Busa pulls out of UIF structures at Nedlac over dysfunction concerns

Business Unity South Africa (Busa) says it has taken the “difficult but necessary” decision to withdraw from the Unemployment Insurance Fund (UIF) structures at the National Economic Development and Labour Council (Nedlac).

The business group confirmed the move in a statement on Wednesday. This includes pulling its members from the UIF board.

It says this follows at least six years of sustained engagement and repeated warnings of alleged maladministration, and ongoing efforts to support labour reforms.

“Regrettably, these efforts have not yielded the desired results,” says Busa CEO  Khulekani Mathe.

“This step is essential to safeguard the reputation of our representatives, uphold sound governance principles, and send an unequivocal message that the current situation is unsustainable.”

Since 2020, organised business and organised labour have participated in multiple processes aimed at reforming the UIF.

Busa says detailed proposals were submitted, addressing governance, operational effectiveness, and service delivery.

In 2024, big business called for a task team to be established at Nedlac to develop a credible plan to address the UIF’s shortcomings.

But it says the process has stalled over the past two years, leaving its deep dysfunction, operational failures and unresponsiveness to continue unabated.

“This has undermined confidence in the process and reinforced concerns that the fund is either unwilling or unable to confront the extent of its dysfunction,” says Mathe.

Read: You may be sending your UIF claim to a dead website

The organisation has also listed long-standing claims that UIF resources have been redirected towards government-to-government programmes that benefit non-contributors, while contributors face delays when making claims.

Busa believes the UIF-Ters (temporary employer/employee relief scheme) experience during the Covid-19 pandemic should have underscored the importance of efficient systems and accountability. Instead, the business group says it exposed serious weaknesses in the fund’s administration.

The UIF’s alleged misappropriation of funds has long been documented.

During the agency’s Covid-19 Relief Funds Audit in 2020, then-Auditor General Kimi Makwetu flagged issued such as payments to deceased people, duplicate payments, overpayments, and government officials applying and benefitting from the scheme.

Last year, Parliament’s Select Committee on Economic Development and Trade was told that the UIF distributed over R800 million in Ters funding, yet over R200 million remained unaccounted for.

Busa wants Minister of Employment and Labour Nomakhosazana Meth to place the UIF under administration to stabilise operations, clear claims backlogs, and address governance failures.

“As part of this process, a forensic investigation should be undertaken to assess the legality and appropriateness of all fund expenditures,” says Mathe.

The added pressure to place the UIF under administration follows recent calls by major trade union federations, including Cosatu, Saftu, and the National Council of Trade Unions.

Meth, in a rebuke issued in June, welcomed a probe by the Special Investigating Unit into allegations of maladministration, corruption, and unlawful conduct linked to training contracts at the agency.

It is unclear at this stage if she has given any thought to the calls for an independent administrator to step in.

Moneyweb has reached out to Meth’s office for comment on the matter, and the story will be updated once received.