Transparency in the time of Covid-19

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71point4 > Blog archive > 2020 > April > 16 > Transparency in the time of Covid-19

Transparency in the time of Covid-19

Posted by: Illana Melzer
Category: Covid-19

In recent weeks, a global consensus among economists and policy-makers has become harshly apparent: the Covid-19 pandemic will lead us into a global recession and its effects will be particularly devastating for the African continent. In South Africa, this profound economic impact will be exacerbated by Moody’s recent downgrade of our economy to a sub-investment grade, citing “deterioration in fiscal strength and structurally very weak growth”.[1] While we have no clear sense of the trajectory of the lockdown, experts estimate that it is costing the country R13 billion per day.[2] To contextualise this figure, the initial three week lockdown will have cost the country over 2.5 times Eskom’s debt of R419 billion ― South Africa’s major pre-covid economic headache. Going forward it is estimated that South Africa’s economic decline could result in a 7% GDP contraction in 2020 coupled with a significant rise in unemployment.[3] The South African Reserve Bank has estimated that up to 370 000 jobs could be lost.[4] As the most unequal country in the world with an official unemployment rate of 29%,[5] the ramifications of increased job insecurity for low-income households, the economy and our society at large will be catastrophic.

Existing mechanisms through the Unemployment Insurance Fund (UIF) will support some job losers. In addition, the government has implemented a number of relief packages aimed at mitigating the pandemic’s adverse economic effects. A Temporary Employee/Employer Relief Scheme (TERS) developed by the UIF will assist companies in paying employee salaries throughout the lockdown period.[6] Although there have been conflicting claims on the amount of money allocated towards the scheme, more recent announcements by Cyril Ramaphosa following the extension of the lockdown indicate that R40 billion has been made available.[7] UIF Commissioner Teboho Maruping reported that over R30 million a day is already being paid on claims ― a significant increase from the R15-R20 million a day that is paid out under regular circumstances.[8] Whether the UIF can sustain additional lockdown extensions remains unclear. Latest published data from the UIF’s 2018/2019 Annual Report reveals that net assets owned by the fund amounted to R144 billion,[9] however this report was subjected to a qualified audit, and included a significant write down of over R5.9 billion on assets that had previously been overstated.[10] This was all before the Covid-19 crisis took 12% off the value of the JSE[11] and significantly reduced monthly inflows.

While data on jobless claims in the USA is reported weekly, reporting on unemployment claims in South Africa remains comparably sparse. The UIF only report on claims and payouts once a year in its annual report. The UIF’s 2018/19 annual report indicated that 671 188 claims were paid out over that reporting period, but provided limited information on who submitted those claims and for what time period.[12] Of course, the data does exist, and has on occasion been made available. By way of example, a very useful analysis of UIF data by Haroon Bhorat, Sumayya Goga and David Tseng was published in 2013.[13]

US Department of Labour Weekly Unemployment Insurance Claims

While it is still early days, it appears that limited data has been made available on temporary relief claims received and paid out by the UIF beyond statements of various UIF officials, such as the announcement published today in Moneyweb on the 39 000 applications received but only 136 processed.[14] This is unfortunate. Experts and commentators have highlighted the importance of transparent public healthcare data in how we fight the Covid-19 battle. Likewise, data transparency is critical to fighting the economic impact of the lockdown.

Complete and regular reporting of TERS claims and payouts would aid our understanding of the impact of the disease on the labour market immeasurably. Better yet, the UIF could make available detailed anonymised data at an individual claim level to enable an analysis by pre-crisis wage level, sector and location. This would allow researchers and academics to explore the data from multiple perspectives, enabling evidence-based, sector-level strategies to support the post-crisis reconstruction of the economy.

Authors: Illana Melzer, Frances Whitehead

References
[1] Reuters (2020). Moody’s Downgrades South Africa sovereign rating to “junk”. https://www.reuters.com/article/safrica-ratings/moodys-downgrades-south-africa-sovereign-rating-to-junk-idUSL8N2BK8M5 (Accessed 12 April 2020).
[2] The Conversation (2020). South Africa needs to end the lockdown: here’s a blueprint for its replacement. https://theconversation.com/south-africa-needs-to-end-the-lockdown-heres-a-blueprint-for-its-replacement-136080 (Accessed 14 April 2020).
[5] StatsSA (2019). Unemployment rises slightly in third quarter of 2019. http://www.statssa.gov.za/?p=12689 (Accessed 12 April 2020).
[6] Department of Employment & Labour (2020). COVID 19 TERS Benefits Easy Aid. http://www.labour.gov.za/DocumentCenter/Publications/Unemployment%20Insurance%20Fund/COVID19%20TERS%20Easy%20Aid_.pdf (Accessed 12 April 2020).
[7] Business Insider (2020). UIF Corona Payouts: 27,000 businesses have applied for help. https://www.businessinsider.co.za/uif-ters-claims-2020-4 (Accessed 14 April 2020).
[8] EyeWitness News (2020). UIF paying out about R30m per day since COVID-19 lockdown. https://ewn.co.za/2020/04/08/uif-paying-out-about-r30-million-per-day-since-covid-19-lockdown (Accessed 14 April 2020).
[9] Department of Labour (2019). Unemployment Insurance Fund Annual Report 2018/19.http://www.labour.gov.za/DocumentCenter/Reports/Annual%20Reports/Unemployment%20Insurance%20Fund/2018/UIF%20Annual%20Report%202018_2019.pdf (Accessed 14 April 2020).
[10] Fin24 (2019). Unemployment Insurance Fund slapped with qualified audit. https://www.fin24.com/Economy/unemployment-insurance-fund-slapped-with-qualified-audit-20191202 (Accessed 14 April 2020).
[11] Fin24 (2020). The JSE is down 12% so far today – it may be on track for its worst day ever. https://www.fin24.com/Markets/the-jse-is-down-10-so-far-today-its-on-track-for-one-of-its-worst-days-ever-20200316 (Accessed 12 April 2020).
[12] Department of Labour (2019). Unemployment Insurance Fund Annual Report 2018/19. http://www.labour.gov.za/DocumentCenter/Reports/Annual%20Reports/Unemployment%20Insurance%20Fund/2018/UIF%20Annual%20Report%202018_2019.pdf (Accessed 14 April 2020).
[13] Africa Growth Initiative at Brookings (2016). Unemployment Insurance in South Africa. A Descriptive Overview of Claimants and Claims. https://www.brookings.edu/wp-content/uploads/2016/06/04_unemployment_insurance_south_africa.pdf (Accessed 14 April 2020).
[14] Tshwane,T. (2020). Incomplete applications hold up UIF relief.https://www.moneyweb.co.za/news/south-africa/incomplete-applications-hold-up-uif-relief/ (Accessed 16 April 2020)

Featured image: https://www.dailymaverick.co.za/article/2014-09-22-op-ed-youth-unemployment-in-sa-apartheid-is-alive-and-well/

Author: Illana Melzer

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