With work stopped for millions by the lockdown, the quickest and simplest way to provide wage support to employees in the formal economy would be for SARS to use the tax system to pay employers a portion of workers’ wages automatically.

Business Day reports this recommendation comes from the Covid-19 Economists Group in a paper written by group convener Miriam Altman.

Employers, labour and the government have negotiated a special Covid-19 benefit to be paid through the Unemployment Insurance Fund (UIF) to employers to disburse.

Altman recommends that the scale of the benefit be calculated along the lines of the Covid-19 UIF benefit and that the funds come from the reserves accumulated by the funds.

The importance of acting quickly to keep firms afloat and keep employees tied to their firms cannot be emphasised enough, she said.

‘The immediate goal in the Covid-19 lockdown must be to ensure that a temporary problem does not become permanent – through needless permanent alienation from work or business, fiscal and/or financial instability, severe destitution, social instability, destruction of sections of economic activity and similar ... this is particularly so in a context of high unemployment and inequality, and an economy that was already struggling,’ the paper says.

While the UIF has given the government and social partners assurances that it will act quickly, business and labour are concerned that the fund will be unable to do so at the pace required.

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