The voices against a “secret” lobby to privatise the Unemployment Insurance Fund (UIF) could count on Cosatu as an ally, trade union federation president Zingiswa Losi says amid increased focus in the public domain on the state of the fund and allegations of irregularities.
The UIF, which pays unemployment and maternity benefits to workers through payroll taxes and holds R130 billion in investments, is back in the spotlight following allegations of misconduct in the R5 billion job creation deal with Thuja Capital.
The deal has led to a fallout in the Department of Employment and Labour, placing Minister Thulas Nxesi on opposing sides against his DG, Thobile Lamati, and UIF commissioner, Teboho Maphiring.
On the back of reports on the Thuja deal, Business Unity South Africa (Busa) sprang into action, trumpeting calls for the UIF to be placed under administration.
Department insiders said Busa wanted the UIF placed under administration “because they want to control it more”.
“Especially after COVID, when they saw UIF spend R64 billion, so they want to control it more. Now they feel there is money there that they can control. The end game is privitisation”.
While Cosatu also followed suit and supported the proposal for UIF to go under administration, Losi told Sunday World in an interview that their interest was only triggered by the fact that the fund holds workers’ money.
She dismissed any privatisation as a solution, adding that the private sector was also not immune to corruption. She cited as an example that during the COVID-19 pandemic, it was discovered that up to 3,200 employers were deducting UIF money from the employee’s salaries but not paying it over to the fund.
“When the private sector is not immune to corruption in this matter, what is it that they want to do with this money?” Losi asked.
“Because there is worker’s money involved, she said, Cosatu would continue to be vocal on matters of the UIF. This included the disputed Thuja Capital investment deal, “which the department is internally squabbling over”.
However, internal sources said Cosatu had always been unhappy that the UIF board was an advisory board, which means that the board could only advise Nxesi, but it had no authority or power over Lamati.
“They hate that because they can discuss all the things they like, but ultimately the DG can do whatever he likes. So, they do not like that board, and they want to have a board where they can have proper decision-making powers. For many years, they have been trying to get rid of it”.
A source said: “As things stand, the only way Nxesi can get his hands on the UIF to do whatever he wants with it is with the DG out of the way. And if he wants to remove the commissioner, he cannot do so without removing the DG, because the DG protects the commissioner”.
The Thuja deal has therefore become a convenient vehicle to achieve both objectives, said the person.
Records showed that the much publicised N Gawula Incorporated forensic report into the Thuma deal was not the first time Nxesi tried to reverse the agreement.
On January 5 – some nine months before the forensic report was concluded last month – acting DG Adv Mzie Yawa wrote to Thuja Capital, saying the deal was “illegal and invalid” because both Nxesi and finance minister Enoch Godongwana did not approve it.
But amid the wrangling over the Thuja deal, highly placed insiders within the department told Sunday World about a confidential report produced by a top audit firm, allegedly recommending that the UIF be privatised.
“Another suggestion is that the labour activation programme be transferred to Productivity SA as part of the reconfiguration of the department to align it with the name change in 2019 from labour to employment and labour,” said an insider.
Productivity SA has a mandate to promote employment growth and productivity. Mthunzi Mdwaba was the agency’s chairperson up until recently, when Nxesi decided to axe him. Mdwaba owned Thuja Capital.
UIF spokesperson Trevor Hattingh said, “The report referred to belongs to Minister Nxesi, and as such, the Ministry of Employment and Labour is best placed to provide a response to your inquiry.”
Nxesi said, “I do not know where privatisation comes from. There is no section that refers to privatisation except for modernisation and digitisation of processes and systems. We will release the report after we have shared it with the Cabinet”.
Busa did not respond to questions.
In a further written reply Nxesi said: “Whoever informed Sunday World of that was misinforming you and should provide you with facts”.
He said there was no such “confidential” report. “Instead as like work commissioned, there is a report not for distribution until finalised and approved. Since the new additional mandate of Employment was added to the DEL, there was a need for the realignment & reconfiguration of the department & its entities”.
He said the objective was to have a fit-for-purpose department and its entities enabled to meet its new mandate & to speedily respond to service delivery priorities.
He said the audit firm was commissioned to re-imagine a citizen led service transformation for the Compensation Fund and UIF.
“They have produced a co-designed proposed ‘To Be’ conceptual model and Organisation Transformation design for both the Compensation Fund and the UIF”.
Nxesi said the audit firm looked at the challenges of the Funds, diagnosed and produced recommendations which are the subject of internal discussion in government.
“There is no such a plan to privatise UIF or any entity under my department. No such recommendation exists”.
He said the reconfiguration of DEL spoke to all its mandate as a department and its entities, it was never focused in just one program like the Labour Activation Programme.
“The department and its entities have many programs. The reconfiguration processes are therefore still continuing, produced work will be presented as part of consultation, engagement and be discussed with all stakeholders”.
Nxesi said the public, through all social partner forums and the media will get to be engaged and taken on board on all developments.
