Department of Labour on its Quarter 1 2015/16 performance & 2014 Budgetary Review and Recommendations Report (BRRR) progress

Meeting report

Department of Labour (DoL) briefing on Quarter 1 2015/16 performance
Mr Thobile Lamati, DoL Director-General, spoke about DoL’s constitutional and policy mandate. He explained that in terms of the graph legend they were using only two: Achieved (100% and complete) or Not Achieved (0% - 99% complete).

Quarter 1 target performance for contribution to employment creation was 44%; promotion of equity in the labour market was 50%; protection of vulnerable workers was 57%, giving an overall aggregate of 47%.

The DG noted the major delays encountered during Quarter 1 of 2015/16 for Programme 1: Administration:
▪ A target was to develop and sign off the Departmental Action Plan to address key challenges raised in the Management Performance Assessment Tool (M-PAT) 1.5 Report. The department did not achieve this as the Action plan had not been signed off although it was developed and it is being implemented by the various Branch Heads and KPI coordinators.
▪ The number of monitoring reports on the Service Delivery Improvement Plan (SDIP) produced within 30 days after quarter end/year end was not achieved. The new SDIP was approved by the Minister in April 2015 for implementation in the current financial year.
▪  The percentage of fraud cases received or detected and finalised per year within 90 work days: DoL did not achieve this due to human capacity constraints. It only managed 60% against a target of 95%.
▪  The annual action plan was approved by end of April with 95% implementation of the activities mapped for Q1. Only 25% of the action plan was implemented. Also, the draft DoL Communication Strategy still has to be reworked and discussed further with Government Communication and Information System (GCIS). A workshop is being arranged with GCIS to finalise the strategy by 31 December 2015.
▪ The target for reducing the vacancy rate was 8% against the vacancy rate of 11.5 %. The department did not achieve this. The reason for non-achievement was filling of vacant posts was suspended from December 2014 to 15 May 2015. The vacancy rate will be reduced with the filling of vacant funded posts since 15 May 2015 to 31 March 2016.
▪ The percentage of disciplinary cases resolved within 90 working-days was 35% against a 100% target. The department did not achieve this. The reason was that the Employee Relations (ER) vacancies in Western Cape, Mpumalanga and Head Office cannot be filled due to the moratorium on the filling of vacancies. Western Cape has been without an ER officer for over two years. Two ER officials from Head Office have been assigned to clear backlogs in provinces and finalise cases by 30 September 2015.  One vacant SR 8 post in the establishment of ER Head Office was advertised and will be filled by 30 September 2015.
▪ On the procurement of fleet vehicles in line with the Departmental benchmark there was a delay by National Treasury to issue the RT57 transversal contract for procurement of fleet.

The DG noted about Programme 2: Inspection and Enforcement Services targets:
▪ For number of designated employers reviewed per year to determine compliance with employment equity legislation, the department achieved 133 against a target of 193. The under-achievement was caused by the delay in the submission of complete information by employers. The remedial action was that weekly follow ups will be conducted and subpoenas issued where employers fail to co-operate in Quarter 2.
▪ For number of designated employers inspected per year to determine compliance with employment equity legislation, 727 employers were inspected against a target of 1044,with a variance of -317. There was lack of capacity to conduct substantive inspections to assess employment equity plans. Training of substantive inspections will be conducted.
▪ For the protection of vulnerable workers, the number of advocacy and educational sessions conducted per year in identified sectors 4 seminars were targeted but the construction seminar was deferred due to unavailability of accommodation. 
▪ On the percentage of reported incidents investigated within 90 days, 44% was achieved against the target 60%. The reason for the variance was the non-availability of an injured person. A provincial incident focal team will be established and deal with the backlog in Quarter 2.

The DG noted for the Programme 3: Public Employment Services:
▪ The number of registered work-seekers provided with employment counseling per year was 46 358 – 13 642 against the target of 60 000. The implementation of new controls for reporting resulted in not all counselling being captured into the system. The manual records kept by the provinces need to be captured into ESSA. No reporting of manual records is allowed to ensure that the reliability of reports is improved. The importance of reporting all counseling sessions electronically will be addressed at the Branch management committee on the 30 July 2015.
▪ For the number of registered work-seekers placed in registered employment opportunities per year, a total of 1033 work-seekers were placed, with a variance of -5217 against a target of 6250. The reason was there was insufficient focus in recruitment, selection and matching of registered work-seekers. They must review the role of Employment Services Practitioner (ESPs) and Employment Counsellors in placing work-seekers in registered opportunities.
▪ For applications for foreign nationals corporate and individual work visas processed within 30 working days, a total of 398 applications were received. A total of 58 (15%) applications were processed within 30 working days (3 for Corporate and 55 for Individual). 340 (85%) applications were processed beyond 30 days (16 for Corporate and 324 for Individual against a target of 19. Increased work visa application volumes had resulted from the new Immigration Regulations effective from 26 May 2014. Service automation is being worked on through the State Information Technology Agency (SITA) as service provider. It is centralising work visa application reception at Provincial Offices and work visa adjudication at Head Office.

The DG said about Programme 4: Labour Policy and Industrial Relations:
▪ The target for Collective Agreements extended within 60 days of receipt the department did not achieve. There was a delay in obtaining final ministerial approval for extension of collective agreements. There should be a review of the process of submission and its approval.

In terms of remedial action, MPAT 1.5 has been launched for the financial year 2015-16 and this gives the Department a chance to improve its ratings on the four Key Performance Areas. Required evidence should be provided to the KPA coordinators as this is the means by which the department can prove that work is being done. The alignment of the Draft Communication Strategy needs to be prioritised to enable implementation of this indicator. Finalisation of received and detected fraud cases would also receive priority. Ongoing training of investigators would be planned such that finalisation of cases is still realised.

The DG said that the performance of inspections is expected to rise due to the fact that inspectors have been given tools of trade that will assist them to carry out their duties timeously. Training for substantive inspections would be prioritised. Quarter 2 performance is expected to rise as most of the non-achieved indicators are due to be performed then. Discontinuing manual reporting on the number of work-seekers provided with counseling will improve performance of the indicator. As the year progresses, performance is expected to improve with the remedial actions that have been proposed.

In terms of Programme 4: Labour Policy and Industrial Relations performance against the planned indicators is on course with only one target not achieved. There is no concern at this stage that this branch will not achieve its planned targets.

The DG concluded that all the remedial actions taken for addressing non achievement of indicators would be relevant to the challenges experienced. The DoL branches have the next three quarters to improve performance and address the backlogs experienced in Quarter 1. 

Discussion
Mr D America (DA) referred to slide 8 where he noticed that the annual targets in the column “annual plan indicators” were less than the column “indicators in the first quarter” and the heading there was not correct.

Ms F Loliwe (ANC) said that the DG in his presentation stated that they were using two legends to reflect progress in their performance. She felt the use of the two legends led to many targets being reflected as not achieved. They met the Auditor-General (AG) yesterday and in the AG report they used three legends not two. DoL should appeal to the AG that it be allowed to go back to the use of three legends. The Committee wanted DoL to achieve 100% but this ruling of having either achieved or not achieved was making their report to be “doubtable”.

Ms Loliwe referred to slides 8 and 9 looking at the contribution to employment creation (44%) and strengthening institutional capacity (35%). The 35% was worrying because improvement will only be brought about when the department could strengthen its institutional capacity. If Administration, which is the engine of the department, was only performing at 35% that was a concern. They needed drastic changes there so that when they report on the second quarter they should be at 60% and above because they did not include partial achievement / borderline cases.

Ms Loliwe asked why the department was setting high targets which they were not able to achieve. If targets were 17 but they only achieved 6, this was not a good picture at all. All their targets were high but when it came to achievement they were low. Why did they not balance their targets with the human resource that they have because they have a burden of vacancies which hindered the manner in which they can perform.

Ms Loliwe noted that the department’s vacancy rate was set at 8% but instead of improving it has gone up to 11.5%. If since 15 May they have been able to start appointing again, then the Committee expects that when they come to report for the second quarter, an improvement should be reflected. For example, the electronic recording of counselling (which was to be addressed in a meeting on 30 July 2015) should show progress. Also, on the ICT Governance Framework, they should be briefed whether that has happened.

Ms Loliwe said that the delay in foreign national visa applications was worrying because during a Committee oversight visit, they discovered people who were struggling to get work permits. The department should not give them a reason to be illegal immigrants in South Africa.

Ms Loliwe said that they were excited to hear that tools of trade have been provided to inspectors. The improvement in the provision of tools of trade should be reflected in the work done by inspectors because of the situation in areas where there were vulnerable workers. The Committee wanted to see the inspectors working.

Ms Loliwe applauded the report that the department had set up a National Performance Review Committee which will ensure that there is improvement. However, the mere fact of having a committee might not work in their favour if that committee was not coming to the party. It must be on its toes so that the Committee could see the ground it was covering; its presence should mean something positive.

Mr America referred to slide 15 on inspection and enforcement services, saying in the previous financial year targets for the first quarter were achieved. He asked why there was a reduction of targets compared with the previous financial year.

Mr America referred to slide 16, asking how the training of the investigators was going to expedite the finalisation of the outstanding fraud cases. If they were not adequately skilled to deal with fraud cases, what were the challenges there?

Mr America asked for clarity on the funds that were transferred from one programme to another programme.

Mr America referred to slide 16 on the rollover submission, asking if it was all right to pay creditors of the previous financial year in the first quarter because DoL reported that it met targets of paying creditors within 30 days and there were a substantial number of invoices that still needed to be paid. Do they have funds to pay those excluded expenses and has this been factored in considering the three months that has passed.

Mr America asked about the procurement of fleet vehicles in slide 17, saying that it was well and good to state that they have not achieved this but how big a fleet had to be procured and where in the process were they?

Mr America referred to the reason for only a 35% achievement of the target for disciplinary cases being resolved within 90 working days, being that employees asked for postponement. He asked whether those employees that faced disciplinary hearing were still working or if they were suspended.

Mr America asked in slide 18 why a target was not indicated in Quarter 1 on the number of designated employers inspected per year for compliance with employment equity legislation. It only stated 727 employers were inspected against a target of 1044 with a variance of -317.

Mr America asked for clarity on the protection of vulnerable workers where the target was four seminars but they have not conducted even one seminar due to the non-availability of accommodation.

Mr America asked for clarity on slide 20 on the number of workplaces inspected to determine Occupational Health and Safety (OHS) legislation compliance because it was humanly impossible to reach the target since they have a shortage of OHS inspectors.

Mr America asked why the number of work seekers placed in employment was so low. If they have employers registering work opportunities with the department and they have a huge database of employees seeking work, was there a mismatch in skills? There was a huge variance between work opportunities and placement of work seekers.

Mr America asked if the Quarter 2 report did not improve, what will be the consequences for non-performance?

Ms S van Schalkwyk (ANC) said that the 47% overall achievement was a point of concern, even 50% would have been better. She asked DoL to give an indication of how the 47% overall performance for the first quarter related to budget expended.

Ms Van Schalkwyk asked for clarity in slide 22 on work seekers registered, where an over achievement could be seen, but in reality when they zoom in, 6 out of the 9 provinces underachieved.

Ms Van Schalkwyk asked for the actual percentage of the vacancy rate at the end of the first quarter.

Ms Van Schalkwyk acknowledged the National Performance Review Committee but was concerned that it would focus on the different departments in the different provinces. But the department has a monitoring tool so as to zoom in to the performance of the different districts in the different provinces to ensure that there were no repeat offenders and to ensure they address capacity challenges at district level.

Ms Van Schalkwyk also acknowledged the interventions made by the DG in trying to turnaround the situation and hope they will see the rewards by the end of the second quarter.

Ms T Tongwane (ANC) asked about slide 8 whether strengthening of multilateral and bilateral relations was purposely done. She asked why there were similarities in slide 14 and slide15.

Mr P Moteka (EFF) welcomed the presentation. He said that slide 10 reflected key areas of importance for DoL, which was employment creation, promoting equity in labour, protecting vulnerable workers, and strengthening occupational safety protection. In the previous quarter, the employment creation target was 11 and in the first quarter it is 9, and as a result there was no improvement. He asked why the target was reduced considering the unemployment crisis in the country.

Mr Moteka said that it was concern that the department scored only 17% in promoting equity in the labour market. He asked why there was poor performance here because this was something that was bothering the country.

Mr Moteka congratulated the department for the improvement in protecting vulnerable workers which has gone up from 40% to 71%. But in the construction industry and on farms where vulnerable workers are mostly found, DoL needs to raise that performance to 100%.

Mr Moteka said that in strengthening occupational safety protection, 10% was not enough. They needed to improve their performance here.

Mr Moteka was concerned about the 35% performance on administration because administration was a key area of any organisation and they needed to improve their performance in that area because this could lead to underachievement in other programmes of the department.

Mr Moteka asked for clarity in slide 18 on the vulnerable workers’ seminars. Were the 4 seminars planned for one day or on different days and did all of them not take place because there was no venue for the seminars?

Mr Moteka requested the department to improve its performance on the number of designated employers reviewed for compliance with employment equity legislation because its target was 193 but it only achieved 133.

The DG replied on slide 8 where the annual plan versus the indicators reported on. What they have reflected in their annual plan was what they were supposed to achieve in the entire year which was why they saw 9 there. Then in the indicators reporting in Quarter 1 in line with their APP they were supposed to breakdown the annual targets into quarterly targets. There were targets they could not break down since they run throughout the financial year.

The DG said with regard to how the training of investigators will improve the resolution of fraud cases. What they needed to do was to increase the pool of the investigators. They could not currently achieve the target because they had too few investigators but if they increased the pool they will make inroads.

The DG said that on rollover of funds they have enough funds to make sure that their commitments for the year were realised. But they wanted to make sure they did not put extra burden on the resources they have, and normally when they did not get a rollover, they do adjustments and move funds to ensure they accommodated whatever commitments they have.

The DG said on the communication strategy that they agree they have not done well. In fact there were number of things they will do to ensure they strengthen their communication and they will inform the Committee when that happens. Given the commitment they have made, they will have a communication strategy ready and will present it to the Committee.

The DG said on the procurement of fleet vehicles that they normally buy in excess of 100 cars and the CFO will give the exact number and the breakdown allocation amongst the different provinces.

The DG said on the 35% of the disciplinary cases, that some of the employees were suspended depending on the nature of the transgression, and some of them were still working for the department pending the outcome of their disciplinary process.

The DG said on the number of designated employers investigated should be 100%.

The DG said that with the OHS inspectors’ achievement that it sounded impossible because they have a shortage of inspectors. It has to do with proper planning and they know they have a limited number of inspectors and the way they used them should ensure a maximum impact. Their strategy was to pull them together and run a project which was in a kind of inspection. They will have a maximum impact if they run it that way rather than having a single inspector to do single inspections like they have done previously done.

The DG said with regard to the number of work places inspected that they have that as a target because in order to match the impact of the inspectors they needed to look at the use of the instruments that were provided for in the legislation. In instances where they have picked up companies that were not complying, they wanted to see whether they have used the instruments. They wanted to see whether they have taken the process further in the enforcement element.

The DG said on the number of work seekers placed and why the placement was so low compared to the opportunities, that it should be remembered when they were before the Committee previously dealing with the low placement rate, that one of the problems they have picked up was that they have got a skills mismatch, as pointed out by Mr America. What they have on the system versus what the companies want were totally different things. This was why their vocational services were doing their best to prepare these candidates so that when they go for interviews, they were well prepared. If they had to take them through a number of training courses, they do that through the Labour Activation Programme. When they came to talk to the Committee about the Labour Activation Programme they mentioned the fact that 70% of the beneficiaries of the programme were UI benefactors and 30% were drawn from the employment services database.

The DG said if the report of quarter 2 did not improve the consequences were those who were supposed to do their work and did not, they would have to face the music. They should account for their non-performance.

Mr Sam Morotoba, Deputy Director General: Public Employment Services (PES): DoL, said that the reduction of employment opportunities had nothing to do with whether employment creation is a priority or not. It has to do with the process they have embarked on with Auditor-General (AG) around making sure that targets and indicators were SMART, and that where there were duplications, they limited them. For instance, the previous year they had an indicator on referrals. Internally with the AG they have finally agreed that it was better to look at the number of people finally successfully placed rather than those that were referred.

Secondly, on contribution to employment creation, Members will be aware that the budget the DoL received was not only for their programmes as they have other entities to consider like CCMA, NEDLAC and so on. What they had previously was an indicator that linked the UIF as well. Therefore, the agreement was to remove that target. When the Committee looked at the performance this was the contribution of the department but over and above this they had add another layer of the entities linked to the department. Therefore, they have removed those indicators on the understanding that when their quarterly or annual report was read, it should be read in context and on the understanding that there was also contribution by others but this was covered in another indicator.

Mr Moroba said that for the foreign national visa applications, firstly the Immigration Act required that before they recommend, the DoL should make sure that people that were applying were applying in the scarce and critical area. Secondly, that they provide proof that there was no other South African that could do the job they were applying for and thirdly, they should conduct inspection to check conditions the foreign worker were subjected to, and where they were bringing in foreigners they must make sure there was a mechanism in place to transfer skills.

The delays came from employers not wanting to provide information or trying to duck the system or the individuals themselves not providing full information. Therefore, they as a department they had to follow up and these caused a lot of delays. However, the manual manner in which they were processing contributed to the delays but now they have come up with an electronic way of processing. The big problem they were dealing with both in the DoL, the police, inspections and other enforcement agencies was not with the more high level skills, it was with the lower level skills where people come in and abuse the system to look for employment and claim asylum status to look for employment.

Mr Bheki Maduna, Chief Financial Officer (CFO): DoL, said that with regard to the rollover of submissions in their annual report they had under-spend R126m with the bulk of it transferred to the Department of Public Works (DPW). Together with DPW they had quite a number of queries with regards to their leases dating back as far as 2006. The DPW indicated that they were owing them that amount and unfortunately they could not pay up until they have satisfied themselves as to how much they owe.

In terms of accrued expenses, yes, it was correct they do this for those that qualified for the rollover. But given their relationship and the fact that the bulk of money was with DPW it cannot be done and they have disputed some of the leases they had with DPW. They have embarked on a project which will end 30 November to solve all the disputes with DPW about leases. They have got about R30m they were working on with DPW. But not all the under-spent amount qualified for a rollover, only those invoices which they have received and have not paid which they could apply for a rollover. However, the key principle was that finance should not dictate the operations. If at the end of any reporting period there are accrued expenses they will be catered for in the next month, but unfortunately in some cases they correspond to the end of the financial year. Unfortunately, also maybe in Government they work on cash basis with regards to Government as a result they had to account in cash at the end of the financial year. However, as already indicated by the DG they will find some money somewhere to then cater for those if the rollover has not been granted or is not sufficient. In some cases it was just a mismatch of planning - they then have to surrender the amount if no activities have started on that particular project.

Mr Maduna said on the procurement of fleet vehicles for the current year that the budget allocated money to buy cars. The total amount of fleet vehicles they have procured in this financial year is 172 cars broken down as follows: Eastern Cape 25 cars, Free State 13, Gauteng 4, KZN 22, Limpopo 40, Mpumalanga 22, North West 3, Northern Cape 15, Western Cape 21, and they will be left with 7 cars.

It should be indicated that unfortunately Government was working on a self-insurance basis and all the cars that had been written off, they did not claim from any insurance but rely on the allocation to make a replacement. Therefore, part of this new fleet will replace cars that had been damaged and were uneconomical to repair.

Mr Maduna replied to the question about irregular expenditure in Quarter 1 (April, May and June 2015) which was not reflected, saying unfortunately no financial inspection was conducted in April, May and June because at that time they were busy engaging with the Auditor-General with regards to preparing the 2014/15 financial statements and following the audit process. The financial inspection has started already in the current second quarter and is still not finished. Therefore, it was correct that they have not yet detected any irregular expenditure in the first quarter, but it did not mean that it was not there; it might be detected in the second quarter when they finalised the financial inspection.

Mr Maduna apologised for the omission of the budget expenditure for the first quarter. The financials were submitted to management for the first quarter in preparation for the presentation to the Committee. They were omitted from the presentation and the CFO was not made aware of that but internally they were part of this report.

DoL Report on the Budgetary Review and Recommendations Report (BRRR)
The DG said that this report was a high level account of progress on each of the key recommendations from the Portfolio Committee on Labour. In cases where a recommendation appeared in more than one section of the report, the first response would as far as possible capture a combined response.

The Committee accepted the report.

The Chairperson said that the DoL should note all the questions that were raised by Members and try to improve in the areas that were not achieved when they come to report on the second quarter.

The Chairperson thanked the DG and his delegation for the presentation and was looking forward for their next engagement.

The meeting was adjourned.