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Minister of Employment and Labor Thulas Nxesi.
Labor and Employment Minister Thulas Nxesi warned that the state Unemployment Insurance Fund could collapse if it is forced to again extend special benefits to workers who have lost income as a result of the coronavirus pandemic.
The government initially pledged R40 billion from the fund, which is financed by workers’ monthly contributions, to subsidize special benefits for three months. The relief, which was granted to those whose employers were unable to pay them or who were forced to take leave, was subsequently extended for another four months until mid-October. So far, nearly R53 billion have been distributed to more than 4.7 million people.
While there have been reports that the FIU has R140 billion available that could be used to further extend the so-called Temporary Assistance Plan for Employers and Employees, much of the money is earmarked for investments such as bonds, property and stocks, and t be from easy access, according to Nxesi. The fund will also need money to pay regular unemployment claims to more than 1.5 million people in the near future, he said in an interview.
“If we spend this money on this temporary plan, what will happen to the ordinary beneficiaries who have put their money into it?” he said. “We cannot collapse this fund.”
The Congress of South African Trade Unions earlier this month called for payments to workers in industries that continue to be adversely affected by virus-related restrictions be extended for two more months. He noted that the fund has around R60 billion in liquid assets that could be used.
“It is much cheaper to invest in saving jobs and companies by expanding TERS than to allow thousands of companies to close and fire millions of workers,” said Cosatu. He admitted that the fund could not provide continued support to workers and called for “a combined relief package in the form of stimulus, tax relief and debt relief.”
Cosatu has disagreed with the government over its decision to breach a three-year pay deal agreed in 2018 by denying raises for public officials this year, a dispute that is now before the courts. The federation has also opposed plans to freeze the wages of state workers for the next three years, a move the National Treasury has said is necessary to control mounting state debt.
Nxesi, whose department oversees the protection of labor rights, said it is closely monitoring negotiations with the unions, which are run by the Department of Administration and Public Service.
“My opinion is that there is a need for a social pact throughout the government to say how we are going to deal with the issue of a salary increase in the face of the loss of jobs that we are seeing,” he said.
The minister also said his department is busy drafting a national employment policy that will aim to deal with the influx of undocumented foreign nationals, some of whom are exploited by local employers.
“We are looking at the sectors where we can implement quotas so that local workers” are employed and safeguard the rights of foreign workers who are legally in the country, he said.
