Labour minister reveals budget cuts for 2021/22 financial year

14 May 2021 - 13:39 By nomahlubi sonjica
Labour minister Thulas Nxesi announced that his department's budget for the 2021/22 financial year had been cut by R350m. File photo.
Labour minister Thulas Nxesi announced that his department's budget for the 2021/22 financial year had been cut by R350m. File photo.
Image: Esa Alexander

Labour minister Thulas Nxesi said on Friday his department's budget for the 2021/22 financial year had shrunk by R351m to R3.5bn.

“The major reductions made by the department are R213m from compensation of employees and R8.5m on goods and services. In addition, budgets across the entities were reduced by R102m,” Nxesi told parliament.

According to Nxesi, the Covid-19 temporary employer/employee relief scheme (Ters) benefit, which started paying out from April 2020, had as of March made payments to 267,000 employers and 5.4 million individual employees at a cost of R58.7bn.

“The compensation fund and the licensed mutual assurance companies have paid for medical treatment and replacement of lost income for 12,500 Covid-related claims over the last 12 months.

“These bodies have also set aside R1.3bn in terms of the COIDA act [Compensation for Occupational Injuries and Diseases Act] to fund vaccines for some three million uninsured workers and COID pensioners.

He said the Unemployment Insurance Fund (UIF) had set aside a budget of R2.4bn for the Labour Activation Programme (LAP), which included:

  • R70m for the business turnaround programme;
  • a total of R250m for new Ters applications; and
  • R1.4bn for the funding of new projects linked to employment opportunities.

“In 2020/21, under the normal Ters programme, Productivity SA supported 25 companies at a cost of R5.6m, directly saving 3,000 jobs. Productivity SA’s business turnaround and recovery programme capacity will be further enhanced in 2021/22 to support 191 companies at a cost of R115m, saving some 10,000 jobs,” said Nxesi.

He said the compensation fund had committed 10% [R7bn] of its investment portfolio towards growth and job creation.

This, he said, included an allocation of R1bn to support employment-creating SMEs over the next four years.

Nxesi said central to the department’s employment strategy was the need to close the skills gap.

“There will be a greater emphasis on digital literacy skills, as well as entrepreneurial skills. To this end my department is collaborating with the departments of higher education, science and innovation, and communication and digital technology.”

In his budget speech, Nxesi also mentioned that the national minimum wage had been increased by 4.5% to R21.69 per hour, from March 1.

He also announced that the majority of the labour department’s entities had received an unqualified audit report from the auditor-general.

“There are, however, challenges around the Compensation Fund, which received a disclaimer. We are committed to continued improvement of governance and an organisational review of the two funds to attain a clean audit.”

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