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UNEMPLOYMENT INSURANCE FUND ANNUAL REPORT FOR THE PERIOD APRIL 2012 TO MARCH 2013 DEVELOPED FOR THE PORTFOLIO COMMITTEE ON LABOUR October 2013
UNEMPLOYMENT INSURANCE FUND
ANNUAL REPORT FORTHE PERIOD APRIL 2012 TO MARCH 2013
DEVELOPED FOR THE PORTFOLIO COMMITTEE ON LABOUR
October 2013
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CONTENTSCONTENTS
•Overview of the Unemployment Insurance Fund
Legislative MandateVision and MissionLeadership and ManagementInstitutional SpreadGovernance set-up of the Fund
•2012/13 - Performance Information
Operational PerformanceHuman Resources ManagementFinancial PerformancePerformance Highlights on Predetermined objectivesJob Creation Initiatives
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Overview of the Fund - Legislative Mandate
Unemployment Insurance Act, 2001 (Act 63 of 2001)
• The Unemployment Insurance Fund (UIF) was established in terms of section 4(1) of the Unemployment Insurance Act, 2001 (Act 63 of 2001) as amended.
• The Act empowers the UIF to register all employers and employees in South Africa.
Unemployment Contributions Act, 2002 (Act 4 of 2002)
• The Unemployment Contributions Act, 2002 (Act 4 of 2002) empowers the SARS Commissioner to collect monthly contributions from both employers and workers.
• Section 9 of the Unemployment Contributions Act, empowers the Unemployment Insurance Commissioner to collect contributions from all those employers who are below the tax threshold.
• UIF contributions are utilised to pay benefits and any other expenditure reasonably incurred relating to the application of this Act.
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Overview of the Fund - Vision and Mission
Vision
The Unemployment Insurance Fund strives to contribute to the alleviation of poverty in South Africa by providing effective short-term unemployment insurance to all workers who qualify for unemployment and related benefits.
Mission
The Unemployment Insurance Fund sees its mission as: – Rendering an effective and accessible service to all
stakeholders.– Being a sustainable organisation with sufficient
reserves.– Administering the Fund professionally.
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Leadership and Management
• The Minister of Labour is the Executive Authority of the Unemployment Insurance Fund.
• The Director-General (DG) of the Department of Labour is the Accounting Authority of the Unemployment Insurance Fund. The Fund is administered by the Unemployment Insurance Commissioner with delegated powers from the DG.
• The Minister of Labour has established the Unemployment Insurance Board in terms of section 47 of the Unemployment Insurance Act, 2001. The Board consists of three members from each of organised business, organised labour, community constituencies and government. Board members are appointed for a period of three years.
• The Unemployment Insurance Board is an advisory board.
Overview of the Fund - Institutional Spread
DoL/UIF operates in 9 Provincial Offices
Nationally provides service in 126 Labour Centres. We have a total of 91 Labour Centres with processing capability.
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Operational Performance
• The Fund had 1,465,218 employers ( commercial, domestic and taxi) registered on the system at end of March 2013 compared to 1,408,205 in March 2012.
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Sector
31 March 2012
31 March 2013
% Change
Commercial 785,626 827,307 5.31%
Domestic 622,579 637,911 2.46%
Total 1,408,205 1,465,218 4.05%
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Operational Performance
• The Fund had 8,330,760 employees ( commercial and domestic) registered on the system in March 2013 as compared to 8,125,575 in March 2012.
Sector31 March
201231 March
2013% Change
Commercial 7,475,681 7,677,232 2.70%
Domestic 649,894 653,528 0.56%
Total 8,125,575 8,330,760 2.53%
Operational Performance
• The Fund paid 731, 131 claims as at 31 March 2013 , an increase of 25,276 claims compared to last year 705,855 total claims paid.
No. of recipients in each category
31 March 2012
31 March 2013
Unemployment 555,969 581,074
Illness 20,966
20,986
Maternity/Adoption 104,407 106,339
Dependents 24 513 22,732
Total Paid 705,855 731,131
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Operational Performance
31 March 2012
(R’000)
31 March 2013
(R’000)
Unemployment 4 354 422 4 687 621 7.65%
Illness 234 126 250 351 6.93%
Maternity/Adoption 708 195 758 457 7.10%
Dependants 315 541 316 457 0.29%
Total Paid 5 612 284 6 012 886 7.14%
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Human Resource Management
• UIF Head Office staff establishment consists of 463 posts.
• 422 (91.14%) of the posts are filled and 41 (8.86%) are vacant posts. Included in the vacant posts are post that will not be filled due to the organizational review process being undertaken by the Fund.
• The new organisational structure of the Fund was approved by the Minister of Labour during the financial year.
• The new structure will increase the staff establishment of the Fund to 559 posts
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Human Resource Management
Salary Band EstablishmentNumber of employees
Vacant Posts Vacancy Rate
Top Management 1 1 0 0.0%
Senior Management 15 14 1 6.7%
Professional Qualified 26 23 3 11.5%
Line Management 47 42 5 10.6%
Skilled 104 91 13 12.5%
Semi Skilled 257 240 17 6.6%
Unskilled 13 11 2 15.4%
Total 463 422 41 8.86%
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Financial Performance – 2012/2013
31 March 2012
(R‘000)
31 March 2013
(R‘000)% Change
Increase/
decrease
Contributions 12,441,164 13,687,497 10.02%
Investment income 4,213,972 4,660,361 10,56%
Benefits expenditure 5,612,284 6,012,886 7.14%
Net surplus 11,837,537 16,006,304 35.22%
Investments 64,854,274 81,171,540 25,16%
Technical reserves 14,527,886 16,465,787 13.33%
Accumulated surplus 47,943,938 62,012,339 29.34%
Total assets 65,973,797 81,848,523 24.06%
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Performance Highlights for the year
Fund Poverty Alleviation Schemes:•Rollout of the training schemes that had been approved during the 2011/12 financial year where
– MICT Seta is training 1000 beneficiaries on ICT training focusing on End User Computing, Technical Support and systems support.
– Telkom/MICT Seta are training 850 beneficiaries on Fundamentals of IT, Advance IT, Electrical Technicians (Refrigeration introduction and systems).
•Investments on Social Responsible Investments amounted to R3.561 billion against the target of R3.254 billion.
•There has been a 93.80% increase in funding for the Social Plan compared to prior year. The Funding allocated has increased from R 13,7 million in 2011/12 to R 26,5million in 2012/13 financial year
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Performance Highlights for the year (continued)
Improve Governance•100% compliance to UI Board and subcommittee charters was achieved at the end of March 2013.
•Internal Audit carried audits at all offices as per the audit plan, with 86% of the audit reports finalised and signed-off by management at the end of March 2013.
•Risk Appetite Framework for Quarter 4 signed off by the UI Commissioner.
•The ACL system is operational and utilized to detect and prevent fraud within the fund.
•93% of all received fraud cases finalised at the end of March 2013.
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Performance Highlights for the year (continued)
Strengthen Institutional Capacity of the Fund•72% of the planned training interventions implemented by end of Quarter 4.
•67% representation of women at Senior Management Service achieved at the end of March 2013.
•3% representation of people with disability at the end of March 2013.
•4.3% vacancy rate as at end of March 2013(excluding posts that will not be filled due to the new structure implementation. Including these posts, the vacancy rate is 8.86%)
•ICT Strategy and Implementation Plan for the UIF approved and being implemented.
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Encourage compliance through enhanced service delivery•86% of all claims received during the 2012/13 financial year were finalised within 5 weeks of application.
•5023 employers have since been accredited to utilize the virtual office and we are continuously in the process of assessing other accreditation applications.
•42 487 active U-filing employers as at 31 March 2013 compared to 35 868 Active U-filing employers as at 31 March 2012. There was an increase of 18.45%.
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Performance Highlights for the year (continued)
Encourage compliance through enhanced service delivery•4% increase in employers registered with the UIF from 1 408 205 in March 2012 to 1465 218 in March 2013.
•Contributions collected increased by 10% compared to the previous financial year
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Performance Highlights for the year (continued)
Performance Highlights for the year (continued)
Improve Stakeholder Relations
•The Fund undertook communication campaigns at al nine provinces during the 2012/13 financial year
•Multi media platform (TV, Radio and Internet ) were utilised to communicate to stakeholders with a reach in excess of 40 million across all platforms.
•The Fund has entered into MOUs with three key stakeholders during the 2012/13 financial year (VIP Payroll, CIPC and TETA)
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Job Creation Initiatives
• The Unemployment Insurance Fund supports the Minister of Labour’s job creation initiatives in pursuing the following outcomes:– Outcome 4: Decent Employment through inclusive economic growth
• Making Our Growth More Labour Absorbing (IDC/UIF Bond & Training Layoff Scheme)
• Reducing Youth Unemployment (Training of the Unemployed Beneficiaries)
• Reviewing Support for small business (Funding for Turnaround Solution)
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UIF/IDC Initiative
• The Industrial Development Corporation (IDC) and the Unemployment Insurance Fund (UIF) commenced their relationship in April 2010 in response to the job losses that were taking place in the country.
• In terms of the relationship, the UIF initially purchased a R2 billon bond from the IDC. The IDC uses these proceeds to fund businesses that will create and save jobs.
• During the 2012/13 financial year, the UIF and IDC continued their collaboration through the issuance of an additional bond of R2 billion. This has increased the total bond to R4 billion.
• To date 21 234 new jobs have been created and 20 161 job saved by companies that accessed the funding from the UIF/IDC initiative.
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UIF/IDC Initiative
• The investment in the IDC by the UIF is part of the UIF’s objective of investing 10% of its total investment portfolio in socially responsible investments, were the focus is on job creation.
• Transactions from this initiative are funded on standalone basis or on a co-funding basis with the IDC funds
• Businesses that access the funding, receive a discounted rate of 5% for a period of time, after which it reverts to a concessionary variable rate linked to prime
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UIF/IDC Initiative• Since inception, there have been 199 approved deals with a total value of
R3,3 billion
• Jobs created were created and saved in the following areas
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FS KZN EC WC GP LP NC MP NW Total
2010/11 1,201 1,164 1,420 6,743 4,752 124 267 1,133 429 17,233
2011/12 1,227 2,140 1,512 9,695 7,973 173 267 2259 663 25,909
2012/13 1,124 3,445 4,964 11,576 15,504 912 355 2,455 1,060 41,395
UIF/IDC Initiative
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UIF/IDC Initiative
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UIF/IDC Initiative
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UIF/IDC Initiative
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Training of the unemployed UIF beneficiaries
• This was a response for UIF beneficiaries who have already lost jobs and require re-skilling for re-integration into the labour market.
• It is implemented through collaboration with various government training institutions to train beneficiaries on critical and scarce skills required in the economy.
• The project began with a pilot in 2010 where 774 youths and unemployed UIF beneficiaries where trained as Artisans in collaboration with MERSETA
• During the 2010/2011 financial year, 1976 youths and unemployed UIF beneficiaries were trained in various artisan disciplines within the mining sector.
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Training of the unemployed UIF beneficiaries
• During the 2012/13 financial year, three training initiatives were rolled out:
– Training of 1000 UIF beneficiaries and unemployed youth on various ICT related training programmes in a collaboration with the MICT SETA
– Training of 1000 UIF beneficiaries and unemployed youth on mining related artisan programmes in a collaboration with the Mining Qualification Authority
– Training 1500 beneficiaries and unemployed youth in various artisan trades in collaboration with the MERSETA
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Training of the unemployed UIF beneficiaries
GP LIM MP NC KZN NW FS WC EC TOTALUIFGSDoL Pilot Project 324 -
- -
- - -
-
- 324
UIF-MQA Artisan Development Project 258 172
176 58
26 215 96
-
- 1 001
UIF-merSETA Artisan Development Project 668 -
28 -
422 - 74
70
14 1 276
UIF-MICT SETA Learnership Project 270 150
200 100
40 100 -
40
100 1 000
1 520 322 404 158
488 315 170
110
114 3 601
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• Beneficiaries who were enrolled for the approved training programmes:
* GP = Gauteng, LIM = Limpopo, MP = Mpumalanga, NC = Northern Cape, KZN = Kwazulu Natal, NW = North West, FS = Free State, WC = Western Cape, EC = Eastern Cape
FUNDING FOR TURNAROUND SOLUTIONS
• In addition to investment in social responsible investments, the UIF continues as the sole funder of Productivity South Africa’s Turnaround Solutions.
• A three year funding agreement has been signed between the UIF and Productivity South Africa and enables the assistance to companies that are in distress with the objective of saving jobs and keeping people in employment.
• In terms of the funding agreement, the UIF allocated R39 million for 2012/13, R55 million in 2013/14 and R58 million in 2014/15 to fund the Turnaround Solutions during the three year period.
• For the 2013/14 financial year, 130 companies are targeted for intervention with potential to save 10200 jobs through the Turnaround Solution intervention.
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FUNDING FOR TRAINING LAYOFF SCHEME
• The UIF has maintained its commitment of R1, 2 billion made towards the funding of the Training Layoff Scheme.
• A total of R105 million has been budgeted for the 2013/14 financial year and R400 million over the next three years.
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Financial Year Allocation to Approved Projects
No of Jobs Saved
2010/2011 R 21 961 133.11 3 2662011/2012 R 6 611 229.01 8282012/2013 R 31 187 883.28 241Total R 59 760 245.40 5 416
Funding for training layoff scheme
• Funding was allocated for 29 companies across 5 provinces:
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Eastern Cape Gauteng KZN Mpumalanga Western Cape
No of Companies 4 11 3 1 10
No of Jobs Saved 459 2869 1160 50 684
Thank You…
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