Labour: Minister's Budget Vote Speech


08 May 2012

Department of Labour, Ms MN Oliphant gave her Budget Vote Speech on the 8 May 201


Honourable Speaker
Honourable Members of Parliament
Esteemed Guests
Ladies and gentlemen

This is the second Budget Vote I have had the privilege to deliver in this august house. I rise on this occasion Honourable speaker in admiration of the role that ordinary workers have played in the struggle for what is now a free South Africa.

The historical unity of workers and their alignment with the liberation movement has continued to be a source of strength going back to the days when factory floors were turned into potent platforms of mobilisation of our people’s struggles.

When the ANC entered the gates of these hallowed chambers, a lot changed for the workers – for the better. We moved with great speed to scrap discriminatory pieces of legislation in the process consolidating various pieces of labour legislation from fifty three (53) in 1994 to nine (9) currently.

Our government has worked tirelessly to give expression to the old injunction of the Freedom Charter that there shall be work and security. This injunction is echoed in International Labour Organisation’s Decent Work agenda which we have adopted in this country.

By decent work we mean work pursued under the conditions of freedom, equity, security and human dignity – the very ideals that drove and continue to drive the peoples’ movement which is now celebrating its centenary.

Honourable speaker

Allow me to re-emphasise the mandate of our department which directs us:

To regulate the labour market through policies and programmes developed in consultation with social partners, which are aimed at: improved economic efficiency and productivity; employment creation; sound labour relations; eliminating inequality and discrimination in the workplace; alleviating poverty in employment; 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.

This has particular resonance for the coming financial year as we will watch closely the passage of the Labour Relations Amendment Bill, 2012 and the Basic Conditions of Employment Bill, 2012 through Parliament. When enacted, these bills will change the way we regulate the labour market.

I indicated in the Budget Vote last year that we would review and submit four Bills to Parliament by the end of the 2011/2012 financial year. Consultation and negotiation on the Labour Relations Amendment Bill and the Basic Conditions of Employment Amendment Bill have taken longer than expected, but they are now with Parliament for your consideration.

Once the amendments to the LRA and BCEA have been promulgated, we will, for the first time, be enhancing protection to cover those workers who work in temporary work, in part-time work and on fixed-term contracts. It has been estimated that the number of atypical employees has grown from 1.5 million to 3.89 million between 2000 and 2010. This means that approximately 28% of employed people in South Africa are in atypical employment. The extension of protection and prohibition of abusive practices experienced by these workers is therefore a very significant step.

While the main thrust of the amendments to the LRA and the BCEA is to address labour broking and atypical employment, there are a number of other important amendments intended to improve the legal framework, to enhance the functioning of labour market institutions and to deal with labour relations problems that have developed.

Amendments to the Employment Equity Act and the new Employment Services Bill are currently being considered by NEDLAC and these should reach Parliament in the not too distant future.

In addition to these legal changes, department, on the advice of the Board of the Unemployment Insurance Fund, is considering improving unemployment benefits through innovative changes to the benefit structure. These changes will be introduced through a proposed bill which I intend taking to Cabinet and bringing to Parliament thereafter.

We are embarking on a new phase of regulation of the labour market, but also a new phase of enhanced legal and social protection. These changes are necessary to deal with current realities in the South African labour market and to pursue government’s vision of employment creation and decent work.

Let me turn to the achievements of the Department during the previous financial year.

DoL achievements during the previous financial year

During 2011, the Department took a number of steps to strengthen the organisation and administration of the Department in order to improve its efficiency and service to participants in the labour market.

It is worth noting, honourable speaker, that the Department received an unqualified audit for the 2011/2012 financial year which provides an important basis for our sound administration. This was a first in six years.

Key senior management positions have been filled during the previous financial year, including that of Deputy Director-General for Corporate Services and the Chief Information Officer.

We have initiated projects in seven key areas to provide a focus for the activities of the Department and to strengthen the functioning of the organisation where necessary particularly in:
Turnaround strategy for Compensation Fund
DoL Organisational Review
ICT Strategy
Redefining Public Employment Services
Redefining professionalisation: IES
As the National Planning Commission has argued in the National Development Plan, without a capable state, the development plans for the country will not be realised.

The Department of Labour intends to rise to this challenge and to ensure that we have a capable entity by the end of the current MTEF period.

Inspection and enforcement services

During the past year, the Department has managed to carry out inspections at 139, 150 workplaces throughout the country. Furthermore 35,327 notices were issued to ensure compliance with labour laws and 1023 prohibition notices were served on companies not complying with labour laws.

The Minister has been leading some of these inspection blitzes in eight provinces in the agricultural sector – chosen because farmworkers are defined as some of the most vulnerable workers in our country.

During these inspections, it became clear that in reality most of the farmers want to comply with the legislation. In fact, honourable members, we were confronted with a heart-warming situation whereby a farmer demanded that we inspect his area of business.

He had not been scheduled for inspection but he insisted and we complied. After inspection, he promised to rectify the four things the inspectors were unhappy about. A follow up has shown that three of the four issues have been addressed adequately. He now awaits an electrician to issue the certificate of compliance.

It has also been our experience that some farmers go beyond the minimum wage and in general treat their workers with dignity. However, I have also been horrified at the treatment of workers in other areas especially in regard to the living areas that they occupy. Some of these places do not deserve to be called living areas.

In general, our inspectors report a relatively high compliance rate, often over seventy percent. The reach of our inspectorate remains limited however, given that they are few in number in relation to the large number of establishments in the formal sector - both public and private sector establishments. The Department currently employs 1 018 inspectors.

I would like to take this opportunity to thank the chairpersons of the Portfolio and Select Committee on Labour for their unflagging support during these visits. Organisations representing farmers have also shown their willingness to help their members to be compliant. Together, we will achieve more.

Honourable members

Discussion has been initiated during the past year in NEDLAC on the possible ratification of ILO Conventions 81 and 129. These deal with inspections in industry and commerce and agriculture respectively. Once concluded, we will consider ratification of these conventions to bring our inspection activities within the framework of international good practice.

Efforts are also continuing to train and upgrade the inspectorate so that they are able to enforce compliance with legislation to ensure that decent work principles are adhered to and address vulnerability in the labour market.
The Department has been fortunate to have had the assistance of ILO in providing training and development for the inspectorate and we look forward to this continued collaboration.

Public employment services

The previous financial year saw significant changes in the Department with the transfer of skills development functions to the Department of Higher Education and Training.

Up to the end of December 2011, our employment services managed to register 403 482 job seekers. Not surprisingly, the majority of job seekers come to Labour Centres in Gauteng (135 651), followed by KwaZulu-Natal (76 261) and the Western Cape (71,571). The service managed to assess and profile 139,428 job seekers and a further 64,798 were referred to employers or placed in vacancies reported to the Department.

Our employment service also increased the number of workplaces registering their vacancies on the ESSA data base system and registered 1053 new private employment agencies.

It is a pleasure also to report that the Sheltered Employment Factories that fall under the Department and that employ more than 1000 persons with disabilities, increased their sales by 5 percent between 2010/11 and 2011/12.

Unemployment Insurance Fund

Honourable members allow me now to highlight to you the work that has been done by the Unemployment Insurance Fund, which has become an example of excellence in relation to service delivery.

Unemployment Insurance, as a social security mechanism, is an important pillar of the Anti-poverty Strategy aimed at ensuring a “better life,” and is a key component of the Decent Work agenda of Government.

For the period ending March 2012, 705, 856 workers accessed the unemployment safety net. The UIF paid more than R5.6 billion in benefits to these workers. This is over and above other efforts the Fund has contributed to, to assist the unemployed with training and job creation.

On the technology front, the UIF has embarked on a new initiative called the Virtual Office, which will allow those employees who have access to the internet, to apply for UIF benefits online.

The new system electronically connects the unemployed with their former employers and provides for:-
real-time declaration of earnings and employment histories;
speedy claim processing
Tracking of all claims through the issuing of unique reference numbers.
This service will save time and cost. And it will be transparent and secure.
This new service will soon be launched and this will be another example of government making use of technology to improve service to its clients. The new virtual office will also enhance the performance of the Labour Centres, many of which are achieving their targets for the turnaround time of claims.

I spoke last year about the socially responsible investments of the UIF which are intended to contribute to job creation.

During the period under review, the Unemployment Insurance Fund together with the Industrial Development Corporation (IDC) enhanced their strategic relationship and interaction. In addition to the R2 billion 5-year private placement bond that was issued by the IDC, and in turn subscribed by the UIF in April 2010, the UIF approved in principle 4 additional bonds of R500 million each to be registered by the IDC and taken up by the UIF.

The first R500-million bond was approved in August 2011 and the second and third bonds were approved in December 2011 – a total amount of R1.5 billion in socially responsible investments. These funds are available to start-up businesses and also support the expansion of existing businesses. Based on approved business plans, the first two bonds have supported the creation 15,056 jobs and the saving of a further 18, 637 jobs.

Up skilling of the unemployed and the UIF beneficiaries through training is needed to improve their chances of re-employment. The training and Social Plan funding is executed in close relationship with the National Skills Fund (NSF), the various Sector Education Training Authorities (SETA’s) and Productivity South Africa.

The Fund budgeted an amount of R210 million for 2011/12 of which R19.46 million had been spent as at end December 2011. R660 million has been budgeted for various training and re-integration schemes over the 2012/13 -2014/15 medium term expenditure period.

With reference to the Training Lay-Off Scheme, the Fund signed funding agreements to the value of R31.11 million from the inception of the scheme up to 31 December 2011 and has paid R9.55 million in training allowances to participating employers and employees. Through the Training Lay-off Scheme, the Fund has assisted 18 companies and 4,330 workers.

Very recently the Training Lay-off played an important role in saving 793 jobs at SAPPI (Pty) Ltd by serving as an interim measure to give relief while a package of possible incentives and initiatives to boost the paper sector were considered by the relevant government departments. The company and the unions involved.

An amount of R600 million has been budgeted for the Training Lay-Off scheme over the 2012/13 – 2013/14 medium term expenditure period.

Compensation Fund

The implementation of the Compensation Fund turnaround strategy aimed at improving and fast-tracking service delivery is at an advanced stage.

The Compensation Fund is currently enhancing the Integrated Claims Management and Financial Management systems, these new IT systems will improve the turnaround time in processing of claims and improve service delivery. It is projected that compensation benefits amounting to R3, 2 billion would be paid by the end of 2011/12 financial year.

To bring services closer to all South Africans, the Compensation Fund has restructured and designed a new Organisational Structure. The CF Organisational Structure has been approved at all levels and will be implemented in the new financial year.

This will also enable decentralisation of all Compensation Fund services to all Provinces. Although decentralisation has been piloted in a number of Provinces, the Fund aims to fully decentralise its service to two Provinces in this financial year.

The Fund is aiming to increase revenue collection through web-based registration of employers, electronic submission of the Return of Earnings (ROE) and employer assessments – details of which will be announced in the next few days.

While the web-based submission of ROE’s would be implemented in the first quarter, electronic submission of medical accounts and provision of pharmaceuticals is targeted for the second quarter.

The total investments of the Fund are currently at R28 billion with reserves amounting to R15 billion. The Fund allocated 5% of its total investment, which amounts to R1,4 billion, to alleviate unemployment through Socially Responsible Investments. This will contribute to job creation and infrastructure development.

The Compensation Fund has also given strong emphasis to internship and learnership programmes during the last year, including those targeting youth, women and people with disabilities.

The Rehabilitation and Re-integration Policy has been developed and the next step will be consultation with all relevant stakeholders. This Policy Framework is aimed at promoting rehabilitation, reintegration and return to work of injured and diseased employees through; case management, re-skilling and other compensatory mechanisms.

The development of the policy has raised the need for amendments to the Compensation for Occupational Injuries and Diseases Act (COIDA), of which certain sections to be considered for amendments have been identified. The COID Amendment Bill is being drafted and the Policy Framework will then be submitted to NEDLAC for discussion.

As part of a broader communication strategy, the Compensation Fund will continue with its provincial educational campaigns in the new financial year.

These road shows are aimed at improving relations with all stakeholders and providing guidance on the Fund’s services, as well as targeting stakeholders through relevant channels.

Labour Relations

In the area of labour relations, as I have already mentioned, the past year has seen the conclusion of discussions at NEDLAC on the Labour Relations Amendment Bill and the Basic Conditions of Employment Amendment Bill. Although this has been a long process, I am confident that Parliament will now be considering legal amendments that will improve worker protection and enhance security of employment.

The bills are an important part of our work in the area of labour relations, but the Department has also concluded reviews of six Sectoral Determinations, including those for the farm and domestic work sectors.

An investigation has been initiated to determine the feasibility of introducing an appropriate retirement savings vehicle for vulnerable workers, especially in the farming and domestic work sectors. If we are able to put in place a retirement savings scheme for these workers, it will begin to promote a culture of saving for retirement among low income earners.

This initiative is intended to assist and complement government’s broader social security reform initiative and is not intended to further fragment savings arrangements in South Africa.

NEDLAC is also dealing with Convention 189 which seeks to provide decent work for domestic workers. Once concluded, we will move with required speed to ratify this convention.

On the international front, the department received a delegation from South Sudan, a newly independent state. The Sudanese were on a wide-ranging fact finding mission on labour issues which saw them consult with almost all the entities of Labour. This trip was funded by the ILO.

We also received a delegation from Swaziland. They have been impressed with the work of the Commission for Conciliation, Mediation and Arbitration and wanted to benchmark the success here at home with their own work. Clearly, our successes are the new export currency and we are proud to make a meaningful contribution to the African renewal agenda.

Finally, between 11 and 14 October 2011, the Department successfully hosted the 12th African Regional Meeting of the ILO.  The meeting was attended by a number of Ministers and leaders of employers’ and workers’ organisations from the African continent. Importantly, it was the last African Regional Meeting to be attended by the ILO Director-General, Mr Juan Somavia, who will retire later this year.

The meeting recognised the progress that had been achieved in implementing the Decent Work Agenda in Africa, while acknowledging that some targets lagged behind, in particular those related to gender equality, youth employment, migration, forced labour, HIV and AIDS at the workplace, social protection and implementation of international labour standards. 

The problem of youth employment and HIV/AIDS at the workplace are also important challenges for the South African Decent Work Country Programme.

In his address to the Regional Meeting, the ILO Director-General said:

“For many observers Africa is turning a corner. Growth is back. Exports are growing. Foreign direct investment is flowing. However, as the representatives of the real economy here assembled, you also know that below the surface of this growth optimism, the undercurrents are still very strong.

Decent work deficits, strong inequalities, persistent poverty, increasing informality, gender discrimination are some of the major challenges in the daily reality of African people. Yet in every one of these fields, you also have success stories. But it is difficult every step of the way. It’s like swimming against the current.”

In many ways, these sentiments characterise the past year in the South African labour market very well. While we have had some success, particularly in the positive employment gains during the second half of the year, we have yet to reverse the job losses of the previous two years.

The Honourable President of the Republic Mr Jacob Zuma echoed these sentiments at the same conference. He said:

“To promote decent work in Africa will require coordinated policies that make employment the main priority.  The basics for putting job creation in an upward trajectory are proper infrastructure development, a well-functioning education system and social and government services that support inclusive growth.”

Honourable members

We will continue to swim against the tide. Let me now turn to the priorities of the Department of Labour for the remainder of the current year.

Department of Labour strategic priorities, 2012/2013

In the Estimates of National Expenditure introduced by the Honourable Minister of Finance, the Department of Labour has been allocated R2, 1 billion for the 2012/13, financial year.

The spending focus over the medium term will be on protecting vulnerable workers, reintegrating work seekers into the labour market and ensuring decent work. However, in order to perform against this mandate, the officials of the Department of Labour need to be equipped, both financially and technically, to perform their duties at the respective places of employment of the people of South Africa.

Increases to the Departments allocations have mainly been in respect of transfer payments to public entities, the CCMA, NEDLAC and Productivity SA, with concomitant increases to compensation of employees, in line with collective agreements committed to in this respect.

The increases to the budgets of the public entities that fall under the Department of Labour are much needed. All three make a critical contribution to the smooth functioning of the labour market. I am also pleased to remind members of the House that the CCMA won a gold award in the Public Service Excellence Awards during 2011.  This is the third time that the CCMA has won such an award.

While we need to strengthen role of all labour market institutions, it should be noted that in times of high unemployment, the workload for the Department of Labour also increases as there are growing pressures in the labour market.  Unfortunately, our budget allocations have not provided much room for expanding services and extending direct support to job seekers, in particular.

In the year to come, the Department will face the following challenges in its administration and organisation:
1.The IT-PPP contract will expire on 30 November 2012.  In this respect, the Department will need to ensure that it is in a position to continue its operations seamlessly, through the correct management of the Exit and Transfer of Services Strategy, as contained in the contract.
2.The Department has also taken a decision to withdraw from the current Transversal Contract on the provision of transport, and has opted to perform this function internally. This is aimed solely at obtaining a more cost effective mode of providing this much needed facility.
3.An Organisational review of the Department will also be undertaken during the 2012/13 financial year. This will be performed by an independent service provider, aimed at ensuring the optimal utilisation of positions within the Department’s establishment.

As part of our contribution towards alleviating unemployment, the department has prioritised a number of interventions and initiatives aimed at influencing policy coherence, improving access to employment, creating new employment opportunities and preventing loss of employment.

During the 2012/13 financial year:
-The Department of Labour will participate in the 101st ILO Conference General Discussion Session on Youth Unemployment. We hope that conclusions reached at this conference, will assist the country in addressing its share of youth unemployment.
-We have also been very active in the G20 Ministers of Labour and Employment Task Team that deliberated extensively on various challenges and successes, approaches, programmes and schemes that could address unemployment. We will continue our participation in our effort to finding lasting solutions to address the plight of our young people. We have made a number of recommendations on youth unemployment and we are awaiting the G20 Heads of States to make a pronouncement in this regard during their June 2012 Summit under the Mexican Presidency.
-As part of our contribution towards the infrastructure development programme announced by the President during his State of the Nation Address, I have instructed the DG, and the Boards of both the Unemployment Insurance Fund and the Compensation Fund, to review our current investment mandate with the Public Investment Corporation (PIC). A certain percentage of the current billions reserves should be invested in projects that are more biased towards employment creation projects. Within a year or two, the Minister of Labour should be able to stand before this house and report on the total numbers of jobs created as a result of deliberately changing the investment mandate.

Finally, 2012/13 is going to be a year of improving worker protection and employment security.

Honourable speaker

As mentioned earlier, one of our priority areas will be in the review and amendments of various legislation. Should Parliament choose to pass the amendments into law, it will be business as usual for many existing temporary employment agencies whose labour practices and those of their clients are in line with what the amendments seek to achieve.

Implementing the amendments to the LRA and BCEA will be a key priority for the Department as soon as they are passed by Parliament. At the same time, the amendments to the Employment Equity Act and the new Employment Services Bill will be strategically important for the Department during 2012/2013.

These areas of activity will be our priority as they link directly to improving the policy framework that governs and regulates the labour market. Improving the regulatory framework is key to laying the basis for greater equity and for reducing inequalities.

On the other hand, the department’s focus areas for 2012/13 will aim to reduce the decent work deficit through improved enforcement and efforts to ensure compliance with labour laws.

Workers, like all of us are entitled to rights, to dignity in the workplace and to conditions of decent work.

The report of the Director-General to the 12th ILO African Regional Meeting was called: “Empowering Africa’s Peoples with Decent Work.” I think it would be a fitting tribute to Mr Juan Somavia to ask members of Parliament to “Empower South Africa’s People with Decent Work”. You can do so by giving your attention to the legislation that we have put in front of you and, hopefully, to support our proposed amendments at your earliest convenience.

I would like to finally commend the budget of the Department of Labour to the honourable members of this house.

I thank you.


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