2011 State of the Nation Address: Impacts on labour, public enterprises, and communications

Meeting report

Chairperson’s opening remarks
The Chairperson noted that the Minutes and Koeberg Report would be discussed in the following week.

The Chairperson noted that the Parliamentary Research Unit would be giving a presentation on the impact of the State of the Nation Address (SONA), focusing on issues such as job creation and service delivery, which would help the Committee in its oversight over the Departments of Labour and of Public Enterprises. She asked that the researchers should also look at what was done in 2010, and how it was done, and that the way to proceed in 2011 should be outlined.

The Chairperson expressed her regret that a member of the Research Unit had needed to take leave of absence. She thanked her for her excellent contribution but was critical that the Unit did not advise what would be done when she had left. Some officials were displaying the wrong attitude to committees.

Mr Ighsaan Jahoodien, Senior Researcher, Parliamentary Research Unit, said that his team would ensure that there was proper distribution of information.

State of Nation Address (SONA): Impact on public enterprises, labour and communications:
Job creation and infrastructure
Mr Ighsaan Jahoodien outlined the underlying and overall theme of the President’s State of the Nation Address, which also outlined the concept of the developmental state. He quoted the President’s statement that “We want to have a country where millions more South Africans have decent employment opportunities, which has a modern infrastructure and a vibrant economy, and where the quality of life is high”, and said that this sentence captured the essence.

The impact of this Address on the Committee would relate largely to jobs, which was the focal point of the Address, whilst infrastructure was also important. Five key priorities of education, health, rural development, agrarian reform, the fight against crime and corruption, and creation of decent work, were carried over from a previous State of the Nation Address.

He reiterated that the key focus was on job creation, and this applied to every department. The six job drivers mentioned in SONA were indicated, and there was reference made to infrastructure development in the sectors of Agriculture, Mining, Beneficiation, Manufacturing, the Green Economy and Tourism. The President did not just mention infrastructure for its own sake, for important points had emerged, such as infrastructure becoming more competitive, being used to provide basic services and reducing the cost of that particular infrastructure. Mr Jahoodien further mentioned the link between infrastructure and the economy and infrastructure and people’s lives.

SONA had noted R75 billion spend by Eskom on new plants currently under construction at Medupi, Kusile and Ingula. He also reiterated the point about returning old plants to service. He also noted the new developments on renewable energy power producers and independent power producers, reflecting on the governments’ intention to purchase power from these independent power producers.

The President’s point on the relation between job creation and skills development for the youth and these programmes was also noted. He advised that it would be important for the Committee to engage with the Department of Public Enterprises to find out their future plans on this aspect. He also noted the large numbers for job creation stated by Eskom in its press briefing.

Mr Jahoodien moved to the aspects dealing with skills development and the 6 000 learners who had gone through programmes with Denel, Eskom, SAA and Transnet. He stressed the importance of recognising the amount of skills development available from these four entities, through bursaries provided for the development of the youth.

Mr Jahoodien also said that the infrastructure development aspects went beyond the borders of South Africa and this meant that the Committee may need to engage on New Economic Partnership for Africa’s Development (NEPAD) in the Southern African region. The President had stressed the need for continued support of North/South Infrastructure development. The implications of this on state owned enterprises (SOEs) was raised, with Mr Jahoodien requesting future oversight by the Committee as to the roles of Eskom and Transnet regarding this initiative.

He further said that this Committee may also wish to engage on the Department of Performance Monitoring and Evaluation, to which ministers would be submitting bi-monthly reports on performance, which would be very useful for the Committee.

Mr Jahoodien noted that the New Growth Path (NGP) was also a focal point of the Address, and this would need to receive attention by the Committee. Once again he reiterated that infrastructure development was one of the five drivers of jobs. He noted the target, for NGP, of 250 000 jobs. NGP also touched on infrastructure development within the Energy, Transport, Water, Communication and Housing sectors. Mr Jahoodien detailed the process of the way forward with regards to infrastructure development, from the expansion of the infrastructure to the maintenance of infrastructure and the replacing and refurbishing of dated infrastructure. The spin-off effects of infrastructure development around a manufacturing component were also highlighted in the New Growth Path, noting the point of maximising the benefits of this process, and the fact that economic empowerment by job creation was also included. . The factors to be taken into account included the roll out of infrastructure for areas most in need of it, such as rural areas. Rural areas also had the biggest water challenges, and the proposal of an estimated R26 billion allocated to water infrastructure for rural areas was also noted.

Electricity and energy was also mentioned in the New Growth Path. The targets to the year 2030 sought the doubling of electricity capacity. Mr Jahoodien said that the Committee must pay attention to renewable energy, which would be very important in future, given government’s aim to generate 33% of electricity from renewable energy. He further noted the aim to generate 25% of electricity from nuclear power.

The New Growth Path also noted the expansion of the rail network system and the rolling stock. A press statement by the Minister of Transport, on 15 February 2011, had mentioned that about 60% of the rail coaches were over 50 years old. These incurred costs for Transnet, and this factor must be taken into consideration. He also dealt with the  replacement of MetroRail and ShosholozaMeyl coaches. Track expansion was also on the agenda of the New Growth Path, but it would be a very costly procedure. The Minister’s encouraging of private sector investment suggested that government was perhaps following that route of infrastructure investment by the private sector.  

Mr Jahoodien outlined the money to be spent on infrastructure development. Mr Jahoodien suggested the promotion of labour through productive methods, and noted that labour intensive components to meet local manufacturing needs were proposed. This also aligned with the infrastructure message, and the NGP would promote competitiveness and sustainable development.

Mr Jahoodien began to outline the briefing of the Minister of Transport, but the Chairperson interrupted and asked him to focus on labour and public enterprises matters.

Mr Jahoodien noted the roll out of an estimated 3 000 kilometres of new transmission lines by Eskom, and the new medium term power purchase programme with independent power producers. He reiterated that the return to service of other power plants, and increase of coal stockpiles, were also areas for consideration by the Committee. The  allocation of R350 billion for electricity guarantees was also noted. A further R60 billion rand was to be invested into the books of Eskom and an estimated loan of R350 million US dollars would be sought, possibly from the World Bank and the Southern African Development Bank. These funds would be allocated to the development of solar and wind power plants. Mr Jahoodien stated that Eskom will be part of the job creation process through this initiative, as it would employ an estimated 5 000 young people, and offer 10 000 apprenticeships and employ 100 000 people during the build programme.

Labour and Transformation
Ms Sindisiwe Mkhize, Parliamentary Researcher, then outlined the key points on labour and transformation in the SONA. She noted the high levels of unemployment, noting a figure of 25% unemployment, with 4.3 million South Africans currently unemployed, of whom 2.7 million had been out of work for over a year. This showed that tax payers had a heavy burden in carrying the rest of the country and those who were unable to contribute to the tax base. This underlined the necessity for government to create employment, as the unemployment impacted on the economy.

The President had declared that 2011 was the year of job creation, through meaningful economy transformation, and an amount of R36 billion had been allocated for this task. The breakdown of this figure showed a R9 billion allocation to the Job Fund, R10 billion to the Industrial Development Corporation (IDC) and R20 billion for the manufacturing industry. Ms Mkhize mentioned other incentives such as promotion of the Small, Medium and Micro Enterprises (SMMEs) but stated that the main focus was to reach the target of creation of 5 million jobs by 2020. There had been much debate over this large target, and whether it would be possible to attain it, but this goal could be achieved if there were proper targets for growth in the economy.

Ms Mkhize said that the main question was putting large numbers into the labour market while assuring decent work. This raised the debate of “quantity versus quality”, and the task of creating such a large number of decent jobs was daunting. Some had even gone as far as to question the quality of the jobs available from the Expanded Public Works Programme (EPWP). The Decent Work Programme rested on four pillars. Employment and Income opportunities were fundamental in setting out principles and rights at work, drawing from the standards of the International Labour Organisation (ILO). The Unemployment Insurance Fund (UIF) and Compensation Fund (CF) fell under the second pillar of Social Protection. Ms Mkhize cited the New Economic Development and Labour Council (NEDLAC) as a shining example of social dialogue and tripartism, and it formed the third pillar. The fourth pillar related to fundamental principles and rights at work and International Labour Standards. A number of factors were considered under the fundamental principles and standard by which “decent work” was measured, and these included unionisation, which was related to freedom of association, the elimination of all forms of forced or compulsory labour, the effective abolition of child labour and the elimination of discrimination. The quality, and not simply the quantity, of jobs must be addressed. The entire process should not just be viewed as a number target in terms but more fundamentally as a target for quality employment of unemployed South Africans.

Ms Mkhize advised the Committee to carefully assess job creation statistics by comparing the numbers given and the quality of these jobs, and to note all the factors that had actually succeeded in job creation. She  mentioned the informal sector as the most performing sector during the past two years of the global economic recession, adding that this sector was known for its job insecurity and zero coverage for benefits such as medical aid and UIF, as well as being a sector where people literally worked from hand to mouth. The statistics showing its achievements in job creation ran contrary to the purpose of pushing the creation of decent jobs agenda.

The other issue addressed in the President’s speech was the Training Lay-off Scheme. This Scheme was established in 2009 under the NEDLAC framework, after sectors in which jobs were being laid off had been identified. Essentially there was a National Job Fund, and the R20 billion allocated for the next three years was considerably larger than the previous allocation of R2 billion. However, there were some concerns about the performance of this Fund. Even though it had saved 7 793 workers to date, this must be compared to the one million jobs shed. This seemed to run counter to the claims by government that the initiative was working. It should be factored in that the 7 793 people assisted probably had up to about six dependents each, but it was still too small. Because of these figures, and the amount of red tape, the Scheme had been widely criticised for not performing as anticipated. 

Another key objective of the State of the Nation Address was that of Labour Market reforms. The Portfolio Committee on Labour held public hearings last year, which were hotly contended, with much debate around flexibility of the labour market as opposed to what was being proposed.

Proposals were made to amend the Labour Relations Act, the Basic Conditions of Employment Act, the Employment Equity Act, and there was also a new Employment Services Bill. The amendments had been criticised and several unintended consequences had been highlighted. The President had also been criticised for an emphasis on cutting costs of business practices and administrative red-tape. She noted that the proposed amendments to the Employment Equity Act addressed questions of equal pay for equal value, and the role of the Labour Inspectors would become important in regulating enforcement and compliance. Proposed amendments to the Labour Relations Act related to the regulation of contract work, labour-broking issues, definitions of employer and employee and the identification and adjustment of administrative issues within the Commission for Conciliation, Mediation and Arbitration (CCMA).

Ms Mkhize noted that the Employment Services Bill addressed the legal status of employment services, decent work schemes for the youth, the promotion of employment opportunities for the disabled, the regulation of foreign workers and private employment agencies. The amendments altered labour-broking in that they clearly stated that no employer should employee a worker if there was no place of employment, and further inserted a requirement for direct employment. The role of private employment agencies had also been redefined, including the amendments on one employer. These amendments were criticised as introducing excessive red-tape for employers, as the challenges around continuously reporting on vacancies to the Department of Labour would involve extra administration and time. Figures and reasons for the employment of temporary staff must also be submitted to the Department. Any employer failing to report and register vacancies was liable to be fined, and this was likely to add to red tape and would increase time spent in and out of court.

Ms Mkhize said that the 2011 SONA was silent on the Wage Subsidy. Last year, the President noted that this initiative would be introduced, but it had since been cancelled. There had been much debate regarding this subsidy, with the Congress of South African Trade Unions (COSATU) arguing that it would create a labour market system where youth would be subsidised in preference to older workers who were not registered, and also believed that it would create a system where those who had been subsidized would get lower wages than permanent workers.

Communications issues
Mr Z Nene, Parliamentary Researcher, noted that he had only been in the job for two weeks but would try to give a presentation on the Department of Communications (DOC) and the entities in the broadcasting, telecommunications and broadcasting sectors, as well as Government Communications and Information Systems (GCIS).

The first part of the presentation focused on content analysis, and here he mentioned debate around the use of the term, which was used generically to describe measurements of content. It was also used to describe a specific analytical approach.

Mr Nene noted the changes from the 2009 to 2010 and 2011 SONA, noting that both 2009 and 2011 focused on job creation, with the main aim of building the economy and social infrastructure. There was a  comprehensive rural development strategy, which was linked to the land and agrarian reform issues, and to food security. Land reform would allow for social amenities and ITC infrastructure. This also covered the issue of land redistribution and security of tenure and restitution. The fight against poverty was addressed through food security. The improvement of the land’s health profile was also addressed in the SONA.

Mr Nene also noted the emphasis on the fight against crime and corruption and the building of a developmental state with improved public services and further strengthening of democratic institutions. In terms of job creation, he noted that the DOC and entities had a vacancy rate of 30%, as demonstrated by the Department’s Annual Report, but there was no indication whether or not these vacancies were funded. However, the President had highlighted that “all vacant posts” must be filled. The GCIS vacancy rate was 3.5%.

Mr Nene then referred to job creation, and said that rural development and the role of ITC in these areas, to ensure service delivery, was key, and this would also address people’s basic needs and create job opportunities. Rural development under the telecommunications mandate would see the construction of post-offices, roll out of power transmitters by SABC, and digital terrestrial transmitters by SENTECH. In addition, the establishment of ITC hubs and call-centres would stimulate growth and development of employment in rural areas.

With regard to connectivity and ITC infrastructure at education centres, the internet would present major opportunities for young learners through interface and use of technology, which in turn allowed for skills development at a young age. This entire process would also allow for job opportunities of SMMEs for training teachers, network access and the construction of computer laboratories. This process would further identify the specific needs of health centres and clinics, and again would assure employment opportunities.

A new feature of the 2011 SONA related to broadcasting. Government committed itself to assist in the conversion of analogue broadcasting to digital broadcasting. At the Regional Radio Telecommunications Conference of all the International Communications Unions, it was resolved that this process must take place globally, including Africa, Europe and the Middle East. Digital broadcasting had many challenges but also allowed for many employment opportunities for local content producers and manufacturers, and should prove beneficial. He added that South Africa currently represented 2.6% of the global frequency spectrum. Analogue posed a problem in compromising of picture quality and the limitation of channels for both television and radio, which would then defeat the purpose of having different media broadcasting in indigenous languages. He again highlighted the importance of migration. He noted the creation of the Digital Dzonga Council, which included all role-players in the telecommunications and broadcasting sectors, from manufacturers to retailers. Government had already assisted in job creation by ensuring that there would be local manufacture of set-top boxes, and the Department had committed itself to roll out of these to the poorer communities. Opportunities would arise for content producers and manufacturers, through the variety of broadcasting and would further contribute to job creation by employing local skilled and unskilled workers.
The manufacturing and the value-share component were important features, and this would again link, through the SOE and Department, to job creation and development.

The SONA also addressed the conversion of the Post Bank through ITC. Mr Nene noted that this would play a positive role in job creation and the achievement of the New Growth Path, and would reduce business practice costs, assist small business development and create and encourage the micro economic climate through the participation of various role players.

Mr Nene then dealt with the regionalisation of the economy. Although there was an intention to create jobs at a higher skilled level, there was still a need for relief for the unskilled, and the Post Office Bank conversion would address this by ensuring services rendered for those unable to do banking. This would create not only job opportunities but also would build infrastructure and reduce travelling costs to reach a bank.

Mr Nene said that the fight against crime and corruption would also play a role in job creation. A study done within the last two weeks showed that South Africans’ consumption of e-media had increased by 10%. However, this related to those with better access, who tended to be also more educated and affluent.  The DOC would be able to create jobs through the Electronic Communications Act and the establishment of the South African National Computer Security Incidents Response Team, who would ensure the regulation, conservation and prevention of the leaking of sensitive information.

Discussion
Mr M Jacobs (ANC, Free State) opened with the request for the standardisation of research reports. Although there was a comparison between the 2009 SONA and the 2011 SONA with additions to identify certain issues, yet figures and future plans were not clearly defined. Although some entities had been mentioned, they were not included in the presentation. He asked how each of the entities would be affected, and what its role in achieving the SONA focus of job creation would be, in particular South African Airways, Denel, Eskom and Telkom. He also asked the Research Unit to specify the response to job creation by the Department of Labour. He further enquired about the legislation which dealt with the issue of decent jobs. He was not impressed with the briefing on communications, which had not gone far enough

Mr Z Mlenzana (COPE, Eastern Cape) was in agreement with Mr Jacobs on certain issues. He thought that the relevance of this to the Committee should be highlighted. The style of presentation was more suited to the portfolio committees and it must be remembered that the Select Committee focused on interests of the regions. He did not think that information was presented consistently, nor was some information presented at all. He noted that there had been some repetition in SONA. Mr Mlenzana also suggested a formal and concrete proposal from the Research Unit setting out the information that the Committee needed for its decision making. The President outlined the way forward, and it was the duty of the Select Committee, assisted by comprehensive research from the Research Unit, to oversee, monitor, follow-up and check that everything was done.

Mr Mlenzana highlighted the lack of information about decent jobs, but stated that the Research Unit had not clearly stipulated what type of “jobs” these would be, or the numbers per year, how this would be achieved and expectancy. This information was needed, so it could be interrogated when the departments presented their strategic plans to the Committee.

Mr Mlenzana felt that a day should be set aside to examine the broadcasting digital migration issue, including the  role and link of SENTECH and the Department. Information was needed on the Japan SENTECH relations and the Southern African Development Community (SADC) resolutions. This information would assist in preventing any underhanded or irregular dealings and business practices, and would also enable South Africa to share in manufacturing the set top boxes, and ensure that there were no negative impacts.

Mr H Groenewald (DA, North West Province) stated that the Committee must look into the promises made by the President in the 2011 SONA. There should be accountability to the public for money spent and promises made, since some promises made in the past had not been fulfilled. It was necessary to look at what work was being done on the ground, and in this regard, the Research Unit could play a major role by doing research and proper investigation of the departments. Each department was allocated a budget and all involved must check where the monies were being spent and whether services were delivered. The Research Unit must monitor progress on the ground and when departments were not performing, its feedback would assist the Committee in raising these issues.

Mr Groenewald agreed with Mr Mlenzana’s comment about decent and sustainable jobs, pointing out that they could not be said to be sustainable if they did not last for any length of time. The crux of job creation was permanency, so that lasting benefits accrued to families.

The Chairperson thanked all the speakers. She reiterated that the Committee required information from the Research Unit to assist in analysing the strategic plans of the departments and SONA. She conceded that perhaps not enough time was given for the researchers to do a proper analysis, but the presentation was not in the format that would allow the Committee to do oversight. She referred the researchers to a document submitted the previous day on the achievements of 2010 and the plan for 2011. The information presented had not seemed to recognise the importance of the Select Committee. She also reiterated her concern that she had not been approached by anyone in the Research Unit to discuss what arrangements would be made to cover for the absence of the former Committee researcher.

The meeting was adjourned.