Unemployment Insurance Amendment Bill [B7-2014]: pre-briefing by Department of Labour

Meeting report

Introduction
Mr K Mubu (DA) asked why it was necessary to meet, if the Amendment Bill could not be passed before the end of term.

The Chairperson replied that the purpose of the meeting was for information.

Mr E Nyekemba (ANC) said that it was not the time and place to discuss procedure. The Committee had to be briefed to understand issues. Procedure was an administrative issue. The Portfolio Committee was not expected to agree or disagree, and to vote.

The Chairperson agreed that procedural issues would be attended to later.

Briefing by the Department of Labour on the amendments to the Unemployment Insurance Act, 2001 [Act 63 of 2001)
Mr Thembinkosi Mkalipi, Department of Labour Acting Deputy Director General, noted that the Unemployment Insurance Act of 2001 came into operation in April 2002. The Act established an Unemployment Insurance Fund (UIF) to which employers and employees contributed. Over the years the fund grew to over R83 billion. During economic meltdown the Fund responded by helping with retraining lay-offs and contributing to housing development in Northwest province. To improve service delivery, the Unemployment Insurance Board recommended that the Act be amended. To comply with the Constitution, the Bill had to address the exclusion of civil servants in the current legislation.

Proposed amendments to the Act dealt with a number of issues. Learners, public servants and foreign workers had to be included in the Act. The period of payment of benefits to the contributor had to be extended from eight months to twelve months. The period in which a contributor could lodge a claim had to be extended from six months to twelve months. Beneficiaries had to be allowed to claim if they had credits, regardless of when a previous claim had been submitted. There had to be provision for the nomination of beneficiaries in the case of death benefits. There had to be assistance to financing employment projects by the Public Employment Services. Powers were needed for the appeals committee to adjudicate on late applications for benefits. The Minister had to be empowered to vary the income replacement rate through regulations.

The Amendment Bill delinked maternity benefits from unemployment benefits. Full maternity benefits would be paid for miscarriages occurring in the third trimester of pregnancy. The Bill decreased the waiting period for illness benefits from fourteen to seven days.

The Unemployment Insurance (UI) Bill was approved by Cabinet. The Department had released the Bill for public comments. It was tabled at Nedlac for social partners to deliberate on it. NEDLAC deliberations were concluded in November 2013.

Discussion
Mr H Hoosan (ID) praised the amendments as positive, as it catered for the most vulnerable in society. He asked if the cost analysis could be made available.
Mr Hoosan referred to the period for claims extended from six months to twelve months. He asked about reasons why people did not claim within six months. He asked if the matter had been studied.

The Chairperson replied that there were many vulnerable workers in South Africa, who had no access to facilities. There were unpaid monies to miners from the Unemployment Insurance Fund that had been outstanding for 10 years. Some places even had no reception. Six months was not enough.

Mr Mkalipi replied that different cultures were currently not accommodated. There were cultures where a widow had to mourn a husband for six months, during which time she was not in a position to apply. There was also the possibility that people from outlying areas did not know that there was a period of six months. There were people who came from Mozambique, went back there and then came back again.

Mr Mubu asked if people had to come to centres for payment.

The Chairperson replied that there was decentralisation into satellite offices in the rural areas.

Mr D Kganare (COPE) quipped that he was still owed his Unemployment Insurance Fund benefits.

The Chairperson told him, amid laughter, that he could not get unemployment benefits in prison.

Mr Hoosan asked about criteria related to Ministerial powers to regulate rates. He asked if the Minister could vary rates for Members of Parliament.
Mr Mkalipi replied that there were obligations to the International Labour Organisation (ILO). South Africa was below the ILO lowest rate of 45%. The South African lowest rate was 38%, because actuaries had indicated that to be the desirable figure. The Minister could not go below 38%.                                      

Mr Kganare remarked that section 3.1 looked like investment by the Public Investment Commission (PIC). The PIC board had to be allowed to look at areas to invest money.

Mr Mkalipi replied that the PIC had to tell where investments had to be made.

Mr Kganare asked about the special dispensation for domestic employers, referred to on page 11.

Mr Mkalipi replied that there was currently no provision for domestic workers to make payments annually. Domestic employers could not fairly be asked to declare every month. NEDLAC was saying that it had to apply to small business also.

Mr Hoosan referred to maternity benefits. Money could go to women to spend time with the child. He referred to the Swedish system that allowed maternity leave to be shared by mothers and fathers. That encouraged fathers to contribute more to raising a child. South African men could be provided with incentives to do likewise.

Mr Mkalipi replied that paternity was not governed by the Act. In South Africa, leave was a family responsibility. There were five days granted, not linked to maternity, but it was not regulated in the Act.

Mr Hoosan referred to the waiting period for illness reduced from 14 days to seven days. He asked if anything prevented people from claiming other benefits.

Mr Mkalipi responded that under the current law, if there was a SASSA grant, one was blocked from others. That was being done away with. If there was credit, there could be benefit regardless of other claims.

Mr Mubu remarked that there was generous improvement. He asked if there were enough safeguards to prevent abuse of the system. There were abuses in the grant system.

Mr Mkalipi replied that the Fund could never be completely foolproof. Employees could defraud the Fund. There were systems to detect that, but it could not be foolproof.

Mr Boas Semwe Department of Labour UIF Commissioner, added that there were controls who prevented those not supposed to claim, from doing so. There was an employer database.

Mr Mubu asked when changes would become effective. He asked if people were aware of when changes would become effective. He asked about retrospective benefits.

Mr Semwe replied that retrospective payment was provided for. One could be paid from the time when unemployment commenced.

Mr Kganare noted that funds had been utilised to assist housing in North West. He asked if it was at Rustenburg. Lessons had to be utilised from other areas where miners had similar problems.

Mr Semwe replied that there was an affordable housing scheme, which was not a grant but an investment. Priority was given to the mining area at Rustenburg.

Mr Kganare remarked that some people had many employers. A gardener could work one or two days a week for a number of people. The worker insurance number came from the employer. It might be good if the workers kept the number.

Mr Mkalipi replied that if someone was employed for 12 hours, there was a responsibility for the employer to register. If it was less than 24 hours per month the employer did not have to register. The employer had to subtract the contribution. If one worked for more than 24 hours for different people, it had to be registered. That applied especially to small business.

Mr Kganare asked what happened if one worked for different employers, and was unemployed by one of them, and still employed by two, for instance.

The Chairperson replied that one would still be able to claim from the two who were still paying.

Mr Mkalipi replied that the law allowed pro rata payment. The employer had to make a declaration.

Mr Hoosan asked if the Swedish approach to maternity and paternity would at least be looked into.

Mr Mkalipi replied that leave was regulated by the Basic Conditions of Employment Act. If that Act changed its approach, the Unemployment Insurance Act would follow. It had not yet been raised by the Department or by labour. There were considerations of cost to the economy. Men could take four days leave. Scandinavian issues did come up.

Mr Nyekemba remarked that maternity leave was long, but paternity leave was only a few days. The Unemployment Insurance Fund only paid maternity leave.

The meeting was adjourned.