UNEMPLOYMENT INSURANCE FUND PRESENTATION TO THE PORTFOLIO COMMITTEE

UNEMPLOYMENT INSURANCE FUND PRESENTATION TO THE PORTFOLIO COMMITTEE ON LABOUR BUDGET REVIEW: 2014 DEPARTMENT OF LABOUR 2014 -07 -02

CONTENTS 1. Vision, Mission and Legislative Mandates 2. Background Planning, budgeting , reporting cycle and key planning concepts 3. Summary of the five year Strategic Plan 2014/15 - 2018/19 4. Performance Report against the 2013 -14 Annual Performance Plan 5. Challenges and Mitigating Strategies 6. Annual Performance Plan 2014 -2015 7. Summary of the Budget 2014/15 – 2016/17 years 8. Unemployment Insurance Bill (progress) Chief Directorate Communication | 2011. 00

Vision The Unemployment Insurance Fund strives to contribute to the alleviation of poverty in South Africa by providing effective short term unemployment insurance to all workers who qualify for unemployment and related benefits

Mission The central purpose and role of the Unemployment Insurance Fund is defined as: • Rendering an effective accessible service to all stakeholders • Being a sustainable organisation with sufficient reserves • Administering the Fund professionally

Legislation Mandates Unemployment Insurance Act, 2001 as amended • The Unemployment Insurance Fund (UIF) was established in terms of section 4(1) of the Unemployment Insurance Act, 2001 (Act 63 of 2001) as amended • The Act empowers the UIF to register all employers and employees in South Africa

Legislative Mandates Unemployment Insurance Contributions Act, 2002 • Section 8 of the Act empowers the SARS Commissioner to collect monthly contributions from both employers and workers who are required to register as employers in terms of the fourth schedule to the Income Tax Act and who are liable for the payment of the skills development levy in terms of the Skills Development Act, 1999 (Act 9 of 1999). • Section 9 of the Act empowers the Unemployment Insurance Commissioner to collect contributions from all those employers who are not required to register as employers in terms of the fourth schedule to the Income Tax Act and who are not liable for the payment of the skills development levy in terms of the Skills Development Act, 1999 (Act 9 of 1999). • These contributions are utilised to pay benefits and any other expenditure reasonably incurred relating to the application of this Act.

Planning, budgeting and reporting cycle

The relationship and timing of the different accountability documents Election Fiscal Years 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Electoral Cycle Planning & Budgeting • Strategic Plans • Annual Performance Plans and Budgets (with MTEF) 5 Year Election Mandate MTEF 5 -year Strategic Plan MTEF. . . 5 -year Strategic Plan Budget APP . . . Budget Budget APP APP APP In-year Reporting • Monthly Financial Reports • Quarterly Performance Reports End-year Reporting • Annual Reports MR MR MR MR MR MR MR MR MR MR MR MR Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 AR AR AR (with annual financial statements) Long-term Reporting • End-term Reviews Strategic & Annual Performance Plan EPR Unemployment Insurance Fund EPR 8

Key Concept • Impact: the results of achieving specific outcomes. e. g. reducing poverty and creating jobs. “ what we aim to change” • Outcomes: medium term results for specific beneficiaries that are the consequence of achieving specific outputs. “what we wish to achieve”. Outcomes refer to a changed state of being and are stated in the present tense. e. g. Representative workforce • Outputs: the final product, or goods and services produced for delivery. “what we produce or deliver”. Outputs contain nouns e. g. A training programme for maths teachers

Key Concepts • Activities: the processes or actions that use a range of inputs to produce the desired outputs and ultimately the outcomes. “what we do” • Inputs: all the resources that contribute to the production and delivery of outputs. “ what we use to do the work” • Performance Indicators: a measurement or other type of evidence that shows whether or not a goal is being achieved. A performance indicators contains a verb. e. g. reduce fraud opportunities by implementation of periodic controls

UIF Strategic Plan 2014/2015 – 2015/19 q Over the five year period, the UIF will pursue five strategic objectives to: • Fund Poverty Alleviation Schemes • Improve Governance • Strengthen the institutional capacity of the Fund • Encourage Compliance through enhanced service delivery • Improve Stakeholder Relations

Link between Service Delivery Outcomes & Strategic Objectives Service Delivery Outcomes Do. L Strategic Objectives UIF Strategic Objectives Outcome 4: Decent employment through inclusive economic growth KRA 1: Contribution to employment creation KRA 1: Fund poverty Alleviation Schemes KRA 5: Strengthening social protection KRA 4: Encourage Compliance through enhanced service delivery 4. 1 Making our growth more labour absorbing 4. 2. Reducing youth unemployment 4. 3. Raising our international competitiveness 4. 4. Analysing the cost structure of the SA economy 4. 5. Reviewing support for small business 4. 6. Expanding our Public Works Programme Outcome 12: An efficient, effective and development orientated public service and an empowered and inclusive citizenship. 12. 1 Service delivery quality and access KRA 9: Strengthening the institutional capacity of the Department KRA 2: Improve Governance KRA 3: Strengthen the Institutional Capacity of the Fund KRA 5: Improve Stakeholder Relations

UIF CONTRIBUTION TO THE NDP Output/deliverab le Indicator Target 2015 Labour activation fund created Approval of the proposal by Minister of Finance by end March 2015. Target 2016 Implementati on of the governance framework for the Fund by end March 2016 Initiatives Percentage of 80% of aimed at total mandated SRI alleviating the mandated SRI committed by harmful committed. end of March effects of 2015 2016 unemployme nt funded. Number of 6000 artisans beneficiaries trained by trained end of March 2015 2016 Target 2017 Target 2018 Target 2019 Operationaliz ation of the Fund by end March 2017 80% of mandated SRI committed by end of March 2018 80% of mandated SRI committed by end of March 2019 6000 artisans trained by end of March 2017 6000 artisans trained by end of March 2018 6000 artisans trained by end of March 2019

UIF CONTRIBUTION TO THE NDP Output/deliv erable Indicator Target 2015 Initiatives aimed at alleviating the harmful effects of unemployme nt funded. Number of beneficiaries trained 6000 unemployed beneficiaries trained in infrastructure development related skills by end March 2015 Target 2016 6000 unemployed trained beneficiaries in infrastructure development related skills by end March 2016 Technology Percentage of 10% of claims 30% of claims to improve claims submitted service submitted through Udelivery through UFiling claims’ implemented Filing portal by end of March 2015. 2016. Target 2017 Target 2018 Target 2019 6000 unemployed beneficiaries trained in infrastructure development related skills by end March 2017 6000 unemployed beneficiaries trained in infrastructure development related skills by end March 2018 6000 unemployed beneficiaries trained in infrastructure development related skills by end March 2019 50% of claims submitted through UFiling claims’ portal by end of March 2017 80% of claims submitted through UFiling claims’ portal by end of March 2018. 95% of claims submitted through UFiling claims’ portal by end of March 2019.

PERFORMANCE REPORT AGAINST THE 2013 -14 ANNUAL PERFORMANCE PLAN

4. 1 ACTUAL PERFORMANCE DURING 2013/14 F/Y FINANCIAL YEAR 2013/14 ACTUAL OUTPUT - VALIDATED STRATEGIC OBJECTIVES Fund Poverty Alleviation Schemes Improve Governance Strengthen the Institutional Capacity of the Fund Encourage Compliance through Service Delivery Improve Stakeholder Relations OVERALL PERFORMANCE Planned Indictors Total Indicators Achieved B/F Partially Achieved Not Overall Achieved Achievement 5 0 5 2 1 2 40% 5 0 5 4 1 0 80% 6 0 6 4 1 1 67% 6 0 6 6 0 0 100% 4 0 4 4 0 0 100% 26 0 26 20 3 3 77 %

Strategic Objective 1: Fund Poverty Alleviation Schemes • The Minister of Labour approved and launched training 9 initiatives and committed R 300 million for training of these unemployed beneficiaries. • • The R 4 billion UIF/IDC partnership has resulted in 21, 192 jobs saved and 23, 268 jobs created since the inception of the partnership in 2009. • The proposal to create a Labour Activation Fund was submitted to the Minister on 31 March 2014 and approval to proceed to the next step of feasibility approved.

Strategic Objective 2: Improve Governance • 90% all fraudulent cases were investigated and finalized during the financial year • Internal Audit were conducted in 28 offices with 90% of reports presented to and signed off by management. Implementation of improvement recommendation is in progress.

Strategic Objective 3: Strengthen the Institutional Capacity of the Fund • 88% of planned training interventions as per the Work Place Skills plan implemented by end of year. • Establishment of the Fund has 3. 7% of People with Disability • Establishment of the Fund has 23% of the Youth

Strategic Objective 4: Encourage Compliance through enhanced service delivery • 86% of claims approved or rejected within five weeks of application • A total of 4043 registered employees used u. Filing to submit claims by the end of March 2014 – An increase of 84% compared to last year • 34% increase in Employers using U-Filing to declare and pay contributions as compared to prior year • A total of 61 new employers were registered by the end of March 2014 – An increase of 4% • 11. 8% increase in contributions revenue to R 15, 3 billion as compared to the previous year by March 2014

Strategic Objective 4: Improve Stakeholder relations • provinces by the 31 st March 2014 to create awareness in the community • Multi-Media campaign had a reach of 41 million people according to GCIS/All Media Survey by March 2014 • 36 Community Radio Stations were utilized during the Workers’ Month campaign • 4 MOUs have been signed between UIF and external stakeholders to improve service delivery efforts

Performance Highlights 2013/2014 31 March 2014 (R‘ 000) 31 March 2013 (R‘ 000) Increase/ decrease % 15, 309, 363 13, 687, 497 12% Investment income 5, 452, 181 4, 660, 361 17% Benefits expenditure 7, 079, 587 6, 013, 886 18% Net surplus 11, 936, 240 16, 006, 304 -25% Investments 93, 414, 431 81, 006, 527 Technical reserves 18, 097, 371 16, 465, 787 10% Accumulated surplus 72, 316, 995 62, 012, 339 17% Total assets 94, 300, 877 81, 848, 523 15% Contributions 15% Increase/ decrease

Actual 31 March 2014 (R‘ 000) Budget 31 March 2014 (R‘ 000) Over/ (under) 15, 309, 363 15, 193, 841 0. 76% Benefits expenditure 7, 079, 587 6, 551, 023 8. 07% Administration 1, 488, 659 1, 622, 147 (8, 23%) Investment income 5, 452, 181 5, 235, 602 4, 14% 11, 936, 240 11, 276, 665 5, 85% Contributions Net surplus

CHALLENGES • Non compliance by employers in terms of compliance to the Unemployment Insurance Act and Unemployment Insurance Contribution

MITIGATING STRATEGIES q. Implementation of the u. Filing System to provide for: • • Electronic Submission of employee information Electronic payment of contributions by employers Online Claims application Improvement of the claims processing functions in the Labour Centres

Key Outputs Key Performance Indicators Target for 2014/15 Initiatives aimed at The number of initiatives approved by the Executive alleviating the harmful Authority effects of unemployment funded The number of UI beneficiaries trained Executive Authority to consider additional new initiatives by March 2015 in comparison to prior year based on merit and effectiveness Executive Authority to consider a training initiative for 1000 beneficiaries targeting other industries listed on the Siyaya database by the of march 2015 Labour Activation Fund proposal developed and submitted for approval Approval of the Labour Activation Fund proposal by the Minister of Finance by March 2015 Percentage of total mandated Social Responsible Investment invested 80% of the mandated Social Responsibility Investment committed March 2015 Fund the Social Plan 10% increase in funding compared to prior year and allocate at least 80% of funding by financial year end

Outputs Performance Indicators Target for 2014/15 Improved compliance to the UI Board , Management Committee and Audit Committee charters Combined Assurance Percentage compliance to UI Board, Management Committee and Audit Committee charters. 80% compliance to UI Board , Audit Committee and Management Committee charters documents by 31 March 2013 Percentage of internal audit reports presented to management and signed-off by Head of internal audit (total planned and approved audits) 92. 5% of reports presented to management and signed off by Head of internal audit by March 2015 Implementation of a fraud prevention strategy Percentage of claims tested for fraud using the ACL system. 100 % of processed claims verified before payment Percentage of cases received and/or detected finalised 95% of cases received or detected finalised by financial year end

Outputs Performance Indicators Target for 2014/15 Skills development enhanced Percentage of Workplace Skills Plan interventions implemented. 80% of planned training intervention implemented by end of quarter 4 Employment Equity Promoted Percentage of employment equity targets achieved. (<= 35 years and people living with disability) 28% youth representation on the staff establishment of the Fund (<=35 years) 3% representation of people with disability by end of March 2015 Low Vacancy Rate Maintained in the UI Establishment Maintain low Percentage Vacancy Rate. 10% Vacancy rate by end of the March 2015 for Unemployment Insurance Head Office Information and communication strategy Phased Implementation of Enterprise Resource Planning (ERP) system Phase 2 of Enterprise Resource Planning system implemented by March 2015. (operations modules)

Outputs Performance Indicators Target for 2014/15 Improved Client Service Percentage of claims with complete information approved or rejected. Technology to improve service delivery implemented Percentage of claims submitted through U-Filing claims portal. 90% of valid claims with complete information approved or rejected within five weeks of application as reflected in the Fund’s operational system by March 2015 10% of claims submitted through U-Filing claims portal by March 2015 Percentage increase on usage of U-Filing system Reduced Losses for the Fund Percentage increase in number of newly registered employers 6% increase in the number of new employer registrations as compared to previous year by March 2015 Percentage increase in contributions revenue Increased Revenue Inflows 40% increase in Employers using U-Filing to declare and pay contributions as compared to prior year by end of March 2015 6% increase as compared to previous year by March 2015 % of Overpayment balance collected ( financial year opening balance plus overpayment noted for the year) Collect 25% of outstanding overpayments balance by March 2015

Outputs Performance Indicators Target for 2014/15 Public educated and informed about UIF Services and obligations Number of communication campaigns undertaken 4 Campaigns per Province by March 2015 Number of people reached through Diversified media campaigns. Media campaign to reach at least 48 million people according through multimedia approach by end of March 2015 10% improvement on level of client satisfaction as compared to the previous survey by March 2015 Strategic Alliances with relevant government entities and other stakeholders Percentage improvement on level of client satisfaction

UNEMPLOYMENT INSURANCE AMENDMNET BILL • Cabinet has approved the Bill in early 2013. • The Department released the Bill for public comments • After encapsulating public comments in the Bill, it was then tabled at NEDLAC for social partners to deliberate on the Bill • NEDLAC deliberations were concluded in November 2013 • Cabinet Approved the Bill in December 2013 for submission to Parliament for further processing.

UNEMPLOYMENT INSURANCE AMENDMNET BILL The proposed amendments deal with a number of issues: • Inclusion of learners, public servants and foreign workers who are currently not covered in terms of the provisions of the UI Act currently • Extension of period of benefits to contributor from eight months to twelve months • Extension of a period in which a contributor can lodge a claim, from six months to twelve months • To allow beneficiaries to claim if they have credits regardless of when they last submitted a claim

UNEMPLOYMENT INSURANCE AMENDMNET BILL The proposed amendments deal with a number of issues: (cont…) • To provide for the nomination of beneficiaries in case of death benefits • To assist in financing the employment promotion projects by the Public Employment Services • To give powers to the appeals committee to adjudicate on late applications for benefits • To give the Minister the power to vary the income replacement rate through Regulations

UNEMPLOYMENT INSURANCE AMENDMNET BILL The proposed amendments deal with a number of issues: (cont…) • Delinks maternity benefits from unemployment benefits • Introduces a 66% fixed rate for maternity benefits • Paying full maternity benefits for miscarriage occurring in the 3 rd trimester of pregnancy • Decrease of the waiting period for illness benefits from 14 days

Chief Directorate Communication | 2013. 00 Thank You…