R4bn Question: Can UIF sustain its core mission amid job creation push?
Employment Crisis
The UIF Labour Activation Programme’s mandate is to mobilise resources, partnerships, and implementation capacity to drive sustainable job creation, retain existing jobs, and support unemployed and vulnerable groups.
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SOUTH Africa stands at yet another crossroads where political expediency challenges institutional integrity, as the Unemployment Insurance Fund (UIF) assumes an unprecedented role in funding a job creation programme traditionally financed by the National Treasury.
The Department of Basic Education (DBE), in partnership with the Presidential Employment Stimulus (PES) initiative under the Presidency, has turned to the UIF for R4 billion to fund the Teacher Assistant Programme — a short-term intervention aimed primarily at unemployed youth.
According to the DBE’s April 2025 CareersPortal document, the Teacher Assistant Programme, now in its fifth phase, aims to create about 200 000 positions for young unemployed people aged between 18 and 34. Participants receive monthly stipends of R4 000, plus R30 airtime, for six months of practical work experience in schools across South Africa.
President Cyril Ramaphosa confirmed the programme’s scale and significance during a June 2 statement. “Today marks the ‘first day at school’ for about 200 000 young people at over 20 000 schools nationwide. They are participants in the fifth phase of the Basic Education Employment Initiative (BEEI), the largest youth employment programme in South Africa’s history.” Ramaphosa further emphasised that the initiative is funded by the UIF Labour Activation Programme alongside national government contributions.
Lala Maje, director for initial teacher education, stated: “This initiative comes as South Africa continues to battle high levels of youth unemployment and an education system that is stretched and overburdened during these difficult economic conditions. Phase five of the BEEI, a component of PES, offers a timely intervention.”
However, this funding model starkly contrasts with the UIF’s core statutory mandate. The UIF is “a statutory social security mechanism” funded by contributor deductions and owes its duty solely to those who have been previously employed and have made contributions.
The UIF Labour Activation Programme’s mandate is to mobilise resources, partnerships, and implementation capacity to drive sustainable job creation, retain existing jobs, and support unemployed and vulnerable groups. It is designed to complement and accelerate PES’s broader economic recovery and inclusive growth objectives.
The Industrial Development Corporation (IDC), which has been appointed as the paymaster for the programme, confirmed receiving an advance disbursement of R2 billion — half of the total requested R4 billion — from the UIF.
Questions sent to the UIF, DBE, and the Office of the Presidency were unanswered at the time this report was compiled.
The UIF recently came under fire in Parliament for delaying payments to workers who became unemployed or were unable to work. The Fund is reportedly plagued by persistent service delivery challenges, payment delays, and limited accessibility for vulnerable workers, which exacerbates the hardships experienced by those it is meant to protect.
The Fund briefed the Parliamentary Select Committee on Economic Development and Trade on its budget and strategic plan, as well as its annual performance plan. MPs stated that the UIF was failing workers who became unemployed or were unable to work due to various reasons.
The Labour Party of South Africa has condemned the “diversion” of UIF funds to the PES, describing it as “economic injustice” that violates the fund’s mandate. “The UIF was never designed to be a general job creation fund,” the party said, emphasising that PES beneficiaries did not contribute to the scheme.
The party highlighted the R2 billion advance payment made to PES programmes, lamenting that retrenched workers would wait months while billions flowed unchecked to “political programmes”. The party warned that paying non-contributors higher stipends than UIF beneficiaries risked collapsing the fund.
The UIF and PES operate under distinctly different mandates, frameworks, and funding models that reflect fundamentally divergent labour market roles. This situation raises critical questions about whether the PES is effectively encroaching on the UIF’s mandate by sourcing funding — including advance payments — in ways inconsistent with UIF’s legal and operational principles.
The UIF, established by the Unemployment Insurance Act, is legally empowered to register all employers and employees in South Africa for unemployment insurance benefits. It primarily provides short-term unemployment relief to eligible contributors who have formally paid into the fund.
The UIF functions under strict governance and financial protocols — its payments were intended as a stopgap during times of crisis, such as the Covid-19 lockdowns, to provide relief for a limited period until economic recovery could resume. Payments are disbursed monthly based on verified claims, and advance payments are strictly prohibited to protect the fund’s sustainability and accountability.
In contrast, the PES is funded directly from the National Treasury and designed as a temporary economic relief initiative targeting short-term employment, especially among youth, and to stimulate the economy through multiple exit strategies.
The reported R2bn PES advance payment already made marks a significant departure from UIF norms, exposing the fund to financial risks and contradicting social insurance principles.
Meanwhile, the UIF attributed delays in Labour Activation Programme stipends to “administrative discrepancies and attempted fraud” by partner companies. It promised improvements via stricter invoice verification and a new electronic payment system to resolve backlogs.
Jacky Molisane, acting director-general of Employment and Labour, warned beneficiaries against protests, stating: “The Department reserves the right to take legal action against those undermining processes.” She confirmed that there was sufficient budget allocation for current stipend payments.
Tshepo Ramodibe, IDC Head of Corporate Affairs, assured that the funds would be managed in accordance with the Public Finance Management Act (PFMA), with oversight from internal audit and subject to external audit. Ramodibe clarified that the IDC’s role is strictly as a pay agent for BEEI, distinct from an implementation agent with autonomy. He firmly denied any claims that political or executive pressure influenced IDC’s acceptance of this role.
South Africa’s youth face a persistent unemployment crisis that limits their economic independence and future prospects. Initiatives like PES and the UIF Labour Activation Programme have the potential to be transformative if implemented effectively. The UIF focuses on accredited training and sustainable job creation, offering structured pathways into formal employment, while PES provides essential short-term relief and work experience.
Nonetheless, fundamental questions remain: Is the PES pushing the UIF out of its core mandate? Is the use of UIF funding in this manner undermining the fund’s sustainability, legal integrity, and governance standards?