South Africa Contemplating ‘National Disaster Benefit’ Fund

(Bloomberg) --

South Africa is considering establishing a ‘National Disaster Benefit’ fund that would pay workers compensation when they are laid off because of the effect of the coronavirus outbreak on businesses.

About 30 billion rand ($1.69 billion) could be made available, from the Unemployment Insurance Fund, according to Matthew Parks, parliamentary coordinator at the Congress of South African Trade Unions, which represents 1.8 million workers.

The intervention comes as South Africa, which was already under fiscal strain before the disease outbreak, prepares for a three-week shutdown. President Cyril Ramaphosa announced the measure and said the army will be deployed to enforce it in a televised address on Monday.

It “will be announced by Thursday formally,” said Parks. It will tackle job losses related to the outbreak, will support job retention, illness payouts and reduced time claims, he said.

The fund would pay out workers at a minimum rate of 3,500 rand a month, which is the national minimum wage, according to a proposal seen by Bloomberg and confirmed by Cosatu, which is taking part in the talks. Employers who want to lay off workers will need to apply to the UIF.

The measure, if implemented, would be the most concrete action yet taken by the government to mitigate the effects of the disease.

©2020 Bloomberg L.P.

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