CCMA, Nedlac, Productivity SA, UIF on Quarter 2 performance; with Minister

Meeting report

Productivity SA: Second Quarter Performance Report

Mr Thobile Lamati, Director General (DG): Department of Labour (DoL) introduced the delegation from the Department present and gave a brief summary of the presentation. He handed over the entire presentation to Mr Mothunye Mothiba, Chief Executive Officer (CEO) of Productivity SA (ProdSA).

Mr Mothiba emphasised the need for job preservation to minimize retrenchments, and also for training to foster a competitive edge for employment growth and productivity. The Department had introduced workplace challenge programmes in the sectors of manufacturing, mining and agriculture. All these initiatives sought to improve economic efficiency and productivity, employment creation, upholding workers’ rights, protecting vulnerable workers and firms’ labour relations. It also sought to craft institutional and legislative frameworks to attain competitiveness of enterprises.

4 762 jobs had been saved in companies facing economic distress since the beginning of the financial year. 3 630 small, medium and micro enterprises (SMMEs) and cooperatives were trained on enterprise development programmes against a target of 2 300. Also trained across the business, labour and government spectrum had been 236 productivity champions, education, training and development (ETDs) and skills development facilitators (SDFs), against a target of 120. Productivity and competitiveness enhancement programmes had supported 177 companies in industry sectors, including special economic zones (SEZs) and industrial parks, against a target of 155.

Discussion

Mr M Bagraim (DA) said that the Department had set targets, for instance, of creating 5 000 jobs, or supporting 4 000 small and medium enterprises (SMEs). It had supported 177 companies, yet it had spent R40 Million. It was a waste of investment.

The Chairperson wanted clarification on where the DoL had performed in respect of training, and where it was experiencing under-performance. She asked where the support to vulnerable workers was. The Department had targeted 97 companies for support with turnaround strategies, but had managed to assist only 32. What were the areas of weakness, and where did the Department require assistance?

Mr D America (DA) wanted an explanation for the DoL’s under-achievements and their direct impact. He also asked about its non-defined targets. The role of ProdSA was to assist struggling and stressed organizations, so what was it doing in that respect?

ProdSA’s response

In his response on the issue of spending, Mr Mothiba said ProdSA was grappling with fixed costs, and proposed a business model to avoid that in future. It was providing training across the country in all the provinces, but he acknowledged that in the Northern Cape and Free State it was facing challenges. He conceded that the colours in the slide illustrating the entity’s performance were distorted, convoluted and misguiding, and would be corrected.

Ms Mildred Oliphant, Minister of Labour, said that most companies that were stressed had not understood the role of ProdSA. She said the structure for training was being reviewed to deal with delays. Companies were now coming on board because they were now aware of the role of ProdSA. She asked the Committee to allow the administration process to unfold.

National Economic Development and Labour Council (NEDLAC): Quarters 1 and 2 Report

Mr Madoda Vilakazi, Executive Director: NEDLAC, emphasised on objectives of the entity and provided a comparative analysis of its performance between quarter 1 and quarter 2 of the 2017/2018 financial year. NEDLAC had made progress in respect of governance, the efficient provision of office support services, risk management and financial oversight, monitoring and evaluation, compliance with institutional and legislative frameworks, and capacity building.

Challenges faced included performance appraisals not being conducted, as some employees had gone on emergency (pregnancy/ ill-health) leave prior to the conclusion of appraisals; no performance improvement plans had been developed, given that employees who had undergone performance appraisals had performed in line with the set standards; in convening meetings, some of the social partners had not been available and responses were not received on time from participants. There was also an insufficient budget allocation resulting in cost pressures, with unfunded mandates such as the National Minimum Wage and Comprehensive Social Security activities, as well as a sovereign ratings downgrade and a shortage of human resources.

Expenditure for 2017/2018 financial year, under programme 1, at the end of quarter 2 was at 54%. This was 4% higher than the average for the first half of the current financial year. Although 4% as a variance was regarded as not significant, some of the contributing factors for the excess were expenditure relating security, salaries of temporary staff, computer software and licence renewals which had been incurred in the first two quarters of the financial year. There had also been an impact from the unfunded national priority projects, such as the National Minimum Wage activities.

Under programme 2, the expenditure was at 60%, which was 10% higher than the expected normal average of 50% for the first half of the financial year. The 10% variance was due to the costs of the National Minimum Wage activities. Another contributor was that the Development Chamber had covered more than 50% of its annual activities for the current financial year.

Under programme 3, the expenditure was at 25%. The variance of 25% was due to the fact most of the activities under constituencies would be undertaken during quarters 3 and 4 for business and labour constituencies.

Organisational priorities for the 2017/2018 financial year included enhancing risk management systems and compliance; lobbying for additional funding in order to address the issue of an insufficient budget allocation and under-funded projects/mandates; effective implementation of the audit action plan; enhanced communication and outreach programmes; ensuring that the work that flowed from the National Minimum Wage lived beyond the implementation date of May 2018; ensuring that South Africans who are currently outside the security net are covered; substantially advancing engagement on the work of the National Health Insurance (NHI) scheme; and continuing with the consideration of Section 77 Notices, in line with the NEDLAC Protocol and Code of Good Practice.

Discussion

The Chairperson asked why the National Minimum Wage was deemed an unfunded mandate.

Mr Bagraim asked how the department was going to fund the National Minimum Wage programme. There needed to be more than an overall expenditure of R32 million and an employee budget of R12 million. In the area of goods and services, was the R9 million for temporary employment or consultancy?

The Chairperson asked why the National Minimum Wage was unfunded, and why there had been preparations and budgeting in 2016 on an issue which had started in 2014. She accused the Department of starting the preparations and budgeting late, there was therefore no need to cry foul on the unfunded mandate.

NEDLAC’s Response

Mr Lamati, DG, said when Mr Vilakazi had said unfunded mandate, he was referring to a number of programmes which had not been budgeted for. For instance, the Department had set up the Committee of Principals, and the technical committee had observed that programmes must continue, and that had necessitated some of them to be classified as unfunded mandates. This included research work that was done. He acknowledged that maybe the terminology that was used by the Executive Director was not correct, but said there were a number of projects and activities that had been undertaken as far as the National Minimum Wage was concerned, that fell outside the allocated funding to NEDLAC. This was not how the Department viewed the issue of the National Minimum Wage. The resources reserved for the Minimum Wage showed how the Department valued the matter. The Department had secured funding from the Treasury to set up the National Minimum Wage Commission and the process was currently under way.

Mr Lamati said the R9 million referred to was the actual expenditure during the first two quarters of the year, and not the budget under goods and services.

Mr Vilakazi said the Department viewed the matter of the National Minimum Wage as important.

Minister Oliphant said conferences dealing with the National Minimum Wage were not funded, and also not under the prescripts of NEDLAC per se, saying that the language used by the executive director was in order. She added that the secretariat of the National Minimum Wage Commission would be permanent, but not the Commission itself.

Unemployment Insurance Fund: 2nd Quarter Report

Mr Teboho Maruping: Commissioner: Unemployment Insurance Fund (UIF) said the critical aims of the UIF were to improve financial management, service discharge, compliance and fund poverty alleviation schemes. The overall achievement per each of these indicators was 58%. In administration, the actual achievement was 11%, which complied with its target of less than 15% of revenue under programme one and its strategic objective of improving financial management. Against an annual target of 80% by March 2018, 85% of total mandated social responsible investment had been committed and the asset manager was fast-tracking the timeframe between deals-in-progress and commitments.

The aim of improving service delivery had not been achieved. There was a lack of integration in claim processing. There was no allocation of claims according to benefit type. As a corrective measure, integration in line with claim processing had been embodied in the delivery action plan. Overtime was also proposed, to clear all applications. The Department had enhanced the system to have an indicator for claims benefit types, and an age analysis report was developed for proactive assessment in line with the turnaround time. The Department also realised that its service delivery action plan made provision for network upgrades, with Wi-Fi access. In line with the lack of system functionality to accommodate the investigation process, the Department had enhanced the system to accommodate to investigation period.

An achievement of 98% was recorded for payment documents processed after receipt. A 98% achievement was also recorded for new companies with complete information issued with registration certificates, and registration was captured on a first in, first out basis. In line with improving compliance to UIF legislative and institutional frameworks, 32 824 new employers were registered, which signified an achievement due to collaboration with the Department of Basic Education to register schools for the National Schools Nutrition Project.

However, the percentage increase in revenue per year was not achieved due to fluctuations based on the volatile economic markets. The percentage of valid claims with complete information approved or rejected was not achieved under service delivery, with a variance of 72% against the target of 90% due to the lack of system functionality to accommodate investigation processes. The targeted percentage of payment documents processed after receipt was achieved, and payment forms were taken manually and captured directly by Siyaya.

The turnaround time to approve or reject the funding of poverty alleviation schemes after receipt of complete information was achieved. However, the turnaround time to transfer funds to partners after the receipt of accurate invoices was not achieved. As a corrective measure, the Department had targeted to revise and align legislation in the 2018/2019 financial year. 

Discussion

Mr Bagraim said that online applications were a nightmare -- slow and difficult to organise. People were having problems with the UIF’s call centres also, as they were not functional on a regular basis. Long queues were still prevalent and many people were being sent back for lack of requisite paper work. There had been complains about this for the past three years. He encouraged the centres to take a leaf out of the book from the Commission for Conciliation, Mediation and Arbitration (CCMA), and recommended that they needed a help desk for people who needed assistance, like in the case of CCMA. He warned that if the Department was having pressure now, there would be more pressure in the case of a new president signing other legislation. He asked if the Department was coping with the retrenchments which had doubled in recent years.

Ms S van Schalkwyk (ANC) asked the Department to indicate the financial performance percentages for quarter 2, since they had not been mentioned or shown in the presentation. She also asked for the performance by individual provinces, and not as a whole.

UIF’s Response

The Commissioner said the UIF was improving its online platform, and it was 85% complete. By the end of the financial year, the online platform would be upgraded to ensure effectiveness and efficiency.

The Department had acquired the latest technology to deal with the issue of call centres. It was worried about the queues, so it had introduced specialised centres which were on the brink of being approved. It had also introduced manual centres in Gauteng and North West Province.

The UIF was working on issues related to compliance. When employers applied for a loan, the bank must check first with the UIF and if the employer was not registered, that would help the UIF to go and inspect, to check the compliance of that company.

DG Lamati pointed out that not all labour centres were processing centres. For instance, someone from Khayelitsha could be referred to Somerset West where there were processing centres. However, the Department was planning to make all centres fully-fledged so that all could be processing centres, to avoid congestion or long queues.

Mr Bagraim asked a follow-up question, questioning what the Department was doing if long queues included those people who were sick and old. He recommended it needed more equipment to help the really needy and the most vulnerable -- those who had lost their jobs.

The DG responded that what was contributing to the long queues were the lack of sufficient and necessary resources that the Department required in the visiting points. The UIF needed more people on ground as a result. The Department was processing a proposal for mobile resources to areas where most people are poor and did not have money to go to labour centres.

The Minister agreed with Mr Bagraim that there was a need for additional funds, but despite the efforts of the Department, there had been no additional funds since 2013.

Commission for Conciliation, Mediation and Arbitration: Second Quarter Report  

Mr Cameron Morajane, Director: Commission for Conciliation, Mediation and Arbitration (CCMA) said 99.98% (36 779 out of 36 787) of all registered cases' first events were heard within thirty 30 days (excluding agreed extensions). Only eight cases were heard outside the statutory period, and this was attributed mainly to administrative errors. As a corrective measure, there was continuous monitoring by regions and corrective action taken where it was due to employee error.

99.37% (4 894 out of 4 925) of arbitration awards were sent to parties by the 14th day after completion of the arbitration process, with 31 awards sent outside the statutory period. As a corrective measure, there was continuous monitoring by the regions and corrective action taken where it was due to employee error.

Against a target of 16 training interventions delivered to capacitate the workforce for efficient and effective delivery of the CCMA mandate, 15 training interventions were delivered. Non-performance on this target was attributed to business disruptions that had resulted in this intervention having to be rescheduled outside the reporting quarter. Against the target of monitoring two Minimum Service Determinations (MSDs) and Minimum Service Agreements (MSAs) and producing a report, four were monitored. However, the performance could not be confirmed as evidence submitted was not in line with the target’s technical indicator. Although work had been performed by the Essential Services Committee (ESC) in respect of this target, non-performance was attributed to the fact performance is not in line with the technical indicator description. Monitoring of entities had been conducted, but entities that were monitored during the period under review did not have and MSA or MSD in place, as required by the technical indicator description. As a corrective measure, engagements had been held with the ESC in order to ensure that in subsequent quarters, performance in this regard is in line with the technical indicator description.

47 311 cases were referred to the CCMA during the period under review, compared to 46 308 in the same period last year. On average, it took 23 days to deal with conciliation cases, as compared to the legislated target of 30 days. On average, it took 52 days to deal with arbitration cases against a target of 60 days. The CCMA managed to settle 35 public interest matters. The CCMA settled 76% of the cases that it heard by conciliation.

It conducted 371 outreach services, inclusive of awareness raising activities, capacity building activities and social justice blockage activities. 11 144 people were capacitated to better understand the law and their rights through the outreach activities conducted. 30% of jobs -- 8 927 out of the 29 610 jobs at stake -- were saved, compared to employees facing retrenchments, through cases referred to the CCMA. It had convened the shop stewards on 21 and 22 September 2017 at Birchwood, Ekurhuleni. It had received 103 complaints and all were investigated and responded to.

Discussion

Mr Bagraim said that the CCMA was going to have a problem with the National Minimum Wage. He asked how the Department was going to handle millions of retrenchments. Looking at the jobless growth, it was going to have a lot of pressure for the coming two years.

Ms Van Schalkwyk acknowledged the 30% of jobs saved, and asked which industries had been affected by retrenchments.

CCMA’s Response

Commissioner Morajane responded that mainly mining was affected by these retrenchments.

The Director General agreed with Mr Bagraim that the case load had increased, and said the Department had requested more funding to deal with the amendments to the minimum wage and the case load, because the cost was very high.

He added that the Department had drawn some lessons from the Geneva conference, in line with online conciliation processes. He said it was correct that if the Department failed to act now, it would face more serious challenges. The Department’s warning systems were telling them that job losses were going to increase. As a result, it was also going to increase its capacity for the bargaining processes.

Minister Oliphant suggested that the load was not only going to double, but to triple.

Realising that the discussion was degenerating into a debate on the National Minimum Wage, the Chairperson reminded Members to reserve that for the processes which were going to take the Department and the Committee there.

Consideration and adoption of Committee minutes

The Chairperson sought consensus to adopt the minutes of 31 January.

Mr M Bagraim suggested that the phrase, “…the Members deliberated extensively on the issues…” was an overstatement and suggested that the word ‘extensively’ be removed. This was based on the fact that due to time concerns, the Members are not deliberating issues at length, therefore the word ‘extensively’ was an exaggeration.

The Chairperson said Members would not die if the word was removed, and proposed it be taken out.

Ms N Tolashe (ANC), seconded by Mr Bagraim, proposed the adoption of the minutes, with the amendment. The minutes were adopted.

The meeting was adjourned.