Commission for Conciliation, Mediation and Arbitration & Productivity South Africa: Strategic plans 2011

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Employment and Labour

21 March 2011
Chairperson: Mr A Williams (ANC)(Acting)
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Meeting Summary

The Commission for Conciliation, Mediation and Arbitration (CCMA) and Productivity South Africa (PSA) presented their 2011 strategic plans to the Committee. The CCMA outlined its operating principles and functions, and noted that its strategic plan was entitled “Siyaphambili”, meaning “We are moving forward”. It aimed to enrich its role in the labour market, build skills to achieve professionalism, deliver excellent service rooted in social justice, enhance systems for best deployment of resources, and monitor and track progress, through a new scorecard, of the strategic plans. Most of its funding came from the fiscus, at R448 million for 2011/12, but other revenue was also outlined, and it aimed to reduce its previous deficit down to R12 million in the current year, and to zero by 2012/13. It outlined its achievements, which included saving of almost 9 000 jobs through various categories of interventions. A total of 38 221 employees were likely to be affected during the financial year. It had managed to maintain relative industrial peace, and indicated those major national disputes where it had successfully intervened. It had received a Silver award for best reputation.

Members noted that part of the mandate of the Committee included an examination of the relevance and value for money of such an organisation, and noted that South Africa had one of the largest and most expensive offices in the world, and whether this could not be successfully reduced. Members referred to the grievances expressed by part-time commissioners and members of the public, including allegations of financial wrongdoing, raised last year in the Committee, and enquired what had been done, and what the Governing Body had also done to address the findings in the Auditor-General’s report and to ensure that the same irregularities did not recur. They were critical of the fact that the strategic plan in their possession was not signed, and that budgets were not attached.
They also questioned why there were no more specific time frames, and how democratisation of the workplace could be achieved. They noted the phenomenon of forum shopping and asked that the CCMA should compile guidance documents, asked about cancellation and possible reinstatement of a contract with Thabiso, payment errors, why vacancies were still listed if they were not needed, filling of vacancies and R308 million spending on goods and services. They enquired why the requested budget had not been given, and urged that all outstanding issues must be rectified.

Productivity South Africa outlined its history, approach, and aims. It would promote collaboration between management and labour, encourage an internalised productivity mindset, and promote social and environmental sustainability, seeking to achieve delivery through partnerships. It managed several strategic programmes around value-chain competitiveness, business recovery and turnaround, and improving production. The main focus lay currently in the Turnaround Solutions projects, which aimed to save jobs, manage retrenchments and create jobs, funded by the Department of Labour (DoL) and under the auspices of the Unemployment Insurance Fund (UIF). The percentage of interventions was outlined, showing a focus on agriculture, civil and construction fields, clothing and textiles, and manufacturing. Most redundancies resulted from automation or cheaper imports, although construction took a downturn after the World Cup. One-third of interventions happened in the Free State, followed by Western Cape and North West. Its attempts to bring management and labour together were outlined, as well as proactive impact assessments and early warning systems. It focused on research, workplace challenge programmes, information technology and knowledge management. It targeted assisting 150 companies in the Workplace Challenge Programme, conducting 12 workshops and helping 20 clusters and groups. It aimed to increase its brand and profile, and noted that the Productivity Awards were a key component. Training programmes were also important, both for intermediaries, other companies and its own staff, and targets were outlined. It hoped to receive R35 million from National Treasury, R55 million from companies whom it assisted with turnaround solutions, around R8 million from the Workplace Challenge Programme, and R10 million from other income. The highlights of the 2010 financial year were indicated, and the challenges included its inability to reach the critical mass, due to severe funding limitations and limited regional presence.

Members enquired about relationships with the Department of Labour and Public Administration Leadership and Management Academy, as well as development agencies at municipal level, noted relationships with Sector Education and Training Authorities, and asked about relationships also with the South African Bureau of Standards. Members generally expressed their concern with the under funding and offered the Committee’s assistance, although one Member questioned why the budget was not attached to the plans, and called for its submission, and asked about National Treasury’s reasons for not granting more funding, and whether PSA would be able to spend more funds. Members questioned why most interventions were in Free State and encouraged it to do more in other provinces, including Mpumalanga. They asked when the final Chief Executive Officer appointment would be made, and queried the gender equity, the Talent Management Committees, and whether its presence during the World Cup was the result of its own efforts. They also enquired about the training course standards, and asked about the use of consultants.


Meeting report

The Committee Chairperson, Mr M Nchabeleng (ANC), asked that Mr A Williams (ANC) act as Chairperson for this meeting. He noted that the Minister was unable to attend as she was attending the International Labour Organisation (ILO) Conference in Geneva.

Commission for Conciliation, Mediation and Arbitration (CCMA) Strategic Plan 2011
Ms Tanya Cohen, Chairperson, CCMA governing body, tendered apologies for other members of the CCMA governing body, giving the reasons also for their inability to attend.

She stated that the operating principles of the CCMA were based on integrity, diversity, transparency, excellence, accountability and respect. She outlined that the CCMA existed to conciliate workplace disputes, to arbitrate disputes that remained unresolved after conciliation, and to facilitate the establishment of workplace forums and statutory councils. It would also compile and publish information and statistics about its activities, consider applications for accreditation and subsidy from Bargaining Councils and private agencies, and supervise ballots for unions and employer organisations, as well as give training and advice on the establishment of collective bargaining structures, workplace restructuring, consultation processes, termination of employment, employment equity programmes and dispute prevention.

The Governing Body (GB) of the CCMA consisted of a Chairperson, three representatives each from organised labour, organised business, and government, as well as a director. There was an independent Audit Committee. Four committees reported to the GB, namely the Finance and Risk Sub Committee, the Human Resources Sub-Committee, the Nomination and Governance Sub-Committee and the Accreditation and Subsidy Sub-Committee. She also outlined that the director also received reports from the Legal and Arbitration Department, the Capacity Building and Outreach Department, the Mediation and Collective Bargaining Department, the Corporate Services Department, the Chief Financial Officer, and two General Managers of Operations, one being responsible for convening the ten Senior Commissioners.

She tabled the Strategic Plan for 2011, noting that its title, Siyaphambili, meant ‘We are moving forward’. This strategic plan was built on previous plans, to enhance business continuity, and included input from all key stakeholder groups. It set out goals and strategic objectives, key performance areas and measurable outcomes for the organisation over the five years from 2011 to 2015.

Ms Nerine Kahn, Director, CCMA, outlined the strategic objectives, which include enriching the role of the CCMA in the Labour Market, building skills to achieve professionalism, delivering excellent service rooted in social justice, to ensure a balance between quality and quantity, and enhancing and entrenching internal processes and systems for optimal deployment of resources. It would also align the structures to enable optimal implementation of the strategy, and entrench an organisational structure that supported delivery on the core mandate.

She noted that the CCMA considered its human capital to be its core resource in the execution of its mandate of dispute resolution. It therefore aimed to have the best human resources practices around recruitment and retention, succession planning, employment equity, maintenance of sound labour practices and optimum usage of the performance management system that was embedded in operations. It would also revitalise its skills base through training, encompassing management development and technical skills development.

Mr Ngoako Sekgololo, Chief Financial Officer, CCMA, said that the CCMA was working to establish a system that would enable it to monitor and evaluate the impact of its offering on the economy, and whether it was reaching its goals of fair democratisation of the workplace, equity and economic development. A quarterly review would be presented to the governing body, in line with the strategic thrust of the institution. A scorecard had been developed to monitor and track progress of the Siyaphambili strategy. This listed the key performance areas under every strategic objective, outlined the targets for 2015, and tracked incremental progress between 2011 and 2015.

He outlined that CCMA received most of its funding from the fiscus. He tabled a slide that indicated that the allocation for the 2011/12 financial year was R448 million. Non-fiscal revenue would amount to almost R12 million. During 2008 to 2010, CCMA had accumulated a total deficit of R47 million. This would be reduced to R12 million in the current financial year, and would be further reduced to zero by 2012/13.

He gave a summary of how the grant would be applied to fund the different strategic objectives up to 2013/14.

Ms Kahn concluded by illustrating the impact of the CCMA’s work in the labour market. Its achievements included saving almost 9 000 jobs, through various categories of interventions. A total of 38 221 employees were likely to be affected during the financial year. The CCMA managed to maintain relative industrial peace in the run up to, and during, the 2010 FIFA World Cup. It had successfully intervened in major national interest disputes, including Transnet, Metrorail, Eskom and the motor industries. It received a Silver Public Sector Excellence Award in the category of Best Reputation in the Legal Sector. It had also, for the last two years, been nominated as one of the top three organisations in the Legal Sector by citizens of South Africa.

Discussion
Mr G Boinamo (DA) noted that the strategic goals were stated, but no time frames were attached, and he wished to know by when the goals must be achieved.

Ms Cohen replied that the strategic plan covered 2011 to 2015. By 2015, all the goal s and objectives had to be achieved. Although the CCMA had concentrated, in this presentation, on the position for 2011/12, the full strategy could be seen in the documents circulated to Members.

Mr
Thembinkosi Mkalipi, Department of Labour representative on the CCMA Governing Body, said that the CCMA came to Parliament to present its strategic plan and its annual report. The latter would indicate what the CCMA had achieved, and how these related to the goals in the strategic plan.

Mr Boinamo noted the comment that CCMA wanted to “democratise” the work place, but he asked if this was achievable, given that democracy was about choice.

Mr I Ollis (DA) had understood that the Portfolio Committee had a dual role in regard to the CCMA. One aspect related to interrogation of the activities of the entity. The other was to examine the broader strategic issues – such as why the CCMA existed. He noted that the CCMA office in Johannesburg was the largest dispute resolution office in the world, although South Africa had a relatively small population when compared to other countries, and this conflict resolution function cost almost R500 million per year. He wondered why it was necessary to have such large and expensive machinery, and whether it offered value for money. He also asked if the CCMA could suggest ways in which it might be able to perform the same function at a lower cost to the country, since other democracies could seemingly function well without such a large and expensive body.

Mr Mkalipi replied that other stakeholders, like the employers and the trade unions, would be better placed to answer that question. He said that in fact it was also important to ask why South Africa had so many labour disputes, as this was not good for the economy, and noted that the CCMA was trying its best to prevent disputes and offer management training to companies.

Mr Ollis noted an increase in the phenomenon of forum shopping. People would firstly approach the CCMA, but, if dissatisfied with its decision, would then approach the Labour Court, and/or the Bargaining Council. He wondered if there was some way to prevent this. He also noted that people were often referred to the wrong forum, so it would be useful if the CCMA could prepare a guiding document to specify which cases should be referred to which forums.

Ms Kahn replied that there were two issues. CCMA agreed that it was frustrating for people to be sent from pillar to post, and so CCMA was currently busy with a process to link up all related organisations electronically, including the Department of Labour (DoL), the CCMA, and the Bargaining Councils. By the end of 2011, it would be possible to log a Bargaining Council case at a CCMA office, from where it would be transferred to the Bargaining Council. DoL staff would also be trained to assist in the process in the long term. The electronic part of the solution would take time to implement. However, there was information on the correct forums for cases, and this would be sent to the Committee.

Ms L Makhubela-Mashele (ANC) said that the Siyaphambili strategy looked sound and workable. She referred to an issue raised in 2010, of dissatisfaction by part-time commissioners with the way they were treated, and asked what had been done to resolve this. She also noted that individuals had raised their dissatisfaction with the operations of the CCMA, and made accusations of maladministration. The Auditor-General (AG) investigated and had issued a report and recommendations. However, there were still reports being made to the Committee that nothing had changed and that funds were misused, although she acknowledged that these allegations were currently untested. She asked, however, what mechanisms had been put in place following the AG’s report, and the progress.

Ms Cohen replied that the CCMA governing body had not been represented at the meeting where the commissioners complained to the PC. She had asked for a report of that meeting, which was not received. There were internal processes to address complaints, and those raised had been addressed by the Director. If a response was needed from the GB, then the complaints must be submitted in writing. CCMA’s response to the AG’s report would be sent to the Committee, as well as the response to the commissioners’ complaints, if so required.

Mr M Nchabeleng (ANC) referred to issues around the company Thabiso, in Polokwane, whom CCMA had apparently used for procurement, but subsequently discovered that it was not compliant with Broad Based Black Economic Empowerment (BBBEE), and the contract was cancelled. The Portfolio Committee had subsequently received reports that the new company appointed in its place had exactly the same banking details as Thabiso. He asked for an explanation. He noted that the Committee needed all entities to be honest, transparent and clear about matters, as it was in the interests of all entities that they should be able to trust each other and communicate freely.

Ms Cohen replied that the wrong procedures were followed in the allocation of the Thabiso contract. The CCMA had entered into this contract after mis-representation that the company had BBEEE accreditation. This was later found to be fraudulent, and the contract was cancelled eighteen months ago. Since then a new service provider for printing services had been sought and secured, but it was not Thabiso. The contract was registered with National Treasury (NT) and the Auditor-General (AG). All issues apart from special investigations that were still pending had been resolved.

Mr Nchabeleng said that there were accusations of payment errors, and he enquired how people could be paid more than once, who was responsible, and what sanction was imposed. He noted that the Public Finance Management Act (PFMA) required that when a department must, when transferring money to an entity, ensure that the money would be used well and could be accounted for.

Ms Cohen  wondered if this question related to the Seven I company, and, if so, explained that this was not a double payment. The amount in the contract differed from the amount paid, and the amount overpaid was being recovered, with the GB keeping track of progress.

The Acting Chairperson said that the AG’s report noted that the CCMA needed to improve in preparing the financial statements and performance reporting.

Ms Cohen replied that the AG’s report made 34 recommendations. 31 of those had been dealt with and closed. Three were still being addressed. Some of the issues referred to related to payments not made by commissioners to South African Revenue Services (SARS). CCMA was monitoring the recovery of those monies from commissioners. She also noted that some CCMA policies were not updated to fall in line with a National Treasury regulation of 2005, and when this was reported by the AG, the CCMA adjusted to apply the regulation as required, and, although the policies had not been formally adopted, the CCMA’s practices were now compliant. She conceded that there were a number of issues relating to incorrect procedures, but these had been corrected and were being carefully monitored by the GB. CCMA had already tabled a comprehensive report on how it was addressing the issues and this could be re-sent to the Committee. She emphasised that no fraud, corruption or mismanagement had been found, and the CCMA achieved an unqualified audit report.

The Acting Chairperson noted the reference to R4.2 million being “saved” through postponement of the filling of non-critical vacancies. He asked how many vacancies there were, and why they were on the organogram, if CCMA could manage without the staff.

Mr Sekgololo replied that when the CCMA was faced with adverse financial conditions, it had centralised the case management function in Johannesburg, rather than using the ten case management officers.

Ms Kahn added that this shared service model worked in certain situations. However, it was not sustainable in the long term, as staff placed under so much pressure would start to take stress leave.

The Acting Chairperson noted the reference to spending of R308 million on goods and services. He wondered if this included consultancy fees, and, if so, asked who the consultants were. He noted that compensation of employees did not appear to be the largest expense for the CCMA.

Ms Cohen replied that the 308 million was budgeted for payment to part-time commissioners.

Mr Sekgololo referred Members to the slide of funding and statement of financial performance, indicating that R194 million was allocated for case work, and R200 000 worth of cases were processed. 65% of the commissioners worked on a part time basis, doing three to four case events per day. The fixed cost of the commissioners was built into the R194 million allocation. The rest of the R194 million related to rental, of R40 million per annum, communications and IT of R20 million, and R10 million for travel and general staff expenses. Subsidies to bargaining councils amounted to R7 million. The remaining 3.5% of the amount was spent on other administrative expenses.

Mr Nchabeleng said that the reputation of the CCMA was dented a few months ago, and he thought that these issues remained still to be explained. The Committee was constantly being approached by the public, who retained concerns about the CCMA.

Mr Nchabaleng noted that the report had not been signed by the GB and questioned its validity, saying that while it remained unsigned nobody could be held to be responsible. He also noted that there was no budget attached.

Ms Cohen replied that the strategic plan, including a budget, had been signed and tabled in Parliament on 9 March 2011. This presentation had not been signed, but this could be done if required.

Mr Nchabeleng insisted that the copies given to the Committee Members were unsigned, and therefore could be seen as not binding.

Ms Cohen repeated that signed copies had been delivered to Parliament and CCMA would make more signed copies available. She appreciated his concerns.

Mr Nchabeleng asked what informed the choice of the four focus areas.

Ms Kahn replied that those areas were seen as the most urgent. With more resources, the CCMA could do more.

Mr Nchabeleng said that CCMA received R95 million less than it had requested. He asked the reason for cutting its budget, and how this impacted on its plans.

Mr Sekgololo replied that the bulk of the R174 million requested was intended for the process of virtualising the taking-on of cases. It was planned that between 130 and 135 would be taken through the DoL offices, and that labour centres would have a case management system and provide updates. Currently, they could only provide feedback, not take on cases. However, this was something that was put in competition with other priorities of government. Competing priorities across other entities had resulted in the budget of the CCMA being reduced. This would impact by delaying the implementation of the taking of cases by six to ten months, and at the end of this time, 135 centres should have facilities to log cases. The R485 million to be allocated for that year would be adequate to address that need.

The Acting Chairperson noted that the Committee, when conducting oversight, wanted to see progress. It was disturbing that the strategic plan was not addressing important issues. He asked if there were plans to fill the vacancies mentioned, and whether the financial controls had been put in place. He noted that the Committee did not wish to see the same issues arising in the following year.

Mr Sekgololo replied that the CCMA had agreed with the AG that the controls and performance management evaluation, as mentioned in his report, had to be tightened up. Those issues should be finalised by 31 March 2011. CCMA, in order to address the issues, had established a risk management unit, which had plotted all the findings and the deficiencies, in order to create an IBTC tool, which was reported back to the AG, and which should ensure that the same findings did not recur. This tool, although newly implemented, was maturing, and its effects should be seen in the next audit report.

Ms Kahn added that the details of this were under  strategic objective 4 and item 4.3 of the Key Performance areas.

The Acting Chairperson hoped that the Committee could be confident that systems would improve, and reiterated that it did not want to see the same deficiencies recur.

Productivity South Africa Strategic plans 2011
Mr Alwyn Nel, Chairperson, Productivity South Africa, noted that the Productivity Advisory Council was established in 1968, with a board of directors consisting of employer organisations, employee organisations and government. In 1975 it became a Section 21 company. In 2007 its name was changed to the current name of Productivity South Africa (PSA), and it was established under Schedule 4 of the new Skills Development Amendment Act No 37 of 2008.

PSA had an approach that was customer-focused and people centred. It promoted collaboration between management and labour, encouraged an internalised productivity mindset, aimed to be multidisciplinary and integrative, and wanted to promote social and environmental sustainability. It adopted a sector- and cluster-based approach, aligned to national priorities, and sought to achieve delivery through partnerships, networks and alliances.

Mr Bongani Coka, Acting Chief Executive Officer, PSA, noted that PSA managed several strategic programmes, including value chain competitiveness, turnaround solutions, organisational production solutions and positioning and brand management. Internal functions included human resources functions that looked after talent management, and finance and administrative functions that sought to underpin the connection between the strategic objectives and financial resources. Monitoring and evaluation monitored and measured the efficiency and effectiveness of PSA.

He noted that “Turnaround Solutions” was its biggest project. PSA was one of the few organisations that focussed on saving jobs. A Turnaround process comprised three phases. The first was saving jobs, the second was managing retrenchments and the third was job creation. This programme was an initiative of the Jobs Summit of 1998. It was funded by the Department of Labour (DoL), was currently placed under the Unemployment Insurance Fund (UIF) and was managed by Productivity SA.  Its key objective was to save jobs.

Mr Coka noted that 53% of PSA’s interventions were in the agricultural sector, 22% in the civil and construction field, 10% in clothing and textile, 4% in manufacturing, and 11% in other fields. Many redundancies occurred from automation. The civil and construction sector losses were unusually high because of the ending of all construction projects for the Soccer World Cup. Job losses in the clothing and textile sector were due to the challenge of cheap imports from countries like China and Brazil. Some work was done in the manufacturing sector, where requested.  

He noted that there was an uneven spread of interventions across different provinces. One-third of interventions happened in the Free State, followed by Western Cape and North West.

He outlined that PSA tried to promote collaboration between management and labour. There was an element of distrust when only management was consulted, but when labour was included, the solutions were more sustainable. PSA was planning to put into place 90 turnaround plans and aimed to close 32 within this financial year. PSA was planning to do 80 impact assessments. Where companies were stable, PSA would advise and assist managers to put early warning systems in place to show if things were going wrong within certain sections of the business, in order to take pro-active steps for resolution. PSA aimed to put 300 such systems in place. PSA also established Pro-Active Future Forums in companies that were not in distress. It was encouraging a discussion forum between management and labour that would look at labour issues relating to productivity. PSA planned to impact upon a minimum of 22 500 jobs through turnaround solutions. If every job provided for five family members, this impacted upon more than 100 000 people.

Mr Coka then outlined the four PSA objectives and focal areas to improve value chain competitiveness in the country. These were research, the Workplace Challenge programme, and Information Technology and Knowledge Management programmes. The research component provided decision makers in government, business and labour with productivity statistics and information. The Workplace Challenge Programme improved the productivity and competitiveness of South African firms and sectors through the implementation of continuous improvement principles at the workplace. IT support was provided by PSA for the installation and maintenance of computer hardware, software, networks and electronic data processing. Its knowledge management function managed the knowledge assets of PSA, to ensure that there was continuity when staff members left.

PSA hoped to assist 150 companies through the Workplace Challenge Programme, with 126 enterprises to be nurtured. Twelve capacity building workshops would be conducted and 20 clusters and user groups would be participating in aftercare. PSA also set out the targets to conduct sector studies in distressed sectors. Clusters were formed in geographical areas to reach more companies with fewer workshops, and they could learn from each other. Four industries and three sectors would be targeted for clusters. This programme was funded by the Department of Trade and Industry (dti). Some companies that had come through the programme became world class.

Mr Coka then outlined that the positioning and branding and stakeholder management objective aimed to raise the public profile of PSA as a brand, and to put concept awareness and productivity on the agenda of every South African company. It rested on three pillars: the first would inspire South Africa to greater productivity, the second would build on the legacy of PSA and the third would build appropriate relationships between PSA and stakeholders. The Productivity Awards were part of this marketing and branding function. There would be five regional and one national function within the financial year. PSA also planned to publish four magazines, six newsletters and have 85 media articles published.

Mr Coka explained the Productivity Organisational Solution Programme, which involved providing productivity training to various intermediaries, conducting direct training to managers, workers and emerging entrepreneurs, and implementing productivity improvement projects in government departments and private organisation for continuous performance improvement. PSA aimed to train 700 educators, 3 500 people in emerging enterprises, 720 workers and managers and 250 skills development facilitators in productivity improvement techniques. It planned to implement a productivity improvement project in one government department. It planned to engage four graduates in a mentorship programme.

PSA had partnerships with the Asian Productivity Organisation and the Japan Productivity Centre. It served on the Secretariat of the Pan African Productivity Association. It reported annually to the Southern African Development Community (SADC) Committee Ministers for Employment, Labour and Social Partners. It reported to the African Union Commission on implementation of Productivity Agenda for Africa.

Mr Coka stressed that PSA evaluated itself constantly in order to make sure that it remained efficient, effective, relevant to the needs of the country and aligned with government programmes. It also endeavoured to recruit competent potential leaders, retain its skilled staff and build a culture of productivity and continuous improvement.

Mr Coka then outlined the financial situation. PSA expected to receive around R35 million from Treasury, R55 million from companies whom it assisted with turnaround solutions, around R8 million from the Workplace Challenge Programme, and R10 million from other income.

He then noted the highlights of the 2010/11 financial year. This included its exposure during the World Soccer Cup, where it had featured in major media platforms observing the effect of the tournament on productivity. The Productivity awards spread to five more regions. It had saved over 133 156 jobs had through Turnaround Solutions, and achieved an increase in Turnaround Solution funding. A growing number of companies participated in the Workplace Challenge Programme. PSA published annual publications, exposing productivity trends in the country, which generated publicity and debates. Its strategic partnerships with international productivity organisations, as well as Sheltered Employment Factories, were other successes. He also outlined the challenges, which included its inability to reach the critical mass, due to limited funding and its limited regional presence, in only three main centres, which resulted in it having to work with stakeholders and partners in the other provinces.

Discussion
The Acting Chairperson noted that the core business of PSA was basically knowledge management. He therefore enquired as to the relationship between PSA and the Public Administration Leadership and Management Academy (PALAMA), as well as with the small business development agencies at municipal level.
 
Mr Coka replied that PSA would look at its relationship with PALAMA, via its close relationship with DoL. In relation to small businesses, it was working with other role players, and used existing facilities and information sources like databases. It had been working with Tswane Local Economic Development initiatives, and with Ethekwini Municipality on small enterprise training. Over the weekend, PSA resuscitated its relationship with Small Enterprise Development Agency (SEDA) in order to work with those enterprises under the mentorship of the latter.

He added that the Sector Education and Training Authorities (SETAs) had gone to rural communities to do job creation, and PSA was linking in with those initiatives. PSA itself had held training workshops in Oudtshoorn, as well as in KwaZulu Natal, as part of this process. It was looking for ways to build relationships with more SETAs, because they also mentored small enterprises, to have a greater impact.

Mr G Boinamo (DA) asked about the relationship was between PSA and the South African Bureau of Standards (SABS).

Mr Iggy Sathekge, Executive Manager, PSA, replied that PSA was in the process of forming a partnership with the Gauteng Enterprise Development Agency and the SABS, because currently these institutions did not speak to each other, although their potential synergy could be very effective in creating sustainable small, medium and micro enterprises (SMMEs).

Mr I Ollis (DA) said that PSA was under funded. Government did not take it seriously enough. It was far better, and much cheaper, to save jobs rather than creating new ones, as PSA had stated, but it would be severely hampered if it did not receive sufficient funding. Brazil was becoming more productive. He asked whether PSA had received funding from the Bill Clinton Foundation or the Ford Foundation, which was the second largest aid organisation in the world. He noted that MP Wilmot James was a long serving director of the Ford Foundation. The Bill Clinton Foundation also funded many different projects in Africa. He believed in PSA and urged that it had to grow, to employ more people and to become more effective in its mission to make South Africa more productive and grow the economy.

Ms L Makhubele-Mashele (ANC) said that the fact that PSA saved 133 000 jobs during the last financial year meant that it was doing something right. She expressed regret that it would not receive more funds from the Department of Labour, and that it would still only be funded by the Unemployment Insurance Fund (UIF). She suggested that the Committee should try to secure more funding for it, and that the PSA should also go to municipal level to increase its interventions into growing the economy. She urged the Committee to involve the Minister in getting funding for PSA from National Treasury. She asked how much PSA would need to market itself more efficiently.

Mr Nchabeleng asked how the Committee could address the budgetary constraints, when there was no budget attached to the strategic plans. He asked how National Treasury had responded to PSA’s pleas for more funding.

Mr Coka apologised that the five-year budget plan was not attached, and would send it through to the Committee. He noted that when PSA had first started on its interventions with SMMEs, its first funding was received from the Kellogg Foundation. PSA had not received funding from the Ford or Bill Clinton Foundations. PSA would revert on the funding suggestions, as he agreed that the more funding, the more the outreach to SMMEs, and the more jobs could be created. He would welcome support from the Committee for extra funding. Given the size of the economy, PSA’s funding and impact was not significant enough. PSA could provide a business model to explain how much funding would be needed and how it would be used.

Mr Nel found it heartening that the Committee understood PSA’s concerns around its dire financial straits.

Mr Xola Sicwebu, Executive Manager: Strategic Management, DoL, replied that DoL was aware of the needs of PSA. The DoL had looked at its own baseline and given cash injections in the past. However, these were not permanent solutions. A permanent solution would require an increase in the allocation from NT. DoL had also requested funds from the NT for other programmes. NT had, in previous financial years, looked at the country’s potential to host a successful World Cup, but had been reluctant to allocate resources in the face of the global economic crisis. DoL would also support the Committee’s call for increased allocation.

Mr Boinamo asked whether PSA would be able to spend more funds.

Mr Coka replied that if funding was approved late, this could be a problem.

Mr Ollis questioned the logic of PSA having one-third of its interventions in the Free State, which had a diminishing population, whereas the provinces of Gauteng, KwaZulu Natal and Western Cape, with their growing populations and growing economic hubs, had very few interventions.

Ms Makhubela–Mashele also asked why there were so many interventions, mostly in agriculture, in the Free State and so few in other provinces, and wondered if this was due to PSA having a higher profile in Free State. Mpumalanga, with large-scale mining and agricultural operations also needed the same assistance.

The Acting Chairperson noted that PSA had no footprint in Mpumalanga, and agreed with Ms Makhubela-Mashele on the huge operations situated there, as well as vast agriculture operations. He wondered why PSA would not link up with large companies, where they were located.

Mr Nchabeleng also raised queries on the spread of pro-active interventions, and wondered if people in Free State did more field work.

Mr Coka replied that PSA had to adopt a pro-active route, as recommended by Parliament, and because it was more cost effective to intervene before the damage was done, as prevention was better than cure. Sometimes, PSA received referrals from the CCMA to intervene in companies where there were imminent jobs losses. If the job losses were prevented, those became jobs saved. When a company approached PSA for help, its jobs were categorised as “jobs impacted upon”. Not all companies who asked for help in fact qualified to receive it, as PSA did a scientific assessment by looking at audited financial statements, the condition of the workplace, the condition of equipment, and held discussions with employees. Only if PSA was satisfied that the company was indeed in dire need, would it start its intervention. He noted the comments about the agricultural sector in Mpumalanga and said that PSA could do the same there as in Free State. He asked his colleague to address initiatives had been embarked upon, approaches by government structures. He was aware that interventions were unevenly spread, and said that PSA was trying to correct this. It had managed in reaching agreement with the Department of Economic Development in the Western Cape. SEDA, Khula and all related organisations and services would be put together in a “one stop shop”. Agreements had also been reached in the North West. PSA was working with the Chambers of Commerce as well as the DoL and SEDA. Gauteng’s coverage would improve significantly, because PSA partnered with the Johannesburg Chamber of Commerce as well as the Benoni Chamber of Commerce, and had reached agreement with Business Unity South Africa (BUSA) to conduct workshops about PSA. All these interventions would spread PSA’s activities more evenly.

Mr Coka noted that every year, PSA would argue for more funding, but none was forthcoming.

Ms Makhubela-Mashele said that Mr Bongani Coka had been acting as Chief Executive Officer since 2009 and enquired why, whether the position had been advertised and how far the process of a final appointment had gone.

Mr Nchabeleng asked what the PC could do to unblock the blockages in the appointment process.

Mr Nel replied that the position of Chief Executive Officer for PSA had been advertised, a shortlist was drawn, interviews were being conducted and the position would be filled within two months.

Mr Nchabeleng asked what the gender equity situation was in the organisation, as there was only one woman in the delegation.

Ms Lovedelia Maupye, Executive Manager: Human Resources, PSA, said that two out of the five top executive positions in the organisation were held by women. 55% of the overall staff complement, were women. The number of women had increased, as PSA was serious about reaching employment equity targets.

Mr Nchabeleng asked what Talent Management Committees (TMC) were.

Ms Maupye said talent management was one of the focal areas of the PSA, and was aimed at retaining scarce skills. 90% of the employees of PSA were industrial engineers, who could get higher salaries if they moved to the private sector, so PSA was trying to retain these skilled staff. It had to have succession plans and also had to ensure that the jobs were interesting. PSA also had to identify people with potential, and, where skills were lacking, to train and develop them. PSA formed partnerships with learning institutions. It groomed young recruits through internship programs. It was strong on knowledge. It had partnerships with Asian countries, which were used to boost its retention plans. Training was always directed and specific, given the limited resources.

Ms Makhubela-Mashele asked whether the media presence of PSA during the World Cup resulted from its own efforts or links with another organisation. She asked why it was not visible throughout the country.

Mr Sathekge replied that there was a need to create brand awareness and to market PSA and its work. The World Cup had presented the opportunity for PSA to debate the challenges posed to companies when preparing for the World Cup, and this had created massive awareness. It was a pro-active campaign, driven by PSA itself.

The Acting Chairperson asked whether the training courses’ unit standards were developed by PSA itself, or whether they were outsourced interpretations of Government’s key priorities. He also enquired to what degree there was consistency and continuity in the training provided by PSA, to lead to a uniform vision of a productive developmental state.
 
Mr Coka said that the training was unit-standard aligned. A trainee, to achieve a certificate, had to produce concrete evidence that his productivity training resulted in improved productivity in the workplace.

Mr Coka added that the analysis of the financial statements showed that 65% of the total funding was paid to service providers and other items. Currently there were 60 staff in PSA. When a company was in distress, PSA had to react immediately. Interventions were sometimes outsourced. If the staff complement was in excess of the guaranteed allocated grant, PSA would be exposed to risk, as had happened in 2008, but if the secured allocation from NT increased, the staff complement could also increase to allow PSA to rely less on outsourced services. However, outsourcing would never stop completely, when dealing with companies in distress. PSA could only attend to its core business. It would never employ legal personnel and would always outsource legal services, as well as marketing services. PSA would attempt to reduce the 65% to a more reasonable figure.

Mr Sathekge said that PSA was in discussion with the Mpumalanga Provincial Government about having the Productivity Awards in Mpumalanga. The cost of the assessment and the creation of awareness around the event was an issue at this stage. Realistically speaking, it would not happen in 2011, but it was possible for 2012, and the PSA would report back on the progress made. PSA had started a collaborative effort, with the Mpumalanga Department of Economic Development, to put together projects and programmes regarding co-operatives. However, most would collapse after about a year. He said that there was a need to instill a productivity principle in these co-operatives. Once this happened, they became sustainable. This was observed in the Free State, with the Farmers’ Trust, who was now exporting products to the United Kingdom (UK). The vision was to achieve the same with the co-operatives in Mpumalanga, where training started in the previous year.

Mr Nel invited the Committee to attend the Productivity Awards, held twice yearly to spread the productivity principles, and for the Committee to include this in its plans, as it would deepen the Committee’s understanding.

The meeting was adjourned.




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