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LABOUR PORTFOLIO COMMITTEE
27 May 2003
DRAFT REPORT ON BUDGET HEARING: CONSIDERATION
Chairperson: Mr S Manie (ANC)
Document handed out
Draft Report of the Labour Portfolio Committee on Budget Vote 17 (Appendix)
The Committee reviewed the Draft Report on Budget Vote 17. The Committee agreed to several changes and submitted them towards the Final Draft.
The Chairperson was impressed by the high attendance of members. He noted that the aim of the meeting was to review the Draft Report on Budget Vote 17 (please refer to Appendix). He added that they only heard from FEDUSA and the Committee constituency at the public hearings, and expressed concerns that neither COSATA nor a representative from business attended. He described the budgetary process, noting that its purpose was to see if money was allocated to the Department was utilised for the determined purpose. They set performance targets, which should be measurable, so they may determine how well they have performed.
He noted that they needed to finalise this report, which was to be presented to Parliament.
The Committee decided to proceed with a thorough reading through the draft report.
A. Introduction to Draft Report
Mr. Mshudulu (ANC) noted the minor spelling mistakes in the document.
Chairperson acknowledged this stating this would be corrected.
Mr. Mshudulu suggested that it needed to be restructured to give it more meaning. He suggested that in the end of the last paragraph they should add the introductory statements Chairperson made regarding the public interests groups not attending.
Mr. Olifant (ANC) agreed, adding that in general they should be more specific, especially with respect to what the Community constituency was.
Chairperson clarified that the Community Constituency included those groups represented at NEDLAC, and added that they would clarify who was present.
Mr. Moropa (ANC) suggested that it was important to include in the introduction the overall budgetary process, so it could be made available to the people, as this was something that was neglected last time.
Chairperson suggested that he might add the introduction he made at this meeting to the document.
B. Budget Allocation for 2003/2004
Mr. Olifant directed the Committee to the estimated expenditure for personnel where it stated that this represented ' a 10% increase on the R320 039 000 estimated for 2002/03. He questioned if the figures should be turned around.
Chairperson upon reading the lines suggested that the "increase" might be changed to "decrease", but added that he would check on this matter.
Mr. Moropa questioned the 20% decrease over the whole MTEF period.
Chairperson stated that the transfer payments were the amount paid out to certain institutions including NEDLAC. He noted that this used to require huge transfers from the Department but now because the state government was taking responsibility there was a decrease in money transferred and this was the reason for the improved state of the UIF. He discussed the issue of vacancies in the Department, stating that the high number was due to the previous restructuring but was unclear as to why it was still the case. There was money allocated to personnel costs which was not spent, and he was unsure of the exact reason for this.
Mr. Mshudulu noted that this later point was covered under the section on Allocation to Auxilliary and Associated services.
C: Allocation per Programme
Programme 1: Administration
Chairperson stated that it was unclear what sheltered employment referred to. It was meant to refer to the Departments' response to those structures in which people with disabilities were given funding. The term could be misconstrued as in the past it was used to refer to protecting the jobs of white people. He wondered if they were referring to this contentious issue.
Mr. Mzondeki (ANC) noted that there had been a process of transformation, but that it was not moving fast enough. He wondered if the protection of disabled persons, was correctly located in the Department of Labour, and wondered if it should instead come from the social development budget because it was more of a welfare issue.
Mr. Madasa (ACDP) stated that he was not present during the public hearings, and wondered if the Department's response to the issue of vacancies was accurately reflected. He asked if attrition and movement contributed to all the vacancies.
Chairperson stated his view that the vacancies were only partially due to attrition and movement. He noted that the document should be changed to reflect this, as it appears to be wholly attributing the vacancies to this.
Programme 2: Occupational Health and Safety of Persons
Mr. Mshudulu suggested that the document must capture the decrease in compensation payments that would follow improved workplace health and safety.
Mr. Olifant suggested that the sentence referring to workplace accidents be re-worded.
Programme 3: Social Insurance
Mr. Mshudulu discussed the UIF report from the Auditor General on the state of UIF and the concerns raised about the irregularities. He wondered if these concerns were being attended to and reflected in the document.
Mr. Durand added that the report should commend the department for their work in turning around the UIF, which reported a surplus.
Chairperson added that South Africa was now one of the leading countries, in providing benefits to domestic workers.
Mr. Mshudulu agreed that it was a success and added that it was an example of the implementation of a law that reflected policy.
Chairperson stated that the Committee had digressed, but added that the registration of all the workers, including domestic workers was still a huge task and would be an ongoing challenge.
Mr. Mzondeki asked if there was a time frame given by the Department with respect to the decentralisation of the claim process to the provinces, as this was very critical.
Chairperson replied that they did not give a time frame.
Programme 4: Employment and Skills Development Services
Mr Mzondeki questioned the correctness of the figure of R2 million allocated for the current financial year.
Mr. Olifant asked if they had mentioned the schools and technical colleges in the budget.
Chairperson noted that it was pointed out that the main concern was more to do with courses and syllabus with respect to the schools.
Programme 5: Labour Relations
The Chair pointed out that he had two concerns with Programme 5. Firstly he suggested the reference to the HIV/AIDS and disability was explained. Secondly he stated that they should comment on the decrease in the number of disputes and the number of workdays lost with this programme, which demonstrated its success.
Programme 6: Labour Policy
Mr. Moonsamy (ANC) suggested that the Department should play a role in the promotion of co-operatives, which could aid in reducing unemployment.
Chairperson added that the Department was doing research on the topic and that his point was taken.
Programme 7: Service Delivery
With respect to service delivery, the Chair noted that they should point out the important role the provinces played in service delivery, as it was at the labour centres and the provincial offices that the public interacts with the Department.
He stated that with respect to the submission section, there was not much to add. He suggested that under the General recommendations regarding 'the participation of NEDLAC stakeholders at local level should be monitored' - the word "monitored" should be changed to "enhanced" or "improved". He expressed his concerns that since the specific performance targets were not noted it was difficult to see if the money was effectively utilised. He suggested that the Department should make these performance targets more clear and measurable.
Mr. Mshudulu agreed.
Chairperson noted that they would apply these comments to the Final Draft and adjourned the meeting.
Meeting was adjourned.
Draft Report of the Portfolio Committee on Labour on Budget Vote 17:
Labour, dated 2003:
The Portfolio Committee on Labour, having considered and examined Budget Vote 17: Labour, reports as follows:
The Committee was briefed extensively on 4 March 2003 by the Director-General and senior officials on the budget allocation for the Department of Labour (DOL) for the 2003/04 financial year. The NEDLAC constituencies were invited to make submissions on the department's 2003/04 budget vote. The Committee conducted budget hearings on 10 March 2003. Only the labour and community constituencies made submissions. The business constituency requested to present its submission at a later date. Presentations made by labour and the community constituencies did not cover all the programmes. The mentioned stakeholders concentrated on specific areas which affect their constituencies.
B. Budget allocation for 2003/04
The Committee noted that the R 1 291 089 000 appropriated to the DOL for 2003/04, indicates a 6% decrease compared to the R 1 296 173 000 allocated for 2002/03. Over the whole MTEF period expenditure decreases by 20% in real terms. This is due to the lower transfers to the Unemployment Insurance Fund (UIF).
The Programme: Service Delivery spends the largest share of the budget over the MTEF period with its share increasing every fiscal year. This is indicative of the Department's increasing focus on service delivery. Personnel is the second largest item that increases steadily in real terms over the MTEF period. However, the estimated expenditure for personnel for 2003/04 is R 271 928 000. This represents a 10% increase on the R 320 039 000 estimated for 2002/03.
The expenditure on transfer payments is declining over the MTEF period. The amount budgeted for 2003/04 is R 519 932 000. This reflects a decrease in transfer payments to the UIF. The expenditure on the Programme: Social Insurance is also declining as a result of the UIF becoming financially sustainable.
The Committee wanted clarity on whether the current budget covered the impact of legislation. It was indicated that the DOL would try to maximise the available resources. The Committee also emphasised the importance of recognising the challenge which the DOL is faced with in relation to enforcing and monitoring compliance.
The increased allocations on the budget baseline are to support the decentralisation of administrative support, regulatory enforcement, and advisory services to provinces in order to improve service delivery.
C. Allocation per programme
1. Programme 1: Administration
The medium-term expenditure estimate for Administration for 2003/04 is R 210 840 000. This will grow by 20% over the MTEF period particularly in relation to corporate services. The allocation for Administration over the MTEF period is on average 17,9% of the Department's total allocation, excluding the statutory amounts. The bulk allocation for Administration is consumed by personnel expenditure.
The Committee raised a concern at the number of vacant posts that exist within the department. The department mentioned that such posts are due to attrition and movements of people during each financial year. The Committee also raised its concern about sheltered employment.
The 8% increase on professional and special services is to accommodate the expansion of the IT function in the department. This will increase by 9% over the MTEF period.
The Committee sought clarity on the disagregation of the roll-overs from 2002/03.
Programme 2 : Occupational Health and Safety of Persons
The medium-term expenditure estimate for this programme for 2003/04 is R 26 481 000. This reflects a 3% real expenditure increase compared to R 24 174 000 estimated in 2002/03. A 9% increase is estimated over the MTEF period. The biggest expenditure is on auditing and technical support to provinces. The 6 % increase on the Subprogramme: Training of Staff is due to the training of inspectors. The spending on this programme is prioritised in an effort to reduce workplace accidents, through appointing additional inspectors and enhancing capacity to address specialised investigations. The service
delivery component of this programme, namely the workplace and blitz inspections, are located in the Programme: Service Delivery.
The Committee noted that there was no budgeted expenditure on research. Furthermore, clarity was sought on whether the department had any mechanism to monitor the use of government cellphones and cars. The department informed the Committee that it had policies which governed the use of cellphones and cars.
Programme 3: Social Insurance
The medium-term expenditure estimate for this programme for 2003/04 is R 269 639 000. This reflects a 25% decrease compared to the R 337 601 000 estimated in 2002/03. The expenditure on the Compensation Fund increases in both nominal and real terms over the short and medium terms. This programme provides administrative and other support to the Fund.
Out of the total estimated for the current financial year, R 257 000 000 is budgeted under the Subprogramme: Unemployment Insurance. The nominal and real spending on the UIF decreases massively over the MTEF due to the winding down of the turnaround strategy implemented to make the UIF financially sustainable.
With regard to the Compensation Fund, the department noted that claim processing enquiries will be decentralized to provinces as a way of improving the system. A report on how the department intends to improve the functioning of the Compensation Fund at a strategic level will be due some time during the current financial year.
Clarity was sought on whether there was a specific project which the department intends embark upon to use the surplus on the UIF. It was mentioned that the surplus would be invested to ensure its sustainability.
Programme 4: Employment and Skills Development Services
The medium-term expenditure estimate for this programme for 2003/04 is R 175 055000. The real expenditure on the programme grew by 4% from 2002/03, and by 7% over the MTEF period. Personnel and administrative expenditure is projected to grow strongly as oversight over the skills development machinery is strengthened with transfer payments declining in real terms. A 24% decrease in expenditure on skills development policy advice and planning is envisaged over the MTEF period.
The Committee raised some concerns around the issue of skills in technical colleges, especially with regard to engineering, the amount of funds allocated for training, centralisation and accessibility of SETAs, as well as school leavers who are unemployed as a result of a lack of training. The department mentioned that the employment strategy framework and learnership programmes are intended to address some of these concerns. The Committee suggested that for the purposes of accessibility, SETAs could be located closer to the labour centres.
Regarding funds allocated for training, it was mentioned that out of the R 2 million allocated for the current financial year, 20% goes to the national skills levy and 80% to SETAs.
As a way of addressing the problem of scarce skills, the department indicated that funds would be made available through the strategic project fund for students who want to pursue studies in mathematics, science, accounting and technology. Some people will receive training in primary and secondary agriculture as part of providing them with an opportunity for sustainable livelihood and access to markets.
On the issue of job creation, the department noted that there were proposed interventions such as the promotion of public works programmes, stimulation of business development, and skills development. These proposals will be tabled at the Growth and Development Summit.
Programme 5: Labour Relations
The medium-term expenditure estimate for this programme for 2003/04 is R 185 544 000. Spending on this programme remains relatively constant with a 1 % real decrease from 2003/04 and a 1 % increase over the MTEF period. Out of the total estimated expenditure for 2003/04, R 160 471 000 is made up of transfer payments to the Commission for Conciliation, Mediation and Arbitration (CCMA) and Ditsela. The transfer to the CCMA makes up 82% of the expenditure of this programme.
The department indicated that its focus during the current financial year included ensuring that the amendments, new regulations and adjustments to the CCMA processes were successfully implemented. It also sought to finalise the policy on child labour and the codes of good practice on HIV/Aids and disability.
The Committee suggested that the Minister be advised on the urgency of releasing the codes of conduct. Furthermore, the policy on child labour should be finalised. The department should look into the possibility of designing a brochure/flyer on workers' rights. The latter could be attached to any CCMA correspondence.
Programme 6: Labour Policy
The medium-term expenditure estimate for this programme for 2003/04 is R 27 821 000 as against the R 26 474 000 that was allocated in 2002/03. Out of the total amount, R 2 million is budgeted for the Subprogramme: Research, Policy and Planning, and R 21 834 000 for the Subprogramme: Promotion of Productivity.
The department indicated that it intended to conduct research on cooperatives and employment creation in order to ascertain the relationship between the two. Research will also be conducted on atypical forms of employment in order to determine whether there are any policy implications.
Programme 7: Service Delivery
The medium-term expenditure estimate for this programme for 2003/04 is R 373 787 000. Out of the mentioned this amount, R 153
094 000 is budgeted for inspection and enforcement services.
(a) Employment and Skill Development Services
(1) The department has no tangible programme to allow for new entrants under 30 years of age to enter the labour market.
(2) Provision of support skills in small business is the area that is not being paid attention by the Departments of Labour, of Trade and Industry and of Finance.
(1) The Departments of Labour and of Education should work together to bridge the gap between learning and the work environment.
(2) The new tax incentives should be amended to a grant form that will be paid to employers in advance. This must be monitored and controlled by SETAs.
(3) A more visual campaign must be introduced to make role players and beneficiaries aware of learnership opportunities.
(4) The Portfolios of Labour and Education, the National Skills Authority and the National Board of Further Education should convene an Indaba in order to evaluate the lack of progress of the National Skills Development Strategy and the Human Resource Strategy.
(5) Business centres should be established in provinces in order to support the development and growth of small business.
(6) Mechanisms should be devised that will assist in co-ordinating support activities for new companies and close corporations.
(b) Labour Relations
(1) The allocation of funds for the above programme does not allow for the strengthening of civil society.
(2) Funding allocated to Ditsela tends to be a one-sided programme that does not benefit entire communities.
The DOL should set up a structure that will allow for civil society to approach it directly for funding.
(c) Auxilliary and Associated Services
Funding allocated to NEDLAC is inadequate.
(2) COMMUNITY CONSTITUENCY
(1) Inadequate funding has been budgeted for enforcement.
(2) There is lack of sufficient follow-up to verify information provided by employers on employment equity targets.
The Committee wanted clarity on the role of the community constituency at NEDLAC. It was mentioned that the community constituency only participates in the development chamber. The Committee also raised a concern on the amount pertaining to the deaf and the blind. It was suggested that funds for this purpose be budgeted for by the Department of Social Development.
D. General Recommendations
(1) Inter-sectoral collaboration between the Departments of Labour And of Education should be enhanced.
(2) The DOL should monitor employers who do not contribute to the Skills Development Fund.
(3) The participation of NEDLAC stakeholders at local level should be monitored.
(4) The allocation of funds for the deaf and the blind should be re-channeled to the Department of Social Development.