Budget Vote: briefing by Department

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Employment and Labour

04 March 2003
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Meeting Summary

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Meeting report

4 March 2003

Chairperson: Mr M Manie (ANC)

Documents handed out:

Presentation on Vote 17
Vote 17: Department of Labour (link to Treasury website)

The Department briefed the Committee on its mission statement, strategic policies and priorities and its budget vote. Overall, the Department seeks to achieve an appropriate balance between security and flexibility so as to reduce unemployment, poverty and inequality through a set of policies and programmes developed in consultation with social partners. It also seeks to improve economic efficiency and productivity, to develop skills and create employment opportunities. Other objectives include maintaining sound labour relations, eliminating inequality and discrimination in the work place and alleviating poverty in employment. Their strategic policies include skills development, achieving employment equity and an improved social safety net in regard to the Unemployment Insurance Fund and the Compensation Fund. The Committee asked whether the Department could provide information on what targets had been met and what targets had been set for the future. They also asked the Department to quantify productivity if they were able to do so.

Mission statement
Advocate Rams Ramashia: Director General, Department of Labour, briefed the Committee on the Department's mission statement.
-Developing skills and creating employment opportunities;
-Maintaining sound labour relations;
-Eliminating inequality and discrimination in the work place;
-Alleviating poverty in employment.

Fifteen point programme
He briefed the meeting on a fifteen point programme to achieve the policies contained in the mission statement. These were:
-Policies developed by the Department that seek to achieve an appropriate balance between security and flexibility.
-Employment creation.
-Implementation of resolutions from the Presidential Job Summit.
-Implementing skills development.
-Employment equity.
-Protection of vulnerable workers.
-Occupational health and safety.
-An adequate social safety net.
-Promoting stable labour relations.
-Social partnerships.
-International relations.
-Monitoring impact of policy.
-Institutional restructuring
-Legislative amendments.

He singled out from those programmes seven items that were of strategic importance. Before he discussed the strategic programmes, he detailed the legislation related to the Department. He was assisted by the Deputy Director Generals Mr Les Kettledas: Labour Market Policies and Programmes, and Deputy Director General, Ms A Bird: Employment and Security, Development Services and Human Resources Development. The legislation includes the Labour Relations Act, Employment Equity Act and Skills Development Act.

Strategic Policies
He outlined the Department's strategic policies:
-Marketing and reviewing of market policies.
-Skills development.
-Employment Equity.
-Protection of vulnerable workers.
-Occupational Health and Safety.
-An improved social safety net in regard to the Unemployment Insurance Fund and the Compensation Fund.
-Promoting stable labour relations.

Vote 17
The Chief Financial Officer, Mr C van der Merwe, presented the Budget on the Labour Vote number 17 for 2003/4. He told the Committee that the main divisions of the vote were:

-Occupational Health and Safety of Persons.
-Social Insurance.
-Employment and Skills Development Services.
-Labour Relations.
-Labour Policy.
-Service Delivery.
-Auxiliary and Associated Services.

As regards the total sum voted, this was less than asked for but the Department was nevertheless determined to fulfil all its priorities to the best of its ability.

He then dealt with the Medium Term Expenditure Framework (MTEF) allocations, leading the Committee through the statistics on the Budget per Programme, the MTEF per Programme, the Budget per Standard Item, and the Transfer of Payments.

2003/4 budget
The Chief Financial Officer of the Department of Labour then presented a detailed account of the 2003/4 Budget. He divided Vote 17 into eight main divisions as follows:
-Occupational Health and Safety of Persons.
-Social Insurance.
-Employment and Skills Development Services.
-Labour Relations.
-Labour Policy.
-Service Delivery.
-Auxiliary and Associated Services.

He ran through each item on the Medium Term Expenditure Framework (MTEF) allocations. On the Budget Per Programme he pointed out the increase from R976 million last year to R1041 million and ascribed this increase mainly to the Service Delivery line item, which needed to be strengthened. He also referred to a R39 million carry over in respect of funds allocated last year to the upgrade of the Laboria building which was not completed as had been contemplated.

He dealt with the Budget Per Programme without additional comment. As regards the MTEF Per Programme figures he again drew the attention of the Committee to the marked increase in the provision for Service Delivery. He said there would be a projected 14.4% overall increase in 2004 /5 year budget and a 7.3% increase for the 2005/6 year. On the Budget Per Standard Item he advised that the decline on the provision for Land and Buildings was due to the carry over of the R39 million on the Laboria building upgrade. On the Transfer Payments Budget, he pointed out that the payments in respect of the UIF had been dropping as it would be phased out .

Mr Manie referred to the forthcoming debate on the Budget and said it was an ideal opportunity to engage the Minister on a one-to-one basis.

Mr J Durand (NNP) said that he was concerned about the arrangements in place to collect UIF contributions. He felt there must be a better way of collecting contributions such as through the South African Revenue Services. He asked the Department what it was doing to get companies to register and whether it was making progress in establishing further pay points. He congratulated the Department on improving the collection of contributions to the point that their projected MTEF allocations for 2005/6 would be zero.

Mr N Ramodike (UDM) asked the Director General what the total rollover of funds had amounted to including the roll over of the Laboria building of R39 million. He said that the total increase in the Budget for the year 2003/4 showed an increase of 6.6% which was less than the annual inflation rate.

The Director General replied that the use of SARS to collect UIF contributions was a medium to long term plan as it would require restructuring. The immediate plan was to use the databases of various government Departments wherever possible. The biggest challenge to collecting contributions lay with individuals not corporations. Farm employees and domestic workers presented the biggest challenge. The attitude of the Department was that those individuals or organisations that unscrupulously and fraudulently misappropriated UIF contributions would be prosecuted and heavily fined.

Mr van der Merwe replied to Mr Ramodike's question about carry over allocations. He said that besides the R39 million carry over on the land item, a further R9 million had been carried over of which he was unable to give details.

The Deputy Director General of Labour Market Policies and Programmes, Mr L Kettledas, responded to Mr Durand's question on the possibility of co-opting SARS to collect UIF contributions. He said that persons earning less than R30 000 per annum were not required to pay tax. Most domestic servants and farm workers fell into that bracket. He mentioned that consideration was being given to exact annual UIF contributions by paying them into a bank account of the Fund or by means of the Internet so as to make it easier. He mentioned that the Department was continually searching for better ways of collect contributions.

Mr Manie intervened to ask the meeting not to devote too much time to the domestic and farm worker problem.

Mr D Oliphant (ANC) said that the creation of co-operatives to create jobs was close to his heart. He asked the Director General how far the research and implementation of this matter had been taken by the Department.

Mr R Moropa (ANC) asked the Director General what his views were on the total budget allocation and whether he believed he had sufficient staff to carry out the work.

Mr M Mzondeki (ANC) addressed the meeting on the allocation for the protection of vulnerable workers. He said that there was a need to prioritise allocations correctly and to implement training as well as promoting employment. He asked the Director General when he could expect to receive the Technical Guidelines Report to be issued by the Minister.

Adv Ramashia said that he would consult with the Minister regarding the technical guidelines Mr Mzondeki enquired about.

Mr S Mshudulu (ANC) asked the Director to what extent the allocation for Health and Safety impacted on the UIF. He said that he had been involved in promoting policies on Health and Safety in his constituency and approached people in strategic positions to assist his campaign.

He agreed that Occupation and Health and Safety (OHS) impacted on the UIF to the extent that occupational hazards and diseases cause people to retire and rely on the UIF. He said that the role of the Department was to set out the guidelines for employers. In the end it was the responsibility of employers. he was pleased that the efforts of the Department were beginning to pay off as was shown by the decrease in UIF claims and the greater co-operation of employers. He praised the work of Mr Mshudulu that he carried out on behalf of the Department on OHS. Every help in propagating the message was highly valued.

Mr Manie raised three points. He asked whether the Director General would be able to provide facts and figures to support his contentions. He asked whether the Skills Development Strategy had kicked in and whether the Director General would be able to quantify the numbers employed by the National Productivity Institute (NPI) He asked how the Director General would be able to determine what the NPIs had achieved in regard to its objectives. Finally, he asked whether it was possible to determine the amount of money that had been spent by NPIs.

The Director General said he was happy with the Budget allocation even though it was less than asked for. All Departments got less than they requested. The question to be worked out was how to get the maximum leverage from the amount allocated. He believed that it took a crisis to become creative in the use of money. The task was to reduce spending in accordance with the Budget without compromising the Department's position.
As regards the transfer of his staff he said that this was unavoidable. The answer had to lie in training.

Ms Bird dealt with the sheltered employment of people with disabilities. She said that most of the focus had been on factories as a suitable environment such as furniture making factories. She emphasised that the factory scenario can be difficult as there is strong competition on the open market. KPMG, Chartered Accountants, had been consulted to produce a report on the best ways to employ people with disabilities. It generated four options that were not practicable and will need to report again.

She stated that the Skills Development Strategy had kicked in and there has been major participation by corporate South Africa. Carefully planned targets have been achieved. 75% of larger firms (employing more than 150 workers) and 68% of firms were participating in studies. Smaller firms were receiving benefits from the Skills Development Strategy programme.

Mr Manie said that there would be a further opportunity to engage with the Department. He mentioned that there would be a draft report after the Budget hearing. He asked the Director General to provide the Committee with specifics on the reductions in employer/worker conflicts. He asked the Director General whether he could provide information on what targets had been met and what targets had been set for the future. He also asked the Director General to quantify productivity if he could do so. He thanked the Director General and his deputies for the fruitful meeting.

The meeting was adjourned.



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