Give us our UIF money

People tend to forget that the Unemployment Insurance Fund (UIF) is not a charity where undeserving people queue for a free handout. It is insurance against losing income – paid for by workers every month, year in and year out.

This insurance is forced on workers by the Department of Labour, which expects employers to collect the insurance premiums from them or face the legal consequences. Premiums are subtracted from employees’ salaries and wages directly – coming out of their pockets before their monthly or weekly pay cheque hits their bank account.

The Department of Labour and the employees at the UIF seem to have forgotten this as well as the fact that it is their duty and obligation to settle claims against this particular insurance fund.

Claims for maternity, death and loss of income should be settled correctly and timeously.

Obligation

When desperate people submit a claim, the UIF and its employees are obliged to assist them. A lot of people who have suddenly lost their job are desperate.

However, when Moneyweb editor Ryk van Niekerk conducted a radio interview with UIF spokesperson Makhosonke Buthelezi, it was akin to poking a stick in a hornets’ nest.

The interview was motivated by complaints sent to Moneyweb by people who said they have been waiting as long as 18 months to get their money, and by others complaining that UIF employees refused to accept claims because the claimant has since found a new job.

The radio interview resulted in even more complaints being made, with the word “desperate” used often – millionaires are not queueing at the labour department’s offices in scruffy buildings.

Typical experience

One claimant writes: “Unfortunately, I am one of those people who have been waiting for an unemployment benefit payout since September 2020. The uFiling call centre cannot understand why payment has not been forthcoming as all the required documentation has been received and is on their system.

“They have escalated my case several times. I have exhausted all avenues – numerous calls to the uFiling call centre, emails to uFiling etc. I am in desperate need of these funds.

“Please can you forward my email to Mr Makhosonke Buthelezi on my behalf and maybe he will be able to assist,” she writes.

Listen to Ryk van Niekerk’s interview with UIF spokesperson Makhosonke Buthelezi (or read the transcript here):

Overwhelmed

Complaints of delays are coming from all quarters, indicating that the UIF is overwhelmed.

Federated Hospitality Association of South Africa (Fedhasa) national chair Rosemary Anderson says Fedhasa members are finding it incredibly difficult to access the only form of financial relief open to them. “It has left us desperate,” she says.

Fedhasa members highlight daily how their experience of the process and system is fraught with inconsistencies and issues. “From the call centre number being disconnected or, when it was working, [being] manned by call centre agents who were not trained to deal with enquiries, to Sars [South African Revenue Service] errors which appear to be the cause of thousands of unprocessed claims.

“Why should employees and employers who have faithfully contributed to UIF for years not be able to access their contributions, now more so when they are desperately needed than in the history of the UIF?” asks Anderson.

“We must not lose sight that these funds [consist] of the employee and employer’s contributions. It is their money,” she says, adding that the system is “simply dysfunctional”.

Claims of ‘good service’

Meanwhile, the UIF’s website and most recent annual report (for the year to end March 2020) brags about good service.

“The fund’s call centre is one of the cornerstones of its operational success. It has a total staff complement of 40 agents, who are always willing to serve the UIF clients. Call centre agents are well-trained and exposed to continuous assessment, mentoring and coaching which translates to customer satisfaction, reduced queuing time and higher first time call resolution.

“During the year under review, the UIF call centre handled more than 843 329 calls from UIF clients compared to 382 434 in 2019. This represents an increase of 121% of calls received,” according to the annual report.

The annual report further states that 93% of unemployment benefit claims were paid within 15 working days, most claims for maternity benefits were finalised within 10 working days, and 95% of death claims were settled within 20 days.

Experience on the ground seems to differ with this take on the situation.

Buthelezi admitted in the radio interview: “The system now is overwhelmed because it was built to process X number of claims, but with the increase in unemployment, there’s been that problem – that it is now overwhelmed. It’s taking more than what it was built for.

“If you go and submit at the labour centre, the issue there is that some people are working at home and we are taking [only] X number of people per day,” he said. He noted that Department of Labour offices are not working with their full staff complement.

Ters, and now Wabu

Meanwhile, the workload has increased tremendously.

Unemployment in SA has increased to the highest levels ever, while government also tasked the UIF to distribute the grants under the Covid-19 Temporary Employer-Employee Relief Scheme (Ters).

Last week Wednesday (August 25), the UIF got even more work when government started using it to distribute grants under the Workers Affected by Unrest (Wabu) temporary financial relief scheme.

The scheme has been established to assist those whose workplaces have been closed due to recent unrest in KwaZulu-Natal and Gauteng, resulting in workers receiving partial remuneration or no pay at all.

Stakeholders believe the distribution of these grants is being prioritised and that the UIF is neglecting its core function.

Adri Smith – an independent consultant who helps employers and employees to register for UIF, do monthly payments and lodge claims – told Moneyweb that it seems that the UIF is purposefully delaying payments and/or is giving preference to Ters payments.

Excuses, excuses

“Excuses range from forms that have been lost or that claims are incomplete. Even when everything is correct and claims proceed to the next level, payment is not forthcoming. No reasons are given when claims are not paid,” says Smith.

“Initially, the online claims system worked well when it was introduced. But then changes were made to it, and the new systems is full of bugs. When it came back online, there was a huge backlog, made worse when UIF started to process Ters claims.”

Smith says the call centre is basically useless.

“If they answer the calls, excuses are endless. It ranges from not working with a full staff complement due to the Covid pandemic to ‘the system is down’, load shedding or it being lunch time,” says Smith.

“People are crying, they have no hope, they don’t have food,” says Smith, adding that people believe the fund has been raided.

“It is not charity, people have paid for this insurance for years and decades,” she says.

Billions available

The UIF should have a lot of money, which may be why government looked its way during the Covid-19 crisis.

Marsha Bronkhorst, who at the time of the last annual report was the fund’s acting commissioner, said in her report: “The healthy state of the fund’s financials enabled us to set aside a budget of R40 billion for the Covid-19 Ters benefit for a period of three months.

“The support for the Covid-19 Ters Benefit is aligned to Section 5(b) of the Unemployment Insurance Amendment Act, which allows the fund to provide financial support to schemes that aim to retain employment for workers.”

The financial statements show that the UIF collected more than R20 billion in premiums during the year to March 2020, earned investment income of nearly R12 billion and received an additional grant of R22 billion from the Department of Labour.

It paid out claims to the value of R15.2 billion, while operating expenses amounted to around R2.6 billion. The biggest expense was salaries – R1.5 billion.

By far the biggest cost item, according to the income statement? Fair value adjustments, to the tune of R22 billion, to its listed share and bond portfolios – and another impairment of R2 billion in the value of investments in associates and joint ventures. However, this should not impact on its cash flow.

Investments

The UIF’s listed share portfolio, managed by the Pubic Investment Corporation (PIC), declined in value to R35 billion at the end of March 2020 compared to R43 billion at the end of March 2016. The bond portfolio declined from nearly R92 billion to R84 billion.

However, while unrealised profits and losses due to market fluctuations must be accounted for in the income statement, they do not affect cash flow. Indeed, the cash flow statement confirms this.

The only investment-related cash outflow was additional investments (of nearly R3 billion) in unlisted associates.

The UIF’s investments in associates and joint ventures has raised eyebrows in the past when billions have been invested in unlisted companies amid allegations that the owners are “connected”. These investments have indeed been written down year after year to a fraction of the value of the original investment. In cases, even the low valuations look dubious.

Nevertheless, the UIF should have enough money to pay valid claims.

It is its responsibility to ensure that it has adequate systems and people to settle claims and assist people unfamiliar with the procedures involved.

Maybe it’s time for the UIF’s non-executive directors to do their jobs as expected.

There are nearly 50 non-executive directors spread all over SA, with some earning as much as R500 000 per annum. They should take management and staff to task.

Read: UIF’s Ters paid out R161m in irregular payments