Activation in the Context of the Unemployment Insurance System in South Africa

• Jurisdiction: South Africa
• Published date: 16 August 2019
• Citation: (2011) 22 Stell LR 205
• Author: Avinash Govindjee
• Pages: 205-227
• Date: 16 August 2019

205

ACTIVATION IN THE CONTEXT OF THE

UNEMPLOYMENT INSURANCE SYSTEM IN

SOUTH AFRICA*

Avinash Govindjee

BA LLB LLM LLD

Associate Professor of Law, Nelson Mandela Metropolitan University

Marius Olivier

BA LLB LLD

Director: International Institute for Social Law and Policy (IISLP);

Extraordinary Professor: Faculty of Law, Northwest University (Potchefstroom Campus);

Adjunct-Professor: Faculty of Law, University of Western Australia

Ockert Dupper

BA LLB LLM SJD

Professor of Law, University of Stellenbosch

1 Introduction

This is the second in a se ries of three articles which address t he key question

as to how the Unemployment Insura nce Fund (“UIF”) should be reforme d in

order to ensure an i mproved unemployment insurance mechanism , and to effect

meaningfu l alignment with the ot her available social security i nterventions in

South A frica. Whi le the rst contribution speci cally addressed the existing

gaps in coverage1 a nd the nal contribution in the series ex amines selected

issues impacting up on the current legal f ramework (including contract ual

interfacing, dispute re solution and adjudication),2 this particular contribution

addresses the conce pt of “activation” in the context of UI F reform.

In essence, a ctive labour market policies aim t o inuence the employment

prospects of the unemployed by encourag ing or mandating pa rticipation

in job-search assista nce programmes a nd skills trai ning, or by directly

increasing the ret urns to labour (for example, through wage subsidies).3 Active

labour market policies can form pa rt of a comprehensive unemployment

protection system comprisi ng unemployment insur ance and unemployment

assistance initiat ives, and may be linked to both unemployment ins urance and

unemployment assistance benets so that participation in, for example, skills

* This contr ibution is base d on work emanat ing from a projec t completed by the a uthors for the

Unemployment In surance Fu nd of South Afr ica in relation t o the reform of the So uth Africa n

unemployment i nsurance syste m T he authors wish to ack nowledge the research a ssistance provided by

Adriaan Wolvaa rdt, doctoral candid ate and researcher of the I nternational Ins titute for Social Law and

Policy (IISLP), and Elija h Taiwo, doctoral candid ate at the Nelson Mandela Me tropolitan Unive rsity

1 O Dupper, MP Oliv ier & A Govindjee “Extend ing Coverage of the Unemploy ment Insurance -system in

South Afri ca” (2010) 3 Stell LR 438

2 M Olivier, O Duppe r & A Govindjee “Redesigni ng the South African Une mployment Insuranc e Fund:

Selected Issue s” forthcoming i n (2011) 2 Stell LR

3 C Smith Intern ational Expe rience with Worke r-side and Emp loyer-side Wage and E mployment Sub sidies,

and Job Search A ssistance Progr ammes: Implication s for South Africa (20 06) 6

(2011) 22 Stell LR 205

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development or public works programmes becomes a pr e-condition for receipt

of available unemployment benets.

There are a number of pri ncipled objections which challenge the use of

activation mechanisms i n South Africa. For example, increa sed activation in

the country is st ill attempted i n the absence of a proper legal framework.4

There is also an ongoing debate, cent red in human r ights discourse, which

tests the merits of act ivation against the human r ights of work-seekers. From

a practical perspe ctive, the potential for greater use of activation mechanisms

in South Africa is l imited by the lack of jobs into which the une mployed

can be “activated” and the i nadequacy of human and ot her resources with

respect to available employment serv ices. From an institutional p erspective,

the transfer of skills development cont rolling authority f rom the Depart ment

of Labour (“DL”) to the Department of Higher Education a nd Training raises

a range of further difculties. This paper focuses on these principled a nd

practical considerations a s being core “building blocks” for potent ial reform.

Nonetheless, the appropriate role of the UI F in the establishment of activation

in South Africa w ill be the key issue addressed in this paper.

This paper will be s tructured a s follows: in part 2, it is argued that the li mited

and short-term i mpact of the UIF, its strong labour market or ientation and its

inability (due to the cur rent inadequate legislative framework) to appropriat ely

contribute to preventing a nd combating unemployment or to rei ntegrate the

unemployed into the labour market all p oint to the urgent need to reform t he

UIF. The concepts of “activation” and “active labour market policies” ar e

introduced in pa rt 3. Particular focu s is placed upon their potential l ink to

future social s ecurity policy-mak ing in South Afr ica. In part 4, the Sk ills

Development Act 97 of 1998 (hereafter the “SDA”) and the draft Employment

Services Bill are exa mined as examples of measures embracing active labou r

market policies in South Afr ica. The gaps in the cu rrent unemployment

insurance syst em as well as the need to enh ance the relationship betwee n the

unemployment insura nce system and (appropriate) activation measur es are

highlighted. In pa rticular, the absence of a link between those excluded fr om

the UIF and the act ivation mechanisms introduced by the SDA is undersc ored.

In parts 5 and 6, we exa mine the problems associated w ith three impor tant

pillars of any activation str ategy, namely, the provision of public employment

services, the cre ation of work opportunit ies and the establishment of a

consolidated databas e linking job seeker s to potential work opport unities.

Finally, part 7 of the paper contains c oncluding remarks as well as var ious

proposals for reform.

2 Background: the need to reform the Unemployment

Insurance Fund

The Unemployment Insura nce Act 63 of 2001 (“the UIA”) establishes an

unemployment insura nce fund to which employers and employees contribute

4 As indicated b elow, proposed “Employ ment Servic es” legislation i s still in dr aft form and t he Skills

Development Act 97 of 1998 does n ot regulate activ ation comprehensively

206 STELL LR 2011 1

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