Department of Labour Budgetary Review and Recommendations Report

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Labour

21 October 2013
Chairperson: Mr M Nchabeleng (ANC)
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Meeting Summary

The Chairperson indicated the outstanding information that had been requested from the Department of Labour (DoL) had finally been received. It had been sent on Sunday and the Committee staff had managed to include that information in the finalised version of the Budgetary Review and Recommendations Report (BRRR).

The Committee was taken through the report.  Members were satisfied with the report, but recommended that the finding on the Compensation Fund (CF) be tightened to reflect the challenges that the entity was experiencing.  The Committee’s key findings on the CF appeared too soft. The Department had lost R16 million on the purchase of the SAPS software for CF.  To ignore the serious challenges that embroiled the CF at present would be a failure on the part of the Committee. The finding should capture that.
 

Meeting report

Opening remarks
The Chairperson said the information that had been requested from the Department, had finally been received. It had been sent on Sunday and the Committee staff had managed to include the information in the finalised version of the BRRR. He requested that the Committee be taken through the amendments.

Department of Labour Budgetary Review and Recommendations Report (BRRR)
Mr Sibongiseni Ngcobo, Committee Content Advisor, took Members through the report and indicated where the changes had been effected. The report was divided into eight sections. Substantial amendments were effected as follows:

Section 3
The amendment read: “in response to the comments from National Treasury (NT), the Ministry reported that the Compensation of Employees budget for the inspection and enforcement services for the 2013/14 financial year, is R465.3 million with a projected under-spending of R45 million, of which R32 million was mainly attributable to the newly created labour inspector posts.  Currently 57 posts of the created inspector posts had been advertised and the Department was in the process of interviewing prospective candidates.”

Section 4
4.1

Inspection services recorded a virement of R634 000 and R1 000 from current payments, and payment for capital assets to transfers and subsidies.

4.2
The sentence that read: “In terms of Section 197 of the Labour Relations Act (1996) the Department had to re-absorb the departmental staff that moved to Siemens when the IT public private partnership started..” – was deleted.

4.4
The information on the 2014/15 Medium Term Expenditure Framework (MTEF) Financial Allocation had just been inserted after the outstanding information from the Department was received on Sunday.

The insertion read: “DoL reported that in addressing its legislative mandate, it required additional funding to address a number of activities that would enable it to implement the strategic priorities. Nevertheless, the National Treasury had issued out a communication that if any funding pressures should arise from a department, there would be no additional funding and departments should reprioritise within the allocated voted funds to address any pending funding pressure for the medium term.”

The DoL in 2013/14 (during the adjustment of estimates of national expenditure) had requested the unforeseeable and unavoidable additional funding to defray expenditure relating to the following claims received from the private partner for IT related expenses:

• R9.3 million in respect of SAP; and
• R3.4 million in respect of a central hardware claim.

No other additional funding had been requested for any other function within the Department, inclusive of the inspection and enforcement services programme. However, the additional funding request was unsuccessful.

Section 6
The Committee inserted a key finding that a total of R66.1 million had been shifted from current payments to transfers and subsidies, payment for capital assets, and payment for financial assets. The majority of this amount -- R59 million -- had gone to payment of capital assets.

Other key findings included:
The labour inspectors had experienced difficulties in executing their duties on businesses owned by foreign nationals as a result of a lack of cooperation from the owners. The Unemployment Insurance Fund (UIF) had spent less than half the amount it had received from contributions on payment of benefits.  It had received R13.7 billion from contributions and spent R6 billion on payments of benefits.  During its annual report presentation to the Committee, the CF had presented a detailed performance and governance improvement plan.

Section 8
Mr Ngcobo pointed out that the Committee needed to decide on timeframes regarding the recommendation on the hand-over of the IT services to the Department, and reporting progress to the Committee.

Other recommendations were that the job creation initiative of the UIF and the Industrial Development Corporation (IDC) should be commended. Further, the Minister should ensure that the UIF reported on the sustainability of jobs created; that the Minister should ensure the Department’s call centre and its entities was capacitated and adequately monitored; that the Minister should ensure that the increase in time for claiming UIF benefits translated to an increase in payment of the benefit; that the Minister ensured that the Department devise a mechanism to ensure that businesses owned by foreign nationals respected the law; and that the Minister should monitor the implementation of the turn-around plan put forward by the CF, and report to the Committee about progress.

Discussion
Mr K Manamela (ANC) requested that Members check if they were satisfied with how the changes had been effected. If there was anything that Members wanted to add, they should do so.

Mr S Motau proposed that the Department report quarterly on the recommendation on the hand-over of IT services to the Department.

Mr A van der Westhuizen (DA) commented that the Committee’s key findings on the CF appeared too soft. The Department had lost R16 million on the purchase of the SAPS software for CF. As the key finding stood, it was just too soft, and did not reflect the dire situation the Committee had found at the CF.  To ignore the serious challenges that embroiled the CF at present would be a failure on the part of the Committee. The finding should capture that.

Mr D Kganare (Cope) said the Committee had also raised an of amending legislation to empower the Commission for Conciliation Mediation and Arbitration (CCMA). The Committee had said the Commission needed to be given an additional tool to perform their work.

Mr Kganare concurred that the finding on the CF was too soft, and that the entity had serious challenges. The Committee should recommend that the turnaround strategy be enforced.

Mr Manamela commented there were no new items to add other than the CF item. That was an indication that the Committee was happy.

The meeting adopted the BRRR report with amendments.

The meeting was adjourned.
 

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