Department of Labour on 2nd and 3rd Quarter 2015/16 performance

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Employment and Labour

16 March 2016
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

The Department of Labour (DoL) briefed the Portfolio Committee on Labour on its quarterly performance report for the second and third quarters, and informed it that its average performance for the period was standing at 56%, while 79% of the budget had been spent. The introduction of stringent quality assurance measures in the provinces had yielded positive results and audits for the DoL. The Auditor-General’s interim management report for 2015/16 that was released in February 2016, reflected significant improvements by all branches of the Department. Public Employment Services (PES) had received an unqualified audit finding on performance information, compared to ‘adverse’ in the previous financial year. Inspection and Enforcement Services (IES) had improved significantly from Quarter 1, and had received a qualified audit finding, from ‘adverse’ in the previous financial year. The DoL would continue to maintain the highest level of integrity on performance information while improving its systems and performance.

The provinces were managing the change from manual to automated systems, and this had resulted in tighter controls and stringent quality assurance measures.

Members wanted to know why employment creation was standing at 44%, because it was an objective of the government to create jobs. What had the DoL done to address retrenchments and job losses? They suggested the Department should have an external body to look at its achievements, because the targets had been set by the DoL itself. They commented that the Department had achieved 53% of its non-compliance targets during Quarter 3, and many provinces had scored zeros. They wanted to find out how the Department was going to achieve the registration of entities when it was unable to employ more staff members because of budget cutbacks. Why had employment equity targets dropped? What was going to be done to reach the targets set for filling vacancies, because there was an indication this might not be achieved by the end of the year?

Meeting report

Briefing by Department of Labour on 2nd and 3rd Quarter 2015/16 performance

Mr Thobile Lamati, Director-General: Department of Labour (DoL), informed the Committee that the average performance for the DoL for Quarters 2 and 3 was standing at 56%. The performance level for administration had been 65%, for inspection and enforcement services it was 67%, and for public employment services it was 44%. However, none of the labour plicy and industrial relations targets had been met. The DoL target had been to perform at 70% and above, which was the national threshold endorsed by the DoL audit committee. At the moment, 77% of DoL APP indicators and targets were at the 75% to 100% achievement level.

Programme: Administration

For Quarter 2, the overall achievement had been 47%, but this had improved to 65% in Quarter 3.

Programme: Inspection and Enforcement Services (IES)

There had been a few provinces that had not achieved some targets, resulting in the non-achievement of APP indicators, but these could still improve. There was a slight drop in IES performance from Quarter 2 – 73% to 67% -- due to stringent quality assurance measures. Reports that could not be validated with adequate evidence had been disqualified.

 

Programme: Public Employment Service (PES)

There had been a large number of indicators that had been consistently performing below par in the financial year. The provinces were managing a change from manual to automated systems, and this had resulted in tighter controls and stringent quality assurance measures. Due to this new approach, a number of reports that could not be validated by the system had been disqualified, and this had resulted in reduced performance (44% achievement in each quarter). Once provinces had adjusted to this new system, the PES performance would improve in 2016/17.

Programme: Labour Policy and Industrial Relations (LB&IR)

Reasons for non-achievement had been interrogated for improvement in Quarter 4.

Milestones

The introduction of stringent quality assurance measures in the provinces had yielded positive results and audits for the DoL. The Auditor-General’s interim management report for 2015/16 that was released in February 2016, reflected significant improvements by all branches of the Department. The PES had received an unqualified audit finding on performance information, compared to ‘adverse’ in the previous financial year. The IES had improved significantly from Quarter 1 (47%) and had received a qualified audit finding, from ‘adverse’ in the previous financial year. The DoL would continue to maintain the highest level of integrity on performance information while improving its systems and performance.

 

As at 30 September 2015, the DoL had defrayed expenditure to the value of R1.218 million against its original budget of R2.687 billion. This represented an expenditure level of 45% against a time expiration of 50%. R366 million had been transferred to the Commission for Conciliation, Mediation and Arbitration (CCMA), while R14 million had gone to the National Economic Development and Labour Council (NEDLAC), and the Development Institute for Training, Support and Education for Labour (DITSELA) had received R10.4 million. This had brought the overall expenditure for labour relations and industrial relations to 48%.

Regarding Quarter 3 expenditure, as at 31 December 2015, the DoL had defrayed expenditure to the value of R2.083 million against its original budget of R2.704 billion. This represented an expenditure level of 77% against a time expiration of 75%. R732 million had been transferred to the CCMA, R29 million had gone to NEDLAC, and DITSELA had received R17 million. The overall expenditure for labour relations and industrial relations had reached 95%.

(Tables and graphs were shown to illustrate performance per programme, performance per strategic objective, comparative analysis of both quarters, and the budget breakdown).

Discussion

Ms P Mantashe (ANC) asked why employment creation was standing at 44%, because it was an objective of the government to create jobs.

 

Mr Sam Morotoba, Deputy Director-General: Public Employment Service: DoL, explained that this could be attributed to both internal and external factors. Internally, the targets that had not been achieved were due to regulations and there had been delays in the establishment of the Board. Those problems had now been addressed and the Board had been established. He pointed out that the DoL did not have enough career counselors. Some had to travel long distances to many labour centres. Treasury had allocated money, but because of budget readjustments, many career counselors could not be employed. This problem was going to remain with the Department for some time. In trying to find solutions, the Department was looking at electronic career counselors. This would involve the introduction of electronic methods to help frontline staff who were struggling to capture information. Externally, since the 2008 meltdown, many countries were struggling to recover, and many sectors like agriculture and textile had continued to shed jobs. The number of registered job seekers was high, but the number of those being employed was low.

The Chairperson pointed out that the government had put mechanisms in place to address or eliminate job shedding and retrenchments. She therefore wanted to know what the DoL had done to address these problems.

Mr Morotoba explained that individual counseling was difficult because of the limited number of people the DoL had, and the areas they had to cover. The electronic counseling involved processing a few questions. An individual counselor would then take the print-out with recommendations from the electronic counselor. There were mechanisms in place. The DoL was using Productivity SA and the CCMA. Productivity SA implemented a turnaround strategy that aimed to rescue companies, and it funded a number of organisations, especially those looking after the disabled. The Unemployment Insurance Fund (UIF) had contributed R2bn towards the training of people in Sector Education and Training Authorities (SETAs) and other companies. The challenge was that some of these companies did not contribute towards the UIF, so there had been reluctance to give out money to companies that had defaulted on the UIF.

The Director-General added that the Public Employment Service (PES) was one of the programmes one had in the labour market system. The DoL had not given the Committee the job placement figures for the country, or employment figures from the expanded public works programme (EPWP), or figures on training that had taken place. Information on jobs saved and created, and training undertaken, was available and would be forwarded to the Committee.

Mr M Bagraim (DA) remarked that the Department had reported many failures. He suggested it should have an external body to look at its achievements because the targets had been set by the DoL itself. The inspectors were not doing their work adequately. From the anecdotal information he received from small to medium size businesses, most employees in SA companies did not have letters of appointment, contracts, or UIF, etc. Some small businesses were not registered at all. He could furnish the DoL with information.

The Director-General replied that the DoL could not go to all workplaces. Ideally, it would like to visit every workplace, but due to capacity challenges it could not. Mr Bagraim was free to give information to the Department so that it could do follow-ups. He said it had been found that some construction companies employed people they did not know because they picked them up in street corners and dropped them there after hours.

Mr I Ollis (DA) commented that the DoL had achieved 53% on non-compliance by companies during Quarter 3, and many provinces had scored zeros. The Department had got to prosecute. The Committee could help the Department with medium to large companies that were not complying. It was understandable, when dealing with small companies, because they did not have the capacity to comply. He also wanted to know why the Department was behind when it came to processing work permits for individuals and corporates. Lastly, he wanted to find out how the Department was going to achieve the registration of entities when it was unable to employ more staff members because of the Treasury cutbacks.

Ms Aggy Moiloa, Deputy Director-General: Inspection and Enforcement Services, DoL, regarding non-compliance, noted that on Occupational Health and Safety (OHS) and inspection in general, the DoL had started from a base that was not strong in terms of capacity. There were vacancies in the inspectorate. The DoL was trying to fill those vacancies speedily.

The Director-General referred to work permits, and said a lot had happened with regard to fraud. As a result four departments, including the DoL, had been appointed to handle permits. These departments were Higher Education and Training, Trade and Industry, Home Affairs, and the DoL. Manual submissions had been eliminated. Forms could now be submitted electronically. A review had been done so that the adjudication panel could be centralised. Provinces were going to carry out their own processes. The DoL systems were going to be in line with those of the Department of Home Affairs.

Ms Phelele Tengeni, Deputy Director-General: Corporate Services, DoL, concerning application for registration by entities, indicated that a new methodology was in place. Incomplete applications were not going to be regarded as complete applications. The way the actual documents had been written was confusing and not doing justice to the process

Ms F Loliwe (ANC) asked why employment equity targets had dropped. She remarked that the performance of the Department was not satisfactory, as it was moving backwards. It appeared that the frontline people responsible for service delivery did not have the right qualifications to do their work.

The Director-General explained that underperformance on employment equity was marginal. The DoL had a shortfall of two target inspections – it had inspected 148 companies instead of 150. The designated companies that were complying were getting support from the Department. 59% of companies were not complying with employment equity prescripts. This was a highly involved exercise. In many instances, it was a battle to get hold of the CEOs. That was why it had become difficult for the reporting period. He also noted that the state of compliance report contained information about employers who were transgressing, and it was going to be published soon.

Ms Tengeni, with regard to frontline people, explained that the challenge with the client service people was that they were performing work for the PES, IES, the Unemployment Insurance Fund and the Compensation Fund. The Department had taken a decision that the UIF and the Compensation Fund should have their own client service people. The IES was also going to have its own client service people. The Department would then monitor how effective this was.

Mr D America (DA) wanted to know what the consequences were for thos involved with the labour policy and industrial relations, because for two consecutive quarters that programme had not been performing well. He also wanted to know what the outcome was of the fraud cases that had been resolved.

Mr Virgil Seafield, Deputy Director-General: Labour Policy and Industrial Relations, DoL, said that most of the work required to be done had been done. Seven differentiated assessments had been completed. These would be communicated through registered mail because of the different reporting times. The Sector Determination around the minimum wage had not yet been finalised. Some targets had not been achieved and were not going to be achieved unless certain amendments were introduced to the legislation. At NEDLAC there were agreements, but there were issues that had not been finalised due to legislation.

An official from the Department informed the Committee that the internal information communication technology (ICT) capacity of the DoL was being strengthened. The DoL had embarked on a process of consolidating all three ICT strategies. The ICT posts were to be advertised. A Chief Information Officer had been appointed to provide leadership in the ICT space. Tools of trade had been provided to staff, and the process had been rolled-out to all staff members. The second area of concern involved the finalisation of fraud cases. The DoL was experiencing an increase in the detection of fraud cases around the UIF. There had been an increase in staffing to deal with the matter. The Department was struggling to meet the 90 days requirement, and some cases required forensics experts. 19 dismissals had been carried out. Other cases had been referred to agencies of the state, but the weakness was that the DoL did not get feedback on cases.

Ms S van Schalkwyk (ANC) wanted to know what was going to be done to reach the targets set for filling vacancies, because there was an indication they might not be achieved by the end of the year. She also asked why fewer performance targets had been reached, when 77% of the budget had been spent.

Mr David Kyle, Acting Chief Financial Officer: DoL, referred to the DOL’s under-performance, and said expenditure issues should be considered in terms of allocations. The majority of allocations went to compensation of employees and goods and services programmes, because the DoL was a service delivery organisation. In the performance information, the DoL did not report on the performance of the CCMA and NEDLAC, although they received an allocation from the Department.

The Director-General added that the expenditure reflected the work that had been done – both the achievements and the partial achievements. The DoL was over by 2% in its performance. The 77% expenditure included transfers to the CCMA and Nedlac. The overall performance of the DoL was at 79%. A transfer was not work per se. Regarding vacancies, he said the Department realised it would not be able to fill all the vacancies because of budget readjustments, and that was why it had decided not to fill the vacancies. It had identified critical posts that needed to be saved. Some employees in the Department were paid a split percentage, depending on the nature of work they did. This had helped the DoL to save on a number of critical posts. Some of these posts were going to be advertised. The DoL was currently busy with a clean-up in order to meet the targets.

The Chairperson remarked that a partial achievement was a vague thing. She wanted to know how much had been achieved and not achieved. The Committee had not been told whether the transfers had been used or not. Lastly, she said the Committee had visited farms in the past, not private companies. The rate of compliance reflected on the report did not refer to farms. The DoL must inform the Committee of the farms that it could visit.

The Director-General explained that partial achievements reflected on the legend the Department was using. It meant the performance indicator was not complete. From an expenditure point of view, the DoL could identify and quantify the amount of money spent, compared to the target achieved. With regard to transfers, he said the Committee could get information from the CCMA on how it had spent its budget. The Department did not include its (CCMA) performance in its performance report. It only allocated the money. The Department had a mechanism to account on this matter.

The Chairperson said that a transfer was something else, but whether the money was used or not was important.

The Director-General said a transfer was not part of the indicators. It was just a transaction. Concerning farms visited, he said that the report on compliance included farms. This was a comprehensive report of work done by inspectors. It contained a breakdown of the sectors inspected. A copy would be made available to the Committee.

Ms Van Schalkwyk asked if there would be any remedial action for poor performance by provinces.

The Director-General reported that this report reflected an improvement on the 42% performance reported last time. It reflected on the steps taken to improve services by branches and formed part of the consequence management. There were consequences for under-performance. The monitoring and evaluation unit assessed the performance of the DoL. It was situated in the office of the chief operating officer (COO). It looked at the compilation of strategic plans, the setting of targets, and other achievements.

Mr Ollis wanted to find out if there was money available for client service officers to be appointed, and asked which posts were going to be closed.

The Director-General indicated that budget was available for the client service officers. The posts of secretaries assisting directors were not going to be filled when a secretary left, because most people were able to do things for themselves because they had laptops.

Mr Bagraim wanted to know what the timelines were for beefing up the inspectorate.

The Director-General said they had had an agreement with Treasury for funding, but now it had been withdrawn. The OHS was going to have its own inspectors and there had been a revision to the plans, with the relationship between the Compensation Fund and the OHS being taken into consideration.

Mr T Rawula (EFF) asked if the DoL had taken the informal sector into account in job creation. He said that even though the Labour Relations Amendment Act had been passed, in terms of the comparative analysis the DoL was lacking behind. He wanted to know why the Eastern Cape was doing better than other provinces, because on the compliance inspectorate it had scored 100%.

The Director-General said the Department was working closely on the informal sector with the Small Business Development Department. They would like to see the informal sector moving into the formal sector. With regard to the comparative analysis, he said the presentation was a summary of the total report of the Department. More information would be sent to the Committee. Concerning the 100% score of the Eastern Cape, he responded that the province had focused on the way it was planning its work. It had planned properly, while others had not. The 100% achievement did not mean there had been non-compliance.

Mr America wanted to know where DITSELA was located in the DoL.

The Director-General said it fells under the Labour Relations Policy and Industrial Relations programme..

The Chairperson remarked that the report of the DoL must talk to its manifesto, the State of the Nation Address and the Nine-Point Plan, including all the policy documents, and indicate how, where and why money was spent. It should talk to the issues of service delivery.

Adoption of draft programme

The Committee’s draft programme was provisionally adopted, with a commitment that the Minister would come to brief the Committee.

 

The meeting was adjourned.

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