The Department of Labour (DoL) briefed the Committee on its 2012/13 Annual Report, along with NEDLAC and Productivity SA. The Department discussed the contribution of each of its branches to the Annual Performance Plan, the Department’s strategic plan, estimates for national expenditure, and key performance indicator performance for the four Departmental programmes: Administration, Inspection and Enforcement Services, Public Employment Services and Labour Policy and Industrial Relations. The briefing provided a comparative analysis of the Department’s performance over the past four years, the challenges contributing to the non-achievement of some indicators and the corrective action to address these areas of challenge.
In response to this presentation, Members raised concerns about the low levels of compliance in the Western Cape, the huge discrepancies in compliance between the provinces, anomalies in the figures between the Annual Report and the presentation and the toning down of the performance indicators. Members also questioned why the Department was not meeting their targets, queried the misconduct and fraud cases, the unprotected strikes and the turnaround strategy for the Sheltered Employment Factories.
NEDLAC briefed the Committee on their Annual Report looking at the predetermined objectives, financial performance, audit and priorities going forward. Media reports based on misinformation had recently branded NEDLAC as "fossilised". However, all the social partners and the Presidency had been supportive at the last forum indicating the critical role NEDLAC played, particularly given the challenges the country faced today. While NEDLAC faced many challenges, since the last time they had met with the Committee, important progress was made in terms of its audit report and strengthening its Secretariat while laying the basis for more engagement by the social partners.
Productivity SA also presented their Annual Report which focused on the programme phases, and programme outcomes of five pivotal areas, namely, organisational issues, value chain competitiveness, workplace challenges, marketing and communication and HR department performance. The financial side of the Report was clearly presented by comparing the 2012/13 transfers and subsidies, income with 2011/12, and providing a statement of the financial performance and expenditure. Also addressed was the independent auditor's report, main challenges for 2012/13, highlights for 2012/13 and future key priorities.
There was not enough time for Members to engage on the briefings made by these two entities so the Chairperson requested that if Members had any questions that they put them in writing.
Department of Labour (DoL) Annual Report (Performance Information) for 2012/13
Mr Nkosinathi Nhleko, DoL DG, outlined the order in which the Department’s Annual Report would be presented. The presentation would look at performance evaluation, challenges contributing to non achievements and provide a comparative analysis of the DoL performance over a period of four years in terms of where the Department had been and where it was going.
Mr Nhleko began by noting the Department worked according to a legend where green represented all that was good, amber indicated work in progress and red indicated that which had not been done.
Looking at the branch contribution to the Annual Performance Plan (APP), for Administration, there were 33 planned indicators of 21 were achieved, eight were partially achieved, four were not achieved which gave an overall achievement of 64%. For Inspections and Enforcement Services, there were 12 planned indicators of which five were achieved and five were partially achieved which resulted in 42% overall achievement. For Public Employment Services, there were 15 planned indicators of which seven were achieved and four were partially achieved which resulted in 47% overall achievement. For Labour Policy and Industrial Relations there were 23 planned indicators of which 19 were achieved and two were partially achieved which resulted in 83% overall achievement. For the overall performance there were 83 planned indicators of which 52 were achieved and 19 were partially achieved ending off with 63% overall achievement at year end.
Looking at strategic objective achievements during 2012/13, the contribution to employment creation there were 15 planned indicators of which seven were achieved and four were partially achieved resulting in an overall achievement of 47%. For the promotion of equity in the labour market there were four planned indicators of which three were achieved and one was partially achieved resulting in an overall achievement of 75%. For the protection of vulnerable workers there were 12 planned indicators of which seven were achieved and three were partially achieved resulting in an overall achievement of 58%. For strengthening multilateral and bilateral relations there were five planned indicators of which four were achieved and one was partially achieved resulting in an overall achievement of 80%. For the strengthening of social protection there were six planned indicators of which two were achieved and two were partially achieved resulting in an overall achievement of 33%. For the promotion of sound labour relations there were five planned indictors of which all five were achieved resulting in an overall achievement of 100%- the same went for the monitoring of the impact of legislation where all three planned indicators were achieved. For the strengthening of the institutional capacity of the Department there were 33 planned indicators of which 21 were achieved and eight were partially achieved resulting in an overall achievement of 64%.
Mr Nhleko turned to an overview of DoL’s strategic plan and estimates for national expenditure key performance indicators for 2012/3 noting that the last column “% achieved” was changed from the original report as the percentages had been calculated incorrectly however everything else remained the same.
Mr Bheki Maduna, DoL CFO, noted the Department was given budget of R2.1 billion. Final expenditure amounted to just over R2 billion (95.1% - the benchmark is 95%). The under-expenditure was as a result of savings on the compensation of employees because of DoL’s vacancies.
Mr Silumko Nondwangu, CFO of the Sheltered Employment Factories, stated their revenue was sitting at R43.7 million which indicated a 3% drop compared to 2011/12. The cost of sales went down so as a result the gross profit increased marginally. The subsidy received from Treasury through the Department increased from R59 million to R67.3 million, the operating expenditure increased from R86.8 million in 2011/12 to R95 million in 2012/13 while the finance costs decreased from 2011/12. The loss for the SEFs for the year decreased from R13.8 million in 2011/12 to R11.4 million in 2012/13 which was about 20% in net loss for the year.
Ms Nolukholo Sigaba, DoL Chief Director for Planning and Monitoring and Evaluation, started with Programme One: Administration (Strategic Objective eight: strengthening the institutional capacity of the Department). The first Key Performance Indicators (KPI) looked at in this programme was the percentage of final reports issued as per timeframes indicated in the approved APP. The Department planned to achieve 85% of these and had achieved 89% which was an over achievement. For the percentage of finalisation of the fraud cases received and detected, 87% were planned to be finalised by year end but the Department only finalised 57%. For the percentage of pre-employment screening applications processed to the State Security Agency (SSA) within a specified timeframe, 70% were planned for but the Department could only achieved 63.3%. For the percentage increase of security vetting of staff in the Department, 8% was planned for but only 6.8% was achieved. The Department had a plan of employing 40% women in the Senior Management Services, 43% youth and 3% people with disabilities but they had only achieved 39% of women, 35.3% of youth and 2.5% of people with disabilities. For the percentage reduction of vacancies by financial year end the target of 7% was achieved.
The Chairperson interrupted to find out what the percentages were in actual numbers or figures as this would help him to follow.
A delegate explained that percentages were calculated based on number of employees they had.
The Chairperson said he wanted the actual numbers. It had been highlighted two years ago that the Committee wanted actual numbers and not only percentages but the presenter could continue in the meantime.
Ms Sigaba outlined a page of the Annual Report which spoke to numbers and figures.
She continued with Administration programme noting the Department had a plan for 82% for the percentage of staff trained in line with the Workplace Skills Plan (WSP) and of this 82.47% was achieved. It was planned for 75% of misconduct cases to be finalised within a prescribed period of time and 78% was achieved. It was planned for 80% of court papers to resolve litigation filed with the court within specified period and 77% of the target was achieved which left a shortfall of 3%. 50% was the planned achievement for elements of the ICT strategy implemented and this was achieved.
Ms Sigaba turned to Programme Two: Inspection And Enforcement Services (Strategic Objective two: promote equity in the labour market). This slide provided a background per province as the provinces were the implementing arms of the Department. The first KPI was the number of workplaces reviewed for compliance with employment equity (EE) legislation and the plan was to have 240 reviewed of which 116 were in the public sector and 124 in the private sector. The Department overachieved by reviewing 345 employers of which 136 were in the public sector and 209 were in the private sector which showed the Department was focused on the private sector. In some of the provinces the Department was not meeting the target for public companies but for private companies they were over-achieving which meant the targets might need to be reviewed. For the number of workplaces inspected to determine their compliance levels in terms of the relevant labour legislation, 87 795 was targeted for inspection of which the Department overachieved by inspecting 101 792 but of those inspected only 55% complied. The Western Cape appeared to be struggling particularly with levels of compliance. There was also a problem in Limpopo, a slight problem in Mpumalanga while the Free State had the highest levels of compliance.
For Strategic Objective three: the protection of vulnerable workers, the Department resolved 70% of labour complaints within a specified number of days of receipt at Registration Services. The Free State and Kwazulu-Natal (KZN) were leading in this regard.
She looked at Strategic Objective five: strengthening social protection still under outcome four, the Department set a target of 41 965 workplaces to be audited under the Occupational Health and Safety Legislation and of this 63% were audited. Of those audited only 52% complied and again the Western Cape seemed to be the problem here. Gauteng, Limpopo and Mpumalanga were also struggling in terms of compliance. The Free State and the North West were leading in compliance. For the following up on these inspections only 21% was done by the Department
Performance against issues raised in the Minister’s budget vote related specifically to the level of compliance. To remedy this, the Department was looking at engaging with organised business and labour in provinces and providing training both to internal and external stakeholders. To mitigate against the declining compliance levels in the high risk sectors sitting at 45% the Department was looking to recruit specialisation approved, develop a new staff structure and to source a learnership and other training programmes. Other issues flagged was to strengthen the roving team which would be done by a roving team programme aligned with the APP, for the team to be provided with the necessary tools and to identify specialist training. Another issue was for the employment equity team to follow up non-compliant employers. Another issue flagged was to speed up the ratification of the International Labour Organisation (ILO) Convention Number 81. The Convention had been ratified so the target was met but there was still a need to address the shortcomings as identified by the ILO. Another issue was to speed up the amendment of the Occupational Health and Safety Act (OHSA) to strengthen the powers of inspectors.
Ms Sigaba turned to Programme Three: Public Employment Services, (DoL Strategic Objective one: contribution to decent employment creation). The KPI was the tabling of the employment services legislation, regulations and guidelines and the target was partially achieved as the Department had done its part and the Bill was now with the Committee. The target to increase the number of work seeker registered in different categories was 450 000 and the Department exceeded this by registering 600 259 work seekers. For this target all the provinces had been overachieving except for the North West. The Department had achieved 59% of a target of 60% to increase the number of work seeker registered in different categories. To increase the number of work-seekers placed/referred to opportunities and other services, 18 000 were targeted for placement and 72 000 for referral. 16 171 (90%) were achieved for placement and 396 plus (550%) for referral way beyond what the Department set out to achieve which meant the target of the Department might need to be revised for being too low as virtually every province was overachieving except for the Northern Cape. To increase the number of employers registering vacancies on ESSA per annum, the target was to increase the baseline from 2000 to 3000 but the Department fell short by increasing it to 2620. All of the provinces were meeting this target and could mean the target was too low for the capacity.
Ms Sigaba discussed Programme Four: Labour Policy And Industrial Relations (Strategic Objective two: promote equity in the labour market for the Employment Equity Act (EEA) and its regulations KPI, the Department targeted for NEDLAC engagement to be finalized on the EEA Amendments by November 2012. This target was not achieved but the Department presented the rationale for the amendments of the EEA to the Committee in February 2013 and public hearings by Parliament on the Amendment Bill started in February 2013. The target relating to the code of good practice and technical assistance guidelines on HIV and AIDS were reviewed and amended. 30 income differentials were assessed to determine race and gender disparities in salaries by March 2013 were achieved. The Department sort to amend the Basic Conditions of Employment Act (BCEA) which was submitted to Cabinet and was currently before Parliament so the process had been achieved. Investigation on the wage differentials were not conducted due to the inability of the IT system to analyse the information as reported through the EE Report. The Child Labour Programme of Action was submitted to the Minister for approval and yet to be returned to be submitted to Cabinet so this target was not achieved. Amendment to the Hospitality sectoral determination was achieved and published on 22 June 2012. The investigation to establish provident funds for the domestic and farm workers sector were delayed due to the possibility of the introduction of a National Social Security Fund by the National Treasury. Ten civil society organisations were chosen to be strengthened. The Department had also produced and disseminated a number of research reports. The Department had a target of 18 collective agreements to be extended within a specified number of days and had actually achieved 25. For the decision to register new labour organisations taken within a specified period, 130 new applications were received, 16 were approved and 114 refused with an average turnaround time of 86 days. Four labour market trends reports were completed for ministerial briefing reports so the target was achieved. The Department was in the process of hosting the Labour Relations Indaba jointly with NEDLAC, engaging the social partners on adversarial industrial relations in the labour market, the hosting of a Child Labour Day in Mpumalanga was postponed so the target was not achieved within the financial year, the Department had requested Treasury for more money for the strengthening civil society and meeting of this target was dependent on Treasury funding this exercise. To pursue compliance around Employment Equity, the amendments had to be fast tracked. A process was underway for the training and up-skilling of 1000 domestic workers on BCEA, Labour Relations Act (LRA) and sectoral determinations.
Looking at the challenges contributing to non-achievement of some indicators and corrective action in addressing the areas of challenge, she explained these challenges related mostly to sheltered employment factories. People with disabilities/ ex-combatants and Compensation Fund beneficiaries assisted with skills for employment in the SEF could not be done because of lack of funding. The number of people in SEFs trained and placed in mainstream economy were none, also because of lack of funding. The saving of jobs through the social plan intervention was delayed because of funding approval from the UIF. There were also challenges around auditing and follow-up inspections and to mitigate this, the Department would increase advocacy in both areas. The Employment Equity Act (EEA) and its regulations could not be amended by financial year-end as the process was out of DoL's hands and with Parliament, wage differentials could not be investigated because of the IT system, vetting of the Department’s staff could not be done because there was no vetting unit but there were engagements with State Security on this.
For the comparative analysis of the DoL's performance over a period of four years based on previous APPs, the average performance over the four programmes over the years was 59%. The comparison also showed the number of planned indicators had been significantly reduced over the years on the advice of the AG and this increased performance by almost 11% since last year which was as a result of focusing more on strategic issues and less on operational issues. The Department had also reduced the number of indicators which were too ambitious or not strategic in nature which had improved the performance of the Department significantly.
Mr Nhleko said the Report reflected the Department was operating in more of a systematic, structured approach like in the area of protecting vulnerable workers. The Department was in a position to react to particular issues. The one disappointing area was that related to performance targets but intervention was made through the assistance of the technical unit of National Treasury. Some of the achievements made were because of a number of initiatives in the Department to continually review their work. A particular area in this regard was service delivery and specifically labour centres. The Department started attracting unqualified audit opinions in 2010/11 and needed attention as in the area of performance indicators and issues with supply chain management.
Mr Nhleko introduced the newly appointed people in the Department of Labour delegation at the request of the Chairperson.
The Chairperson raised the point that some figures in the presentation were not tallying and there were variances in the figures between the presentation and the Annual Report. The two documents were not talking to each other. He was worried to hear the Department was toning down their objectives in order to meet the performance indicators and thought this was settling for mediocrity and a dropping of standards. He did not think the Department applied their minds to the figures.
Mr F Maserumule (ANC) wanted to hear specifics about compliance in the Western Cape which he found surprising. He asked about the challenges of paying money to Public Works in the area of challenges. He wanted the Department to be more specific in statements made in the presentation so that he could be informed.
Mr S Motau (DA) welcomed the new members of the Department. He questioned the Department’s audit findings particularly a lump sum on one of the slides and asked what had happened there. He wanted to know how much was paid out and why this was not done in accordance with the rules. For the achievement of targets he felt for instance 63% was not good enough in the real world, unless they were in the Department of Education and he wanted to know why the 37% was not achieved. He was concerned about under expenditure which was compounded in this case by a large number of vacancies and under expenditure previously. He felt it did not make sense to have vacancies while there was under- spending. Turning to misconduct and fraud cases partially achieved, he asked why there were still outstanding fraud cases as this was a priority area.
The Chairperson thought that fraud cases were life threatening for the Department.
Mr A Van der Westhuizen (DA) asked how the Department could say it performed well given the rise of unprotected strikes especially the past terrible year. He was worried that people were operating outside of the law while the Department thought they had a good year in terms of labour relations. He highlighted his problem with targets and a written parliamentary response he received from the Minister who said that the Department was expecting 240 work place visits per annum while the Annual Report alluded to something else. He was concerned the targets set out in the Report were very low. Regarding SEFs, there was a discrepancy between a government compensation figure outlined today and what was cited at an oversight visit of the Committee. It seemed that despite the number of turnaround strategies for dealing with SEFs they were still an enormous burden on the tax-payer and a "black hole".
Ms L Makhubela-Mashele (ANC) wanted to know why the hole must be described as black.
Mr Van der Westhuizen replied that it was a hole in space where things disappeared. The simple equation was that SEFs were costing R5000 per month per disabled employee and this was unsustainable. He wanted to know from the Department when the SEFs were expected to break even as would be required of any other factory.
Ms Makhubela-Mashele appreciated and commended the work put in by the Department and she saw the Department was moving in the right direction. She asked what the real issues which needed to be looked at were given the number of unprotected industrial actions crippling or denting the economy –did this mean the Department was not doing something right? For non-compliance in Programme 2: Inspection and Enforcement Services, she felt compliance must come from the side of the employer – non-compliance showed the employers were just taking the labour legislation and dumping it somewhere. She was not surprised the Western Cape was leading in non-compliance because she could not recall one employer that the Committee visited in the Western Cape which was complying 100%. The inspectors could not always be blamed as the will needed to come from the employers. Perhaps the Department needed to go in on a different advocacy path to bring in the employers. With the amendments, Parliament would move in the direction of strong penalties to send a clear message to employers. She felt the Department had improved since 2009 with sound processes in place to report correctly. She said it was one thing not to meet a target but to put it down would also be problematic.
The Chairperson said strikes did not just happen when workers were ill-disciplined but was because workers had exhausted all other measures and were left with no other option but to withhold their labour. Ten years ago in the Western Cape, accommodation on the farms of the Western Cape was different to what it was today and there was a lot of improvement in the accommodation of farm workers. He said it took many people to tango, not only two. He would be watching the issue of ex-combatants and military veterans very closely.
Mr Van der Westhuizen could not understand why there were such huge gaps between levels of compliance among the different provinces and asked if the Department could explain this and what they were doing to standardise the level and address such low compliance levels as it was a serious problem.
Mr Maserumule could not understand why it was so difficult for employers to consider basic principles like a basic salary which covered the necessities of transport, housing, clothing, education, water and electricity. He could not understand why some of the key sectors like mining and agriculture were still the same when he worked there during the 1970s.
Mr Nhleko highlighted that some of the issues raised were quite broad and required lengthy discussion like issues related to strikes and required a different platform altogether. Everyone should be concerned as in 2012 there were 99 strikes as opposed to 74 in 2011 so there was an upward trend. 45 of those were unprotected while the rest were protected. The Department was not party to collective bargaining and wage negotiations so they could not step in and dictate. Both law and logic dictated the onus of negotiations were on both the employers and employees. For him two major issues were beginning to come to the fore- the extent to which leadership was exercised and providing on issues around labour relations. The other issue was simply the technique around industrial relations management and cases of inconsistencies which led to bedevilled relations. The Department’s labour indaba planned with the CCMA would begin to shed some light n some of these dynamics in the labour space and allow for a sensible policy debate. The serious labour unrests in SA during the 80s, like the 1986 miners strike, were quelled by a crop of leaders. He highlighted some problems and legal complications with the investigation of some cases of misconduct. He said a policy debate was needed on consequences for the public sector as a result of under-performance otherwise they would be going nowhere. On the issue of gaps in compliance what was required was for employers to take pride on complying with labour legislation as he had prided himself in being a good driver. The issue of advocacy came in here. A policy issue would address the matter of why employers could not provide a salary which covered the necessities as there were two interest groups – employers said they were not running a charity while the employees had a number of social demands. The medium of collective bargaining sought to balance the two.
Mr Maduna said that in 2012/13 there were many challenges experienced by the Department in relation to its work in the Western Cape and had to do in the area of strengthening social protection. The Department had taken the inspectors under the care of the province and group them to do better work. This had resulted in significant improvement in the Western Cape. The varying level of compliance had to do with two things- the attitude of the employers and the effectiveness of the instruments used to enforce compliance by employers. In some places the mere presence of an inspector served sufficiently for compliance and the legislation also served as a deterrent.
The Chairperson asked why this problem of resistance was only experienced in the Western Cape.
Mr Maduna said there were a number of reasons like the hope of not getting caught when breaking the law lack of education among employers to be good citizens and comply with the law or face being taken to court which was a long route the Department did not prefer. There was the problem of attitude among employers. In the Western Cape the Department had picked up there were many so-called labour law consultants especially in the farming areas that were advising employers how not to comply with the law. The Department was dealing with this and had consulted AgriSA because it was very important. The law encouraged people to start their own businesses but the business should not be such that it encourages circumventing the law. This could add to why there were high levels of non-compliance in the Western Cape.
The reduction of the targets was to improve on the work of the Department and to add value to the services provided to focus on the quality of the work. Members should not worry about the number but the outcome and impact of the Department’s actions with the resources available.
An official from the Department spoke to the issue of Public Works noting that Public Works was mandated to procure accommodation for departments in government buildings or through leases. With government buildings there were minimal challenges in terms of maintenance. Challenges were experienced in the leased buildings as was also experienced by other departments. DoL had requested Public Works to speed up the process as supporting documentation was needed for all money paid and this contributed toward under-expenditure.
Another Department official spoke on misconduct saying the Report did not go to the extent of giving names and the type of sanctions that was meted out but they could provide this information if the Committee so wished.
The Chairperson thought this was an anomaly as there must be consequences for whoever authorised the decision so that the incident was not repeated. He said oversight was not the responsibility of the Department but that of the Committee. He wanted them to move on with answering the outstanding questions as time was running out.
A Department official said that with SEFs, departments had agreed to order furniture and hospital linen from the factories which would increase the sales in the factories. This would mean the likelihood of financial losses would be reduced and would allow the SEFs to employ more people with disabilities and establish other factories in Mpumalanga and Limpopo. The nature of SEFS were that they were not so much about profit but about providing employment to people with disabilities. For the foreseeable future government would continue to provide subsidies to the factories for operational expenses over and above sales of income from government as was the case over the last seven decades.
The Chairperson said they needed to improve the quality of their products to compete in the market as they had competent tools of production which would make the SEFs produce good quality products. If they used cheap materials they would lose clients. The Department itself was not happy with the services of the SEFs so they needed to improve.
Mr Sam Morotoba, DoL DDG: Public Employment Services, discussed migrant workers and what was looked at by the Department when granting work visas. He said the Immigration Act required the Department to intervene in a number of areas when granting an individual visa or corporate permit. An individual visa allowed a foreign individual to come and work in SA while a corporate visa allowed a company to bring in a certain amount of people into the country. He explained the Department looked at three broad things, namely, the preference and rights of SA citizens to be the first ones to get access to opportunities given the high levels of unemployment in the country unless the employer could justify otherwise. There was an issue around the scare skills list and the Department facilitating in sending people from this list of scare skills to the company instead of granting corporate permits. With the conditions of employment, the Department’s inspectors needed to check whether the foreign workers brought in were not working in lesser conditions than the current or other employees.
The public employment services monitoring tools for placement in decent jobs in terms of the Skills Development Act, he admitted, were limited and some cases were not backed by legislation. If they were challenged, some of the arguments would not be sustainable.
The Chairperson said the issues related to the non-tallying of the figures were dangerous as incorrect figures presented to the Committee could be considered as lying to Parliament. He wanted the Department to be careful next time and to apply their minds to the reports brought before the Committee. Fingers would be pointed at the Department for lying to the Committee which in turn lied to the Speaker which in turn lied to President who then lied to everyone in the country. People would then touch the statistics that came from SA and the DoL.
Nedlac on its Annual Report 2012/13
Mr Alistair Smith, NEDLAC Executive Director, was happy they had a full team. He apologised that the four convenors of the labour, business and government constituencies were not present as they were attending a select committee meeting and the short notice period meant it was difficult to change arrangements.
The Chairperson said the Committee needed to know when they were holding meetings with other Committees so that Members of this Committee could attend.
Mr Smith explained an agreement was made at last year’s meeting to have all four convenors present to represent the social partners.
He began the presentation by way of some introductory comments. He said NEDLAC was recently not portrayed in a good light in the media and some of these criticisms were unfair and based on misinformation with what was actually happening within NEDLAC. They had been called "fossilised" but had not yet been called a black hole - a term which they intended to stay far away from. He was encouraged by the support of all of the social partners and the Presidency at the last forum which indicated the critical role NEDLAC played, particularly given the challenges society and the country faced today. There was recognition that NEDLAC found itself within a very difficult context balancing between the growth path trajectory of the country and the need to address equity and redistribution and its key role had been acknowledged. Recent articles in the newspaper showed these were complex issues and showed there was no real appetite for leadership engagement and compromise at the moment. While NEDLAC faced many challenges, since the last time they met with the Committee, important progress was made. Looking at the audit report of the AG, important progress was made over the last year and a bit. The focus was particularly on strengthening the Secretariat while laying the basis for more engagement by the social partners.
A key focus was to ensure that when legislation was placed on the Annual Report that it was dealt with at NEDLAC. They were getting better cooperation from the various departments in terms of commitment to Bills. In the previous APP, NEDLAC was more reserved and circumspect in dealing with the pieces of legislation.
Looking at the predetermined objectives for 2012-13, a key focus was to improve turnaround time and to have a performance indicator where an unforeseen piece of legislation can be dealt with in at least six months from being tabled at NEDAC. They were beginning to see an improvement in this area.
Mr Smith highlighted that almost an entirely new team had been appointed over the past year and put in effort to strengthen the capacity around the financial unit. In 2011/12 it was found NEDLAC met only 33% of the targets set in the APP but had now improved that to 76% and they had actually covered more pieces of legislation and policy like the NEEDU Bill, Customs Control Bill, Tourism Bill and National Electricity Regulator Act. For policies, they looked at the Section 77s and the demarcation issues. A lot of work still needed to be done for performance management but good progress was made. The reliability had also improved which partly spoke to the investment made into the performance management monitoring system within NEDLAC.
Turning to NEDLAC’S financial performance, the key point was that NEDLAC was not adequately resourced over the years in relation to the expectations of NEDLAC. A similar entity to NEDLAC in Algiers had four times the staffing complement and this was an issue which needed to be addressed if they were serious about social dialogue and dealing with the challenges faced as a society through social dialogue. This was not just resourcing of the secretariat but about building the capacity of the various social partners to represent interests according to the political commitment made in 1994. The resources which had come in over the past few years have helped the entity. They had also looked at which areas of NEDLAC could benefit from cost-saving to make meetings more efficiently by reprioritising resources. Overall, NEDLAC was in healthy financial standing through improved financial management and control. However they were also dealing with roll-over because of delays in trying to revamp and upgrade the building housing NEDLAC which was not what one really wanted when having important dialogue. They had also fallen behind in occupational health and safety. They had gone through a tender process and were on the verge of making the appointment of a project manager to begin to commission this work. They would have to find alternative accommodation for about three to four months so that the work got done adequately. Historically the entity had also fallen behind in competitive pay grades. Leveraging up of the resources was critical in the more strategic areas of facilitation, research and much more improved communication. This would be worked on in the next budget cycle.
In terms of the audit, NEDLAC had worked to achieve an unqualified audit opinion. One of the milestones for this year was that the entity had strengthened the audit, risk and internal audit function. The one challenge was around the SCM but they had established a SCM unit and built this into the resourcing of NEDLAC. Some improvement was made in the area of performance management but better controls around the information, oversight and monitoring was needed moving forward.
Mr Smith concluded by looking at the priorities going forward noting NEDLAC would continue strengthening financial oversight, financial management and controls as the groundwork for this had been laid. They would continue to refine the competency and capacity of the secretariat. There was also the adoption of the protocol on the working relationship between NEDLAC and Parliament and they were looking at holding a workshop with committees on this and improving the levels of coordination. Importantly was the upgrading of the building which would yield many benefits. NEDLAC’s focus the last year and a half was on internally on strengthening the secretariat and improving turnaround times. They now needed to work quite aggressively on the bigger issues in promoting better engagement and dialogue between the social partners.
The Chairperson was very happy with the audit and risk unit but asked if it could be sustained. He wanted Productivity SA to present first and then to discuss both these entities thereafter.
Mr Bongani Coka, Productivity SA CEO, said that ten years ago, through the Minister, October was declared productivity month. Two media sources and radio stations were aiding in promoting this and promoting productivity for economic growth. Productivity SA was a tripartite company with a vision to lead and inspire a productive and competitive South Africa.
He explained that Productivity SA advocated for the saving of jobs. The Turnaround Solutions Programme was an intervention which delivered turnaround and contingency plans for companies that were faced with the risk of financial ruin, extensive job loss and sustainability challenges. It was not cost effective to look at the companies which were losing few jobs given the entity’s limited funding. The phases of this programme was, one, turnaround solutions, two, managing retrenchments and, three, job creation in the areas of extensive job losses.
In terms of criteria, companies employing +50 people were targeted and which showed performance decline over three months. Productivity SA achieved targets in key sectors such as agriculture and manufacturing.
Mr Coka said the results were that 36 clients were nurtured and 26 Future Forums were established leaving sustainable economic improvement.
In terms of deliverables and actual results, 4 000 jobs were targeted through the turnaround intervention but 3 886 jobs were saved.
Mr Coka outlined the budget allocated late by the UIF for 2012/13 was R26.5 million as opposed to R53 million had they worked for the whole year.
He outlined the programme outcomes included improving productivity, improving profitability, improving company performance through better marketing, financial strategies, management, HR and operations. Effective communication between employees and management was a key problem in most of SA companies and hence SA was rated 144 out of 144 countries in this regard. They also focused on job security and establishing an early warning systems to detect signs of decline. Productivity SA also provided education and training to intermediaries to reach more people in the economy.
Mr Coka discussed deliverables and actual results. Productivity SA was able to train 647 educators, reach 3 884 SMMEs through Productivity Improvement Workshops, train only 212 skills development facilitators (SDFs) and conduct training for 152 government managers which exceed the target.
The programme outcomes included an increased number of intermediaries facilitating the spread of productivity competencies and mindsets, generating and disseminating knowledge and key productivity drivers and challenges and an increased number of educators, learners, education, training and development (ETD) service providers and SDFs with enhanced productivity competencies and mindsets. Other outcomes included an increased number of public sector organisations, including municipalities managing their resources efficiently and effectively.
Moving onto value chain competitiveness, the programme Strategic Focal Areas included research, the workplace challenge programme, knowledge management and information technology.
Mr Coka said research concerned the information and knowledge generation to influence policy debates and decision making by investors. The programme performance was that Productivity SA ran five seminars with a target of nine provinces on issues particular to that region. The report on the SMMEs was slightly delayed.
In terms of knowledge management, there was SharePoint for document and content management, they had developed the norms and standards report for milestone two, registered 28 of their trademarks and were institutionalising knowledge by generating knowledge.
Looking at workplace challenges, these included the improvement of productivity and competitiveness enterprises. The new focus was to increase the competitiveness and therefore employment in previously underdeveloped regions of the country. Most of the targets were met for this: 13 change facilitators and three interns were coached and trained for management processes against a target of 15. Experimental training opportunities were sourced for 69 unemployed graduates in scare and critical skills against a target of 67. Due to funding delays, 100 experiential training opportunities could not take place and this was rolled over to the current financial year. They had developed a monitoring and evaluation system and a benchmarking tool and four quarterly reports had been disseminated. They had created awareness of these programmes which was marketed extensively.
Mr Coka discussed marketing and communication which was key in this month of promoting productivity. The first programme objective was to inspire South African towards greater productivity achievements, build the legacy for Productivity SA and to build appropriate relationships between Productivity SA and stakeholders.
The programme performance in the area of marketing and communication was to create national awareness and branding through TV and radio, seminars, presentations, website and printed media.
The programme outcomes in the area of marketing and communication was to create awareness of the importance of productivity and competiveness, create an association of productivity concepts with Productivity SA, for South Africans to embrace the concepts of productivity that led to changed behaviour, creation of an entrenched brand awareness that led to a strong brand equity and to be at the forefront of productivity thinking and discourse.
Mr Coka turned to the HR department programme performance which was able to establish a talent management committee. The talent groups were also categorised.
Mr Bheki Dlamini, Productivity SA CFO, looked at finance and administration. Productivity SA received a grant from the DoL, funding for Turnaround Solutions came from the UIF which was R26.5 million - only late in the year which contributed to under achievement on the targets for Turnaround Solutions. The workplace challenge was funded by the Department of Trade and Industry (DTI). The total funding received was R71. 75 million.
In terms of the income comparison from 2011 through to 2013, the Department provided the lion’s share of 57% followed by Turnaround Solutions. In the current financial year, the Department’s share dropped to 52% although the total revenue had increased. The reason for this was that Productivity SA looked inward for solutions and generated their own revenue which had increased to 8% in the current financial year from 4% in the previous year.
Mr Dlamini moved onto the statement of financial performance and expenditure. The biggest chunk of expenditure went to the compensation of employees. With a shoestring budget, Productivity SA had managed to keep expenditure just below the level of inflation and curbed to very minimal levels. They also boasted a surplus of R2.1 million which represented an improvement of R15 million from the previous deficit of R15.7 million. Treasury had allowed them to keep this surplus.
For the statement of financial position, also known as the balance sheet in colloquial terms, Productivity SA did not keep many assets as their assets were people and knowledge research.
The independent auditors’ report for 31 March 2013 showed Productivity SA had a clean bill of health indicated by the unqualified audit.
One of the main challenges of 2012/13 was that the committed funding (R55 million for 2013/14) from UIF for the Turnaround Solutions programme remained outstanding. This was hampering Productivity SA’s ability to deliver on targets on time.
Mr Dlamini noted the highlights for 2012/13 included increased self-generated revenue by 154%, an expansion of Productivity awards to the Mpumalanga province, an expansion of the awards category to include cooperatives in line with government strategy, raising the profile of the Productivity SA brand by being in media discussions on productivity, resulting in significant media coverage and supporting of the industrial sectors through the Department of Mineral Resources. Other highlights included a partnership with East London IDZ for a virtual incubator, working with the Limpopo Department of Education to train more than 400 educators in the province on the improvement of productivity in schools during challenging times in March 2013 and Productivity SA acquired accreditation with the South African Board for People Practice as a service provider.
The future key priority areas included improving processes and tools used, to increase their provincial footprint, to develop and secure knowledge, to manage talent, to maximise on the relationship with key stakeholders, to improve responsiveness and to demonstrate impact.
The Chairperson noted there were no substantial issues and they were running out of time – the meeting was meant to end at 12h45 and people were beginning to panic about missing their flights. He asked that Members raise their issues in writing to these two entities.
The meeting was adjourned.
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