Meeting with delegation from the Parliament of Botswana; Department of Labour 2012 Annual Report: briefing

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Employment and Labour

08 October 2012
Chairperson: Mr M Nchabeleng (ANC)
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Meeting Summary

A delegation from the Botswana Portfolio Committee on Labour and Home Affairs visited South Africa to learn about the workings and running methods of portfolio committees as this is a new method of governance in Botswana.  The Chairperson gave a presentation on the the work of the portfolio committee including its structure, workings, operating procedures and roles and responsibilities.

Discussions then followed, South African delegates emphasised the report by the chair on issues such as the importance of interrogating the annual reports of government departments and the role of the portfolio committee. South African delegates then asked about Labour Law policies, the role of external stakeholders and unions on labour laws and if disputes had ever reached court. The challenges of a minimum wage policy and the role of trade unions in making law were discussed by both delegations and the Batswana delegation explained the benefits and challenges of the Localization and Training Programme, the working of security services and the methods that courts used for labour disputes.

The Department of Labour (DOL) presented the Annual Report for 2011/12, which summarised the programmes of the Department, the work undertaken in that year, and highlighted areas in which there were challenges in performance. Key areas showing progress included the complaint responses, the employment of women and a reduction in vacancy rates. The DOL had been reported, by the Auditor-General, as achieving only 41% of targets, despite spending 99.5% of the budget, but it took issue with this, stating that this failed to take into account targets that were partially achieved, which were very difficult to quantify in percentage terms. Particular areas of focus included attending to labour law amendments, rebuilding the Public Employment Services (PES), implementation of the Decent Work Country programme, strengthening of the inspectorate in the Department of Labour, and reducing inequality and discrimination in the labour market. DOL had exceeded its target to inspect 130 000 workplaces, 10 000 JSE listed companies and ordinary designated employers, conduct 15 000 blitz inspections and settle at least 70% of received labour related complaints within 14 days at registration services. It had sought to reduce incidents in the high-risk sectors by inspections, blitzes and the holding of yearly seminars, and had targeted inspections in industries that exposed workers to silica dust.  It had not achieved targets for registering 600 000 job seekers on the Employment Services for South Africa (ESSA), and had only managed to refer or place 96 505 job-seekers, instead of the targeted 450 000. In this year, the targets for the Sheltered Employment Factories (SEF) were not achieved. It had also under-achieved on targets to employ youth, which were largely accredited to low skills levels of candidates and insufficient opportunities being registered. Evaluations and reports were outlined.

The presentation on the financial statements noted that the Department had been allocated R2.17 billion and overall expenditure was at 99.5%. Although the Department’s audit report was not qualified, there were some failures to ensure compliance with policies and procedures, vacant posts were not always filled on time, and contractual obligations were not always settled within 30 days. The Sheltered Employment Factories (SEF) showed a loss of R12.6 million in this year, with high material losses, but a management action plan was developed and a turnaround strategy put in place in the current year to address these problems.

Members were concerned that the presentation documents were tabled only on the morning of the meeting, which made it difficult for them to go into some of the issues in depth. For this reason, further briefings were required in relation to the SEFs, the setting of targets, and the cases involving corruption and fraud. Members asked for details about the irregular expenditure, and noted that a full report on the Public Private Partnerships would also be given at a later meeting. They enquired about the setting of targets, why the job seeker placements were so low, and how this was being addressed, and the procedures of filling internal vacancies. Members also enquired if more inspectors would be hired, asked for an explanation of discrepancies in compliance across the provinces.

Meeting report

Meeting with delegation from Botswana

The Chairperson welcomed Members and the delegattion from Botswana. He acknowledged that Botswana was a home to many members of parliament during the apartheid struggle. He explained that the aim of the meeting was to share experiences; look for places of similarities and opportunities for cooperation and create good neighborliness and economic prosperity for all people. 

After introductions, the Chairperson gave an overview of the work of the portfolio committee. He explained that unemployment was the main cause of the problems facing South Africa and emphasised the importance of addressing challenges such as poverty and inequality through job employment. He outlined the government’s strategies to promote job creation such as better education and skills development and the targets it had created and how it planned to meet them.

He outlined the composition of the Committee and explained that the role of the Committee was to ensure executive accountability and that the Department of Labour delivered on its mandate.

The Chairperson mentioned the entities which the Department of Labour was responsible for- these included the Compensation Fund (CF), the Unemployment Insurance Fund (UIF), the National Economic Development and Labour Council (NEDLAC), the Commission for Conciliation, Mediation and Arbitration (CCMA) and Productivity South Africa (PSA).

He further explained the annual activities which the Committee embarked on to ensure accountability- these included strategic plan sessions, quarterly reports, annual reports, and budget review and recommendation process. 
The Committee also drafted sector specific programmes and since 2009, it had focused on the agricultural sector, the domestic workers, labour migration, decent work country programme and labour legislation.

The Chairperson then outlined the stages undertaken by the South African government when preparing legislation.

Ms Makhubela-Mashele (ANC) suggested that we do not go through the whole presentation as the time was getting short and would not allow much time for discussion.

The Chairperson continued and explained that in many instances there had been objections when it came to the passing of legislation, therefore Parliament always ensured public participation before a bill was passed. Parliament relied heavily on public participation. With this he ended the briefing and offered the floor to the delegation from Botswana.

The Chairperson of the Botswana Portfolio committee on Labour and Home affairs, Hon. Gibson Nshimwe explained that his committee was only introduced in late 2011. This was their first trip to South Africa. The committee had mandates which derived from standing orders and Parliament. Labour and Home Affairs was combined in one ministry and included a number of areas like labour, immigration, women’s affairs and internships (this was introduced for graduates to give them exposure to industries as many graduates are struggling to find jobs). The objective of the visit was to benchmark how the SA portfolio committees were run. Botswana's Parliament was only 46 years old. The concept of portfolio committees was new in Botswana and they therefore hoped to learn from South Africa on how to better operate these committees. The country had recently launched the Country Work Programme but hoped to go further in terms of mirroring South Africa.

Mr A Williams (ANC) elaborated on the fundamental importance of the annual report as it showed the performance of a department and it could be used to hold an entity accountable for not keeping their pledges. A department could previously report on wastage and bad spending and it could get a clean audit because it reported but now the Auditor-General gave a response on performance and not just how a department had spent its money. He suggests that in Botswana, the Auditor-General report on the performance as well as the financial state of the department.

Mr S Motau (DA) brought a perspective on the role of the opposition in a portfolio committee. The role of a Portfolio Committee was to hold the ministry to account. He explained that if the committee did not like the decisions made by the government, it was debated and raised at the portfolio committee and gave the example of labour broking. The Portfolio Committee should interrogate more deeply what the government proposed and this could be helpful in raising issues that may otherwise be avoided. In urgent cases, they could go straight to the minister; these questions could be raised in the house and they were obliged to respond. Therefore they had a role in the decisions made by government.

Ms Makhubela-Mashele asked what the impact of the labour laws were on the Botswana economy. In addition, she asked the about the response of stakeholders or the impact of stakeholders who may not agree with the department of Labour might have on the outcome of labour laws. She asked for their experiences and if any of the labour legislation disputes had gone to court.

Mr Tibone (MP, Botswana) responded that the situation in Botswana had grown from the way that Botswana had developed. It was a small country, a small economy and started in a place where there were no unions. The government took the initiative to ensure that unions were created and advanced. However, tensions then developed. Now, the unions were working mostly with opposition parties in opposition to government. Inevitably, now whenever the government introduced a bill, which affected employment, there would be opposition from the unions. However, the government did consult unions so there was always some balance.
The minimum wage which government sets was always considered too low by the Labour Unions. Botswana had struggled to find the balance here especially in the case of farm workers and they were interested to see how South Africa had achieved that balance.  In Botswana, the minimum wage was 445 pula a month for agriculture (about R500) but it never rose above the minimum amount so it was also the maximum amount. This created tensions with the government who claimed it was only a guideline but employers used it as a standard wage.

Mr Van der Westhuzen (DA) thanked the Botswana committee for drawing the attention to the challenges of minimum wage; he was concerned that this problem created an over demand for labour when there was no jobs available and warned that jobs could be lost by setting the minimum wage too high. However, he explained that South Africa had not seen any significant job loses by setting the minimum wage too high. A problem was that the minimum wage could become a recommended wage and people would not deviate from this pay rate.
He went on to say that it could be hard to calculate the cost of pay especially in agriculture as this could also include services such as free housing, water and land to farm. 

Mr D Kganare (COPE) observed that the historically South Africa faced the challenge of paying people with food and alcohol and not money and people become very sceptical. He asked what the labour laws were under which the security services operated and how they dealt with foreign skilled labour and if the previous programme of creating understudies in the field was successful and if they have changed that policy.
He noted that in South Africa the unions were in alliance with the ruling party. He explained that three federations in South Africa which were historically affiliated with the three parties, the ANC, the Pan African Alliance and the National Party however these alignments had changed over time. This showed that unions were not necessarily aligned to anybody and and could be independent. Progress had been made with the advancement of public hearing which reflected the views of different unions.

The Chairperson reminded the Committee that they were running out of time, that not all the questions could be addressed but it was just the start of the process of work between the two countries in this area and suggested that the Committee visit Botswana and expressed a wish to learn from Botswana in areas such as IT systems.

Hon. Fidelis Molao (MP Botwana) responded to some of the committee’s questions. He explained that Localization and Training Programme was a problem as the employer must sit down with the department of labour and outline their training location and programme for that sector and indicate how soon and how the post would be localized and how the expatriates were identified by that sector. The security services had its own staff associations. There was no constitutional court in Botswana and if a case had gone through the lesser courts then it could be taken further to the court of appeal. 
He expressed that there were many more questions that Botswana wanted to ask South African committee members and explained the difficulties of dealing with so many ministries. He reiterated the difficulties with the minimum wage and that people were being denied employment, as people could not afford to pay.

Mr Gibson Nshimane, explained that in Botswana, there were two union federations. Neither was formally aligned with political parties.

The Chairperson observed that although the delegates were representing the ministry of department of labour and home affairs; they were more interested in issues of labour. He remarked that youth unemployment was a serious problem especially in South Africa- 70% of the population are youth.

Department of Labour 2012 Annual Report briefing
Mr Nathi Nhleko, Director General, Department of Labour, apologized that no copies of the presentation were provided in advance.

He noted that the presentation on the 2011/12 Annual Report reflected the areas of work that the Department of Labour (DOL or the Department) had undertaken. He noted that the audit in the previous year had clearly shown areas where improvements were needed.

The strategic objectives from the past year had included attending to labour law amendments, rebuilding the Public Employment Services (PES), implementation of the Decent Work Country programme, strengthening of the inspectorate in the Department of Labour, and reducing inequality and discrimination in the labour market. DOL also had to ensure access to income protection services through the Compensation Fund (CF) and Unemployment Insurance Fund (UIF) and reintegrate workers into the labour market.

Mr Nhleko noted that the DOL work was done under four programmes; namely Administration, the Inspections and Enforcement services (IES), the Public Employment Services (PES) and Labour Policy and Industrial Relations (LP& IR).

The presentation focused on key progress in areas such as complaint responses, employment of women, youth and disabled persons, the reduction in vacancy rates, the improvement in the number of misconduct cases finalised within a prescribed period of time, and the development and implementation of the Exit and Transfer services plan (see attached presentation for full details).

Mr Nhleko highlighted the outcome of Decent Employment through inclusive economic growth. Here, the DOL had exceeded its target to inspect 130 000 workplaces, 10 000 JSE listed companies and ordinary designated employers, conduct 15 000 blitz inspections and settle at least 70% of received labour related complaints within 14 days at registration services.

He noted that the DOL had sought to reduce incidents in the high-risk sectors such as iron and steel, construction, chemical and agriculture/forestry. This was done by inspections, blitzes and the holding of yearly seminars. The DOL had also conducted inspections in the identified industries where workers were exposed to silica dust. The rates of these inspections, broken down by industry, were noted on pages 43 and 44 of the Annual Report.

The DOL had a target of registering 600 000 job seekers on the Employment Services for South Africa (ESSA), and this was partially achieved, with registration of 553 883 workers. 40% of those job seekers were assessed and profiled within the targeted 60 days after registration.

The DOL had struggled to meet targets in respect of 450 000 job seekers being placed or referred on, since only 96 505 were referred or placed into opportunities. However it had managed to exceed the targets of having 2 000 public employment vacancies and 1 500 private companies register vacancies on ESSA, with numbers of 2 475 and 1 162 respectively.

Mr Nhleko then displayed targets and achievements for the number of jobs saved through social plan interventions, increased sales from the Sheltered Employment Factories (SEF), to government, which should lead to the intake of more people with disabilities into the SEF, and the number of people from designated groups placed in training and income generating opportunities across the categories of youth, women and people with disabilities. The targets in these named areas had not been achieved. No further people with disabilities were hired into the SEFs, and in relation to sales, only a 0.67% increase was recorded. Despite the target to employ 100 000 youth, only 28 339 were employed. The department accredited this to low skills levels of candidates and insufficient opportunities being registered. The breakdown of these results was noted on page 51 of the Annual Report.

Mr Nhleko then outlined progress in other areas. The DOL had attended to amendment of the Employment Equity Act (EEA) and its regulations. The Code of Good Practice and technical assistance guidelines on HIV and AIDS were reviewed and amended. The Income Differentials were assessed, to determine race and gender disparities in salaries. Other targets that were achieved included the amendments to the Basic Conditions of Employment Act, and reviews of the existing sectoral determinations.

Mr Nhleko noted that the DOL had been advised that must compile and submit a report on co-operations and deliberations with other departments. In the field of improving bilateral and multilateral relations, it had compiled and submitted reports, either through internal consultations across its own programmes, or in consultation with other departments, that would ensure that if would comply with the International Labour Organisation (ILO) requirements.

The Department had aimed to issue four Annual Labour Market Review Reports, and it had managed to produce the Industrial Action Report 2011, the Annual Labour Market Bulletin, the Annual Administrative Statistics Report and the Job Opportunity and Unemployment in the SA Labour Market Report.

It had also completed an evaluation of the National Skills Development Strategy (NSDS II), a  UIF Client Satisfaction survey, a study into UIF noncompliance in the taxi, domestic and catering sectors, and an assessment of registration, recruitment and selection services in ESSA.

Mr Bheki Maduna, Chief Financial Officer, Department of Labour, took the Committee through the financial aspects of the Department’s report. The DOL was allocated a total of R2.17 billion and he noted the breakdown across the programmes (see attached presentation for more detail). The programme of Administration was allocated R707 million, and had spent R704.2 million. IES was allocated R375.7 million, and spent the same. PES was allocated R332.7 million and spent R32.2 million. LP and IR was allocated R601.8 million and spent R594.9 million. The current expenditure was therefore at 99.5% of the budget. The Auditors did not report any qualifications or emphasis of matter on the financial statements, but did find that the Performance targets were not specific on PES and IES, and performance indicators were not well defined in IES.

Other challenges found by the auditors included the fact that goods and services of a transaction value above R500 000 were procured without inviting competitive bids. The Accounting Officer had failed to report the deviation from normal procurement processes to National Treasury and the Auditor General. In some cases, employees of the Department performed remunerative work outside their public service employment, without obtaining written permission from the relevant authority. In the Human Resource Management unit, there were vacant posts that had not been filled within 12 months. Some vacant posts in the Department were not advertised within six months. In addition, contractual obligations and money owed by the Department were not settled within 30 days, as required by the Public Finance Management Act (PFMA).

Mr Maduna then outlined the management and financial outcomes of the Sheltered Employment Factories (SEF). There was a gross profit of R13. 93 million, but the operating expenses amounted to R89.9 million, leaving an overall loss of R12 6 million for the year. He commented that the SEF was unable to operate as a going concern, due to high material losses. There had been a high rate of irregular expenditure noted at SEF, due to a lack of supply chain management services. Other challenges continued from the previous year. Another new challenge was that consultants were appointed to render services, despite the fact that there was sufficient time to recruit people to perform the work.

Mr Maduna noted that, in order to deal with the issues raised, the Department, including SEF, had developed a Management Action Plan that would address all the Auditors’ findings and queries. Progress reports were provided to Management Committees and the Audit Committee, and follow-ups would be performed during the year by the Internal Audit Unit, in preparation for the new audit in the new financial year.

Mr Nhleko added that a great deal of progress has been made, although he acknowledged that there was still a huge amount to be done. The shift in focus meant that there was now increasing emphasis on service delivery points. A priority for the DOL would therefore be to review the extent to which the Department was correctly positioned correctly to fulfill its obligations. It had also to look at how to build capacity of SEFs to deal with areas such as specialisation. It would be focusing on greater job creation in the country, and assessing how the DOL could play a greater role.

Mr D Kganare (COPE) expressed his concern about the late delivery of the presentation and suggested more questions may arise at a later date when the documents have been read fully. This concern was echoed by various other Members.

Mr A Williams (ANC) noted that the Annual Report said that of the 140 planned targets, only 82 were achieved, so 59% were not achieved. Despite this, the DOL had spent almost 99% of the budget. He asked how this was possible.

Mr D Kganare (COPE) asked how targets were set, and whether there was a specific formula. He noted the inconsistency, with some being achieved and some not.

Mr K Manamela (ANC) also questioned the determination of targets, pointing out that in the previous year, it was intended to carry out 130 000 inspections. He asked whether the targets for inspections were linked to the number of employees.

Mr Maduna responded on the apparent discrepancy in the achievements of targets and budget spent. He explained that targets which were only “partially achieved” had not been mentioned in the report, as it had been difficult to quantify the level of achievement. This was why there was a note that 59% of targets were yet to be achieved. National Treasury had noticed the problem in showing the achievements of the departments, but had not yet created a system for quantifying partially achieved targets.

Mr Richmond Ntuli, Planning, Monitoring and Evaluation Unit, DOL, also addressed the rate of 57% achievement. He noted that the targets were based on the fiscal allocations for each programme. Government created a scientific formula for measuring achievement, as shown on the slides in red, amber and green, which, respectively referred to not achieved, partially achieved and achieved. The brackets for achievement were pre-determined, so that performance at 0-25% would be “not achieved”, that between 26% and 75% was “partial achievement” and 75% and over was regarded as “achieved”. However, this was actually unrealistic and it was in practice impossible to measure achievement in a totally objective way. DOL had met with the National Treasury to ask for some way to achieve links between financial information and performance information. A compromise was developed, known as the S-M-A-R-T targets. However, he noted that DOL was not in agreement with the overall assessment by the Auditor-General that the DOL had only 57% performance, believed that the “partial performance” rates should be taken into account, and hoped this would be done in the next financial year.

Mr Williams enquired what control systems had been put in place to maintain and protect the assets.

Mr Maduna noted that the DOL had three categories of assets - major, minor and IT assets. There were also many smaller categories. For some of these, the Auditor General could not give a location, and that explained why there were two items missing ion the report. The Department was in the process of finalising its asset register.

Mr A van der Westhuizen (DA) observed that the Annual Report stated that four reports were produced over 12 months. However, the dates of these reports indicated that they had been produced over 18 months. He asked how many of them had in fact been produced after the end of the 2011/12 financial year.

Mr Les Kettledas, Deputy Director General: Labour Policy and Industrial Relations, DOL, explained that information for the last financial year only came through in the new financial year. The cut-off date for information was thus March, but the report was only distributed in September, after the information had been received (in March), collated, edited and published. The same was true of the Annual Report. That explained why the reports appeared to cover a period of eighteen months; in fact the data was gathered over only twelve months.

Members requested further clarification on how this was done, and the time taken to gather the information and data.

Mr van der Westhuizen noted the wide disparity, across the provinces, in compliance by employers that would lead to successful resolutions to labour complaints. He asked what had caused this.

Mr Kganare noted the ongoing issues about the accommodation of mine workers and farm workers. He wondered it there was any suggestion to separate out issues around workplaces and living places in the future.

Mr S Motau (DA) noted that supply chain management was not working effectively, and asked why it was failing and what could be done to resolve that matter.

Mr Maduna noted that there were always issues around the supply chain. However, he explained that supply chain was not always a financial issue alone. All managers in the Department had a role to play with the finances in the Department. For this reason, DOL had now introduced a new scheme of training for managers to educate them on their roles and responsibility in managing the supply chain,

Mr Motau commented that the job seeker placement numbers were very low, asked why, and what the DOL intended to do to rectify this.

Mr K Manamela (ANC) asked that the Department should specify the positions that were vacant, when speaking about vacant posts, and state, for instance, that these were categories of field workers, senior management and so on.

Mr Manamela asked for more detail on the number of people from specific groups placed in specific places and areas of employment. He wondered to what extent the DOL would work with the Departments of Higher Education to try to achieve greater employment. He noted that, at the moment, not all employers were legally obliged to register their vacancies with the Department of Labour. Since this report indicated that many did not do so, he suggested that consideration should be given to making this compulsory.

Mr Sam Morotoba, Deputy Director General:Public Employment Services, DOL, explained that the poor figures for work placement opportunities and referrals were linked to the setting of targets and the way in which, in this financial year, some services were dropped. The figures only showed successful placements and not those that were currently still in the process. A number of people came into the Department’s offices for work placements; counselling and UIF complaints. It was a legal requirement that before anyone could claim from UIF, s/he must first register as a work seeker. This was a further contributory factor to the difference in numbers. However, since 2011/12, this requirement had been adjusted.

He added that up to 40% of candidates who were registered for assistance in finding work placements had skills lower than a Matric level and they found it very difficult to access employment opportunities that were advertised. The Department received most of the candidates who were taken on for employment opportunities from the Department of Education, since there was a partnership between the DOL and education sectors to provide many training schemes with various departments who provided employment opportunities.

Mr Maduna noted the comment on whether it should not be a legal requirement for all groups to register vacancies. The DOL had produced the documentation that would amend the legislation, and tabled it in Parliament, and it was now up to the Committee to take the process further.

Mr Nhleko wanted to explain the Department’s view on successes and achievements. Since it operated within the constraints of the economy, there would always be a disjunct between the people profiled and the people placed. Placement was reliant on the availability of vacancies. Another constraining factor was that there were people who registered and were profiled, but could not be matched to the needs. There had to be a broader collaboration, government-wide, on how to get people skilled and trained to the levels that were needed, to assist them in obtaining jobs and growing the economy.

Mr Manamela asked if the DOL was planning to get more inspectors and to improve the inspections.

Mr Nhleko believed that the solution to the issues with inspections was not merely to increase the number of inspectors, because there was a history of working with people in improving their working environments in South Africa. Mr Nhleko believed the Department should work more with organised labour to address issues of monitoring, health and safety and working standards. He noted that the DOL did not have adequate capacity to inspect every workplace in the country. and believed that inspection for compliance should not be solely the Department’s responsibility. Instead, collaboration and co-operation needed to increase.

Mr Manamela noted that no report appeared for Limpopo.

The Chairperson observed that there was a widely-held view, amongst the public, that the Public Service was corrupt. He took the point that overall, the DOL appeared to show a clean financial record. However, he was concerned at the fact that wasteful and fruitless expenditure appeared to be rising and asked how this linked in to the concept of the audit not being qualified. He also wanted more details on the Public/Private Partnership costs.

Mr Maduna responded that there was one contract which was very irregular, and that had skewed the figures. He emphasised that in general, the DOL had an unqualified report. In general, the level of irregular expenditure was not rising and the figures here were attributable to the one contract just mentioned.

Ms Makhubela- Mashele asked for more details about the irregular expenditure. She commented that there were five areas of irregular expenditure, including money for casual labour, procurement procedures, and suppliers not having followed the prescripts. She said that the mere mention of one instance did not fully cover all these areas.

Mr Maduna then clarified that the Public/Private Partnership cost of R11.6 million was the one main instance of irregular expenditure that had pushed these figures up.

Another irregular expenditure figure related to casual labourers. The Department has 438 offices across the country, and the Chief Directors in the provinces had approved casual labourers for cleaning those visitors’ points, and the financing of this was also approved at provincial level. However, this proved problematic when it came to the attention of the Accounting Officer. For the future, those delegations had now been revised. It was causing unnecessary delay to maintain the policy, as had applied in 2011/12, that even one-day cleaning jobs had to be approved through the accounting officers.

Another instance of irregular expenditure related to the plan to upgrade inspectors, which was later revised, but in the meantime some inspectors were wrongfully upgraded, which was regarded as an irregular expenditure.

He offered to supply checklists for the most complicated irregular expenditure accounts on the report.

Ms L Makhubela-Mashele wanted an explanation about the shifting of funds from one programme to another, citing instances where money was moved from IES to other areas, despite the fact that IES showed budgetary constraints.

Mr Thobile Lamati, Chief Inspector, Inspection and Enforcement Services, DOL, spoke about the voluntary roving safety representatives in Mpumalanga, that were recently implemented by the Department. This project had required a negotiation with the farmers. However, he noted that money had run out as negotiations were not successful, and so the funds had to be transferred back to the department to be used elsewhere.

Mr Maduna noted that it was in the interests of the Department to ensure that the budget for the year was fully spent, to avoid the situation where funds had to be returned to National Treasury.

The Chairperson asked for a report on criminal activities, and how far corruption and fraud cases were being dealt with by the DOL. He insisted that the Committee be provided with details of how the cases were being handed, how many there were, and how many had been passed to the police for prosecution.

Mr Nhleko explained that in order to fully answer this question, DOL would need to search the UIF database for details regarding fraud, so that it could then compile a full report. He asked that the Committee wait for that report to be compiled before holding a full discussion and any necessary follow-up on these issues. However, he would welcome any issues being raised now for further attention by the DOL, for a report back at a later meeting.

He added that it was necessary to distinguish between cases of fraud and corruption, and those of irregular expenditure. He said that by the time the DOL had brought in the concept of exit and transfer services, these were out of alignment by eight years. He believed this was a matter to be urgently addressed. He also noted that there were difficulties in following procedures when the service provider was working elsewhere. He again suggested that the Department could come back to the Committee with a full report on all the interests. Noting the interest about the PPP contract, he said that this would also be responded to in future, at  a later date.

Mr Van Der Westhuizen asked for an explanation for the delays of the filling of posts and the payment of supplies and how the department plans to improve the placement rate of job seekers.

Ms Lerato Molebato, Deputy Director General: Corporate Services, DOL responded to the concerns about filling vacant posts. The National Intelligence Agency had to vet applicants, and the vetting process had taken far longer than anticipated. For the future, this requirement had been changed to an internal security vetting. In addition, it was necessary for the South African Qualifications Authority to verify the qualifications of applicants, which slowed down the process, but a new process had since been created to address these problems. She advised Members that the breakdown of the vacancies available appeared on page 202 on the Annual Report.

Mr Maduna commented that skills and training formed a critical part of the Department’s ethos and the DOL had already expressed an intention to become a learning organisation. The DOL was able to access all the university and technikons, and he reiterated that employees were sent through these programs. The DOL, internally, also had a bursary programme that any member of staff could access. The DOL was also undertaking audits to check the skills and placement of its own staff. He reminded the Committee that this Report related to the previous financial year and thus did not show the number of employees trained in particular areas.

Mr Williams enquired what specific measures the DOL would be taking to ensure that the SEFs could operate as a going concern.

Mr Kganare thought that government was failing to play its role properly in regard to the sheltered employment. He asked what plans the DOL might have to resolve these issues, through the public and private sectors.

Mr van der Westhuizen asked why the costs of the SEFs exceeded their income and why government was not making use of the factories for its own supplies. He stressed that government must turn the situation around.

Mr Silumko Nondwangu, Chief Executive Officer, SEF, explained that a turnaround strategy had already been developed for the underachieving SEF factories, and the business process had also now been endorsed by the Department of Labour. The turnaround strategy would address the markets, sales and the capacity of the factories to generate sales and income, as well as the legal forms and identity of the SEFs. National Treasury had now funded some elements of the SEFs and the strategy was now being implemented.

The Chairperson noted that the Committee would need to have sight of the proposals and policies that were being considered for the  SEF, as it had to monitor that project. He stressed that this must be regarded as a team project on which everybody should be able to work.

Mr Motau asked if the targets were costed, and if money was attached to each target. This might explain irregularities in costings.

Mr Williams suggested that the Committee needed to be given a report with a response to all 25 points of non-compliance mentioned in the Auditor General’s report. He also asked for a written breakdown of actual and partial achievements with full details that would explain the 41% achievement rate but 99.5% expenditure rate.

The Chairperson commented that the documents tabled today set out a substantial amount of information. It was unfortunate that Members had received them only on that morning, as this did not allow sufficient time for Members to peruse them thoroughly, and formulate all their questions. He again noted his concerns about the lack of time given to the Committee to read and process the documents effectively, and reiterated that the DOL must ensure that they were, in future, submitted in good time. The Chairperson emphasised the importance of addressing all issues as they were raised, to avoid the situation where the same matters had to be revisited.

Mr Nhleko apologised again for the late delivery of the documentation and promised to enquire into what had caused the blockage, to avoid it happening in future. He agreed that the substantive issues, and not the paperwork, should be the focus of concentration at meetings.

Mr Nhleko added to his previous comments on the fraud and corruption matters, by assuring Members that matters of fraud or corruption would be referred to the police. He again said that he would return with a full report on how many cases there were, and what was being done in them. This report could be used with others in government so that the topic was more holistically addressed.

Mr Nhleko also undertook to report more fully on the SEFs and other developments in projects.

He reminded Members that the current PPP contract would end in the near future, an promised also that there would be a full report and inquiry into the matter, how the money was spent, and what the problems were.

The meeting was adjourned.


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