Labour Laws Amendment Bill: way forward; DoL Quarter 4 performance & Protected Employment Enterprises: status report

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Employment and Labour

25 May 2016
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

The Supported Employment Enterprises was set up to create employment for ex-service persons who had disabilities that prevented them from entering the open labour market. The entity had preferential procurement status. A brief history of the former Sheltered Employment Factories and SEE was set out, including the turnaround strategies and the implications of the Employment Services Act of 2014. It was presently in transition to becoming a full government component and would require time and technical support and strategic leadership from the Department of Labour, and there were consultations to explore the possibility of opening two more factories in Mpumalanga and Limpopo. The projects were outlined that were intended to reposition it in the market. Members stressed the need for the business community and business owners to be more informed, and to ensure that this entity was sustainable. They asked why there was delay in complying with employment equity and why vacancies were not filled, and about the employees and demographics. They asked about any products in the developmental stages, and about the process and procedures for identifying and testing products, and suggested the need for further partnerships and how the entity would be solving its under-expenditure and problems highlighted by the Auditor-General.

The Department of Labour presented its fourth quarter 2015/16 performance report, noting the performance in all of the quarters as 47%, 58%, 53% and 64% and overall it had under-performed in its target to create employment opportunities and promote sound labour relations. The achievements and under achievements in each of the programmes was described. Members asked about the reasons for under-performance, and the reason why it was unable to strengthen its capacity to perform, and why there were still issues that had not apparently been inspected. They were concerned about inadequacies in occupational safety, especially in Gauteng, and the criteria for selection of companies. The Department assured the Members that the process of signing performance agreements with Chief Directors in the provinces was under way, and explained how the targets were set, and how these would be related back to issues identified.

The Committee discussed the process on the Labour Laws Amendment Bill, and said that the Committee needed to consult with various stakeholders and unions, and to assess the impact of the Bill on the Committee's budget. Members commented that they thought the Bill generally desirable but some felt that the provisions needed further work. They then discussed the steps to be followed towards the public hearing. They commented that full public hearings would be impossible as the Committee would be in recess, and suggested that proposals must be invited. They asked that reports on the process be drawn pending the further work in the next session.

Members adopted minutes.
 

Meeting report

Supported Employment Enterprises (SEE): status and current position
Mr Silumko Nondwangu, Chief Executive Officer, Supported Employment Enterprises, briefed the Committee on the current status of the Enterprises (or SEE).

He noted that the sole purpose of SEE was to create employment for ex-service men who had disabilities that prevented them from entering the open labour market . The entity had preferential procurement status, which meant that government departments were compelled to buy products from the entity - this included office and school furniture as well as hospital linen and uniforms.

When the Preferential Procurement status was revoked in 1999, the number of people employed in the predecessor to SEE, which was then known as the Sheltered Employment Factories, had  declined, skills levels of employees stagnated and the demographics in SEE became unbalanced.

SEE developed a turnaround strategy which was approved for implementation. The aim of the strategy was to stabilise factories through growth in sales, increase the number of people with disabilities employed in the SEE and become a repository to the public and private sector organisations that wanted to meet their Employment Equity targets in terms of disability.

SEE was given a legal status through the Employment Services Act 4 of 2014 and it became established as a National Government Component through the Public Service Act. This meant that SEE would have its own governance, advisory committee and other structures like Audit and Risk Committees.

This transition to a full government component will require time for the preparation of its business processes and governance structures. SEE will also require technical support and strategic leadership from the Department of Labour (DoL or the Department)to help with the transition. Consultations with the Department of Public Works are under way to explore the possibility of opening two more factories in Mpumalanga and Limpopo.

The entity has a plethora of projects under way to reposition it in the market and to ensure that it generates adequate revenue to obtain self-sustainability. The projects include:

  • A study trip to Algeria undertaken for the purposes of building collaborations and drawing lessons on the manufacturing of prostheses.
  • Identification and re-commissioning of some SEE factories to be used as manufacturing plants for prostheses and assistive devices.
  • Consultations to continue with the National Treasury and Department of Public Services and Administration (DPSA) to conclude the administrative process for the entity to become a National Government Component.
  • Product developments initiatives to ensure that factories provide new products that are in demand.
  • New products made from recycled material are being produced
  • The possibility of manufacturing furniture that uses less natural wood due to decline in wood supply.

Discussion
Mr M Bagraim (DA) congratulated the entity on its achievement. He stressed the need for the business community to be more informed and business owners educated. The entity should also partner with other enterprise and organisations to allow for more out of the budget. in terms of budget. There is need for sustainability.

Ms P Mantashe (ANC) asked the reason for the delay in complying with the Employment Equity Act. She also asked why the vacancies were not filled?

Ms F Loliwe (ANC) asked how reliable the clients of the entity were, as she was worried about  sustainability. She also asked what plan the entity had in regard to the filling of the vacant positions. She suggested that the SEE should embark on programmes, especially advocacy programmes, to attract clients.

Ms Mantashe asked for the number of employees and the demographics in order for the Committee to monitor the implementation of the Act. She asked what were the employment targets?

Mr D America (DA) asked what kind of products were in the developmental stage. He also asked at what stage in the process was this entity with regard to identifying products and testing of the products, and what products are being produced from recycled materials?

Mr Nondwangu in response said that the reason for the failure of the SEE at present to meet its target on employment equity is the result of its inability to get enough contracts from government departments. The entity is working towards restoring its status of procuring business opportunities from various government departments, especially the Department of Basic Education and Department of Health. The major problem relates to factory employees but management was working on it. The recruitment process of employees through public services also aided the high vacancy rate.

He noted that the SEE already did have advocacy programmes, especially one called Open Base where the entity invited members of the public and stakeholders to come and view its programmes. It also issued newsletters.

There are many initiatives underway on product development. Some of these projects that were still in the development stage were described. It included trolleys that can carry 50 litres, for example to help disabled persons to carry water from the communal taps to the households. The entity is also developing trolleys for municipal workers. It is also converting used tyres to outdoor chairs.

The Chairperson asked about the former turnaround strategy developed by the Department. She asked that the SEE outline what is its main challenge, and the plan to solve any challenge?

Mr Nondwangu responded that the first turnaround strategy was approved by the Department to revive the entity when it was about to collapse. The first strategy involved building on the manufacturing abilities of the factories and getting competent people to run the factories. The turnaround referred to in this presentation is the strategy towards becoming a full-fledged government component. It will take time for the entity to finish the process of transiting to a national government component. This process would have to include legislative and administrative processes and wide consultation with stakeholders. The entity might collapse in the absence of long term contracts, especially if the National Treasury reduces its support. The entity needs support from the DoL and National Treasury until such a time that it can be able to generate its own sales.

The Chairperson also asked how the entity is working on solving its under expenditure, and wondered what the plan was towards solving the problems that the Auditor-General had highlighted.

Mr Nondwangu said the SEE will provide the Committee with the breakdown of the demographics. 

Mr Thobile Lamati, Director General, Department of Labour, said that there are two sides to the factories. One is subsidised by the State, and clearly without this continuing State support the factories would not survive. However, the other side was to build the manufacturing capability of the factories. The achievements in employment equity would have to be seen as a gradual process. Consultation had taken place with the relevant people living in the provinces where the factories will be built.

A member of the Department of Labour answered the question on reliability of supply. He noted that the SEE had managed, through the Department of International Relations and Cooperation, to prevent other departments from relying on external suppliers. This created an opportunity for the SEE to be in position to take on contracts. One example was that the DG signed three contracts with the Department of Health and Basic Education. The National Treasury has also approved the plan for the SEE to charge government departments 50% deposit upfront. This deposit had minimised the debt usually experienced by the entity.

On the issue of partnerships, the DoL was giving money to National Treasury to support other organisations operating within the aims of SEE, for instance by subsidising the salaries of deaf and blind employees. The problem being observed with the National Treasury is that traditionally some organisations benefitted while others did not. The Department and National Treasury were now working on a scheme that will extend to the organisations that did not benefit previously.

The Chairperson noted the financial challenges faced by the entity and asked how it will be financed. She advised that the problem should be looked into as soon as possible.

Mr Bagraim suggested that the entity look for partnerships that will provide expertise.

4th Quarter of 2015/16: Report of the Department of Labour (DoL) and its entities
Mr Thobile Lamati, Director-General, Department of Labour, briefed the Committee on the 2015/16 4th quarter performance of the Department of Labour.

In quarter one, the overall performance achievement of the Department was 47% of its target, 58% in quarter two, 53% in quarter three and 64% in quarter four. The Department had underperformed in its target to create employment opportunities and promote sound labour relations.

On its Administration programme, the Department did not achieve its target to improve the Department’s performance based on the Management Performance Assessment Tool criteria. It also did not achieve its targets to
- resolve 100% of disciplinary cases in 90 working days
- employ an indicated number of women, youth and persons with disability
- reduce its vacancy rate
- implement effective ICT governance framework; and to annually review and implement the ICT strategy of the Department.

On its Public Employment Services, the Department did not achieve its target of processing foreign nationals' corporate and individual work visas within 30 working days.

In relation to Labour Policy and Industrial Relations, the Department significantly improved performance from quarter 3 to 4.

Discussion
Ms Loliwe asked the reason for the underperformance by the Department, and the reason for its inability to strengthen its capability to perform. She pointed out that  Mpumalanga still had known issues yet the statistics with regards to inspection indicated that all inspections had been carried out as planned.

Mr I Ollis (DA) noted that there are inadequacies in occupational safety, especially in Gauteng. He also queried the inspection and enforcement services statistics presented by the Department with regards to Gauteng. He wanted to know what were the criteria and sample for the selection of companies.

Mr America expressed dissatisfaction at the underperformance of the Department.

Mr Sam Morotoba, Deputy-Director General: Public Employment Services, DoL, responded that the process of signing performance agreements with the Chief Directors at the provinces to solve the under-performance problem is under way. The Department has also introduced very strict performance monitoring processes, to make sure that the information that comes from the provinces are supported with evidence. This will also enable the Auditor-General (AG) and internal audit to verify the authenticity of the information. The AG is satisfied with the measures that had been put in place, despite the fact that they were quite harsh. A Career counsellor’s post has also been advertised in various provinces.

For the visa processing, the Department has moved away from manual system to a better system that will assist the Chief Financial Officers, who were overburdened. Some staff at the local level are also unable to access the manual system, but this new system will help improve the performance.

Mrs Aggy Moiloa, Deputy Director-General: Inspection and Enforcement Services, DoL, responded that the 100% performance was related to the achievement of the targets as set out in the Annual Performance Plan (APP). This 100% achievement did not mean that there are no cases in Mpumalanga. It was known that there are inadequate resources to cover the inspection cost and the vacancy rate is also a factor to underperformance.

Ms P Tengeni, Deputy Director-General: Corporate Services, Department of Labour, spoke to the issue of strengthening institutional capacities. The vacancy rate is being rigorously addressed by the Department. The vacancy rate arises as a result of the slowness in filling the vacant positions caused by some processes. This includes processes like investigation which was not present before. In the past the Department usually advertised vacant position without investigation. Women’s representation had also improved.

There were also challenges in the area of investigations, with increases in the number of fraud detection cases. There were severe capacity constraints for the investigation. The Department lost a seasoned investigator through resignation as this person was to move to the private sector. The Department is competing with the private sector for resources. The Department is also working on its retention strategy though it is difficult to negotiate retention at the junior level.

Speaking to the issues of ICT, it was noted that the DoL now has a Chief Information Officer  and the entity is nearing finalisation for the consolidating of the ICT.

Mr Lamati said that those who have not performed well will be taken to task.

Mr Ollis asked the Department to forward its annual report to the Committee to provide clarification on the inspection and enforcement statistics recorded in Gauteng.

Labour Laws Amendment Bill: Process

The Chairperson reminded the Committee that it had followed the steps so far for the processing of the Bill and the next step is for the Committee to comment on the issues that had been raised and for the Committee Members to decide whether to pass a motion of desirability on the Bill.

Ms Mantashe said the Bill is desirable for the Committee to look into it but consultation should be had with the various stakeholders and unions. Furthermore, it would need to be decided what would be the impact of the Bill on the Committee’s budget?

Mr Ollis said he believed that the Bill is desirable but further investigation is needed as some of the provisions are not satisfactory. The Bill has some financial implications.

Ms Loliwe requested the Members to vote on the desirability before raising other issues.

The Committee Secretary read the motion for the desirability of the Bill.

Members unanimously voted that the Bill was desirable.

The Chairperson asked the steps to be followed towards the public hearing

Mr Ollis said that since the Committee will be in recess for the next three months a full public hearing will be impossible. He suggested that proposals should be invited from anyone in the country while the hearing will be in the Parliament. The funding of this process should also be looked into.

Ms Loliwe suggested that as the process is unfolding, the cost implications should be reviewed.

The Department of Labour said that the report on the issue is not ready but will be forwarded to the Committee once it is ready.

The Chairperson suggested that since the Committee will be on recess, that report should be drawn and then sent to Members during the recess period. She also suggested that if the report is accepted by members and the Department confirms the availability of funds, the call for public submissions will be advertised. The Committee’s programme after the recess will be rescheduled to hear the public submissions.

Mr Ollis suggested that advertisements be published calling for submissions and proposals.

The Chairperson responded that advertisements will cost a lot of money.

The Department's representatives suggested that the Committee should rather wait for the report before advertising to avoid wasteful expenditure.

Mr America suggested that attention should be paid to legislation that focuses on job creation.

Consideration and Adoption of minutes

The minutes of 11 May 2016 were adopted by members.

Announcement

The Chairperson reminded Members that only chairpersons of committees will attend the Geneva Conference.

The meeting was adjourned.

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