BUSA withdraws from UIF, says current situation is unsustainable
· The South African
Business Unity South Africa (BUSA) announced that they are withdrawing from the Unemployment Insurance Fund (UIF) structures at Nedlac. They will also be removing their representatives from the board.
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Reasons for their departure include safeguarding the reputation of their own representatives and their own ethical principles on good governance.
But BUSA also wanted to send a clear message to the industry and South African: that the current situation at the UIF is unsustainable.
BUSA’s relationship with the UIF
BUSA is the apex body for organised business, formed in 2003. It represents business in dealings with government and labour, notably through NEDLAC.
They have maintained a relationship with the UIF since 2020. They were unafraid to criticise during this period and engaged in various reform initiatives for the South African insurance scheme.
In 2024, they even established a task team to try to find a way to reform the UIF. But two years later, they report no clear commitment to ensure that this would be effective.
They do not mince their words. They call the UIF “deeply dysfunctional, characterised by persistent operational failures, governance weaknesses, delays, unresponsiveness, and a drift away from its core mandate.”
What the UIF does for South Africans
The UIF was set up to provide short-term relief to workers who become unemployed or are unable to work. It can also be used to give relief to dependants of a deceased contributor.
It came into operation on 1 April 2002 and, according to the South African Revenue Service (SARS), is governed by the Unemployment Insurance Act, 2001, and the Unemployment Insurance Contributions Act, 2002.
UIF is one of the many social relief schemes offered by the South African government.
However, it has not been without criticism for poor performance. South Africa’s organised labour federations have called the UIF “notorious” for “long queues and inefficiencies”.
‘Proper governance systems have been deliberately undermined’
BUSA mentions a growing impression about the UIF that also led to their decision to withdraw.
This was that “proper governance systems have been deliberately undermined.” They describe an organisation where board meeting quorums are rarely achieved to due meeting being frequently rescheduled or rescheduled at such short notice that members cannot attend.
To BUSA, these disruptions are “not due to a lack of willingness to participate, but because of impractical and ad hoc arrangements.”
Urgent action needed
BUSA have called on the Minister of Employment and Labour, Nomakhosazana Meth, to urgently place the UIF under administration.
They want this to be done through an independent administrator.
Additionally, they call for a forensic investigation “to assess the legality and appropriateness of all Fund expenditures.”