Occupational Specific Dispensation: Health Department briefing

NCOP Health and Social Services

17 August 2009
Chairperson: Ms R Rasmeni (ANC)
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Meeting Summary

The Department of Health noted that although it had been intended that the Minister brief the Committee on the National Health Insurance policy, this was still being finalised for submission to Cabinet, and was therefore not ready for presentation. The Department then briefed the Committee on the Occupation Specific Dispensation (OSD) in the health sector, giving a detailed outline of the background, the reasons why it was necessary to come up with a new remuneration structure, how the Department sought to implement it, the fact that it was first set for the nursing profession as every public health facility had nurses, although it may not have other health professionals, and what it sought to achieve. The presenters noted that remuneration was not the only challenge to the attraction and retention of health professions in the public sector, but that conditions of work, availability of medicines, equipment and location were other factors, which the scarce skills dispensation had not addressed. It had been found that pharmacists, for example, were earning less than administrative officers, and thus proposals were made that in fixing remuneration regard must be had to the nature and scope of the work, competence levels, experience and performance.

OSD was not done on a group, but on an individual basis. OSD would provide differentiated remuneration dispensations across all sectors of the public sector health service, would cater for the unique needs of the different occupations, and prescribe grading structures and job profiles to eliminate inter-provincial variations. OSD would also provide adequate and clear salary progression and career-pathing opportunities. There was an agreement for longer salary grades with higher salary ceilings, but the performance-based differentiated progression still had to be negotiated with the profession. The Department had overspent on the nurses’ OSD, partly because of incorrect estimates, partly because of incorrect data. In respect of OSD for doctors, dentists, pharmacists and emergency services personnel, National Treasury had provided about half of what had been requested and the Department and labour agreed that a once-off pensionable gratuity would be paid rather than backdating salaries. The Department said that emergency services were not, at the moment, a stable nor highly professionalised grouping, and the Department was replacing the short course structure with a two-year new qualification. It was also encouraging more staff to lecture. It was arranging special dispensations for those personnel who were jointly employed by universities and the Department. The proposal for the allied and therapeutic group was to be negotiated from September 2009.

Members asked about the implications were of the insufficient funding provided by the National Treasury, which powers were to be removed from the provinces, what barometer was used to calculate rural allowances, whether the Department had any tools for carrying forward performance evaluation, what problems had arisen with OSD implementation, how more tutors would be secured for nurses, and whether there would be recognition of prior learning.

Meeting report

Occupation Specific Dispensation (OSD): Department of Health (DOH) briefing
Mr T Mashamaite (ANC; Limpopo) raised his concern that documents for this meeting had been received by Members only shortly before the meeting commenced, and asked the Department of Health representatives to give reasons as to why this was so, pointing out that the Committee had not been given sufficient time to study the documents.

Mr Thami Mseleku, Director-General, Department of Health, replied that, since the meeting had been confirmed relatively late, the Department had itself not been given enough time to prepare. He apologised for this.

The Chairperson said that the Committee accepted both his reasons and apology.

Mr Mseleku said the Minister of Health was to present a proposal on the National Health Insurance (NHI) Policy to Cabinet for its approval, and therefore had not yet finalised the processes regarding the National Health Insurance Policy. He asked that the briefing on the National Health Insurance (NHI) Policy therefore be deferred until the Minister had presented the proposed framework to Cabinet, and it had been adopted by the Executive.

Mr Mashamaite asked whether any date had been set for the NHI presentation to Cabinet.

Mr Mseleku answered that the matter would be dealt with by Cabinet in the next four weeks.

Dr Percy Mahlathi, Deputy Director-General, Department of Health, then gave a presentation to the Committee on Occupation Specific Dispensation (OSD). In 2004 there had been a resolution with labour sectors at the Bargaining Council, identifying the need for health professionals to receive priority in terms of a new remuneration dispensation. The OSD for health workers was to look at ways of improving the remuneration of health workers, especially since it was realised that the public health sector was losing skilled practitioners. Remuneration was identified as a major challenge, although it was not the only one. Other issues included the conditions under which people worked, the availability of medicines, equipment and other issues. Scarce skills and rural allowances had been introduced previously, but part of the challenge with scarce skills was that the major beneficiaries were those in the medical profession and a few categories within nursing. By 2004 it had become clear that there was dissatisfaction among other allied medical professionals who felt that their skills also needed to be declared as scarce skills. The current system then became unsustainable as the amount allocated was insufficient.

In 2006 the Department of Social Development provided some relief to social workers. In 2006 proposals based on the outcome of transversal job evaluations in the public health sector also began to be developed.

Also in 2006, the Department of Public Service and Administration conducted a Personnel Expenditure Review. Prior to this, an analysis had been done in 2004 and 2005, to determine what professionals were paid in the Public Service, and it was found that a pharmacist was, for example, earning less than an administrative officer. The recommendation was that when fixing remuneration of health professions, regard must be had to the nature of the work that they were doing, rather than to fixed salary scales across the board. A new remuneration policy framework was then developed. One of the recommendations was for the development of Occupation Specific Dispensation (OSD) for the targeted occupations. That remuneration policy framework was approved in principle by Cabinet on 5 September 2007 and then referred to the Mandate Committee for finalisation. Elements of that policy were included in the 2007 wage agreement (Resolution 1 of 2007), including the principle of OSD. OSD was therefore only a part of that Resolution.

Dr Mahlathi said that OSD's objectives were to improve the ability of the public service to attract and retain skilled employees, to provide differentiated remuneration dispensations for the vast number of occupations in the public sector, to cater for the unique needs of the different occupations and to provide a unique salary structure per occupation. It would also prescribe grading structures and job profiles to eliminate inter-provincial variations. He said, in this regard, that one of the major challenges was that the majority of Emergency Medical Services (EMS) personnel were in the Western Cape because that province, a few years back, had increased the salaries of EMS personnel. Provinces were no longer to have the power to vary salaries. OSD would also provide adequate and clear salary progression and career-pathing opportunities, based on competence levels, experience and performance. It was hoped that by following this programme, people would find the public service more attractive from both a remuneration and career-pathing point of view. He noted that during 1996 there had been an increase in the salaries of medical professionals in the public service. Within two years, however, the same people who had had their salaries revised were complaining that they were now insufficient. Money was made available to solve the chronic problem, but this was not sufficient, since it was not necessarily solely a money problem. A decision was then taken to place emphasis on both remuneration and career-pathing in order to prevent people from outgrowing their salaries.

Dr Mahlathi said many people did not understand what OSD was. It was a forward-looking plan to systematically increase salaries after pre-determined periods, based on specific criteria such as performance, qualifications, scope of work, and experience. The Department hoped to engage private practitioners to do sessions at public Health facilities. As these doctors' responsibilities increased, so would their salaries. This would hopefully keep them full-time in the Public Service. OSD was not intended to be an across-the-board salary increase.

He said that before 2006, the Department had done a job evaluation of all the health professions, and found that increasing salaries by one notch would cost R5.3 billion per annum (over a three-year period). After engaging with National Treasury it became clear that that amount could not be made available. Because the majority of medical professionals thought that the R5.3 billion was made available for one particular year, there was much unhappiness around the issue. The Department took a proposal to the National Health Council suggesting that the nursing profession be prioritised, and that policy had then started with that profession. He explained that the reason for this was that every health facility in South Africa had nurses, although not all had doctors. Specialised nurses and nurse educators were in short supply. An audit had found that there was a lack of nursing tutors. The Department's view was that if nursing was stabilised this would start turning around the health sector as a whole. The original estimate for nursing OSD was R1.458 billion in one year. There had been over-expenditure of around R600 million which was due to systemic challenges within the Department.

Another important factor was that OSD was not done on a group basis, but rather on an individual basis. Each professional would be evaluated on the nature of what he or she was doing, his or her experience, qualifications and the like.  Resolution 1 of 2007 was not stating how much each professional should earn but rather stated the need to develop a remuneration structure for doctors, nurses and other professionals. This had, in accordance with the Resolution, been implemented; for nurses during October or November 2007, for doctors during 2008 and for other professional groups in July 2009.

Resolution 2 of 2007 introduced OSD for nurses and the Department backdated its payments from 1 July 2007. There were indications that the projected amount would be insufficient, due to the implementation challenges. The data used showed that there were more than 96 800 nurses, but because OSD evaluations were done on an individual basis, the Department then found, when doing the translations, that in the public service there were actually 105 000 nurses. The OSD was therefore under-budgeted by about 10 000 nurses, which was the reason why the Department was showing over-expenditure. The data had been incorrect, with some people listed as clerks or porters, although they were actually employed as nurses. OSD would aim to sort out these discrepancies. A number of legal processes, grievances and disputes had arisen, most of which had been resolved.

Resolution 3 of 2009 dealt with the medical and dental professionals as well as pharmaceutical and EMS personnel. The Department had identified certain categories of clinical managers that were required. In bigger hospitals there would be a need for someone to take care of the clinical areas, either medical or dental. There had been a delay in the agreement on OSD for doctors, dentists, pharmacists and EMS personnel because Treasury had made only R500 million available to the Department for this purpose even though the Department needed around R 1 billion. Because of this delay, the Department negotiated with labour to pay a once-off pensionable gratuity, calculated at 5% of the basic annual salary. The Department was currently busy calculating this in order that payments could be made. It could not do a back-pay, as this cost would be too high.

EMS presented a challenge as it was not a highly professionalised grouping. The introduction of OSD here was intended not only to stabilise but also to professionalise the grouping. The Department was in the process of doing away with short courses as a qualification for this grouping, and instead had introduced a new qualification of Emergency Technician. This envisaged a two-year training programme aimed at improving the quality of skills. However, because lecturing staff for EMS were in short supply, the Department had started paying a “lecturing allowance” of 10% of basic salary to EMS personnel who performed lecturing duties at an EMS College.

The Department had also introduced a change in the pensionable composition of the “total cost to employer” packages applicable to health professionals, which were covered by the 70%:30% split. These were people who were on joint appointments between universities and the Department of Health. This area still had to be addressed with the Department of Education from a performance point of view.

In terms of implementation, 5% of the basic salary would be paid out as of 30 June 2009. One of the challenges the Department faced was that the medical and dental professionals accounted for 86% of the R1.022 billion earmarked, while 10% went to pharmacists and only 4% to EMS personnel.

Another of the Resolution’s key aspects was the agreement upon longer salary grades with higher salary ceilings from “production” levels upwards, which allowed for further salary progression. For example, those who performed very well would have a double-notch progression within a one- or two-year period. The area of performance-based differentiated salary progression had to be negotiated with the profession in order to best ascertain how to judge performance of professionals. The proposal for the allied and therapeutic group had been tabled by the Department and was with labour. Negotiations around this proposal were set to commence in September 2009.

Dr Mahlathi concluded that the Department of Health had spearheaded OSD as it was driven by the need to improve the conditions of health professionals in the public service. He emphasised that there would henceforth be no differentiation in the amounts earned by interns across the different provinces.

Ms B Mncube (ANC, Gauteng) asked what the implications were of the insufficient funding provided by the National Treasury for OSD.

Dr Mahlati answered that this problem affected the Department when it came to negotiating with labour. If the Department had been given the funding there would have been fewer problems with the implementation of OSD. The Department was mindful that health professionals should not be permitted to bankrupt the State because of salary demands. It was for this reason that measures such as performance evaluation, experience, qualifications and so forth had been factored in.

Mr Mashamaite asked which powers were to be removed from the provinces. He also asked what barometer had been used to calculate rural allowances.

Dr Mahlati replied that the Department intended to remove the discretion that provinces had formerly had to decide what they would pay their medical professionals, regardless of what was happening nationally. If a particular province felt the need to adjust these salaries, it would have to make a presentation to the National Human Resource Committee. In respect of rural allowances, he said that one of the challenges was the definition of 'rural', although the Department was currently employing the definition compiled by Statistics South Africa. The Department was trying to do some differentiation, as it recognised that some areas, no matter how high the salaries being offered, would simply find it hard to attract doctors. Rural allowances needed to be changed. Non-financial incentives (such as spousal relocation) also needed to be looked at.

Mr S Plaatjie (COPE; North West) asked whether the Department had any tools in place in carrying forward performance evaluation.

Dr Mahlati answered that the Department had a draft tool in place to deal with performance evaluation.

The Chairperson asked whether the Department had identified any problems in its implementation of OSD.

Dr Mahlati answered that the three-month period was for the once-off payment. The Department was hopeful that it could implement the actual remuneration structure within the next three months, although this would depend largely on the readiness of the provinces. The once-off payment was made mainly in order for people to see that OSD was a reality.

Mr Mseleku added that issues such a community service and tertiary service also related to the powers of provinces. Also, in the previous implementation of nurses’ OSD, there had been uneven implementation. The Department now wanted to ensure that it was approved from a central point in order to guarantee uniformity of implementation.

Ms M Boroto (ANC; Mpumalanga) asked how the Department was going to secure more tutors for nurses. She further enquired whether institutions offering nursing qualifications would have the content of their courses monitored. She asked whether recognition of prior learning would also be considered for older, more experienced nurses.

Dr Mahlati answered that the Department had been engaging with the Council on Higher Education, the Nursing Council and the Department of Education around developing a Nursing College at which the bulk of nurses locally would be trained. This College's admission requirements would also be less stringent than the requirements for universities. Monitoring of nursing colleges that were not registered was the function of the South African Nursing Council. The Department did recognise those nurses with experience, but also encouraged them to attain additional qualifications over the next five years. The national Department was asking provinces to encourage further studies among their nurses through the provision of bursaries and stipends.

The meeting was adjourned.


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