Labour Minister's Budget Speech


23 May 2011




24 MAY 2011


This is my first budget vote speech, since my appointment as Minister in the Labour portfolio. In this regard, I would like to take this opportunity to thank the honourable President, President Jacob Gedleyihlekisa Zuma for entrusting me with this important function as well as showing confidence in me.

Our Constitution, honourable Chairperson places an injunction on us as government and the democratic state to ensure equality between men and women, between black and white, between urban and rural, between rich and poor. It is this Constitutional ethos that drives the work of the department of labour. In other words Chairperson, it is not possible for South Africa to speak of a well developed society on the basis of equality and justice in isolation of
improved economic efficiency and productivity; employment creation; sound labour relations; eliminating inequality and discrimination in the workplace; alleviating poverty and unemployment; enhancing occupational health and safety awareness and compliance in the workplace; as well as nurturing the culture of acceptance that worker rights are human rights.

Essentially, this is what the mandate of the department of labour is all about. These policies and programmes that regulate the labour market are developed in consultation with our social partners. In its assumption of administration, government, through the President placed a priority on job creation through meaningful economic transformation and inclusive role. This is a task that has got to be undertaken with dedication, commitment and a higher level of vigour. It would require that the department of labour together with its social partners, organised labour and organised business and community constituency be focussed and remain committed to achieve common goals.

South Africa at the end of 2010 was characterised by:
over  4.2 million persons unemployed;
of the above number  2.8 million are long-term unemployed,;
of the unemployed, the most are young persons within the range of 25 and 34 years of age, with low levels of skill and work experience.

These are not just numbers, but individual persons whose lives are severely affected by a lack of income, lack of security and a lack of dignity.  These are the people who require assistance to find work or to re-enter the labour market. 
On the one hand South Africa experienced a significant increase of industrial action through strikes. As a result of which, a lot of workdays were lost due to industrial  action in seventy four cases.  These industrial actions which were about improved wages and working conditions took place when the world was hit by economic meltdown.

It would be important to study and derive lessons from these industrial actions with the view to confront and improve on the labour relations systems. It must also be remembered that labour relations in itself requires ongoing engagement and refinement from time to time. Once an analysis has been conducted, one could hope that 2011 will see much more improved labour relations in the respective workplaces with a focus on bringing about stability and industrial peace.

The SA economy in 2010 began to show signs of recovery from the recession as we experienced in year 2009. In the fourth quarter of the same year we also saw a small gain in employment, with growth projected to be positive during year 2011.

As part of our commitment and effort in bringing about a society based on justice and equality for all, the department identified policy gaps in the following legislations:
Labour Relations Amendment Bill, 2010
Basic Conditions of Employment Amendment Bill, 2010
Employment Equity Amendment Bill,2010, and
The new Employment Services Bill, 2010.

Further, we are also addressing policy gaps in Sheltered Employment Factories with the specific emphasis on accommodating the needs of people with disabilities and gender equality.

In recent times, labour brokering has attracted a huge policy debate in our country, mainly due to abuses that have commonly been associated with the practice. It is for this reason ladies and gentlemen that one of our key aims in amending labour legislation is to address the phenomenon of labour broking and its associated abusive tendencies.

We do this well aware, that amending this legislation will have important consequences for the operation of the labour market system. The debates on these bills have attracted a variety of responses which illustrate clearly the articulation of different interests that could be affected by the proposed amendments.

As government, through the department of labour, we will continue to work constructively with our social partners and will further endeavor to find appropriate labour framework that gives sufficient protection to workers that have been rendered vulnerable through certain abuses.  We will do so, mindful that our policies should not have negative consequences for employment.

As at the turn of the fourth quarter, our inspectors visited more than 192 000 workplaces across the country.  Of the workplaces visited, 77 percent were found to be compliant with our labour laws.
During the year under review, we have continued to conduct
blitz inspection programmes with the view of targeting high risk and problematic sectors. Activities conducted were focussed on Wholesale and Retail, Construction, Agriculture and Forestry, Hospitality and, Private security sectors and a number of shopping malls.  

We are intensifying our efforts on inspection and enforcement as part of our commitment to ensure the creation of decent working conditions for workers, at the same time ensuring a competitive environment under which business can operate.

We have begun to focus our energies on the need for professionalisation of the inspectorate. Professionalisation of the inspectorate would require us to consider issues of upgrading the level of inspectors and training of which we have already started to engage the service of the International Labour Organisation to provide training.

The department remains focused in ensuring the highest level of compliance by companies. In this regard, Notices have been issued to non-complying employers and we have referred 295 cases to the Labour Court and 415 employers to the Magistrates Court. We hope that those who flout the law will be successfully prosecuted.

The previous financial year saw significant changes in the Department with the transfer of the skills development functions to the Department of Higher Education and Training.  The transfer has been concluded and the department has begun re-positioning the public employment services during the year.

The new Employment Services Bill sets out the proposed legal framework for the operation of our employment services.  This Bill also sets out the role of Productivity South Africa under the mandate of the Department and provides a legal basis for the operation of the Sheltered Employment Factories.

During the 2010/11 financial year, our employment services managed to register 472 179 job seekers. The service managed to link 70 percent of these registered jobseekers to career counselling, skills development interventions, work placement opportunities as well as UIF and Compensation Fund benefits. Our career guidance services were undertaken by the nursing colleges in Gauteng – saving them up to R21million in recruitment costs.

We will continue to step up our commitment to improve our employment service to contribute to job creation in South Africa.

For the period up to March 2011, the Unemployment Insurance Fund paid benefits to 693 000 beneficiaries with a total value of R5.3 Billion, compared to 779 604 beneficiaries with a total value R5.7 Billion the previous year. The Fund experienced a very slight decrease in unemployment benefit payments compared to the same period in the year 2009/10. The decrease is mainly due to the effects of the recession wearing off. This once again highlights the importance of the UIF as a safety net during times of unemployment and economic crisis.

The Unemployment Insurance Fund has invested 68 per cent of its Investment portfolio in Central Government, Municipal and Parastatal bonds and money market instruments that support infrastructure projects that will create and sustain jobs. The Fund has identified a number of projects in pursuit of the creation of decent work in South Africa. The contribution made by the Fund comprises both Commercial and Social Responsible Investment (SRI). This is an investment of R35 billion of the R52 billion portfolio.

The Unemployment Insurance Fund has also invested in the Industrial Development Corporation (IDC) through the purchase of a R2 billion bond during 2010 with the aim of creating and sustaining jobs.  These funds are available to start up businesses, to provide a debt portion of expansionary acquisitions for existing businesses and to facilitate working capital funded expansions.

The UIF has also taken further steps by setting aside R 1 billion over the 2009/10 – 2013/14 medium term period for schemes aimed at re-integrating unemployed UIF beneficiaries back into employment. The scheme involves participation by various Sector Education and Training Authorities in re-skilling the unemployed in critical scarce and soft skills.
The Fund is also providing assistance to Productivity South Africa through allocation of funding to the Social Plan. For the 2010/11 financial year R48 million has been committed towards the Social Plan. In the financial year 2011/2012, we aim to save 20 000 jobs through the Social Plan interventions.

The Compensation Fund which caters for injured on duty processed claims and paid compensation benefits in 2010/11, at an amount of R2.1 Billion.

In terms of Medical Claims the Fund paid 186 563 medical accounts in 2010/11 at an amount of R1, 9 billion, as compared to 135 829 at R1, 5 billion during the same period in 2009/10. Revenue of R4, 5 billion was raised in 2010/11. The increased capacity in debt collection yielded positive result as R431 million debt has been recovered. Compensation Fund’s total investments increased by R3, 2 billion from R23, 3 billion to R26,5 billion in the year under review.

The Compensation Fund is aiming to increase the number of registered employers in the current financial year, in order to improve revenue collection through employer assessments.

To promote return to work, develop skills and improve functionality of injured and diseased employees, the Fund has begun developing an integrated comprehensive policy framework for rehabilitation, re-integration and return to work of its beneficiaries. This will require amendment of the Compensation for Occupational Injuries and Diseases Act and the amendments are projected to be promulgated in 2014/15.
The implementation of the Compensation Fund turnaround strategy is at an advanced stage. This is aimed at improving claims turnaround time, bringing compensation fund services closer to the people through decentralisation and job creation.

In September 2010, the department launched the South African Decent Work Country programme at NEDLAC. Through this programme, the ILO will work together with government, organised business, organised labour and the community constituency to give support to initiatives aimed at promoting the decent work agenda. 

Speeding up economic growth and transforming the economy to create decent work and sustainable livelihoods is the first priority of government for 2011 and also through to 2014. Decent work will feature strongly in all economic policies during the coming period. 

Despite the significant progress in changing our economy to benefit our people, unemployment, poverty and inequality remain serious challenges. Decent work is the foundation of the fight against poverty and inequality and its promotion should be the cornerstone of all our efforts.

The last ANC National Conference held in 2007, resolved that the ANC led government will make the creation of decent work opportunities and sustained livelihood, the primary focus of our economy.

Discussion of decent work, in fact, goes back quite a few years in the international community and it is worth noting that the 2005 World Social Summit of the United Nations General Assembly, Heads of State and Government of more than 150 countries made a commitment to implement a far-reaching international agenda.   They declared that:

“We strongly support fair globalization and resolve to make the goals of full and productive employment and decent work for all, including women and young people, a central objective of our relevant national and international policies as well as our national development strategies, including poverty reduction strategies, as part of our efforts to achieve the Millennium Development Goals.”[1]

This commitment has led to the whole United Nations system recognising the Decent Work Agenda and to placing it at the centre of relevant national and international policies and development strategies.  So, the direction that we are now taking in South Africa is not new, in fact, it is overdue. 

Decent work has been defined by the ILO as being productive work for women and men in conditions of freedom, equity, security and human dignity.  Decent work involves opportunities for work that is productive and delivers a fair income, provides security in the workplace and social protection for workers and their families, offers better chances for personal and skills development, gives people freedom to express their concerns, to organise and to participate in decisions that affect their lives and guarantees equal opportunities and equal treatment for all.

The Decent Work agenda of the ILO is made up of four pillars.  These are:

Employment creation and enterprise development;
Social protection;
Standards and rights at work;
Governance and social dialogue.

These four pillars are intended to work together in an integrated manner and to apply to different areas of policy, to policies directed at the workplace and the way in which people carry out their livelihoods.  What is important to realise about decent work is that it does not prescribe a ‘one size fits all’ approach.  A decent work agenda for Italy and Ethiopia may look very different to the one for South Africa.
Our employment creation strategies must speak to the realities of the South African economy and labour market.  Our priorities in the area of social protection must address the gaps that we find here.  The South African constitution, the Labour Relations Act and Basic Conditions of Employment Act provide a strong floor of rights and standards. 

Equally, we have a very good framework in our legislation for governance and social dialogue, although we may need to find ways of strengthening our practice of social dialogue.

In pursuing decent work in our context, it is our national priorities that must shape our response going forward.  The Framework agreement between the social partners on how to respond to the international economic crisis simply says:

“By decent work we mean the need to increase the level of employment as well as improve the quality of jobs.”[2]

Decent work is, therefore, a package deal, an integrated way of looking at work in our society in conditions of freedom, equity, security and human dignity.  And we already have some targets, the most important of which is the target of halving unemployment by 2014.  

Let me now turn to the priorities of the Department of Labour over the next year.

The Department will, in the 2011/12 financial year focus on the following strategic areas:

Reviewing and submitting to Parliament amendments to labour legislation – the Basic Conditions of Employment Act, Employment Equity Act, Labour Relations Act and a new Employment Services Bill.  Our aim is to create a policy framework to promote decent work, and a policy framework for the provision of public employment services which will enable government to maintain a database of job seekers and job opportunities, as well as matching and placement of job seekers. The Department will during the 2011/12 financial year consult with stakeholders and on conclusion, present the bills to Parliament.  The Occupational Health and Safety Act 85 of 1993 pre-dates the Constitution of the Republic and requires updating, in certain areas.  The Department intends to repeal this legislation and replace it with new OHS legislation to ensure a safe and healthy working environment and to protect workers against hazards associated with their work or use of machinery.

Strengthening Inspectorate - The Labour inspectorate will be strengthened to monitor and enforce compliance with legislation to ensure that decent work principles are adhered to and address vulnerability in the labour market. 
The department was allocated R60 million in the two outer years of the Medium Term Expenditure Framework by National Treasury for the creation of additional inspectors’ posts at specialist levels.

Reduce inequality and discrimination in the labour market through effective compliance monitoring and enforcement of the Employment Equity Act and this Act is currently under review.

Improve access to social security services provided in terms of the Compensation Fund and Unemployment Insurance Fund; including reintegration of workers into the labour market.

These areas of activity will be our priority.  On the one hand, they link directly to improving the policy framework that governs and regulates the labour market. Improving the regulatory framework is a key to laying the basis for greater equity and for reducing inequalities. 
On the other hand, the department’s focus areas for 2011/12 will aim to reduce the decent work deficit through improved enforcement and efforts to ensure compliance with our labour laws. 

Various branches and public entities within the department have outlined plans to contribute to creating jobs, saving jobs in identified distressed companies and sectors and placing in excess of 2 million work-seekers in jobs over the period 2011/12 through to 2013/14.   Interventions planned by the department involve training, re-skilling of workers in order to give them capacity to compete in the open economy. Funding to be provided through the Compensation Fund and Unemployment Insurance Fund will include:

A continued investment of  R 9 billion of the R26,5 billion portfolio in commercial and Socially Responsible Investments by the Compensation Fund;
A continued investment of R 44 billion of the R52 billion portfolio in commercial and Social Responsible Investments  by the Unemployment Insurance Fund

The Unemployment Insurance Fund has set aside R1 billion over the 2009/10 – 2013/14 medium term period for the schemes that are aimed at re-integrating unemployed UI Fund beneficiaries back into employment.  The scheme is funded by the Fund and involves participation by various Sectoral Education and Training Authorities in re-skilling the unemployed in critical scarce and soft skills.

In order to further assist in preventing retrenchments, the UI Fund has committed R1. 2 billion towards the Training Layoff Scheme. This scheme is designed to provide support to companies in distress that intend to retrench employees. 

Productivity South Africa’s Social Plan will be given R290 million in funding over the period 2011/12- 2015/16. This is funding that will go towards providing assistance to companies in distress.

The Public Employment Service branch of the Department has identified a number of interventions aimed at creating and sustaining jobs.  The highlights are as follows:

The department aims to refer 450,000 work-seekers for placement in jobs and other opportunities in 2011/2012 and in excess of 2 million work-seekers will be referred for placement in opportunities over the period 2011/12- 2015/16. This will be accomplished through the job matching exercise in the Employment Services System of South Africa known as ESSA.
Through the employer services functions the department aims to provide assistance to 51,500 workers in distressed sectors over the period 2011/12- 2015/16. 

There are 151,000 people from designated groups who will be placed in training and income generating opportunities over the period 2011/12- 2015/16. The total targeted group comprises of 10,000 Youth, 15,000 Women and 4,000 persons with disabilities.

The Sheltered Employment Factories, which fall under the Public Employment Services branch, aim to increase orders for goods leading to the creation of jobs for 3,500 people with disabilities over the period 2011/12- 2015/16. In addition, the Sheltered Employment Factories aim to accommodate more people with disabilities from disadvantaged communities as it previously accommodated only a certain category of ex combatants.

About 3,200 learners will be recruited over the period 2011/12- 2015/16 to participate in Sheltered Employment Factories’ Centre of Excellence with the view of training them as mentors and placed in both the Sheltered Employment Factories and in the open economy. 

In addition to contributing to job creation during 2011/12, the Strategic Plan of the Department outlines a number of ways in which the Department intends improving its efficiency and service delivery.  I will not list all of these, but examples include:
improvements in the time taken to finalise compensation claims;
improvements in the processing of claims for unemployment insurance benefits;
increased sale of products from the sheltered employment factories;
a campaign aimed at reducing exposure of workers to silica dust, and;
eliminating the department’s vacancy rate. The Department has employed Director General, Nkosinathi Nhleko who has undertaken to eliminate vacancy rate within this financial year.

We are also looking forward to hosting the 12th Africa Regional meeting of the International Labour Organisation (ILO) during October 2011.  This meeting will be attended by a number of Heads of State of African countries as well as the Director General of the ILO.

Chairperson, the department has been allocated R1.98billion for the 2011/12 financial year.  This represents an 11 percent increase to the 2010 baseline.  The bulk of the increase goes to conditions of service improvements and to the budget of the Commission for Conciliation Mediation and Arbitration (CCMA). 
In closing, Chairperson, let us recall the words of our former President, President Nelson Mandela, who called on all of us – in his first State of the Nation Address as President of South Africa – “to regard labour as a resource and not a cost”. 

As the economy begins to recover and as we strive to make 2011 the year of job creation, we would be well advised to bear this in mind that in creating the many new jobs that government is committed to, we cannot treat labour only as a cost factor.  We need always remember that labour is a very special commodity. 

Workers, like all of us are entitled to rights, to dignity in the workplace and to conditions of decent work.
Chairperson, allow me to congratulate all political parties and their supporters that participated in the recent local government elections for the wonderful manner in which they conducted themselves during the election campaign period and on the Election Day.

Honourable Members of this house,
I hereby put forward before you the Budget of the Department of Labour which I highly commend.
I thank you.


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