Key labour issues: Department of Labour Workshop

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Employment and Labour

28 February 2011
Chairperson: Mr M Nchabeleng (ANC)
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Meeting Summary

The Department of Labour (DOL) presented an overview of its organisational structure and function to the Committee. An outline was given of the mission and values of the Department, how it was structured, the legislation that applied to it, and the role and purpose of each of the five branches, as well as the responsibilities of the head of that branch. There were five programmes run by the Department for 2010/11. The purpose, structure and function of the Unemployment Insurance Fund, the Compensation Fund, the Commission for Conciliation Mediation and Arbitration (CCMA), Nedlac, Productivity SA and Sheltered Employment Factories (SEF) were outlined. The Department and the two Funds were based in Pretoria, but there were nine provincial offices, 125 labour centre offices and 20 mobile units that were used to access remote areas. The Department provided services in 72 of the 139 Thusong centres. It was noted that some aspects of the presentation, including the budget, would not be addressed at this meeting, but would stand over until 15 March.

Members asked what legislation was in place to regulate public employment services and agencies, and asked for more details on the performance management systems and DOL presence on the ground. Members asked for and received detailed information on the worth of the UIF (R52 billion), how it addressed the risk of corruption, how it worked and how benefits were calculated. Members asked how the investment decisions were made, and cautioned that this money was not government money but must be protected for the benefit of those who lost their employment, and perhaps some discussion was needed on amendments to the UIF Act. Members asked for an outline of the purpose and function of the Department as a whole. A Member was critical of the mobile vehicles chosen, since they did not appear to be able to cope with rural roads. Members then asked how forms of work were declared essential services. The Department outlined that this was decided after application had been made by the employer, not a worker or the public, to an Essential Services Committee under the Labour Relations Act, and detailed that the notice and motivation would be distributed also to trade unions and other interested parties, since the declaration as an essential service limited the right to strike, and in this regard it was noted that the Constitutional right to strike was not unlimited, and that Service Level Agreements after a declaration of essential services regulated the position. Members asked for a list of essential services, and asked what the consequences were if workers went on strike in defiance of the declaration, what determined whether it would be declared essential and whether the Department itself could declare a service to be essential. 

Meeting report

Key Labour Issues: Department of Labour (DOL) briefing
Mr Sam Morotoba, Acting Director General, Department of Labour, gave the Committee an overview of the Department of Labour (DOL) organisational structure and function. He outlined the DOL’s vision, as well as the stated purpose, values, its presence throughout the country and its legislative mandate.

Mr Morotoba indicated that the vision of the DOL for the South African labour market included an environment of investment and economic growth, job creation and decent work. In order to achieve this, the DOL would need to regulate the labour market, ensure the integration of the unemployed into the labour market, ensure enforcement of all labour legislation and the protection of the unemployed and injured. The DOL’s work was predicated on the values outlined by Mr Morotoba, which included the treatment of all workers with dignity, care and respect. The DOL respected and promoted client centred services, accountability, integrity, education and development. The DOL adhered to the Batho Pele Principles, as well as the Department’s Service Charter. There was a performance management system for all employees.

Mr Morotoba outlined the presence of the DOL on the ground by explaining that the Department’s headquarters, as well as the head offices of the Unemployment Insurance Fund (UIF) and Compensation Fund (CF) were in Pretoria, with a country wide presence of nine DOL provincial offices, as well as 125 labour centre offices and 20 mobile units, which were used to access remote areas. Mr Morotoba added that the DOL provided services in 72 of the 139 Thusong centres.

He set out the legislative mandate of the DOL, noting the Acts that it must enforce (see attached presentation).

He then outlined the structure of the upper level organisation of the Department of Labour. The Minister of Labour was Hon Mildred Oliphant. The post of Director General was currently unfilled, and Mr Morotoba was therefore serving as Acting Director General. The DOL had five branches, including the Chief Operations and Corporate Services, Inspection and Enforcement Services, Public Employment and Services, Labour and Policy, and Industrial Relations. The DOL also administered the Unemployment Insurance Fund, as well as the Compensation Fund. It had five main delivery programmes in 2010/11, which were Administration, Inspection and enforcement services, Public Employment Services, Labour Policy and Labour Market Programmes, and the Unemployment Insurance Fund and Compensation Fund. For the UIF and CF, the DOL received a special allocation from the budget to cover employees seconded across from the Department.

Mr Morotoba described the detailed function of each of the branch heads, as well as the Director General (see attached presentation). The Director General had to provide strategic leadership to ensure overall efficient and effective management of the DOL. This included assuming overall management and accountability for all DOL resources, ensuring that poverty was alleviated through the use of the UIF and CF, providing strategic leadership, ensuring that actions supported the provision of decent working conditions and providing public employment services.

Mr Morotoba then outlined the functional responsibilities of the five Deputy Director Generals (DDGs). The DDG of Corporate Services was tasked with providing effective and efficient management over the human, financial and asset resources, as well as the strategic transformation, corporate governance and change management processes within the Department. Corporate Services attended to the function of managing all services directed to financial management support, internal and external communication, human resources, legal services and efficient and effective ICT service. The Operations Branch thus provided efficient operations management of the rendering of core services, including service delivery points, and this was linked also to monitoring, coordination and evaluation of service delivery in all provinces. The Chief Directorate of Provincial Operations had a similar role, but on a smaller scale. Its purpose was to ensure compliance with legislation administered by the DOL, while ensuring effective management of resources in the provinces.

The DDG of Inspection and Enforcement Services was tasked with ensuring the development and review of inspection strategies and directives, and then enforcing them. This was done through the coordination and conducting of inspections, the identification of high risk and problematic sectors and the development of necessary interventions, and the development and implementation of advocacy and educational strategies.

The Public Employment Services branch provided public employment services, to assist companies and workers to adjust to changing labour market conditions. It would also regulate private employment agencies. It had three main functions: the development of relations with employers, work seeker registration and placement services, and the provision of employment through sheltered employment factories and disability workshops.

The purpose of the Labour Policy and Labour Market Programmes branch included the coordination and development of labour policies and labour market programmes. This branch fulfilled the functions of facilitating and monitoring of the labour market and support programme related initiatives, the implementation of labour laws, and the participation and coordination of government’s interaction with social partners at the New Economic Development and Labour Council (Nedlac).

Mr Morotoba then outlined some of the entities associated with the DOL. These included the UIF, the Compensation Fund, the Commission for Conciliation Mediation and Arbitration (CCMA), Nedlac, Productivity SA and Sheltered Employment Factories (SEF).

The stated purpose of the UIF was to alleviate poverty in South Africa by providing short term unemployment insurance to all workers who qualified for this benefit. In relation to the Compensation Fund the DOL had to provide strategic leadership in achieving the vision, mission and objectives of the CF, as well as developing strategic plans in line with the mission, and translating them into achievable objectives, as well as championing institutional transformation.

The CCMA was established in terms of the Labour Relations Act as an independent body with national jurisdiction. The CCMA existed to try to reach conciliation on workplace disputes, establish picketing rules, facilitate the establishment of workplace forums and statutory councils, accredit bargaining councils and consider applications for subsidies for dispute resolution by bargaining councils and private agencies.

Nedlac was the seat of national social dialogue in South Africa, and was in many ways a uniquely South African model. It was set up in 1994. It was a representative and consensus-seeking body whose three chambers of business, government and labour sought to reach agreement on policy matters through negotiation and discussion based on mandates.

Productivity SA was established in 1971 as a Section 21 national productivity institute company, but was later re-established as a Schedule 3 public entity under the Skills Development Act of 1998. Productivity SA aimed to promote a culture of productivity in various workplaces, as well as developing relevant productivity competencies and facilitating productivity improvement and competitiveness in the workplace. It was also concerned with conducting productivity research.

The Sheltered Employment Factories were established in 1948. They were intended to provide work opportunities for disabled people. They facilitated on-the-job training, and helped in job placement for disabled people. They also provided technical assistance to emerging and existing enterprises that promoted the employment of people with disabilities.

Mr Morotoba began to review the proposed budget for the Department of Labour. However, the Chairperson asked that any discussions on the budget should be held over to the meeting of 15 March.

Mr I Ollis (DA) asked what legislation was in place to regulate public employment services and agencies.

Mr Morotoba answered that the DOL was no longer responsible for the Skills Development Act, since a presidential proclamation issued on 1 November 2009 moved the responsibility from the DOL to the Department of Higher Education and Training (DHET). Only employment services were left under the jurisdiction of the DOL.

Mr A Williams (ANC) asked for more details to be provided on the nature of the performance management systems, as well as the extent of the DOL presence on the ground.

Mr Morotoba answered that unfortunately he did not have the map showing the full presence of the DOL to show the Committee, but drew attention to the number of ground units shown in the presentation. He added that the mobile units were not fully functioning, but that the extent of the DOL’s reach was dependent on the budget.

Mr Williams also asked for clarity on the UIF, how much it was currently worth, and what was being done to fight corruption surrounding these funds.

Mr Morotoba said that the UIF was currently was worth R52 billion. He said that the nature of both the UIF and Compensation Funds meant that they faced the risk of corruption. A number of cases of corruption had already been investigated and prosecuted. He also commented that all senior management members of the DOL had signed performance management agreements.

Mr Ollis asked for an explanation of how the UIF worked, and how the calculation around benefits to applicants was done. He also asked whether an employer could pay the contributions in bulk to the UIF.

Mr Boas Seruwe, Unemployment Fund Commissioner, answered that the UIF was administered by a board of governors, but acted in an advisory role to the accounting authority. The UIF was a fund to which every employee earning below a certain threshold (R12 500) must contribute. 2% of the salary was paid into the Fund, with 1% being contributed by the employer, and 1% by the employee. The UIF handled R450 million annually, and was currently worth around R52 billion. The contributions received would be invested, and, depending on the market, earned around R250 million in interest annually. Any surplus from the UIF would be invested into government bonds. The UIF had been financially evaluated and found to be in a sound position.

He then detailed the formula used to determine the benefit payout. This was calculated by the number of credits accrued over time. For every six days that were worked, one credit was accrued, up to a total of 238 credits. This translated into eight months. Mr Seruwe added that the UIF worked on the basis that the higher the salary lost, the lower the percentage would be paid out, so the percentage ranged from between 38% of monthly income, in the case of higher salaries, to 60% of monthly income for lower salaries.

Mr Ollis commented that he had not understood how the UIF calculation was done.

A Member asked for clarity on who ultimately decided on what would be invested. He wondered if the surplus could not be used to further job creation.

Mr Seruwe answered that the different investments were widely distributed, but that in respect of the excess the investments were increasingly being made into the equity market.

The Chairperson cautioned the DOL on the types of investments undertaken by the DOL, and commented that those that were chosen must be safe investments.

Mr Ollis added that the money invested in the UIF was not tax, and that the UIF was functioning like an insurance fund. He added that the investments needed to be very carefully considered, and it must be remembered that the money in the UIF did not in fact belong to government. A discussion on the amendment of the UIF Act would help to ensure that better served the poorer workers who needed to benefit from the Fund.

The Chairperson said that he would like Members to focus on the key role and purpose of the Department.

Mr Les Kettledas, Deputy Director General: Labour Policy and Industrial Relations, Department of Labour, commented that the DOL existed to regulate and protect the labour market. Workers and employers must have their rights protected so that the economy could grow, in accordance with the vision and mission of the DOL.

Mr Morotoba added that there were many role-players in the labour market who had an influence in the smooth running of the labour market. Trade unions and employers’ unions were also pivotal in ensuring cooperation.

Mr Thembinkosi Mkalipi, Chief Director, Department of Labour, added that the laws were intended to protect both the employees and employers.

The Chairperson noted that some of the matters on the agenda would need to stand over until after the Minister had presented the budget, as there could be some changes to the Strategic Plan. The legislation would not be discussed until it had been referred by the House.

The Chairperson made an observation on the mobile stations and the buses used. These were too low-slung to be driven on rural roads. He asked how the remote villages could realistically be reached and noted that commitment to work was the only factor that would make a difference. He asked why the wrong buses had been chosen for the purpose in the first place, if they were deemed unsuitable.

Mr Ollis then enquired how a particular form of work was declared an essential service. He wondered if the military would be declared as an essential service.

Mr Mkalipi, explained that the Essential Services Committee was set up under the Labour Relations Act and was housed at the CCMA. The Committee was comprised of two representatives from labour and business, and an independent person appointed by Government in consultation with social partners. An employer or government department was required to apply and motivate that it should be considered an essential service, and this was done through the CCMA. The notice and motivation would then be distributed to the trade unions in the organisations, or other interested parties, for their comment, because a declaration as an essential service interfered with the right to strike. The Committee would decide whether the service should be declared as essential, after it had listened to input from both parties. If it was declared essential, then workers in the service would not go on strike, but their wages and salaries would be negotiated through arbitration.

Dr A Luthuli (ANC) asked for the list of essential services.

Mr Mkalipi said the declaration of essential services was published in the Government Gazette, and was available on both the Department and CCMA websites.

Dr Luthuli asked what would happen if workers went on strike and ignored the essential service declaration.

Mr Mkalipi said if workers went on strike, and had not followed procedure, the employer had the right to interdict the strike. In addition, the employer could give the workers notice, arising from their breach of contract, and dismiss them. However, essential services were bedevilled by the Service Level Agreement, where both parties had to agree on the level of service needed before workers could go on strike. In the past, parties had not been able to reach the minimum Service Level Agreements, and so the unions had argued that because these agreements were not in place, the workers were entitled to go on strike. Employers, for their part, argued workers in these services were not entitled to go on strike even if there was no Service Level Agreement in place.

Dr Luthuli commented that the situation was very clouded, and nothing was concrete.

The Chairperson asked for explanation of essential services, with or without application by the employer. He referred to the recent strike by health professionals that had resulted in unnecessary loss of life. He asked if the declaration as an essential service was dependent on an application being made by the employer, or whether it could be declared.

Mr Mkalipi replied that the Constitution guaranteed the right to strike, and there was no law that prevented strike action. However, there was a law that said that Constitutional rights could be limited. The Labour Relations Act (LRA) set up an Essential Service Committee, and this, following application and motivation, would decide whether to limit the right to strike in specific areas. The international approach was that it was not possible to declare the whole sector essential. Thus, for example, not everybody who worked in Baragwanath Hospital would fall in the category of “essential service” and, for instance, only people working in areas such as the Intensive Care Unit (ICU) could be declared essential. The same applied to municipal services.

The Chairperson asked what determined a service being declared essential, and whether the Department of Labour had the right to declare any service essential, or whether that was dependent on an application by the employer or municipality.

Mr Mkalipi replied that the Department of Cooperative Governance and Traditional Affairs could bring an application on behalf of all the sections in municipalities. The Department of Home Affairs had applied for the declaration of immigration officials at the border posts as an essential service, but had not succeeded in this yet as the matter was subject to a court action. A  service could only be declared essential through application being made, and justification of the request.

Dr Luthuli asked what would happen if workers disregarded the agreement and went on strike.

Mr Mkalipi said that if processes were not followed, the workers would lose protection of the law against dismissal. The employer could institute disciplinary action against workers who took strike action. The only challenge for the employer would be implementation of the disciplinary process against large numbers of workers. The employer would have to act fairly, as some of the workers might not actually have gone on strike action, but could have been away sick on the day of the strike.

The Chairperson observed that workers in essential service risked loss of protection against dismissal if they went on strike without following procedures, and were at the mercy of their employer. Although under the Constitution workers had the right to strike, there were certain obligations that had to be fulfilled before they went on strike. However there should be ways in which workers’ concerns would be addressed.

Mr Mkalipi emphasised that contracts differed. It was the employer’s responsibility to ensure that it was reflected in the contract that the service was essential, otherwise these contracts could not be used as disciplinary tools in the event of a strike action by employees.

Mr Ollis asked whether the public could petition for a service to be declared an essential service, for example, if patients were unhappy with the lack of treatment in hospitals during a strike.

The Chairperson commented that it would be easier if things were done by structures than by individuals.

Mr Mkalipi reiterated that it was the employer’s responsibility to apply for essential service. Workers would never apply to be regarded as an essential service. There was no avenue for the public to apply for companies or services to be declared an essential service. All major critical operations had been declared essential services, and a list would be made available to the Members. In the last three years, one or two cases had come in for approval, the last being the Department of Home Affairs border posts staff. There was no backlog of applications. The main issue was whether both workers and employers respected the fact that they had been declared as essential services, and this was borne out by the strikes that took place recently in those service areas deemed essential services.

Mr G Boinamo (DA) asked whether school governing bodies could apply for listing of the school as essential services.

Mr Williams commented on the issue of fire-fighters strike, saying that, through collective negotiations with South African Local Government Association and the Municipal Workers Union, some firefighters would be able to go on strike, on the basis that the essential services had only been reduced but not entirely affected.

The Chairperson observed that the issue had been debated satisfactorily. It was clear that relevant organisations applied for declaration of essential services. He asked that the list of essential services and the composition of the Essential Services Committee be provided to the Committee.

The meeting was adjourned.


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