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Minister of Employment and Labor Thulas Nxesi.
- The Minister of Employment and Labor, Thulas Nxesi, has warned that the FIU fund does not have unlimited resources.
- Since the start of the lockdown, more than R49 billion in benefits have been disbursed in the form of more than 11 million payments.
- Nxesi delivered a ministerial briefing at the National Council of Provinces on Tuesday.
The Unemployment Insurance Fund (UIF) is not a “money tree” with unlimited resources.
That was the warning from Labor and Employment Minister Thulas Nxesi, who revealed on Tuesday that the FIU has around 50 billion rand available.
Nxesi delivered a ministerial briefing at the National Council of Provinces (NCOP) on the measures his department has taken to mitigate the Covid-19 pandemic.
Through the Covid-19 Temporary Employee Assistance Plan (TERS), more than R49 billion in benefits have been disbursed in the form of more than 11 million payments since the start of the shutdown.
READ | TERS coronavirus FIU payments to resume
Nxesi said rand 23 billion was disbursed in Gauteng, in five million payments, and rand 484 million was disbursed in the North Cape, in more than 100,000 payments.
‘Mass unemployment’
At the same time, R 7.5 billion was disbursed in 1.3 million payments in normal FIU profits.
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Nxesi said there were plans in place to ensure the sustainability of the FIU fund.
“We have around R50 billion available. The question we need to answer now is what is the way to go when we have to deal with mass unemployment. This is a serious matter that the FIU board is looking at.
“It is difficult at this stage to determine all the cuts. But if the worst comes to the worst, we could find ourselves in the situation of 2008, where we would have to appeal to the government,” he said.
Nxesi said that while the FIU was reused, it was also necessary to incorporate the necessary financial controls.
“I said at the time, ‘We don’t start paying benefits before the controls are in place.’
“This led to initial delays and complaints from employers that conditions were too onerous, which, in turn, compromised the FIU’s controls in the rush to get payments to laid off workers,” he said.
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He also said that the FIU was aware of the risks of fraud with TERS payments.
Nxesi said:
I need to point out that from the beginning the FIU was well aware of the fraud risks with the new Covid benefits system, especially given the large sums involved. That is why the FIU developed a strategy to ‘follow the money’ and budgeted for a full audit to account for every penny paid. We make this very clear to employers in our commitment to Nedlac, as well as in the instructions we issue. We said [to businesses]- We will support you and your workers, but when this is done, you will be audited.
In September, all Covid-19 TERS payments were suspended after various allegations of corruption and complaints that employees were not receiving their money.
The suspension of payments allowed the FIU to implement adequate controls and mitigate the identified risks.
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During the first payment run on September 21, and following the suspension of TERS payments, errors were detected and payments were rejected.
Some of these included the rejection of 193 applications after it was discovered that the applicants were deceased.
Nxesi said 1,688 government employees who applied for TERS were rejected. Two requests from inmates and 1968 applicants with invalid identification numbers were also rejected.
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“The holes are being plugged. The FIU has received the correct master data from the Department of Internal Affairs, which is the most recent data, so no deceased employees will be paid.”
“The risk of inflated wages by employers has also been corrected, as now verified by the FIU with the last declared wage.
“All identification numbers for minors have been blocked in the system,” he said.
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