Activation in the context of the unemployment insurance system in South Africa

25 January 2013

The main aim of labour market activation policies is to bring jobless people from unemployment or inactivity into work or, at the very least, to influence the employment prospects of the unemployed positively. Activation schemes typically make benefit receipt conditional upon job search activities, acceptance of available job offers and participation in training activities. This article addresses the appropriate role of the Unemployment Insurance Fund (UIF) in the establishment of activation in South Africa. It focuses on a number of principled and practical considerations and constraints that challenge the use of activation mechanisms, such as the fragmentation of the existing legal and institutional frameworks, the lack of available employment opportunities and human rights considerations. It is argued that the limited and short-term impact of the UIF, its strong labour-market orientation and its inability to appropriately contribute to preventing and combating unemployment or to reintegrate the unemployed into the labour market all point to the urgent need to reform the UIF. The gaps in the current unemployment insurance system are highlighted, as is the need to enhance the relationship between the unemployment insurance system and (appropriate) activation measures. The role of existing social security and employment creation initiatives in this dynamic is also considered. In particular, the absence of a link between those excluded from the UIF and the activation mechanisms introduced by the Skills Development Act 97 of 1998 is underscored. Proposals contained in the Employment Services Bill are also evaluated. It is suggested that an expanded form of employment services provision, incorporating a network of labour centres, ought to receive prioritisation in the South African context. This must be coupled with a move to consolidate the various available governmental databases in terms of which unemployed persons may register as job-seekers. The creation of an enabling framework to achieve such goals would require a variety of legislative changes, some of which are discussed in the article.