1. UNEMPLOYMENT INSURANCE FUND ANNUAL REPORT FOR THE PERIOD APRIL 2012 TO MARCH 2013 DEVELOPED FOR THE PORTFOLIO COMMITTEE ON LABOUR October 2013

2. 2 CONTENTS Overview of the Unemployment Insurance Fund Legislative Mandate Vision and Mission Leadership and Management Institutional Spread Governance set-up of the Fund 2012/13 - Performance Information Operational Performance Human Resources Management Financial Performance Performance Highlights on Predetermined objectives Job Creation Initiatives

3. 3 Overview of the Fund - Legislative Mandate Unemployment Insurance Act, 2001 (Act 63 of 2001) 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. Unemployment Contributions Act, 2002 (Act 4 of 2002) The Unemployment Contributions Act, 2002 (Act 4 of 2002) empowers the SARS Commissioner to collect monthly contributions from both employers and workers. Section 9 of the Unemployment Contributions Act, empowers the Unemployment Insurance Commissioner to collect contributions from all those employers who are below the tax threshold. UIF contributions are utilised to pay benefits and any other expenditure reasonably incurred relating to the application of this Act.

4. 4 Overview of the Fund - Vision and Mission 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 Unemployment Insurance Fund sees its mission as: – Rendering an effective and accessible service to all stakeholders. – Being a sustainable organisation with sufficient reserves. – Administering the Fund professionally.

5. 5 Leadership and Management The Minister of Labour is the Executive Authority of the Unemployment Insurance Fund. The Director-General (DG) of the Department of Labour is the Accounting Authority of the Unemployment Insurance Fund. The Fund is administered by the Unemployment Insurance Commissioner with delegated powers from the DG. The Minister of Labour has established the Unemployment Insurance Board in terms of section 47 of the Unemployment Insurance Act, 2001. The Board consists of three members from each of organised business, organised labour, community constituencies and government. Board members are appointed for a period of three years. The Unemployment Insurance Board is an advisory board.

6. Overview of the Fund - Institutional Spread DoL/UIF operates in 9 Provincial Offices Nationally provides service in 126 Labour Centres. We have a total of 91 Labour Centres with processing capability. 6

7. Operational Performance The Fund had 1,465,218 employers ( commercial, domestic and taxi) registered on the system at end of March 2013 compared to 1,408,205 in March 2012. 7 Sector 31 March 2012 31 March 2013 % Change Commercial785,626827,3075.31% Domestic622,579637,9112.46% Total1,408,2051,465,2184.05%

8. 8 Operational Performance The Fund had 8,330,760 employees ( commercial and domestic) registered on the system in March 2013 as compared to 8,125,575 in March 2012. Sector 31 March 2012 31 March 2013 % Change Commercial7,475,6817,677,2322.70% Domestic649,894653,5280.56% Total8,125,5758,330,7602.53%

9. Operational Performance The Fund paid 731, 131 claims as at 31 March 2013, an increase of 25,276 claims compared to last year 705,855 total claims paid. No. of recipients in each category 31 March 2012 31 March 2013 Unemployment555,969 581,074 Illness20,966 20,986 Maternity/Adopti on 104,407 106,339 Dependents24 513 22,732 Total Paid705,855 731,131 9

10. Operational Performance 31 March 2012 (R’000) 31 March 2013 (R’000) Unemployment4 354 4224 687 6217.65% Illness 234 126 250 3516.93% Maternity/Adoption 708 195 758 4577.10% Dependants 315 541 316 4570.29% Total Paid5 612 2846 012 8867.14% 10

11. Human Resource Management UIF Head Office staff establishment consists of 463 posts. 422 (91.14%) of the posts are filled and 41 (8.86%) are vacant posts. Included in the vacant posts are post that will not be filled due to the organizational review process being undertaken by the Fund. The new organisational structure of the Fund was approved by the Minister of Labour during the financial year. The new structure will increase the staff establishment of the Fund to 559 posts 11

12. Human Resource Management Salary BandEstablishment Number of employees Vacant PostsVacancy Rate Top Management 1100.0% Senior Management 151416.7% Professional Qualified 2623311.5% Line Management 4742510.6% Skilled104911312.5% Semi Skilled257240176.6% Unskilled1311215.4% Total 463422418.86% 12

13. Financial Performance – 2012/2013 31 March 2012 (R‘000) 31 March 2013 (R‘000) % Change Increase/ decrease Contributions 12,441,164 13,687,497 10.02% Investment income 4,213,972 4,660,361 10,56% Benefits expenditure 5,612,284 6,012,886 7.14% Net surplus 11,837,537 16,006,304 35.22% Investments64,854,27481,171,540 25,16% Technical reserves14,527,88616,465,787 13.33% Accumulated surplus47,943,93862,012,339 29.34% Total assets65,973,79781,848,523 24.06% 13

14. Performance Highlights for the year Fund Poverty Alleviation Schemes: Rollout of the training schemes that had been approved during the 2011/12 financial year where – MICT Seta is training 1000 beneficiaries on ICT training focusing on End User Computing, Technical Support and systems support. – Telkom/MICT Seta are training 850 beneficiaries on Fundamentals of IT, Advance IT, Electrical Technicians (Refrigeration introduction and systems). Investments on Social Responsible Investments amounted to R3.561 billion against the target of R3.254 billion. There has been a 93.80% increase in funding for the Social Plan compared to prior year. The Funding allocated has increased from R 13,7 million in 2011/12 to R 26,5million in 2012/13 financial year 14

15. Performance Highlights for the year (continued) Improve Governance 100% compliance to UI Board and subcommittee charters was achieved at the end of March 2013. Internal Audit carried audits at all offices as per the audit plan, with 86% of the audit reports finalised and signed-off by management at the end of March 2013. Risk Appetite Framework for Quarter 4 signed off by the UI Commissioner. The ACL system is operational and utilized to detect and prevent fraud within the fund. 93% of all received fraud cases finalised at the end of March 2013. 15

16. Performance Highlights for the year (continued) Strengthen Institutional Capacity of the Fund 72% of the planned training interventions implemented by end of Quarter 4. 67% representation of women at Senior Management Service achieved at the end of March 2013. 3% representation of people with disability at the end of March 2013. 4.3% vacancy rate as at end of March 2013(excluding posts that will not be filled due to the new structure implementation. Including these posts, the vacancy rate is 8.86%) ICT Strategy and Implementation Plan for the UIF approved and being implemented. 16

17. Encourage compliance through enhanced service delivery 86% of all claims received during the 2012/13 financial year were finalised within 5 weeks of application. 5023 employers have since been accredited to utilize the virtual office and we are continuously in the process of assessing other accreditation applications. 42 487 active U-filing employers as at 31 March 2013 compared to 35 868 Active U- filing employers as at 31 March 2012. There was an increase of 18.45%. 17 Performance Highlights for the year (continued)

18. Encourage compliance through enhanced service delivery 4% increase in employers registered with the UIF from 1 408 205 in March 2012 to 1465 218 in March 2013. Contributions collected increased by 10% compared to the previous financial year 18 Performance Highlights for the year (continued)

19. Improve Stakeholder Relations The Fund undertook communication campaigns at al nine provinces during the 2012/13 financial year Multi media platform (TV, Radio and Internet ) were utilised to communicate to stakeholders with a reach in excess of 40 million across all platforms. The Fund has entered into MOUs with three key stakeholders during the 2012/13 financial year (VIP Payroll, CIPC and TETA) 19

20. Job Creation Initiatives The Unemployment Insurance Fund supports the Minister of Labour’s job creation initiatives in pursuing the following outcomes: – Outcome 4: Decent Employment through inclusive economic growth Making Our Growth More Labour Absorbing (IDC/UIF Bond & Training Layoff Scheme) Reducing Youth Unemployment (Training of the Unemployed Beneficiaries) Reviewing Support for small business (Funding for Turnaround Solution) 20

21. UIF/IDC Initiative The Industrial Development Corporation (IDC) and the Unemployment Insurance Fund (UIF) commenced their relationship in April 2010 in response to the job losses that were taking place in the country. In terms of the relationship, the UIF initially purchased a R2 billon bond from the IDC. The IDC uses these proceeds to fund businesses that will create and save jobs. During the 2012/13 financial year, the UIF and IDC continued their collaboration through the issuance of an additional bond of R2 billion. This has increased the total bond to R4 billion. To date 21 234 new jobs have been created and 20 161 job saved by companies that accessed the funding from the UIF/IDC initiative. 21

22. UIF/IDC Initiative The investment in the IDC by the UIF is part of the UIF’s objective of investing 10% of its total investment portfolio in socially responsible investments, were the focus is on job creation. Transactions from this initiative are funded on standalone basis or on a co- funding basis with the IDC funds Businesses that access the funding, receive a discounted rate of 5% for a period of time, after which it reverts to a concessionary variable rate linked to prime 22

23. UIF/IDC Initiative Since inception, there have been 199 approved deals with a total value of R3,3 billion Jobs created were created and saved in the following areas 23 FSKZNECWCGPLPNCMPNWTotal 2010/111,2011,1641,420 6,743 4,7521242671,133 42917,233 2011/121,2272,1401,512 9,695 7,9731732672259 66325,909 2012/131,1243,4454,96411,57615,5049123552,4551,06041,395

24. UIF/IDC Initiative 24

25. UIF/IDC Initiative 25

26. UIF/IDC Initiative 26

27. UIF/IDC Initiative 27

28. Training of the unemployed UIF beneficiaries This was a response for UIF beneficiaries who have already lost jobs and require re-skilling for re-integration into the labour market. It is implemented through collaboration with various government training institutions to train beneficiaries on critical and scarce skills required in the economy. The project began with a pilot in 2010 where 774 youths and unemployed UIF beneficiaries where trained as Artisans in collaboration with MERSETA During the 2010/2011 financial year, 1976 youths and unemployed UIF beneficiaries were trained in various artisan disciplines within the mining sector. 28

29. Training of the unemployed UIF beneficiaries During the 2012/13 financial year, three training initiatives were rolled out: – Training of 1000 UIF beneficiaries and unemployed youth on various ICT related training programmes in a collaboration with the MICT SETA – Training of 1000 UIF beneficiaries and unemployed youth on mining related artisan programmes in a collaboration with the Mining Qualification Authority – Training 1500 beneficiaries and unemployed youth in various artisan trades in collaboration with the MERSETA 29

30. Training of the unemployed UIF beneficiaries GPLIMMPNCKZNNWFSWCECTOTAL UIFGSDoL Pilot Project 324 - - - - - - - - UIF-MQA Artisan Development Project 258 172 176 58 26 215 96 - - 1 001 UIF-merSETA Artisan Development Project 668 - 28 - 422 - 74 70 14 1 276 UIF-MICT SETA Learnership Project 270 150 200 100 40 100 - 40 100 1 000 1 520 322 404 158 488 315 170 110 114 3 601 30 Beneficiaries who were enrolled for the approved training programmes: * GP = Gauteng, LIM = Limpopo, MP = Mpumalanga, NC = Northern Cape, KZN = Kwazulu Natal, NW = North West, FS = Free State, WC = Western Cape, EC = Eastern Cape

31. FUNDING FOR TURNAROUND SOLUTIONS In addition to investment in social responsible investments, the UIF continues as the sole funder of Productivity South Africa’s Turnaround Solutions. A three year funding agreement has been signed between the UIF and Productivity South Africa and enables the assistance to companies that are in distress with the objective of saving jobs and keeping people in employment. In terms of the funding agreement, the UIF allocated R39 million for 2012/13, R55 million in 2013/14 and R58 million in 2014/15 to fund the Turnaround Solutions during the three year period. For the 2013/14 financial year, 130 companies are targeted for intervention with potential to save 10200 jobs through the Turnaround Solution intervention. 31

32. FUNDING FOR TRAINING LAYOFF SCHEME The UIF has maintained its commitment of R1, 2 billion made towards the funding of the Training Layoff Scheme. A total of R105 million has been budgeted for the 2013/14 financial year and R400 million over the next three years. 32 Financial YearAllocation to Approved Projects No of Jobs Saved 2010/2011R 21 961 133.113 266 2011/2012R 6 611 229.01828 2012/2013R 31 187 883.28241 TotalR 59 760 245.405 416

33. Funding for training layoff scheme Funding was allocated for 29 companies across 5 provinces: 33 Eastern CapeGautengKZNMpumalangaWestern Cape No of Companies4113110 No of Jobs Saved4592869116050684

34. Thank You… 34