Presentation to the Portfolio Committee on Labour 20 January 2009 Annual Report 2007/08 Unemployment Insurance Fund B Seruwe Presentation to the Portfolio Committee on Labour 20 January 2009 Annual Report 2007/08 Unemployment Insurance Fund B Seruwe

2 Structure of Presentation 1.Key issues (Achievements/Challenges) Financial performance Operations and Decentralisations Stakeholders People Management Social Security Reforms Corporate Governance /08 Financial Information 3.Auditor-General Report 4.Conclusion

3 Financial Performance In 2007/8, the Fund performed better as compared to the previous years. This can be supported by the following: Achieved an increase of contributions collection to the total amount of R 9.1 billion representing 13.75% increase in comparison to 2006/7. In 2006/7, R 8 billion was collected. Payments made to our beneficiaries ( ) to the total amount of R 2.9 billion, a 3% increase as compared to 2006/7. In 2006/7 the Fund paid out benefits to the total amount of R 2. 8 billion. There was a slight increase between 2006/7 and 2007/8 and this positive margin was perceived as to the results of economic strengths with minimal job losses.

4 Financial Performance Surplus recorded was R6.8 billion. This was 14% more than the surplus for 2006/7. The surplus recorded in 2006/7 was R 6 billion The efficient implementation of the investment strategies and proper controls led to the Fund ‘s investment yielding R 2.1 billion. Total income stood at R 11.3 billion for the year. Total value of assets amounted to R 27.8 billion as compared to 2006/7 where the asset worth was R 20.6 billion. This increase in value is attributed to investment strategies that the Fund adopted.

5 Financial Performance Cont -- Actuarial valuations were performed and yielded some interesting results. This valuation focus on long-term solvency of the Fund by projecting contributions, benefit- payments and expenses over the next ten years. The valuation indicated that the Fund is in a sound financial position as at end of March However, the economic turmoil facing the world and the country affects the Fund in a negative way because of looming job losses. We have started to see the increase in the turnouts of clients at our Labour Centres. We are dealing with these challenges through the implementation of social plan. Another actuarial valuation is undertaken to project sustainability under the current economic conditions.

6 Financial Performance One of our key indicator was to reduce overpayment (work and draw) by improving recovery of overpayments by 5 % as compared to 2006/7 Achieved - R 16.4 million was recovered in 2007/8 from clients as compared to R 9.4 million for 2006/7. With no doubt 74% increase is acceptable but there are still challenges that the Fund need to address such as:  Employers are not timeously sending us information of their employees – employment records leading to continual drawing of benefits by the public.  Recoveries of overpayments.

7 SUMMARY OF FINANCIAL ACHIEVEMENTS AS AT 31 MARCH March 2008 (R‘000) 31 March 2007 (R‘000) % Change Increase/ decrease Contributions9,164,6328,056,06614 Investment income2,187,7891,398,23956 Benefits expenditure2,921,4602,837,8513 Operational expenditure727,202672,9558 Net surplus6,866,9596,007,73714 Investments26,864,18819,997,76134 Technical reserves9,911,1808,674,71514 Accumulated surplus15,430,5629,800,06857 Total assets27,823,80020,618,96035

8 FINANCIAL INFORMATION - BUDGET VS ACTUALS 31 MARCH March 2008 Actuals (R‘000) Budget (R‘000) Variance (R’000) Variance % Over/ Under Contributions9,164,6328,737,435427, Investment income 2,187,7891,348,637839,15238,35 Benefits expenditure 2,921,4603,913,192(991,732)25.34 Operational expenditure 727,202924,791(197,589)21.37 Net surplus6,866,9595,238,9341,628,

9 Operations Our achievements continued to show in the operations of the Fund where : As at end of financial year under review, the Fund has registered total of domestic workers and domestic employers. This is a great milestone in ensuring that vulnerable workers are covered and protected. There is still a lot of work to be done in this area especially in the Taxi industry. We have experienced a slow breakthrough in the Taxi Industry in terms of employer registrations. Moving forward is our concerted effort in addressing this challenge. Our communication campaigns will be intensified and constant engagement with role players in the Taxi Industry.

10 Operations Cont - - Increase number of employees on the database- 5 % increase as compared to 2006/7 Registered new employers on the database. The total of registered employers by end of March 2008 was A total of new employees were added to the database. The total of registered employees on the database by end of March 2008 was

11 Operations Cont - - In responding to the needs of our clients, the Fund received claims during the year and approved 97.5% (approval rate) of those claims representing clients. The small margin of 2.5% is for the claims that are not entitled to payments, because of among others resignation clause We have managed to pay benefits to clients to the total amount of R 2.9 billion. Clearly more than households were assisted during the hardship of unemployment. As part of the active labour market policy, the Fund is introducing the training programmes for the unemployed. The programme will be piloted in G North and G South

12 Decentralisation of functions In committing to better and improved service delivery the Fund engaged in the decentralisation of functions in the year under review The Fund has decentralised its processing functions to the lowest level in the provinces. Functions were decentralised to the Labour Centres. The Labour Centres with processing functions were increased from 32 to 57. This imply that a client’s claim will be processed and finalised in that Labour Centres unlike previously where documents were sent to the Processing Office. The functions that were decentralised are: Processing of claim Adjudication of claim Finalisation of claim

13 SUMMARY OF BENEFIT PAYMENT PER CATEGORY Benefit payments to beneficiaries2008 R’ R’000 Unemployment Illness Maternity Adoption Dependents Total Changes in benefit payment ( ) Total

14 Social Security Reforms As part of the process of the social security reforms in the country: The Fund participated in the debates and planning processes of the social security reforms. A number of research papers were produced and presented by the Fund to the Interdepartmental Task Team on Social Security 1.A paper on wage subsidy 2.A paper on institutional arrangement on comprehensive social security 3.A paper on Improvements of unemployment insurance system in South Africa

15 Stakeholders engagement Conducted four advocacy campaigns per province and six National ones. We have partnered with the SABC in conducting six (6) outside broadcasts wherein the intention was to bring awareness to the broader society about their rights regarding UIF. Exhibited and marketed the UIF at among others the following shows: Franchise business opportunities South African Women’s Inventors and Innovators Symposium (SAWISS) Annual Municipality Domestic Workers Day Annual National Skills Development Exhibitions Small Business Opportunities Again, 2007/8 has been the hallmark of campaigns in the Taxi Industry. This industry will be treaded with serious engagements to ensure that compliance move to an acceptable level.

16 People Management The Fund values its human capital and strives to continuously develop its staff. In 2007/8, the Fund : In the spirit of human capital development, awarded bursaries to 18 staff. Continue to train and develop all staff. Trained 394 officials on more than thirty (30) training initiatives/courses. The Workplace Skills plan was developed and implemented.

17 Corporate Governance Again in 2007/8 the Fund obtained/received an unqualified audit report from the Office of the Auditor General. This was the third year in succession from 2005/6 to 2007/8. Management and staff remain committed to the good cause by ensuring that the control environment of the Fund is good. Compliance to legislations has been the cornerstone of our operations and we continue to improve. Without casting and blowing own trumpet, the Fund is regarded as the first complaint entity by the parent department - DoL. We have worked closely with the Executive Authority and the UIF Board in addressing the strategic intent and challenges of the Fund. We have also welcome the new Board in this current year and the good work continues.

18 Auditor General Issues IssuesManagement Action/Progress Challenges on declaration 3 year cycle verification started to verify claims paid. Training on new processes in all Provincial offices done. New processes and procedures are currently being implemented.

19 Auditor General Issues IssuesManagement Action/Progress Overpayments ( Work and Draw) Operational system was enhanced to avoid overpayments. Recovery methods initiated and implemented. Debt collection procedure guideline implemented.

20 Auditor General Issues IssuesManagement Action/Progress Management of performance Information Development of Integrated Performance Management policy started. The strategic plan 2009/10 – 2011/12 aligned with National Treasury Framework. Internal Audit constantly conduct internal audit reviews on performance information.

21 Conclusion The Fund has appreciated the tenable successes and acknowledged some of the challenges facing the organisation and we continue in our strides to address these challenges. In this year 2008/2009, we have started to address these challenges. We are on roadmap to –improve the utilisation of U-filling system, –development of Debt Management and ERP systems, –Introduction of payroll inspectors, –training of the unemployed, –capacitating provincial offices and Head Office.

Thank you