Supported Employment Enterprises performance; COSATU Memorandum; Election of Chairperson

Meeting report

Election of Chairperson
Ms F Loliwe (ANC) was nominated and elected as the Chairperson of the Portfolio Committee on Labour.
She thanked Members for showing confidence in her capacity.

Mr M Bagraim (DA) congratulated her for being elevated from acting Chairperson to Chairperson and said he is looking forward to working well with her.

Ms S Van Schalkwyk (ANC) congratulated her on behalf of ANC.

Supported Employment Enterprises (SEE) overall performance and plans: briefing by DOL
Ms Marsha Bronkhorst, Chief Operating Officer: Department of Labour, apologised for the absence of Director-General Thobile Lamati who was attending the International Labour Organisation (ILO) governing body session in Geneva. She asked the Chairperson if it is possible for the presentation to focus on future plans more than performance. The request was granted by the Chairperson. She requested the Chief Financial Officer of Supported Employment Enterprise in DOL’s Public Employment Services to present.

Mr Silumko Nondwangu, SEE CFO, said he will focus on variance in provinces, improvements as well the legal problems and SEE future plans. In line with programme performance indicators, production norms and standards were developed and training conducted with factory managers and instructors by end March 2017. However, performance norms and standards were not properly implemented leading to failure in achieving planned targets. To overcome this under-performance, there was collaboration with Productivity SA to assist in conducting a work study and review of SEE manufacturing processes, development of SABS certified norms and standards, implementation of approved SEE norms and standards throughout the factories and up-skilling of key personnel involved in production planning and execution.

Increase in the gross profit margin in the period 2016/17 increased to 41%. Nevertheless, there was 149% gross loss. As counter-strategies to this underperformance, implementation of SABS certified norms and standards to ensure efficient and cost effective production processes was undertaken. There was an increase of revenue through capacitating the Business Development Directorate (filling of currently approved vacant posts) as well as development and implementation of a cost reflective price list. Against this backdrop, and in line with the percentage of all SEE employees developed as per Work Skills Plan per annum, 80% of the Work Skills Plan was implemented by the end of March 2017. Statistics not achieved included 32 officials underwent training (2% of the establishment) with 8 (25%) being persons with disability. Strategies to overcome the under-performance were the establishment of the SEE Training Committee, consolidation of training requirements for all directorates within SEE and filling of the vacant approved Human Resources Training and Development post.

One of the Supported Employment Enterprise (SEE) strategic objectives is to provide work opportunities for persons with disabilities. The annual target for 2017/18 is 150 persons with disabilities provided with employment opportunities in SEE by end of March 2018. The SEE 2017/18 Quarter 1 target was 25 and 47 persons with disabilities were provided with employment opportunities. Another strategic objective is to develop and implement programmes that promote employability of Persons with Disabilities. The target for marketing campaigns for 2017/18 are nine regarding the existence of SEE and products manufactured. The Marketing Strategy Implementation Plan for 2017/18 was developed by the end of the quarter as a target. The annual target is two radio campaigns and four print media campaigns. The print media campaign for Quarter 1 was not achieved. Another program performance indicator is 100 special schools will be visited nationally and made aware of the existence of SEE by the end of March 2018. The Quarter 1 target was 25 but only 4 special schools were visited by the end of the quarter.

In terms of financial performance, revenue is below budget due to delays in production. Only the Quarter 1 subsidy was received and the budget reflects four months, hence the variance in Other Income. Operating expenses are below budget mainly due to unfilled funded positions.
SEE future plans include issuing terms of reference by end of February 2018 to conduct a feasibility study for the opening of two new factories in Mpumalanga and Limpopo; embarking on a process from 15 November 2017 with Legal Services assistance to develop proposed amendments to Chapter 7 of the Employment Services Act to clarify the status of SEE as a trading entity as opposed to the current government component; establish an advisory board and its functions, clarify the appointment and powers of the CEO. Other future plans seek to expand current employment levels of People with Disabilities during 2018/19 by employing an additional 200 persons in 2018 and another 250 in 2019 in line with the Annual Performance Plans. SEE will visit special schools to conduct recruitment, secure more contracts through enhanced marketing and partnerships with government and other external stakeholders during 2018/19. This will include nine product exhibitions, radio campaigns and print media. Other plans seek to modernise factories through procurement of additional machinery without displacing current workers; develop new products that are labour intensive but also meet requirement for various markets; re-open medical clinics in all SEE factories and ensure that they are staffed with nurses and doctors from the Compensation Fund at regular agreed intervals as well as utilising spare capacity of SEE sections for employment creation projects, such as toilet paper, glass recycled projects and medical assistive devices for the Compensation Fund.

Discussion
Mr M Bagraim (DA) said that the Committee is desperate for people with disabilities to be in employment. He asked why only 1% of the disabled are employed in the public service against the 3% stipulation by the Labour Ministry. He recommended that there is need to triple that figure. To increase sales of goods, he spoke about investigating preferential procurement in SOEs such as ESKOM and SAA. In line with civil society, he said that there should be interaction with people with disabilities. He asked for the department’s future plans in that area. He also recommended that to secure more contracts, the department needs to utilise community radio stations which are desperate for content and also local newspapers. He said they do not need money for these processes but they are supposed to be a bit innovative. In line with employment equity, the department’s responsibility is to employ people with disabilities as well as interact with equity inspectorates in an effort to know how many are living with disabilities. The Advisory Board must be carefully planned and must be an independent board and not politically marked. He recommended that the department appoint the Chief Executive Officer (CEO) to the Advisory Board and he said that as a Committee, they do not want big man CEOs. He strongly supported the re-opening of medical clinics.

Ms S Van Schalkwyk (ANC) said that there is need for clarification about needed improvements in the first quarter performance. SEE failed the performance by a huge margin. She asked on what is the current vacancy rate, how many did the department employ by the end of the financial year and she asked if the department’s approaches in its future plans are sustainable in the long run.

Mr T Rawula (EFF) requested the actual demographics of the transformative agenda in terms of women, youth and the disabled. Of the 47 people with disabilities employed, he asked what types of jobs are these, are the jobs permanent or on contract. He said this information is important to assess the performance. On future plans, he asked if there are possible projects to elevate SEE into an entity rather than a sub-entity. He recommended that it must be elevated so that it has the same status as other entities in the department. On the modernisation of factories, he said there is evidence that modernisation is associated with Information Technology (IT) and mechanisation. The more DOL introduces IT and mechanisation, it will lead to the displacement of workers. He asked DOL what they have in mind about the disruption of labour.

Mr L Khoarai (ANC) said that he is new to the Labour Portfolio Committee and he requested the department explain acronyms such as SEE in full so that they accommodate everyone in the discussion.

The Chairperson said that there are no time frames for the SEE future plans. The interest of the Committee is when you will be opening factories such as in Mpumalanga and rural provinces like Limpopo.

Mr D America (DA) said the comparative analysis of quarters 1 to 4 per strategic objectives of 2016/17 do not make sense. He sought clarification on the 67% under effective and efficient financial management and governance. Under the statement of finance performance for 2016/17, he asked why there is an enormous difference of profit and loss for the year between R44 055 868 and R39 827 797.

In response, Mr Sam Morotoba, Deputy Director-General (DDG): Public Employment Services in the Department of Labour, said that persons with disabilities are defined in the Employment Equity Act. He admitted that the 3% target by the Ministry to employ persons with disabilities is not being achieved. On preferential procurement, he said the Department experienced some problems with the Ministry of Finance. On the request for time frames, he said the Department is going to draw lessons from factories in China and Germany before opening them. On the opening of clinics, he traced the background, saying the closure historically was because of loss of revenue. The Compensation Fund and the Department is going to employ nurses and doctors as a way to address or stop the problem of moonlighting, that is, doing work somewhere on top of one’s official job. More clinics will be opened to keep them busy. On the question of disabilities, he said as a Department, they need to expand the employment of people with disabilities and open opportunities for the youth sector.

Mr Nondwangu replied that the challenge as a department is that they need to simultaneously employ as well as generate revenue internally. The Department does not have enough revenue therefore there is need to extract more revenue through extracting more contracts.

Ms Bronkhorst promised that next time DOL will provide an index listing of all the abbreviations so that they accommodate everyone in the discussion.

In response to modernisation as a threat to labour, Mr Virgil Seafield, DOL Deputy Director-General: Labour Policy and Industrial Relations, said that modernisation will entail installing high end equipment and will not affect or disrupt labour. On the types of jobs they used to measure performance, he said close to 1 000 employees in factories are permanent employees although there will be some contracts here and there. He said the demographics requested by Mr Rawula will be sent in writing to the Committee. They are trying to address the past in the present on gender representation.

Mr Rawula said that in terms of transformative demographics, legacy representation is a fair comment but he asked DOL about their commitment to that. He said otherwise he is comfortable with the report.

Ms Bronkhorst replied that the Department of Labour is fully committed to correcting the demographics to be fully representative of the country. She said the Department will enforce that legislation.

COSATU Memorandum on Labour Brokering and Outsourcing
The Committee had been referred the COSATU Memorandum, tabled on the 27 September 2017, in order to respond to COSATU on the matter of labour brokering. The Committee discussed the way forward.

Mr Bagraim said he has serious objections to the demands on labour brokering contained in the Memorandum. He said he will provide a response to Committee in writing. He was opposed to discussing the demand and said perhaps it can be tabled in August 2019 but not now. The demand can result in a change to the Constitution and about 11 pieces of legislation would need to be changed. He said that it will take 6 to 7 years to embark on that journey.

Mr Rawula said that state capture and the role of companies influencing government must be treated with urgency. He said labour brokering and outsourcing remains a sensitive issue. He said such primary challenges affecting society are not being addressed. He suggested that Members be given two weeks to consult with their parties then the COSATU Memorandum can be discussed.

Ms S Van Schalkwyk (ANC) agreed with Mr Rawula that the real challenges affecting the community are not being addressed. She said that the matter must be dealt with in finality before 1 December 2017.

Mr America said that COSATU cannot influence the Committee to simply push for change in the legislation as it will affect the economy. However, he suggested that Members come back next week to discuss the matter. He proposed voting about the matter, saying that as a Committee, they can go with numbers, as democrats – it happens that it is only the government that we know.

Mr X Ngwezi (IFP) said that he has been attending the Committee for the past five months but he was being downplayed in the Committee.

The Chairperson immediately intervened and said that Mr Ngwezi must remember that he is an alternative member and he is not being downplayed at all.

Mr Ngwezi said that the COSATU matter must be dealt with before December, thereby sharing the same sentiment as Ms Van Schalkwyk.

The Chairperson said the COSATU document must be forwarded to the Department of Labour so that they can guide members of the Portfolio Committee on Labour. The matter must be treated with the urgency that it deserves, stating that the Committee was given the Memorandum by the Deputy Speaker of Parliament to respond to COSATU on the matter of labour consultancy.

Ms T Tongwane (ANC) proposed that the matter be discussed in two weeks’ time.

The Chairperson said it seems as if only one party is ready and she proposed that the Committee allow other parties to go and consult so that every party will come with an informed position on the matter.

The minutes of the 18 October 2017 meeting were adopted without amendments.

The meeting was adjourned.