Can the Unemployment Insurance Fund survive a reopening of the Temporary Relief Scheme?

Unemployment Insurance Fund (UIF) spokesperson Makhosonke Buthelezi said despite the threat that stricter COVID-measures pose to the livelihoods of many South African enterprises, “there are no immediate plans to reopen the Covid-19 Temporary Employee/Employer Relief Scheme (TERS).”

Western Cape Finance and Economic Opportunities MEC, David Maynier, has called upon the government to reopen applications to the UIF’s TERS scheme for businesses and employees that won’t be able to operate during Adjusted Lockdown Level 4.

The stricter guidelines posed at this level are expected to have a significant impact on the livelihoods of many South African enterprises, especially in the liquor-, hospitality, and tourism sectors. Maynier further argued that businesses in these sectors would struggle to keep afloat despite the leniency provided for takeaways, but still urged the public to show their support over the next two weeks.

Job losses were an inevitable economic symptom of the Covid-19 pandemic. This not only placed pressure on businesses and individuals but also on the Unemployment Insurance Fund (UIF) that was forced to step in and soften the blow through its Temporary Employee/Employer Relief Scheme (TERS).

Industries classified as non-essential saw a decrease in employment between 2020’s fourth quarter and the first quarter of this year. It is estimated that between 84 000 and 87 000 jobs were lost as a result of the COVID-19 pandemic.

Until mid-October 2020, TERS dispensed more than R53 billion to more than 4.7 million people whose incomes were affected by the pandemic. This exceeded the original R40 billion set out by the fund to aid income losses, which led to TERS closing applications.

“If we blow this money on this temporary scheme, what will happen to the ordinary beneficiaries who have put their money into it?” warned South Africa’s Employment and Labour minister, Thulas Nxesi in November 2020. “We cannot collapse this fund,” he further warned.

The National Economic Development and Labour Council are still discussing the situation around TERS and possible solutions, especially in light of the announcement of Adjusted Lockdown Level Four, implemented Sunday, 27 June 2021.