Cut UIF contributions to create jobs and stimulate the economy
The Democratic Alliance (DA) calls on the Labour Minister, Mildred Oliphant, to take advantage of our massive R65 billion Unemployment Insurance Fund (UIF) to introduce temporary stimulus measures to lower the costs of doing business and put money in the pockets of workers.
The UIF has grown from R54bn at the end of 2010/11 to R65bn at the end of 2011/12. Annual collections of approximately R12.4bn are offset by expenditure of only R5.6bn. This means that the fund grew by a tidy R6.8bn in the last financial year.
We propose that UIF contributions made by both employers and employees are provisionally halved (from 1% to 0.5%) until the capital base of the fund contracts to a predetermined benchmark.
This combined employer/employee discount would stimulate the economy on two fronts:
- Demand side - the cost of hiring workers would be reduced, incentivising business to increase employment;
- Supply side - the net wages of workers would receive a boost, effectively increasing the spending power of consumers.