Department of Labour, Compensation Fund & Unemployment Insurance Fund on their 2016 Annual Performance Plans

Meeting report

Briefing by the Department of Labour on its Strategic Plan 2015 – 2020 and its Annual Performance Plan 2016 - 2017
The delegation comprised of amongst others Mr Thobile Lamati, Director General; Mr Boas Seruwe Unemployment Insurance Fund (UIF) Commissioner; Mr Vuyo Mafata Compensation Fund (CF) Commissioner; and Mr David Kyle, Acting Chief Financial Officer.

Mr Lamati undertook the briefing. The Committee was given insight into how the Department of Labour’s Strategic Goals tied in with Outcome s4,5, 11,12,1 and 14 of government. Targets had also been set in achieving the Outcomes. The briefing continued with the Strategic Plan of the Department of Labour as it pertained to its Programmes.
 
Administration Programme
With the performance indicator of reducing the vacancy rate by 31 March 2016 the annual target was set at 9.9%. Quarterly targets were set at 12%, 11%, 9.9% and 9.9% for Quarters 1-4. With the aim of paying its invoices received within 30 days the annual target and quarterly targets were set at 100% in order to be fully compliant.

Inspection and Enforcement Services Programme
A performance indicator was to have a number of designated employers reviewed per year to determine compliance with employment equity legislation. The annual target was set at 808. Quarterly targets were to have figures at 202, 242, 162 and 202 for Quarters 1-4. On the number of workplaces inspected per year to determine compliance with labour legislation the annual target was set at 134 958. Quarterly targets were to have figures at 33 740, 40 487, 26 991 and 33 740 for Quarters 1-4. The Committee was also provided with a breakdown of provincial targets.

Public Employment Services Programme
With the performance indicator being the number of advocacy campaigns conducted per year the annual target was to have 261 advocacy campaigns conducted by March 2017. Quarterly targets were to have figures at 80, 79, 51 and 51 for Quarters 1-4. On the number of work-seekers provided with employment counselling per year the annual target was set at 150 000. Quarterly targets were to have figures at 36 000, 77 970, 106 480 and 150 000 for Quarters 1-4. The Committee was also provided with a breakdown of provincial targets.

Labour Policy and Industrial Relations Programme
With the performance indicator of having collective agreements extended within 90 calendar days of receipt by 31 March, the annual target and quarterly targets were set at 100% in order to be fully compliant. On the number of labour market research reports produced annually the target was set to have four research reports in line with the RME Agenda 4 signed off by the Deputy Director General of the Labour Policy and Industrial Relations Programme by 31 March 2017. The target for Quarter 1 was to have data collection instruments piloted. No target was set for Quarter 2. By Quarter 3 data collection should be completed and a 1st draft report should be prepared. In Quarter 4 four final research reports should be submitted and signed off by the Deputy Director General.

The Committee was also provided with information regarding the budgetary allocations of the Department of Labour over the medium term. The budget for 2016/17 sat at approximately R2.847bn.

Briefing by the Department of Labour on the Compensation Fund’s Strategic Plan 2015 – 2020 and Annual Performance Plan 2016 - 2017
Mr Lamati undertook the briefing. The Committee was given insight into the link between the Compensation Fund’s Annual Performance Plan (APP) and government’s service delivery outcomes. The rest of the briefing covered the APP and spoke to performance indicators and quarterly performance targets per Programme.

Programme 1: Administration
On internal auditing a performance indicator identified was to have a three-year and annual risk-based internal audit plan approved by 31 March 2017. The annual target was to have the plan approved by the Audit Committee by March 2017. No targets were set for the Quarters 1, 2 and 3. For Quarter 4 a target was set to have a three year and annual risk-based internal audit plan approved by 31 March 2017
 
Programme 2: Operations Management
A strategic objective identified was to provide faster, reliable and accessible Compensation for Occupational Injuries and Diseases (COID) Services by 2020. A key performance indicator was to have authorised claims paid within five working days. The annual target as well as quarterly targets was to have 100% of authorised claims paid within five working days.
 
Programme 3: Provincial Operations
In line with the strategic objective to provide faster, reliable and accessible Compensation for Occupational Injuries and Diseases (COID) Services by 2020 the performance indicator set was to have registered claims adjudicated in the current financial year. The annual target was to have 85% of registered claims adjudicated in the current financial year. The targets for Quarters 1, 2, 3 and 4 were to have 85% of the registered claims adjudicated by 30 June 2016, 30 September 2016, 31 December 2016 and 31 March 2016 respectively.
The total budget for the Compensation Fund for 2016/17 was approximately R5.176bn.

Briefing by the Department of Labour on the Unemployment Insurance Fund’s Strategic Plan 2016 – 2021 and Annual Performance Plan 2016 - 2017
Mr Lamati undertook the briefing. The Committee was also given insight into the link between the Unemployment Insurance Fund’s Annual Performance Plan (APP) and government’s service delivery outcomes. The briefing continued with the Strategic Plan and APP of the Unemployment Insurance Fund as it pertained to its Programmes.

Programme 1: Administration
On sound financial management with the performance indicator being administrative expenditure (excluding capital expenditure) as a percentage of revenue the target for the medium term 2016/17- 2020/21 was to have administrative expenditure less or equal to 15% at the end of each financial year. On the APP no targets were set for Quarters 1-3 of 2016/17 but for Quarter 4 the target was to have administrative expenditure less or equal to 15%.

Programme 2: Business Operations
On technology to improve service delivery with the performance indicator being the number of claims submitted through U-filing claims portal per year the target for 2016/17 was to have 20 000 by the end of March 2017 and for 2017/18 to have 30 000 by the end of March 2018. At the end of each financial year 2018/19 – 2020/21 the target was to have 40 000. On the APP with the annual target being 20 000 the targets for Quarters 1-4 were 5000 by the end of June 2016, 10 000 by the end of September 2016, 15 000 by December 2016 and 20 000 by March 2017 respectively.

Programme 3: Labour Activation
On the funding of poverty alleviation schemes with the performance indicator being the turnaround time to transfer funds to a Skills Education Training Authority (SETA) after the approval of Training Layoff Scheme application the target for 2016/17 – 2020/21 was 30 days by the end of each financial year. On the APP with the performance indicator being the turnaround time to approve or reject a Training Layoff Scheme application received from the SETA per year the annual target remained within 30 days after receipt of application. No targets were set for Quarters 1-3. For Quarter 4 the target was within 30 days after receipt of the application.
The Unemployment Insurance Fund’s budget for 2016/17 was approximately R2.453bn.

Discussion
Mr J Londt (DA, Western Cape) asked how many times the Minister of Labour, Ms Nelisiwe Oliphant had attended a meeting of the Committee. There was always an excuse given by the Minister for not being able to attend.  

The Chairperson said he would look into the matter regarding the attendance of political leadership at meetings of the Committee. He was aware that the Minister of Labour had apologised for not being able to attend the meeting but he understood that the Deputy Minister was supposed to attend the meeting.

Mr Londt really wished to know how many meetings the Minister or Deputy Minister of Labour had attended of the Committee.

Mr W Faber (DA, Northern Cape) said he had in the past brought up the option of the Committee using video conferencing facilities for persons like Ministers who were unable to attend meetings. He felt the Department of Labour delegation was far too large. He asked why if the briefing document was well over 100 pages were only two pages covering information on provinces. On page 43 in relation to the Northern Cape Province he asked why the number of designated employers reviewed per year to check on compliance with employment equity legislation sat only at 46 when the number of employers inspected per year to determine compliance with employment equity legislation sat at 85. Why such a huge difference in number? Were the two not done together? On page 44 also on the Northern Cape he asked if there were 3000 work opportunities registered per year why were there only 400 registered opportunities filled by registered work seekers per year. He further asked why a total of R2.3bn had been spent on the investigation and monitoring on the national minimum wage structure.

Mr Lamati, on why only two pages of the briefing covered the provinces, explained that once the strategic plan was done then it would be translated into an operational plan that went to the provinces. The two pages of information covered the work of provinces in relation to the Strategic Plan and Annual Performance Plan. On page 43 he said it was the intention of the Department of Labour to capture unemployed people on the Department of Labour’s database. He pointed out that across government there were various initiatives to create jobs. Placement of jobs was not necessarily done by the Department of Labour. Employers were required to register job opportunities with the Department of Labour. Placement of persons in jobs depended upon the skills that they had. The Department of Labour put persons through vocational programmes to prepare them for job opportunities. The number of persons placed was always less than the number of registered persons. In many instances the Department of Labour referred persons to other institutions and it was difficult for the Department of Labour to track these persons. Almost all the persons employed at the Medupi Power Station were accessed from the Department of Labour’s database. He explained that there was not a total of R2.4bn spent on the national minimum wage. There had been an error in the Medium Term Expenditure Framework document. There was no way that the Department of Labour could spend R2.4bn on the national minimum wage structure when the budget for the Department of Labour was R2.9bn. The error had been corrected in an address which the Minister of Labour had made. He clarified that the Department of Labour had brought such a huge delegation to the meeting for the very reason of providing a provincial perspective. Managers from provinces formed part of the delegation.  

Mr S Mthimunye (ANC, Mpumalanga) pointed out that the labour market was still white male dominated in core positions of industry. How did the Department of Labour intend to address the matter? The domination by whites was unfair. The closure of Evraz Highveld Steel had a huge economic impact upon the people in the area as many jobs had been lost. What was the Department of Labour doing to assist people who had lost their jobs at Highveld Steel? He also asked what was happening at Lily Mine.

Mr Lamati, on transformation, said that the Department of labour had a Director General Review Report. The Department approached companies who were designated employers and reminded them what their plans or policies for transformation were. If what was contained in those plans were not met the Department of Labour asked for reasons why those plans were not met. The Department of Labour consequently made recommendations to those companies and presented them to the companies’ chief executive officers. It was after all the chief executive officers that had signed the employment equity plans. The Department made sure there was compliance and if not matters were taken to court. The Department of Labour’s Labour Market Policy Division looked at income market differentials. There should be equal pay for equal work done. The Department of Labour differentiated between employment equity inspections and normal inspections.

He was aware that Highveld Steel had closed down but it was due to reasons beyond the Department of Labour’s control. Media reports had alleged that Highveld Steel had closed down due to the Department not paying training layoff scheme amounts to Highveld Steel. He confirmed that he had approved the payment of R84m to Highveld Steel. The Department of Labour had chosen to pay the amount in increments of R15m. Before making payment he had requested Highveld Steel to provide the Department of Labour with its due diligence report and its business rescue plan. The response from Highveld Steel was that the documents were confidential. Only when the documents were submitted in January 2016 to the Department of Labour did he give the go ahead for the R84m to be paid. Media reports however alleged that Highveld Steel was going down and the Department was concerned that it was throwing money towards a company that was sinking. The Department had met with representatives from Highveld Steel and the National Union of Mineworkers of SA (NUMSA) and agreement was reached that workers could still go through the Labour Activation Programme. The Department of Labour agreed to process Unemployment Insurance Fund (UIF) claims until Highveld Steel was back up and running.  He stated that Lily Mine was under business rescue.

Mr Seruwe said that Lily Mine had not yet approached the UIF.

Ms M Dikgale (ANC, Limpopo) agreed with Mr Faber that the Committee needed greater information on provinces. She asked whether SETAS were spending funds as they should. How were SETAS being monitored? She pointed out that a few years back the audit outcomes of the Department of Labour had not been good. Was there an improvement since then?

Mr Lamati said that the Department of Labour had over the last three years obtained unqualified audit reports with findings. The intention was to get a clean audit.

Mr Mafata said the Compensation Fund was audited separately from the Department of Labour. The audit outcome on the Compensation Fund was not as good as the audit outcomes of the Department of Labour and on the Unemployment Insurance Fund. Some of the audit findings of the Compensation Fund were that there were inadequate records on information as well as incompleteness and accuracy of revenue.

Mr Lamati stated that there was an action plan in place to address the challenges at the Compensation Fund. The action plan would be provided to the Committee. 

Mr Seruwe on SETAS said that the Department of Labour worked in partnership with them. If a certain number of persons needed to be trained, then the Department would sponsor half the cost of the training. The Department did however first look at the deliverables of SETAS.

Dr Y Vawda (EFF, Mpumalanga) felt the Chronic Medication Programme needed to be monitored. He asked if the Department intended to establish a huge database on which employers and employees’ records were kept. It would be useful. He pointed out that the briefing did not speak about socio-economic justice in terms of labour laws. How was labour to be monitored in SA? There was often talk about investment not being made in SA due to labour costs being cheaper abroad. How wait then explained that countries like Germany and Canada had full investments even though their labour was expensive. The problem was that SA’s society was not stable. Socio-economic stability invited investment.  Once SA’s society was stable then investment would come on its own. He pointed out that SA had two economies. There was the mainstream economy and then there was the informal economy which basically consisted of the poorer section of society. How could it be ensured that there was a database on figures of employment that included persons in the informal sector of SA’s economy? Another problem was that 80% of people did not earn decent wages. There needed to be an increase in the minimum wage. Maximum salary was a term that should form part of one’s vocabulary.

Mr Lamati stated that there was a database of employers at the Unemployment Insurance Fund. Statistics SA often used the database. There was a database at the Compensation Fund as well. On the issue of socio economic differences he noted that the vision of the Department of Labour was to have an environment for investment, employment and decent work. There were a number of policies in place. The intention was to have labour peace in SA. If the perception of investors was that the climate in SA was not conducive for investment, then it would impact upon economic growth and the entire value chain. In the end workers would be affected. Labour instability did not help SA. The Department of Labour had produced an Industrial Action Report. The Report had found that when workers placed demands before employers say for example a wage increase at 10% then employers would offer 6%. In the end 8% would be agreed upon. In the meantime, workers would go on strike. Why did employers not at the start offer 8% which could have prevented strike action?  Maturity was needed from both sides. The Commission for Conciliation, Mediation and Arbitration (CCMA) had been proactive and in the mining industry had started a pilot on dispute prevention. The CCMA would go in to look at issues before negotiations. This was just one of the programmes that the Department of Labour had introduced. He pointed out that union density was very low. The collective bargaining system had to be very good. The state was only responsible for setting the minimum wage and labour legislation. If collective bargaining collapsed, then it placed a huge burden on the Department of Labour. It was difficult for the Department to go to all workplaces. He reiterated that union density was becoming a problem. SA was ready for investment.  It was a subjective opinion that market policies were inflexible. On a national minimum wage, discussions had taken place at the National Economic Development and Labour Council (NEDLAC). Social partners had in principle agreed on a national minimum wage. The actual figure was now being worked on. The national minimum wage should however not affect Small Medium and Micro Enterprises (SMMEs) in any way. On the other hand, the amount could also not be set too low as the idea was to eradicate poverty. The amount set could not be too high either as it would kill collective bargaining. He agreed to make all reports available to the Committee. 

Mr E Makue (ANC, Gauteng) asked that reports of the Department of Labour be provided to the Committee. He was concerned about the casualisation of labour as the Congress of South African Trade Unions (COSATU) had put it. Supermarkets used a great deal of casual labour which they sourced through employment agencies. These workers received almost no protection. Another group of workers that was of concern was disabled persons. He spoke about a blind school that had closed where 150 blind persons had lost their jobs. There was a trend that more and more workers were moving away from being unionised. Tensions between unions were also common. Due to the fact that workers were not unionised it made strike action disorganised. On page 24 he felt that the employment equity of 808 was far too low. On page 33 he also felt that the target of 150 000 work-seekers provided with employment counselling was also too low. If counselling of work-seekers had taken place in previous years what percentage of them had actually gained jobs? He pointed out that the Committee would have appreciated a separate briefing on the Compensation Fund as it was to receive on the Unemployment Insurance Fund. On page 58 he referred to the findings that the Department of Labour had found which had affected its audit outcome and asked for specifics on what they were.

Mr Lamati stated that the casualisation of labour continued to be a huge challenge. Legislative amendments had been made but only time would tell if they yielded positive results.  He expounded on a project where blind persons were producing furniture and that the furniture was being bought by government and others. He conceded that the Department’s employment equity targets were low but cautioned that one needed more resources when high targets were set. Target setting took into account resources that were available. He further conceded that the 150 000 figure was low when one considered that there were 5.7m unemployed people in SA. It was an issue about capacity that was available. On how many persons were able to get employment after receiving counselling he said that a report would be provided to the Committee. Unemployment in SA was a huge problem and unfortunately he did not have a clear answer on members’ expectations.

Ms Z Ncitha (ANC, Eastern Cape) asked whether the audits done by the Department of Labour on employers included employers of farm workers and domestic workers.

Mr Lamati conceded that more could be done on vulnerable workers like farm workers and domestic workers. He said inspections were done at employers of domestic workers and farm workers. On these inspections the Department inspected employment registers.

The Chairperson asked what the vacancy rate of the Department of Labour was at present. He noted that the Department of Labour’s collective bargaining strategy that had been submitted to Cabinet should be submitted to the Committee as well. The Department of Labour should monitor trends. He asked what the Department of Labour’s state of readiness was on what was happening on the platinum belt. He pointed out that disturbances of industrial peace often lead to job losses. He asked what the Department of Labour’s plan of action was on these occurrences.

Mr Lamati responded that the vacancy rate currently in the Department of Labour was 11%. A copy of the Department of Labour’s strategy to improve collective bargaining would be provided to the Committee. 

Committee Minutes
Minutes dated the 12 April 2016 were adopted unamended. Minutes dated 11 May 2016 were adopted as amended.

The meeting was adjourned.