Department of Labour; Supported Employment Enterprises; NEDLAC; Compensation Fund Annual Performance Plans

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Labour

03 May 2017
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

The Portfolio Committee received presentations from the Department of Labour, the National Economic Development and Labour Council (NEDLAC), the Compensation Fund and the Commission for Conciliation, Mediation and Arbitration (CCMA) on their annual performance plans (APPs) for the 2017/18 financial year. The entities provided details of their objectives and the budgets available for them to meet their targets.

The Department of Labour (DoL) was taken to task for reducing its targets without explanation, and there was also criticism that unemployed youths were not being made aware of the system for registering as work seekers. It was suggested that the DoL should work more closely with the Department of Higher Education in order to create greater awareness of the system.

Members commented that NEDLAC’s operations needed to be improved. Its Development Chamber did not sit with other chambers, and this was detrimental to the interests of South Africa at large. Small businesses were lumped together with big businesses. As a result, small businesses did not have their own independent representation at NEDLAC, and their voices were not heard. How could its operations, specifically the representation of unemployed people, be improved?

The Compensation Fund was asked why there was no mention of pensions as part of the strategic plan, and only as part of the problem. Why was it not a focal point? On the issue of budgets, the revenue and expenditure estimates were considered unusual. The revenue from investments had dropped significantly -- what were the reasons for this?

The Commission for Conciliation, Mediation and Arbitration (CCMA) indicated that its priorities included effectively and efficiently implementing the legislated mandate of the CCMA with respect to conciliations and arbitrations, enhancing and expanding the employment security mechanisms to save jobs and alleviate business distress, and to facilitate improved collective bargaining to promote orderly and healthy labour relations. Its total 2017/18 budget allocation was R885 million.

The Members interrogated the report by asking questions about the correctness of certain figures in the CCMA’s budget, how it was going to reduce the backlog of unresolved cases, and the financial challenges it faced in respect of some leased offices of the organisation. 

Meeting report

Department of Labour (DoL) Presentation

Mr Thobile Lamati, Director-General: Department of Labour, described the DoL’s financial programme, and said it took into account a number of factors and was based on the financial state of the country.

Ms Marsha Bronkhorst, Chief Operating Officer: DoL, explained the different entities and programmes established to assist the Department to fulfill its mandate. She concluded by stating its targets through performance indicators.

(See attached document)

Discussion

Ms F Loliwe (ANC) asked about the number of registered work seekers. She argued that the unemployed youth were unaware of the system, and wanted clarification on how the Department was planning to reach its targets. 

Mr I Ollis (DA) expressed his disappointment with the presentation document, and said that the Department had reduced targets without explanation. He referred to some of the targets as unacceptable. There were also grammatical errors. He asked where the labour market research findings would be published, and if Parliament would receive a copy. He also argued that Members did not have the previous year’s budget for comparison purposes, and asked that in future, reports should be more factual and concise. 

Ms S van Schalkwyk (ANC) was concerned with the targets set for work seekers. She argued that the Department of Higher Education could strengthen the system, and asked how the DoL planned to work with such institutions. She also asked how they planned to strengthen the structure of the system itself. 

Mr D America (DA) referred to the slides related to work seekers, and asked for clarity on the difference in percentages between the provinces. He said that a social impact study needed to be conducted to implement the national minimum wage, and asked what the Department’s role would be in facilitating this.

Mr T Rawula (EFF) referred to the reduction of targets for inspections and enforcement services (IES), and asked whether this had been due to the result of a loss of capacity in the Department.

Mr Lamati replied that the Department had not reduced targets, but had simply reduced the indicators. He argued that this assisted in reporting more effectively.

The Chairperson asked for further clarify on the reduction of indicators, and what difference it had made.

Mr Lamati replied that there would normally be two indicators for investigating incidents. This would comprise the inspection and enforcement aspect. He argued that by consolidating the two indicators, there was no reduction of targets.

The Chairperson asked whether this meant the Committee would not be in a position to question the number of inspections.

Mr Lamati replied by referring to the presentation slide, saying that there were six indicators in total but that this had between reduced into two for effective reporting. The mandate for doing inspections remained the same, but that the type of inspections had not been explained in the report. 

Mr Ollis argued that since the indicators had been reduced and consolidated into one, the Committee has less information on the details of their work. It was difficult for the Committee to break down the information since it had not been presented with the same indicators as last year. 

Mr Rawula said that the function had not been lost, and the only difference was that there was not the same sub-categorisation as before.  He contended that the consolidation of functions saved time ,but asked what the impact was from a cost perspective.

Mr Lamati said that the Department continued to give the Committee the same information. On the question of costs, he said that the work was completed by the same officers, and the only cost-saving came from printing fewer papers. When an inspection took place, the inspector had to come back and serve a notice. More often than not, the employers would not be there to have the notice served on them, and this made it difficult to determine who to punish. Employers were not always available and notices could only be served when they were. On the advocacy issue, he said that the Department informed the youth about job opportunities on a regular basis. Employers often agreed to employ youths on the spot. He concluded that this was proving to be working well and would be continued in 2017/18.

The Chairperson said that the Committee understood the challenges that the Department faced, but argued that this should not result in under-budgeting.

Mr Lamati replied that the Department had tried its best to match what they had been given to the work that they did. While it would be desirable to investigate every incident and resolve 100% of the cases, this was not realistic as the DoL did not have the inspectors to achieve this. The Department had been allocated money to appoint more inspectors, but this had since been taken away.

The Chairperson replied that the Committee was not expecting the Department to budget for more than what they had been given. It was clear it could not go beyond this. It had to budget for 100% out of what they already had. 

Mr Sagren Govender, Chief Director: Public Employment Services, replied to the concerns raised around advocacy. He said that the Department had planned 261 communication campaigns across the country. This impact was reaching the youth effectively. On the issue of targets, it was correct that the targets had been reduced, but he argued that this was due to budgetary cuts. He reassured the Committee that the Department would work more closely with its partners to cope with operational costs. It was not desirable to do less, but the costs had hampered their process. This concern had already been communicated to the Treasury.

On the issue of improving the system itself, he said that the Department worked closely with other government departments, specifically the Department of Basic Education, to share data in order to improve the efficiency of the system.

He concluded by stating that self-help kiosks had been installed in labour centres, as well as smart screens displaying employment opportunities. He added that online registration had been introduced and enrolment functions had been provided for.

The Chairperson commented that the Department was affected by budgetary cuts, and asked what the exact decline was.

Mr Lamati said that targets for inspections and investigations had been increased in certain areas, but that in other areas they had been reduced due to the budgetary cuts. The Department noted the concerns raised by the Committee on the consolidation on indicators, and agreed to break them down into sectors to allow the Committee to monitor their performance more easily.

NEDLAC Presentation

A delegate from the National Economic Development and Labour Council (NEDLAC) began the presentation by stating the four goals which underpinned the organisation. The annual performance plan (APP) had been designed to achieve these goals. Both the APP and the strategic plan had been approved and were in the process of being implemented. The three different programmes designed to reach the entity’s goals were explained at length, as well as the resource allocation and the estimated expenditures for each programme.

Discussion

Mr Ollis commented on how NEDLAC’s operations needed to be improved. Its Development Chamber did not sit with the other chambers, and this was detrimental to the interests of South Africa at large. Small businesses were lumped together with big businesses. As a result, small businesses did not have their own independent representation at NEDLAC, and their voices were not heard. There were about three big labour federations which were represented, and he asked whether NEDLAC should not be canvassing other groups too. He asked for clarity on how its operations, specifically the representation of unemployed people, could be improved.

Ms Loliwe commented on the structure of the presentation. She said that NEDLAC had chosen to end the presentation by listing its priorities, and the Committee would assess its performance based on this. She asked for an explanation of how the last two priorities would be achieved. 

The delegate from NEDLAC replied to the concern regarding the Development Chamber. He explained the manner in which chamber was structured, and argued that there was no space for discussions outside of this. Everything that came out of the Chamber was discussed internally. He concluded by pointing out that the community constituents were included in strategic matters.

On the issue of representing new federations, he said that the organisation had not received any applications from unions, but it was aware of bodies who intended to apply. Once the applications were received, they would be deliberated upon to determine if certain bodies met the requirements. This process had to be followed.

On the issue of small businesses, he said that this had never been formally raised at NEDLAC. The composition of the constituencies of NEDLAC had been determined in 1995, and perhaps this needed to be revisited to ensure that it was relevant to today’s context. Lastly, on the issue of priorities listed in the last two bullets, he said that different types of interventions would be employed as an ongoing plan to reach targets.

The Chairperson raised a concern about representation, and said that Members of the Committee had a responsibility to go back to the NEDLAC protocol to remind themselves how representation took place.

Compensation Fund: Presentation

Mr Vuyo Mafata, Commissioner: Compensation Fund, described how the organisation was focused on making sure that claims came in and were adjudicated within a reasonable time. The policy environment was also explained, and the issues around improving medical benefits and extending pensions were highlighted. It was stated that various administrative amendments would be made and that the organisation was looking forward to them.

Another delegate focussed on the budgetary issues, indicating that the organisation’s revenue estimate for 2017/18 amounted to R14.5 billion, of which almost R8 billion was from employers and nearly R6 billion from investments. Expenditure was expected to amount to R9.3 billion.

Discussion

Mr Ollis asked why there was no mention of pensions as part of the strategic plan, and only as part of the problem. Why was it not a focal point? On the issue of budgets, he found the revenue and expenditure estimates unusual. The revenue from investments had dropped significantly -- what were the reasons for this? The estimate for the compensation benefits had also dropped. This surprised him, since Parliament had recently declared new amendments. He concluded by asking what plan the entity had to reduce the paperwork at the branch level. 

Commission for Conciliation, Mediation and Arbitration (CCMA): Presentation

Mr Cameron Morajane, Director: CCMA, said the Commission’s mandate was drawn directly from Section 23 of the Constitution, that dealt with labour relations. It was a statutory body established in terms of the Labour Relations Act and was independent of the State, any political party, trade union, employer, employers’ organisation, federation of trade unions or federation of employers’ organisations.

Priorities in the 2017/18 annual performance plan included:

  • Effectively and efficiently implementing the legislated mandate of the CCMA with respect to conciliations and arbitrations;
  • Enhancing and expanding employment security mechanisms to save jobs and alleviate business distress;
  • Facilitating improved collective bargaining to promote orderly and healthy labour relations;
  • Intensifying dispute management and prevention interventions to reduce conflict in the workplace and transform workplace relations;
  • Improving governance processes and striving for maximum compliance to prescripts and best practice to improve business processes.

The 2017/18 APP had been developed in alignment with the Department of Labour”s MTSF and the government’s Programme of Action, and in compliance with all the relevant guidelines and frameworks. The audited 2015/16 actual performance and estimated 2016/17 performance had served as a baseline. There had been interactions between the Department of Performance Monitoring and Evaluation (DPME), National Treasury and the Auditor-General (AG) to reduce the number of targets, to ensure concentration on more strategic targets, as well as to ensure the alignment of targets to the “SMART” principle.

Mr Morajane said although the base of the 2017/18 APP was the legislated mandate of the CCMA, focus was more on the discretionary, value-added services of the CCMA. In dispute management and prevention, the CCMA would play a more proactive role in addressing the high levels of workplace conflict, disputes and job losses. It would achieve this by empowering workplaces to practice fair labour practices, early intervention and detection of potentially volatile situations, and facilitation of the creation of an environment in which parties had the knowledge and skills to resolve their impasses at the workplace.

On improved collective bargaining, the priority was to promote orderly and healthy labour relations, facilitating improved means of confronting challenges facing collective bargaining, and revisiting negotiation tactics in this dynamic environment.

The executive summary of the CCMA’s 2017/18 APP had four programmes which were linked to four strategic objectives. There were a total of 15 strategic targets set for 2017/18. Other operational activities and projects of importance were implemented and monitored through the Director’s Ten Point Plan.

Strategic objective 1: Enhancing the labour market to advance stability and growth.

The key priority area (KPA) here was to provide thought leadership and facilitate dialogue. The performance indicator in this regard was the number of engagements convened with strategic labour market stakeholders to provide thought leadership on identified strategic labour market topics. The 2017/18 annual target was for one engagement to be convened. Another performance indicator was to convene four engagements with users to facilitate social dialogue on identified strategic labour market issues. To advance employment security, the performance indicator was the percentage of jobs saved compared to employees likely to be retrenched (as per the cases referred to the CCMA). The annual target was for 35% of jobs to be saved as compared to employees to be retrenched. New strategic partnerships should be established for collaboration to accelerate service delivery in the labour market, for the benefit of the users. The annual target in this regard was for four new strategic partnerships to be established.

Strategic objective 2: Advancing good practices at work and transforming workplace relations

The first KPA was to proactively facilitate improved collective bargaining. The performance indicator was for 12 building interventions on effective negotiation skills delivered to users. Another performance indicator was one collective bargaining improvement process conducted for an identified user in an identified sector. An annual target was for two transformations in the workplace interventions delivered for users.

Strategic objective 3: Building knowledge and skills

The KPA was to develop and deliver capacity building programmes for Users, aligned with the needs of the labour market. The performance indicator was 48 capacity building interventions delivered to users.

Strategic objective 4: Optimising the organisation

The KPA was to implement the legislative mandate of the CCMA effectively and efficiently. The performance indicator was that 100% of all registered cases’ first event heard within 30 days excluded an agreed extension.

In order to prioritise its organisational sustainability, the CCMA’s financial sustainability strategy would be developed in the 2017/18 financial year. With regard to providing for continuous professional development aligned with the needs of the organisation, a number of training interventions would be delivered to capacitate the workforce for efficient and effective delivery of the CCMA mandate. In this regard 39 training interventions would be delivered.

Ms Annah Mokgadinyane, Head of Strategy: CCMA, said the 2017/18 total budget allocation for their organisation was R885 million. R308 million would go towards the compensation of employees, R549m for goods and services, and R23m for transfer payments. The 5% average increase in grants over the MTEF period was mainly from the normal baseline increase. Income from rendering services increased by 15% year on year, as per projected collections.

Discussion

Mr Ollis asked whether it was correct that the budget of the CCMA was currently R885m or R864m. Had the problems of rental offices, which the CCMA had had in the previous years, been resolved? One particular issue had been in KwaZulu-Natal -- had they sorted out the financial problems in their offices so that they did not have trouble with proper rental contracts and be liable in future?

Ms Loliwe commented that every time the CCMA made a presentation there was a concern raised about the number of backlog cases. What relief was the organisation seeking to solve the backlog? What was the real challenge?

Mr America said he was fascinated by the dispute prevention measures that had been described in the presentation. It was a new area that presented lot of opportunities for research, and he hoped for the best in that endeavour. He appreciated the detailed financial plan that had been presented to the Committee, with lots of the expenditure and income elements being put into perspective. The only area of concern, or lack of comprehension, was in the acquisition and disposal of assets, and he would like clarification of this aspect.

CCMA’s response

Mr Morajane confirmed that the CCMA’s budget was R885m, inclusive of the additional funding they received for MIBC and interpreters.

On the Durban lease in KZN, one of the biggest achievements there was that the Durban lease involving R6m, because of the irregular procurement of a portion of the building, had been resolved. However, the landlords were trying to reopen the Cape Town lease. They had reissued a summons afresh and the CCMA was not sure what the issue was this time around. Therefore, there was nothing they could do, and it was costing them money to defend the matter.

For the rest, if one looked at their strategic priorities on compliance and governance issues, they were beefing up on this so that they were decisive with people that were in the wrong. They had now received a report that anyone found guilty of irregular and fruitless expenditure would be disciplined. They had taken action against 20 employees who had been found out in the current quarter, and there was a cleanup process that was involved. This was to send a message that compliance was more important. This would have a positive impact in dealing with procurement in general, and they were making progress in this regard.

Regarding the number of backlog cases, it was correct that they always came before the Committee and expressed regret about that. Finding the best possible way to resolve the case backlog was part of their priorities. If they could succeed in preventing disputes, it would have a direct impact on the number of cases that were referred to them, so they were going to put a lot of resources and more effort into dealing with those cases. They would monitor and see if this had an impact. Their research team had been asked to explore other alternative methods they could use, without violating people’s rights, ensuring that even if grievances were resolved elsewhere without coming directly to the CCMA, their case load would start reducing.

The second most important solution was to ensure that the CCMA had very efficient and effective bargaining councils. For example, if a bargaining council collapsed, and given the number of cases it was dealing with, all those cases would come to the CCMA. If more than one bargaining council collapsed, one would see a ripple effect, and collapses would still continue. Therefore, the solution would be to put lot of effort into dispute management and make sure that the bargaining councils were effective. The information department team would ensure it monitored the implementation of this programme quarterly so that at the end of the current financial year, they would do a full assessment and see how the CCMA was making an impact. If they were not, they would have to revise their strategy again. However, the volatility of the labour market as it stands now threatened to increase the number of cases they would have. However, they would report progress to the Committee on the impact they were making on the case backlog.

Mr Morajane said they will look at the annual report and answer in writing the last question raised by Mr America, which dealt with disposable assets and the particular figure he was referring to.

The Director-General thanked the Committee for its oversight exercise over the Department. When they crafted the APPs and the strategic plans, they were trying to respond to the comments the Committee had made throughout its engagements last year with the Department and its different entities.

The Chairperson said the Committee was looking forward to more engagements with the Department and its entities so as to be able to resolve all the challenges they were encountering in the labour market.

The meeting was adjourned.
 

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