COSATU statement on the current challenges engulfing the Unemployment Insurance Fund

4 October 2023

The Congress of South African Trade Unions (COSATU) is deeply concerned by the endless challenges workers experience when submitting their claims to the Unemployment Insurance Fund (UIF), as well as continuous allegations and revelations of serious corruption surrounding some UIF investments.

The UIF is an employer employee contributions scheme established to provide salary compensation for workers when they are retrenched or dismissed or when they are on maternity, parental or adoption leave. The state does not contribute a cent to it. It exists solely to support workers when they are in need of salary relief. It is not a slush fund for anyone, whether they are politicians, state officials or failed businessmen.

Workers struggle to submit their claims and receive their payments. There are perennial queues at UIF offices across the country where workers wait in vain for days on end to have their claims processed. The problems at the UIF are many and completely unnecessary in the 21st century when information technology is readily available.   The issues range from an IT system that is routinely offline, to understaffed offices, overstretched employees, user unfriendly and confusing forms and applications systems, as well as delinquent employers who pickpocket workers’ contributions and fail to hand them over to the UIF.

The consequence is millions of workers fall through the cracks and struggle to access their unemployment insurance funds when they are most in need. COSATU has raised the need for the UIF to modernise its systems with the Fund and the Department of Employment and Labour countless times since 2020 when the system’s failings became most glaring. Despite many PowerPoint presentations, workers still remain in queues.

COSATU has been deeply alarmed by allegations of serious corruption facing some UIF investments. The recent exposes hanging over the R5 billion proposed gift by the UIF to Thuja Investments are extremely worrying. The Federation is amazed by reports that the UIF and Department intervened to authorise this R5 billion payment to this company despite advice from the UIF and the Public Investment Corporation (PIC)’s investment committees not to do so. We are further troubled that this company is said not to have presented a business case that could stand the most elementary scrutiny. The Minister of Employment and Labour, Mr. TW Nxesi is correct to raise a red flag over the serious conflict of interest that the owners of this venture, Mr. M. Mdwaba and his son, have when Mr. Mdwaba (senior) is the chair of the public entity, Productivity SA, with whom he has proposed to do business with. It is clear that he must be removed as chair of Productivity SA.

Whilst the Federation is pleased that the Minister responded positively to COSATU’s action for action on this dubious business proposal that reeks of a get rich quick scheme, we believe that further decisive action is needed as we fear this is merely the tip of the iceberg.

President Cyril Ramaphosa needs to place the UIF under administration and authorise the Special Investigations Unit to conduct a comprehensive forensic audit of all UIF investments. SARS must be roped in to conduct lifestyle audits of all persons involved in UIF investments and ensure that any individual found wanting must be held accountable, irrespective of which positions they may hold. SARS needs to be tasked to put in place a modernised application and payment system that will ensure workers can apply for their funds and receive them with ease and that the space for chaos and corruption comes to an end. The PIC needs to explain what measures they will put in place to prevent future scams from appearing in UIF investments.

Government needs to show the necessary decisiveness and fortitude. Workers cannot afford a business as usual approach. The 6th administration needs to conclude its work with a modernised and cleansed UIF that serves workers and is free of looting. COSATU will be seeking an urgent meeting with the Presidency and the Minister to ensure action is taken.

Issued by Matthew Parks, Acting National Spokesperson & Parliamentary Coordinator, COSATU, 4 October 2023