UIF Labour Activation Programme

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Employment and Labour

14 June 2018
Chairperson: Mr B Mashile (ANC)
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Meeting Summary

The Committee heard an update from the Department on the Labour Activation Programme and the reaction of Members was a mixture of praise and criticism. Members praised the Labour Activation Programme’s Turnaround Solution which was designed to protect and save jobs but were not happy with the organisation and quality of the information in the presentation.

The presentation painted a positive picture for the 2017/18 financial year with the Labour Activation Programme scoring 92 percent in overall performance. The number of current active projects on the Training of Unemployed arm of LAP was 11, with 533 learners in actual jobs. 6 684 jobs had been saved through the Training Lay-off Scheme.

Monitoring of projects and reporting thereon was a recurring motif of the meeting, after the issue was first raised by the Chairperson, who questioned the presentation's listing of monitored projects without any indication of the findings obtained from such monitoring.

A disagreement arose concerning the status of the learners who were part of the TOU. One Member was of the view that they were ‘true workers” and therefore entitled to all the benefits available under the Basic Conditions of Employment Act, including the provisions of the National Minimum Wage Bill. Another Member believed otherwise, saying the beneficiaries were learners and were still required to satisfy a part of a statutory qualification.

Although unrelated to the agenda, the issue of the National Minimum Wage and the legislative procedures concerning it came up during the meeting, when a Member of the Opposition noted that the draft regulations for exemptions from the National Minimum Wage Act had been considered during the Member’s unintended absence. The Committee Secretary had not sent notice of the meeting to his email address. The Member had intended to make comments on the regulations, but it seemed the period for comments had already expired. He said that he would personally write to the Minister on the matter as he believed that the closing of public comment on the regulations had been done “by stealth”. However, it transpired that the Member still had six days in which to submit commentary.

Meeting report

Opening Remarks

The Chairperson welcomed the Acting Director-General (DG) of the Department of Labour (DOL), Mr Sam Morotoba, saying that the Committee’s view was that an Acting DG had the same powers as a permanent one and that the Committee expected Mr Morotoba to use those powers in full and not to “frustrate” the Committee by a failure to do so. The Chairperson read out apologies from Ms L Theko (ANC), Mr P Moteka (DA) and Mr W Madisha (COPE).

Mr M Bagraim (DA) complained that, through no fault of his own, he had not attended the last two meetings because the invitations had apparently been sent to a wrong e-mail address. He, therefore, wanted it to be recorded that he had not been “absent” at the meeting but had not been notified due to a Committee staff error. The Chairperson accepted his explanation and hoped that the error had been noted and corrected.

Mr Bagraim also said he had noticed that during his absence, the Minister of Labour had sent the Committee the draft regulations for exemptions from the National Minimum Wage. Mr Bagraim had intended to make comments on the regulations, but it seemed the period for comments had already expired and therefore he asked the Chairperson for clarity on what the actual position was.

The Chairperson said he was certain that all Committee Members would get an opportunity to comment on the regulations once the Bill had been passed and signed. He said that was the usual procedure in such cases, but also assured Mr Bagraim that he would make a follow-up on the issue. Mr Bagraim said he would personally write to the Minister on the matter as he believed that the closing of public hearings on the regulations had been done “by stealth”.

Ms S Van Schalkwyk suggested, and the Chairperson agreed, that Mr Morotoba be asked to investigate the matter and give a response to Mr Bagraim through the Committee Secretary. Mr Morotoba said the DOL’s view was that the draft regulations were a preliminary internal exercise by the DOL and the closing date for comments, contrary to Mr Bagraim’s information, was still six days ahead (20-06-18). He confirmed the Chairperson’s view that Committee Members would be afforded the chance to comment on the regulations once the Bill had been passed by Parliament and signed by the President.


Before Mr Teboho Maruping, Commissioner: UIF, DOL, led the Committee through an update of the Labour Activation Programme (LAP), Mr Morotoba provided an introduction. The Unemployment Insurance Fund (UIF) was established with the primary objective of collecting contributions and paying such contributions to workers when the need arose, based on certain criteria. However, the global economic recession had forced the UIF to seek alternative ways to assist overall government efforts to create and retain jobs. The instrument designed to realise the above objective was the LAP.

Specifically, the LAP had gone into partnership with Technical and Vocational Education and Training (TVET) colleges; Sector Education and Training Authorities (SETA’s); and companies through social plan funding (turnaround solutions) and Training Lay-off Schemes (TLS).

The Committee had visited some of the LAP projects and had identified issues which needed serious attention and the presentation was an update on what been done to address those concerns. The highlights of Mr Maruping’s presentation for 2017/18 were as follows:

- 92% overall performance of LAP-

- 11 current projects on Training of Unemployed (TOU) with 533 learners in employment-creation

- four TOU projects involving 8 516 learners

- 6 684 jobs saved:

- five TLS applications approved involving 773 jobs

- 49 projects monitored.


The Chairperson remarked that Mr Maruping’s report said monitoring had been or was being done on projects in different parts of the country, but it was silent on what been learnt from that monitoring exercise. Why was that? Mr Maruping replied that the intention was to indicate that the projects were being monitored, but he understood the Chairperson’s concern and said the next report would include detailed evaluation of the monitoring process.

Mr Bagraim complimented the presentation on its turnaround strategies and solutions, but he differed with the Department’s designation of the LAP beneficiaries as “learners,” instead of the “true workers” they really were. He said he fully expected the Department to put its money where its mouth was and ensure that the beneficiaries got paid at least R80 a day. Mr Bagraim said it would be “the height of irony” if the DOL failed to do this. As workers, the beneficiaries were entitled to medical check-ups, tool kits and protective equipment. Referring to current active projects, he said the total national recruitment figure of 533 was “pitiful” and even begged the question of what the point of it was in the first place.

Praising the Training Lay-off Scheme (TLS) as a “fantastic idea”, Mr Bagraim, however, wanted to know why the trade unions were still not particularly supportive of it. After all, the scheme was an alternative to retrenchment, whereby the employment relationship between employer and employee was suspended whilst employees went on a skills training programme.

Ms Van Schalkwyk disagreed with Mr Bagraim on the beneficiaries being workers. She said the beneficiaries were learners because their involvement in the project was in fulfilment of the practical experience portion required by Technical and Vocational Education and Training (TVET) colleges before a full qualification was given. She asked Mr Maruping to indicate when the issue of stipends, which had been highlighted as a challenge in the presentation, would be resolved.

She also requested clarity on the significant discrepancy between the number of actual learners and the targeted number of learners. Was this due to over-targeting? Referring to a table indicating a summary of evaluated projects, Ms Van Schalkwyk asked why the number of learners for Project Management had not been given, yet the cost of the training had been (R924.000).

Ms Schalkwyk also commended the DOL on the number of jobs saved through LAP and said that, although the numbers might not appear significant, one job lost was one job too many. Regarding the TLS and companies rejected based on insufficient information, she enquired whether rejected companies were given another chance to remedy and resubmit.

Ms F Muthambi (ANC) wanted to find out how far the LAP had gone in forging partnerships with various stakeholders, which was the first one of the four pillars of the intervention. For example, it looked as if less than a quarter of all Sector Education and Training Authorities (SETA’s) in the country had been brought into the programme. Echoing the Chairperson’s concerns, she asked about the findings of the monitoring process. Were the objectives being met? Ms Muthambi also asked that the next time, the briefing should say something about the other three pillars of the LAP.

Mr D America (DA) wanted to know what happened to learners who had completed their theoretical training. Were they currently at work or sitting at home? He also requested clarity on whether the LAP had made follow up visits to companies where jobs had been saved to see if the jobs were still in existence. Mr America drew attention to three apparent discrepancies in Mr Maruping’s briefing about BMW (SA), one of the companies involved in the TLS project.

In one instance the company’s application was reported to have been pending because of outstanding financial statements; in another, the company was listed among the rejected applicants while, in yet another part of the same briefing, BMW SA was shown to be “at quality verification by the LAP.” What did the latter mean in simple terms and which of the three instances was the correct one? In the case of another company, House of Monatic, there was no information at all on the outcome of its application.

The Chairperson felt he was speaking for all when he said the presentation suffered from a lack of coherence. He said that one should be able to understand at least 75 percent of a presentation without a need for explanation, but unfortunately that could not be said in the present case.

Response from DOL

Mr Maruping said he was in agreement with the Chairperson and other Members that the presentation needed to be made simple and easy to follow. In part reply to Mr Bagraim, he said the issue of medical check-ups, tool-kits and protective clothing had been resolved and apologised that the presentation had not indicated so. To Mr America, he replied that the learners referred to were still sitting at home awaiting placement for workplace training. Regarding the trade unions’ lack of enthusiasm for TLS, Mr Maruping said the issue was a “dicey” one. It was hard to negotiate a solution when a worker had been with the company for a long time and just wanted to go home. Regarding the stipend, he assured Ms Van Schalkwyk that by September 2018 the issue should be resolved.

Explaining why there was no information on project management, Mr Maruping said the word “fee” was missing on the entry, meaning that it should be read as “project management fee”. This was the fee charged by service providers, which he said was between five and seven percent. Mr Maruping said the DOL had set up an appeals committee to give rejected companies another chance to be part of the TLS project. To Ms Muthambi’s question on SETA’s, he said that not all of the SETA’s had been targeted as part of the pilot stage of the programme. However, more SETA’s would be involved as the programme expanded.

Mr Maruping said companies on the TLS programme were visited during the monitoring process and he agreed that that was where the Chairperson’s criticisms on monitoring were particularly relevant. He again promised that the next time all the relevant findings would be included in the presentation and that periodic visits to companies would be made a standard feature of the programme.

Mr Morotoba further explained that a lot of companies were rejected because the TLS had undergone changes since its initial launch during the 2008 economic recession. One of those changes had been due to legislative amendments which affected the UIF itself. Currently, TLS relief was targeted mainly at companies undergoing temporary refurbishments to equipment, during which time workers were idle, sometimes up to six months. In such cases, the DOL insisted that only companies willing to retrain workers for the new work environment should be considered for the TLS. In other cases, “double dipping” occurred when companies in distress applied for TLS without disclosing that they were already benefiting from a similar intervention by the Department of Trade and Industry. When the DOL found out, the companies quickly withdrew the applications.

In response to Mr America’s query on BMW (SA), Mr Morotoba explained that the different instances in the presentation related to different financial periods. In the 2016/17 period the company was rejected but was again up for evaluation in 2017/18 because it was producing a new model, the BMW X3, and therefore could qualify for TLS to retrain workers for the new technology.

Mr Morotoba said another case of “double dipping” occurred when workers chose to take their UIF money and, after spending it, came back for LAP assistance. He said trade unions were struggling to convince workers/members who were financially under pressure that the best option was to hang on to UIF credits a bit longer. Responding to queries whether the Department made follow ups on companies who had been assisted in saving jobs, Mr Morotoba explained that contracts between DOL and companies had previously included a clause preventing the other party from carrying out retrenchments post assistance. However, the DOL’s legal unit had advised that the clause was unfair, and it had therefore been removed. To mitigate the risk of post-assistance retrenchments, the Department was using the LAP’s Turnaround Strategy to assess whether a particular company could avoid retrenching or not, before deciding to put that company on the TLS programme.

Using the case of the forest fires that had devastated areas of George in the Western Cape in 2017, Mr Morotoba said the Department was conducting a broad  review of the TLS programme to include new situations, such as forest fires or storms at sea, that could cause companies to seek  business rescue to prevent retrenchments, and those new conditions were being discusses between government, industry and labour at the National Economic Development and Labour Council (NEDLAC).

Further discussion

The Chairperson wanted to know what kind of assistance, if any, was given to companies when applying for the TLS, to avoid rejections that could easily have been avoided. How many companies had been found to have submitted fraudulent applications? When companies were rejected, what were the consequences of that decision? What did monitoring of the TLS programme actually entail?

Mr America reminded Mr Maruping that his question on the House of Monatic application had not been answered yet.

Responding to the Chairperson’s question on monitoring, Mr Maruping said his team had done site visits to companies, from which reports were derived, and in the case of learning programmes, the monitoring team had engaged the students on their experiences. To Mr America’s question, he said House of Monatic’s case was currently before the project adjudication committee for review.  

Tackling the Chairperson’s question on the assistance given to companies, Mr Morotoba said a conflict of interest would arise if DOL officials were involved in assisting the very same companies they were adjudicating on. However, clear guidelines were available on the DOL website for applicants. The DOL normally did not pronounce on whether applications were fraudulent or not, but it was fairly easy for officials to judge early on from looking at the quality of the information that something was not correct and to reject the application.

The monitoring process unfolded in three different ways. Firstly, Productivity South Africa, which was a partner in the Turnaround Solution, had its own independent mechanism. Secondly, LAP projects jointly undertaken with SETA’s were monitored at provincial level where, at the local labour centre, the committees assisted the UIF in ensuring that the project did what it was intended for. Thirdly, the monitoring for the TLS was mostly done by the SETA concerned, the trade union and the DOL.

The Chairperson was not entirely satisfied with the DG’s answer on fraudulent applications and therefore asked the DG to further apply his mind on the matter. His concern was that the DOL was spending time and money processing fraudulent applications and there were no consequences for the culprits. There should be some kind of deterrent against the practice. The DG accepted his point and said the Chairperson’s concerns would be considered when the rules came under review. 

Adoption of Quarterly Report and Minutes of Meetings

The Chairperson told the meeting that the Quarterly Report was not ready for consideration and adoption and proposed that the issue be put aside, and the Committee Secretary be allowed to continue working on it. The Committee concurred.

The Committee then went to approve the minutes (with amendments) of the following meetings: 02 May 2018, 09 May 2018, 18 May 2018, 23 May 2018, 30 May 2018.

The minutes of the 16th May 2018 were deferred pending a ruling on parliamentary procedure regarding the wording of the outcome of the Committee’s deliberations during that meeting on three Labour Bills passed by Parliament.

The meeting was adjourned.



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