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Disbursement of COVID-19 Relief Funds Under the Spotlight

December 14, 2020

Department of Employment and Labour

The employment and labour minister, Thulas Nxesi, has welcomed the Auditor General’s (AG) recent findings of improvements in the way that the Unemployment Insurance Fund (UIF) strengthened controls on the disbursement of Covid-19 relief funds.

In a statement, the minister also welcomed the AG’s second special report on financial management by government, state-owned entities and municipalities during the Coronavirus pandemic.

According to the department, the report shows that the UIF had “significantly improved its controls and has also been able to recover close to R3.5-billion that had been paid out to non-competent claims”.

The minister also highlighted efforts by labour inspectors and the UIF’s Risk Management Unit, working closely with law enforcement agencies, that led to the recovery of millions of rands and several arrests.

“We were always aware of the risks of fraud with the new Covid-19 TERS hence we developed a strategy to ‘Follow the Money’. The auditors that we appointed are already on the ground to examine the financial records of companies that we paid to check the authenticity of their claims and verify if the money was paid over to workers,” said minister Nxesi.

Meanwhile, in another statement, the department’s director-general, Thobile Lamati, pointed out that while “better-than-expected latest Gross Domestic Product (GDP) figures indicate that more people got employed, this does not mean that South Africa is out of the woods”.

Lamati added that the rate of absorption of new entrants into the labour market was still low “rated at below 60% figures compared to other developed countries”.

“The results in the third quarter of 2020 appear to suggest that the increase in the GDP translates into increased employment but it does not indicate that South Africa is out of trouble with the persistent stagnant high number of unemployed people in the country. The labour absorption rate increased only by 1.2 percentage points from the second (36.6%) to the third (37.5%) quarters of 2020,” said Lamati.

Lamati emphasized that government departments such as the employment and labour department need to “strengthen mechanisms to monitor and implement the new economic recovery plan, in particular the Presidential Job Summit and high infrastructure investment in the short and medium term in order to combat the high level of inequality and poverty in the country”.