Who qualifies for unemployment bebefit in South Africa?

When your employer terminates your service, you can apply to the Unemployment Insurance Fund (UIF) for benefits. The benefits are only available to you if you have been contributing to the UIF while you worked. You cannot claim if you have resigned, been suspended or absconded from work.

 The UIF covers employees in the formal economy (eg. workers in micro and small enterprises) , domestic workers and farmers.  In 2010, 642 007 domestic employees were registered, compared to 7 109 462 commercial employees in the formal sector. In 2010 UIF had 7.8 million declared and effectively registered participants. However, an estimated more than 4 million people were still left uncovered. Therefore consideration is being given to the extension of the UIF to the self employed and atypical workers.

The contribution rate is 2 per cent of the employee’s salary (1 per cent by the employer and 1 per cent by the employee) paid monthly through the payroll tax collected by the South African Revenue Services or paid directly to the UIF by those in informal or irregular employment. Five categories of benefits are covered under the UIF Act – namely unemployment, maternity, illness, and adoption and survivor benefits in the event of the contributor’s death. While the primary benefit is for unemployment, contributors may also claim benefits during short periods of illness or absence from work due to maternity or adoption. The unemployment benefit ranges from 38 per cent of income for high income earners to a ceiling of 60 per cent of income for the lowest income earners, paid for a maximum period of 238 days.

There is still a large gap between the number of unemployed and the number of people with claims on the Fund.  In 2010, 628 595 people received unemployment subsidies. This amounts to only 15 per cent of the 4.1 million unemployed (24 per cent of the active population). Part of the reason for the inefficient coverage is that more than 50 per cent of the unemployed report that they had never worked and thus they have never contributed to the UIF, making them ineligible.  Of those that had worked before, almost 68 per cent had been unemployed for more than a year and would have exhausted their benefits if they had ever been eligible for them (238 days, roughly 8 months). Over the last two years there has been an increase in uptake of beneficiaries due to the economic crisis. In order to improve its coverage, the UIF is studying the extending unemployment benefits and introducing a social continuation benefit for the long term unemployed.