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Minister Nxesi aims to revamp the UIF to stamp out fraud and reduce queues at labour centres across the country

Despite the widespread corruption scandals that nearly derailed efforts to mitigate the devastating impact of the Covid-19 pandemic, the South African government was generally hailed for putting in place a package of financial and social benefits relief measures for the vulnerable. These interventions were targeted at workers and employers whose companies were affected by the pandemic and the unrest in KwaZulu-Natal and some parts of Gauteng.

Disruption of economic activities

The imposition of lockdowns and other related intervention measures to curb community transmissions significantly disrupted economic activities across the country. Scores of employees were retrenched as several companies either scaled down or completely stopped their operations. To strike a balance between curbing the spread of the coronavirus and loss of life while allowing some economic activity, the government announced a comprehensive package of economic-financial relief measures to bolster the economy, businesses and workers during the different alert levels of the lockdown.

Covid-19 TERS

The Department of Employment and Labour, through the Unemployment Insurance Fund (UIF), provided wage subsidies to employees and employers affected by the lockdown.  The fund budgeted R40 billion to finance the Covid-19 Temporary Employee/Employer Relief Scheme, also referred to as TERS for a period of three months. But the monthly extensions of the national state of disaster, coupled with subdued economic activities, meant the scheme had to be extended several times — till mid-July 2021.

Fraudulent activities

TERS proved to be an effective financial intervention tool in assisting distressed employees and employers during the global pandemic, but it was seriously undermined by rampant corruption and fraud. The inadequate control measures in the new system, which was hurriedly developed, compounded these challenges. The scale of corruption and fraudulent activities necessitated the involvement of several law enforcement agencies to bolster the department’s own risk management unit in detecting and stemming the waves of corruption.

The agencies included the South African Police Services’ Hawks, the Special Investigating Unit (SIU), the National Prosecuting Authority (NPA), the Financial Sector Conduct Authority (FSCA) and banking institutions. The partnership resulted in several arrests and prosecutions, and some of the money wrongly claimed was returned.

Securing proclamation orders

These parties also succeeded in preserving funds against suspected fraudulent claims. From a total of R230 836 322 targeted for preservation orders, an amount of about R133 951 840 has been successfully preserved by the Asset Forfeiture Unit through the courts and secured, pending investigations. Twelve convictions for fraud and corruption were recorded and 25 cases are being heard in court. Recently 16 suspects accused of defrauding the scheme of R2.2 million were arrested. Among the culprits were the fund’s own officials, nine of whom were investigated for charges related to misconduct regarding alleged contravention of the supply chain management process. Eight of the nine cases have been finalised, and sanctions meted out.

Follow the money project

One tool the UIF introduced was the “follow-the-money” project, to deal with employers who claimed the TERS fraudulently, or who did not pass the claimed relief benefits on to their employees on whose behalf the claims were made. The UIF has vowed to verify every cent spent through TERS; to date R18.9 billion has been verified out of the R62.4 billion TERS expenditure; R43.5 billion must still be verified, to see if the funds have reached the intended beneficiaries.

Financial stability of the fund

Of this amount, the banks will verify R26.93 billion, while the remaining R16.67 billion will be verified through a panel of audit firms. The banks have been roped in to leverage their ICT capabilities to assess, for instance, whether the employees in question have been receiving their salaries (even before TERS) in the same bank account that was used to receive the TERS.

Despite these fraudulent activities the fund remains financially stable, and has, in the last two quarters of the 2002-2023 financial year, been able to accumulate a surplus of over R3 billion. As recently as the end of September 2022, the fund’s technical reserves amounted to R46.6 billion, with an accumulated surplus of R55.5 billion, amounting to a total net asset of R102.1 billion.

Partnership to create jobs

The UIF has teamed up with the Industrial Development Corporation to set up a fund with a view to creating sustainable jobs and retaining them by supporting job-creating transactions, while providing concessionary funding. According to the Public Investment Corporation’s socially responsible investment report, the fund’s investments have created and sustained about 30 878 jobs; of these 15 411 are permanent and 8 918 are temporary. The fund size is R5 billion.

Labour Activation Programme

The other initiative that the fund has launched to assist troubled companies that seek to retain their employees is the Labour Activation Programme (LAP), through which the UIF has extended the normal TERS to six companies with 634 employees, at an expenditure of R27.2 million in 2021-2022. Under the scheme, the UIF funds 75% of an employee’s basic salary up to a maximum amount of R17 119.44 per month, for a maximum period of a year. The key feature of the LAP is the employability enhancement programme, the objective of which is to boost prospects for employment for the jobless, enable entrepreneurship and preserve jobs by integrating unemployed people back into the labour market. For the 2022-2023 financial year, the budget for the LAP is R3.1 billion. To date the programme has enrolled 31 633 learners into various skills development programmes. A budget of R1.7 billion was set aside to initially recruit about 55 000 people.

Payment delays and inefficiencies

The department and the UIF are aware of the difficulties and challenges that clients have had to endure at various labour centres when accessing their benefits. Queuing for long hours due to the IT-related technical glitches has been a major challenge. Minister of Employment and Labour Thulas Nxesi acknowledged these difficulties and said plans are afoot to address them. These include improving efficiency by completely overhauling the entire architecture of the existing payment system.

An exhaustive skills audit will be carried out so that only those people with the relevant technical expertise, such as actuaries and financial and forensic experts, will be employed. Nxesi said these are the calibre of people required to assist the department in disbursing billions of rands, as well as detecting early on any fraudulent or corrupt activities.

The department has deployed various ICT solutions to reduce queues at its centres. It will, among others:

  • From this month to early 2023 deploy a solution to address a gap in the claim processing system, to enable managers to see which claims have not been attended to yet. The expectation is that this will result in a real-time view of the process flow. It also includes messaging to claimants, telling them how far their claim is and when they will be paid, so they do not need to physically visit centres to reactivate claims.
  • The persistent problem of downtimes will be overcome by replacing the current SITA IT system. Each staff member will have a laptop and a universal sim card to operate on the Vodacom, MTN and Cell C platforms. These are better, faster and “generally immune to downtime, [and are] reliable and dependable”, according to the minister.
  • From this month clients shall be able to monitor progress of their claims on their cellphones, irrespective of the calibre of the phone. They will be enabled to access UIF services free of charge, using the zero-rated USSD and Mobile APP. It is hoped this will reduce travel to labour centres and help keep queues to a minimum.
  • The fund has also developed a zero-rated online portal for TERS (follow the money) which will be deployed live. This will enable employees who received TERS benefits to declare and verify the benefits they received. The information will be used in the audit process of the follow the money project. A new structure has also been approved to increase the capacity of labour centres to deliver quality service.

Call centre services

The UIF has partnered with an outsourced service provider, Alteram Solutions, to render call centre services. This will help the UIF to resolve some of the shortcomings exposed during Covid-19 pandemic, such as inadequate human resources and space constraints. The fund has increased the number of its agents from 40 to 250, thus enabling it to efficiently handle the amount of calls received, and their technology has been upgraded. —