Productivity SA on its 2015/16 Annual Report

Meeting report

Briefing by Productivity SA on its Annual Performance Report 2015/16
Mr Mothunye Mothiba, Chief Executive Officer, Productivity SA, briefed the Committee on the entitity’s annual report.

Strategic Objective 1: Support initiatives aimed at preventing job losses
A total of 43 companies facing economic distress were supported through turnaround strategies. Just under R11.5m had been utilised for interventions in 2015/16. A total of 6976 jobs had been saved. 39 future forums were established with 374 employees trained. A total of 112 champions had been trained.

Strategic Objective 2: Capacitated ETD Service Providers and Small Medium and Micro Enterprises (SMMEs) in order to contribute to sustainable employment creation
A total of 6917 beneficiaries were capacitated in 2015/16 on productivity related concepts. These included 642 educators, 4837 emerging entrepreneurs, 934 workers, 299 skills development facilitators and 205 managers. There was also a strategic partnership with the South African National Apex Cooperatives Organisation (SANACO) which was bearing fruit.

Strategic Objective 3: Products and Services of assisted companies become world-class and competitive
A total of 610 companies were implementing the Workplace Challenge (WPC) Programme. 184 new entrepreneurs joined the WPC, 278 companies were implementing the WPC and 332 enterprises were in aftercare. There were nine success stories in all.

Strategic Objective 4: WPC success stories
Companies assisted by Productivity SA’s WPC programme that reached the National Productivity Awards were H & M Rollers and Tshedza Concrete Art. With H & M Rollers their reject rate decreased from 4.8% to 1.2%. Sales had increased from 6% to 14.8% and staff had increased by 78%. With Tshedza Concrete Art their production output increased from 85% to 95%. The number of its employees increased from four to twenty five and its reject rate decreased from 12% to 5%.   

Strategic Objective 5: National Awareness Campaign
A total of 51 workshops and seminars were conducted on productivity awareness. Productivity awards were also held in seven provinces excluding the Free State and the Northern Cape Provinces. 28 companies in various categories of the awards went through as finalists for the national awards. Amongst the winners for 2015/16 was K-Way Manufacturer (Pty) Ltd in the Western Cape Province and Bakutudi Cooperative in the Limpopo Province.

Strategic Objective 6: Talent Management
Within Productivity SA seventeen career paths maps were generated for six senior managers, four middle managers and seven junior managers. Employment equity demographics within the organisation were 70% African, 9% Coloured, 10.5% Indian and 10.5% White. There were 44 males and 58 females.
Other strategic achievements included self generated revenue of just under R15.4m and the approval of a new business model by Productivity SA’s Board.
The Committee was provided with insight into the challenges faced by Productivity SA during 2015/16 and the remedial actions that were taken to address them.

Some of the challenges were:
-The decline in economic activity and the increase in companies in distress, including the number of affected workers placed great strain on Productivity SA’s resources to cope with the demand for support and services
- Productivity SA was underfunded and undercapitalised for effective delivery of its mandate to promote employment growth and productivity in SA
- Funding for Turnaround Strategies (Unemployment Insurance Fund (UIF) funding) to support companies in distress for job retention and preventing job losses was not guaranteed for long term and was insufficient to respond to demand.
- Funding appropriated by parliament was insufficient to enable Productivity SA to attract appropriate human capital (skills and expertise) and to invest in product development and the upgrading of product offerings.
- Productivity SA was not appropriately profiled and this limited awareness and the culture of productivity and competitiveness.

Remedial actions for 2016/17:
-The UIF had committed to provide additional funding of over R97m and to assist Productivity SA to explore other sources of funding like the Presidential Infrastructure Committee (PIC) and the Industrial Development Corporation (IDC).
- Productivity SA was working closely with the Department of Labour to review funding for Public Employment Services/other sources of funding towards schemes to minimise the retrenchment of employees, including turnaround strategies, layoffs, re-training of retrenched workers for alternative employment opportunities
- Productivity SA had a research agenda in place the aim of which was to focus on measuring and evaluating productivity improvement and competitiveness in workplaces and the economy, to maintain a database of productivity and competitiveness systems and to publicise same as well as to disseminate information.
Members were also provided with information regarding the finances of Productivity SA which included figures on income and expenditure. For 2015/16 total income amounted to R96.754m whilst its expenditure sat at R99.259m. There was therefore over expenditure of around R2.5m.
 
Discussion
Mr Y Vawda (EFF, Mpumalanga) asked what Productivity SA’s generated income was. Was it income from departments like the Department of Trade and Industry?

Mr Mothiba responded that Productivity SA did raise revenue and pointed out that there were three sources of revenue. There were firstly the funds allocated by Parliament ie R46m. Secondly there were grants that were received from the Unemployment Insurance Fund (UIF) and the Department of Trade and Industry. Thirdly, Productivity SA offered its services for pay to companies like Anglo-American. However revenue from services for pay was not that much. The budget of Productivity SA was R110m. Productivity SA was working on striking up partnerships with entities that could assist it. He assured Members that when he appeared before the Committee again he would provide details. He added that Productivity SA targeted state owned enterprises and assisted them with issues like Broad-Based Black Economic Empowerment (B-BBEE). With its new business model Productivity SA would be able to do more.

Mr B Nthebe (ANC, North West) said that he wished to make three observations about Productivity SA. The first was that Productivity SA acknowledged its shortfalls. He said that growth and productivity was competitive. Research capacity of Productivity SA was also non- existent. The second observation was about Productivity SA giving support to SANACO. He noted that in every municipality training of cooperatives took place. The reality was that SA was not close to what the Asian Tigers had done on cooperatives. In SA everybody was doing the same thing. There was a need to be different. His third observation was that Productivity SA having nine success stories seemed to be on the low side. He felt that Productivity SA had an over reliance on the national fiscus.

Mr Mothiba noted the observations made and said that if Members looked at Productivity SA’s Strategic Plan 2016/17 then it covered them. He conceded that the 2015/16 performance was not that good but said that strides were nevertheless made. He noted that performance on average had moved from 34% to 70%. On cooperatives the reality was that if one pushed numbers then it was not outcome orientated. The nature of Productivity SA’s training was on productivity improvement.   

The Acting Chairperson asked whether Productivity SA had distributed its Annual Report to the Committee. If it had not been distributed then he asked that it be made available to the Committee. He asked why Productivity SA was not cooperating with academic institutions. He also stated that priority economic sectors like tourism should be targeted as findings had shown that it could play a significant role in job creation. Was Productivity SA engaged in any dialogues?   
  
Mr Mothiba replied that Productivity SA deliberately did not target tourism for now and only concentrated on manufacturing. He was under the impression that the Annual Report had been tabled. He would ensure that the Committee received it. Productivity SA was working with academic institutions and was entering into a Memorandum of Understanding (MOU) with the University of Johannesburg.

Mr L Magwebu (DA, Eastern Cape) observed that Productivity SA was only located in three provinces. What was it doing to improve the situation? Why had Productivity SA developed research reports but had not published them? He raised the issue of the closure of factories at Dimbaza in the Eastern Cape. The entity was not properly profiled.

Mr Mothiba conceded that Productivity SA’s profiling was not that good. He said that if you asked ten people if they had heard about Productivity SA then only three would say yes. One of the things that Productivity SA did was to enhance the productive and operational efficiencies of enterprises. He also conceded that there were reports that were not published. He had addressed Productivity SA’s Board about the publishing of reports needing to be addressed. The intention was to have four sessions and to have a report for each. Three out of four reports had been finalised. Productivity SA had approached the Department of Trade and Industry about A needing to have a presence in Industrial Development Zones (IDZs).Productivity SA’s involvement in the Eastern Cape was minimal. 

Mr Thobile Lamati, Director-General, DoL, explained that the factories in Dimbaza had a goal. The first was to create employment and the second was to stop people from gravitating towards urban areas. He was of the view that the factories needed to be opened. He said that in many provinces there were examples of good infrastructure that had been built by the then homelands.

The Acting Chairperson said that having a good quality product was a good thing but not the best thing. He asked whether Productivity SA assisted Small Medium and Micro Enterprises (SMMEs) with market access. He also asked why there were regional offices in Western Cape and KwaZulu-Natal but not in Gauteng. He added that Stats SA provided the Committee with reliable statistics. Could Stats SA provide statistics on Productivity SA’s behalf? Productivity SA was asked that when they rescued companies did the numbers of employees increase or decrease after the rescue.

Mr Mothiba said that Productivity SA did have fully fledged offices in KwaZulu-Natal and the Western Cape. The office in Gauteng was housed within Productivity SA’s head office. On leveraging the shortcomings in market access he said that if one managed costs then pricing became better. The gains in productivity had to be shared. If workers’ jobs were saved then they could contribute towards taxes. Productivity SA had not yet formalised a relationship with StatsSA. There were turnaround solutions programmes to assist companies in distress. Interventions on re-employment would be considered if jobs could not be saved.

The meeting was adjourned