Department of Labour Strategic Plan 2011-2016 and Budget Vote 18: briefing

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Labour

14 March 2011
Chairperson: Mr M. Nchabeleng (ANC)
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Meeting Summary

The Department of Labour briefed Members on its Strategic plan for the 2011/12 financial year and the following four years. The Department highlighted issues of its Key Result Areas that it had merged with some of Government’s 12 key outcomes. This was what had informed projected goals and targets, of which the most important was Outcome Four: Decent Employment through Inclusive Economic Growth. The Department spoke in depth about its four main strategic objective programmes and the relevant issues these brought to the fore. The Department of Labour then summarised the Department’s financial budget Vote 18, with a comparison from the previous financial years. The Department also dispelled misperceptions about the withdrawal of certain funds from the Department.

Members asked why the Department had made allowance for the broad use of consultants and why these functions could not be performed internally. The Department responded that it would depend on the programmes and their specific needs, and there was a rigorous procedure before approving engagement of consultants. Some heated discussion ensued regarding the Department’s apparent funding of unions, specifically the Congress of South African Trade Unions (COSATU). The Department replied that it had not funded it, but had made payments to it, along with other institutions, to celebrate May Day. A lengthy discussion also arose over the Department’s definition of Decent Work. After discussion, it was decided to allow the Department to respond to this question in writing within five working days. Issues were also raised concerning the Unemployment Insurance Fund and Compensation Fund, as well as the perceived small improvement the Department had planned for in its Strategic Plan. 

 

Meeting report

Department of Labour: briefing
Mr Sam Morotoba, Acting Director-General, Department of Labour, told Members that his presentation was in two sections, of which the first dealt with the key outcomes that had been married with the Department’s own Key Result Areas (KRA) within the various programmes outlined under their strategic objectives. The most important, with the Minister having signed a performance agreement with the Presidency, was Outcome Four: Decent Employment through Inclusive Economic Growth.

There followed a the brief financial analysis of the Department’s finances and allocation for the coming financial year beginning 01 April as well as a summation of the previous financial years records. At the end of each programme outline, however, the Department provided the planned programme expenditure according to the stipulations the National Treasury had given.

The Department identified certain challenges that its programmes sought to, and continued to address, such as the challenges of unemployment, inequalities and unfair discrimination in the work place, the efficient handling of domestic and cross-boarder migration, the strengthening of labour market institutions and agencies as well as ensuring the development and implementation of effective instruments for constant performance monitoring. The Department also outlined some of the key strategic programmes that it would focus on for the 2011/12 financial year - reviewing and submitting amendments to various Labour Law Acts, such as the Conditions of Employment Act, Employment Equity Act, the Unemployment Insurance Fund Act and the Occupational Health and Safety Act. The Department also intended to rebuild public employment services, implement the Decent Work Country Programme as well as increase access to income protection services such as the Unemployment Insurance Fund (UIF) and Compensation Fund.

Programme One’s strategic objective focused on the administration of the Department and Ministry of labour, citing their goal to decrease their vacancy rate from 9% to 8% and have 70% of all misconduct cases finalised. Programme Two’s objective was on Inspection and Enforcement Services where the Department planned to increase compliance of all employers with all the labour laws and aimed to have conducted 10 000 inspections by year end. Programme Three dealt with the Public Employment Services. The Department noted that the current number of job seekers registered with Employment Services totalled 6 000. The Department also asked the Committee to be aware that the Sheltered Employment Factories, Unemployment Insurance Fund and the Compensation Fund would be presenting to the Committee soon. Programme Four concerned the newly named Labour Policy and Industrial Relations, previously known as the Labour Policy and Labour Market Programmes, which dealt with Employment Equity and Standards issues, as well as the international relations component of the Department. The Department continued to serve on the governing body of the International Labour Organisation (ILO) and would seek to strengthen South Africa’s interest and position in this body and engage other countries on international labour matters.

Mr Bheki Maduna, Chief Financial Officer (CFO), Department of Labour, briefed the Committee on the Medium Term Budget Policy Statement: Vote 18 for the financial year ahead. He made comparisons with the previous years and addressed the spent and unspent funds. He showed how the Department had fared well in decreasing the margin for unspent funds. He dispelled the misperception that the Department, due to large amounts of unspent funds, had some funds redrawn; this was not the case. He stated that the Department had certain functions transferred to the Department of Higher Education and Training, and funds allocated to those functions were transferred out of the Department’s budget. He also mentioned the option of a rollover of funds for the Department through a request to the National Treasury. The Department also highlighted that its funding was two-fold; there was the money allocated through the national budget as well as the Department’s requests for additional funding for certain programmes, some of which were granted and some rejected.

Discussion
Mr A Williams (ANC), asking about the strategic plan, raised several instances where the Department cited as little as 5% for improvement over the projected years, and in others showed no projected improvement at all. Referring to the Auditor-General’s report and the assessment of the Department, he voiced his disapproval of such a matter and stated that the ruling Government could not accept such a strategic plan that did not aim for 100% compliance. His second point concerned the consultants the Department had listed within its budget framework. He wanted to know who were these consultants, how much they would be paid and why. He asked if the Department could not do the work.

Mr G Boinamo (DA) asked what the Department meant by the term Decent Employment, because in his view, work was work, and why should people have to wait for the Government to produce decent work. He also mentioned his disappointment with the Department for not keeping with the spirit of Batho Pele, in that as yet, the National Compensation Office in Pretoria was still not accessible by people especially in the rural areas, even because of the breakdowns of the Department’s buses into those areas. He asked the Department what it intended to do to achieve Outcome Five - building a skilled and capable workforce. A skills audit was necessary for the country so that policy could be better driven to deal with it. He referred to page 29 [see document] where the Department outlined a goal of processing 30 applications in 30 working days; by implication this resulted in one application a day. He asked how this could be. With reference to page 50, he asked the CFO what the reasons were for non-expenditure on certain line items that the National Treasury ultimately refused to finance.

Mr I Ollis (DA) referred to page 8 [see document] asking the Department how exactly it was going to create decent employment through economic growth. He then added that in terms of the Department’s target of reducing vacancies to 8% it should rather focus on 5%. He asked for clarity on the number of job seeker placements the Department reported, stating that the Committee had received different figures and that in the future attempts should be made to keep the Committee abreast of such matters. He pointed to page 33 [see document] that outlined targets for the UIF and Compensation Fund, and wanted to know why the Compensation Fund was getting away with such lenient targets; the Department should be more stringent on this institution. He asked why the Department was funding trade unions, specifically the Congress of South African Trade Unions (COSATU) but not others. He referred to the budget outline that showed the Department having funded May Day celebrations. Mr Ollis also sought clarity on the Umsobomvu Youth Fund's transfers mentioned by the Chief Financial Officer, asking why the transfer amounts between the two financial years were so different. He ended with a question on whether the units that had been rejected for funding by the Treasury were not going to receive any funding at all, because if that was so, the sheltered Employment Factories were in trouble. How was the Department going to rectify this situation?

The Chairperson responded to the May Day issue, saying that it was important to recognise and celebrate it as South Africa was a member of the international community. As such the relevant Department to incur the costs for such a celebration would be the Department of Labour.

Mr Ollis interjected saying that he was not against the celebration of such an event, but wanted to know why the Department’s funding was not equitable. For instance, why was Solidarity not included in receiving funds? He believed that funding of trade unions was not the job of the Department.

Ms L Makhubela-Mashele (ANC) responded that Mr Ollis must do his research on which unions were being funded and which others were not, before he started lambasting certain unions and not others.


The Chairperson concluded that the matter of funding unions was, in fact, a clarity seeking question and discussion should rather wait until information was given, perhaps in written form for all Members to read, by the Department.   

Dr A Luthuli (ANC) commented that the Department’s strategic plan was not detailed, and in some instances vague, as to how and when it planned to do the things it set out to do. He noted that the strategic plans should be detailed accounts of the SONA (State of the Nation Address) and when they were not clear the Committee’s oversight function was hampered.

The Chairperson agreed with Dr Luthuli. With reference to the Inspection and Enforcement Services, he asked if the inspections were done only if the Department had received requests, or if initiative could be taken if Members of the Committee were made aware by something in the media perhaps. He also asked what happened to those workplaces that were found to be in non-compliance, what were the penalties and he wondered if it was possible to make non-compliance with the Basic Conditions of Employment Act a criminal offence.


Mr Morotoba called upon his colleagues to respond to those questions that were sector specific, but advised the Committee that matters pertaining to the UIF and Compensation fund would not be dealt with as these units were still to present in detail to the Committee.

Mr N Pasha, Acting Deputy Director-General: Corporate Services, responded to the proposed 5% decrease in vacancies within the Department, highlighting that in the strategic plan the Department had set a target of anything below 8%, of which the national standard was 6%. What was contributing to slowing down the process of feeding positions involved the verification and credit check process that took time to finalise. Answering the question posed about the Internal Audit targets being only 80% [page14], he responded by saying that with a new Internal Auditor it made more sense to set targets that were achievable and 80% was a starting point which was expected to grow by 5% year on year, which was achievable.

A member of the Delegation responded to the question of why only 30 applications were processed over 30 days effectively being one application per day. He stated that the process involved in each application had three stages and required the co-ordination of three different departments to see to it, those being the Departments of Labour and Higher Education and Training as well as the Sector Education and Training Authorities (SETAs) and of course the Commission for Conciliation, Mediation and Arbitration (CCMA) which send the applications to them. This process took time.

Ms Siyanda Nxawe, Deputy Director-General: Inspection and Enforcement Services, with respect to how the Department went conducting investigations and inspections, stated that the Department undertook pro-active inspections and reactive inspections. In the former spot checks and tip offs led to the inspections and in the latter there were routine inspections where employers were given notice. She then responded to the question of what the Department did when employers had not complied. It could issue contravention certificates or prohibition orders that could shut down workplaces or operations. It also had the ability to refer cases to the courts.


Mr T Mkalipi, Senior Executive Manager, took up the response to how the Department views decent work, clarifying that this was a term accepted as Government policy as well as that of the International Labour Organisation. This could be broadly understood to be jobs that ensured people had the right to social security, the right to representation and social dialogue amongst other things. However, noting the difficulty of this question the Department agreed to put this response in writing. As for the matter of funding unions, he categorically stated that the Department had never funded unions and did not intend to do so. The amounts that were reflected in the budget were payments made to unions and other organisations for their May Day celebrations, for which they lodged a request with the Department and had to account for every cent used; it was not only COSATU. He ended by responding on how the Department helped to facilitate economic growth, by saying that the Department was responsible for creating access to employee services as well as providing prevention and support for resolving of disputes that occurred in the workplace. The Department thus was helping to create industrial peace which was needed to gain economic growth.

Mr Morotoba explained the peculiar situation of the UIF and the Compensation Fund, believing that each had different difficulties in achieving their mandate and that this was what informed the targets set for them. The issue with the Department’s trucks being used in accessing the rural areas through a pilot project to create awareness around things like the Compensation fund, was that a few of them had run into a few problems due to the bad roads and their suspension and height was not being adequate for that terrain, but this was being worked on. As for the Department and how it plans to help create employment, he highlighted that both the UIF and Compensation Fund had large reserves of which a portion of that money went to the Public Investment Commission that invested in massive job creation projects on behalf of the Department. With regards to the differences to the amounts transferred out to Department of Higher Education and Training for Umsobomvu, the change over of functions occurred over two financial years. Mr Morotoba also noted the space limitations in the presentation that resulted in not providing a breakdown for the exact numbers of job seekers who had been placed and registered, but this would be sent to the Committee in writing.

The Chairperson interrupted, asking “where is the money being invested, and how is it performing?”

Mr Boinamo also wanted to know what would happen if the Department’s investments went insolvent.

Mr Morotoba asked the Chairperson to hold off on these kinds of questions until these two entities presented in detail to the Committee when they would also provide detail on their investments, as these decisions were guided by actuaries and strict guidelines from Treasury. He continued to answer questions on the Sheltered Employment Factories [page 38], clarifying that the request made to Treasury for this scheme was for additional funding above and beyond what the Department had already allocated, so there was no need to worry.  

Mr Bheki Maduna explained that it was hard to predict in the Strategic Plan how much would be spent on consultants as those figures were not yet available; it would be clarified better in the Annual Report. He also answered the question posed about why the target for the effective management oversight on public entities [page 8] was set at 90% for all the years and not 100%; he stated that due to the difficulties incurred on the ground as well as departments not meeting deadlines, it was impossible to set the target at 100%. He finished by elaborating on the non expenditure items. These were non-core items which could not always be predicted such as travelling costs.

Mr Williams was disappointed with some of the responses, especially to the non-response on why some of the expected targets were at 0% over the period of five years. He also believed that the Department did not have a hold over its finances, as outlined in the Auditor-General’s report, and suggested that the Department got a copy of this report and rectified its act.

The Chairperson inquired how the Department reached its budget figure for proposed consultants if it could not give a clear indication of how much would be spent on consultants.

Mr Morotoba replied that at the end of each programme there was an outline of the budget for that programme. This included how much could be spent on consulting. He maintained that there were procedures that had to be followed before consultants were brought in, such as applying to the accounting officer stating the need for consultants and why that work could not be done internally. Consultants must also be chosen from a database where all consultants had been checked and verified. He then responded to the low percentage output targets, by saying that while 100% was ideal it was not always realistic and the Department had to acknowledge those difficulties when compiling the strategic plan. He concluded by promising that his Department would send a copy of the summary of its achievements within the past year so that Members could know how well it had done so far. This would be sent in writing.

The meeting was adjourned.

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