This is in addition to existing job protection and unemployment insurance mechanisms, he said on Wednesday.

Nxesi told Parliament's portfolio committee on labour and employment on Wednesday that while the Unemployment Insurance Fund and the Compensation Fund were going to be under "very serious strain" for some time, the economic impact of the coronavirus pandemic had prompted the department to consider investing aggressively in job creation.

Finance Minister Tito Mboweni is expected to be ready to table an "emergency" budget, which will make provision for Covid-19 relief efforts by 24 June. President Cyril Ramaphosa previously announced that R500 billion in fiscal support would be directed towards coronavirus relief efforts.

'Not all companies will make it'

Nxesi said on Wednesday that while the department had thus far been caught between an expected budget revision by National Treasury and the middle of the pandemic, it had still managed to assist more than 2.5 million workers received the benefit to the value of more than R3 billion.

"As the pandemic continues, not all companies will make it out. Jobs will be lost and the demand for the UIF protections will increase. So, these are the realities faced by the UIF as we begin to get things moving in the economy," said Nxesi.

Labour and Employment director-general Thobile Lamati told parliamentarians that changes to legislation have allowed the department to invest, not only in job retention but in job creation.

"We are currently busy sharpening our instruments and tools to respond to a lot of companies that will be distressed. Our normal mechanisms are there to respond to issues like retrenchments.

"We also have a social impact fund which is aimed at assisting in the retaining of jobs by helping companies that are struggling," said Lamati.

Job creation

UIF Commissioner Teboho Maruping said the fund would look to have 10% of the monies budgeted set aside by March 2025 for "more decent jobs" to be created.

He said the estimated amount would be revised depending on the number of people who may become unemployed and need to make claims.

At present, Maruping said the fund was still committed to investing aggressively towards to creation of jobs through its schemes. 

"Unemployment Insurance Fund Assets Under Management Funds will be set aside for funding employment creation schemes. The fund has budgeted R7.6 billion for the next three years," said Maruping.

Maruping said the UIF wanted to increase the number of newly registered employers protected by the fund to 79 000 by the 2022-23 financial year and 900 000 employees by the 2022-23 financial year.

The UIF holds R71 billion in government bonds and there have reportedly been concerns that it may have to sell bonds if there is an unmanageable spike in unemployment as a result of the pandemic.

According to Maruping, targets may have to be reviewed to meet the needs of the economy. He added that the UIF was looking to offset likely reductions or stagnation in allocations from Treasury by broadening its options for funds.

"We have been asking actuaries to look at our portfolio and advise where we can advise our investment strategy. We are having a marathon of meetings just to look at our investment position and possible strategies," he said.

Vuyo Mafata said the Compensation Fund budgeted R4.1 billion for the payment of benefits for the current financial year.

It is also working on processing claims faster, and wants to progress from having 85% of claims adjudicated within 20 working days in the 2020-21 financial year to having 90% of claims received adjudicated within 10 working days by the 2022-23 financial year.

Mafata said the Compensation Fund wanted to progress from having 4% of its assets allocated to black asset managers through the Public Investment Corporation to 12% of assets under management allocated to black asset managers by 2022-23.

He said the Compensation Fund is looking to have 95% of requests for pre-authorisation of specialised medical intervention finalised within 10 days of receipt, while 90% are currently finalised within this time.

Fin24