Withdrawal is essential to safeguard the reputation of our representatives, says Busa CEO Khulekhani Mathe
Busa CEO Khulekani Mathe has called on employment and labour minister Nomakhosazana Meth to urgently place the UIF under administration. File picture: Thapelo Morebudi
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Business Unity South Africa (Busa) has given up on the dysfunctional Unemployment Insurance Fund (UIF) after years of trying to get the state-owned entity on the right track.
In a vote of no confidence, Busa CEO Khulekhani Mathe announced it had taken the “difficult but necessary decision” to withdraw from the UIF structures at the National Economic Development and Labour Council (Nedlac) and to remove its representatives from the UIF board.
“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,” Mathe said.
Busa has called on employment & labour minister Nomakhosazana Meth to urgently place the UIF under administration, with an independent administrator tasked with stabilising operations, clearing claims backlogs and addressing governance failures. A forensic investigation should be undertaken to assess the legality and appropriateness of all fund expenditure.
No plans to fix UIF
Labour federation Cosatu agrees with the call, with parliamentary co-ordinator Matthew Parks saying Cosatu shared Busa’s concerns and frustrations. He described the UIF as a “disaster” with no attempts being made to improve the problems.
Workers waited for months and even years for payment of unemployment and maternity benefits. “The department has no plans to fix it,” Parks said.
Labour planned to meet President Cyril Ramaphosa soon about its call for the UIF to be put under administration, he said.
The UIF is funded by contributions from employers and employees and is meant to provide income support during periods of unemployment, maternity, illness, adoption, parental leave, reduced working time or other qualifying income loss.
The fund has repeatedly received qualified audit opinions from the auditor-general due to weaknesses in internal controls, an inability to substantiate documentation and major ICT challenges. Irregular, wasteful and fruitless expenditure without any meaningful consequence management has also taken place.
The fund is not bankrupt but its systems are broken, its critics say. At the end of the 2024/25 financial year (the latest figures available) it had net assets of R154bn. In that year its total revenue amounted to R26bn, with investment revenue of R11bn. A total of R18.6bn was paid out in benefit payments.
Busa said the UIF remained “deeply dysfunctional”, characterised by persistent operational failures, governance weaknesses, delays, unresponsiveness and a drift from its core mandate.
“It is unacceptable that contributors are left without support while funds are redirected, delayed or absorbed into programmes that do not directly address their statutory entitlements,” Mathe said.
He said Busa’s decision to withdraw from UIF structures followed six years of sustained engagement, repeated warnings of maladministration and ongoing efforts to support reform for the benefit of workers, employers and the stability of the labour market. “Regrettably, these efforts have not yielded the required results.”
Reform programme
Mathe said organised business and organised labour had participated in many processes aimed at reforming the UIF since 2020. Detailed proposals had been submitted, addressing governance, operational effectiveness, service delivery and the need to place contributors at the centre of the system.
In 2024, Busa called for the establishment of a Nedlac task team to develop a credible reform programme for the UIF, but progress has stalled over the past two years, with no clear commitment to ensuring the effectiveness of the task team. This undermined confidence in the process and reinforced concerns that the UIF is either unwilling or unable to confront the extent of its dysfunction.
Mathe said there was a growing impression that proper governance systems had been deliberately undermined. UIF board meetings had frequently been scheduled or rescheduled at short notice, making it difficult for members to adequately prepare or adjust their commitments. The disruptions had contributed to repeated failures to achieve quorum.
Also of serious concern was the continued expansion of labour activation programmes in ways that appeared to overlap with the mandates of the department of higher education & training and the sector education and training authorities.
“Equally troubling are efforts to redirect UIF resources towards government-to-government programmes that primarily benefit non-contributors, while contributors themselves face delays, exclusion and administrative barriers,” Mathe said.
“Business remains committed to constructive engagement with the government and labour to build a functional and credible social security system that protects vulnerable workers. However, such engagement must be grounded in accountability, urgency and a genuine commitment to reform. Workers and employers cannot be expected to continue funding a system that fails them when they need it most,” Mathe said.
• This article has been updated with new information.