Unemployment Insurance Fund Bill: briefing

Meeting report

JOINT MONITORING COMMITTEE ON THE IMPROVEMENT OF QUALITY OF LIFE AND STATUS OF WOMEN
31 October 2001
UNEMPLOYMENT INSURANCE BILL: BRIEFING

Chairperson: Ms Govender

Relevant Documents
Unemployment Insurance Bill [B3-2001]
Summary Draft Report on Violence Against Women (please email [email protected] for a copy)

SUMMARY
The comparable inconsistencies in the provision for maternity benefits in the Unemployment Insurance Fund Bill and the Basic Conditions of Employment Act (BCEA) were discussed. The manner in which the UIF Bill calculates the amount granted under a maternity benefit was criticised as unconstitutional on the grounds of sex, gender and pregnancy. The Bill's handling of maternity and allied issues was generally seen as a failure to recognise and address the specific socio-economic needs of women.

The Commissioner of the Unemployment Insurance Fund discussed the general background to the Bill, as well as the new approach adopted by the Department of Labour that infused the current structure and provisions of the Bill. It was decided that the manner in which the issue of maternity benefits is dealt with in this Bill has to be revisited and reformulated.

MINUTES
Ms Fatima Seedat: Commission on Gender Commission and Ms Corianne de Villiers: Women's Legal Centre, were requested to air any points of contention in the Unemployment Insurance Bill.

Ms F Seedat informed Members that the Bill had been passed on Friday, 24 October, and a report on the Bill had also been passed on 30 October. The Bill has taken a bold step in including seasonal and domestic workers in the proposed Clause 3(1)(e), but Clause 3(2)(b) makes such inclusion dependent on the investigation to be done on this issue in terms of the proposed Clause 3(2)(a) of the Bill. The Bill also accommodates public service workers, and a report is expected from the Departments of Labour and Finance in nine months time that details the development of this process.

Part D of the Bill deals with maternity benefits, and the Department of Labour, the office of the President and the Commission on Gender Equality have conducted a study on this matter. The aim of the study which, ironically, will also be completed in nine months time, is to identify means to ensure maximum coverage for the lowest paid workers. Yet this portion of the Bill could still come under constitutional criticism. For this reason the legal opinions of two separate counsels has been sought on the Bill's handling of pregnancy, which relates to "gender" in Section 9(3) of the Constitution, and the right to social benefits in terms of "social security" in Section 27(1)(c) of the Constitution.

Ms C de Villiers took the opportunity to provide Members with some background to the Bill. The Bill provides various benefits for employees such as those relating to unemployment, maternity, adoption and illness, yet it fails in establishing the same scheme to govern all these different benefits. Also the scale of benefits has been formulated to afford a higher unemployment insurance to the lower income earners, with the result that the higher income earners now receive a lower unemployment insurance which could range from 30-60%. Furthermore, the period of employment is now stressed, as the Bill provides that for every 6 days of employment the employee would receive 1 day of full pay leave. Thus the emphasis now falls on the amount being earned and the period during which the employee has been paying into the Unemployment Insurance Fund (UIF). This is the same scheme being entrenched by the Bill for all the benefits contained therein.

Ms Villiers stated further that the Gender Monitoring and Advocacy Collective (GMAC) contends that maternity benefits are not afforded adequate protection and consideration in the Bill because it still fails to correct the disadvantaging of women, especially pregnant women. GMAC further questions the extent to which the Bill complies with international obligations relating to the treatment of women in the workplace. As mentioned by Ms Seedat the two legal opinions procured foresaw definite constitutional problems with the Bill, and the constitutional court itself has allowed for people to be treated differently to ensure an "equality of outcome".

The Bill fails to address the issue of maternity benefits specifically, as well as the need to address the specific needs of women, and for this reason it discriminates unfairly against women on the grounds of sex, gender and pregnancy in terms of Section 9(3) of the Constitution. The South African government could argue that such blanket coverage would simply not be financially feasible, yet so conclusive study has been done to show otherwise. In the Grootboom judgement the Constitutional Court itself held that government policy must be reasonable, and priority must be given to the needs of the most vulnerable members or groups in our society. For this reason it is insisted that both low-income earners and all women on leave receive the full 100% salary compensation under the Bill. Furthermore, there are two clauses in the Bill that allow employers to supplement the unemployment insurance payout under the Bill. But these are, as the two legal opinions suggest, very unclear and need to be reformulated.

Ms Seedat then contended that the Bill is inconsistent with the Basic Conditions of Employment Act 75 of 1997 (BCEA) in the following instances. Firstly, Section 25(1) of the BCEA entitles women to a minimum of four months maternity leave, whereas the Bill provides for a maximum period of four months leave. Secondly, Section 25(3) of the BCEA provides that no woman shall work within the first six weeks after having given birth, whereas the Bill focuses on the period of employment and subsequent amount paid into the UIF which could severely reduce the claimant's rest time. The reason for this assertion is that the Bill provides that the claimant will receive one full day of paid leave for every six days of employment. This means if the claimant has only been working for a period of 2 months before the confinement, she would only receive 10 days paid leave. Consequently, a claimant who needs the money would be forced to return to work well within the six-week period required by the BCEA. Also, Section 25(3) calls for certain amendments to the Unemployment Insurance Act of 1966, which this Bill has not effected. The International Labour Organisation (ILO) recommends that, as far as possible, female employees should receive the full 100% compensation.

Discussion
Ms C September (ANC) stated that what is being fought for here are the rights of the seasonal and domestic workers, as well as those who form the most vulnerable sector of the national workforce. The primary concern with the issue of maternity benefits is that the Bill effectively creates a "window for negotiation" between employee and employer which creates unnecessary problems. This problematic formulation of the section thus narrows down the arguments to, not only the financial elements of the debate, but also the category of workers disadvantaged by the Bill's dispensation and also "waters down" women's rights via the negotiation allowed by the Bill.

Ms S Botha (ANC) inquired whether the inclusion of "public services" in the Bill creates any problems.

Ms Seedat replied that GMAC, the Congress of South African Trade Unions (COSATU) and other trade unions agreed to its incorporation in the Bill.

Ms B Sono (ANC) stated that women comprise the majority of the public service and requested clarity on the fact that, in recent times, the threshold has risen from 93% to 97%.

Ms Seedat responded that this increase is welcomed as more women would now be covered by this legislation, and also their contributions to the UIF would now be received to cover the costs incurred in reimbursing the low-income women earners. The South African government has been approached to replace 100% of the earnings for the most vulnerable earners, and the rest should at least have the bargaining power to negotiate with their employer for anything in addition to the UIF payout. The latter situation deals with those higher paid employees with power bargaining power who could then use it to negotiate with their employer or via a trade union.

Ms September contended that in this regard the public service is not disadvantaged to the same extent as those currently applying for maternity benefits, for example. Thus the preferred point of attack here should be the constitutional issues raised earlier, in terms of whether the South African government should be allowed to ignore the provisions of the BCEA.

Ms Seedat replied that, on purely utilitarian grounds, this "boosted" the fund.

Ms September cautioned against the adoption of this sort of approach as the UIF has a bad history of "falling apart", and has experienced problems with corruption and other complicating factors in the past.

Ms B Sono (ANC) informed the Committee that the regional expenditure incurred in negotiating around the UIF is R455 million, and that the UIF is currently operating with a deficit of approximately R888 million. Yet this does not affect the UIF as it continues to replace salaries. This Committee must then address the issues relating to the UIF that need reform and must, in doing so, be mindful of the UIF mandate.

Ms Seedat replied that it seems appropriate to raise the political issues surrounding the existing debt incurred by the UIF in this Committee meeting. The Unemployment Insurance Board (UIB) was requested to work according to a 100% replacement model, to establish whether this option would be feasible in the long run. Furthermore, this would not only seek to afford benefits to women in terms of Rands and cents, but also seeks to combat poverty and economic disempowerment.

The Chair inquired how the issue of maternity benefits is presently being dealt with by the Bill.

Ms Botha asked whether there are any provisions in the Bill that limit maternity leave to "a period of four months within a single cycle".

Ms Seedat stated that maternity and related issues should not fall under "unemployment" as provided by the Bill, and this constitutes unfair discrimination under section 9(3) of the constitution as women are branded as unemployed because they are pregnant. In other words, the only reason they are considered unemployed is because they are women, and therefore constitutes unfair discrimination on the grounds of pregnancy, sex and gender.

Mrs Botha suggested that clarity on this issue under the Bill is required.

The Chair noted that Mr S Mkhonto, the Commissioner of the UIF, had just entered the venue and drew him into the discussion.

Unemployment Insurance Fund Commissioner
Mr Mkhonto replied that the issue raised by Ms Seedat is highly problematic, and the Department of Labour has been attempting to resolve it since the inception of the BCEA, which still has not fully addressed the issue. The parties to the BCEA negotiations agreed that the matter would be left to the UIF Board, as it was felt that the Board would be better placed to finally resolve the issues. Yet this Bill has struggled to resolve this issue, and the National Economic, Development and Labour Council (NEDLAC) has passed the Bill because it addresses the broader concerns with the financial status of the UIF. The UIF operated smoothly when it only covered "unemployment", but between 1952 and 1959 the South African government failed to use revenue generated by taxes to provide for the other contingencies because it was felt that the UIF was operating successfully enough to cover these as well. For this reason the illness, adoption and maternity benefits were included as "deemed provisions" under the 1966 Act.

Mr Mkhonto informed the Committee that the current Bill was then redrafted to remove these "deemed provisions" so that a claimant would no longer be able to access both unemployment and maternity benefits, as these were now separate. Also the "one third rule" was removed, which provided that if the employer replaced one third of the claimant's previous earnings, such claimant would not be able to receive any benefits from the UIF as well. The UIF is thus currently experiencing "serious financial problems" because the formulation of the Bill now makes it increasingly difficult to recover any compensation from the employer, and the UIF cannot pay out more than what was previously earned by the claimant. Furthermore, the objective of the UIF being to provide unemployment insurance to all members of the workforce, the Commission is currently conducting a study to determine whether it would be viable to deal with maternity benefits in a separate piece of legislation altogether because this issue does not properly fit into this Bill.

Mr Mkhonto then turned to the concerns raised by Ms Seedat regarding the BCEA. He stated that it deals primarily with working women and its provisions are therefore tailored to meet their needs. Yet the Department of Labour sees no difference between the unemployment and maternity benefits but if the claimant wishes to extend the period of leave granted by the Bill, she could still apply to the claims officer to have her request considered. Indeed, the claimant could also apply for the other benefits provided for in this Bill in addition to the maternity benefit, as the various benefits are considered separate and distinct.

With respect to the concerns surrounding the 100% replacement model, if the decision is taken to award full benefits to claimants who have worked for only four months, the process alone would cost the UIF upwards of R500million. Should it be decided that this regime needs to be changed then permission has to be given by Cabinet for such alteration. This is because the financial resources currently allocated to the UIF allow it to just break even.

The Chair requested Mr Mkhonto to clarify whether the cost involved here relates to the lowest paid workers, or to them all.

Mr Mkhonto replied that the current statistics available on this matter indicate that two-thirds of low-income workers earn less than R3000 per month.

Ms Seedat responded that the exact figures are R1300 or less per month, as indicated by the Threshold Subsistence Level.

Mr Mkhonto replied that the problem here is that the Threshold is not a reliable yardstick, and therefore cautioned against effecting an amendment that is devoid of any scientific validity.

The Chair then inquired of Mr Mkhonto whether the Department of Labour has consulted Statistics South Africa (SSA) in attempting to identify an exact threshold, and requested clarity on the precise costs involved as well as on the exact threshold of the low income earners. Further input from the Department of Labour is awaited.

Mr Mkhonto informed the Chair that this information would not be difficult to assemble and it could be delivered to this Committee by the end of the day. The provisions of the Bill dealing with pregnancy do not seek to allow working women alone to benefit from the UIF, and the legislature cannot make the maternity benefits more lucrative than the other unemployment benefits provided by this Bill. As mentioned earlier, a separate Bill or fund might need to be established to deal exclusively with maternity benefits.

The Chair contended that the problem with the Bill is its failure to acknowledge the fact that women contribute "productive as well as reproductive labour". This has to be considered is drafting any legislation dealing with issues relating exclusively to women, such as maternity benefits.

Ms Ntlabati (ANC) reminded Members that under the previous public service dispensation women were forced into retirement after their fourth pregnancy. Clarity is requested on the position under the Bill.

Ms J Semple (DP) inquired whether there is any limit on the maternity leave granted to a claimant in excess of the period prescribed by the Bill.

Mr Mkhonto replied to Ms Semple's question regarding the "cut-off point" to excess maternity leave granted, by acknowledging that the linking of maternity benefits to the period of employment in the current provision is not the best option. It is for this reason that it was suggested earlier that the maternity benefits should apply to all women, because if the inquiry is limited to only the unemployed, then the government would delegate the matter to the UIF which is struggling to break even as it is. The most likely prognosis is that this issue would be "parked" under the UIF again, but perhaps the report would provide substantive improvement.

Ms September encouraged the Department of Labour and the UIF Commission to keep this Committee informed of any developments regarding the report that is to be presented in nine months time. Furthermore, the definition clause in the Bill needs clarification because it provides that pregnant women are regarded as being unemployed, and they also have to pay provident fund dues. Yet men in same-sex relationships are now also granted maternity benefits under the adoption provisions in the Bill.

Ms Sono contended that the costs involved in fully accommodating the social security needs of pregnant women under this Bill are vital here, because it has a direct impact on the future sustainability and ability of the UIF. The commissioner has to bear these concerns in mind.

The Chair called on Ms Seedat and Ms de Villiers to raise any further issues they may have with the Bill.

Ms de Villiers suggested that the Canadian equivalent of the UIF is termed, more positively, the "Employment Insurance Fund". This fund deals successfully with the same issues as the UIF, and a hasty decision to relegate the issues relating to maternity to a separate piece of legislation should be avoided. Furthermore, as Mr Mkhonto suggested earlier, it is undesirable for the unemployed to allege that maternity benefits are more lucrative that the other unemployment benefits provided by the Bill. This is precisely the reasoning behind the assertion that the constitution allows women to be treated differently and preferentially to achieve an equality of outcome. She urged the Committee is urged to carefully evaluate the figures and data provided by the Commissioner, as it could possibly be a further two to three years before the Parliamentary process is completed, during which time so many women would have been disadvantaged.

Ms Seedat contended that the maternity issue is in its current dire position because of repeated acts of sheer negligence, first under the previous dispensation, then by the BCEA and now, it seems, by this Bill as well. Thus this Committee should firm its resolve and strive to include some form of protection in this Bill.

The Chair asked Mr Mkhonto how many members of the UIF commission were female, and how many women were involved in the NEDLAC deliberation process.

Mr Mkhonto replied that there is, as yet, no commission as such, but the members of the current body are 100% male, with the only female member retiring in June earlier this year.

The Chair then stated that the Bill has to be amended to accommodate all these concerns.

Summary Draft Report on Violence Against Women
The Chair called for the five documents dating back to 1999 that deal with violence against women to be assimilated into one coherent report, and requested that the recommendations and key findings be highlighted.

Ms S Dawood, an ANC researcher, informed Members that the Summary Draft Report has been assembled with this exact purpose in mind, and the relevant points have been listed. Yet the Report does seem less like a summary because it is too comprehensive, and for this reason the key issues are currently being extracted for use as a framework for further discussion.

The Chair replied that once the revised report is submitted to this committee, members would be better suited to decide which matters should be brought before Parliament.

The meeting was adjourned.