Unemployment Insurance Bill: hearings

Meeting report

LABOUR PORTFOLIO COMMITTEE
20 March 2001
UNEMPLOYMENT INSURANCE BILL: HEARINGS

Chairperson: Mr S Manie

Relevant submissions:
Centre for International and Comparative Labour and Social Security Law
Business South Africa
Disabled People of South Africa
Black Business Council
National Association of Democratic Lawyers
Unemployment Insurance Bill [B3-2001]

SUMMARY
The Centre for International and Comparative Labour and Social Security Law, said that Clause two of the Bill was too narrow. The purpose provision should include the preventing, avoiding and combating of unemployment. Since these additional purposes are not included in the Bill, it is highly unlikely that nay surplus in the Fund may be used towards giving effect to funding any programme, scheme or even research in to preventative measures. Business South Africa called on the Government to "bail out" the Department from their huge debts. Disabled People of South Africa put forward as proposal that disabled people who have lost their jobs should be able to receive disability grant as well as unemployment insurance benefits. The Black Business Council said that the Department needs a new administration system, which is efficient and effective, with sound internal controls to ensure a drastic reduction in fraud and corruption. The National Association of Democratic Lawyers made proposals relating to changing the manner of payment of illness and maternity benefits by the Department.

Centre for International and Comparative Labour And Social Security Law
Prof M Olivier, Director of the Centre, said that although the Bill makes provision for investigation into the inclusion of domestic workers, the provision is vague since inclusion as a definite outcome is not ensured.

The UI Bill provides for a graduated scale of benefits ranging from 29,5% to 58,6% of previous earnings. The problem with this is that the rate at the lower end of the graduated scale is well below the internationally accepted target of 45%. The basis on which the scale is graduated should be reviewed and a more equitable distribution (45%) should be devised.

The Bill makes provision to avoid "double-dipping". This is to avoid an employee from claiming unemployment benefits with other benefits. Prof Olivier said that the envisaged regulation of "double-dipping" is skewed, inconsistent and unfair and in need of serious reconsideration.

Business South Africa (BSA)
Mr B Shipman submitted that the Committee should not conclude its deliberations on the UI Bill until the Contributions Bill has been made available to it.

BSA supports the concept of a progressive benefit structure under which lower income earners would have a higher IRR than higher income earners. This subject to the qualification accommodated for in the Bill, which is that in the interests of fairness, the IRR of 45% of earnings which applied under the current Act to all contributors should apply to the average earnings of the contributors to the UIF.

Mr Shipman said that the Government had agreed at NEDLAC to provide a grant to repay the current overdraft of the Fund and stand as guarantor for deficits of the UIF in the transitional period of two years. This should be recorded in the Bill so that when the Bill becomes law the UIF would be able to operate on a financially viable basis. See attached document for the substance of this submission.

Disabled People of South Africa (DPSA)
Mr M Parks, Parliamentary Liaison Officer: DPSA, said that there was a need to de-link the issue of disability grants from unemployment insurance. Why should a disabled person who receives a disability grant not be entitled to unemployment insurance upon being unemployed? To disallow disabled employees unemployment benefits would be to "crudely say that the problems they face are not different to non-disabled workers or pensioners and that they do not deserve special assistance".
See attached document for the substance of this submission.

Discussion
An ANC member referred to Prof Olivier’s written submission in which he wrote that the Bill omitted the requirement that "a person loses the right to illness benefits if the illness was caused by his/her own misconduct". The member asked for an explanation of such an occurrence. Prof Olivier replied that this would be when somebody deliberately injures him/herself and as a result that person is unable to work. This exclusion should be retained in the Bill.

Mr Parks added by saying that such a requirement would lead to a process that resembles a "witch hunt". Employees that are ill would be questioned as to the cause of their illness. He said that punished workers are vulnerable and there is no need to provide more reasons for exclusions from the scope of the Fund.

He also said that if an employee is paying UIF tax then whether he is receiving a disability benefit or not, he should be entitled to unemployment benefits.

The member also asked what sectors does BSA represent and how far do they relate to small businesses such as "spasa shops". Prof Olivier replied that he could not provide a confident answer for this question, as he was unsure about the number of emerging businesses that are represented by BSA.

Ms Thabethe asked whether BSA could help the Department with decreasing their huge overdraft. BSA replied that the Business sector does not control the Fund. The Government controls the Fund. Whether the Government decides to accept the input by BSA on how the Fund should be run, is entirely up to the Government.

Mr Bell asked whether BSA considered what DPSA had said about "double-dipping". Mr Shipman replied that they are in agreement with what DPSA said about "double-dipping". The Department has to reconsider the regulations on "double-dipping".

Black Business Council (BBC)
Mr D Moshapalo, Chairperson of the BBC said that the BBC is concerned with the exclusion of domestic workers from the scope of the Bill in terms of section 3(1)(d). Domestic workers being the most vulnerable employees should be included in the scope of the Bill.

The BBC also believes that special exemptions should be made for domestic workers. If they were expected to contribute on the same basis that other workers, their take-home pay would be considerably less. This should be considered during the proposed investigation.

Mr Moshapalo said that the Fund should be fully exempted from tax, thus allowing maximum benefits to contributors. See attached document for the substance of this presentation.

National Association of Democratic Lawyers (NADEL)
Ms J Kehler, Senior Researcher: NADEL, said that the Bill should apply to domestic workers from the onset. Especially with regard to maternity benefits it is crucial not exclude the vast number of female employees who are employed in the domestic sector.

NADEL also suggested that the payment method for illness and maternity benefits should be made optional, either by direct deposit into the beneficiary’s bank account or to the beneficiary at an employment office.

Ms Kehler stated that Part G of Chapter 2 of the Bill should include legislation that provides for equivalent treatment of UIF cheques by the banks in order to minimise hardship by beneficiaries who otherwise have to wait an additional week before receiving their benefits. See attached document for the substance of this submission.

Discussion
Mr Oliphant asked what the basis of BBC’s statement that domestic workers should be exempt from contributions. Mr Shipman replied that whatever contribution is made by domestic workers would affect their already low take-home. Also the domestic workers salary is not pre-determined.

Mr Oliphant also referred to the suggestion made by Ms Thabethe that BSA should assist the Fund financially. Mr Oliphant said that clause eight of the Bill makes provision for this. He said that Mr Shipman should take this message back to BSA and they should consider this suggestion. The Department should also take this option to the Minister. He also said "please don’t come back to us again and tell us that you’re still in the red, make sure that you have knocked at all doors".

Mr Bell said that the Bill could not be looked at in a vacuum. The Committee had to also look at the Contributions Bill.

The Chairperson said that the Department after hearing all the suggestions and recommendations would draw up a comprehensive matrix containing all the suggestions and recommendations. The Department must put the necessary resources in to this process. The political parties would also have to put forward their political mandates on areas where differences can arise.

Ms F Seedat (Commission on Gender Equality) said that although the public had been invited to provide suggestions eg mechanisms to include domestic and seasonal workers in the scope of the Bill, the responsibility of finding such solutions should not shift from the Department. The Department must still continue with its own process.

The Chairperson concluded by saying that with out exception the Committee had agreed to include domestic and seasonal workers the only question left to be answered is how to do this in a way that the law would still work.

The meeting was adjourned.