UIF claimants drop in the first six months of this year

The number of claims for unemployment benefits has dropped from 455,000 to 404,000 indicating that their might be a small improvement in employment prospects for this year. Image: Wikipedia

Seruwe said the decline in the number of claimants was also because of tighter monitoring and processing of applications to clamp down on fraud.

Despite the improvement, the number of claims remains high, reflecting the weak growth of the local economy.

About 404,000 people claimed for unemployment insurance between January and July this year, compared with 455,000 over the same period last year. The number of claimants is estimated at between 50,000 and 60,000 a month.

"People are getting jobs and we believe companies are not shedding as many jobs as it has been perceived to be the situation," Seruwe said. Statistics SA data show that although job losses were still reported in the second quarter of this year, the economy also created 39,000 jobs over the period, mainly in private households and the informal sector.

While the number of claimants fell, the value of claims increased as the fund raised the income ceiling.

The fund paid out R4.2bn in claims between January and July - about R400m more than the same period last year. "If we do not increase the ceiling it means we are not going to pay people higher benefits. So we increase it to get more income but also to pay people more at a higher scale," Seruwe said.

Surplus of R50bn

The Free Market Foundation's Loane Sharp says that the R50bn surplus in the UIF should be returned to employers and the UIF liquidated. Image: Google Plus

Free Market Foundation Economist Loane Sharp said the UIF's surplus of nearly R50bn was not far-reaching.

"SA's unemployed people are mostly those in long-term unemployment and youth with no work experience who do not benefit from the UIF," Sharp said.

"The UIF should be liquidated and the surplus funds returned to employers," he said.

Like several other government agencies, the UIF's main challenges included non-compliance by employers, particularly small businesses.

Seruwe said the compliance rate of small businesses to UIF contributions was "very low", leading to cross subsidisation of the informal sector by larger companies that were contributing.

South African Chamber of Commerce and Industry Senior Policy Consultant Pietman Roos said some smaller businesses probably did not comply because of "administrative complexities".

"It is quite possible that many smaller businesses find the paperwork associated with UIF daunting because they either do not have the skills, resources or time to fully familiarise themselves with the reporting and requirements," Roos said.

Seruwe said, however, that the fund had done a lot to make compliance easier over the past few years, including improving online submission processes.

He said that higher economic growth would benefit the fund as more companies would employ and make more contributions to the fund. Higher economic growth rates are forecast only from next year.

Source: Business Day via I-Net Bridge