The Minister of Finance is seeking public comment on a proposal for a temporary reduction in employers and employees’ contributions to the Unemployment Insurance Fund (UIF), while keeping benefits unchanged. In the 2015 Budget Speech, the Minister proposed to reduce the remuneration threshold against which the contributions are calculated from the current monthly amount of R14 872 to R1 000, providing much-needed support to the economy, by putting about R15 billion back into the pockets of workers and employers. The contributions reduction would draw down on the UIF’s accumulated surplus which currently stands at more than R72 billion.
Given the challenging economic environment that has led to downward revisions in economic growth, a reduction in unemployment insurance contributions will provide significant support to households and employers. The reduction is proposed to take effect on 1 April 2015, and would be reconsidered for the next fiscal year, shortly before 1 April 2016. If implemented, both employers and employees will be required to pay a maximum of R10 each per month, down from the current maximum of R148.72.