South Africa’s labour support system could soon undergo one of its most significant transformations in years, as government moves to reposition the Unemployment Insurance Fund (UIF) and the Compensation Fund into standalone public entities aimed at delivering faster, more accountable services to workers.
The proposed reforms, which were presented to the Portfolio Committee on Employment and Labour on 27 May 2026, are being framed as part of a broader effort to modernise labour institutions and improve the state’s response to unemployment, workplace injuries and social security challenges.
At the centre of the plan is the intention to establish both the UIF and Compensation Fund as Schedule 3A national public entities under the Public Finance Management Act, giving them greater operational autonomy while keeping them fully accountable to government.
The Portfolio Committee on Employment and Labour has welcomed the proposal, describing it as a necessary intervention to address long-standing governance delays, administrative inefficiencies and service delivery frustrations experienced by workers and employers alike.
For years, both funds have operated as branches within the Department of Employment and Labour – a structure officials say has slowed decision-making and limited institutional responsiveness. Under the proposed model, each entity would have its own governance structures, accounting authorities and accounting officers, allowing quicker decisions and more focused management.
Deputy Minister of Employment and Labour Judith Nemadzinga-Tshabalala said the reforms should be viewed as part of a larger vision to build a capable and developmental state. “It is important to think of these legislative amendments as an intention to remove administrative bottlenecks, clarify governance responsibilities and create institutions with greater operational agility and accountability. This is essential if we are to respond effectively to rising unemployment, labour market disruptions and the changing nature of work,” she said.
Government insists the restructuring is not a step towards privatisation, but rather an attempt to strengthen oversight, improve claims processing and modernise outdated ICT systems that have repeatedly drawn criticism from the public.
Workers applying for UIF benefits and employees seeking compensation for workplace injuries have often faced delays linked to ageing systems and administrative backlogs. Officials believe the reforms could significantly improve turnaround times and restore confidence in labour institutions.
“A capable state is measured not only by legislation or policy frameworks, but by its ability to deliver services efficiently, transparently and with dignity. Workers who submit UIF claims and injured workers seeking compensation must experience institutions that work for them,” Ms Nemadzinga-Tshabalala said.
Beyond governance reforms, the department also highlighted plans to strengthen labour inspections, improve compliance monitoring and promote safer workplaces.
Parliamentarians welcomed assurances that no jobs would be lost during the restructuring process, although committee members stressed that the transition must remain consultative and worker-centred.
Concerns were also raised about the high number of acting appointments within the department and its entities, particularly in senior management and ICT-related roles. Committee members warned that institutional stability would be critical if the reforms are to succeed. The committee further emphasised the urgency of accelerating ICT modernisation, noting that recurring service delivery complaints continue to undermine public trust in both funds.
Committee chairperson Boyce Maneli said the reforms must ultimately improve the everyday experience of workers and employers interacting with labour institutions. “We must build institutions that are responsive, accountable and capable of delivering quality services to workers and employers alike. These reforms must ultimately strengthen the developmental role of the state and restore public confidence in our labour institutions,” he said.
According to the department, progress has already been made in governance planning, organisational design, legislative drafting and stakeholder consultations. However, officials acknowledged that delays linked to the Compensation for Occupational Injuries and Diseases (COID) Amendment Bill remain one of the biggest risks to implementing the reforms on time.
As the process unfolds, Parliament says it will continue monitoring developments closely, including legislative progress, staffing, governance reforms, ICT upgrades and labour inspection capacity.
If successful, the restructuring could mark a turning point for South Africa’s labour support system – one aimed at creating institutions that are faster, more responsive and better equipped to serve workers in a rapidly changing economy.
Temba Gubula
29 May 2026
Arrange a tour