Department of Labour & National Economic Development and Labour Council: 2009/10 Annual Report presentations

Meeting report

Opening remarks
Mr I Olli’s (DA) announced that Mr A Lou (DA) was resigning from Parliament and moving to the Northern Cape legislature.

The Chairperson thanked him and asked that a written statement should be sent to the Committee.

The Chairperson noted that a student from the University of Cape Town was observing the Committee’s proceedings, and asked her to address the Committee.

Ms Vuyizeka Sayisi, who was from Dudenek near Port Elizabeth, said she was studying Business Law and was passionate about business and the economic enlistment plight of black people. She would appreciate it if anyone was interested in mentoring her.

Mr Ollis replied that he would be interested in mentoring Ms Sayisi.

Department of Labour (DoL) 2009/10 Annual Report & Financial Statements briefing
Adv Nkaholeng Phasha, Acting Deputy Director-General: Corporate Services, Department of Labour, outlined the work of Programme 1 (Administration). The purpose of this programme was to provide for strategic support and advisory services and the overall management of the Department of Labour (the Department or DoL). Measurable objectives were set out in respect of communication, financial management, human resources management, information technology (IT), the internal audit, risk management and security services.

Communication was marked by the media profiling of both Ministerial events and Departmental programmes. There had been eleven advertising campaigns implemented, and 707 000 publications of different titles were distributed at various departmental events, provincial offices and labour centres. Legal Services had handled 147 cases. 126 debt collection cases were handed to State Attorneys for recovery, 91 contracts were finalised and 49 legal opinions were finalised. In the areas of human resource management and employment equity (EE), the Department had exceeded the national target of 2% employment of people with disabilities, by 0.6%. The Senior Management Services (SMS) level was dominated by males (67.9%) but there had been an increase of just over 1% in female representation (32.1%). Males were, however, under-represented in lower levels. The vacancy rate had been reduced from 17.2% in 2009/08 to 13.8% in 2009/10. In April 2010 the Department had smoothly managed the transfer of Skills Development staff to the Department of Higher Education and Training (DHET). Challenges in the human resources area included pre-employment screening and qualification verification by the South African Qualifications Authority (SAQA), and the fact that the organisational structure was not adequately funded.

Adv Phasha outlined that in 2009/10, the Risk Management Unit had been established and the Department had developed, reviewed and approved the Risk Management Strategy, the Risk Policy and the Fraud Prevention Plan. 30 internal audits were planned, of which 27 were finalised and their reports issued, and three draft reports were issued. Security strategies and security awareness programmes were implemented in seven offices. Security support was given to Ministerial izimbizos, including the Zimbabwean Ministerial delegation. However, the vetting unit was unable to be established, because National Treasury had not given the necessary allocations.

Ms Siyanda Zondeki, Deputy Director-General: Service Delivery, Department of Labour, outlined the presentation on Programme 2 (Service Delivery). This programme aimed to ensure the compliance with and implementation of DoL policies and programmes, through monitoring, evaluation and inspections. It had achieved 6 500 jobs registered on the Employment Service Database (ESD), 4 225 (65%) of registered work seekers were placed in permanent employment, and 2 000 Occupational Health and Safety (OHS) incidents were investigated. There was a 2% decrease in workplace related injuries and deaths, 75% compliance with legislation by the workplaces that had been inspected workplaces and 80% percent of labour complaints were settled within 90 days. She noted that the targets for placing work seekers in employment aimed for 70% of registered opportunities per annum. The target for 2009/10 was 65%, of which 41% was achieved. Measures were put in place to implement and enforce the Employment Equity Act (EEA) and service delivery Acts. In terms of strengthening social protection, 51.5% of Unemployment Insurance Fund (UIF) claims were finalised within five weeks, against a target of 70%.

Ms Zondeki outlined that key challenges in OHS included the lack of a case management system, lack of competence in OHS, and insufficient capacity to investigate incidents and to assess enhancements in systems. Corrective measures included the development of a case management system, a roving team of inspectors and plans to resource the Labour Centres adequately.

Mr Sam Morotoba, Acting Director-General, DoL, presented on Programme 3 (Employment and Skills Development Services (ESDS) and Human Resources Development). He noted that the number of additional unemployed persons who had been assisted to enter learning programmes was 10 134, in comparison to the target of 18 000. The number of new learners who completed learning programmes was unknown, because when this Annual Report had been compiled the figures were not available from other departments. However, the target had been 9 000. 3 598 new undergraduate bursaries were awarded, compared to the target of 7 000. 1 088 postgraduate bursaries, as compared to the target of 1 700, were awarded. 56 669 Adult Basic Education and Training (ABET) learners ere registered by the National Skills Fund (NSF), which exceeded the target of 40 000. 44 759 of them had completed programmes, in excess of the 20 000 target. 11 928 additional unemployed people had been trained, as against a target of 90 000. The number placed in employment had been only 6 933, although the targets were 63 000. The number of additional cooperatives that received skills development support, the number of ABET learners registered by Sector Education and Training Authorities (SETAs) and the number of additional ABET learners who had completed programmes were targeted at 1 000, 100 000 and 40 000 respectively. The first and third targets were exceeded, but only 41 546 had been registered by the SETAs. Mr Morotoba finally stated that the number of workers assisted to enter scarce skills programmes and the percentage of workers who completed these programmes were at 111 831 and 195 768, both of which exceeded the targets of 26 000 and 13 000.

Mr Morotoba outlined that the challenges included the economic recession causing a smaller number of apprentices to be indentured, and company intake of learners had declined sharply due to the effects of the recession. Insufficient applications from learners meeting requirements were received by the National Student Financial Aid Scheme (NSFAS) and the National Research Foundation (NRF).

Mr Les Kettledas, Deputy Director-General: Labour Policy and Labour Market Programmes, Department of Labour, presented on Programme 4 (Labour Policy and Labour Market Programmes). This programme aimed to establish an equitable and sound labour relations environment. Its measurable objective was to improve employment equity (EE) by inspecting additional Johannesburg Stock Exchange (JSE) listed companies each year to assess their compliance with legislation. The implementation of the Director-General Review System was targeted. 67 JSE companies were reviewed and had their EE plans approved. Twelve National EE Awareness Campaigns were successfully conducted in all provinces. These campaigns were extremely successful, with high attendance rates. New EEA forms and guidelines for online reporting were published. Five sectoral determinations were reviewed and amended. A report on the outcome of the investigation into the Welfare Sector was completed, but a sectoral determination was not made.

555 applications for variations were dealt with, of which 402 were granted, 138 were refused and two were withdrawn. OHS regulations on the worst forms of child labour were published. Eight civil society organisations involved in building capacity of labour organisations were funded. In regard to the registration of labour organisations, there had been 1 118 new applicants, of which 17 were approved and 101 were rejected. There were 19 labour organisations de-registered because they were not genuine, 26 had been deregistered owing  to non-compliance and four owing to amalgamations. The Research, Monitoring and Evaluation Agenda 2 (RME2) was developed and approved. A number of annual labour market reports were published, as detailed in the presentation. The DoL Executive Dashboard system was developed and implemented by April 2010. A vacancy filling, pilot survey, and a Compensation Fund Client Satisfaction survey was started, which would be completed by March 2011.

Mr Bheki Maduna, Chief Financial Officer, Department of Labour, said that during 2008/09 there had been 6% under spending, but in 2009/10 there was spending of R2 063 458, out of the total allocation of R2 090 284, which amounted to under spending of 1.3%. The Auditor-General’s findings for the previous four years, since 2006/07, had been negative, since the Asset Register showed incorrect values. However, all these issues had now been addressed and there were no qualifications in the 2009/10 year. There were some problems around Public Private Partnership (PPP) Assets, including an inadequate PPP Assets register and a difference in the closing balance between the Asset Register and the tangible assets. This arose because of difficulties with Siemens, who was supposed to deliver an Asset Register to DoL, but had taken far too long to implement the action plan, which led to the qualification. For the future, DoL had formulated an action plan that did not rely on Siemens, and would thus obviate similar qualifications. In regard to performance, the Auditor-General had found the DoL to be wanting, and this was flagged as a matter needing attention by the Department.  Investigations on fraudulent payments were completed and Corporate Services was finalising the resultant cases. A poor report had been received in respect of Sheltered Employment Factories, as outlined on page 169 of the Annual Report. The National Skills Fund had now been transferred to the Department of Higher Education and Training, with an unqualified audit.

The Chairperson said that a summarised briefing should be given on Information and Communications Technology (ICT), since this was in the Annual Report. This division could return later to the Committee to give a full report.

Mr Mothunye Mothiba, Acting Chief Information Officer, Department of Labour, said that he would talk to page 35 of the Annual Report. The focus of ICT activities, until the end of the 2009/10 financial year, had been to ensure that the governance structures relating to PPP agreements were in place, to allow for monitoring of services. This had been done, and the structures were fully functional The Director-General had taken command of this process. Programme Managers were required to give Siemens their business requirements so that Siemens knew exactly what to deliver. The DoL had become aware that some systems were not moving, and had thus put in place a programme to document all items in the PPP agreement, to ensure that they were addressed. The results should become apparent in 2010/11. KPMG had also been contracted to do a review of PPP contracts, and the crucial recommendation was around governance, whereupon the DoL put measures in place to address the recommendation. Key challenges around ICT included inadequate capacity, especially in the CIO’s office, and delays, as outlined, from the service provider.

Discussion
The Chairperson said that the DoL’s Annual Report was important, as all other entities reporting after this would be judged by what the DoL had said.

Mr W Madisha (COPE) said that some of the information given today contradicted what the Minister of Labour had said in the National Assembly. He added that not all problems were addressed. He would have preferred the Department to outline the progress of implementation of remedial measures.

Mr Madisha asked why gender equality in SMS was not achieved, and what the DoL had planned to redress this. He also said that not all the objectives in regard to SETAs had been achieved, and here again, the Department did not outline a programme to handle the issues and achieve the objectives. It also had not outlined what it was doing about labour brokering, nor say what needed to be done.

Adv Phasha replied that employment equity was difficult to manage as employees came and left for various reasons. The DoL had developed a EE plan, which was one of the key strategic areas. Progress on EE was monitored on a monthly and quarterly basis. With the move of Skills Development staff to the DHET, there had been fluctuations, and it was not possible to say when the over-representation would be redressed, due to constant fluctuation.

Mr Ollis referred to page 13 of the presentation on security services, and asked why the DoL was providing security support at Ministerial izimbizos. A unit in the South African Police Services (SAPS) should be handling these matters. He asked what role the DoL had played in providing security to the Zimbabwean Ministerial delegation.

Adv Phasha replied that the Security Directorate performed various functions in the Department, such as vetting and pre-employment screening. At izimbizos, this Directorate co-ordinated security arrangements and looked into issues of access control. Before the events they assessed the situation. When the Zimbabwean delegation came, the Directorate had co-ordinated security and worked with SAPS and other security agencies.

Mr Ollis said that he was very concerned about point 2 on page 15, in relation to service delivery. The Department said that 65% percent of registered work-seekers were placed in permanent employment. However, the Minister of Labour had replied in writing to questions posed by Mr Louw, saying that total registrations were at 631 000, but 7 008 people were placed in employment. This represented 1%, yet the Department was claiming a rate of 65%, based on about 4 000 people. If this number referred to opportunities for placement, then the small numbers made sense. However, it was not put this one. Either the Minister or the Department was incorrect.

Mr Morotoba responded that the total numbers, for work seeker placement, were that 90 000 were to be trained, while the target in respect of placements was 63 000. The placement figure was reported on the document. The 23 000 figure represented a proportion of the 90 000, which was why the figures did not add up. The DoL had merely said that the figure was reported below. Placement was not only about jobs, as the numbers of people who came into the DoL also referred to those who had approached it for career counselling, learnerships and apprenticeships. There was a major question around people who were unemployed work seekers. He added that he may need details of the specifics to provide a full response.

Mr Ollis noted that Page 20 said that labour relations tends were not worsening, but they clearly were. It was a problem if people were not coming to the DoL.

Mr Ollis noted that only half of UIF claims were finalised within the targeted five week period.

Ms Zondeki replied that with regards to the performance of the UIF, there was an increased demand for services due to the economic recession. Due to this the DoL had had to engage with the UIF Commissioner to develop task-teams to help centres. The situation had since improved.

Mr Ollis thought that the figures on page 30, dealing with bursaries, were worrying because they were low, and this indicated that the DoL was not handing out bursaries to students who desperately needed the money. He asked why this was so, and what the Department was doing if it was receiving insufficient applications from learners who met the bursary requirements. He asked whether it, for example, advertised for additional learners or tried to understand why they were not meeting the requirements. In general, some targets were good and others were shocking. He asked whether the DoL should not be changing the targets where these had been exceeded.

Mr Morotoba replied that in regard to the NSFAS and NRF, the DoL had refrained from allocating bursaries on its own, and had decided to work with the two institutions. The DoL had given the NSFAS R51 million. As learners passed, the NSFAS was supposed to write off these amounts. At the end of the year, the NSFAS had under spent by R21 million. The Department had also raised the question around why there had been underspending. The Minister of Higher Education and Training had also expressed concern over this. A review of the NSFAS would shortly be done.

Mr Ollis referred to page 40, and said that small businesses often needed variations. This Committee had made efforts to help the embroidery industry, which had been turned down. He asked what the Department was doing to help small businesses, and what were the processes to get help.

Mr Kettledas replied that in regard to small businesses there were several mechanisms for variations. The Small Business Ministerial Determination of 1999 varied four conditions of the Basic Conditions of Employment Act (BCEA). Bargaining Councils had exemption committees, to whom any employer within the Council’s jurisdiction could apply for an exemption. Within the BCEA, there was a mechanism where an application could be made for a Ministerial Variation. For the specific example that Mr Ollis had raised, further information would need to be given. 

Mr Ollis asked what advice the Department gave to labour organisations who did not comply, provided that they were genuine.

Mr Kettledas responded that there were a number of areas where the Department provided advice. When a trade union applied for registration, it needed to submit its constitution, and it was possible that this may not comply with the law. In this case, the Registrar would point out the defects, and give the trade union time to correct them. Other reasons for non-compliance included the non-submission of a list of office bearers or non-submission of audited financial statements from already registered organisations.

Mr Ollis was concerned about the R5 million overpayment, and stressed that the money had to be recovered. He noted that the Department consistently overspent on administration yet under-spent on service delivery, which was what mattered to the public. He asked what the Department was doing about this.

Mr Kettledas said that the bulk of the staff in the DoL were in the Administration programme and that a large percentage of the under spending was related to employee vacancies, which the Department could not fill.

Mr Maduna responded that the Department was recovering the R5 million amount. He added that under spending on Administration had come as a blessing in disguise, as the Department was suddenly faced with a R30 million bill from the DPW relating to leases, which were not originally budgeted for. Overall, the DoL’s budget had balanced out.

The Chairperson asked for further clarity on security as she did not understand the manner in which the DoL co-ordinated its security work with State security agencies. She thought that the person dealing with security issues should rather interact with the State security agencies. The work of providing security for foreign dignitaries was the job of government security services, so she could not understand how the DoL was involved in such provision.

Adv Phasha replied that each and every department had a security section that provided physical security, securing of information and co-ordination of functions, with other State security departments. DoL’s security section worked closely with the SAPS and the National Intelligence Agency (NIA). When Ministerial delegations from other countries visited the Department, it would have to co-ordinate the availability of other agencies and ensure that the SAPS was there.

The Chairperson asked whether this was not an outsourcing of serious tasks to amateurs, although she thought that perhaps Adv Phasha might not be explaining it quite clearly. Security guards could not be used for VIP security. She asked for clarity on exactly what security in the DoL entailed. 

Mr Morotaba replied that in the DoL, “security” referred to guards, not people doing sophisticated work. Sometimes they did the physical work of security, although not VIP protection. He fully agreed with the Chairperson that this was important work.

Mr Kettledas added that security for foreign dignitaries was taken care of by SAPS’s VIP Protection Units, not departmental officials.

The Chairperson asked how the Department had come up with the statistical targets used as measurable objectives for 2008 to 2011. She also referred to page 39 of the Annual report, and asked whether the DoL deliberately set low targets in order to make its job easier. 

The Chairperson asked whether the private or public sector had registered more placement opportunities.

The Chairperson asked how far the DoL had gone in the professionalisation of inspectors and if they were dealing with complaints recorded in 2009 in that area.

Ms Zondeki said that the Department was strengthening the professionalism of inspectors and had developed job categories. It needed to ensure that there were funds to ensure professionalism. So far the Department had established a roving team of inspectors.

The Chairperson noted that on page 47 of the Annual Report, the Department reported on decreased incidents, which were ascribed to more workers knowing their rights. She asked whether the DoL had commissioned a study on this report, and, if not, how it had reached this conclusion.

Ms Zondeki added that that the Department had not commissioned a study on decreased labour incidents, but believed, after the information sessions it had held with workers, and the awareness campaigns, that the decrease could be ascribed either to the fact that people were more aware of their rights, or that they had been discouraged. The Department would have to look further into the matter. The  information reported was extracted from the statistics of the Labour Centres in the provinces.

Mr Kettledas replied that that the DoL did do some of its own research and analysis, but that some was commissioned outside and overseen by the DoL. The Department did not have a fully fledged research unit.

The Chairperson asked what the DoL was doing to address OHS in Kwazulu-Natal. The Annual Report did not give details on set targets.

The Chairperson said that in regard to the Auditor-General’s concerns, it was important to note the shifting of funds done by the Department, including the shifting from transfers to subsidies. This contradicted the Public Finance Management Act (PFMA), which did not allow for a transfer from capital expenditure to subsidies.

Ms Zondeki said that in regard to capital expenditure, the DoL had capital projects running through the Department of Public Works (DPW). Because of DPW problems, the projects could not be done. The Department had therefore approached the Minister on this.

Mr Maduna added that details were contained in the Annual Report around the necessary approval for the shifting of funds.

The Chairperson noted the qualified Auditor-General’s report on the Sheltered Employment Factories (SEF), due to the inability to verify the accuracy of calculations, and irregular expenditure of R3 million. She called for an explanation.

Mr Ziets Fourie, Acting Chief Executive Officer, Sheltered Employment Factories, Department of Labour, said that a new team had been appointed with PriceWaterhouseCoopers, who were to attend to the verification of financial calculations, but this team had been unable to comply with the Auditor-General’s request in time. With regard to cell phone contracts, he noted that the person was now reimbursing the SEF. The irregular expenditure related to the previous manager acquiring assets from Indlela, which had to be stored on private premises, as they were not related to the core function of the SEF.

The Chairperson noted the remarks by the Department that Siemens inaction had led to the qualified audit, and that in order to prevent recurrence, the Department had its own systems in place. Although she did not need an answer now, she requested that when the full ICT report was presented, the Department must also answer whether it was more confident in its own structures, and whether it was still paying Siemens for something that the DoL was now doing itself.

National Economic Development and Labour Council (NEDLAC) 2009/10 Annual Report & Financial Statements briefing
Mr Herbert Mkhize, Executive Director, National Economic Development and Labour Council, outlined the presentation on the Annual Report for 2009/10. He outlined that the National Economic Development and Labour Council (NEDLAC) was a uniquely South African seat of national social dialogue. NEDLAC was a representative and consensus-seeking body, which strove to promote the goals of economic growth, the reaching of consensus and the consideration of all proposed labour legislation. Its governance structure was composed of four constituencies. Businesses were represented by Business Unity South Africa, labour by the Congress of South African Trade Unions, the National Council of Trade Unions and the Federation of Unions in South Africa, government by the DoL, Department of Public Works, National Treasury, Department of Trade and Industry and other government departments. The community was represented by the Women’s National Coalition and various other community organisations.

The Labour Market Policy Work Stream (LMPWS) had become indispensable in dealing with national dialogue. In 2008/09, when the country was plunged into the electricity crisis, NEDLAC was summoned to deal with the issue. The NEDLAC social partners had emerged with an electricity plan. Again during the recession, NEDLAC developed a response to the global economic crisis. He emphasised that in both instances social dialogue was indispensable. The LMPWS was a key stream, and at a point in the Labour Market Policy Review the DoL would have to table something to NEDLAC. Other streams included the Trade and Industry Policy Work Stream (TIPWS), the Development Policy Work Stream (DPWS), the Public Finance and Monetary Policy Work Stream (through which NEDLAC architecture influenced where the budget was going), the Special Projects Work Stream (which had dealt with the response to the recession), anti-poverty strategy frameworks and Eskom’s World Bank Loan. There was also a Section 77 Work Stream, which was dealing with trade union issues.

He added that he had not included anything on human resources in this presentation, but it was in the Annual Report. Diversity in NEDLAC was a bit of a problem as it was struggling to find one white person to ensure that it met EE quotas. NEDLAC had received a clean audit in this financial year. However, it desperately needed more money. 

Challenges in the policy environment included policy uncertainty. NEDLAC needed to know what government intended to do about labour brokering. It did not help that the Department of Home Affairs also had not informed NEDLAC what it intended to do about foreigners. Policy uncertainties worried NEDLAC. The Employment Equity Commission had recently reported that, simply put, transformation in the country was failing, with poverty rates remaining high. Policy co-ordination between departments was not where it should be. There was another issue of global pressure, and whether the country should increase its debt to deal with social problems. The economy was not growing strongly enough and demand outstripped capacity. There was also a disconnect between what happened at National level in terms of social dialogue as opposed to Provincial and local levels.

Discussion
Mr Madisha welcomed the proposals on the way to proceed, and said that the Committee needed to sit down with the DoL and ask what needed to be done. NEDLAC alone could not shoulder the burden. 

The Chairperson said that in 2008/09 NEDLAC had been due to discuss the role of women in business.

Mr Mkhize replied that in relation to women’s’ roles in business there were two policy work streams, the TIPWS and the DPWS. The issue was that community organisations did not participate in the TIPWS, but only in the DPWS. The problem was that the issues were not in the DPWS. This was a matter that he was attending to. He apologised that at this stage he was unable to present anything concrete. There was a view within NEDLAC that in some cases it should not wait for government but that they should forge ahead with other partners.

The meeting was adjourned.