National Productivity Institute: briefing

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Labour

09 October 2000
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LABOUR PORTFOLIO COMMITTEE
10 October 2000
NATIONAL PRODUCTIVITY INSTITUTE: BRIEFING


Relevant Submissions
National Productivity Institute slide presentation - text outline only (See Appendix 1)

Summary
The National Productivity Institute briefed the committee on its current activities and future plans within the area of productivity in South Africa. They see productivity enhancement as a key instrument for achieving economic transformation, the elimination of poverty and inequality and establishing social justice.  NPI has adopted a holistic approach to productivity improvement which focuses proactively on developing the productive capacity of all citizens and organisations, both in public and private sectors.

MINUTES
National Productivity Institute
The Chairperson of the NPI Board, Mr Ketan Lakhani, noted that this meeting was an historical occasion for NPI.  In its thirty year history they were not aware of any presentation ever given by them to the Portfolio Committee and he said they were grateful for the opportunity to brief the Committee on its activities. He noted that the delegation before the Committee had primarily been appointed to the Institute nearly two years ago to help transform the Institute and its activities.  They wanted to bring to the Institute a degree of accountability. He introduced the delegation which consisted of a Board Member of NPI, a COSATU representative for the Institute, NPI’s Executive Director (newly appointed), NPI’s Financial Manager and Senior Manager (responsible for advocacy and promotion).

In the presentation by the Executive Director, Ms Yvonne Dladla, the following points were made:
- The National Productivity Institute has been in existence since 1968.  Its main objective is to develop South Africa’s productive capacity so that all citizens can enjoy an improved quality of life.
- Currently, the Institute functions as a Section 21 not-for-profit organisation, with the largest share of funding being derived from the Government (Deparment of Labour).  The Institute has about 100 persons employed at its head office in Pretoria and two regional offices in Cape Town and Durban.
- The main focus of developing South Africa’s productive capacity is carried through the delivery of professional consulting services to the public and private sectors in areas such as human resource management, leadership and management training, marketing, technology development, productivity measurement and productivity awareness programs among others.
- They started to transform the organisation in1998 when the new board and the new advisors council was established.
- The main focus of the transformation process has been to try and move NPI from its role as a small institute in Pretoria that no one knows about (in terms of the majority of the country) into one that brings productivity awareness throughout South Africa.  Also, to try and demystify the whole concept of productivity so people can start to relate to productivity as something that the nation needs to be involved in order to develop the economy of the country. 
- Additionally, their programs should be relevant to the needs of all South Africa rather than having an Institute that is only benefiting a section of society
- In terms of the governance of NPI, a tripartite Social Plan and Productivity Advisory Council (SPPAC) was established to incorporate the interests of labour, business and government on issues of productivity enhancement.
- The role of SPPAC is to formulate and communicate a vision for South Africa in which productivity is positioned as an instrument in creating wealth, distributing wealth, transforming society and achieving a competitive economy, as well as to set broad policy and strategy guidelines for productivity improvement.
- A tripartite Board of Directors consisting of eight individuals is also in place and represents the major social partners of labour, business and government.
- The Board of Directors ensures adherence to the SPPAC policy and strategy guidelines by the NPI; ensures that the NPI is transformed and reconstructed; ensures that the affairs of the NPI are conducted in accordance with good corporate governance principles.
- The Minister of Labour appoints the members of the SPPAC.
- Along with these changes, a participatory process was initiated to revisit the strategic direction, the programs and the structure of the NPI.  This process includes both the Advisory Council which formulated the vision and mission late last year and the Board of Directors, as well as members within the organisation.
- On the strategic shifts made by the Institute: the outcome has been a more holistic approach to the role of the NPI in the current South African and global context. This approach seeks to develop the productive capacity of all South Africans to participate in the economy and to share in its benefits.  It can be summarised as follows:
the centrality of tripartism, productivity enhancement in its broader social context, a focus on priority sectors that were neglected in the past such as women, youth, education, SMMEs and rural communities
- Previously NPI focused merely on manufacturing and retail big business but in order for  the country to benefit from the whole process, they need to include everyone.
- Additionally, they felt that it was important that they look at the public sector because it is important that productivity programs be introduced there to ensure that they utilise their resources efficiently and effectively.
- The equitable sharing in the benefits of productivity improvement is also one of the areas that NPI seeks to address.
- These shifts are being made and incorporated into the programs of the Institute so as to re-establish the NPI as an organisation of relevance to the majority and as an organisation that can contribute meaningfully to the economic development of the country.
- Their new vision states that they would like to be to be the irrefutable champion of the holistic, innovative and sustained development of South Africa’s productive capacity for the equitable benefit of all in a socially responsible manner.
- Their mission statement is that NPI is a tripartite body dedicated to the development and enhancement of South Africa’s productive capacity by articulating the spirit of tripartism through research, information dissemination, training, facilitation, consultation, auditing and monitoring on all productivity issues and challenges in order to improve the quality of life of all South Africans.
- To implement this vision and mission they came up with a different structure. Previously NPI focused mainly on consulting services to organisations, so there was a need to restructure their operations and processes. - There are six divisions, some of them entirely new, and in other cases incorporating previous sections of the organisation.  Some of them also incorporate a distinct focus on generating income for the organisation.  The divisions are as follows:
· Strategic projects - a new division that plays a crucial role in substantive tripartite initiatives such as the Social Plan and Workplace Challenge by offering technical support and expertise that is available within the NPI.
· Emerging Sector - a new division that will develop the productive capacity of the priority sectors identified by the NPI, such as women, youth, education, SMMEs and rural communities.  It will promote and facilitate access to resources, training, skills and technology.
· Technology Development - is a new division that offers technology support through identifying and developing technology best practices for the NPI’s target markets.  Technology is understood in a broader sense of processes and systems.
· Knowledge and Skills - is a new division that will develop particular sets of competencies - knowledge, skills and values - and the corresponding implementation methodologies on a sectoral as well as organisational level if required.
· Consulting - is the primary income-generating area of NPI and delivers productivity enhancement services on a consultative basis through highly experienced consultants.  It not only provides income, but it is almost like a laboratory for NPI where they can go out and test some of the technologies that they have developed in the marketplace.
· Promotions and Advocacy - this the NPI’s communications, public relation and marketing arm and is also responsible for productivity awareness raising programs.  Additionally, they would like to add a component that looks at government policy and legislation so they can look at its impact on productivity.
- The offices in Cape Town and Durban would be responsible for doing these same things.
- In all of its services, cross-functional initiatives are encouraged as well as strategic partnerships with appropriate public and private sector organisations, other service providers and agencies.

Key Programs
Social Plan Technical Support Facility (SPTSF)
As an outcome of the Presidential Jobs Summit, the Social Plan was launched as a program to prevent job losses where possible, manage them more humanely where they are unavoidable and encourage local economic development within communities that are affected by retrenchments.
The NPI’s specific role is to assist in preventing job losses through this plan.  This is being done by establishing an early warning system (for early identification of sectors in distress), facilitate the establishment of future forums for workers and management to agree on turnaround strategies, and establishing Social Plan Centres for the dissemination of information on the Social Plan and its various programs.  The first Social Plan Centre will be launched on October 26 in Gauteng.

Workplace Challenge
The Workplace Challenge is a joint initiative of the Department of Trade and Industry and Nedlac that brings about negotiated workplace change to improve the productivity and competitiveness of specific sectors. In 1999 the NPI became the program manager for the Workplace Challenge which is scheduled to be completed by July 2000.  Twelve sectors have been identified including capital equipment, furniture, plastics, footwear, clothing, textiles, fish processing and fruit packaging among others.

Each sector has an average of six pilot companies that have agreed to follow the workplace transformation path to improving productivity and act as demonstration sites for sharing experiences and information with other companies in the sector.

Emerging Sector Initiatives (new division in the planning stage)
To achieve the objective of developing the productive capacity of the priority markets of the NPI, the following programs are being implemented:
· an audit of the SMME sector with respect to support and capacity building services is being conducted (the report should be available by the end of the year)
· a program focusing on women in rural areas has been initiated
· NPI involvement in the Manufacturing Advisory Centres (MACs) [on going for the past two years] in Durban and Port Elizabeth that assist established SMMEs with further development.
· A partnership with the University of the Western Cape - students are placed with SMMEs as part of their training to assist entrepreneurs with business skills.

Productivity Literacy Program (newly developed)
In order to demystify the productivity concept and to introduce a basic understanding of the concept among all South Africans, a productivity literacy program is being developed. Initially, this program will be aimed at ABET learners, particularly those in lower levels - up to standard six. A consultative conference to initiate the program was held with major stakeholders on 27 September.

Productivity in Professional and Vocational Training
As a part of the objective of repositioning productivity, this program seeks to introduce productivity concepts into professional and vocational training in partnership with institutions such as the South African Qualifications Authority (SAQA). This will mean that everyone will qualify with specific productivity knowledge no matter what their discipline and will impact significantly on productivity levels.

National Productivity Agreement/Accord
This is an outstanding issue of the Presidential Jobs Summit, and the NPI has been tasked by the SPPAC to work towards the finalisation of a national productivity agreement. In finalising such an agreement the NPI will act as a technical and administrative facilitator.  The Minister of Labour and the executive director of Nedlac have expressed support for such an agreement.

Proposed programs
Research and analysis
This is the area in which NPI is still lagging far behind.  NPI believes that in order for them to be real productivity champions they should be generating research around productivity in South Africa so that relevant stakeholders can be able to access information when looking for the status of productivity in South Africa in different sectors.
The objective would be to develop a research and analysis capacity so that the NPI can become the provider of credible and relevant information on productivity issues and factors that impact on productivity, ranging from HIV/AIDS to policy issues.

Public Sector Support
The NPI is at the stage where they have been engaging different departments to see how NPI can help in introducing productivity intervention strategies within the various department both provincially and nationally to make sure that productivity improvements become part of their operations.  This is still in its early stage as well.

National Productivity Campaign
This aims to raise the awareness of the importance of productivity.

Milestones and Achievements of 1999/2000
- The Institute continues to play a key role in the region.  It was involved in the adoption by SADC heads of government of a Declaration on Productivity and also assisted with the establishment of a productivity centre in Malawi.
- As part of its strong export-marketing focus the NPI assisted the commercial refrigeration industry as well as a leading kaolin manufacturer to export to Malaysia and Indonesia.
- The NPI also continues to serve on the National Export Advisory Council (NEAC) and in collaboration with the DTI participated in the National Export Week.
- The Workplace Challenge expanded to 12 sectors and 27 companies with participating companies reporting improvements in production capacity of 200 per cent and improvements in quality levels of 150 per cent.
- The NPI also developed training materials for skills development facilitators for the Department of Labour.
- As part of implementing the Social Plan, the Institute was involved in the Social Plan Task Team for the mining industry.  They also facilitated the establishment of an export marketing hub (co-operative) in the clothing industry for cut, make and trim operators with a view to creating sustainable job opportunities.
- A number of sector projects continue to be managed by the NPI under the Sector Partnership Fund.  The objective is to identify the factors that inhibit a particular industry or economic sector from being globally competitive and then to devise strategies to overcome the core problems.  In 1999 these sector projects included the Ukhukhula refrigeration initiative, the forestry contractors productivity initiative and the clay-brick manufacturing project.
- The NPI also hosted a symposium on globalisation in conjunction with the Federation of Swedish Industry.

Challenges
As part of the international productivity movement the NPI is keen to revive the Pan African Productivity Association so as to contribute to Africa’s economic development.  Steps have been taken to get this process under way.

Discussion
Mr Heine (DP) commented that it would help in the future to receive reports before the meeting so they may review it and spend more time listening than reading during presentations.  He asked for the board  members names and if their positions are paid. In the two years since the Board was re-organised, has national productivity increased or decreased?  I would like a report on this.

The NPI Chairperson stated that their annual report was recently submitted to the Minister of Labour who has not yet tabled it in Parliament, so that is why they were not able to share their annual report with them. The Board members are not paid. He then listed the current Board members. Mr Manie added that the annual report of the NPI is currently being tabled and will soon be available with much of this information.

On the issue of productivity, NPI’s Senior Manager gave some statistics to the Committee.  He said that Labour Productivity in 1999 was up 4%, Capital Productivity 1999 was up 5%, Multifactor productivity was up 2% in 1999; from 1993 –99 Multifactor Productivity on average was up 3,2% annually, labour productivity was up 5,5%, capital productivity was up 1,3% on average. Productivity improvements reflected in those statistics have basically come about as a result of declining employment.  He showed a graph to the Committee that depicted that decline from 1990 to 1999/00 in various job sectors.

In response to Mr Manie’s request that they also provide statistics reflecting sectors showing increasing employment for a balanced view, an NPI board member commented that the point is that these statistics represent the manufacturing and the mining sectors, the largest employers. He agreed there had been an increase in the service sector. Another NPI member added that labour had been suspicious of the NPI in the past.  Most times the NPI would come into a company and two to three months down the line, jobs are shed.  People are told they are not productive and there is downsizing.  In 1998 NPI came to a common understanding of what productivity is.  In an effort to move forward in a process of transformation, they redefined their mission and vision.

Mr Ramodike (UDM) asked what are NPI’s views on the unhappiness that seems to surrounding the proposed amendment to labour laws?

The NPI replied that it is difficult for the NPI to have one single position on the basis of its composition.  It has a tripartite nature. Debate around the amendments is taking place at Nedlac where business, labour and government are negotiating on this legislation.

Mr Mshudulu (ANC) asked how the NPI has tried to get its information filtered down to people in the workplace?  How do you ensure it will benefit the people of this country?

The NPI replied that they do have what is called a Labour Caucus under the umbrella of Nedlac and some of this information is part and parcel of the reports. Within the Institute they are utilising the Workplace Challenge, the Social Plan and so on for information sharing.  Part of the advocacy unit’s responsibilities is to propagate information by utilising publications, various institutions and organisations such as COSATU, as well as  joining workshops/meetings within the labour arena. It was added that due to budgetary constraints, their monthly publication is subscription based.  If they could get more resources, then they could ensure that relevant sectors receive complimentary copies.

Mr Oliphant (ANC) welcomed their transformation and said that NPI has done tremendous work and their history is not that bad. He asked what percentage of NPI’s budget is generated by consultation work?  Is there any donor funding?  Finally, in the document you refer to revival; why is a revival necessary? I think that it is a continuation of good work.

NPI explained that of the R9 million, a total of about R2 million is generated through consulting.  From 1999 to 2000 they had received some funding from Netherlands for an education program, that was about it.  The rest is from the Departments of Labour and Trade and Industry.

The Chairperson of the Board commented that one of the challenges that this new NPI delegation faces is rebuilding the organisation. The NPI used to be a one-man band with a staff of one hundred.  When the past executive director left, the institutional knowledge left with him, thus the need to reestablish the NPI.
 
Ms Thabethe (ANC) thanked the NPI for their presentation but said that she was not sure whether their mission was a practical one. Does NPI have the capacity to deal with all the issues?  Regarding the National Productivity Agreement, how do you try to change the mindset of people considering the past era; how will you ensure that this agreement is taken in good spirit and is able to be implemented by the people? She also asked how the poor provinces and rural areas are reached (as part of their initiatives covering women, education and youth) since their three offices are based in Pretoria, Durban and Cape Town. She also asked about the representation of the disabled.

Mr Lakhani replied that the agreement/accord is important so that employers, the government and trade unions can agree on a common understanding of what productivity means and what its implications are and how it can be implemented into the organisation.  The next step would be to assist bargaining councils in introducing the productivity concept into their annual initiations and wage agreements. 

In terms of NPI’s capacity, he said that they are severely limited in being a truly national organisation.  They are trying to develop strategic alliances with other government institutions like Statistics South Africa, universities, HSRC as well as private enterprises and NGOs to increase our capacity and influence a wider stretch of the population.  They are very aware that as the NPI is funded by the state, their responsibility is to citizens at large rather than just those that can afford their services.  Alliances with NGOs can assist with this.  In terms of progress with the Social Plan, he wanted to make clear that NPI’s responsibility is technical support for the Social Plan.  NPI’s task is to give information, research, mechanisms for early warning systems for industries under stress.  They are launching the very first Social Plan Centre in Gauteng this month to provide such information.  They see themselves as being facilitators of other agencies.  They do not want to duplicate activity, but to coordinate the productivity effort nationally.

The Executive Director agreed that their mission is very broad.  Their various divisions focus on the different parts of their mission. For example, their Emerging Sector has established contact with all of the provinces in terms of SMMEs.  She said that NPI has done nothing as yet with regard to the disabled.  She said that it is good that it was raised so that they understand it is something they must deal with. They have few resources. However, they try to work with companies that have money and NPI provides the technical knowledge while at the same time impacting on the market.  Right now they have no money for programs.

Mr Rasmeni (ANC) asked how they are faring with the Social Plan for people dealing with job loss in the declining mining and manufacturing industries. Has NPI done research around the EU/SA Trade and Development Agreement, in terms of the impact that it has on productivity and job creation, particularly in the agricultural sector?

Ms Dladla replied that NPI has established future forums in various companies as well as Transnet, so they are helping to facilitate the process.  She said that NPI has started on the EU agreement, but not as they should and they will take note of the question.

Chairperson Manie said that the old definition of productivity was that workers want more money for less work and the bosses want more work for less money. People from the two sectors of business and labour will not understand the concept the same way as they are coming from two completely different mindsets.  How do you change this?  For people to buy into a concept, they need to know that they are going to be benefiting from it.  Are there things that you are doing to get buy-in from the unions and business in order to move away from the old way of looking at productivity? Do they see the need to ensure that their activities are directly linked to the economic sectors that have been identified in terms of the 27 SETAs (Sector Education and Training Authorities)?
 
The NPI said that there is representation of NPI officials on some of the SETAs so that they do try to inject the concept and notions of productivity in the educational development program.  In the absence of a national accord, it is very difficult to represent a truly tripartite understanding of productivity in the various bodies.

Mr. Mshudulu (ANC) asked how far has the NPI assisted employers in getting them to come out in the open as to how jobs are rated? How would you advise on the importance of the grading system and how it relates to productivity output, training and the benefits that the workers get out of it?

The NPI replied that they have been discussing grade sharing.  Some of NPI’s consultants have been introducing this concept in organisations.  It is a process that is going to take some time.

Chairperson Manie concluded that the general view is that productivity in South Africa is extremely low. In reality, there are some positive models of productivity in South Africa. He emphasised that the NPI must engage with this Committee and allow the Committee to assist them in achieving their goals.  He thanked the NPI on a good first meeting with the Committee. The meeting was adjourned.

Appendix 1
National Productivity Institute
Building a nation at work
Presentation to the Portfolio Committee on Labour, 10 October 2000

Introduction
·Non-profit organisation (est 1968)
·Transformation since 1998
·Tripartite governance through:
-Board of Directors, and
-Social Plan and Productivity Advisory Council (SPPAC)

Tripartite representation
·Labour
-Cosatu, Fedusa, Nactu
·Business
-BIFSA, NAFCOC, SEIFSA, SAAU, SACOB, AHI, Chamber of Mines
·Government
-Departments of Labour, DTI, DPSA, Education, Minerals and Energy, DACST, Agriculture
·Strategic shifts
·Tripartite approach
·Productivity in its social context
·Focus on productive capacity (access to knowledge, skills, resources and technology)
·Special attention to priority markets (women, SMMEs, youth, rural areas)
·Foster public sector linkages

Current trends
·Labour productivity up 4,0% in 1999
·Capital productivity up 0,5% in 1999
·Multifactor productivity up 2,0% in 1999
·From 1993 to 1999 MFP up on average by 3,2% annually
·Labour productivity up on average 5,5%
·Capital productivity up 1,3% on average annually

Vision
The irrefutable champion of the holistic, innovative and sustained development of South Africa’s productive capacity for the equitable benefit of all in a socially responsible manner.

Mission
The NPI is a tripartite body dedicated to the development and enhancement of South Africa’s productive capacity by articulating the spirit of tripartism through research, information dissemination, training, facilitation, consultation, auditing and monitoring on all productivity issues and challenges in order to improve the quality of life of all South Africans.

Structure
·Strategic Projects
·Emerging Sectors
·Technology Development
·Knowledge and Skills
·Consulting
·Promotions and Advocacy
·Two regional offices

Key programmes
·Emerging sector initiatives
·Social Plan Technical Support Facility
·Workplace Challenge
·Productivity Literacy Programme
·Productivity in Professional and Vocational Training
·National Productivity Agreement

Workplace Challenge
·Nedlac and DTI initiative - NPI is programme manager
·Restructure workplaces for productivity and competitiveness
·R24-million, two-year programme
·12 sectors with 72 pilot companies
·production capacity up 200 %
·quality levels up 150 %

Emerging sector initiatives
·SMME audit
·Women in rural areas(WIRA)
·NPI - UWC mentorship programme
·Linkages with SPTSF and others
·Manufacturing Advisory Centres -Port Elizabeth and Durban

Productivity in academic and vocational learning
·Introduce productivity concepts into professional  and vocational training
·In partnership with SAQA
·Productivity literacy campaign through ABET
·Consultative conference on 27 September 2000

National Productivity Agreement
·Presidential Jobs Summit issue
·National framework for a common approach to productivity
·Allow for sectoral and shop-floor initiatives and agreements
·NPI would be technical and administrative facilitator
·Link with other agreements
Research and analysis
·Build capacity within NPI and find partners to assist with:
-productivity research and analysis
-macro-economic / labour market research and analysis (eg prices, wages etc)
-sectoral research and analysis
-issue based (HIV / AIDS) research and analysis

National productivity campaign
·Multi-year, targeted campaign
·Dual nature: awareness and action
·Mass character (all sectors, partners)
·Political leadership from Minister
·Strategic endorsement by the President

Key Milestones of 1999 / 2000
·Export marketing (commercial refrigeration and kaolin manufacturer)
·National Export Advisory Council member
·Assistance to Malawi
·Expansion of Workplace Challenge
·Active involvement in SETA’s

Key milestones
·Management development through Leadership orientation seminars
·Developed training material for skills development facilitators for DoL
·Technikon productivity audit
·Palletisation at Johannesburg market
·Manufacturing Advisory Centre (MAC)

Services on offer
·Productivity consulting and training in
-human resource issues
-administrative productivity
-skills development
-exporting, marketing and sales
-leadership development programme
-auditing and research


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