The fatal link between declining trust in government and clogged UIF payments

Written by Ciaran Ryan. Posted in Journalism

The public mood is swinging angrily against this lockdown and now we now why. From Accounting Weekly.

President Ramaphosa’s declining popularity over the lockdown is at a tipping point

Two pieces of news this week illustrate how radically the mood has swung in SA: trust in President Cyril Ramaphosa and the security forces has declined in recent weeks from 75% to 69% (according to an Ask Afrika survey), while Business Insider reports that 700,000 applications from companies for Unemployment Insurance Fund payouts failed in May because employees were not registered.

It should have been obvious from the start of the lockdown in March that the already strained UIF administration would battle to handle the staggering volume of claims expected to come its way. And so it has turned out. Employers and companies are turning to their accountants to navigate the sometimes labyrinthine online application process. If there’s any solace in all this, it is that accountants have demonstrated their worth to the economy as never before.

“Accountants are among the unsung heroes in this lockdown crisis,” says Nicolaas van Wyk, CEO of the SA Institute of Business Accountants (Saiba). “The feedback we are getting is that they have never worked so hard. They have been thrust into the frontlines of this crisis and have done exceptional work in making sure their clients receive UIF payments – but it is clear that the system is unable to handle the sheer volume and complexity of the task forced on it.

“As Saiba, we have an interest is ensuring that the UIF payments system functions as efficiently as possible and we, as accountants, are willing to assist the Fund to streamline their processes. We have the technical skills and we now have a deep-level understanding of the obstacles that employers are facing in making claims. But it is clear that there needs to be much better communication with the accounting community and the UIF to see how we can sort out the difficulties, which appear to be growing by the day.”

Labour minister Thulas Nxesi has appealed to companies “to do the right thing and declare workers who still need to be paid.”

The Department of Labour says an amount of R3.2 billion from the first round of UIF payments remains in abeyance as the Fund awaits further details from employers, “to be able to soften the blow for at least 725 791 workers represented by 123 977 employers.”

Clearly responding to claims that the UIF was deliberately withholding funds to save money, Nxesi this was counter-intuitive because it is clear that “the demands on the UIF going forward are going to be massive. But we move from the point that it’s important that workers are not disadvantaged and as such, we appeal for the details so that the Fund can help those who need the money or for whom this may be the only source of funds.”

While employers and the government lob blame grenades at each other, the lives of millions of South Africans are on the line. Feedback from accountants who are dealing with these applications on a daily basis, there is an element of truth on both sides.

This is no trifling matter. The National Employers Association of SA (Neasa) says 78% of employers still haven’t received their May UIF monies. Of the 22% of employers who received payment, only 47% were paid in full.

Payments for April are still held up. Neasa surveyed its 10,000-plus members and found that 21% of employers still haven’t received their April UIF monies. Of the 79% of employers who received payment, only 55% were paid in full. Neasa CEO Gerhard Papenfus says the false message to workers emerging from government is, “We’ve paid the employers, but they haven’t paid you. That’s just not true.

“This is a scandal. What started out as a campaign to stop the spread of the virus has now turned into the killing of businesses. And what I see coming out of this is the looting of the country’s pension funds, which has already been suggested by the trade unions.”

Saiba member Tasmin Laight (recently profiled here) says the blame for failed UIF payments cannot be directed at any one particular party: “One cannot solely point fingers at employers. Yes, some employers have been negligent in registering their employees, some payroll companies are not submitting UI19s (the form used to declare UIF on behalf of employees) to the Department of Labour and are only submitting to SA Revenue Services (Sars) monthly. Most payroll software programmes have an automated report that generates your UI19 for the month.  But the user needs to generate it and send it via email to the Department.”

“There is a massive clerical problem within the Department of Labour, mainly related to new applications. Some of my own clients’ applications still pending for more than a year. There are also cases where similar trading names have been amalgamated and registration and PAYE numbers are obviously being overlooked. To me the Department is severely under-staffed, or there is a management issue. The lack of automated application software is also a problem. It should be an automatic application process, such as that done by Sars.”

Applicants are required to fill in an emailed response from the Department which is then returned to be data captured by a clerk on the other side. Another administrative problems is the revamped website removed older UIF returns from March 2015 and never replaced them. Accountants have complained that no new returns could subsequently be submitted, preventing the addition of new employees. “So many of my companies (clients) have had errors, or their employees were not registered,” says one accountant. “Where companies have similar names, they have been amalgamated which means employers cannot claim UIF funds because their employees are registered under another company with a different trading name.”

It’s time to call the fire brigade. As Saiba’s Van Wyk points out, accountants have shown their worth to the economy. Now it’s time to solicit their help in sorting out the UIF mess. “We are ready to help,” he says. “This is a life and death matter for too many businesses and employees. We need to solve this problem together for the sake of the country.”

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.