Department of Labour and entities Annual Report 2010/1011

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Labour

17 October 2011
Chairperson: Mr M Nchabeleng (ANC)
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Meeting Summary

The Department of Labour and its entities presented their 2010/2011 annual reports to the Portfolio Committee on Labour.

The Auditor General kicked off proceedings with a broad presentation that covered all the entities including the Department of Labour. The Auditor General informed the Committee that The Department of Labour had received an unqualified opinion. The Compensation Fund had a qualification on revenue, receivables and claims. The Unemployment Insurance Fund had a clean audit with no matters of emphasis. The Sheltered Employment Factories had a qualification on inventory and fixed assets. It had a qualified opinion overall. The National Economic Development and Labour Council had an unqualified opinion. The Commission for Conciliation, Mediation and Arbitration had an unqualified opinion together with Productivity South Africa. The qualification on assets for the Department of Labour was cleared for this year as opposed to last year; this was an improvement. There was irregular expenditure incurred in the Department of Labour as a result of non-compliance with supply chain management regularities. There was nothing to report on fruitless and wasteful expenditure.  The strategic plan of the Department of Labour was not aligned to the indicators; planned targets were not measurable not time bound. The audit outcomes of the Compensation Fund, which was an entity of the Department of Labour, had a qualified opinion. There were material misstatements which were discovered, these related to receivables, revenue and claims. The risk unit of the Compensation Fund identified losses that were as a result of criminal activity by employees or service providers. Investigations were ongoing and some have been finalised whilst others have been handed over to the South African Police Services. The Compensation Fund had a lot of non-compliance issues with regards to supply chain management National Economic Development and Labour Council received an unqualified opinion. The internal audit committee at National Economic Development and Labour Council was not functioning very well and this should have been addressed. The Commission for Conciliation, Mediation and Arbitration were unqualified for the year under review and received a clean financial audit for the year under review. The Auditor-General had reported irregular expenditure as well as fruitless and wasteful expenditure by the Commission for Conciliation, Mediation and Arbitration. There was a huge increase on irregular expenditure from the previous year; to address this, the Commission for Conciliation, Mediation and Arbitration has reviewed its policies and procedures and aligned them with Treasury regulations. Overall the Commission for Conciliation, Mediation and Arbitration has improved; there was nothing negative or new to report on its financial statements or its pre-determined objectives. The Productivity South Africa was unqualified on pre-determined objectives and there was nothing to report.

The Department of Labour informed the Committee that out of the 652 611 known job seekers, 483 038 were registered. The Department of Labour had identified 39 887 job opportunities and had placed 12 801. A total of 65 853 job seekers were given career counselling, 25 814 were given work placement; 451 950 were referred to the Unemployment Insurance Fund; 8 732 were referred to the Compensation Fund and 7217 were referred to the Department of Higher Education and Training for further skills development. There were 19 companies that applied to the Department of Labour for the training and layoff scheme and 6183 workers benefited from this. The amount spent on the training and layoff scheme was R40 million. As a measure of strengthening employment equity implementation and enforcement mechanisms; the Department’s objective was to subject 200 companies to DG review by March 2011. 60 of the companies were to be listed on the Johannesburg Stock Exchange. The Department achieved a figure of 266 companies that it reviewed; 96 were listed on the Johannesburg Stock Exchange and 156 recommendations served. The Department intended to amend the Basic Conditions of Employment Act, investigate wage differentials and review existing sectoral determination as part of the Objective of protecting vulnerable workers. The total number of workplace inspections by labour inspectors totalled 192 129 companies and 331 129 notices were issued. The figures for complaints and investigations were as follows: the total number of complaints received was 154 441; complaints investigated totalled 120 566; complaints settled within 90 days were 116 131. The intended target for labour inspections was 200 000 companies however the public service strike interruptions largely contributed to the Department of Labour not meeting this target. The Department of Labour produced some of the following reports: Industrial Action Report; Annual Labour Market Report and Client Satisfaction Survey for Medical Doctors. The Department of Labour had to comply with 92% of the Auditor General’s recommendations but had set the target to 100%. The Department had subsequently achieved an unqualified audit opinion. As at the end of March 2011, 91.40% of posts were filled against a target of 90%. Women employed at the Department at senior management level comprised a 34.6% rate against a target of 40%.

The Compensation Fund highlighted its key challenges that affected the mandate as being the number of delays and non-reporting of accidents by employers. This was driven by a lack of knowledge and fear over prosecution for non-compliance with legislation by employers. The Compensation Fund was able to provide pilot programmes which resulted in the decentralisation of the Compensation Fund.  This has meant that in all provinces there was a Compensation Fund. The Compensation Fund has dealt with 33 845 compensation claims; 245 966 medical aid claims and it has dispensed with R418 million in the provinces. The Compensation Fund has held three educational workshops in Limpopo, Eastern Cape and Mpumalanga. The Compensation Fund also set up offices in the Compensation Fund where it had handled and resoled problems. A formal risk management strategy has been adopted; this was a successful and effective strategy.  There was also a fraud prevention plan; 160 cases of fraud were investigated; a crime line has been established: 0800 20 49 74. This year the CF has increased compensation funds paid to workers from R771 million in 2009/2010 to R881 million in 2010/2011. During the financial year the Compensation Fund has paid between R1.4 billion to R1.9 billion in medical expenses. The Compensation Fund has made 329 091 payments. The revenue of the Compensation Fund has increased from R4.8 billion to R5.2 billion. Other revenue such as interest and penalties has declined by about 70%.  Investment income has increased from R1.9 billion to R2.1 billion. There has been a decline in benefits from R2.9 billion to R2.2 billion. Administrative expenses have declined by 26%. Actuarial adjustments have increased by about 85%. The Compensation Fund had a surplus of R3.6 billion.

The Commission for Conciliation, Mediation and Arbitration had met every single one of its set objectives during the 2010/2011financial year.  For the past four years the Commission for Conciliation, Mediation and Arbitration has managed to schedule conciliations within 30 days as per the statutory requirement. Commissioners have managed to also achieve delivery of awards within 14 days as per the statutory requirement. The average turnaround time was 39 days as required by law. In the year under review the Commission for Conciliation, Mediation and Arbitration heard 154 279 cases. Since 1998 the Commission for Conciliation, Mediation and Arbitration caseload has kept rising. Research has concluded that the rise in the Commission for Conciliation, Mediation and Arbitration’s case loads was a result of what was happening in the economy. The case load stabilised ij 2010 and 2011 however there were indications over the last few months that there was potential for it to rise again. The Commission for Conciliation, Mediation and Arbitration now had 12 regional offices, 6 satellite offices and over 480 onsite hearing rooms and over 250 offsite hearing rooms. The Commission for Conciliation, Mediation and Arbitration now had automatic case management access thanks to the Department of Labour. This meant that workers could walk into any Department of Labour office and establish the status of their case with the Commission for Conciliation, Mediation and Arbitration.  Within the next year workers would be able to lodge their cases at Department of Labour offices. Large scale retrenchments have gone up and this was of concern. the AG had issued an unqualified audit with a few matters of emphasise, this was an improvement from the previous financial year.

The Unemployment Insurance Fund had received a clean audit from the Auditor General. The contribution requirements of the Unemployment Insurance Fund remained at 2%, 1% from the employer and 1% from the employee. The Unemployment Insurance Fund had 9 provincial offices. The labour centres could service more than 820 service points. Certain functions have been moved from head office and provincial offices and have been placed where they could be easily accessible. The Unemployment Insurance Fund covered 1.3 million workers from the domestic, commercial and taxi industries. New employers contributing to the fund have increased by 4.4%. The total number of employees that were serviced were 7.9 million, they have increased by 2.04%. The fund has paid 4.1 billion towards unemployment, R222 million towards illness and R659 million towards maternity. The dependents payout was R317 million. The total amount paid was R5 3 billion. The total number of people paid was 732 000 people, there was a decrease of 0.5%.  The Unemployment Insurance Fund had an approval rate of 93.7% which meant that the majority of applicants were successful. The majority of the claims paid out were in Gauteng followed by the Western Cape and KwaZulu Natal.

The National Economic Development and Labour Council had launched the Decent Country Work Programme and its role was to monitor this, the Social Plans Review Programme was complete as well. The Bills that have been completed in terms of the National Economic Development and Labour Council process were the Cooperatives Amendment Bill Municipal Systems Bill, Customs Control Bill, Customs Duty Bill and Superior Courts Bill has been complete. The Climate Change Green Paper and Water Quality Risks Paper have been completed. The activities around the Industrial Policy Action Plan were ongoing. The National Economic Development and Labour Council had a mandate to monitor the Financial Sector Charter and this was ongoing. The Section 77 applications received during the current financial year were the electricity tariff request from the Congress of South African Trade Unions the inability of the police to combat crime from Solidarity and the quality of water request. These Section 77 applications were ongoing. The organisation had a clean audit with only one matter of emphasise.

Productivity South Africa’s performance entailed establishing stakeholder partnerships in poor performing provinces such as Limpopo, Mpumalanga and North-West; Productivity South Africa saved more than 15 500 jobs and it expanded the Productivity Awards Programme in the Eastern Cape , Productivity South Africa also  had the lowest labour turnover in the last 10 years with a 6% resignation. During the period under review Productivity South Africa trained 406 educators and 3 000 Small Medium and Micro Economic Forums. There were 500 workers trained on productivity concepts as well as 200 Skills Development Facilitators. Productivity South Africa had compiled research reports on the impact of labour legislation, efficiency and productivity in the use of municipal land for economic development, public sector productivity and performance, development of minimum norms and standards for reward and recognition in the Unemployment Insurance Fund as well as best practice in public employment policy. Productivity South Africa had nurtured 141 enterprises and thus exceeded the set target of 64, it had held 30 capacity building workshops and it participated in 18 projects on orientation and implementation.

The Committee questioned the reasons for senior managers in the Department of Labour not participating in performance appraisals. The Department of Labour was also asked why it had made so few job placements. The Committee inquired as to how much had been set aside for the training and layoff scheme. A Member raised concerns on family members or friends of senior staff members doing business with the Department of Labour and asked how this would be addressed. A Member pointed out to the Compensation Fund that the number of claimants as well as payouts to beneficiaries had dropped drastically over the past five years. It was pointed out that during the last economic downturn the Commission for Conciliation, Mediation and Arbitration buckled under the pressure of the case low, the entity was asked what measures it had in place to deal with the almost probable downturn this time round. A Member of the Committee pointed out that the graph representing the Commission for Conciliation, Mediation and Arbitration’s case load indicated that labour relations were not handled very well in this country and that there was too much fighting and antagonism. Perhaps this was a comment for National Economic Development and Labour Council and the statistics should be seriously considered by the organisation. The expenditure for helping companies in distress at R6.5 million was considered to be too little given the R1.2 million that had been set aside for this initiative. Progress on the Maritime Shipping Act process in National Economic Development and Labour Council was requested by the Committee.


Meeting report

The Chairperson congratulated the Department of Labour for a job well done. The audit reports were good this year and there were lots of improvements. The challenge was on sustaining the good performance and the Department had to start with addressing the matters of emphasis.

Auditor General Report
on Labour Cluster Audit Outcomes 2010/2011
Ms Zanele Keta, Auditor from the Office of the Auditor General (AG) said that the presentation would focus on the audit outcomes of the Department. AG reports in general reflected on the financial statements, pre-determined objectives and compliance with rules and regulations. The Department had an unqualified opinion. The Compensation Fund (CF) had a qualification on revenue, receivables and claims. The Unemployment Insurance Fund (UIF) had a clean audit with no matters of emphasis. The Sheltered Employment Factories (SEF) had a qualification on inventory and fixed assets. It had a qualified opinion overall.  National Economic Development and Labour Council (NEDLAC) had an unqualified opinion. The Commission for Conciliation, Mediation and Arbitration (CCMA) had an unqualified opinion together with Productivity South Africa (PSA).

The qualification on assets for the Department was cleared for this year as opposed to last year; this was an improvement. There was irregular expenditure incurred in the Department as a result of non-compliance with supply chain management regularities. There was nothing to report on fruitless and wasteful expenditure. The strategic plan of the Department was not aligned to the indicators; planned targets were not measurable not time bound. The indicators were not well defined in terms of reliability of information. Material misstatements were discovered as a result of the audit on financial statements. These were corrected during the audit. There were no investigations that related to the Department’s operations. The performance assessment of senior managers had not been conducted during the course of the financial year.

The CF, which was an entity of the Department of Labour, received a qualified opinion. There were material misstatements which were discovered, these related to receivables, revenue and claims. The risk unit of the CF identified losses that were as a result of criminal activity by employees or service providers. Investigations were ongoing and some have been finalised whilst others have been handed over to the South African Police Services (SAPS). The CF had a lot of non-compliance issues with regards to supply chain management. The reason for this was that an old and outdated supply chain management system and guideline was being used. There were no identified fruitless and wasteful expenditure. The AG received incomplete records concerning claims and payables and proof of earnings of employees were not provided. There were instances where employees did outside work without the necessary permission. The UIF had no reports on pre-determined objectives. The SEF improved in terms of finances, they were qualified for this financial year as opposed to other years where they had received disclaimers. Their pre-determined objectives were not measurable. The SEF had significant write offs on inventory, this was due to the high number of theft incidents; performance contracts for staff members were not signed and there were a number of key vacant positions that had to be filled immediately. NEDLAC received an unqualified opinion. The internal audit committee at NEDLAC was not functioning very well and this should have been addressed. The CCMA were unqualified for the year under review and received a clean financial audit for the year under review. The AG had reported irregular expenditure as well as fruitless and wasteful expenditure by the CCMA. There was a huge increase on irregular expenditure from the previous year; to address this, the CCMA has reviewed its policies and procedures and aligned them with Treasury regulations. Overall the CCMA has improved; there was nothing negative or new to report on its financial statements or its pre-determined objectives. The PSA was unqualified on pre-determined objectives and there was nothing to report. There was accountability and the staff took their work seriously. Overall PSA received an unqualified opinion.

Department of Labour 2010/2011 Annual Report Presentation
Mr Nkosinathi Nhleko, Director General (DG) for DOL, explained that some of the strategic objectives of the Department were employment creation, promotion of equity in the labour market, protecting vulnerable workers and promoting sound labour relations. The Department had to have an improved public relations programme. The Department had embarked on a job seekers registration initiative. Out of the 652 611 known job seekers, 483 038 were registered.  The Department had identified 39 887 job opportunities and had placed 12 801.  A total of 65 853 job seekers were given career counselling, 25 814 were given work placement; 451 950 were referred to UIF; 8 732 were referred to the CF and 7217 were referred to the Department of Higher Education and Training for further skills development. There were 19 companies that applied to the Department for the training and layoff scheme and 6183 workers benefited from this. The amount spent on the training and layoff scheme was R40 million. The Minister had instructed NEDLAC to conclude negotiations on the Employment Services Bill in order to accelerate special employment opportunities for people with disabilities from all racial groups amongst other things. As a measure of strengthening employment equity implementation and enforcement mechanisms; the Department’s objective was to subject 200 companies to DG review by March 2011. 60 of the companies were to be listed on the Johannesburg Stock Exchange (JSE). The Department achieved a figure of 266 companies that it reviewed; 96 were listed on the JSE and 156 recommendations served. The Department intended to amend the Basic Conditions of Employment Act (BCEA), investigate wage differentials and review existing sectoral determination as part of the Objective of protecting vulnerable workers.
The total number of workplace inspections by labour inspectors totalled 192 129 companies and 331 129 notices were issued. The figures for complaints and investigations were as follows: the total number of complaints received was 154 441; complaints investigated totalled 120 566; complaints settled within 90 days were 116 131. The intended target for labour inspections was 200 000 companies however the public service strike interruptions largely contributed to the Department not meeting this target. The Department produced some of the following reports: Industrial Action Report; Annual Labour Market Report and Client Satisfaction Survey for Medical Doctors. The Department had to comply with 92% of the AG’s recommendations but had set the target to 100%. The Department had subsequently achieved an unqualified audit opinion. As at the end of March 2011, 91.40% of posts were filled against a target of 90%. Women employed at the Department at senior management level comprised a 34.6% rate against a target of 40%.

Discussion
Ms L Makhubela-Mashele (ANC) referred to the AG’s reports on senior managers in the Department not complying with performance appraisals, what were the reasons for non-compliance on the part of the managers?

Mr D Kganare (COPE) asked why was it difficult to make more placements when the job opportunities were at 89 000. Under what circumstances were employees paid a leave gratuity? On page 25 of the annual report, were there funds available to proceed with the vetting? Who set the target of 50% employed youth on page 28 of the annual report if it was unrealistic as per the reason given by the Department, why set a target if it was unrealistic? Could there be an explanation on the underperformance and non-compliance of the Department as per the AG’s report?

Mr I Ollis (DA) asked who the AG considered to be its stakeholders within government. Was the AG satisfied with the contract for assets such as computers which the Department entered into with Siemens?  How big was the problem of CF staff doing outside work?  What kind of intervention would be useful in the CF? The CCMA was given an unqualified audit whereas in the past the problem was that they received funding late and thus made their payments late, was this no longer a problem? The Department had said that R40 million of the allocated funding for the training and layoff scheme had been used, how much was set aside in the first place? Where did the work place inspections take place and why was there money recovered from these inspections? Why did the Minister of Labour instruct that the NEDLAC process should be accelerated, the NEDLAC process required consensus and how could the Minister simply give out instructions on this matter?

Mr Nhleko replied that the performance appraisals were identified as a problem internally by the Department. The Department had requested assistance from the Public Service Commission (PSC) in resolving this matter. The Department had discovered that for a period of two to three years there were no performance appraisals that had been done. There were limitations that varied for the number of job placements that the Department could achieve. One could have job seekers registered on the Department’s system but the job market may be only able to absorb a certain amount or none at all.

Mr Bheki Maduna, Chief Financial Officer (CFO) of the DOL, said that when an official left one post to go to another they had their leave days carried over in advance, where an official’s tenure in the public service was terminated their leave was calculated and paid out in money as a gratuity.

Mr Sam Moroto, Deputy Director General (DDG) of the DOL, said that at times the problem with placements was that there was a mismatch between employee profiles and employer criteria. The majority of registered candidates still required further skill development.

Ms Siyanda Nxawe, DDG: Inspector and Enforcement in the DOL, said that the monies recovered by the Department during inspections at businesses occurred where it was found that an employee was paid below the minimum wage threshold or that they had leave money due to them after termination of service.

Mr Kenny Fick, Acting Chief Operations Officer (COO) from the DOL, said that the Minister of Labour had requested the social partners at NEDLAC to speed up the process around discussions on the Employment Services Bill as the Department had envisaged that by this time the Bill would be in Parliament.

Ms Keta said that the AG considered its stakeholders as being Parliament and the departments and entities it audited as it engaged with them on audited financial statements. The AG had to prove that a certain amount that was spent resulted in fruitless and wasteful expenditure before it could make such a pronouncement. The AG had not done a review on the sustainability of the CCMA’s funding for the current financial year; the entity should be in a position to respond.

Ms Daisy Motaung, Auditor from the Office of the AG, had raised concerns on the management of the Public Private Partnership (PPP) contract in terms of its monitoring. Further concerns on the business continuity of the Information Technology (IT) environment were raised. The AG had merely highlighted to management that outside remuneration for staff could get out of hand if not properly managed. The qualification on the CF was on revenue and receivables. The intervention that was required was to capacitate and provide further skills for the CF.

Mr Nhleko added that the Department had available funds for vetting purposes. The youth target of 50% and how it was not feasible was a reflection of something that the Department could not achieve but the target still stood and the Department would try to have 50% of its staff drawn from the youth.

The Chairperson asked what the memorandum of understanding with Namibia and Zimbabwe entailed. What was the latest on the Indlela investigations, what sanction would be meted out against guilty staff members, the Committee was very interested in this.

Mr Kganare said that his concerns were around family members or friends of senior staff members doing business with the Department, how would this be prevented from happening?

Mr Nhleko said that he was unsure about discussing the Indlela investigations; the report on the investigation was currently with the Department of Higher Education and Training.

Mr Moroto said that the Indlela investigation around the procurement was instituted after the transfer. All staff members of Indlela have been transferred to the Department of Higher Education and Training including Indlela itself. So far only one official has been charged and dismissed. The other persons that were investigated were not prosecuted because charges could not be formulated properly. 

The Chairperson asked if anybody from the DOL had been charged.

Mr Moroto replied no.

Mr Les Kettledas, DDG from the DOL, said that the memoranda of understanding with Zimbabwe included the regulation of the status of migrant workers particularly in Limpopo where they worked on the farms, the regulation of social security, the task force on asbestos that was established, labour law reform, dispute resolution, social dialogue and occupational health and safety. The memorandum of understanding with Namibia dealt with the same issues including labour law reform and labour hiring which was the equivalent of labour brokering in South Africa.

The Chairperson requested a copy of the memoranda.

Compensation Fund 2010/2011 Annual Report presentation
Mr Mongezi Mngqibisa, Chairperson of the CF, said that the measurable objective of the Fund was to pay compensation for death and disablement caused by occupational injuries or diseases sustained or contracted by workers within 90 days. The strategic objective of the CF was to provide an efficient social safety net; promote efficiency and stability; promote the financial stability of the fund and to improve corporate support and services. The key challenges that affected the mandate were the number of delays and non-reporting of accidents by employers. This was driven by a lack of knowledge and fear over prosecution for non-compliance with legislation by employers. In terms of vacancies the CF was able to capacitate the top management structure. When an employee was injured the CF and employer had to come together to resolve the matter. The CF was able to provide pilot programmes which resulted in the decentralisation of the CF. This had meant that in all provinces there was a CF. The CF had dealt with 33 845 compensation claims; 245 966 medical aid claims and it has dispensed with R418 million in the provinces. The CF had held three educational workshops in Limpopo, Eastern Cape and Mpumalanga. A formal risk management strategy had been adopted; this was a successful and effective strategy. There was also a fraud prevention plan; 160 cases of fraud were investigated; a crime line has been established: 0800 20 49 74.

This year the CF had increased compensation funds paid to workers from R771 million in 2009/2010 to R881 million in 2010/2011. The CF had made 329 091 payments. The CF was trying to attend to the claims as they came as well as to make payments timeously. During the financial year the CF had paid between R1.4 billion to R1.9 billion in medical expenses. The figure for medical expenses which was paid to medical aid service providers was almost double that of compensation paid to workers. The CF had to bring the figure for medical aid expenses down. The revenue of the CF had increased from R4.8 billion to R5.2 billion. Other revenue such as interest and penalties had declined by about 70%. Investment income has increased from R1.9 billion to R2.1 billion. There has been a decline in benefits from R2.9 billion to R2.2 billion. Administrative expenses had declined by 26%. Actuarial adjustments had increased by about 85%. The CF had a surplus of R3.6 billion; this was not good news as the money was supposed to go to the workers. In terms of the vacancy rate the CF had filled 373 additional posts. There were no senior management vacancies except for one post where there was an acting incumbent. Staff turnover was at 2.7%. The CF had a qualified opinion in the area of contributions and assessment of debtors as well as in the area of claims. One of the reasons why the AG had found that there was irregular expenditure was because of the Siemens PPP contract which they cancelled at the last minute. In terms of fraud and theft the fund has recovered R2.4 million. The new claims and financial management system was launched on the 1st of October. Going forward the CF would attempt to collect more revenue in order to deal with its shortfalls this year.

Discussion
The Chairperson said that it was problematic that the CF had only provided its document at the meeting and in addition it had received a negative rating from the AG. Hopefully the next audit would be a clean audit.

Mr Ollis said that most entities under labour were improving and this included the CF. The number of payments from 2006 to this financial year had steadily dropped and this meant that less people were being paid. It could not be possible that less and less people were being injured at work, this would mean that all the factories were clean, safe and running smoothly as a result of awesome labour inspectors. The only realistic assumption was that less people were claiming and this was worrying. The number of payments should be increasing. The trend seemed to be that less people were claiming, yet the population was increasing and of those who claimed they received less money. Could the Committee get an update on the document handling capabilities of the CF? Where there were contracts entered into with third parties, there has to be tight management and penalties around sub-contracting because companies tended to sub-contract over and over to the point that there was no management.

Mr Nhleko said that the declining trend and figures that supported that could not be used as the sole basis of concluding that there were fewer payments or that factories were running perfectly. The DOL would have to conduct more comprehensive research and analysis.

Mr Kganare asked what human capacity constraint meant.

Mr F Maserumule (ANC) said that year in year out the Committee was bombarded with the ‘integrated policy framework’, this cannot go on forever and even now it had become a nice song. What positives were going to come out of this process?

Mr Mngqibisa said that the State Information Technology Agency (SITA) had been assisting the fund in the area of IT management. SITA was on the verge of assisting the CF on information management before the new DG started working. It was true that the integrated policy framework was becoming tiresome but now the Minister has signed it. The number that was declining was not for beneficiaries paid but invoices from service providers. Some of the reasons behind the figures that did not seemed accurate was that there was a lot of fraud involving the use of details from previous claims where fraudsters changed the date and details of the service provider from the original claim. There had been in fact more claims paid out but the question was whether the right people had been paid. The CF had put measures in place against this and perhaps less fraudster attempted to try their luck.

The Chairperson said that the Committee was not doing well time wise and some of the questions would have to be answered in writing at a later stage.

CCMA 2010/2011 Annual Report presentation
Ms Tanya Cohen, Chairperson of the CCMA said that the CCMA was a statutory body established in terms of the Labour Relations Act. There were two new members of the governing body for the CCMA, they were Arino Ranchod and Leon Grobbelaar. The strategic goals taken from the 2011-2015 Strategic Plan were the promotion of social justice and economic development in the workplace, the delivery of professional, user friendly and quality service and the last strategic goal was around maintaining organisational effectiveness and striving for continuous improvement. The strategic objectives were to enrich the role of the CCCMA in the labour market, build skills and professionalism, deliver excellent services rooted in social justice, enhance internal processes and systems, align the structure for optimal implementation and entrench the organisational culture of the CCMA that supported the delivery of its mandate.

Ms Nerine Khan, Director at the CCMA, said that the entity had met every single one of its set objectives during the 2010/2011financial year.  For the past four years the CCMA has managed to schedule conciliations within 30 days as per the statutory requirement. Commissioners had managed to also achieve delivery of awards within 14 days as per the statutory requirement. The average turnaround time was 39 days as required by law. In the year under review the CCMA heard 154 279 cases. Since 1998 the CCMA caseload has kept rising. Research had concluded that the rise in the CCMA’s case loads was a result of what was happening in the economy. The case load stabilised in 2010 and 2011 however there were indications over the last few months that there was potential for it to rise again. The CCMA now had 12 regional offices, 6 satellite offices and over 480 onsite hearing rooms and over 250 offsite hearing rooms. The CCMA now had automatic case management access thanks to the DOL. This meant that workers could walk into any DOL office and establish the status of their case with the CCMA.  Within the next year workers would be able to lodge their cases at DOL offices. Large scale retrenchments have gone up and this was of concern.

Mr Obed Sekgololo, CFO of the CCMA, said that the AG had issued an unqualified audit with a few matters of emphasise, this was an improvement from the previous financial year. 16 matters had been resolved and only two remained where one involved overpayment which was being sorted out via legal action and the other matter was a possible South African Revenue Services (SARS) penalty. The CCMA had reduced its deficit from R46 million to R15 million. The cash flow target was a ratio of 1 to 1, at the moment it was at 0.58.

Discussion
Mr Ollis referred to the case load statistics, and agreed that the rise in the CCMA’s case loads was a result of what was happening in the economy as a generalisation however if one looked at the statistics for the South African economy’s performance over the same period there would be no correlation. The statistics would not match. The CCMA statistics were more extreme then that of the economy, this meant that a lot more cases were handled then the normal state of the economy would allow. The graph representing the CCMA’s case load indicated that labour relations were not handled very well in this country and that there was too much fighting and antagonism. Perhaps this was a comment for NEDLAC and the statistics should be seriously considered by the organisation.

Ms Makhubele-Mashele said that during the last economic downturn the CCMA almost could not function as its finances were stretched to the limit, with the next downturn looming what systems have been put in place to counter this possibility.

Mr Nhleko replied to Mr Ollis’ question and said that the statistics indicated that the CCMA was standing at 154 279 cases out of 6.5 million economically active people, the cases were a drop in the ocean and not a true reflection of an antagonistic labour system. There was however a need to review the SA labour market system.

Ms Khan replied that the CCMA had improved its finances and performance and that it was driving its staff very hard and this was an issue. The CCMA was working on a new business model and possibly a change in how it was funded.

Ms Cohen said that the SA labour system was not unduly antagonistic it was just that there was a lot of pressure in terms of jobs. There was just so much at stake when it came to labour negotiations and this was driving the CCMA’s caseload.

Unemployment Insurance Fund 2010/11 Annual report presentation  
Mr Boas Seruwe, Commissioner from the UIF said that the UIF’s mission was to render an effective and accessible service to all stakeholders. It operated inn 125 labour centres and of these, 54 had processing facilities. The UIF had received a clean audit from the AG. The contribution requirements of the UIF remained at 2%, 1% from the employer and 1% from the employee. The UIF had 9 provincial offices. The labour centres could service more than 820 service points. Certain functions have been moved from head office and provincial offices and have been placed where they could be easily accessible. The UIF covered 1.3 million workers from the domestic, commercial and taxi industries. New employers contributing to the fund have increased by 4.4%. The total number of employees that were serviced were 7.9 million, this figured had increased by 2.04%. The fund had paid R4.1 billion towards unemployment, R222 million towards illness and R659 million towards maternity. The dependents payout was R317 million. The total amount paid was R5. 3 billion. The total number of people paid was 732 000 people, there was a decrease of 0.5%.  The UIF had an approval rate of 93.7% which meant that the majority of applicants were successful. The majority of the claims paid out were in Gauteng followed by the Western Cape (WC) and KwaZulu Natal (KZN). The UIF had 455 posts of which 425 had been filled. There was a vacancy rate of 6.5%, 2% of staff were people living with disabilities and 56.5% were female. The total number of employees who have left was 11. The internship programme has produced 124 new appointees. Investment income increased by 2% and the investment portfolio followed suite with a 20% increase. 

The turnaround of claims was that 73% of claims were settled within five weeks. The Minister of Labour began a programme that would provide employment for those on the UIF database. This year the UIF had produced 122 artisans and most of these people have been absorbed in the labour market. The key challenges were the turnaround times for the processing of claims and job losses that resulted in less funding for the fund. To improve its services the Fund has developed a system where claims could be made electronically. The advantage of this was that claims would be processed faster. The Fund was involved in labour market programmes aimed at providing skills.

Presentation: NEDLAC 2010/2011 Annual Report
Mr Alaister Smith, CEO of NEDLAC, said that the bulk of the work that NEDLAC conducted was around the Trade and Industry Chamber and labour market. The labour market policy review was work that was ongoing. The Decent Country Work Programme has been launched and NEDLAC’s role was to monitor this, the Social Plans Review Programme was complete as well. The Bills that have been completed in terms of the NEDLAC process were the Cooperatives Amendment Bill Municipal Systems Bill, Customs Control Bill, Customs Duty Bill and Superior Courts Bill has been complete. The Climate Change Green Paper and Water Quality Risks Paper have been completed. The activities around the Industrial Policy Action Plan (IPAP) were ongoing. NEDLAC had a mandate to monitor the Financial Sector Charter and this was ongoing. The Section 77 applications received during the current financial year were the electricity tariff request from the Congress of South African Trade Unions (COSATU), the inability of the police to combat crime from Solidarity and the quality of water request. These Section 77 applications were ongoing. Economic Growth was a fundamental issue especially from a global perspective. There were worrying comments from the Minister of Trade and Industry that SA was on the tipping point of de-industrialisation. Social dialogue was going to be important for resolving issues going forward. 

Mr Umesh Dulabh, CFO for NEDLAC announced that the organisation had a clean audit with only one matter of emphasis. The matter of emphasis was on the cost of land and buildings at the Rosebank offices, there was a change in an accounting standard as a result of a grant from DOL which would have set off the cost for land and buildings. The AG had wanted NEDLAC to reflect the grant in its financial statements to show the correct value of the offices in Rosebank. The grant had amounted to R15 million and in the prior year it was R19 million. For the next financial year the grant had been increased to R24 million. NEDLAC had a net deficit of R384 000 for the year.

Presentation: Productivity SA 2010/2011 Annual Report
Mr Bongani Coka, CEO of PSA said that the organisation assisted SA businesses, industries and the general public. PSA believed that high levels of business productivity were directly linked with high levels of business competitiveness. The organisation inspired other organisations to promote growth in the economy. PSA only intervened in a company that employed more than 50 employees, after which productivity, performance and profitability went up. It had very strict criteria especially for companies in Gauteng, WC and KZN. Most interventions were in the agricultural sector. The PSA had planned on creating 140 future forums but only established 108 this was due to funding constraints with one funder coming on board in August 2010 only. 15 523 jobs were saved as a result of the established future forums. During the period under review PSA trained 406 educators and 3 000 Small Medium and Micro Economic Forums (SMME). There were 500 workers trained on productivity concepts as well as 200 Skills Development Facilitators. PSA had compiled research reports on the impact of labour legislation, efficiency and productivity in the use of municipal land for economic development, public sector productivity and performance, development of minimum norms and standards for reward and recognition in the UIF as well as best practice in public employment policy. PSA had nurtured 141 enterprises and thus exceeded the set target of 64, it had held 30 capacity building workshops and it participated in 18 projects on orientation and implementation.

PSA had a mandate to create awareness on productivity in SA. To achieve this it had published 183 articles, implemented a print and electronic campaign, completed the annual productivity month project plan, revamped the website, printed four productivity magazines, developed five regional newsletters and implemented 22 awareness workshops. PSA had one of the lowest vacancy rates in government and it had an excellent talent attraction and retention strategy. Staff turnover was also very low. PSA had improved on its revenue base. The compensation of employees figure did not increase this year. The Committee should note that the amount for goods and services did not increase in the same way as the 2009/2010 financial year; the funding was received late and was not spent. The balance was favourable for this year as the entity ended up with R12.1 million in its bank account. The highlights for 2010/11 was that stakeholder partnerships were established in poor performing provinces such as Limpopo, Mpumalanga and North-West; PSA saved more than 15 500 jobs and it expanded the Productivity Awards Programme in the Eastern Cape (EC), PSA had the lowest labour turnover in the last 10 years with a 6% resignation.

Discussion
Mr Kganare asked when the structure affecting the UIF for workers would be approved by the Minister. The expenditure for helping companies in distress was R6.5 million out of a budget of R1.2 billion, why? What impact did the PSA interventions have for the businesses? Who set up the targets for PSA because often entities set up low targets so that they could overachieve? What action did PSA take in order to try and reach other provinces besides using other government departments?

Mr Maserumule referred to NEDLAC and asked if the Department of Labour was brought in to deal with the amendments that related to the National Shipping Act which was currently within the NEDLAC process?

Mr Nhleko said that the structure affecting the UIF for workers had been approved by the Minister.

Mr Moroto said that there were some companies which were rejected and not assisted, this contributed to the figure for assisting companies in distress. The Committee should note that the figure that was agreed to for use in terms of assisting companies in distress was R21.9 million.

Mr Coka replied that PSA had decided that it had to do a thorough analysis of the turnaround programme. A report was compiled on this and it would be shared with the Committee as well as the case studies that indicated the results of a company after the intervention of PSA in terms of job creation, turnover, profits, job security and employer-employee relations. PSA set its targets in terms of available resources and dedicated time. PSA had begun various initiatives for working with several Chambers of Commerce across the country e.g. Bloemfontein, WC and Pietermaritzburg etc. Various Sector Education and Training Authorities (SETA) were used to reach rural communities.  The PSA had also taken the initiative to conduct training in Qwa Qwa, Soshanguve and Soweto.

Mr Smith said that the Maritime Shipping Act had had an Amendment Bill introduced in the NEDLAC process but it was later withdrawn in the middle of negotiations. NEDLAC had spent a lot of time trying to convince the Department of Transport (DOT) to join the negotiations. The DOT had re-introduced the Bill and everything was now on track.

The Chairperson thanked all entities and adjourned the meeting.

Meeting Adjourned.



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