related annual reports that had passed their due date, including from the Government Employee Pension Fund (GEPF) and the Compensation Fund, and would take the matter further in January if the UIF has not presented its case.

Solidarity had requested more information from the UIF on numerous occasions, but had not received any feedback as yet.

He also said that Solidarity agreed with the Cosatu notion on the matter of accountability and the claims process.

South Africa’s system of social security is creaking under the weight of an increasingly brittle economy — and there’s no better time for an overhaul than now. Covid exposed many of these fault lines, however, this reckoning had been coming long before the pandemic swept into town in March 2020.