Business Maverick

BUSINESS MAVERICK

Government offers scant assistance for struggling businesses and workers during new Level 4 lockdown

(Photo: Waldo Swiegers / Bloomberg via Getty Images)

All that’s on offer from the government is the resumption of payments under the Covid-19 Temporary Employee Relief Scheme (Ters), which is managed by the Unemployment Insurance Fund. The extension of the R350-a-month social grant, which targets unemployed people, is not yet on the table.

A week after SA was thrown deeper into a lockdown that has heavily restricted public life and movements, shut down the alcohol industry and prohibited dining at restaurants, the government is yet to offer income-relief measures to financially distressed consumers and businesses. 

The only income-relief measure that the government plans to reinstate is Unemployment Insurance Fund (UIF) payouts to workers who have been temporarily or permanently sent home due to Level 4 lockdown regulations. 

Business, labour and social partners concluded their meeting with government representatives on 2 July at the National Economic Development and Labour Council (Nedlac), where measures to contain the economic impact of intensified lockdown regulations were discussed. The Nedlac meeting resumes on Tuesday. 

South Africa has already descended deeper into a crisis; lockdown regulations have accelerated the collapse of the economy, the number of business failures has grown, and more people have been pushed into poverty and joblessness.

Two individuals who are part of the Nedlac discussions told Business Maverick that the government has agreed – in principle – to reinstate the UIF’s Covid-19 temporary employee relief scheme (Ters). The proposal to resume Ters benefits for workers – only in restricted sectors such as hospitality, liquor and tourism industries –  has been sent for approval to the Cabinet and the National Coronavirus Command Council, and approval is expected by the end of this week. 

If approved, the UIF would open applications for Ters payments on 19 July, and payments would be processed from 26 July. Business and labour representatives have lobbied for the window of Ters applications and payments to be brought forward to accommodate a possible extension of Level 4 lockdown regulations, which took effect on 28 June, and are expected to run until 11 July. 

Matthew Parks, the parliamentary coordinator for Cosatu, said labour representatives want Ters benefits to be available to affected workers for as long as stricter lockdown regulations remain in place. 

“The main thing is to get money to workers as soon as possible and not delay matters,” said Parks. 

More relief measures 

Stakeholders at Nedlac also discussed the extension of the R350-a-month social grant, which came to an end in April. The grant provides relief to individuals above the age of 18 who are unemployed, do not receive any income or any other social grant or support from the National Student Financial Aid Scheme or the UIF. It costs the fiscus about R2-billion a month for the grant to be administered. 

Business Maverick understands that the Department of Social Development has asked the Cabinet to extend the grant for as long as the strict lockdown remains in place. But National Treasury has refused to make funding available for the grant. 

Stakeholders at Nedlac have argued that the Treasury can afford to extend the grant as it is going to end the 2021/22 fiscal year with a windfall of about R100-billion, thanks to the recent commodities price boom. Put differently, Treasury will have more money for the economy than it initially projected. 

The government’s economic response during the third wave of Covid-19 infections pales in comparison to its response during the first and second waves. In addition to Ters benefits and the R350-a-month Covid-19 grant, the government, during the first and second waves, mobilised commercial banks to offer consumers payment holidays and debt relief, offered small businesses loans that were guaranteed by the fiscus, and tax incentives were offered to struggling businesses. 

South Africa is one of the few countries in the world that has intensified lockdown regulations without offering additional income-relief measures to laid-off workers and struggling businesses. Although not comparable to South Africa, the US and UK moved swiftly to reintroduce stimulus cheques for affected households, once-off grants to support struggling businesses, and other forms of employment support during their waves of Covid-19 infections. Life is slowly returning to normal in the US and UK due to the fast and wide roll-out of Covid-19 vaccines. DM/BM

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