The Compensation Fund reported that it had been reasonably successful in achieving its targets for the year. R986 million had been paid out in awards. There was a backlog in claims, which was attributed to slow integrated technology systems. A number of cases of fraud against the Fund had been investigated, both by those in the medical sector and by employees of the Fund. Members were assured that the Fund had sufficient cash reserves and was a going concern. There had been some under-spending, mainly due to delays in implementing a new staff structure. The integrated technology system had been upgraded, and an online submission system was already addressing the backlog in claims.
Members described the performance of the Fund as dismal. Many claims had been rejected due to technicalities, and claimants should be guided in providing the required information. Members were reassured that cases of fraud did not involve private hospital groups, although there had been one case of an erroneous double payment being made. Members stressed the need for a turnaround strategy, and the one instituted some seven years previously had not worked. Officials of the Fund were told that they could not blame the systems. Some of the problem might stem from poor training of officials. The role of the State Information Technology Agency (SITA) was questioned. Members were still waiting to see the amendments to the Compensation for Occupational Injury and Diseases Act. Members asked what had been done to those found guilty of fraud, and expressed concern that some senior management positions were occupied by consultants.
The National Economic Development and Labour Council (NEDLAC) had achieved most of its targets. Its income for the year was R25 million. There was a focus on increasing the capacity of the secretariat. It had budgeted for a deficit, but delays in a project to renovate the building and its facilities had led to a surplus. A roll-over had been requested.
Members questioned the competence of staff, and the perception that NEDLAC was little more than a forum for big business and trade unions, with little concern for the unemployed. Members also questioned the body's productivity.
The Commission for Conciliation, Mediation and Arbitration (CCMA) aimed to enrich the labour market. With a large number of retrenchments lately, it had also played a role in lay-off training and had established a job saving unit. It had acted in some high profile matters. The Commission was looking to increase the professionalism and skills of its staff. It had offices around the country and more were planned, and it also worked with the Department of Labour. It had recorded a small surplus. It was doing well in terms of paying accounts within thirty days.
Members praised the work being done, but were dubious if it was carrying sufficient reserves. They were told that the two months' reserves were sufficient for its needs.
The Unemployment Insurance Fund had set goals of improving revenue collection, improving the payment of benefits, contributing to government initiatives and effective administration. Most targets had been achieved. There had been savings on administration costs. There were substantial commitments to lay-off training and poverty alleviation schemes. The budget for the coming year should see a surplus of R6 billion.
Productivity South Africa was involved in a number of strategic partnerships. It had a limited provincial footprint due to financial constraints. Grant funding contributed 40% of its budget, and it had to rely on providing services for the balance. Members found it ironic that the body specialised in providing turnaround solutions, but its tight budget made it a candidate for a turnaround strategy itself.
Members regretted that the Sheltered Employment Factories were not represented at the meeting, as they played a crucial role. The Department reported that they were seen as an integral component of the Department rather than an entity.
Compensation Fund presentation
Mr Shadrack Mkhonto, Commissioner, Compensation Fund (CF), said that the CF had experienced some difficulties in the last financial year (FY) due to the introduction of new integrated technology (IT) systems. Of the 45 targets CF had set itself, 62% had been fully achieved, 16% partially achieved and the remaining 22% had not been achieved. The definition of not being achieved was an achievement of less than 50% of the target.
Mr Mkhonto said that as the end of March 2013, 48 508 awards had been made to the value of R986 million. Some 99 226 claims had been accepted of a total of 201 724 registered, and there was now a considerable backlog due to the slow system being used. Many claims had been repudiated. Claims were entertained where a worker was injured in the course of his duties. Some R2.7 million had been paid out for the purpose of additional compensation as envisaged in Section 56 of the Act. Lump sums amounting to R5.9 million were paid to widows. The payments for partial impairments were R437 870. R107 million had been paid in lump sum benefits for partial impairments. There were pension payments of R783 million and temporary total disability (TTD) payments of R84 million where no pensions were paid. The total payments in the 2012/13 FY had been R986 million.
Mr Mkhonto compared the figures to other years. Much progress had been made in 2013. Regarding burial expenses the position was much better than in previous years. It was with partial dependencies and TTDs where there were problems.
Mr Mkhonto said that there was a 12% increase in invoices from medical practitioners, with 934834 been paid out. Less had been paid in Rand value, with this figure declining by 22% to R1.4 billion. The medical backlog project had been introduced in 2012. The processing of medical claims had been improved. Some R400 million less had been paid out compared to the previous year. There had been 142 cases of fraud. Of these 86 had been finalised. Some R2.5 million had been ordered to be repaid to the fund. Two medical care providers had been convicted and sentenced. Seven former staff members had been charged with fraud in this regard.
Mr Brian Leshnick, Chief Financial Officer (CFO), CF, said that invoicing had been improved. An on-line website had been introduced which had been a major success. In the last quarter there had been 94 000 submissions, generating revenue of R3.3 billion. Nearly 83 000 assessments had been received on-line. In the preceding two months when the 2012 submissions were opened, CF had received 82 870 submissions with a total revenue of R3.4 billion. By the preceding week there were over 100 000 assessments. In April R1.6 billion had been received online. Some of the processes of issuing letters of good standing had been tightened. More controls had been introduced. R8.1 billion had been invoiced by the end of the FY compared to a target of R5.6 billion. This showed that the initiatives were being successful. Some employers were still not part of the net. On financial ratios, the current ratio was 4:1 against a target of 2:1. There were sufficient cash reserves. Returns on investments had also been ahead of targets. The pension portfolio return had also been better than expected.
Mr Leshnick presented the spending performance to the end of February. There had been an underspend on administration and on benefits to employees. On compensation of employees and administration fees, the spending was about 90% by the end of the year, and 65% for fixed expenses. One reason was that there had been a budget for the implementation of the new structure to cater for the decentralisation of services to the regions, and for the filling of key vacancies. The new structure was not fully implemented. The unions had only agreed in August, but the new complement was now in place. This had resulted in savings on compensation. The delays with the decentralisation process had also resulted in reduced spending. Some projects could not be implemented.
Mr Leshnick said that the future budgets were more in line with what had been planned for 2012/13. Additional staff were now being recruited. A number of initiatives were now coming to fruition. He anticipated that the budget would be achieved in the future. There should also be more payments to beneficiaries.
Mr Mkhonto said that there was engagement with medical service providers. Employers had been engaged through bargaining councils. The CF intended to address the areas of filling vacant posts and appointing a full-time CFO and a Chief Operations Officer (COO), and replace other executives who had left the organisation. The turnaround strategy would be put in place. The Compensation for Occupational Injuries and Diseases Act (COIDA) Amendment Bill would be introduced. A new claims management strategy would be introduced.
The Chairperson felt that too much had been skipped in the presentation, and asked for some more clarification on the failings experienced by the fund.
Mr Mkhonto said that the integrated training and financial system was challenging. Siemens had left the Fund in November, and a new service provider had been sourced. Issues were being addressed relating to management information systems (MIS). Management was still dependent on IT staff to produce these reports. On the letters of good standing, a new system would allow employers to access these letters themselves. This process had stalled. The testing was being finalised, and he hoped that online requests would be possible in the following year. The system provide by Siemens was not complete. When payments were made, medical providers could not be given an explanation of what had been paid. The improved product had been launched. An electronic portal would be introduced in the new FY. Employers could register themselves on line, submit payments and report accidents. Medical staff could also submit their claims online. Various communication methods would be available. A new revenue strategy had been introduced in December 2012, resulting in a massive increase in revenue. One of the elements was discounts to employers who paid on time, and on line. This reduced processing costs significantly. Some initiatives had been introduced regarding the letters of good standing. The backlog was an issue that CF intended to finalise. The project introduced in January 2013 was now making an impact, and he hoped to see a significant improvement by the end of 2013. The amendment of legislation was dependent on the Board, and the Amendment Bill had only gone to the Minister in the new year. He had driven most of the programmes himself, and had seen challenges in some of the provinces.
The Chairperson invited Members to pose questions, but asked for the emphasis to be on financial matters due to time constraints. He was worried about the interaction with stakeholders.
Mr A Williams (ANC) felt the system was dismal. Many claims had been delayed due to insufficient information. This amounted to some 83 000 claims. He asked if there was any mechanism to assist claimants. The Auditor-General (AG) had reported inadequate systems in place, and was unable to determine the interest and penalties due. He was not seeing any sign of the turnaround strategy.
Mr A van der Westhuizen (DA) asked if any private hospital groups were involved in cases of fraud. His impression was that the compensation fund had invested heavily in software that was found to be unsuitable, and had then changed to SAP. He asked what costs were involved. Doctors could see how their claims were being processed, but not which claims had been acknowledged. It seemed that some claims were being outsourced, and asked for statistics. He asked for a commitment on eradicating the backlog. A recent television show had claimed seven years previously that the Fund was going through a turnaround strategy. He asked what could convince him that this one would work.
Mr S Motau (DA) had other words than dismal. He had asked the Minister to put the Fund under administration. The reply was that government was trying to turn things around. He asked if the CF had any assurance for him in this regard. Things that should be done by the CF were being referred to his party office.
Adv A Alberts (FF+) asked what the total backlog was, and what part of this was cases older than five years. There was a backlog project and he asked what this would consist of.
Mr F Maserumule (ANC) asked if one could work in the rain without getting wet. The Fund could not continue to heap blame on the systems. He asked for a time-frame for certainty on when the backlog would be dealt with. He asked what was being done to upgrade staff. The machines were only machines. The human operators behind the machines might not have the proper training.
Mr E Nyekemba (ANC) commented on the Siemens system. There was a new service provider from December. He also sat on the Portfolio Committee on Public Service Administration. The State Information Technology Agency (SITA) always said that it was working with the Fund and the Department of Labour (DoL). The amendments on COIDA would come to Parliament, but had been outstanding for some time. He asked when these could be expected.
The Chairperson noted the ex-employees accused of colluding with health service providers. He asked at what level these people had served. He wanted a list of the case numbers. When fraud was committed, Members wanted to see the money returned but also see the culprits behind bars. There had been many service providers. Rand Mutual was a new one to him. He asked how many service providers were on the books. Sometimes too many cooks spoiled the broth. 'Cooks' and 'crooks' seemed to go together at the CF. There were candidates who could be appointed as CFO rather than use consultants. It was worrying to see consultants occupying such high offices. The person should rather be recruited as an employee.
Mr Mkhonto said that there was a service provider to expose the challenges. He had been unable to work for four months. The officials had tried to focus on addressing the backlog, and there had been a loss of focus on stakeholders. He had met with the South African Medical Association (SAMA) the previous week. Legacy claims going back five years had been referred by them to the Public Protector. At the meeting they had agreed on the format and procedure for claims. SAMA would follow the same process. These claims amounted to about R130 million. He hoped that this would be completed by the end of 2013. No private hospital groups were involved in the cases of fraud, but there had been a duplicate payment to a private hospital. This was being recovered, and seemed to be a mistake by a CF official who had ignored a system generated warning that it might be a duplicate payment.
Mr Mkhonto said that regarding software, there had been an e-claim system which did the work it was supposed to do, but was based on manual processes. When he was acting Deputy Director-General (DG) he had asked for a feasibility study, which had been delivered with distinction. The CF had been told that it must implement the SAP solution, which was not tailored to the medical environment. This had been poor advice from the service provider. A consultant had identified the Rand Mutual as the best solution. Revenue was collected from employers, the Fund was paying for injured workers, medical compensation and pensions. The problem was one of scale. The Minister had given the Fund time to explore this option, and it should be embraced with speed. The RMA and FIMA functions had not been outsourced. Compensation in the construction and mining industries should be administered separately. Rand Mutual would deal with the mining industry and FIMA with construction.
Mr Mkhonto had also seen the report on the Fokus programme. His predecessor had spoken about the turnaround time. He could not speak on that person's behalf. The information was not available, and the first he knew about it was when the programme was aired. Most of those interviewed were aligned to the Solidarity trade union . There had been assurances before. They were trying to drive change in CF, but were not seeing the fruits yet. The revenue numbers were beginning to talk. The challenges lay at management level and the need for enhancements. The critical area was claims administration. SITA worked with the IT department as support in a supervisory role. They ensured that the IT environment was managed.
Mr Mkhonto added that DoL was doing quality control on the COIDA Amendments. There were areas of governance in which assistance had been given on a proper governance model. Most of the employees charged with fraud were at a very junior level. No suspects at management level had been identified. Most culprits were enticed into these fraudulent activities. Employees were being made aware of the consequences. There was a short-list of candidates for the position of CFO. The Minister would be asked to set up a panel to interview candidates.
Mr Leshnick acknowledged that there was not much progress with the turnaround strategy. Reports from the AG and the Standing Committee on Public Accounts (SCOPA) emphasised the need for a major turnaround. One of the tools would be a forensic audit to uncover some of the underlying systemic causes. A consequence of the investigation would be that if there were issues of maladministration or fraud, the necessary actions would be taken. Once the causes were identified, the information would inform the strategy. A recommendation would go to the supply chain bodies for approval of the companies to assist with both the turnaround strategy and the forensic investigation. Work should start by the beginning of July.
Mr Leshnick added that the first thing to be achieved by the turnaround strategy would be an online registration of claims. All claims would be handled this way, and claims would not be accepted if there was missing information. Employers would be notified with progress of the claim. There would be automatic and almost instantaneous adjudication. A number of claims were insignificant and did not require an award. This would prevent backlogs being created. There were projects under way to address the current backlog. At the start of January there were about 200 000 claims in the backlog, but these had been reduced to about 20 000. The compensation division could now determine the claim, and assess the associated medical invoices. There was progress, but the current system was still creating backlogs. Employees and doctors would be informed of the status of their claims. Currently the progress of doctors could not be tracked as it was a manual system.
Mr Leshnick said that the key service provider was EOH, who had taken over from Siemens. They were under contract by DoL to manage hardware and the current SAPS systems. They did outsource to other specialists. Where there were additional service providers the process would have to be managed carefully. The e-claims were still in force. Currently fewer than 1 000 claims a month were being processed on the old system, and these dated back to before December 2010. Late claims were the result of the employer not submitting a claim, in which case employees came through a labour centre. Such people should not be prejudiced. He was confident that a suitable process could be identified for isolated incidents of this nature. One of the key parts of the new system was training.
The Chairperson felt that there had been so many new systems which had not added any value. There was expertise both within and outside the DoL that could add value. It seemed that the Fund kept taking on people that did not add value. The people being affected were the most vulnerable workers. The Committee received harrowing stories form affected workers. He asked how much had been spent on these service providers. He suggested to Members that another meeting was needed with the CF to lay matters to rest once and for all. Members would then know what to expect in the near future. He did not anticipate any benefit in continuing the current engagement. He thanked the Commissioner. Written questions had been sent to his office. The suggested meeting would help to create a deeper understanding of the issues.
National Economic Development and Labour Council (Nedlac) presentation
Mr Alistair Smith, NEDLAC Executive Director, had only received notification of the meeting the previous day. The presentation had been put together hurriedly.
The Chairperson said that the invitation should have been sent some time previously.
Mr Smith said that in the last year and a half, the focus on repositioning Nedlac had been on the functioning and capacity of the secretariat. This covered a whole range of procedures, systems and staff structures. They were also looking to increase the capacity of stakeholders and other social partners. There had been a qualified audit report in the previous FY. Over 80% of the specific objectives in the Annual Performance Plan (APP) had been achieved. The secretariat was functioning well, and there was cooperation from stakeholders. Income had increased to about R25 million. There had been problems with resources before. In 2011 there had been a recognition of the situation, and funding had improved. Specific plans had been put in place. This was still the entity with one of the lowest budgets.
Mr Smith said that Nedlac had worked towards making significant savings. At a governance level, a lot of work had been done in the preceding years. Travel was intensive and was a major cost, but there had been an improvement in efficiency. The budget for the current FY was still for a deficit. The infrastructure around the building could not be implemented, and the result was a fairly good surplus for the year. An application for a roll-over had been made. Controls were better and the appropriateness of the budget had to be reconsidered given the mandate it was expected to fulfil.
Mr Smith listed some milestones. There had been strengthened financial governance and oversight. A chairperson had been appointed for the Audit Committee. A forensic investigation had been conducted. There had been a comprehensive internal audit. The AG would conduct the external audit. Another issue was on segregation of duties, and the key findings were being implemented. There had been improvements in supply chain management (SCM) and management of assets. There had also been an adverse finding in this regard.
Mr Smith present a summary of priorities. All policies and procedures had been reviewed. He hoped that these would be signed off within a month. A number of important appointments had been made, but there were some vacancies. Development of staff was a priority. A remuneration committee had been established. An SCM unit was being established. There would be work on IT. The major expense would be renovating the building, meeting rooms and recording facilities.
Mr Williams said that one of the problems was the lack of high level managers being appointed to meetings. He asked if this was still the case.
Mr van der Westhuizen asked what was being done to make Nedlac more productive. There was a view that this was a forum for unions and big business, but there was not much concern for the unemployed. He asked if Nedlac still had a credit card.
Mr Motau said that a former colleague had taken a swipe at Nedlac. He asked how the body responded to the comments of Mr Vic van Vuuren.
Mr Smith assumed that Mr Williams was referring to the secretariat. A programmes manager and two senior coordinators had been appointed, and more would be appointed. The existing staff still had to be developed, and their skills would be upgraded. There was recognition of the need for external expertise on an ad hoc basis. Some of the issues were becoming very complicated. The focus was on building the capacity of the secretariat. There had been a significant improvement in performance. There was some routine work to be done, but Nedlac had dealt with the bulk of the legislation that had come its way.
Mr Smith added that the message to social partners was hitting home, namely that turnaround times were important. The new policy on accountability of social leaders was now being rolled out. Basic time-frames of between three and six months, depending on complexity, were being set. He was aware of the need to revise the exiting representation. Sensitive discussion was needed, but was a bigger societal challenge. Nedlac was happy to engage in discussion. Constituencies had to be held accountable to their support bases.
Mr Smith assured Members that the use of credit cards had been severely restricted. There was a Diners Club card, but there were much more effective controls. Most of the credit card expenses were travel related. He had extensive engagement with Mr van Vuuren, but the article was more of a swipe at leadership in general than just at Nedlac. There was a bigger conversation needed on the challenges. He would continue the discussion in this regard.
Conciliation, Mediation and Arbitration (CCMA) presentation
Ms Nerine Kahn, Director, Commission for Conciliation, Mediation and Arbitration (CCMA), said that the CCMA had specific scorecards. Its first target was always to enrich the labour market. One of the key challenges was the training lay-off scheme. The CCMA had ensured that 5 512 workers had been put into this scheme, which had saved jobs. It had been able to save 26 000 jobs, from about 58 000 jobs identified for retrenchment, including some voluntary retrenchments.. The CCMA had been involved in issues such as the mediation process in the Marikana issue. It had been very involved in the agricultural sector and the hospitality sector. She highlighted four matters, but these were the outstanding issues. The CCMA was involved in a number of day to day issues in a changing industrial environment.
Ms Khan said that there was a focus on increasing the professionalism and skills of the CCMA's workers. Strategic objective 3 was delivering excellent service. About 85% of its work dealt with unfair dismissals. She showed Members a map with all the offices around the country.
Ms Khan said a lot of Human Resource (HR) and resource design had been undertaken. It held itself to be open, honest and accountable. A strong policy framework was in place. There was a focus on the flow of information. There was strong monitoring of service delivery. There was an anonymous corruption reporting hotline.
Ms Khan said that there was an improvement on the targets set. There was a statutory requirement on enquiries outside thirty days. No cases were taking longer than this to receive attention. Some 73% of cases were being settled. 95% of arbitration cases were heard within the stipulated period. Arbitration awards should be received within fourteen days, which was being achieved at a level of 99%. She was proud of this statistic. The average conciliation was 24 days and for arbitration 61 days. In fact, CCMA had slowed itself down a bit as it was perceived to be moving too quickly.
Ms Khan said that there was a scorecard. In many cases it achieved more than a rating of three, its benchmark for quality service.
Ms Ntombi Boikhutso, CFO: CCMA, still that the financial statements she would present were still unaudited. Non-current assets had increased by about R8 million. This was a result of the replacement of IT equipment. The ERP system had been upgraded. In current assets, debts were being recovered more efficiently. The total assets were R108 million. Liabilities had increased by R4.4 million, mainly due to an escalation in operating costs. There were new leases for offices. The increase in current liabilities was due to projects being put on hold. The accumulated surplus at the end of the FY was R445 000.
Ms Boikhutso said that CCMA respected the principle of playing creditors within thirty days. Only R80 000 of current debt was older than thirty days. The reduction in the surplus was ascribed to an approved roll-over in the previous FY. A number of projects had been put on hold. CCMA was still solvent at the end of the FY.
Ms Boikhutso said that the grant received was R448 million. There had been an increase of 82% from the training conducted by CCMA. This revenue had increased to R8 million. Another income was from investments. This was a short term investment. Instead of leaving the grant received in the cheque account, the money was invested in the money market until needed. There was no risk attached to this investment. Investment had increased by 30% to R9.8 million.
Ms Boikhutso said that expenditure had increased to R515 million, which was 3% higher than budget. A contract management system was in place as compared to the earlier manual system. The 21% increase in expenditure was huge, but the number of cases had increased. The rental of their premises had exceeded inflation. Other overheads such as electricity had also increased above the inflation rate.
Ms Boikhutso reaffirmed that CCMA was in a healthy financial position. She was not expecting any adverse audit reports. The CCMA had received an allocation of R594 million, of which R80 million was for some specified projects. These projects included implementing Employment Amendments, web enablement of the case management system, new offices in Welkom, Tzaneen and Vaal triangle and the establishment of a job saving unit.
The Chairperson asked how the job saving unit would link up with Productivity South Africa (SA).
Mr Nyekemba felt that the job saving unit sounded good, but he asked if this was informed by lay-off training. He asked what the approach was. The Act stipulated what had to be done. CCMA would only get involved with the number of workers to be laid off.
Mr Maserumule was fascinated on an oversight visit. He had visited a small office in Pietermaritzburg in KZN which was described as a CCMA office. He would not stop celebrating if there were more offices in the rural areas.
Mr van der Westhuizen concluded that CCMA had enough working capital for just two months of operation. He asked what they considered to be a prudent reserve. He had seen the statistics on efficiency, but asked how the case load of commissioners might have grown. He asked if there were other ways of engaging with employers. He appreciated that CCMA was bringing justice closer to the public, but it was still an enormous budget. He asked how the case load could be reduced.
Ms Khan replied that the job saving unit worked with their counterparts in DoL, and did work together with Productivity SA. The training lay-off scheme was a motivation in establishing this unit. Commissioners had all noticed that the first resort was to cutting jobs rather than other ways of saving costs. A whole training scheme to empower both employers and employees had been developed. This was being done every day. Cases regarding large-scale retrenchment had increased. This was the rationale behind the job saving unit. Generally CCMA dealt with people at the end of an employment cycle. It was about changing mindsets. The approach would be to have a strategic section reporting to the director. They would talk to the trade unions and other role players. They worked with a number of Departments.
Ms Khan was happy that Mr Maserumule had noticed the Pietermaritzburg office. Their services had to be accessible. They worked with DoL on outreach programmes. The web enablement system would work together with the systems of the DoL. There were more DoL offices, and enquiries could be directed through these offices where the CCMA was not present. CCMA officials also gave services on certain days at DoL offices.
Ms Boikhutso said that the two month reserves were sufficient. CCMA received an allocation on a half-yearly basis. The necessary documentation had to be submitted to DoL. There was never a case of money being received later than April. The position had been tighter than two months in the past, but the situation was more comfortable now.
Ms Khan said that the number of cases per day had increased from 660 to 689. In that time there was no increase in staff, but there was an increase in efficiency. One of the challenges was changing the industrial environment. The focus was moving from dispute resolution to dispute management. This was aimed at changing the way the workplace operated. This should reduce the number of cases being brought into a combative environment.
Unemployment Insurance Fund (UIF) presentation
Mr Vuyo Mafata, CFO: DoL – Unemployment Insurance Fund (UIF), said that the financial statements were still being audited. He apologised on behalf of the Commissioner, who was ill. The UIF was focussing on four goals. A five year strategic plan had been introduced in 2011. The goals were improving collection of revenue, improving payments of benefits, participating in government initiatives and effective administration of the Fund's operation. It had achieved 74% of its indicators fully, achieved 22% partially, and not achieved 4%.
Mr Mafata said that the March figures had not been ready at the time when the presentation should be made. The March figures were still unaudited, but indicated a 7% increase in contributions. There had been a 10% increase in investments. The benefits paid had exceeded the payments in the previous year. The budget for benefits was R7 billion. This had not quite been achieved due to the income ceiling being introduced earlier than expected. The impact had only been felt after October. The surplus of the fund was R62 billion. Investments were mainly in bonds, and interest rates there were low. The UIF investments did however increase the value of the bonds. The value of investments had increased by 25%. Money collected paid for benefits and administration costs. Technical reserves had increased by 9%. Total assets were valued at R82 billion.
Mr Mafata said that there had been a 15% saving in administrative costs. On the revenue side, the budget had been exceeded by just under 1%. There was some underspending on poverty alleviation, as the bulk of funding was towards lay-off schemes. R1.2 billion was committed to training schemes. Spending on administration was limited to 15% of revenue. 8.5% was spent on the administration of the fund, and the target for the coming year was 8.7%. The budget for contributions was R12.8 billion, which would be reviewed mid-year. Revenue from investments was targeted at R4.7 billion. The budget for benefits was R7 billion. In terms of the new Bill more would be allocated to benefits. This had been factored into the 2013/14 budget. R1.2 billion had been allocated to training, R400 million of which had been set aside for the current FY. R210 million had been budgeted for other training schemes so that the unemployed could be re-integrated into the job market. The budgeted contributions for the 2013/14 FY was R13.9 billion, and for benefits R7 billion. This would generate a surplus of R6 billion.
Mr Motau saw R81 billion sitting in reserves. Perhaps the Treasury should make a loan. More could be done for the plight of the unemployed, but unemployment should not become too attractive.
Mr van der Westhuizen was looking forward to the new Bill.
Presentation by Productivity SA
Mr Alwyn Nel, Chairperson: Productivity SA, introduced the presentation.
Mr Bongani Coka, Productivity SA CEO, identified the strategic objectives. The first priority was maximising stakeholder relationship. They provided the majority of the funding. As the organisation grew, it had to remain sustainable. Long term contracts were a key to this. A three year contract with UIF had been secured. The next priority was learning and growth. The organisation needed to remain at the cutting edge. Improving responsiveness was another priority, with a response time of 48 hours. Clients were asked to assess this. Productivity had to be measurable, and show a return on investment. There needed to be an improved provincial footprint. Given the financial constraints, they had worked with Economic Development Department (EDD) and were looking at co-funding. In 2006 they had gone into partnership with Asian counterparts, and were able to share tools and skills. They had visited Singapore and Japan, and had received valuable training.
Mr Coka said that there was a concern about the lack of presence in Mpumalanga. Awards had been presented in that province in the previous year and a pilot programme was in place. Co-operatives had now been included in the awards as an area where employment could be created. The profile of the organisation had been raised by media exposure. There had been support from the Department of Mineral Resources (DMR). The mineral sector had been experiencing challenges. One of these was the Amplats and Lonmin issues. Productivity SA would look at the productivity challenges in the mines. More work was being done in the Eastern Cape. An incubator for small, medium and micro-enterprises (SMME) would be established in East London. With the Limpopo Department of Education, teachers were being trained. A significant number had been trained despite the strike. They were now looking at other provinces.
Mr Coka listed the partnerships which had been place. The biggest organisation dealing with co-operatives was the South African National Apex Co-operative (SANACO). It was also working with the Small Enterprise Development Agency (SEDA) and the Department of Trade and Industry (dti). Competitiveness could only be achieved through productivity. A pilot programme had been launched in Mpumalanga in conjunction with the International Labour Organisation (ILO). Productivity had been accredited as a service provider, and this made it possible to attract more partners. The SCORE project was a tool to make the country more competitive, and Productivity SA was the only accredited trainer in Africa. A number of SMMEs were being assisted. Productivity SA had participated in a number of government studies. The preliminary study indicated that Productivity SA interventions ranked in the top three in the country.
Mr Coka said that the partnership with EDD was aimed at developing productivity accords. One of the focus areas was agri-processing, but also on aluminium production. Inputs were made on what could make these sectors competitive.
Mr Coka said that funding was a challenge. The grant income only covered 40% of the budget. Partnerships were sought with a variety of partnership.
Mr Bheki Dlamini, CFO: Productivity SA, noted that Productivity SA had received a clean audit report. There had only been a small issue over the non-submission of predetermined objectives. The budget was a shoestring one. The total revenue was R122 million, made up of grants and transfers. These added up to R115 million, and it had to find the other R7 million itself. The expenses were mainly on compensation and for goods and services. There was some depreciation and interest paid. Interest received was invested until needed, as with the CCMA. The transfer from one of the funders had not been used immediately and it had earned a little bit of interest.
Mr Dlamini showed the sources of revenue. The bulk of guaranteed revenue was about 40% from the DoL and Workplace Challenge. The turnaround strategy helped companies in distress, and the income generated there was R65 million. Own revenue sources accounted of R7 million, which was about 65% of total revenue.
Mr Williams wanted to know how much of the goods and services budget was actually for goods and services.
Mr van der Westhuizen saw a sizeable contract with UIF. He asked if Productivity SA had competed in the open market for this contract. Treasury had raised a concern over the going status of Productivity SA at one stage. While they taught turnaround strategies, they seemed to be in need of one themselves.
Ms L Makhubela-Mashele (ANC) asked what kind of training had been given to the teachers in Limpopo. It seemed most of Productivity SA's interventions were in Limpopo and Mpumalanga. The model could perhaps be transferred to other provinces.
Mr Dlamini replied that the goods and services included all payments such as property rental, stationery, training venues, catering and so on. The budget was not itemised, but there would be a full breakdown in the Annual Report. Consultants were generally only used in areas where Productivity SA was no expertise. For example, a mining engineer might be brought in where a mine was concerned. The contract with UIF was for three years. This was borne out of the need to fund the turnaround solutions programme. DoL had commissioned the UIF to fund Productivity SA. The value was R104 million. It was true that there was an accumulated loss of R3.5 million in the previous FY. However, there had been a surplus of R9 million in the year before that. There was a turnaround plan including the partnership initiatives and the projects outside grant funding. They had recently signed a R13 million contract with a major entity. They had reported to the audit and risk committee.
Mr Coka said that there was a question over sustainability. Compensation to employees was about R38 million. This consumed almost all of the grant, but the agreement had been that this should only be for external service providers. Productivity SA had demonstrated the need to use services to turn companies around. Sustainability programmes could be addressed when there was long term funding. There were three year contracts with Rand Water, the City of Johannesburg and Transnet. Productivity SA would continue to lobby the Committee for more funding as it could put such extra funds to good use. He had spoken about the agreement with the Department of Education. This could be used in other provinces. It had always been Productivity SA's commitment to train teachers nationally, but there were political constraints. Teachers were reluctant as this had to be done in their own time. They were working hard in other provinces. Mpumalanga was warmed up, and the Eastern Cape was coming on board as well as KZN. The footprint was extending towards all provinces. They would go wherever they were sent, but there needed to be an agreement with the province. Regarding content, a productivity mindset had to be inculcated into the learner. The cost of absenteeism had to be understood by learners. There was positive feedback from teachers, who were able to take this mindset to the learners.
Mr Coka said that on being confined to the major centres, it was a question of the level of the grant. Productivity SA was unable to maintain offices in all provinces. After salaries had been paid there was very little left for offices in other provinces. The dti funding was voluntary. The UIF funding was voluntary, but was also subject to the approval of the UIF board. Centres were only maintained where there was a high level of economic activity. They could still work in the other provinces. They would look at working through the labour centres to increase the footprint.
Mr Sam Morotoba, DoL Deputy DG: Public Employment Services, said that Sheltered Employment Factories (SEF) was part of the DoL. They could be invited, but due to legal requirements they were still included as an integral part of DoL.
The Chairperson wanted to know what was happening with them. If there were hiccups Members would like to know what could be done for this important component of DoL. There had been a meeting with the Minister of Women, Youth and Persons with Disability. It would be good to know what they were doing even if they were not present themselves.
Adoption of Minutes
The minutes of the meeting of 17 and 23 April 2013 were adopted as amended.
The meeting was adjourned.
- CCMA Financial Status
- Compensation Fund Briefing on Strategic Plan for 2013-2018 & 2013 Annual Performance Plan
- National Economic Development and Labour Council (Nedlac) presentation
- Productivity SA presentation
- 2nd Term Committee Programme - 2013
- Unemployment Insurance Fund 2013 Budget, Strategic Plan and Annual Performance Plan
- We don't have attendance info for this committee meeting
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