Department of Labour, Compensation Fund, Unemployment Insurance Fund on their 2014 Strategic Plan

Meeting report

Chairperson’s Opening Remarks
The Chairperson introduced herself and welcomed all members and delegates to the first official meeting of the Portfolio Committee on Labour. She appealed for maximum cooperation between the Committee members and the Department of Labour (DoL) as this would facilitate a smooth term, ensure a huge success rate and produce an increased delivery on labour matters for the South African people.  

Department of Labour (DOL) Workshop on Budget Review
Mr Sam Morotoba, DOL Acting Director General, explained the organisational structure of DoL and highlighted its vision, mission and values. He clarified the constitutional, legislative and other policy mandates. He enumerated the challenges that DoL face in the labour market. They were: unemployment and under employment, the changing nature of work, inequalities and unfair discrimination, domestic and cross border labour migration and the inadequate instruments for constant performance, monitoring and evaluation of labour market and programmes to determine their impact on the economy. He noted the peculiar problems confronting each province (see document) and outlined the seven programmes under DoL: Programme 1: Administration which consists of the Ministry; Deputy Minister, Director General’s Office; Corporate Services (CS), Chief Operations Officer (COO), Chief Financial Officer (CFO), Programme 2: Inspection and Enforcement Services (IES), Programme 3: Public Employment Services, Programme 4: Labour Market Policy & Industrial Relations, Protected Employment Enterprises (currently trading as Sheltered Employment Factories, Unemployment Insurance Fund (Schedule 3A Public Entity) and the Compensation Fund (Schedule 3A Public Entity).     

Mr B Maduna, DOL Chief Finance Officer, reported on the audit outcomes of 2012/13 financial year, explaining that predetermined objectives were not well defined, funded vacant posts were not filled within 12 months, vacant positions were not advertised within six months, some creditors were not settled within 30 days of receipt of the invoice and the accounting officer did not take effective steps to prevent fruitless and wasteful expenditure. He presented the budget allocation for 2013/14 and 2014/15 and the unaudited expenditure results for 2013/14. As at March 2014, 95% of the appropriation for Administration was spent whilst 97% of Inspection and Enforcement Services were spent. Public Enforcement had spent the whole amount allocated to them and Labour Policy and Industrial relations spent 98%. The 2014 budget was decreased by R106 million. The funding challenges of the Department were: spending pressures, strengthening of existing programmes and new priorities, implementation of the new Employment Services Act, funding of the Office of the Chief Information Officer, funding of Inspection and Enforcement Services and funding of the new Deputy Minister’s Office.

Mr S Morotoba presented the DoL Strategic Plan 2014 – 2019 and its alignment with Medium Term Strategic Framework (MTSF) and the National Development Plan (NDP) and looked at the indicators.

Programme 1: Administration
Ms P Tengeni, DDG of Corporate Services, presented on its 2013 / 2014 Annual Performance, Challenges and Annual Performance Plan 2014/2015. She noted that 75% of fraud cases were received, detected and finalised against the targeted 90%. The annual target for women in DOL senior management (SMS) was 45%, youths were 43% and people with disability (PwD) were 3%. As at 31 March 2014, 38.5% of women had been employed at the SMS level, 32.9% of youths and 2.5% of PWD. Some of the challenges included the high staff turnover in the Internal Audit Directorate, lack of capacity and skill to investigate DoL fraud cases, changes in the organisational structure, numerous fraud cases that took longer than anticipated and the additional posts that were created during the performance cycle. (See document for additional details on the Strategic Objectives, Programme Performance Indicators and the Medium Term Targets).

Programme 2: Inspection and Enforcement
Mr T Lamati, DDG of Inspection and Enforcement Services, said its goal is to provide decent work by regulating non-employment and employment conditions through inspections and enforcement in order to achieve compliance with all labour legislation. There are a total of 830 inspectors of which 160 are occupational health and safety (OHS) inspectors, 336 Team leaders, 75 Principal Inspectors and 129 vacancies. The percentage of inspectors in developing countries is 1 inspector to 20 000 entities whereas South Africa has 1 inspector to 114 000 entities and this figure results in an ineffective enforcement of OHS Act provisions. He drew the Committee’s attention to the reduction rate in worker vulnerability through improved compliance and enforcement. A total figure of 75% complied with 69% complying in the Eastern Cape Province, 55% in the Western Cape and 87% compliance rate at Gauteng. Of the total target of 90 000, actual target inspected was 129 259 employers, with 97 526 who complied and 31 733 did not comply. A total of 66% client complaints had been resolved. A total of number of 209 shop stewards were trained as against a target of 100. The challenges experienced during implementation were budget cuts on operations and human resources. Corrective measures initiated was lobbying of the Portfolio Committee to engage with National Treasury to increase the inspectorate baseline to address the impact of budgetary constraints on service delivery.

Programme 3: Public Employment Services (PES)
Ms E Tioane, Acting DDG of Public Employment Services, said PES provides assistance to companies and workers to adjust to changing labour market conditions and to regulate private employment agencies. Currently there were 95 Employment Services Counsellors and 214 Employment Services Practitioners. Strategic objectives and their indicators were noted. In 2013/14, the number of work-seekers targeted to be registered on the Employment Services of South Africa (ESSA) database was 500 000, however a total of 618 092 (124%) were registered. 41% (250 160 of 500 000) of work-seekers against a target of 50% were provided with employment counseling. A total of 15 570 (82%) work-seekers were placed in registered employment opportunities in provinces as against a target of 19 000. PES challenges were: PES being under staffed at service delivery points, insufficient financial support for capacity building and implementation of employment schemes, skills mismatch between registered work seekers and registered opportunities (Supply & Demand) and the resistance of registration and non compliance by Private Employment Agencies (PEAs) and Temporary Employment Services (TES).

Programme 4: Labour Policy and Industrial Relations
Mr T Mkalipi, Acting DDG of Labour Policy and Industrial Relations, said this programme ensures the facilitation of the establishment of an equitable and sound labour relations environment and the promotion of South Africa’s interests in international labour matters through researching, analysing and evaluating labour policy and providing statistical data on the labour market, including providing support to the institutions that promote social dialogue. Two challenges encountered were the promulgation and the implementation of legal amendments and the instability of the labour market. Strategic objectives and indicators were outlined.
  
Discussion
Ms F Loliwe (ANC) wanted clarification on the offenders that were not compliant with the system. Could DoL offer some information on the categories of misconducts with 77% cases of misconduct resolved? With 80% of litigation cases resolved, what were the weak areas of DoL that exposed it to constant litigation?

Ms P Mantashe (ANC) requested that amendments be made on the revised Strategy Plan. She noticed that the information on it was outdated. She raised concerns on insufficient enforcement officers in the Department. She pointed out that the high vacancy rate and staff turnover, especially the audit staff, needed to be addressed. Could these issues be addressed with the current budget? What would be a reasonable percentage increase on the DOL budget so as to improve on the current situation? What were the disciplinary measures that had been taken against the non-performing officers?

Mr H Nkoana (ANC) asked DoL to make suggestions on how to alleviate the challenges listed? He noticed that in Programme 1, two items had been added to the original five items listed under Administration. Why the additional breakdown? On the Audit Outcomes, DoL stated “Funded vacant posts were not filled within 12 months and vacant positions were not advertised within six months”; he felt that this statement was contradictory. He asked for clarity on “the accounting officer did not take effective steps to prevent fruitless and wasteful expenditure.” He asserted that there was a massive problem if the accounting officer is incompetent.    Had the Department sought assistance from other departments since DoL mentioned that they had a shortage of capacity to effectively carry out its duties. Could DoL give a breakdown of from which provinces the wholesale and retail industry shop stewards were trained. What would the Department do regarding the 19 mobile units? Are they all operational? Even then, it was obvious that 19 units could not suffice for the whole country.

Ms S van Schalkwyk (ANC) expressed her concerns on the Internal Audit Directorate. She wanted to know whether exit interviews were conducted for resigning staff so as understand why they were leaving the Department. What was DoL doing to increase its responsiveness to clients complaints especially in communities where targets were not met? Could the Department embark on regular awareness campaigns to the community on the services rendered by DoL as this would keep the community informed and up to date on the time frames set by the Department? Was there anything that was being done by DoL to increase the percentage of placed work seekers as the unemployment rate is very high? Additionally, DoL indicated that staff training was according to the Workplace Scheme Plan, had there been any provision made to enhance the upward mobility of current staff members?    

Mr P Moteka (EFF) inquired on what had been done about the unqualified audits mentioned in the report. What could be done to forestall its reoccurrence? He asked what could be done in terms of the law to compel or curb the non-compliance of the PEAs and the TESs. He observed a poor performance from the Inspection and Enforcement Services as most of their targets were not met. He asked what had been the trend and was the poor performance a repetition or an exception? Proper measures must be put in place to ensure compliance by all relevant bodies. He suggested that as part of the solution in the reduction of unemployment rate, work seekers that were capable but are less qualified could be employed and then trained by the Department to meet the needed requirement.

Mr D America (DA) drew the attention of DoL to the ratio of inspectors per entity which was 1:114 000 as against the accepted rate of 1:20 000 in developing countries. He noticed that there was a reduction in the budget by R106 million, was there a plan in the pipeline on how to expand the capacity of labour inspectors so as to ensure compliance at the workplace? On the Audit Outcomes, he agreed that the predetermined objectives were not well defined and were vague. What measures had been initiated to recover irregular and wasteful expenditure? He insisted that concerted efforts must be introduced to reduce the present vacancy rate. On the Administration Annual Performance Plan 2014/15, the percentages are vague. Were the percentages on an annually or quarterly basis? The vacancy rate was reduced by 10%, 10% of what figure? How does DoL ensure proper measurement of targets? He emphasized that as good as having targets were, targets must be measurerable and must be monitored on a regular basis. In his opinion, the number of advocacy and educational sessions conducted per year in identified sectors were too few. There should at least be advocacy and educational sessions conducted per year in all provinces. In addition, explanations should be given as to why targets were not met and suggestions should be made as to how the Committee could assist in achieving those targets. How were reports reported? Were they on an annual or quarterly basis? He noted that DoL was silent on absenteeism in the Department and asked what the tolerable rate at DoL was?                            

Mr Morotoba replied that many of the 126 Labour Centers had been built outside residential areas, thereby limiting the communities’ accessibility to them.

Ms Aggy Moilo, the Chief Operations Officer (COO) in her response said that she had noted the suggestions and concerns raised by the members and would certainly act on them.

The Chairperson interrupted her and asked if she had captured all the questions relating to her section. This she answered in the negative?

The Chairperson said emphatically that all questions must be noted. She reminded the staff of the Committee to ensure that all questions were duly captured.

Ms Mantashe expressed her disappointment in the response given by the COO of the Department. If the responses given by DoL would be such bland statements, then what commitments was DoL giving to ensure improved service delivery?

Mr Morotoba intervened and reassured the Committee that he had noted the inconsistencies outlined in slides 17-19 of the document which was either duplicated or outdated information. He promised to sort this out.                

Ms Tengeni responding to the challenges of finalizing cases said that there were different kinds of cases, some minor like absenteeism which take a shorter time unlike the major ones, like fraud cases. Since it was difficult to predict the complexity of each case, these cases are dealt with as they arose.

The Chairperson wanted to know how DoL made its projected targets. What would be done about provinces with unmet targets by DoL?

Ms Tengeni replied that she also picked up such concerns when she took up her appointment in April 2014 as the DDG, Corporate Services. She agreed that perhaps they had made some unrealistic targets in the past as a Department but proper steps would be taken henceforth to deter this. She added however that there was a huge challenge regarding capacity in the provinces. Provinces needed to be adequately skilled in order to handle investigations. For example, one of the Risk Managers relied heavily on his deputy for inspective purposes so it would be difficult to cover all the needed areas.        

The Chairperson urged the DG that caution should be made in deploying unskilled manpower in areas because of shortage of skills. Something definite had to be done by DoL in this regard.

Ms Tengeni responded that on the quest to fill vacancies, the budget had been made available. The vacancy rate being discussed were vacancies already funded or budgeted for. Some of the measures initiated to curb the high turnover rate were liaising with other organisations that pay workers better than DoL and introducing non financial remuneration to appreciate the extra work done by the employees. Answering in the affirmative she said that exit interviews were being conducted to discover the issues supporting high turnover as this information would assist in curbing the reoccurrence of such high turnover rate. The two omissions noticed regarding Security Services and the Office of the CIO was an oversight. It was omitted while preparing the slide. She responded positively on training being offered to assist with upward mobility of employees. DoL has a policy to mentor employees who have the capacity or potential from lower level to middle level or management positions. She clarified that the targets reflected in the presentation were annual targets; however these targets were often broken down to quarterly achievable targets. She acknowledged that matters of absenteeism were not reflected in the presentation and promised to provide a written response on it.

Mr Morotoba explained that DoL has the internal capacity to investigate cases; however, when criminal cases crop up, such cases are referred to external agencies that have been mandated to act on such cases.  Litigation issues were mostly on HR related cases and few on UIF issues. On the categories of misconduct, cases of sick leave or dismissed allegations were referred to external agencies for facilitation and prosecution.

Ms Mantashe asked whether the training given to employees were informed and supervised by DoL. Were the areas of training for the employees related or directed in line with the needs of DoL or the needs of the individual. She emphasized that direction must be given in this respect.

The Chairperson reminded Committee members that since each member was new in the Committee, it would be crucial to listen attentively and learn from the Department as this would curb repetitive questions and aid quick understanding of how DoL worked. She inquired on the issue of vacancies and wanted to know why there were delays by DoL of up to six months to advertise vacant positions? Of the positions advertised, how many positions had been filled? How many funded vacancies existed in DoL, how many had been filled and what positions were they?

Mr Moteka reminded the Committee and DoL of section 24 of the Employment Equity Act which supported that if a person had the potential to acquire a skill in a short time, such person could be appointed and trained to fill such vacancy.

The Chairperson warned the DG that in presenting their reports, cases that were not in the jurisdiction of DoL should be clearly indicated so that all the cases are not lumped together. She asked what the vacancy rate figure was that had been reduced by 6%.
 
Mr Morotoba chipped in on the issue of employee training, that the need of the Department was paramount to individual employee need for training. Supervisors could suggest to Department employees in need of particular training that would enable them to carry out their duties in a better way and this would be attended to. Personal training desired by individual employees was not funded by DoL. The presentation was a reflection of the financial year which was between 1 April 2013 and 31 March 2014. However, quarterly reports could be produced at the request of the Committee. Furthermore, the Committee should be reminded that as much as DoL was eager to fill vacancies, there are other areas that are would aid the process of getting people employed that are beyond the control of the Department. One of the reasons why the rate of employing young people (ages 21 – 35) was increased was to give them an opportunity to join the Department and to reduce the high turnover rate of employees especially inspectors. The 6% vacancy rate was on the base figure of 8 062.                   

Afternoon session
The Department response continued with Mr Maduna replying that unqualified audits were good results whilst qualified audits were negative or adverse reports. For the just concluded financial year, the Department had received an unqualified audit with few adjustments to make from the AG’s office.  The issue of fruitless and wasteful expenditure and even the revenue not collected had been sorted out and would be reflected in the 2013/14 annual report. The HRM directors engaged with the auditors on the issue of the lump sum payment of the terminated employee. The issue had been resolved and would also be reflected in the next audited report.             

Responding to questions asked on the low placement of work seekers, Ms Tloane said that last year the Department managed to assist 15 000 people to be gainfully employed. For this financial year, the target had been moved to 20 000 people. Additional ways explored by the Department to assist work seekers, was to improve their skills so that they could be self employed. Other services also liaise with DoL to train and provide apprenticeship programs that would enhance the chances of the work seekers in getting employment. Chapter 3 of the Employment Services Act answers the question of non-compliance. There are relevant bodies that have been mandated to enforce or deregister companies that are not compliant. DoL achieved 41% out of its target of 50% of work-seekers registered on the system that had been provided with employment counseling. This was because not all the labour centres in the provinces have employment counselors. Employment counselors are those that assist work seekers to enhance their skills and increase their chances of being placed.  
  
Ms Mantashe asked why the Western Cape Province did not have a target figure reflecting the number of work-seekers placed in registered employment opportunities on the presentation slides.

Ms Tloane replied that it was a typographical error. She said that the Western Cape target was 2 090 people.   

Ms Loliwe asked what the challenges in the Western Cape were that brought about so much variance between the target of 2 090 set by the Department and the actualized percentage of 27% giving a variance of 1 531.

Responding, Ms Tloane explained that one of the challenges that arise was the issue of skills mismatch. She however noted that the challenges being encountered were not peculiar to the Western Cape.

The Chairperson was insistent on knowing why the Western Cape had the smallest percentage. She also wanted to know what the criteria of DoL in fixing targets were.

Ms Tloane responded that the resources available in the province, the population, and geographical employment opportunities among other things were issues considered in determining the target of a province. In terms of the Western Cape, she noted too that it has the third highest GDP in the country.

Ms Loliwe drew the attention of DoL to the presentation when the targets are compared with the achieved figures; she noted that no target was met in the provinces.

Ms Mantashe reiterated that the Department should be worried that the province with the third GDP performed so poorly. She emphatically said that the challenge of skills mismatch presented by the Department was not a tenable excuse.

Ms Tloane replied that new measures have been initiated to ensure that job opportunities were not wasted as a result of skills mismatch.

Mr Mkalipi clarified that another challenge encountered was the attitude of employers in using the facilities of DoL. Greater achievements had been recorded in this respect in Johannesburg because employers were willing to make use of the services of DoL. He added that the figures presented were not the only work seekers that were placed in the provinces but they represented work seekers that had been placed solely by DoL.

Ms Schalkwyk suggested that it would be appreciated if for future reports, the designations of the work seekers placed could be presented.

Mr Lamati informed the Committee that in the past, the law did not mandate or compel employers to make use of DoL in hiring staff, therefore DoL had to depend on the goodwill of employers. However, with the emergence of the Employment Service Act, the Department now has a legal instrument to compel employees to hire work seekers through DoL.

Mr Morotoba agreed with the observation of the Committee members on the issues that needed to be sorted out in the Western Cape to increase the placement of work seekers in the province. He reiterated that the attitude of the employers in not wanting to use the system was an important issue that needed to be sorted out. He mentioned that Chapter 3, section 198 of the Labour Relations Act dealt with the registration of the labour brokers. The labour brokers brought in foreigners without the necessary documentation to work so that the employers could pay less than the stipulated amount. He gave an example of Zimbabweans that were employed massively by farmers to work on the farms.  

The Chairperson asked how the issues of employing foreigners at the expense of South Africans could be curbed.

Ms Mantashe agreed that the labour movement was presently weak. She categorically said that DoL must enforce the laws of the country on compliance if they wanted these issues to be resolved.

Ms Tloane added that the new immigration laws and the new legislation of the Employment Services Act ensured that employers must first crosscheck with DoL before employment could be carried out. DoL has a database that would be consulted to ascertain the work seekers eligible for the vacancies available. These vacancies are prioritized for South African citizens, but a foreigner could be considered if there were no eligible South Africans for the positions available.

Mr Morotoba commented that the Home Affairs assisted with inspections when the Department had to deal with foreigners. He cited cases of inspections that had been conducted in the past that involved illegal workers who were foreigners and the foreigners had to jump the fence when they saw the officials of Home Affairs. Another major challenge was foreign workers that had asylum permits. Asylum permits allowed work seekers to be employed. Therefore a balance needed to be made between asylum seekers and the standardization of these issues. The Immigration Board of which DoL is a part of has been trying to standardize issues so that the autonomy of the country is maintained and yet without being xenophobic. He insisted that immigration issues were a delicate matter and strategies that would not inhibit foreign investments must be initiated.

Mr Lamati cited examples of employees that were not properly documented who were deported. He insisted that it would be difficult for DoL to singly enforce these enforcement rules but if jointly enforced by all the relevant bodies, the enforcement would be successful. Insufficient enforcement officials were also an issue that needed to be sorted out. It cost R250 000 to hold advocacy training that is why the budget could only accommodate six training session in the year. Client Services Officials must resolve complaints within seven days but when complaints were not resolved within the seven-day time frame, the complaints are then referred to the inspectors for further investigation. He emphasized that complaints irrespective of where they were lodged would eventually be resolved.

The Chairperson noted that issues around the inspectorate had been ongoing for a while now. Why were there continuous problems in the IES? She asked whether the Department was in any position to arrest erring employers and employers that are exploiting their employees.   

Replying in the affirmative, Mr Lamati said that much help had been sought from the Minister to assist with issues to do with the inspectorate. He added that at the time of sorting the issues at hand, the National Treasury decided to reduce the DOL budget by R106 million. DoL is therefore optimistic that it could prevail if National Treasury reverted this position. The Department did not have the powers to arrest persons but could through the available legal instruments compel erring employees. He cited the example of one of the biggest farms in Limpopo which had been taken to court by DoL because it owed its staff up to R27 million in salaries, owed more than a million to the Compensation Fund and owed several millions to the UIF. He stated that through the use of the legal instruments available to DoL, many successes have been registered.        

The Chairperson then urged the Department to be more aggressive in their enforcement strategies.

In his comments, Mr Morotoba said that workers have been continuously advised to be registered with the trade unions, as the trade workers union would be able to bargain and stop exploitations. They would be able to fight for the safety of the workers. He added that it would be impossible for DoL to deal with all the pending issues with the available resources. How could 1 200 inspectors be adequate for the entire country? It was like a drop in the ocean. Furthermore, additional funds were released for the Department through the assistance of the previous Portfolio Committee on Labour, however, before registration and other processes could be concluded, the National Treasury demanded the money, stating that it would be returned at a later time since it was not being spent. The problem with this was that as the available vacancies were filled, payments could not be made. The Minister however is committed to raising it in the Budget Enforcement Committee. DoL would also raise it during the Medium Term Strategy Framework in October and would hopefully get some allocation to assist with its enforcement needs.

Mr Moteka commented that the lack of adequate training of work seekers would contribute negatively to employment initiatives. People would still be vulnerable and could be taken out of jobs if they were not adequately skilled for the positions they occupied.     

Mr C Maxegwana (ANC) observed that in the history of South Africa, the Labour Movement was at its lowest in terms of strength. He noted that there are workers working in dangerous conditions in many parts of the country. How then could DoL reinforce itself in such matters? Who are those that assisted DoL about such dangerous positions? How does DoL reach out to those areas?  

Mr Lamati replied that DoL relied on the Labour Movement by training them to play that important role of checking whether working conditions of workers were appropriate or not. DoL would then act on the complaints passed on to them. Another medium used by the Department was to go on ministerial outreaches to remote places that under normal circumstances would not have been visited. Additional inspectors could also be brought in to assist the inspectors on the field to cover more ground and go to those remote places that may not have been visited. This action is embarked upon so as to understand the working conditions of the people. Lastly, DoL also could act on the counsel of the advice offices. The advice offices are funded by the Civil Society Fund.

Mr Mkalipi explained the issues around unemployment and what DoL is doing to intervene. He said that DoL creates an environment where the employer and the employee could relate easily with each other. It enhances peace and stability in the labour market. DoL does not necessarily create the actual jobs. The Department provides assistance to companies and workers to adjust to changing labour market conditions and to regulate private employment agencies. The South African Labour Market is always compared to the European Labour Market, however, Europe was more concerned about educating the market not on enforcement because, people comply automatically unlike the South African market. He added that the allocation given to DoL is not enough to embark on proper inspection. He explained briefly how the allocated amount was distributed in DoL. Presently, the level of the strength of the trade unions is 25%. Unless this level is increased, it would be difficult for proper enforcement to take place. It could even get worse.            
   
Mr Morotoba responded that sometimes the trade unions come to report maltreatment cases to DoL or an individual calls in to report or when individuals are injured and hospitalized, they are advised by the nurses to call the Department which they do. These are ways in which DoL gathers information and these form the basis on which inspections are conducted.                    

Compensation Fund Budget Review, Strategic Plan 2014-2019 and the Annual Performance Plan.
Mr Shadrack Mkhonto, the Compensation Fund Commissioner presented its objectives, vision, mission, values and the strategic goals of the following programmes: Corporate Management and Executive Support, Chief Directorate: Financial Management, Chief Directorate: Operations Management and the Chief Directorate: Corporate Services.

Mr T Mokomatsidi, the Chief Director, Corporate Support, elaborated further on the Strategic Objectives of the Fund. The strategic goals and outputs of the Fund for the year 2014-2019 were outlined (see document).

Mr K Tselane, the Acting Chief Director of Operations, presented the challenges that the Compensation Fund encountered in the previous financial year. The challenges included inefficient IT Systems, slow turnaround times in processing compensation claims, backlog in processing claims and payments, delays and/or non-reporting of accidents, human capacity constraints and engagement with trade unions. Additionally, the non-compliance by stakeholders, incomplete information by employers, delays in the submission of banking details or annual returns by beneficiaries and employers were challenges also faced by the Compensation Fund. Furthermore, he noted that fraudulent activities negatively affected the finalisation of employer assessments and therefore increased the debt book.

Mr Johnny Modiba, Chief Finance Officer of the Compensation Fund, listed the Fund’s priorities for the 2014/15 financial year. These included the implementation of a turnaround and modernisation strategy by conducting a scoping exercise on the ICT environment, establishing a programme management office, implementing business process re-engineering, finalising the decentralisation process including the placement of staff and resettlement to provinces, implementing the Umehluko claims processing system, investing in Socially Responsible Investment as part of the implementation of the Government’s Medium Term Strategic Framework 2014-2019, exploring ways to strengthen the capacity of DoL to conduct payroll audits, implementing a comprehensive plan to address the disclaimer audit opinions, finalising the amendments to COIDA and improving human resource capacity through recruitment and capacity development. The approved allocations for the 2014/15 financial year for Corporate Management, Financial Management, Operations Management, and Corporate Services as well as line items such as compensation of employees were made noted (see document).
  
Discussion
Mr W Madisha (COPE) referred to the Compensation Fund (CF) as an important structure that must not be overlooked. He pointed out that there was a major problem of the decentralization of CF’s operations and that there must be a proper headquarters for the structure. He advised that the structure should concentrate on introducing proper training initiatives to ensure that the staff is well equipped. He noted that 75% of workers in the country were no longer unionized therefore it would be essential for the CF to be informed on steps to take.

Commenting on the challenges facing the CF, Mr America said that it was extremely concerning. He identified some areas in the presentation that needed to be looked into. He said that the Strategic goals 1.2 - Full Conformance with all IIA standards by 2019 was scheduled to have been put into place by 2019, whereas in the subsequent tables on the presentation, it was categorised under 2016/17 financial year. Strategic goal 1.4 - Development and implementation of Business Continuity Plan, in terms of the performance indicators did not suggest any clear deliverables and all the subsequent years were just repetitive with no clear deliverables. He suggested that Strategic goal 1.7 - Implementation of all CF priority projects within committed project plan/ schedule with measurable targets and budget should be presented as 2014/15 - 10% of the projects in the Turn-around plan implemented, 2015/16 – 20%, 2016/17 – 40%, 2017/18 - 70%, 2018/19 – 100% and not as 10%, 10%, 20%, 30% and 30% for the listed consecutive years. He asked what criteria would be used to measure the improvement of financial viability in contributing towards job creation through Socially Responsible Investment (SRI). The figures under the Compensation Fund Budget 2014-15 Financial Year, Executive Summary 2012-13 to 2014-15 did not add up to the total figure. This could just be a typographical error but it must be looked into.

Ms Schalkwyk was surprised at the alarming high cost of the consultancy fees. She advised that work seekers with the required skills should be employed instead of the consultants being paid exorbitant consultancy fees. She agreed that the challenges highlighted by the CF were alarming and something drastic needed to be done. She expressed her concerns on the slow pace of the finalization of claims especially occupational diseases. She asked whether the issues raised by the Standing Committee on Public Accounts (SCOPA) had been addressed.

Mr Nkoana shared the same view as Mr Madisha on decentralization and with Ms Schalkwyk on the alarming nature of the Fund’s challenges. There should be consequences when employers fail to submit their annual returns. The settlement of claims within 30 days must be followed up. Fraudulent activities negatively affecting the finalisation of employer assessments causing the increase of the debt book, must be promptly dealt with. He asked when the issues on decentralization would be completed. He warned that these issues must not reoccur next year. He asked whose duty it was to finalise amendments to COIDA. He added that reliance on consultants would not augur well for effective service delivery.

Ms Mantashe inquired on how many of the concerns raised by the AG had been addressed. She indicated that the presentation did not reflect how much had been budgeted for capacity building. She emphasised that minor issues like the purchase of air conditioners were not priorities. Issues arising must be prioritised with regards to service delivery. She noted that decentralization was a crucial one.    

Mr Maxegwana expressed his dissatisfaction with the way compensation issues were treated. The processes involved were full of delays. There was a lack of information on the part of the CF. It seemed that the CF had no action plan because timeframes and expectations were not clearly spelt out.  

Responding, Mr Mkhonto apologised for the shortcomings in the report. The annual report of the 2013/14 financial year if it had been presented would have shown the Committee what the CF had been trying to address and the timeliness. He informed the Committee that for six months the CF was without any Chief Finance Officer because the previous one resigned in April 2012. Therefore consultants were brought in to fill the gap. The new CFO was just appointed six months ago. He added that there had been no Chief Director: Corporate Services and a new one had just been appointed in March 2013. A Chief Risk Officer was appointed in June 2014. The Head of Supply Chain was appointed in July 2014.  He hoped that the necessary approval would be given soonest so that the new Chief Operations Officer would be appointed by August 2014. Presently, the positions of the Chief Internal Audit Officer and Chief Controller were still vacant. These were the gaps that warranted the appointment of the consultants. He agreed that there was a major challenge in the area of claims and revenue. He said that he is very passionate about decentralization and the CF is working hard to actualise it. Presently in Cape Town, claims can be processed from start to finish which may just require some information from the Head Office. He assured members that very soon claims would be processed from start to finish in all the provincial offices.

Ms Mantashe asked how far the CF had gone with the decentralization process. She said that the members were tired of empty promises.

Mr Mokomatsdi in his response said that the CF went through an organizational review which culminated in the agreement that the services of the CF needed to be provided for at the lowest level possible. An organisational structure was created which had positions from labour centre level. The structure had been approved by the Minister by 2011. However before implementation could take place, some processes like labour relations had to be taken care of. DoL developed a procedure for the migration of staff and to move workers from one structure to the other. Office space and accommodation had to be taken care of. Presently 80% of the processes had been completed, however, issues around movement needed to be completed.

In essence, Ms Mantasha said, the target of completing the decentralisation process by March 2014 as promised had not been fulfilled.

Mr Mokomatsdi in CF’s defence said that the issue of labour relations, recent issues around unprotected pickets, labour boycotts and strikes caused the delays and impacted on the timelines. He assured members that the process had been resuscitated.    

The Chairperson chipped in that with all these challenges, it seemed that the excuses and stories behind not meeting the target might go on till year 2015.

Mr Mokomatsdi replied in the negative. He said that with 80% of the process completed, it would not take too long to finalise it.

The Chairperson insisted that the Committee was not pleased with the answers received. The CF must commit themselves to the Committee as to when it would be completed. She hoped that the challenges would have been overcome by the next presentation.

Mr Mokomatsdi promised to come back with the outstanding reports to clarify the matters arising. He added that R9.5 million had been committed to train employees based on the identified needs. The CF had put together a Workplace Skills Plan. A skill audit will also be conducted since the last one was conducted about 2-3 years ago.

Ms Mantasha expressed her disbelief at the response of Mr Mokomatsdi. She asked how the Workplace Skills Plan could be developed without initially engaging in a skills audit.

Mr Mokomatsdi replied that a skills audit was a quiet involved process.

An intense discussion went back and forth with Mr Mokomatsdi on the issue of decentralization and the processes involved. 

Ms Schalkwyk asked whether the employers had been approached so as to identify their target areas. She added that the members were more interested in a long time capacity-building initiative that would produce a lasting change than just meeting a short time or minor need.

Mr Ngoane clarified that the need to understand what the CF was doing was to enable the members to have a sense of ownership and to effectively present it to the Parliament. He reminded them that if the members did not have confidence on the explanations given, it would be difficult to approve the budget.

Mr Mokomatsdi replied that the CF would come back at a later date to give the Committee a detailed and dependable explanation of the decentralization processes so that they could take ownership of the initiatives being introduced. Bursaries had been given to some employers to assist them in getting qualifications so as to grant them horizontal or vertical mobility in the vacancies that were available.

The Chairperson wanted to know how many bursaries had been received.

Mr Mokomatsdi responded that he was not sure but that he would make the information available to the Committee.

Ms K Tselane, the Acting Chief Director of Operations of the CF, promised the Committee that the decentralization processes would be finalised by 31 March 2015 and progress reports would be given to the Committee either monthly or quarterly or as demanded for. She said that this would be possible because all the processes involved had been finalised in the provinces. Part of the decentralization process was to ensure that the clients knew where to go to when in need of treatment. Doctors and nurses would be in the provincial offices and labour centres to attend to the clients with occupational deceases and to make sure that they are given preference. The doctors and nurses who refused to treat the clients with occupational diseases have been warned and such issues have been rectified.

Ms Mantasha reiterated that she was not impressed with the report. She proposed that the CF should go and put their house in order

The Chairperson similarly was unhappy with the way the questions were answered. She said that Mr Mokomatsdi answers were vague and did not give any hope as to what to expect while on the other hand, Ms Tselane came up with an energetic response and assured the Committee that by the end of the financial year the issues would have been sorted out. She said that they were not well coordinated. However, because the meeting was the first, the controversial issues raised would be overlooked and she expected that by the next meeting, the issues would have been better sorted.

Mr Modiba chipped in that CF would be committed to giving a turnaround quarterly report to the Committee. He informed the Committee that the Board members and the subcommittees had been appointed by the Minister and they would be inducted between 14 and 18 July 2014. Their work would be advisory in nature. In the previous financial year, funding was approved and in the past six months of his resuming his position, 20 of them have been cleared. The plan would be to reduce the consultants as instructed, however, since they may still be needed occasionally, a Management Consultancy Plan and a Skills Policy is being developed to compel the consultants to transfer their skills whenever they were called upon to assist the Fund.

Evening session
Unemployment Insurance Fund Budget Review: 2014 Department Of Labour
The vision, mission and legislative mandates were presented. The key concepts were: Impact: the results of achieving specific outcomes such as reducing poverty and creating jobs.
“What we aim to change” Outcomes: medium term results for specific beneficiaries that are the consequence of achieving specific outputs.
“What we wish to achieve” Outputs: the final product, or goods and services produced for delivery.
“What we produce or deliver” Activities: the processes or actions that use a range of inputs to produce the desired outputs and ultimately the outcomes.
“What we do” and “What we use to do the work” Inputs: all the resources that contribute to the production and delivery of outputs. Performance Indicators measurements were noted.

The Performance Report against the 2013-14 Annual Performance Plan, the Strategic Objectives and the Performance Highlights 2013/2014 were reported to the Committee. The challenges recorded were the non-compliance by employers in terms of compliance to the Unemployment Insurance Act and Unemployment Insurance Contribution. The mitigating strategies were the implementation of the uFiling System to provide for: Electronic Submission of employee information, Electronic payment of contributions by employers, Online Claims application and the Improvement of the claims processing functions in the Labour Centres.

The proposed amendments to the Unemployment Insurance Bill dealt with a number of issues. These were the inclusion of learners, public servants and foreign workers who are currently not covered in terms of the provisions of the UI Act, the extension of period of benefits to contributor from eight months to twelve months, the extension of a period in which a contributor can lodge a claim, from six months to twelve months, allowing beneficiaries to claim if they have credits regardless of when they last submitted a claim, providing for the nomination of beneficiaries in case of death benefits, assisting in financing the employment promotion projects by the Public Employment Services, giving powers to the appeals committee to adjudicate on late applications for benefits, giving the Minister the power to vary the income replacement rate through regulations, de-link maternity benefits from unemployment benefits, introduce a 66% fixed rate for maternity benefits, paying full maternity benefits for miscarriage occurring in the 3rd trimester of pregnancy and decreasing  of the waiting period for illness benefits of 14 days.

Further details on the UIF Annual Performance Plan 2014 -15, Summary of the Budget, the Legislative Amendment and the Unemployment Insurance Amendment Bill were made available in the presentation.

Minor issues were raised by the Committee members on the report of the Unemployment Insurance Fund.

The meeting was adjourned.