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Solidarity welcomes proposal to reduce UIF contributions

Trade union Solidarity welcomed the proposal of the Department of Finance to reduce contributions to the Unemployment Insurance Fund (UIF) from a maximum of R297,44 per month to a maximum of R20 per month.

This measure will return the UIF’s excessive reserves to workers. Solidarity has been requesting such a reduction since 2012, as the UIF continually collects far more funds than is necessary to carry out its mandate.

According to comments submitted to the Department of Finance by the Solidarity Research Institute (SRI), the UIF currently has an investment portfolio of R94 billion. Moreover, the fund annually collects more than twice as much money as is needed to pay out claims, which leads to the continuous growth of the fund’s reserves to the detriment of the labour market.

Paul Joubert, senior economics researcher at the SRI, says all workers contributing to the UIF will definitely have 0,93% more money, up to R138,72 per month, in their pockets when the reduction is implemented. “Depending on how the so-called employers’ UIF contribution will be handled, this amount could rise to R252,47, or alternatively, more money would be available to employers to employ additional workers,” Joubert says.

“Solidarity is also proposing that the lower contribution not only apply to the 2015-’16 financial year but that the repayment of excessive reserves to workers be continued until the UIF only has a prudent, adequate reserve left to carry out its existing mandate,” Joubert says.