Department of Labour on its 4th Quarter 2014/15 Perfomance Report

Meeting report

Department of Labour Fourth Quarter 2014/15 report briefing
Mr Thobile Lamati, Director General, Department of Labour, briefed the Committee on the 4th Quarterly Report 2014/15 for the Department (or DoL). He indicated that he had asked other colleagues to accompany him both in order to expose them to the kinds of concerns that the Committee had, as well as to provide more detailed answers on their areas of work.

He indicated that previously the Department had been using three legends performance indicators, but was now using a two-legend format to align with systems used by the Auditor-General. The performance was based on strategic outcomes of the Department as set out in the Annual plans.

He outlined the Service Delivery Outcomes and Departmental Strategic Goals. The first strategic outcomes-oriented goal related to decent employment through inclusive economic growth. There were seven sub-categories, namely to:
- promote occupational health services
- contribute to decent employment creation
- protect vulnerable workers
- strengthen occupational safety protection
- promote sound labour relations
- monitor the impact of legislation
- develop occupational health and safety policies.

The second strategic outcome oriented goal was to create a skilled and capable workforce to support an inclusive growth path. The strategic goal therefore was to contribute to decent employment creation.

The third strategic outcome oriented goal was to create a better South Africa, a better Africa and a better World, by strengthening multilateral and bilateral relations. The fourth strategic outcomes oriented goal was to have an efficient, effective and development oriented public service, and here the DoL would contribute by strengthening the institutional capacity of the Department. The fifth strategic outcomes oriented goal was to transform society and unite the country, which would be achieved by promoting equity in the labour market.

Mr Lamati thereafter analysed the 2014/15 fourth quarter performance by strategic goals. From January 2015  to March 2015, out of 48 planned activities, 28 were achieved and 20 were not achieved. This resulted in 42% of the goals not being achieved. However, he pointed out that this was a conservative assessment of performance and there were three areas in which 100% of the strategic goals were achieved. Thereafter he outlined the branch contribution to performance. These branches were Administration, Inspection and Enforcement services, Public Employment Services (PES) and Labour Policy and Industrial Relations. The observation was that there was a significant improvement in performance by the Inspections and Enforcement Services.

Mr Lamati then moved on to the major performance challenges in this quarter. In relation to the promotion of equity in the labour market, the Department ensured that companies that were found to be non-compliant were dealt with in terms of the relevant legal instruments. In particular the Gauteng province brought the number down and there were service delivery problems. A large office in Gauteng was closed which made it difficult for this particular office to work. The Soweto office was also temporarily closed due to renovations. The office at Maponya Mall also created problems, as the mall owners complained that the mall was being flooded by clients from the Department of Labour. In addition there was also a high vacancy rate at the Gauteng office. He also mentioned that the Code on Equal Pay was finalised but its publication was still pending because it needed to be approved by the Committee on Employment Equity. Publication of the Code should be done in the first quarter of the 2015/2016 financial year.

Mr Lamati went on to address the protection of vulnerable workers. The target for this goal was achieved as the Department managed to inspect 42 682 workplaces, in excess of the 30 137 target.  Out of the 42   682 workplaces inspected, 5 372 were non-compliant. Some of the non-compliant workplaces were dealt with in terms of the relevant labour legislation. The Department was also working in conjunction with the Department of Home Affairs in order to do salary benchmarking. The Department managed to carry out 90% of the inspections for work permits, and inspections were conducted within five days. The Department was also working with the UIF to achieve the goal of protecting vulnerable workers. The only challenges faced with achieving this goal was the non-availability of employers when inspections were to be conducted. In relation to strengthening occupational health and safety, the challenge was the lack of Occupational Health and Safety (OHS) specific human capital. The corrective action taken therefore was capacity building in the OHS specialisation model.

Mr Lamati then went on to deal with the goal to contribute to decent employment creation. Employment services regulations were developed, but there was a delay in the promulgation of the Employment Services Act. This was due to the fact that the Presidential proclamation notices were returned from the Presidency for amendments and additional supporting information. In addition the Department of Higher Education and Training (DHET) indicated that it had issues with the Act and a meeting was to be set up to ventilate these issues.

The Department intended to register 187 500 work seekers in the fourth quarter but managed to exceed that target and successfully register 192 234 work seekers. There were, however, challenges experienced in matching suitable candidates who met the requirements of the employers. It would be meeting regularly with employers and getting companies' declarations from UIF. The Department also managed to provide employment counselling to 70 402 registered work seekers, above the target of 55 000. Counsellors adopted a group approach and counselled a number of clients at a time. The provinces also participated in the National Youth Development Agency (NYDA) "Start Here" Campaign which was vigorously marketed. Out of 5 000 registered work seekers the Department managed to place 3 866 work seekers. The challenge experienced again was matching suitable candidates to requirements of employers. The Department also processed complete applications for corporate and individual work visas within 30 working days. The Department also met its target in terms of strengthening multilateral and bilateral relations. A number of reports on International Labour Organisation (ILO) Article 19 and 22 were submitted by March.

Mr Lamati also remarked that, in pursuance of promoting sound labour relations the Department managed to extend a number of collective agreements within 60 days of receipt. The Department processed applications for completed and competent labour organisations. In relation to monitoring the impact of legislation there were four Annual Labour Market Trend reports published by March 2015. In addition, the Client Satisfaction Survey report was also completed and submitted by 31 March 2015. Four Research Reports in line with the RME Agenda 3 were signed off.

Mr Lamati then dealt with the goal of strengthening the institutional capacity of the Department. The challenge faced here was the Service Delivery Improvement Plan, which was not yet signed by the Minister. In addition 595 of fraud cases received or detected were finalised and 10.67% of posts within the Department were vacant. This was due to the fact that the Department had suspended the filling of vacant posts to ensure that it would manage to keep in budget. It had managed to reduce irregular expenditure compared to the previous year. It intended to increase the percentage of women in SMS, youth and people with disabilities.

Mr Lamati progressed to the Finance Report. The Department underspent by 4.96% and this amounted to R126 356.00. The Department underspent in the area of goods and services. There were software payments that were not paid because the supplier invoiced the Department on the last day of closure and the payments could not be processed. Mr Lamati added d that part of the under expenditure was also due to operating leases that could not be paid. These leases were procured through the Department of Public Works (DPW) which was supposed to invoice the Department of Labour; since it had not invoiced, it could not be paid and this accounted for R35,6 million which was not spent. The Department also underspent in the area of transfers and subsidies. Additional funds that were requested for claims from the Compensation Fund for injury on duty pay outs were not fully utilised, due to less than anticipated claims.

Mr Lamati concluded that the Department’s actual annual performance was around 50% and therefore 50% of the planned work in the Annual Performance Plan (APP) was not achieved. The major challenge the Department was facing was shrinking financial resources. This had a high impact on the human resources of the Department, as vacant positions were not filled.  The high targets set by the Department of Labour at the start of the financial year could not be met as the human resources were depleted and were not replaced. The newly adopted legends drastically increased the standards of performance in the Department of Labour. Performance under 100% was regarded as incomplete and this had a huge impact on the performance of the Department of Labour.

Discussion
Mr M Bagraim (DA) stated that a lot of work had been done to determine how many employees come to look for work, but he also wanted to know how many companies registered as looking for workers. He also wanted to know whether the Department was properly placed to take the post of recruitment agencies, when this Department itself had failed to place work seekers. He was of the opinion that the legislation was ridiculous if employers were expected to notify the Department whenever they had vacancies. He wanted to know whether the Department had the capacity to pursue the placement of work seekers.

Mr Bagraim asked if promoting sound labour relations equated to extending collective agreements. He queried how much was being spent on investigating the impact of legislation. He asked if the Department to tell the Committee how it was planning to strengthen institutional capacity. He asked what was happening when irregular expenditure was discovered, if perpetrators were disciplined and how much did that cost the Department. He asked also how cases of fraud were dealt with, and how much that had cost the Department.

Ms F Loliwe (ANC) commended the Department’s transparency, but was not happy with the performance, although she acknowledged that the Mr Lamati was coming up with mechanisms to improve the picture. She stated that the Committee’s exposure to vulnerable workers previously showed that it was impossible to postpone plans to protect them, and asked therefore what immediate plans were put in place to achieve 100% implementation, despite the challenges in Gauteng, and how work on vulnerable workers was to be improved.

Mr D America (DA) took issue with the number of workplaces that were inspected, particularly inspections that were carried out in the Free State. He asked if the Department had dealt with the 430 employers and issue notices, and if 40 inspections were carried out.  He then enquired about the Department’s goal for decent employment creation. He queried the placement of 3 866 employees only, out of the 5 000 registered work seekers. He acknowledged that the Department made reference to the issue of mismatched skills but he wanted to know what else was being done in order to place the work seekers in employment. Thirdly he requested that the Department make the Client Satisfaction Survey available to the Committee. He further wanted to know what corrective action was being used to curb irregular expenditure. Lastly he wanted to know about the Service Delivery Improvement Plan, and whether this implied that ongoing training of investigators would be concluded by 30 June 2015. He also wanted to know whether the transfer of skills would only take place in the fourth quarter.

Ms S Van Schalkwyk (ANC) appreciated the report and pointed out that a constant challenge was the fact that work seekers did not report when they were placed, and wondered if there was any monitoring tool to ensure that they were being placed. She asked why there was under spending in the Department when there was a backlog in the payment of compensation claims, and whether it had dealt with that backlog.

Mr I Ollis (DA) suggested that monitoring of work seekers who had been placed could be done via telephone, to produce an easy way to track which work seekers had been placed. He remarked that there were many warning signs in the report, and he commented that the Department had been correct in adopting the standards used by the Auditor-General. He asked if Mr Lamati would hold the staff accountable, as the 50% success rate of the Department was very low. Things needed attention, and a lot of targets were missed. He commented that the number of vacancies registered by employers seemed very high, which seemed to indicate that companies were registering their vacancies, but the placements were very low, and questioned why this was so, if it was due only to the skills mismatch or whether there were other factors at play. He also wanted to know what the definition of a completed labour organisation application was, and if the term "labour organisation" referred to a Trade Union? He was concerned that there were a number of problems in Gauteng, such as the closing of offices and the lack of capital, asked which building was closed and why it was deemed unsafe for occupation, as also whether the Department had owned the building and how it would address that issue. He queried why the DoL was asking for R15 million additional funding, as it had not spent fully on the budget of R53 billion.

Mr Lamati addressed the issue of the Service Delivery Implementation Plan, saying that there was a typographical error in the report, and the amendments had been made. Additional funds requested for compensation differed from the normal compensation claim; they were claims for the public servants. These claims were lodged with the Compensation Fund but were channelled through the Department of Labour. In that financial year no claims were received, and so the money allocated was not used. Previously, there had not been provision for these "abnormal" claims in the R53 billion budget.

Ms Pheleli Tengeni, Deputy Director General: Corporate Services, DoL, responded to the questions that affected her branch. Fraud cases investigations are done by the Department internally, so no payment was being made to external people. Only recently did the Department need to procure the services of a forensics firm in order to carry out investigations. The Department accepted recommendations of presiding officers on disciplinary action. She did not have the statistics with her of written warnings and dismissals, and would prepare a report and send it through to the Committee.

The Chairperson asked for more detail on the investigations being carried out by an outside firm.

Ms Tengeni explained that Sizwe Ntsaluba Gobodo was called in because of the nature of the issues that arose. The investigation was still in process and it would be premature for her to go into the issues. She reiterated that all other investigations were carried out by internal staff, who were paid salaries.

The Chairperson questioned the role of the Department’s legal department, asking what types of matters it handled.

Ms Tengeni stated that the Department handled non-forensic cases. Forensic investigations were carried out by risk managers; there were currently only eleven people in the Department who were qualified risk managers. There were also only two people in the provinces altogether.

Mr Johnny Modiba, Chief Financial Officer, Department of Labour, noted that the irregular expenditure matters would have been dealt with by the time the Department presented its Annual Report. He amplified on the funds requested for the Compensation Fund, and repeated that this was not the same as the fund for normal employees. The Department had project an over-expenditure here, particularly since numerous claims were lodged in the first two quarters of the financial year, but they suddenly ceased, which explained why the budget was not spent.

Mr Modiba said he had no specific details on the building in Gauteng, other than that it was across the way from the Carlton Centre.

Ms Aggy Moiloa, Chief Operating Officer, Department of Labour, explained that it was in the Nedbank Mall, at 145 Commissioner Street Johannesburg. The building had been closed for some time because it did not comply with the OHS standards - with several points, including the possibility of asbestos, the quality of air and the cleanliness of the building. Quality assurance activities were carried out by NOSA and all the issues were attended to, but before the Department could move back into the building, it had been destroyed by fire. This was a huge problem as the building was the biggest labour centre in the country. She also added that Sebokeng Labour Centre was closed.

The Chairperson wanted to know at what stage the Department had realised that the building had problems, and whether it should not have seen this before leasing the premises.

Mr Lamati said that the process followed to acquire the building was done in conjunction with the Department of Public Works. When the building was procured, it complied with the OHS standards, but problems arose later with the systems regulating the flow of air in the building; the plant doing so had the capacity to service only one-third of the building. The Department’s offices alone had one hundred people, and no adequate supply of air. The system was not meant to cater for everyone, and also became clogged, and was not serviced. The DoL got in an external person to fix the problem, but by then it was not compliant.

Ms F Loliwe (ANC) wanted to know why the Department was holding on to a building that was impacting negatively on operations.

Mr I Ollis (DA) asked about the closure of the Sebokeng building, the Maponya Mall building and the Gauteng building; he wanted to know where all the staff from these closed buildings were now operating.

The Chairperson stated that she did not want to comment on results by the Department of Labour and the Department of Public Works. She also wanted to know how long the building had been closed and whether the Department was still paying rent for the building. She also asked what the role of the landlord was. She agreed that it was necessary to know where the workers from that building were now, and what they were doing.

Mr Lamati replied that the workers had to move to other offices and the people from those offices were scattered throughout other labour offices in Sandton, Germiston and Kempton Park. The workers were attending work.

Mr Modiba stated that the Legal Department of the Department of Public Works was assisting the Department of Labour with the lease, but DoL was now getting a second opinion on that lease. It had also received bills for municipal charges that were not paid. The DoL had no standing to resile from the lease because it had been concluded between the DPW and landlord.

Ms van Schalkwyk asked for clarity how many DoL offices, countrywide, were closed.

Ms Loliwe noted that there had been other tenants also in the building, and asked whether they were apparently still occupying, or if only DoL had been affected.

The Chairperson questioned why the DoL had not moved on on discovering the problems and why it waited for the DPW to take action. The workers now scattered elsewhere were probably frustrated with their working conditions.

Mr Modiba said that the Department of Public Works identified another building which, if suitable, the Department of Labour would gladly accept.

The Chairperson wanted to know whether the Department of Labour had put pressure of the Department of Public Works to procure another building.

Mr Modiba agreed that it had, and asked the DPW to sort out all outstanding issues.

Ms T Tongwane (ANC) asked when the building that was being renovated would be completed.

The Chairperson asked how Mr Lamati would deal with the issues now. It was impossible to have a province that lacked a Labour Centre. Workers would get frustrated at not being able to come to work in a set place. She conceded that the Gauteng building was a tricky issue, but wanted more answers on the other offices and the other labour centres. She said that the Department must give the Committee deadlines of when the buildings would resume operations. She also wanted to know how the services would continue to be rendered by the Department in the meantime, and stressed that if any services had been ceased, they must be reinstated immediately.

Mr Lamati said that he did not have information with him on all the Labour Centres but promised that he would carry out an analysis of what was happening in each centre. He also stated that he had written to the Director General of the DPW to propose a meeting, and was waiting for a response. Other steps were being taken also in the meantime, and the DoL was prepared to withhold its rent since it had had to move to different offices. Other ways were being found to ensure that the public would not be inconvenienced.  The Department was making use of its mobile units ,as well as carrying out site visits. There was no fixed date as to when the Soweto offices would be opened, although construction was almost complete. He again asked for an opportunity to carry out a proper analysis of all the offices to ascertain which offices were closed.

The Chairperson asked the Department to do so, and come back with answers before end July. She reiterated that she did not know why the DoL was continuing to pay rent.

Mr Modiba explained that there were different categories of money that were being paid to the Department of Public Works. The DoL paid for the use of government buildings, leased buildings and municipal charges. He said that the Department of Public Works had established an agency to collect municipal charges, but it was not invoicing the Department on time and in some instances this led to the closure of some offices, so that all these processes had to be streamlined.

The Chairperson said that it did not matter who owned the buildings, the point was that the Department was paying for services that it was not getting. The Department could not be held responsible for damage that was not its own fault and she asked again why it was paying money.

Ms Loliwe hoped that the CFO was not paying the DPW, cautioning that he would be disciplined if he was.
Mr Sam Morotoba, Deputy Director General: Employment Services, Department of Labour, addressed questions around the placement of work seekers. He clarified that the current legislation did not oblige employers to report their vacancies, but the Minister could prescribe that certain employers should report their vacancies. A number of employers, however, voluntarily approached the Department and 110   000 vacancies were identified. He also addressed the question regarding whether the Department was now assuming the role of a temporary employment agency. The Department was concerned with the protection of vulnerable workers, and therefore was focused on how to engage private employment services in a particular manner. He referred to ILO Convention 188, which clearly stated that the government, public and private employment services must work together to protect vulnerable workers. The Department was working together with APSU, which was also concerned by the level of abuse of vulnerable workers. The Department also earmarked scarce and critical skills and approached APSU to assist companies looking for such skills. The DoL was also working with the Department of Home Affairs to ensure that the Labour Market would be provided with the right skills. More employers were approaching the Department with their vacancies, because this reduced their recruitment costs and it could help their positions to be filled more quickly. The difficulty in filling the vacancies was often due to the way in which such vacancies were packaged, and this in turn created problems when it came to the matching of skills. Work seekers also did not package their CVs well. The other issue was the fact that employers were including requirements that were not inherent to the post they advertised, and many of these requirements were discriminatory. For example, some employers required work seekers to speak Chinese or have a drivers licence even when it was not needed. He also cautioned that there was a discrepancy between the placement rate and the jobs required. There was a mismatch because old jobs were diminishing hard and fast. He used the example of the motor industry, where most traditional manufacturing plants had closed down and although new jobs were emerging through new technological advancements, the former workers whose names were on the DoL database did not necessarily have these skills. The follow-up process with employers was laborious and work seekers did not always provide feedback once they had been placed.

Mr Morotoba said that new measures were being put in place, such as the Regulations in terms of the new Act to ensure the de-registration of a person as a work seeker. It would be important to keep the register. He also added that the UIF was being used to assist in ascertaining whether certain work seekers had secured employment, and once a person was employed, it would reflect on this database. The DoL was also linking with the Department of Public Services. It had spoken to SARS, but this entity had some challenges around disclosure. Finally, the DoL would be looking at international tools that could be used to track work seekers, particularly those not formally employed whose details would not be in the other databases - examples might be taxi drivers. For these reasons, the unemployment figures may be bloated.
Mr Morotoba then went on to deal with the provision of "decent employment", which was cast on four major pillars which the government must unlock, but with the DoL playing a role. One way to unlock the pillars was by social protection such as UIF and pension funds which provided social security. The right to work was being realised through mechanisms such as the Commission for Conciliation, Mediation and Arbitration (CCMA). Employment creation was also being aided by the Department, which possessed huge reserves in the UIF and the Compensation Fund. The money was not just sitting in the coffers of the Funds but some was invested with the Public Investment Corporation, the Industrial Development Corporation and various other structures. Such funds were being invested in the construction of highways and other projects which resulted, in turn, in the creation of jobs.

The Chairperson asked whether the information provided by the Department was accurate. The Department did not know exactly how many work seekers were employed and how many were not.
Mr Modiba stated that the information provided was information which auditors could verify, although it was accepted that this might in fact result in under-reporting.

The Chairperson agreed that verification was not an easy task.

Mr Temba Mkalipi, Acting Deputy Director General, Department of Labour, said that the term "labour organisations" referred to employer organisations and trade unions that were required to be registered. Trade unions were not required, by the Constitution, to be registered but if they did not register, they missed out on certain benefits, such as representing their members at the CCMA. He also said that the extension of collective labour agreements did promote sound labour relations. The Department of Labour promoted sound labour relations in two ways: firstly, through legislation and its enforcement, and secondly through dispute resolution, since the Department facilitated collective agreements and negotiations.

Ms Moiloa stated that the figures in relation to the Free State were a typographical error, which she would amend.

The Chairperson asked how the Committee could be assured that the figures given for non-compliant employers were accurate. She reminded the Department that one of the Committee's functions was oversight and asked where the Committee should visit and what it should be looking for, if it did not know the numbers of companies inspected.

Mr Lamati said that there were inspection registers, which would be the verification source for all those companies. There would also be inspection files. He explained that there were different types of notices that were issued to non-compliant companies - a compliance notice, a contravention notice and an improvement notice. After all the companies were given notices, the next stage would be for the cases to be referred to Court if the companies still did not comply. Inspectors have a checklist, and the compliance is measured in terms of the Basic Conditions of Employment Act.

The Chairperson asked when the Department would go back to check whether the company had complied after  the notice was issued.

A Departmental representative stated that the companies were given adequate time to comply, and another visit would be conducted after 90 days.

The Chairperson asked if Mr Lamati would be able to say which provinces were fully compliant.

Mr Lamati said that the Department could provide  a list of the provinces that were compliant. There would be a file on each company showing when the inspections were carried out and whether there was follow up.

Mr Malati said that there was a plan to improve the performance in Gauteng. Performance would be monitored on a regular basis and the Department agreed to personalise each province’s performance. If a province was not performing, the Director General would call for an explanation. The Client Satisfaction survey would be made available to the Committee.

Mr America asked that the survey should be presented at the Committee’s next meeting.

The Chairperson reiterated her concerns at the employees who were "squatting" in other offices of the DoL. She also emphasised that the Committee was not happy with only 50% achievement of the Department’s goals, as this was not good enough.

ILO Conference
Mr Lamati briefed the Committee on the ILO Conference from 31 May to 13 June 2015. He went through the full programme.

Mr Ollis asked that the programme be emailed to all the Members who were to attend the conference.

Other Committee business
The Chairperson, discussing the programme, referred to the ILO trip. She had discussed this with the House Chair, and confirmed that the Committee was granted permission to travel abroad, although the application was not yet signed. They would have to leave by Saturday.

Ms Loliwe tabled a formal proposal that the workshop scheduled for 29 May be postponed until after 13 June, when the Members would have returned.

Mr Ollis agreed and said that since the meeting on 10 June was not required, the Committee would in fact only lose one week of Parliamentary time, and the other programmes could be postponed to other dates.

The Chairperson suggested that the programme tabled for 29 May could be linked under one group.

Ms Loliwe agreed and said the workshops could be condensed into one day to allow the Committee to finish on 29 June.

The Chairperson made the point that the Committee must agree a date and consider how many companies and trade unions were ready to present.

Mr Ollis asked when the  NEDLAC Report would be tabled.

Ms van Schalkwyk asked for the programme to be sent in advance to Members and pointed out some logistical problems with flights from North West for the meeting on 17 June, requesting an 11:00 start.

The Chairperson suggested that Members prioritise the workshop on 29 May 2015. She suggested that the Committee should apply to have the workshop on Thursday, as there were no plenaries on that day. She asked the Committee Secretary to work on a revised programme, incorporating the workshop and NEDLAC report.

The meeting was adjourned.