CAPE TOWN, Western Cape — The escalating UIF governance crisis has prompted the Congress of South African Trade Unions (COSATU) to warn of a potential “second wave of state capture” within the country’s social security funds. Following a high-level engagement with President Cyril Ramaphosa, the labour federation is demanding immediate executive intervention to address years-long benefit payment backlogs and systemic mismanagement at the Unemployment Insurance Fund (UIF) and the Compensation Fund.
Matthew Parks, COSATU Parliamentary Coordinator, outlined the severe impact of the systemic collapse on both workers and employers. According to Parks, employers are struggling to register their workers, while beneficiaries are forced to queue for days at labor centers. He highlighted that IT systems are frequently offline, online applications routinely fail, and claims are consistently ignored or delayed.
“We have received complaints from workers that they applied for maternity leave benefits, and the child is now in a crèche. We’ve had cases of workers who were injured years ago still waiting for benefits,” Parks explained, noting that several labor centers, including the Krugersdorp branch, have been closed for over a year.
Despite the severe service delivery failures, Parks emphasized that the crisis is not rooted in a lack of funding. He noted that the UIF holds combined assets of approximately R150 billion, and the Compensation Fund also holds significant assets. Because these are contribution-based schemes funded by monthly deductions from employees and employers, the money is already available.
“The issue is management,” Parks stated. He pointed to the absence of permanent commissioners, an archaic and inadequate IT system, frequent internet outages linked to the State Information Technology Agency (SITA), and a profound lack of trust among social partners.
Addressing the allegations of corruption, Parks suggested that the chaotic environment is being deliberately maintained by some individuals to facilitate theft. “If systems are modern, efficient, transparent, and foolproof, then it’s very difficult to steal,” he noted, drawing a direct comparison to the South African Revenue Service (SARS), which utilizes sophisticated, tamper-proof systems.
To resolve the crisis, COSATU is calling for the immediate reversal of the acting UIF commissioner’s appointment and the deployment of competent management from outside the department. Parks proposed enlisting the assistance of SARS to implement modern, user-friendly IT systems, arguing that the turnaround could be achieved within three to six months.
Furthermore, the federation is demanding a ruthless crackdown on corruption. Parks called for the Special Investigating Unit (SIU) and the Hawks to conduct a “head-to-toe” investigation into the funds. This probe must target everyone involved in defrauding the system, including senior managers, “tenderpreneurs,” employers who deduct UIF contributions from workers’ salaries but fail to pay them over, and individuals submitting bogus claims.
Following a meeting with President Cyril Ramaphosa and the Minister of Employment and Labour, COSATU has set strict deadlines for intervention. Parks revealed that the labour federation has proposed deploying the SIU and the Hawks within the next month. They are demanding a concrete turnaround plan, developed with the input and buy-in of social partners, by the end of August, with full implementation targeted for the end of 2026.
While acknowledging ongoing discussions at the National Economic Development and Labour Council (Nedlac) regarding a broader overhaul of the social security net—potentially consolidating old age grants, SASSA pensions, and unemployment funds to reduce administrative costs—Parks stressed that such structural reforms will take years.
“We don’t have a few years to tell workers who are queuing to simply receive maternity leave benefits that we need to wait,” Parks concluded. “These funds need to be fixed now.”
