Achievement of Millennium Development Goals: Department of Labour progress report

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Employment and Labour

07 February 2012
Chairperson: Mr M Nchabeleng (ANC)
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Meeting Summary

The Department of Labour outlined the successes and challenges it faced in its work towards achieving the Millennium Development Goals (MDG) and outlined the various programmes that had been put in place to achieve the results required of it, as well as the targets that had been outlined. 
The presentation covered the means of compiling a report for the United Nations General Assembly. It was explained that the Department was unable to compile this report themselves as there were procedures a nation state must follow to compile a report. The presentation also covered the various programmes implemented including Inspection and Enforcement Services Programme and the Public Employment Services Programme.  The presentation outlined the work that had been done in these programmes as well as how the programmes worked noting the successes and challenges experienced.

The discussion tended to focus on various key issues including the employment of foreign nationals. The department had stated that it had sought to work with Home Affairs to remedy this problem. However it was of the strong opinion that migrant workers should be given the same rights as South African workers due to problems of exploitation.  The Chairperson and the members also raised the issues of inspectors having an inappropriate relationship with farmers as well as the lack of inspectors. On this issue the Department stated that it had considered a number of options to remedy the various inspection problems including ‘inspectors without borders’ and blitz inspections. It had also sought to train up more inspectors in order to solve the lack of capacity to handle the great number of inspection but faced budgetary problems on this point.
Various members raised the issue of the use of funds asking why there had been information relayed that there was an excess of funds yet there seemed to be an under utilisation of funds especially in the realm of the training lay off programme. Members also raised the notion of capacity building through interaction with other departments to which Mr S Morotoba answered there had been collaboration with other departments.

The Committee Members asked a series of questions all of which were however not answered by the Deputy Director-General, Mr S Morotoba as the Chairperson chose to end the meeting stating that it was beginning to take the form of a ‘strat meeting’. He stated that for the Department to answer members questions based on ‘how the Department planned to do this or that’ was an issue that could not be tackled in this meeting.

Meeting report

Millennium Development Goals: Department of Labour’s progress report
Mr Sam Morotoba, Deputy Director-General, Department of Labour, summarised that there were eight Millennium Development Goals (MDGs) and the Department of Labour (DoL or the Department) work contributed towards, in particular, MDG 1: the eradication of extreme poverty and hunger and MDG 8: development of global partnerships for development. MDG 3, relating to the promotion of gender equality and empowerment of women, was also key to the work of this Department. The Department of Labour had sought to align itself by setting out the Key Results Areas (KRAs) that would allow it to set its targets, and map progress towards achieving the MDGs and the Government National Outcomes. He illustrated (see attached presentation) how KRA2 was aligned to the achievement of MDG3.

He noted that South Africa must provide an update report on its progress in achieving the MDGs, to the United Nations General Assembly. The Department of Labour was not responsible for doing this alone, but there were processes set for the governments. Statistics SA had been mandated to draw South Africa’s report, and it would then be referred to the Minister in the Presidency who would present the report. The specific input from Department of Labour would relate to MDG 1.

An official from the Department of Labour added that in order for Statistics SA to compile all the information into a report, the Department of Labour (and other departments) would need to provide the relevant information. She reiterated that the National Planning Commission had made a presentation on the MDGs in March 2011 and the Department of Labour representative had been assigned to the group that dealt with the poverty and hunger indicators. All government representatives had not only participated in the sectorial working groups, but had also provided statistics with a certification of their credibility. MDG 1 indicators would be available from Statistics SA and the Department of Social Services, including the number of people who lived on under US$1 per day, the share of the poorest quintile in the national consumption, the growth rate of GDP per person employed, and the employment to population ratio (see attached presentation, page 7).

She then gave a presentation on the figures indicating whether the goals would be achieved. The targets included reducing the proportion of population living below $1 a day to 5.7, reducing the poverty gap ratio (of those living on less than $1 per person per day) to 1.6, as well as the poverty gap ratio of those living on $1.25 per person per day to 2.7.

Ms Marabolo outlined the various programmes within the Department that correlated the KRAs and the MDGs. The most important was the Inspection and Enforcement Services (IES) programme. In this regard, she noted that MDG3 related to the promotion of gender equality and empowerment of women, and KRA3 covered the promotion of equity in the labour market. The IES programme had been responsible for implementing the Employment Equity Act since its promulgation. It also had labour inspectors inspecting work places for procedural compliance, and cases of alleged unfair discrimination were referred to the Commission for Conciliation, Mediation and Arbitration (CCMA). In the past few years, designated employers had been subjected to the Director-General’s Reviews and Process to test their substantial compliance to the Employment Equity legislation. Regrettably, the reports had shown very little progress in achieving equity in the work place. Technical Assistance Guidelines had also been developed to assist in the implementation of the Act. Employment Equity Road shows had also been conducted to create awareness and assist employers in reporting, whilst an Employment Equity system had been developed that allowed employers to submit reports online.

The same official then went to outline the work done in terms of KRA 4, which referred to the protection of vulnerable workers. She stated that workers in specific sectors of the labour market (most notably the agricultural and domestic sectors) had been identified as vulnerable workers and thus required the most focused intervention. Sectorial determinations were also established, which set the minimum employment conditions and wages within these sectors, and promulgated for implementation. Labour inspectors similarly were responsible for conducting inspections and enforcing compliance with these determinations. In the past three years, the Department of Labour had identified high risk and problematic sectors that required “blitz inspections”. Based on all this information, specific programmes had been piloted and implemented to increase awareness on health and safety in these sectors.

The Occupational Health and Safety Act and regulations addressed MDG 7: ensuring environmental stability and KRA 5 also looked to strengthening social protection. The Department worked jointly with the Departments of Environmental Affairs and Mineral Resources to ensure the protection of the environment and workers. There had also been participation in technical committees and committees of experts, both regionally and internationally, to ensure regulation and environmental sustainability.

Ms Marabolo indicated that the purpose of the Public Employment Services (PES), Programme 3 in the Department of Labour, was to promote employment of citizens, improve access to the labour market for work seekers and provide opportunities for new entrants to the labour market. It also sought to improve employment prospects of persons with disabilities, improve employment prospects of work seekers and employees facing retrenchment. It would also facilitate access by work seekers to training. A regulatory framework for the PES was provided, comprising registration of vacancies, employment of qualifying foreign workers, and other related matters to promote employment growth and work place productivity.

Specific targets for MDGs and KRAs
Ms Marabolo then outlined the targets for the various MDGs and KRAs. In relation to MDG1, the target was, between 1990 and 2015, to halve the proportion of people living on less than US$1 per day, and also to halve the proportion of people who suffered from hunger. In order to address MDG3, and KRA2, the Department had developed, and would shortly submit for public comment, the Employment Services Bill, which was currently with the National Economic Development and Labour Council (NEDLAC).

In relation to eradication of poverty and hunger, and KRA1 (Contribution to Employment Creation) Ms Marabolo outlined various figures showing the number of jobseekers registered and placed in opportunities (see attached presentation, slide 17). Employer services were also listed, showing the numbers of companies registered to opportunities and the numbers of companies assisted through the Department of Labour and Department of Higher Education and Training (DHET) training lay-off scheme (see attached presentation, slides 18 and 20). Further figures were also displayed for the products and services of assisted world class and competitive companies, and jobs saved in distressed companies (slide 19).

The Department’s Programme 4: Labour Policy and Industrial Relations also contributed to the achievement of MDG1. South Africa had increased the real wages of workers covered by sectorial determinations during the years 2001 to 2011, particularly the wages of domestic and farm workers. Employment in sectors covered by the minimum wage legislations was said to have grown significantly over this period, at around 2.9 % per annum, whilst output grew 4.6 %. Overall, employment of workers covered by the minimum wage legislation in South Africa grew at a rate of 2.9% per annum from nearly 3.5 million in 2001 to just over 4 million in 2007.

The proportion of households, categorised by poverty status and sectorial determination of households, was illustrated, with categories ranging from ultra-poor to non-poor. The various sectors of retail, security, forestry and contract cleaning in two years (2001 and 2007) were used for illustrative purposes. Although the percentages of the ultra-poor in some sectors such as retail, domestic and farm workers had fallen, it had risen in other sectors, such as contract cleaning.

The Labour Relations Act allowed the Minister of Labour to extend the collective agreements concluded by bargaining councils to non-parties, and doing so would cover vulnerable workers who normally would have been excluded from these wage increases and social security benefits like pension funds and medical aid schemes. Over a period of approximately ten years the average wage settlement in South Africa was around 8% and the wage settlement was more than the average inflation rate of 6%.

The most recent average wage settlement rate in bargaining councils with published collective agreements was indicated on slide 25. The lowest wage income of an unskilled worker in South Africa was about $9 per day, so the lowest wage income for employed workers in the bargaining council system across all sectors was above the US $1 a day mark.
Ms Marabolo reiterated her earlier comments on women’s participation and empowerment, noting that the Employment Equity Act, 1998, Regulation, Codes of Good Practice and Technical Assistance Guidelines all contributed to achievement of MDG3  This was done by promoting equal opportunities and fair treatment in employment through elimination of unfair discrimination. It was also done by implementing affirmative action measures to redress the disadvantages in employment experienced by designated groups of black people, women and people with disabilities, to ensure their equitable representation in the workplace. There had been progress in the number of women represented in decision making powers. At top management levels, women constituted 18.2% in 2008 and 19.0% in 2011, of all positions. At senior management level, women constituted 28.3% in 2008 and 29.3% in 2011 of all positions. The level of professionally qualified women constituted approximately 40% of all incumbents in 2011. This was a positive indicator, as these women would be employed at senior and top management levels.

Ms Marobolo noted that the Department of Labour also responded to MDG 6: combating of HIV and Aids, noting that, after the International Labour Organisation’s summit on HIV/AIDS in June 2010, the DoL had acted immediately to bring its code of good practice on key aspects of HIV/AIDS in the workplace into line with each provision of the recommendations. The process should be completed at the end of March 2012, and would be supplemented by reviewing the Technical Assistance Guideline that was currently in operation.

South Africa addressed MDG 7: development of global partnerships for development, by strengthening its partnerships in the Southern African Development Community (SADC) in various ways. The DoL participated in the SADC Employment and Labour Sector (ELS) Committee that dealt with regional employment and labour issues. There were also several memorandums entered into with countries within the SADC region, to ensure advanced socio-economic relations.

Specific comments on concerns raised previously by the Portfolio Committee
The Department official wanted to outline the progress that the DoL had made to addressing concerns addressed by the Committee at earlier meetings. Firstly, there had been concerns that many South African companies preferred to hire foreign workers over nationals. The Department had conducted an investigation into the driving forces, and the extent of migrants in towns closer to the border posts. In particular, it had conducted investigations and extensive research would also be done on the position in Musina, to gain a better understanding of the rationale behind the choice of workers by the companies.

The second concern had related to wage gaps. Here, the DoL had developed and implemented wage policies. However, research indicated that this would not be the sole solution to alleviating poverty. The DoL had, in answer to MDG1, looked at the possibility of extending social protection to categories of workers who were currently not covered by Unemployment Insurance, such as public servants. The DoL also considered measures that would ensure that vulnerable workers were covered as beneficiaries of the Compensation Fund.

There had been criticisms that the Employment Equity Act provisions relating to enforcement and compliance were not sufficiently strong and that employers were able, in the past, to circumvent certain provisions, which hindered the achievement of MDG3. This Act was now being amended and strengthened in the necessary areas. Regulations would be developed to advance the cause of women. In addition, the notion of equal pay for equal value was now being entrenched in this Act during the amendment process, to counter any disparities in remuneration based on gender or race.

Discussion
The Chairperson stated that that all departments must play the roles assigned to them.

He added that in addition to the comments addressed already, the Committee had also noted that the use of the “dop” system, particularly in the Western Cape, must be eradicated. He agreed that there was a need to question in depth why many companies preferred to hire foreign nationals rather than South Africans. He also made the point that the DoL and other stakeholders had to ensure that people were paid what was due to them, whether their work was done legally or illegally, and this would ensure that illegal migrants were not employed in preference to local residents. He urged the DoL to ensure that all these matters were attended to.

Mr F Maserumule (ANC) said that whenever comment or criticism was directed to the DoL, the latter should take this seriously. He was particularly referring, in this regard, to the Chairperson’s comment on late submission of the material needed for the meeting, which had arrived only on the previous evening, which gave Members insufficient time to comprehend and digest the content of the presentation. The Chairperson had cautioned that if this happened again, the Committee would send the presenters away.

Mr Morotoba responded on the issue of migrant workers, noting that the Employment Services Bill contained clauses dealing with this. The Department of Labour was frequently in contact with the Department of Home Affairs, as the relevant pieces of legislation were sometimes in conflict on their aims. Although the Immigration Act required people to be provided with work permits in some instances, the Department of Labour would already have local people with the requisite skills on the database of potential employees. The DoL was being frustrated when it took such issues to court. There was not currently sufficient legislation to require employers to employ locals, and thus assist the DoL in its goals. Sometimes, employers would bring in other foreign nationals, and impose requirements such as certain language proficiency to ensure that they could do so. However the key principle remained that all migrant workers were to enjoy the same rights as any South African worker, because they had in the past been exploited.

Mr Morotoba stated that the Department had also proposed a research project to look into the empirical evidence about employment. He was grateful for anecdotal evidence provided by Members outlining issues that plagued migrant workers, such as their being employed because they could not join unions, or cases where they were paid less than minimum wages or comparable South African workers’ wages, or even cases where they were paid in kind, not currency. On the other side, there was a perception that South Africans were lazy when compared to foreign workers. However, he agreed that there was a need to examine the allegations, assess their veracity and see how they influenced the employers’ choice of employment.

Mr Maserumule stated that various questions had previously been raised but were never answered. He suggested that it would be good to bring on board other departments in order to make sure that all issues concerning workers were being tackled holistically. Mr Maserumule argued that if the Department needed to build capacity, then it must do so, in a practical way, rather than propounding theories. He believed that such capacity could be built by bringing in expertise from other departments, concentrating more resources on inspectors and training to source “what was good and bad, and right and wrong”. He also thought that more capacity was needed in how to interpret the law. He believed that many farm owners tended to behave in a way that flouted various provisions, and demeaned workers. There was a need to address living conditions as well as working conditions, through clusters. Nobody should be expected to live in the sorts of conditions that often prevailed, 17 years after democracy.

Mr Morotoba replied that the DoL had worked with other departments. He reminded the Members that DoL and the Department of Home Affairs had jointly briefed the Committee on the projects that the two were undertaking. One example was the amendment of the Immigration Act. The two departments had faced challenges when permits were granted to over 66 000 Zimbabweans, and further common issues concerned the deportation of those who had overstayed their permits, when the DoL had given input to the Department of Home Affairs.

Mr Morotoba noted that the Clusters were in place, but there were some difficulties with the way they were grouped, because some departments tended to be sidelined. The DoL would be attending a meeting of the Economic Cluster, along with the
Departments of Home Affairs and Agriculture. He believed that there was coordination between the departments. DoL had also worked with the Department of Transport. However, he did agree that there was a need to coordinate efforts as there had been cases where one department took a decision that had unintended effects on others.

The Chairperson raised the problematic relationships between labour inspectors and the farmers, saying this needed to be investigated further. He said that sometimes the inspectors were alleged to be working hand in hand with the farmers, or not inspecting areas correctly, concentrating instead on buying produce, or discussing matters with the farmers alone.

Mr Morotoba replied that people had been generally very supportive of the Department’s inspections on the farms. He was grateful that Members of the Committee had been exposed to the situation on the ground, and pointed out that both the Labour and Public Enterprises Portfolio Committee Chairpersons had been invited to participate in farm inspections in the past. He was aware, however, of the allegations that had been made about the conduct of some inspectors, and the Department was considering instituting the concept of “inspectors without borders”, to ensure that inspectors would be moved around, and would not necessarily inspect their own areas, where they tended to be over-familiar with other residents, which increased the risk of corruption. Having said that, he reminded the Committee that there were certain complications with inspections, as the inspectors needed to notify the farmers in advance of the inspections, to avoid being faced with the excuse that gates were locked to ensure the farmers’ protection or dogs were unleashed to prevent anyone coming in. The amendments would seek to give inspectors more powers, and allow other agencies, such as South African Police Services, also to assist. He had taken note of the comments that inspection services should be strengthened. The issues were well known, documented in a report, and the DoL was dealing with the issues. He cited dialogue and interaction with the Agriculture Economics Association to address common concerns. Whilst some regions could agree on some issues in meetings, it was, however, found that implementation could be a problem, especially if the farmers were unwilling to cooperate. The DoL had debated meeting farmers to promote the building of better partnerships. Funding to Civil Society organisations had been increased, where they sought to improve the capacity and understanding of farm and other vulnerable workers. However, this was under review, as it did not appear to be having the desired impact. It was necessary to ensure that all workers understood labour laws.

Mr Morotoba also argued that trade unions should be playing a major role in educating their members and ensuring that issues of security and safety were observed and abuse of workers did not occur when workers were organised. Despite the presence of trade unions the DoL still found itself more and more involved, because in some sectors the unions were weak; this was a matter that the Minister had raised with quite a number of trade unions. The Minister had stressed to the unions that the DoL had done all it could to strengthen them, yet was still being blamed for the abuse of workers. The Department found that abuses were being reported to the DoL directly, in preference to being reported to the unions.

Mr S Motau (DA) asked if there were enough inspectors for the work that had to be done. He noted that there had been little progress in achieving equity in the workplace, as shown by slide 10, but said that this was not surprising if there were insufficient numbers of inspectors to do the work.

Mr S Morotoba stated the DoL did not have sufficient capacity and in fact had only 1 000 inspectors to fulfil all inspections. There had been some efforts to improve this, including National Treasury giving additional allocations. However, it took quite some time to train an inspector, and the Department, having trained people, then found that the private companies would try to poach them. This was an on-going challenge as the Department faced budgetary limits. He agreed that the programme should indeed be strengthened and this applied equally to all labour legislation.

Mr Motau stated that promoting employment growth and workplace productivity was a strong statement, but asked how this was to be done, and what would be done in future. It was common knowledge that there was low productivity and high unemployment.

Another Member added that there was a need also to explain how inspection would work.

Mr Morotoba replied that there were a number of interventions made to promote productivity and growth. The Unemployment Insurance Fund had in excess of R57 billion and the Compensation Fund had in excess of R27 billion. This money was invested with the Public Investment Cooperation (PIC) on the condition that the money must be used to create employment. There were several examples of projects, including efforts at Cape Town International Airport, and the freeway in Johannesburg, using workers’ money investments with PIC. The DoL sought to tighten the conditions even further, to specify the numbers of jobs and projects created with each investment. Productivity was also assisted by the Social Plan Programmes, which comprised three levels, the first of which was to try to ensure that a company in difficulties would be saved from closing.

Mr A Van Der Westhuizen (DA) sought clarification on a number of points. In relation to slide 19, he noted that he wanted more details of what “saving jobs” would comprise, and what exactly it meant.

Mr van der Westhuizen asked why the number of non-poor people in the forestry sector had dropped, as indicated on slide 23. He further queried the reason for the reduction of figures of non-poor people in other sectors, including retail, and the reason why the numbers of people in the ultra-poor and poor categories had increased.

Mr van der Westhuizen wanted clarification whether the numbers of distressed companies being assisted had decreased, and asked if this was due to companies not needing assistance, which would suggest that some of the Department’s work was becoming redundant.

Linked to this was the R7 billion of unused funds set aside for training, and he asked why, if people were being trained through the Training Lay Off scheme, to compensate for the economic situation, some of the poorest provinces were not receiving allocations.

Mr E Nyekemba (ANC) welcomed the report, saying that it showed progress. He too had questions on the Training Lay Off Scheme and why so much had been unused. He noted the reports on slide 18 on the numbers of companies and workers assisted, but wanted to know exactly how the money allocated was used, and what was happening in future.

Mr Nyekemba also sought clarification on whether there was unemployment insurance offered within the taxi industry.

He asked if the 40% reported by the Department on slides 26 and 27 were inclusive of the public sector.

Mr Nyekemba also posed questions on the preference for employing foreign nationals, noting that this appeared to be prevalent not only in the agricultural sector, but also other industries. He asked what else the Department planned, if a central determination and minimum wage did not produce the solutions required.

The Chairperson noted that there was insufficient time for DoL to answer these last questions, which related more to strategy. He noted his appreciation for the efforts that the Minister of Labour made, particularly in relation to vulnerable workers, and noted that the Committee and Department were working to the same goals.

The meeting was adjourned.

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