Business Maverick

Government pitted against business and labour over income relief for laid-off workers during the lockdown 

By Ray Mahlaka 3 November 2020
Caption
An unemployed man holds a self-made advertising board for jobs. (Photo: EPA/NIC BOTHMA)

Business and labour are vexed by the government not extending the Covid-19 Temporary Employer/Employee Relief Scheme (Ters) beyond September. The Covid-19 Ters is a centrepiece in President Cyril Rampahosa’s ‘R500bn’ economic stimulus package, which seeks to support SA’s frail economy during the lockdown. 

The government has put itself on a collision course with labour and business over its failure to extend a Covid-19 scheme that provides income relief to laid-off employees during the lockdown. 

Labour and business representatives have used the words “blindsided” and “in bad faith” to describe the decision by the government’s National Coronavirus Command Council (NCCC) to not extend the Covid-19 Temporary Employer/Employee Relief Scheme (Ters) beyond September.   The NCCC, which was formed in March, comprises at least 19 Cabinet ministers and coordinates the government’s response to stop the spread of Covid-19.  The spat over Covid-19 Ters has the potential to fracture the relationship between labour, business, and the government, which has mostly been cordial since the start of the lockdown in March. 

The Covid-19 Ters, which is administered by the Unemployment Insurance Fund (UIF), was introduced in March to provide income support to employees who have been temporarily or permanently sent home due to the Covid-19 outbreak. It is open to all employees, who along with their employers, make monthly contributions to the UIF. The amount of relief to employees is based on a sliding scale of between 38% and 60% of their earnings, in which the lowest-paid employees are paid at the top of the scale. Employees can be paid a minimum monthly payment of R3,500 (tied to the national minimum wage) and a maximum of R6,730.

The scheme was initially meant to stay in place for three months, from April to June – a period in which SA was in a hard lockdown that ravaged the economy and labour market. Further extensions of the state of disaster have prompted the government to extend the Covid-19 Ters from 16 August to mid-September. 

Labour and business are unhappy

Labour federation Cosatu and business lobby group, Business for SA (B4SA), said they were informed on Friday (30 October) afternoon by their umbrella body, the National Economic Development and Labour Council (Nedlac), that the NCCC has decided to not further extend the Covid-19 Ters. B4SA is made up of Business Unity SA and the Black Business Council and was formed to respond to the Covid-19 crisis.  Cosatu and B4SA said they were not consulted on the NCCC’s decision, despite negotiations between both organisations and the government at Nedlac over the past two months to extend the Covid-19 Ters.  Vexing Cosatu and B4SA is that the NCCC’s move comes after Ramaphosa made a commitment that the income relief for laid-off workers would be available until the end of the state of disaster, which has been extended by the government to 15 November. 

Cosatu wants an urgent meeting with Ramaphosa and Employment & labour minister Thulas Nxesi to ask the pair to extend the Covid-19 Ters. A spokesperson for Nxesi said he will formally respond to the matter later this week. 

NCCC powers

Cosatu has gone further to question the NCCC’s powers and whether its mandate extends to the Covid-19 Ters when it is usually tasked with lockdown rules. “The NCCC has no ambit under the UIF Act to make any decision regarding the UIF’s operations. The NCCC can be taken to court because it has no legal standing on the UIF. It is the Minister [Nxesi], the UIF board and Commissioner that can make such decisions,” Cosatu parliamentary co-ordinator Matthew Parks told Business Maverick. 

B4SA has supported Parks’s view: “In ordinary times, these decisions [on Covid-19 Ters] should be made by the Minister and director-general [DG] of the labour [department], based on consultations with the other social partners [labour, business and community partners at Nedlac]. Unfortunately, as has been so often the case over the last seven months of the state of disaster, the Minister and the DG seem to be removed from the decision making,” the business grouping said in a statement. 

B4SA believes that for as long as the national state of disaster and lockdown are in place, the Covid-19 Ters is still required. “There are still a significant number of employees who are vulnerable and whose employers are unable to implement special measures to ensure their safe return to work, or who are unable to return to work on a full-time basis on account of the current government restrictions under the state of disaster.”

Cosatu’s Parks said the Covid-19 Ters should be extended until January 2021 because there is a possibility that SA might impose further lockdown restrictions on the movement of people and public life – like has happened in the UK, France, and Germany because they face a second wave of infections.  Cosatu wants the Covid-19 Ters to be extended for employees who are restricted from working under level one of the lockdown such as those over the age of 60 and those with comorbidities.

Parks believes that the extension of the Covid-19 Ters would cost the UIF about R3-billion to R4-billion a month.  Although UIF’s administration is widely regarded as poor with long delays between workers applying for benefits and receiving them, B4SA said the UIF can still afford to extend the Covid-19 Ters. B4SA said the social partners’ investigations found that the UIF has a significant amount of illiquid investments amounting to R59-billion, which can be freed-up to fund benefits for employees. DM/BM

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  • I think it is rather simple. The government is running out of money and don’t know how to prioritise their limited expenditure. As businesses shrink and/or close so fewer people will be employed, aggregate demand in the economy will decline, causing more businesses to close, creating a downward spiral. The rapidly declining tax revenues will continue their downward acceleration unless the ANC has a eureka moment and magically grasps the fact that ALL state income is derived from taxpayers. Sadly, I’m not convinced that they understand this, and will proceed down the Zimbabwe / Venezuela route until they realize, “Oh hell the NDR didn’t work.” But by then all the “cadres” will have fat offshore accounts so who cares if millions starve.

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