Minister of Employment and Labour Budget Speech & response by DA
10 Jul 2019
Minister of Employment and Labour, Mr Thulas Nxesi, gave hisBudget speech on the 10th July 2019
- Honourable Chairperson and Members of the Portfolio Committee on Employment and Labour
- Deputy Minister
- Leadership of organised labour, organised business and community organisations
- The Director General and Senior Management of the Department
- Members of the media
- Honoured guests and member of the public
Let me start with a question: what are the implications of the reconfiguration and renaming of the Department? Clearly, this reflects that the priority for this 6th Administration is jobs.
The renaming and reconfiguration of the Department reflects the refocusing from purely labour regulation and labour relations to the transformation of the labour market, employment and conditions of employment. We cannot achieve this alone. We continue to depend on the private sector to propel employment. This is why the President’s investment drive is so important.
So let me share with you our thinking on the role of the reconfigured Department.
First, where we can, we will leverage the resources of the Department – and of our entities – which are our labour market instruments - the UIF (Unemployment Insurance Fund) and the CF (Compensation Fund) – to preserve jobs and to invest in job creating initiatives.
Second, as the Department, we provide coordination and seek to collaborate and align our efforts with other Departments and agencies both to create jobs and to ensure that our people get the skills required in the market place.
Third, we intensify efforts to strengthen the labour market through the variety of tools at our disposal and in line with the Vision of the Department to [Quote] “strive for a labour market conducive for investment, economic growth, employment and decent work”.
This must include doing away with red tape. However, it does not mean reducing workers’ rights as proposed by the Opposition, which constantly exaggerates a perception of the supposed rigidity of the labour market. Indeed, research indicates that there is a relatively high level of re-allocation and easy movement of labour between firms.
In the current situation of deep systemic unemployment and slow growth, government has to use its active labour market policies to improve access to jobs and skills.
Let’s go to specifics.
Our Public Employment Services Branch has been allocated R611 million rand to drive the implementation of these active labour market policies – including providing free career counseling, retraining and upskilling, job placing, and providing subsidies to support workers with disabilities in employment. [This includes 13 factories, under the Supported Employment Enterprises programme producing high quality furniture and linen. They need to be supported by all government structures, as well as the private sector.]
In addition, we will establish 10 specialized Youth Centres over the coming two years – in addition to our existing 126 Labour Centres. [In fact, we are officially launching the first of the Youth Centres at 13h00 today, nearby, at 22 Parade Street. Portfolio Committee members are welcome to join us.]
In this financial year, we will also ensure that our passive labour market tools - mainly the Unemployment Insurance Fund strengthen our Labour Activation Programme to focus on the following:
- vocational and remedial training for the unemployed;
- programmes for youth in transition from school to work, including apprenticeships and some 130,000 learnerships over three years
Also, subsidized, targeted measures to provide employment including:
- hiring subsidies - paid to private-sector employers; and
- Assistance to unemployed persons who wish to start their own businesses.
- As part of transformation, funds have been allocated to three new black Asset Management Companies.
To achieve this, the UIF has budgeted R 7.9 billion rands over the next three years. The focus is to fund jobs, not just training.
The Department will form partnerships with employers and training institutions – particularly in collaboration with the Department of Higher Education and Training - to address the future skills needs of the labour market. The President has said that we must train the youth for the digital jobs which are expected to be created in the wake of the Fourth Industrial Revolution.
The President has flagged the need for Social Dialogue and a Social Compact. NEDLAC is critical to this. The Department will consult with all social partners to review the constitution of the Council to promote greater inclusivity. Governance challenges at NEDLAC – which resulted in disciplinary processes against senior officials - are being firmly addressed.
Honourable Chairperson, in October 2018, a Presidential Jobs Summit was convened by NEDLAC. Of the 77 commitments made, 70% are on track for implementation. I should mention that in contrast to previous Summits, a Monitoring and Evaluation tool was put in place to track outcomes.
Already these interventions have resulted in saving jobs, through the Training Layoff Scheme, and via a sizeable investment from the UIF’s High Social Impact Fund. R1.2 billion rand was invested in Edcon preventing the loss of 140,000 direct and upstream jobs. I should mention that the investment comes with strict conditions to guarantee the investment capital and a sustainable turnaround in the business.
Honourable Chairperson, it is worth noting that the Ministers of Employment and Labour in SADC have agreed to develop a Regional Labour Migration Policy by the end of 2019. In turn, the Department will finalise a new national migration and employment policy in consultation with all social partners.
Honourable Chairperson, we preserve jobs by improving the productivity and competitiveness of our businesses. Productivity South Africa, an entity of the Department, has done sterling work in assisting SMMEs through its Turn Around Solution Programme. The Department is currently reviewing the funding model, so that Productivity SA can expand its work.
Honourable Chairperson, a stable labour market is necessary for creating a conducive environment for investment. Recent amendments to the Labour Relations Act address strikes or lockouts that are intractable and violent. These provided for the establishment of an advisory arbitration panel. The Commission for Conciliation Mediation and Arbitration (CCMA) is responsible for implementing these measures.
This year marks 22 years of the existence of the CCMA, and saw the enactment of the long-awaited National Minimum Wage Act and Employment Law Amendments, expanding the jurisdiction of the CCMA to provide protection to the most vulnerable workers.
Honourable Chairperson, some 194,000 cases were referred to the CCMA during 2018/19, compared to 187,000 referrals in 2017/18. This large caseload is indicative of the failure by both business and labour to moderate workplace conflict. Nevertheless, this institution continues to serve a critical role in stabilizing labour relations.
Honourable Chairperson in pursuit of social justice and a transformed labour market, the Department published the Employment Equity Amendment Bill (2018) for public comment. The 2018 Employment Equity report reflects that at Top and Senior Management levels, women only account for 23.5% and 34.5% respectively, whereas persons with disabilities remained at 1% across all sectors of the economy.
The National Minimum Wage was initially set at R20 per hour. This is not enough to lift people out of poverty, but it is an important start, and indications are that some 6 million workers will benefit. Inspections, to date, indicate a high compliance rate with only 7% of employers failing to pay the prescribed rate.
Prophesies that wholesale retrenchments would follow the introduction of a National Minimum Wage were not borne out. An expected massive spike in CCMA cases has not occurred. By the end of September, the National Minimum Wage Commission will publish research into the impact of the changes on employment, poverty levels and wage differentials.
The EE Amendment Bill will be prioritised for tabling in Parliament - to regulate the setting of sector specific employment targets to address the gross under-representation of blacks, women and persons with disabilities. In addition, it will also ensure that an Employment Equity Certificate of Compliance becomes a precondition for access to state contracts. R1.2 billion rand has been budgeted for this programme.
Despite carrying out 167,000 inspections during the current year, we don’t have adequate numbers of inspectors to reach every workplace. We rely on the activism of shop stewards and the public to be our eyes and ears, as well as the good will of responsible corporate citizens.
During the course of this financial year, we will be adding 200 inspectors to the current team that is working to ensure implementation of the national minimum wage. With the DM and the DG we will be launching a blitz of inspections in the near future. Honourable members of the Portfolio Committee are welcome to join us.
Our Inspection and Enforcement Services Branch has been allocated a budget of R628 million for the current financial year.
Honourable Chairperson, I cannot over-emphasize the importance of social protection in our fight against poverty. As part of government’s entrenched labour market policy, the UIF mitigates the effects of retrenchments. Recent amendments to the Unemployment Insurance Amendment Act will:
- expand the coverage and period for UIF beneficiaries from different industries such as domestic workers, interns and those in learnerships;
- increase the income replacement rate for maternity benefits to 66%;
- extend a contributor’s entitlement to benefits under certain circumstances; and
- finance employment services.
Average turnaround time of payment of UIF claims has been shortened from 10 to 7 days.
The UIF also contributes to fighting poverty and unemployment, in that 20% of its Social Responsibility Investment (SRI) Fund is invested in high impact job creation business ventures across all sectors and provinces. To date, almost R17 billion has been allocated to the SRI investments, which has in turn created 23,442 jobs.
Honourable Chairperson, the recent ILO Conference resolved that Occupational Health and Safety be elevated to a fundamental principle and right.
Once again we face the limitations of inspection and enforcement in the field of health and safety.
Let me mention the good work done by media in exposing the non-compliance and failure to report accidents by employers. My Department is processing the compensation claims of the injured persons concerned.
Earlier this year, we launched a campaign to encourage those who have suffered workplace accidents or diseases, and where claims were not processed, to report this to our Labour Centres. Furthermore, during this year we will appoint an additional 500 occupational health and safety officers.
Honourable Chairperson, the Department has worked tirelessly to restructure the Compensation Fund and there have been real improvements. We will soon present to this House amendments to the Compensation for Occupational Injuries and Diseases Act (COIDA) to make provision for the inclusion of domestic workers, and to fund rehabilitation in order to return to work.
R17.1 billion has been paid out to beneficiaries by the Compensation Fund in the last year. Whilst this mitigates the effects of injuries and diseases, and represents a large injection into the economy, it is also a clear indication of the failure to prevent workers’ exposure to occupational injuries and diseases.
Honourable Chairperson, the Compensation Fund also contributes to fighting poverty and unemployment, in that 10% of the Fund’s R42 billion surplus is invested in high impact job creation business ventures across all sectors.
I commend the Department on its efforts to meet the annual performance targets, with an 80% score. Building on the solid foundation laid by my predecessors, we will continue to strengthen oversight and governance structures.
My, thanks to the staff of the Department, the DG, and the Deputy Minister who will present on the service delivery aspects of the Department.
Finally, my thanks to my wife and family for the continued support.
In summary, our priorities are:
- Employment creation and preservation by leveraging Government’s labour market tools;
- A labour market conducive to investment – based on stability, appropriate skills and employment incentives;
- Social justice based on social dialogue, backed up by enforcement;
- Again, more jobs.
Honourable Chairperson, I therefore table the budget of the Department of Employment and Labour.