2 June 2006
Labour Minister Membathisi Mdladlana has today (Friday) announced a second
increase, in as many months, in the maximum earning levels of benefits of the
Unemployment Insurance Fund (UIF).
On a yearly basis, the UIF sets out maximum rate of earnings or remuneration
ceiling for its benefits that provides a limit for the two percent
contributions. This is then used to calculate the income replacement rate (IRR)
for each claim for benefits.
All workers who earn above the maximum level will only contribute up to the
maximum and when they become unemployed will then receive benefits at the rate
of their contribution.
Announcing the increase the Minister said the adjustment would be by 12%
with effect from 1 July 2006. The current increase came hardly a year following
a huge increase by 24% in October of last year.
Explaining the two major increases coming not far apart from each other,
Minister Mdladlana explained that this was due to the fact that there was no
increase in 2004. The last increase before October was in 2003 by 9%.
In monetary terms it means that the monthly level of remuneration for
determining maximum contributions and benefits will be increased from the
current R10 966,00 per month to R11 662,00 with effect from 1 July 2006.
According to the latest increase, contribution payable will as from 1 July
2006, be calculated on R139 944,00 of annual earnings or on R11 662,00 of
monthly earnings or on R2 691,23 of weekly earnings.
âIt simply means that as the Labour Department, between October 2005 and
July 2006, we have managed to put an extra R2 826,00 in the salary ceiling.
This can only make the fund more attractive to both the low and high income
earners,â added the Minister.
The Minister concluded by explaining that by adjusting the annual
contributory earnings, there was also a corresponding increase in benefits to
workers. This step further highlights the importance that the fund places on
improving the lives of the workers.
The latest increase has already been published in the Government
Gazette.
Enquiries:
Kgomotso Sebetso
Cell: 073 269 9870
Mokgadi Pela
Cell: 082 808 2168
Issued by: Department of Labour
2 June 2006
