The Unemployment Insurance Fund (UIF), which had reserves of about R83 billion, would grow by R2.76bn a year if public servants were included as contributors, Adcorp labour market analyst Loane Sharp said on Friday.
Public servants are currently excluded from the UIF, presumably because of their security of tenure, but a new bill proposes including them and other categories of workers who are not at present covered.
Ndivhuwo Mabaya, a spokesman for Public Service and Administration Minister Lindiwe Sisulu, said there was a total of 1.6 million public servants in the national and provincial governments and municipalities.
However, Sharp said the number was 2.83 million, including parastatals.
Labour Minister Mildred Oliphant released the Unemployment Insurance Act Amendment Bill for public comment on Friday.
It will add new categories of employees who were previously excluded as beneficiaries. This includes learners, public servants and foreign workers.
Musa Zondi, a spokesman for Oliphant, said the inclusion of the new categories was to make the legislation conform with the standards of the International Labour Organisation, improve the payment of benefits to contributors, and extend the period within which the benefits were payable.
He said Oliphant first tabled the bill with Parliament before it was approved by the cabinet.
The UIF was technically bankrupt in 1998, but thanks to more efficient collection methods, the UIF has grown from reserves of R7.031bn in 2004 to R27.8bn in 2008 and to R83bn currently.
Sharp said the bottom line was that the government had realised there was a significant surplus in the UIF and was going to use it to boost election numbers through job creation projects, which were largely white elephants.
“Job creation is in the private sector, where each job is self-funded. In the public sector it is taxpayers’ money. The UIF is just another tax,” he said.
Both an employer and an employee to which the act applies are obliged to contribute 1 percent of the employee’s remuneration every month to the UIF.
The UIF is used to provide income-replacement benefits in cases of unemployment, illness, maternity and adoption, as well as dependants’ benefits.
Zondi said that after encapsulating public comments in the bill, it would be tabled at Nedlac for social partners to deliberate on it.
He said that over the years the UIF had grown immensely.
“During the economic meltdown, the fund responded by contributing to training lay-offs by helping companies that were facing economic distress to cope with the crisis.
“Rather than employees being laid off, they were retrained and absorbed back by their companies.
“Furthermore, jointly with the mining sector, the fund is contributing to the housing development to the communities of the North West province,” he said.
Last Monday, Oliphant increased the annual earnings threshold for protection under the Basic Conditions of Employment Act (BCEA) from R183 008 to R193 805.
Gavin Stansfield , a director in the employment practice at law firm Cliffe Dekker Hofmeyr, said: “The earnings threshold is significant as employees who earn in excess of the threshold are excluded from the protection offered by certain sections of the BCEA.”