NEDLAC, CCMA, Productivity South Africa: Strategic Plans & Budgets 2009/10

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Labour

11 June 2009
Chairperson: Ms. L Yengeni (ANC)
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Meeting Summary

NEDLAC briefed the Committee on its current status and work plan. There was a possibility that NEDLAC would be moved to the Department of Economic Development. The briefing covered the  leadership, finance and development, the mission and structure of NEDLAC. A major issue concerned what could be done to ensure that companies did not too soon or unnecessarily resort to job retrenchments. The leadership team would also deal with broader macro-economic issues including monetary policy and the balance of payments constraints.

The work and projects of the Finance and Investment Team, the Employment Team, the Distressed Sectors’ team, the Social Policy team, the Trade, Investment and Industrial Development Policy workstream, the Labour Market Policy workstream, Development Policy workstream, and Fiscal and Monetary Policy workstreams were all described in turn. It was noted that special projects included a review of the growth and development summit agreements, the National Framework on the global economic crisis, issues around farm workers, agrarian and land reforms, social dialogue at the provincial level, and social dialogue in Africa and internationally. The income was reviewed and the point was made that NEDLAC did not receive comparable support to other similar agencies.  Finally the challenges for social dialogue were outlined as resurfacing adversarialism of the past, the tight timeframes allowed to finalise issues, and lack of flexibility from some government departments, or very tight mandates obtained from Cabinet that did not allow trade-offs. Policy coordination was also a challenge, sometimes NEDLAC would be sidelined and forum-hopping was also an issue.

Members raised questions on whether companies approaching NEDLAC might suffer a drop in their share prices, how this could be addressed, the possible transfer of NEDLAC to the Department of Economic Development, how NEDLAC would address labour broking and outsourcing, when NEDLAC had become aware of the challenges with its social partners, and what NEDLAC required of Parliament. Members noted that although Parliament could not intervene in NEDLAC’s problems, nor require people to use this forum, NEDLAC and Parliament could perhaps find a way to use NEDLAC’s skills more effectively. It was agreed that a further meeting would be needed to discuss this and spending issues. The question of job losses was addressed. Members asked whether the funding was sufficient, what role NEDLAC would play in Memorandums of Understanding, and how NEDLAC evaluated itself in the unemployment area.

The Commission for Conciliation, Mediation and Arbitration reported that the number of cases had increased and efficiency had improved significantly since its inception. The CCMA had managed to save a number of jobs related to cases which had been referred to the organisation. The economic recession had increased the number of job losses and increased the workload of the CCMA. Members asked about the success rate of the cases referred to the Labour Court, the slow turn-around time of cases in the Labour Court, and an alleged corruption case in Barberton involving a CCMA staff member.

Productivity SA explained that its role was to improve productivity in all sectors of the economy. Productivity SA was struggling to make itself known by most South Africans, and it was difficult to have a presence in all provinces due to capacity problems. Members’ concerns included the inadequate communication strategy of the organisation, the inability to make industry implement the recommendations of Productivity SA, the focus on only three provinces while ignoring the rest of the country. The number of women and youth owned SMMEs helped by the organisation was also questioned.

Meeting report

New Economic Development and Labour Council (NEDLAC) framework and work plans
Mr Herbert Mkhize, Executive Director: New Economic Development and Labour Council, discussed the background, mission, and structure of NEDLAC. He discussed the framework for South Africa’s response to the international economic crisis.

He noted that
the leadership team would use funding mechanisms, including proposal for a jobs fund. There was infrastructure funding including development bond. There was a high level engagement with other Chief Executive Officers in the financial sector. There was also consideration being given to what could be done to avoid companies resorting, too easily, early or unnecessarily, to retrenchment.  The leadership team aimed to deal with broader macro-economic issues including monetary policy and addressing the balance of payments constraints.

The finance and investment team was ensuring that at least R787 billion was raised for the public investment programme, which would be spent in projects with the largest social, employment and economic return. They sought to develop proposals to fast-track the public investment programme. They also sought to define the role of development finance institutions in public investment programmes, to identify additional sources of funding, identify priorities, financing and capacity constraints, and engage the financial sector on the flow of credit.

The terms of reference for the employment team were to develop proposals to avoid early or unnecessary resort to retrenchments, to address public sector related issues in the framework, and to expand the public works programme. They were training layoffs, using the Sector Education and Training Authorities (SETAs) and were addressing labour broking and outsourcing problems. The employment team was also working with the Unemployment Insurance Fund (UIF) to address the problem that employers might keep employees on their payroll although they were not working at the current time. NEDLAC wished to get benefits for these workers during the time that they were temporarily not being utilised and paid.

The Distressed Sectors’ team aimed to sustain local procurement, develop fast-response mechanisms for companies in distress, identify sectors in distress and develop strategic responses to them. They also aimed to improve sectoral coordination.

The Social Policy team dealt with the Emergency Food Relief Programme and the Food for All programme. It addressed cost-drivers in the food chain, and competition measures to address food prices. They were investigating community-based food production on a mass scale. They were fast-tracking spending on Fund for Social Relief of Distress. They were facilitating social transfers, the child grant and old age pensions.

The Trade, Investment and Industrial Development Policy workstream was reviewing the development finance institutions’ mandates. It was fast tracking the finalisation of the Cooperatives Strategy and the Implementation Plan. It was enhancing the role of multi-national companies on the African continent. There was targeted procurement for small enterprises. It monitored trade and illegal imports. It conducted bilateral and multilateral trade negotiations. It was conducting a World Trade Organisation (WTO) Trade Policy Review and European Economic Partnership Agreement (EPA). Mr Mkhize also noted that NEDLAC would play a role in the memorandums of understanding that were signed. Although he did not go into detail on every issue, he indicated that there was further detail in the attached documents.

The Labour Market Policy workstream dealt with social plan review, the Insolvency Bill, Labour Court rules, the Immigration Act, issues of employment equity, the Superior Courts bill, the labour market policy review, the Decent Work country programme, skills development, human resource development strategy, social security, Section 77 notices, and demarcation disputes. Additional details were once again outlined in the attached documents.


The Development Policy workstream was dealing with the expanded public works programmes (EPWP) Phase II, HIV and AIDS, public transport, the anti-poverty strategy, the Food for All programme, land reforms and agriculture, human settlements, the Basic and Higher Education policy framework, comprehensive social security, xenophobic attacks and youth policy.

The Fiscal and Monetary Policy workstream was addressing the state of the South African economy, with regard to the fiscal policy, national budget processes, and the global financial crisis. It was in favour of comprehensive social security and retirement funds reforms. Additionally, it was involved in the National Poverty Measures and national poverty line, National Health insurance, the National Credit Act, the development finance institutions (DFIs), the Financial Sector Charter Council, education and promotion of savings, implementing the Finance Protocol for rural development, and renewal nodes. It was reviewing South Africa’s experience in managing the relationship between macroeconomic variables, such as exchange rate, prices and interest rates.

Special projects included a review of the growth and development summit agreements, the National Framework on the global economic crisis, issues around farm workers, agrarian and land reforms, social dialogue at the provincial level, and social dialogue in Africa and internationally.

Mr Mkhize briefly reviewed the income received by NEDLAC (see attached document) but did not address how the money was spent. He commented that NEDLAC did not receive comparable support to other similar agencies.

Lastly, Mr Mkhize addressed the challenges for social dialogue. There were positional stances that clouded the issues, such as the resurfacing adversarialism of the past. There were tight timeframes allowed to finalise issues and little flexibility from some government departments. Policy coordination was a challenge for NEDLAC processes. In some cases NEDLAC had found that it was being sidelined on key issues. There was an absence of a formal protocol with Parliament and forum-hopping. Finally, mandates obtained from Cabinet were too tight to allow space for trade-offs in the NEDLAC processes.

Discussion
Mr I Ollis (DA) asked for an explanation of the acronym ITEC. He also asked what the process was for a company to approach NEDLAC. He asked whether such approaches would affect share price, and what could be done about this dilemma.

Mr Mkhize responded that Mr Ollis had made a very valid point. Once the word was out that a company had consulted NEDLAC, this could well drive the share price down. Such an approach must be done very carefully. A public company would not have to come and file a formal application.


Ms F Khumalo (ANC) asked about the possible transfer of NEDLAC to the Department of Economic Development.

Mr Mkhize could not comment on the move from the Department of Labour to Economic Development. NEDLAC was not expected to play any rule in the implementation. For example, compliance with the legislation currently rested with the Department of Labour, and dispute resolution rested with the Commission for Conciliation, Mediation and Arbitration (CCMA). There were times that people expected NEDLAC to implement matters, whereas the truth was that they were unable to do so. NEDLAC did not have any problems with the legal framework of the Act.


Mr E Nyekemba (ANC) asked if the Act did not give power for NEDLAC to intervene with agencies. He also asked about the details of how it would address labour broking and outsourcing. He also asked when NEDLAC became aware of the challenges regarding the social partners that they worked with, pointing out that NEDLAC has been in existence for some fifteen years.

Mr Mkhize said that NEDLAC must try to find a way to address the concerns with labour broking. He noted that on 10 July a task team would meet, and this problem was on the agenda.


Mr P Chauke (ANC) asked what NEDLAC wanted from Parliament and whether it required a more special relationship. He asked if there was a problem with the current law-making process.

Mr W Madisha (COPE) stated that Parliament and NEDLAC must not be adversarial and must work together. He asked about the problem that the mandates obtained from Cabinet were too tight. He commented that NEDLAC needed to track its spending.

Mr Mkhize said forum hopping was a problem that had been in existence for a while. NEDLAC was an enabling body but people were not required to come and consult NEDLAC, nor could they be forced to do so. Forum hopping was therefore very difficult to control. He suggested that perhaps Parliament, when hearing of a problem that had not been through NEDLAC, should ask the parties why they had not made use of this opportunity. 

Mr
Nyekemba said that Parliament would not intervene with NEDLAC’s problems.

Mr Mkhize said that perhaps Members and NEDLAC were taking past each other on this issue, but that more time was needed for him to clarify the point later. He suggested that Members meet with NEDLAC another time to share some of the details of the presentation.

Mr Madisha asked about what increased funding might help. He asked what was being done about the unemployed, and how they know that the Unemployment Insurance Fund (UIF) money was being spent appropriately.

Mr Mkhize could not give a summary of the work in progress. It was not that NEDLAC was not doing anything. The approach that it had taken was that it was not going to wait until there was a grand plan to respond to the crisis. When NEDLAC decided to intervene with something, they would go ahead and do it. Not many people knew that the financial crisis was going to happen. It was not South Africa’s doing, and many of the public did not think that this financial crisis would hit South Africa. NEDLAC, meanwhile, had a plan for when it did influence the country.

Mr Mkhize then made the point that
NEDLAC tried to influence Parliament, where it could, but recognised that the lawmaking authority rested solely with Parliament. NEDLAC wanted to take advantage of the participative democracy, but was not asking for special treatment.

Mr Ollis said that Parliament needed to address how Members should use NEDLAC. NEDLAC was trying to say that it did not want Parliament to lose sight of NEDLAC’s existence, and, since it was created by Parliament, would like the opportunity to be used by it.

Mr Mkhize also noted that Parliament had nothing to do with a number of issues that appeared to be negative.

Mr A Louw (DA) said that the negative issues were something that needed to be dealt with.


Mr Nyekemba said that Parliament should schedule a meeting with NEDLAC and that Members needed the details of how NEDLAC’s money was spent.

Mr Madisha said that he believed Members needed to deal with some of the issues now.

The Chairperson said that if there were serious issues now, then they must be addressed.

Mr Mkhize said that the National Jobs Initiatives would be reverting with details about a Fund to help deal with the global economic crisis.

Mr Chauke said that only NEDLAC knew their plan and that they needed to tell Parliament.

Mr Mkhize said that that an audited statement would be provided by NEDLAC by the end of August 2009. NEDLAC had until September 2009 to submit their Strategic Plan.

He said that the UIF must play some role in mitigating the impact of job losses as a result of the global economic crisis. There were legislative limitations if they started to explore training layoffs. He explained that in a training layoff, the person was technically still on the payroll, but was not in fact working. The UIF and NEDLAC were exploring options of solving that technical limitation. Generally, there was a limited period (usually six months) for which people could receive benefits. NEDLAC was looking into the possibility of extending this time.

The Chairperson asked why NEDLAC’s R15 million budget was not considered enough.

Mr Mkhize said that there was a process that NEDLAC had to go through before asking Parliament for money. He said that he did not mean to imply that it was not enough. He simply meant to say that NEDLAC was not receiving as much money as comparable organisations.

The Chairperson asked what role NEDLAC played with Memorandums of Understanding (MOUs)

Mr Mkhize answered that he did not yet know what that role would be since NEDLAC had to define and clarify the social partners in the MOUs. However, it was clear that South African companies could not be permitted to treat their workers in other countries worse than they would treat their workers in South Africa.

The Chairperson said since she was new to the Committee’s work, she did not understand everything about the MOUs. She also pointed out that this was the first time the Committee was meeting with NEDLAC.

Mr Mkhize said that when the Department of Labour wanted an issue to be placed on NEDLAC’s agenda they needed to clarify exactly what was needed. 

The Chairperson said that she did not want to be a spokesperson for NEDLAC, but NEDLAC had to readjust their plans in light of the State of the Nation address recently made by President Zuma. She asked how NEDLAC had evaluated itself in terms of unemployment.

Mr Mkhize responded that jobs were incidental to doing business.  NEDLAC was working with businesses to create jobs. He believed that there was huge progress being made as a country, in terms of uniting all of the stakeholders behind one vision. NEDLAC’s role in creating the 500 000 new jobs had manifested itself in job retention at the present time.

The Chairperson said that NEDLAC needed to keep track of how much was being done, so Parliament could get a complete sense of what was going on.

CCMA briefing
Ms Nerine Khan, National Director, spoke briefly about the values, mission and the function of the CCMA. She outlined the structure of the organisation. Outlining their Strategic Focus Areas, she touched on the goals of the CCMA, which were measured by means of a scorecard. The goals were: the promotion of social justice through professional delivery services, while ensuring compliance with legislation at all times; user-friendly quality services delivered with speed; and operational effectiveness while ensuring services were cost effective. The Tsoso Strategy encompassed the setting of goals and strategic focus areas and measures that would guide the CCMA till 2010.

She spoke briefly about operational efficiencies at provincial level. Mpumalanga and the North West were the only two provinces that had not improved in operational efficiencies. She noted that the economic recession had led to many retrenchments and increased the workload of CCMA. The rise in caseload had not been matched by a rise in budget allocation. The majority of retrenchments were in the SMME sector. She hastened to add that despite these circumstances, her organisation would assist people as best as they could.

Discussion
Mr P Chauke (ANC) said that the whole country should guard against the collapse of the CCMA. He asked the CCMA delegation how did they expect the Committee do to help.

Ms Khan replied that her organisation had spoken with the Department of Labour and the Gauteng Provincial Government with regards to funding and the response was positive

Ms Niewhoudt-Druchen (ANC) enquired about the steps taken to help the deaf workers that approached the CCMA for help on labour matters.

Ms Khan replied that her organisation had been using sign language interpreters and continued to send personnel for sign language training. The CCMA would interact with sign language organisations in the near future.

Mr W Madisha (Cope) asked for clarity on the 500 000 million jobs that the President had said would be created before the end of the current year. He was sceptical that if the country could lose 600 000 jobs, it could create 500 000 jobs through the Expanded Public Works Programme. He felt that temporary jobs were not a step forward. He cited the example of the motor industry that lost 100 000 jobs within two weeks. He asked the nature of the relationship between the CCMA and the Labour Court, and whether there were any targets for the number of jobs saved by the CCMA. What was the success rate of the cases referred to the Labour Court. Were there any capacity problems with regards to staff? He asked about the role of the Sheriff. What steps were taken by the CCMA to fast track the long process of issuing awards? What had been done about corruption among staff members?

Ms Khan replied that it was relatively easy to save existing jobs than it was to create new jobs. The Bargaining Council had been trying to save some job losses; the motor industry was one example. The CCMA had improved significantly over the years. The reasons for the slow turn-around time were the result of multiple factors. Commissioners would sometimes get sick or they took leave to bury family members thereby delaying the process. Some employers would bring in many witnesses just to delay the process and employers had multiple legal representations. She said that it would be inappropriate for her to criticise the Labour Court because she was a lawyer by training and the Labour Court was supposed to play an oversight role over her. The Labour Court fell under the jurisdiction of the Department of Justice and not the Department of Labour. It was difficult to change things in another Department.
The Court had no stipulated timeframes to finish cases. Wealthy employers took advantage of workers who did not have proper representation and tried to drag out cases as much as they could. On the matter of awards, when arbitration awards were awarded the employers would sometimes ignore them and the process took six to 24 months.  After the issuing of an award, the matter would be outside the sphere of the CCMA. Sheriffs operated outside the CCMA. Sheriffs attached property of the employer to pay awards. However, before they attached property, the employee had to pay a deposit. The deposit was used as insurance in case the wrong property was attached. Most workers did not have money after six months of unemployment.

Ms Mashele (ANC) raised his concern about the outsourcing of certain services by the CCMA. She lauded the work done by the CCMA.

Ms Khan replied that the CCMA did not outsource any work, but they had been using part time Commissioners. The Road Freight Bargaining Council made use of an independent body, which was privately owned.

Mr Chauke commented that it would be very difficult to understand the Tsoso Strategy part of the report without having read the Annual Report.

Mr Madisha (Cope) said that he was aware that the employers were using complicated methods to undermine the role of the CCMA. The Portfolio Committee and Parliament were there to enact legislation that would help the CCMA to be more effective in what it was doing. He then asked the CCMA to forward statistics of all the sectors affected by job losses and those saved by the Bargaining Council.

Mr Chauke said that the Committee would need feedback on the corruption case that was reported by Hon W Madisha (Cope). He said that corruption needed to be exposed on every front.

The Chairperson said that the report could only be compiled after the alleged corruption case had been fully investigated.

Ms Khan replied that the CCMA was expected to work according to fair labour practice, the rights of employees had to be protected at all times. The CCMA will start by investigating the corrupt practices within the organisation before exposing the alleged corrupt employee.

Productivity South Africa
Mr Bongani Coka, Acting CEO, outlined Productivity South Africa’s history ,briefly touched on the strategic objectives and its National Awareness Campaign as well as taking a look at productivity in industry. They had international partnerships with similar organisations in other countries such as Japan. Japan had been using productivity centres much longer than any country in the world. He noted that government funding accounted for only 40% of their funds. The rest came from other sources such as from the companies they were assisting. He noted that government funding had increased by 5% annually. South Africa had been helping other African countries to set up similar structures throughout the continent. The challenges they faced included increased capacity so as to reach all provinces. Increased funding hampered the attainment of the goals set up in the goals of the organisation. Productivity SA was not really understood by the smaller companies. Some of the achievements were that the Small and Micro enterprises improved their survival by increasing their profitability.

Discussion
Mr E Nyekemba (ANC) raised his concern that the presentation did not show any figures about the progress made in improving productivity. He asked whether Productivity SA had any authority to compel employers to implement recommendations.

Mr Coka said that all the companies that approached his organisation had to commit themselves to implement the suggested strategies. Impact assessment would clearly show whether those strategies were implemented or not.

Mr Madisha suggested that Productivity SA should work with the Proudly SA campaign. He suggested that the organisation should tap into the Job Creation Fund.

Mr Coka said that he welcomed Mr Madisha’s suggestion and mentioned that his organisation was working with Business, Labour and the Government.

Mr Chauke was puzzled by the fact that a 40-year-old Productivity SA only existed in three provinces.

Mr Coka said that interventions were not focused on the three provinces only. He pointed out that KZN, Gauteng and the Western Cape had the biggest slices of the economic activity of the country. Other provinces had only satellite offices as a result of capacity problems.

The Chairperson asked about the State Owned Enterprises that had been helped. What criteria was used to select such entities? Were there any early warning systems for companies that needed interventions? She asked for clarity on Model Companies. What measurements were used to measure the progress made when working with educators?

Mr Coka replied that Productivity SA had worked with Spoornet and Transnet because they had approached the issue themselves. Model Companies were those that implemented the turn-around strategy and improved productivity. Model Companies were used as role models for struggling companies. The training of educators was spread over five years. The results of assessments had shown that there has been some improvement.

Mr Madisha mentioned that Productivity SA was not visible enough. He asked what strategies had been used to change their image problem.

Mr Coka replied that Productivity SA had partnered with the SABC on numerous campaigns and there was a Productivity Week. The organisation and the SABC Education Department had made some educational programmes together. He added that productivity was an abstract concept hence the awareness campaign.

Mr Chauke said that the institute also had to work with rural business people to improve their productivity.

Mr Coka replied that it was difficult to deal with individual SMMEs but they dealt with them as a group. About 20 000 skills development facilitators had been trained in collaboration with the Sector Education and Training Authority.

Ms Lusizo asked about the number of women and youth owned business that had been helped by Productivity SA.

 

Mr Coka replied that his organisation targeted youth, women and the disabled with the help of Umsobomvu Youth Fund.

The meeting was adjourned.

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