The Committee considered the Draft Budgetary Review and Recommendation Report (BRRR) on the Department of Labour as well as the minutes of 12 September, 10 and 11 October; the Report on the oversight visit to Gauteng and Free State Province; and the Committee Programme – 4th Term 2018. The Committee was informed of the letter from the CCMA and EFF.
Most of the discussion centred on the Department of Labour BRRR, specifically the observations and recommendations on page 41 to 43. The focus of discussion on the Committee’s recommendations includes that the Minister ensure that vacant funded posts within the department are filled without delay and priority be given to critical posts; that the services of the Department’s Internal Audit and the Audit Committee are utilised and their reports implemented to avoid negative findings from the Auditor-General (AG); the need to investigate irregular expenditure, and fruitless and wasteful expenditure; and that officials who have flouted regulations are timeously subjected to disciplinary procedures. The last recommendation was that additional funding is made available to the Commission for Conciliation, Mediation and Arbitration (CCMA) to enable it to fully implement its statutory obligations in terms of the National Minimum Wage, Basic Conditions of Employment Act, and Labour Relations Act.
The Committee adopted the report with the DA not agreeing with the observations and recommendations.
The Committee adopted the minutes of 12 September, 10 and 11 October 2018. The Committee also adopted the Report on the Oversight Visit to Gauteng and the Free State and agreed to the Committee Programme. The Committee heard about the correspondence from the CCMA and the letter from the EFF.
The Chairperson mentioned that the programme was too long and asked for co-operation to make it shorter. He said there is an updated agenda; the original agenda did not make provision for the meeting of 11 October 2018.
The Chairperson said the Committee does not have the quarter four expenditure report. He said normally the Committee must deal with the Annual Report. He added that the fourth quarterly report should reflect issues to come out of the Annual Report. The Committee needs to deal with the Annual Report as this has consequences for the Moneys Bill Act.
Apologies from Members were noted.
The Chairperson noted that Mr P Moteka (EFF) is consistent in his absence. He added that the Committee Secretary is to enquire about his absence with an understanding that he is sick, but there is a need to establish the extent of his challenges.
Ms T Tongwane (ANC) adopted the agenda, and Mr D America (DA) seconded.
The Chairperson mentioned the need to deal with the Draft Budgetary Review and Recommendation Report (BRRR) to make changes, then finalise and approve the changes. He added that the recommendations need to find their way to the Medium Term Budget Policy Statement (MTBPS) of the Finance Ministry. If not approved today, the findings would not find their way to the ATC. It may not affect the MTBPS.
Ms S van Schalkwyk (ANC) expressed support for this.
No members disagreed.
The Committee considered the BRRR report.
The Chairperson said he hoped the Committee had received the report within time; and had had it for three days. The report was ready on Friday. He said that maybe the report is reasonably acceptable, until members agree it is acceptable. He enquired if, on the bulk of the report (excluding the observations and recommendations) whether any problems had been picked up. He indicated there is a big section which indicates that desktop research and analysis of some of the reports influence the labour sector.
Mr M Bagraim (DA) said the only thing the Committee needed to debate is pages 41 to 43 (observations and recommendations). He added that there was not much the Committee could change in the other part of the report. He supported looking at pages 41, 42 and 43 and said he would like to make a few comments thereafter.
The Committee considered page 41.
The Chairperson asked the Secretariat to lead the Committee.
Mr R Ngcobo, Content Advisor to the Portfolio Committee referred to the Draft BRR Report. On page 41, under paragraph 9 are Committee observations. He said that after considering the presentations made by the Department and its entities on other reports, and input from the Auditor-General (AG), the Committee made the following observations;
- 9.1 The Department materially underspent its allocated budget by R211.8 million, primarily on the Administration programme where it underspent by R92 million, and Public Employment Services where it underspent by R77 million;
- A major reason for variance between appropriated funds and expenditure was reported to be vacancies in the Department that resulted in an underspending in the Compensation Of Employees (COE);
- 9.2 The AG found that the financial statement audited were not prepared in accordance with prescribed financial reporting framework as required by the Public Finance Management Act (PFMA);
- 9.3 The AG found that effective steps were not undertaken by the Department to prevent irregular expenditure which amounted to R1.2 million;
- The AG found that effective steps were not taken to prevent fruitless and wasteful expenditure which amounted to R4 million.;
- 9.4 Inspection and Enforcement Services Programme has been struggling to attract and retain labour inspectors for the past few years. Many labour inspectors left the Department for higher salaries in the private sector and to Departments such as the Department of Mineral Resources (DMR);
- 9.5 Productivity SA has developed a proposal and seeks to shift away from the current multi-party financing structure, namely the Unemployment Insurance Fund (UIF), the Department of Trade and Industry (DTI), Transnet, and EOM, to a single final mechanism;
- 9.6 The Labour Policy and Industrial Relations Programme spent 98.4% of its allocated budget but achieved only 38% of its predetermined targets. However, a larger portion of this programme’s budget goes to transfers and subsidies, mainly transfers to the Commission for Conciliation, Mediation and Arbitration (CCMA);
- 9.7 The Supported Employment Enterprises identified a need to review the current approved structure to capacitate the entity and ensure the smooth running of the organisation.
The Chairperson said the Committee observations will direct its recommendations, and members must agree on them first otherwise it would make the recommendations fruitless. He mentioned that some recommendations are additional to those the Committee may have made in the quarter one expenditure report, as well as in quarter two, quarter three and possibly quarter four reports. The Committee had been making these recommendations continuously when it was considering those expenditures. Those reports that were submitted to the National Assembly (NA) are formal resolutions of the NA. He added that the Committee expects the Department and entities to implement them.
The Chairperson opened the observations to the floor.
Mr America mentioned that subsequent to the presentation of the Annual Performance Plans by the Departments, it emanated from the AG that the National Economic Development and Labour Council (NEDLAC) failed to disclose wasteful and irregular expenditure of over R1 million. He asked if the Committee was going to express an observation with regard to that omission from NEDLAC.
Mr America added that; 9.6 – Labour Policy and Industrial Relations Programme spent 98.4% of its indicated budget but achieved 38% of its pre-determined targets. A larger portion of this programme budget has transfers and subsidies, mainly transfers to the CCMA. He did not see a relationship between the two. On the first and second sentence, although the Committee knows a larger portion of the budget is allocated to transfers and subsidies, it does not speak to the 38% of the outcomes achieved. It was his view that it only achieved 38% of its pre-determined targets, and to leave out the last section, for discussion.
Mr Bagraim said the observation is missing the fact that South Africa is experiencing the worst crisis it has ever suffered, with almost 10 million people unemployed. He added that the Department of Labour (DOL) has overlooked that. He said the Department has not performed. The Committee needs to mention that, otherwise the Committee is not doing the country a service at all.
Mr Bagraim mentioned that the Department has set its targets, but is setting them low, and does not even meet them.
Mr Bagraim mentioned that in 9.1 the Department materially underspent on the allocated budget. He said there should be an observation at 9.1 that the Department can transfer (referring back to 9.6). Certain parts of the Department are completely under-resourced, like the Inspectorate. He said that it should be an observation that the Director-General (DG) of the Department should indicate where more money is needed, or is underspent, and restructure the budget in a business-like manner. He added that there is a need to capacitate the Inspectorate. He said the CCMA needs funds. On 9.1 he suggested making a comment that there should have been an overview by the DG.
On 9.2 Mr Bagraim said the Committee has been singing the same tune for the last four years. Every year the Committee makes the same comment. His same comment applies to 9.3 on irregular expenditure, seeing this every quarter. He said the Committee should put an observation on this. The Department does not seem to learn from history. They keep having irregular expenditure, wasteful expenditure, and keep preparing financial statements not in accordance with the prescribed financial reporting.
Mr Bagraim said that with regard to 9.4 The Inspection and Enforcement Services – the observation is that many labour inspectors leave, and whereas the Committee has made this observation before, no one listens to its observations.
On 9.5 Mr Bagraim said with regard to Productivity South Africa (SA) the members observe that they had developed a proposal. Maybe the Committee should extend on that; and give an outline as Productivity SA has been innovative. He suggested this to give them more plausibility.
Mr Bagraim said he would not speak on 9.6. On 9.7 the entity identified a need to review its current approved structure. An observation should be that it has not explained what its thoughts are for the future. The Committee should ask the entity to capacitate itself and explain that as well. He said the Department has failed South Africa in terms of its overall mandate to create an environment for job creation. South Africa is at its worst ever since the advent of democracy.
The Chairperson mentioned that Mr Bagraim is entering into the discussion. Some of the issues Mr Bagraim was raising need departments and commissioners to respond. Moving funds requires the DG to inform the Committee. He said that there are limitations of messing around with the budget. He said that an observation that is raised must have an appropriate recommendation. If the Committee makes an observation that the Department has not performed, what is needed is a subsequent recommendation that is measurable and can measure performance.
Ms L Theko (ANC) her main concern would be that the Department would utilise internal audit functions. On page 103 of the Annual Report, the report of the AG mentions that financial statements were not prepared in line with prescribed financial reporting as per the Public Finance Management Act (PFMA). Her observation is to make sure the systems are capacitated.
Ms Theko mentioned that on 9.2 the Department cannot retain the labour inspectors. She suggested the Department adopt a retention strategy as part of the recommendation and observed this as a serious problem because there are issues which need to be inspected by the labour inspectors. She noted with concern that this issue keeps being flagged over for the last four years. She said there are certain areas where some communities are not benefitting from the services of labour centres. Some municipalities and rural areas do not have fully functioning labour centres, like Bushbuckridge Municipality, and the Committee needs to ask the DG to look at this. The same observation might relate to all the provinces. The provincial departments need to give the Committee a briefing on their status and how they can improve to ensure that services are provided to all the people.
The Chairperson suggested going through each point and say if they agree or disagree.
Ms Van Schalkwyk referred to Mr Bagraim’s concern about the job creation function of the Department over the past four years. She said the same concerns are being raised and debated in the Committee. She said that even though the Department has been mandated to creating an enabling environment for job creation, the Economics Cluster deal with the same mandate. It is not fair towards the Department to place the issue of unemployment solely at the door of the Department of Labour.
Ms Van Schalkwyk, on 9.1, said she shares the same concern about the material underspending of the allocated funds by the Department, and about the reason for the variance between the funds and expenditure, namely the underspending on COE. She proposed the observation go through without any amendments.
The Chairperson stated that some of the observations might need to be tweaked because the Committee is observing and extracting it from the Annual Report. He invited the Committee to express their views on all of the points, one by one.
Ms Van Schalkwyk referred to 9.2 and asked if the Committee can find a way to insert the word “audited” to read “The Auditor-General found that the financial statements audited were not prepared in accordance with prescribed financial reporting framework”, but also added that the AG mentioned the non-adherence to the recommendations of Internal Audit, and previous audits. She added that members made recommendations that those prescripts have not been adhered to.
Ms Van Schalkwyk indicated that she agrees with the observation in 9.3, as it is. Also, she suggested that the Committee should mention the increase in the amounts in comparison with previous years, and the increasing amounts of irregular and wasteful expenditures
Ms Van Schalkwyk suggested that 9.4 stay as it is because the Committee has raised its concerns in this regard.
Ms Van Schalkwyk said that in terms of 9.5, the statement is fine, and suggested just going further with the recommendations.
Mr T Rawula (EFF) said on 9.2 and 9.3, the non-adherence to the process was repeated in all reports of the Department. He suggested there was a recommendation to that in 9.3. He also pointed to the Committee’s observation of the Department’s non-adherence to compliance with PFMA and government and said it was a cause for concern to the Department and the Committee’s oversight role. He said one cannot have a department that does not comply with financial regulations. He noted the increase in wasteful expenditure. He recommended that for irregular expenditure the law must take its course. He added the Committee’s observations from the first, second, and third quarters, and that people should have been arrested. He added that the Committee should take some responsibility.
The Chairperson said it is not the intention to defend the Department. There are limitations. In terms of the PFMA, the responsibility to correct things is with the Accounting Officer. He added that the Committee expects the Accounting Officer, namely the DG, to make the corrections raised by Committee in terms of the powers vested in them, but the Accounting Officer is not complying as mandated by the PFMA. Parliament’s power has been enhanced with the creation of the Budget Office. Through the Budget Office, it is empowered to shift money from errant programmes to those that comply. Now Parliament will rely on the AG through the new powers given, to take certain Accounting Officers to task where they are not doing the right thing as advised. The Committee can raise issues but expects the Accounting Officer to make changes in line with the PFMA. On the fruitless expenditure, the Committee expects the law will take its course. There is very little that the Committee can do, as it cannot take the accounting officer to court. One can only make a recommendation, for that is the separation of powers. The Committee does not have executive powers to cross the line. The Accounting Officers should deal with issues in terms of the PFMA. He said the Committee can only make an observation and recommendation on the basis that the Committee expects them to do something about it. The Department is limited by resources, so certain recommendations may not be practical for the Department to do in this financial year. It depends on the budget. If Treasury says one cannot go beyond this on COE while the Committee says it must go on, then those two are contradictory.
Mr W Madisha (COPE) said the Committee has been useless in that it has looked at the reports but not made any progress in so far as saying to the Executive, this is the route it must follow – given that the Committee is representing the people of South Africa. He proposed that the Committee re-look into this.
The Chairperson said the Committee has taken a step by empowering the AG to get action from the Accounting Officer. He said the Committee seeks to inform the Political Head and Accounting Officer of what action the Committee is recommending. The Committee must be aware that for an organ of state to implement the recommendations, it is limited by the resources it has, and by budget constraints on what it can spend. He said the Committee can make recommendations, but the entity must be aware when it gets the resources, it must deal with the matter. The AG is empowered and can challenge the Accounting Officer to account.
Mr Rawula said on 9.4 on page 41 it states as an observation that the inspectors are leaving the department for the private sector, for salaries. 10.4 seems to be denying this as it suggests that there is adequate funding for the inspectorate.
The Chairperson clarified that the report is not final, and suggested the members first agree on the observations, then make recommendations. The recommendation must talk to the observation.
Mr Rawula said this applies to 9.6 too.
Mr America said that with regard to observation 9.4, although it is true that inspectors may leave the department for greener pastures, it is not the only reason why people change jobs. He suggested that the Committee does not restrict it to salaries, and adds other reasons unknown for leaving the Department.
Mr America referred to the disclosure of wasteful expenditure in NEDLAC. He asked how the Committee was going to incorporate this as an observation. On 9.6, the last part of the observation is obsolete and has no bearing on the first part of the observation.
The Chairperson referred to 9.4 and said that the Department raised that people are going for better salaries in DMR, and in the private sector. He said the Committee’s recommendation must be inclusive. The fact of the matter is that the Department is neither attracting nor retaining them. And he mentioned the pressure of burn out, being overworked which may form part of the reasons. The Department raised the issue of better salaries, especially in DMR.
The Chairperson asked if the Committee can agree to the changes on 9.2.
Ms Van Schalkwyk wanted the Committee to add “non-adherence” to Internal Audit and Audit Committee recommendations.
The Chairperson said on 9.3 Ms Van Schalkwyk was talking about characterising these amounts as increases. He asked if there is agreement.
Ms Van Schalkwyk mentioned that the declared amounts and the amounts disclosed after the audit are different. She was unsure how to word it better to highlight the point that after the audit it was found that there was an increment to the original amount indicated.
Mr S Ngobo, Content Advisor to the Portfolio Committee said on page 20 it states that fruitless and wasteful expenditure of the Department increased by R300 000 to R4 million between 2016/17 and 2017/18. He said it was correct; there was an increase in fruitless and wasteful expenditure.
Ms Van Schalkwyk said it is correct, but she also wished to highlight that with the declared amount after the audit it was nearer to R1 million, and that had not been declared.
Mr Ngobo said there was a discrepancy between the financial statement disclosed and the final amount disclosed by the AG in wasteful and irregular expenditure, which is what Ms Van Schalkwyk has raised.
This was confirmed as correct.
The Chairperson said the meeting should capture that section correctly (namely 9.3). He asked how it should be read.
The Chairperson asked the Committee to go to the recommendations and deal with 10.1 first, finish it, then deal with the next one. He said the under-expenditure which was raised relates to COE. The recommendation read as follows: “The vacant funded posts within the Labour Portfolio are filled with duly qualified persons without delay”. He asked if that will solve the point on under-expenditure because of the underspending on employees.
Mr Bagraim said maybe some of the posts which are funded are not needed. The recommendation should be to look at what posts are actually required, such as the Inspectorate and the CCMA. With that recommendation, the Committee can go back to the Minister and ask for funding to be re-allocated.
The Chairperson said the Department had underspending on COE as they had vacancies. They can only fill the funded posts. Those that are unfunded cannot be filled. The Department may need inspectors, but if the positions of inspectors are vacant and not funded, they may not fill them. In the public sector, employing personnel is required in terms of an approved organogram and funded posts. The Public Service and Administration (DPSA) requirements need to be complied with, as well as Labour Relations regulations. He said that if there was underspending on personnel because of vacancies, the only solution one understands is to fill those positions. He said that the organogram will be assessed.
Mr L Khorai (ANC) said anything can assist the Committee to expand on the recommendation.
Ms Van Schalkwyk said it will not be an issue to strengthen the recommendation that priority should be given to critical posts.
Mr Bagraim said it assists towards strengthening the recommendation. He said that when making a recommendation, the Committee is giving a little guidance to the Department to fill the funded posts. The Committee needs to start making proper recommendations to the Department to relook at the organogram. Looking at critical posts goes part of the way.
Mr Madisha suggested that the issue should be based on audited staff. This is one of the things to be looked at. The members of staff in the public service was around 1.3 million. Most of the posts have been done away with, and are not been filled. The Committee needs to agree and check from time to time if this has been done.
The Chairperson posed that the Committee agree to extend the sentence in 10.1; that priority should be given to critical posts. He added that the Committee has not made a finding on the organogram itself. To make a recommendation on the organogram may be far-fetched. What the Committee has made a finding on is that the Department has vacant posts which resulted in underspending on their COE.
Ms F Muthambi (ANC) recalls that the Deputy Director-General (DDG) indicated that the Department has started filling some positions, and most will start on 1 November 2018. With the recommendation, it may be key with the outstanding positions to follow up on progress.
The Chairperson posed keeping the additional sentence, and that they should not forget prioritising key posts and filling them. That should deal with that point.
The Chairperson asked to deal with 10.2. He said the AG was worried about the manner in which the financial statements were compiled, they are not compliant with the PFMA. The recommendation the Committee has is that the service of Internal Audit and the Audit Committee of the Department are fully utilised and their reports implemented to avoid the negative findings by the AG. These two institutions have made recommendations to the Department. If the Department is complying with what the Internal Audit is recommending, as well as Audit Committee, then it should be able to comply with the requirements of supply chain.
Mr America said he agrees with the recommendations. He added that the Internal Audit Committee reports to this Committee, so the Committee can monitor what is happening in the Department. He mentioned that it was offered by ‘Commissioner Marapeng’ that an internal auditor comes with him and they report on their activities every quarter.
The Chairperson said the Internal Audit unit cannot report to this Committee directly. During those engagements the Committee can ask the Accounting Officer to give it copies of the report of the internal auditors or Internal Audit Committee
Mr America agrees to get reports from the Audit Committee.
The Chairperson says the Committee can make the request to get the last two or three copies of the Internal Audit report. The Internal Audit committee cannot report directly to the Committee. This would be a violation of protocol or rules.
Mr Bagraim said he does not agree with 10.1. But on 10.2 he recommended that the Department capacitates itself with properly qualified people who will be able to do the audit and present a report properly, in line with what the AG is saying.
The Chairperson said that a proposal has been made to the Department to employ properly qualified people, and asked if the current staff are not qualified.
Mr Bagraim said they have filed four years in a row.
Ms Van Schalkwyk said she cannot recall if the AG ever mentioned whether the internal auditors have the capacity to deal with the problems of the Department. She said maybe the Committee should park that concern or recommendation and deal with this issue later when they interrogates the report.
The Chairperson said that his biggest fear is when one has not made a finding that there are inappropriately qualified people in certain positions and maybe that is a recommendation.
Mr Rawula said that the restructuring of the recommendations is correct. He said the observations in 9.2 are not talking about the failure to utilise the internal auditors fully, but the inability to comply with the prescribed methods. The Committee needs to check if they are qualified to do their job. Now the Committee is making a recommendation saying they should be fully utilised. They could not follow the prescribed way of doing the audit. There is nothing wrong with the recommendation. He asked if internal auditors do have the required skills and capacity. He said that is how one can restructure the recommendation.
The Chairperson confirmed that the recommendation is to make sure that personnel are appropriately qualified.
Mr Madisha suggested that the Committee agree with that point. He posed through the Chairperson to endorse the recommendation to let this happen because in the past, no proper work was done, and the Committee must ensure implementation.
Ms Muthambi referred to 9.2 and the Annual Report. She said the Audit Committee made an observation that the Department is not utilising the Internal Audit. This was the finding of the AG. Part of the problem in 9.2 is that financial statements are not prepared in accordance with prescribed financial reporting. This is what the Internal Audit has expressed as a concern. She said it is not about the capacity of Internal Audit. The Internal Audit reports to the Accounting Officer, so it is not incumbent to implement what they are recommending. The problem is with the Accounting Authority and the use of reports.
The Chairperson said that what is being said is to add a sentence to conscientise the Department to ensure there are appropriately qualified personnel in the Department.
Ms Theko said the problem of suitably qualified personnel in 10.1 was identified. Maybe the Committee can expand 10.1. She proposed adding, “Even where there are funded vacant posts” the Department must consider appointing suitably qualified applicants.
The Chairperson said that what the Committee is saying is already accommodated in 10.1
The Chairperson asked Mr Madisha if what agreed in 10.1 was correct.
Mr Madisha agreed. He referred to 10.2, the fact that work is not happening properly. He said it is correct to say if the Committee goes back to 10.1 and says “with those vacant funded positions the person that has to be employed there should be the person that is able to make sure that 10.2 takes place”.
Mr Rawula said the Committee qualified 10.1 in terms of priority. It may not be necessary to take into consideration what the Committee wants to mean in 10.2 in terms of the internal auditors. The point he is making is that 10.1 which qualifies the need for suitable administration may not automatically cover 10.2. He feels that it is not an issue to say that it ought to be ensured that there are suitably qualified people. The people in 10.2 who are Internal Auditors may be qualified according to the standards of DOL, but they may not be suitably qualified in terms of the expertise, hence one tries to qualify the observation.
Mr Bagraim mentioned that with 10.2 the Committee has been told by Ms Van Schalkwyk and Ms Muthambi that there are qualified people there. He was not quite sure what 10.1 has to do with it because those posts are filled. He said that if they are qualified people then the Committee should make another observation that those people should be disciplined for gross negligence. His understanding is that they are not qualified, but if they are, the recommendation should be that the Department takes disciplinary action as soon as possible, get rid of them, and get the right people in. His strong recommendation is that they are not qualified, and they should fill the post(s) with qualified people, or if they are qualified, then there is a need to get rid of them because they are grossly negligent.
Ms Van Schalkwyk re-iterated that she never said Internal Audit Committee is lacking capacity or sufficiently qualified people. She said the issue of capacity of Internal Audit has never appeared. The Committee must investigate it when interrogating the quarterly reports, and can find out if the incumbents are qualified and capacitated or not, and then make a recommendation in that regard. It would be unfair at this stage to assume the one or the other.
The Chairperson proposed making a recommendation on a finding – if people are qualified. If they are not, the finding is baseless. The observations form the basis of the recommendation. On the issue of capacity they have not been able to do what is expected. The issue raised is non-compliance. Under 10.1, the Committee must not mix the two sentences;
- It is calling for vacant posts to be filled with suitably qualified people without delay; and
- Asking the Department to prioritise critical posts.
These are two separate recommendations under one. Do not mix them and conclude that the Committee is saying that the suitably qualified positions that must be filled must be those ones in critical posts. The Committee is calling for two separate actions. If the Committee calls for suitably qualified in 10.2; the positions are already filled, suggesting that people must be fired. He indicated that Mr Bagraim said this. The Chairperson asked for agreement on 10.2 as it was drafted. The Chairperson said the Committee has already called for the Department in 10.1 that whatever vacant positions get open must be filled with suitably qualified persons
Mr Rawula asked if the chairperson was saying the Committee must leave the recommendation like that, that they must be fully utilised as if the observation was about utilisation.
The Chairperson confirmed.
Mr Rawula argued that the observation was failure to comply with prescribed methods, namely the financial statements.
The Chairperson highlighted that Internal Audit and Audit Committee inform the Department how to go about the financial statements. Internal Audit have made recommendations on a monthly or quarterly basis. The Department has ignored the recommendations. He said the members are proposing that the Department must fully utilise Internal Audit with its reports to inform them on the internal control systems, and utilise them on implementing their recommendations. This allows Internal Audit to check the internal control systems, whether they are working correctly, and heed their reports where they are commenting on flaws.
The Chairperson said he would like for one member to recommend 10.3.
Ms Theko said the issue in 10.2 is an issue of compliance. She recommended saying “the Department has to comply with the PFMA in implementing the findings and recommendations by the AG”. The Internal Audit and the Audit Committees are functional, the capacity is there.
The Chairperson mentioned that the annual financial statements are not in accordance with the prescripts of the PFMA. He commented that the members are saying that for the Department to prepare its annual financial statements in accordance with the PFMA, it must listen to Internal Audit and the Audit Committee
Mr Ngobo said he thinks the Chairperson has explained it. He noted an observation of the AG that should the Department have implemented the recommendations that were made by Internal Audit and the Audit Committee, it would not have got the negative findings. The recommendation is trying to address that.
The Chairperson asked if the Committee would agree to 10.2 as it is.
Mr Khorai proposed to approve as said by the Content Advisor.
Mr Bagraim said he does not agree, and that he is in the minority on 10.1 and 10.2.
The Chairperson said on 10.3 that after expenditure, the first “and” must be a comma to make the sentence readable. Then the sentence will read as follows, “Incidental irregular expenditure, fruitless and wasteful expenditure are investigated, and officials who are found to have flouted regulations are dealt with in terms of disciplinary procedure”. He has a view not to use the words “dealt with”. He suggested it read “those that have flouted regulations are subjected to remedial action”; but changed it to say “subjected to disciplinary procedure or the process of law”.
Mr Rawula said the sentence does not talk to the people who are responsible and have been found to have flouted. The recommendation talks to people that are going to be investigated for the role they have played. He suggested to amend the sentence to talk to precautionary suspensions while the investigation is taking place.
Mr Bagraim said he likes the Chairperson’s suggestion but proposed to put in the word “timeously” to the suspensions as the AG has complained that they have been sitting on suspensions for years. This kills that problem the AG raised.
Mr Madisha said in terms of disciplinary procedures he would like to believe that disciplinary procedures exist. The disciplinary procedures that exist in one type of work may not be the same in another, and he wants to check this. He believes having the comma is correct, and proposed it reads “incidents of irregular, fruitless and wasteful” so that the Committee removes the first “’expenditure” and put a comma there.
The Chairperson mentioned that there are two concepts, one of irregular expenditure, and one of fruitless and wasteful expenditure. By omitting the first expenditure so that one has irregular, fruitless and wasteful expenditure, that will make it one concept, when it is two concepts.
Ms Muthambi confirmed that the Committee is dealing with two different expenditures. She referred to the issue raised by Mr Madisha and said it is correct to say that they are given management letters to respond to. One expects senior management to act on issues raised by the AG. When management came to the Committee to account they should have been able to explain how they acted in terms of irregular expenditure, and fruitless and wasteful expenditure. On 10.2 with non-compliance what is supposed to be done is to take people through the personnel process with a consequence management mechanism. Hence the Committee said the Department must give an audit action plan so that it can be tracked as a committee. On 10.3, it is non-negotiable where people are supposed to be charged, and if not, there is no consequence management.
The Chairperson proposed that after the word “irregular”, the replacement of ‘’and’’ with a comma does not take place and to save the “and” in the need to recognise the two separate concepts. He suggested introducing a semi-colon and break the two concepts instead of an “and’’. He suggested that the Committee delete “deal with” and rather say “be subjected to disciplinary procedures”, or was the Committee satisfied with the words “subjected to legal action”. He requested assistance on whether to say those that are found to have flouted regulations are subjected to disciplinary procedures or they are subjected to remedial action.
Ms Van Schalkwyk wanted the first line to say incidents of irregular expenditure and insert “as well as” fruitless and wasteful expenditure
The Chairperson said it is fine, they will insert a semi colon.
Ms Van Schalkwyk said officials are found to have flouted regulations, and agrees with Mr Bagraim that actions are being taken but it is very slow. She suggested to insert the word “timeously” to remedial actions.
The Chairperson referred to 10.4. He said members were worried about the inspectorate, that the Department is not attracting and not capable of retaining personnel. He read the recommendation on 10.4 and said it should read at the end “… and develop retention of labour strategies”.
Mr Rawula said that the recommendation should talk to a review of a salary scale against what is happening in the market. He does not know how to put it, but it should be reviewed in order to avoid losing specialised skills.
Mr America agrees with Mr Rawula in terms of the review of the conditions of service and salary structures. That should flow out of the recommendation for retention strategy. He said the salaries are one element, however there may be other elements as to why inspectors are leaving. That should be contained as part of the retention strategy. He adds that it is not necessary to specify what needs to be done to retain qualified inspectors, but the Department should present the Committee with a retention strategy. At that stage the Committee can interrogate the appropriateness of retention strategy
Mr Khorai suggested on 10.4 to take out “entertain”, and to say the Department “retains its strategy to make sure that it retains the inspectors”.
The Chairperson read out the sentence in 10.4 and indicated that what Mr Rawula was saying is that the portion “is adequately resourced” is not solving the problem. He wants the review of the salaries. The Chairperson asked Ms Muthambi to assist the Committee, and asked whether the Committee can call a department to review salary scales outside of DPSA.
Ms Muthambi said the salaries of public servants are decided collectively. The recommendation of the retention strategy is the most appropriate one. Based on the fact that the Department can identify positions that it does not need. It should be informed by the retention strategy and can be motivated to DPSA due to special circumstances because these are specialised skills that they are dealing with. The retention strategy be able to have all these things that are raised. It’s a process.
The Chairperson said the Department cannot simply alter the salary scales of Assistant Directors or other specialised positions. It can be done departments.
Ms Muthambi confirmed it can it be done with the DPSA.
Ms Muthambi said it can be done with a motivation to explain that one does not need an Administration Officer. They need only an Inspector. And that Inspector is key then.
The Chairperson said he is trying to get to the recommendation. He is trying to understand if the Committee calls for the Department to review the positions of Inspectors for the purpose of increasing their salaries to retain them. The Department cannot perform because that power is outside them.
Ms Van Schalkwyk reflected on the comments of Ms Muthambi and Mr America and highlighted that the members’ observations have been about the salaries of Inspectors, but there might be other reasons as well why they are leaving. Their recommendations must speak to that as well. The Department should develop and present a retention strategy to the Portfolio Committee, so that the Committee has some insight into how to remedy the situation. The Committee must speak to the recommendation that establishes if it is only the salaries that is a problem as another problem might arise whilst resolving the salary issue. She proposed exit interviews be conducted to establish either the problem or the causes for the high turnover. Then they can incorporate their findings in the exit strategy as part of the retention strategy.
The Chairperson summarised what Ms Van Schalkwyk has said; first, the Inspection and Enforcement Services Programme is adequately resourced so that suitably qualified inspectors can be appointed; second, that they are provided with relevant tools of trade and to monitor implementation of labour laws; third, the Department develop retention strategies; and four; that the Department conduct exit interviews for those that resign.
Ms Van Schalkwyk said the Department must first report back to the Committee during their quarterly presentations or make a retention strategy.
The Chairperson asked if it is necessary to report because when the Committee asks them to develop the retention strategy, or when the Committee needs the quarterly report, it can just ask the Department where it is with the retention strategy. Conducting exit interviews creates an opportunity of identifying why people disappear. The Department complained about Mineral Resources paying more, as do the private sector. Others are going to local government because of higher salaries and job titles. The exit interviews will provide an opportunity to establish what makes the personnel leave over and above salaries, in other words.
Mr Rawula wants a recommendation to cover the observation that people are leaving for the private and public sectors because of salaries. He said he agrees with all what has been proposed in terms of exit interviews of staff. There has to be action that talks to ensuring a level of standardisation of salaries in the Inspectorate Services, and in the public service. He indicated that the process Ms Muthambi is applying is important to give credence to the observations that have been made. It is a serious finding if DOL Inspectors are paid lower. He adds that there must be a key process of comparing the DOL salaries with others and ensure there is a salary review.
The Chairperson said some of the issues which were being raised have to be dealt with in the retention strategy, such as, if salaries or conditions of employment are a problem so that people do not leave. All departments are expected to do exit interviews. Unfortunately, personnel can leave suddenly without having the opportunity of an exit strategy
Mr America said the retention strategy makes sense. Perhaps the Committee needs to consider recommending a post evaluation of the Inspectors with a view to upgrading those posts, and if they emerge at a higher salary level it would benefit the current Inspectors. Perhaps the Committee can instruct the Department to embark on a process of post evaluation of the Inspectorate with a view of regarding those posts.
The Chairperson said that members agree on the disparities in the salaries of inspectors as a reason for personnel leaving. He said when making the recommendation members expect the Department to comply, but the Department cannot as it must be done by DPSA. If the key to the retention strategies is to relook salaries, the Department will liaise with DPSA to relook these positions. He advocates for a post evaluation. Next year the Committee will ask whether the Department has actually done the evaluation, unless that is outside their powers. He asked for agreement that the salaries will form part of the package of the retention strategy. The Committee will ask what retention strategies the Department has come up with in compliance with the Committee’s recommendation, and will evaluate the appropriateness of these actions.
The Chairperson referred to 10.5 – Productivity SA had a problem of not receiving funds from the Unemployment Insurance Fund (UIF). He said it is understood from the Minister and Productivity SA that Productivity SA has embarked on ceasing a multi-pronged strategy for funding – that is receiving funds from UIF, DTI and other entities. Productivity SA will embark on a single funding model. He said that is what the recommendation in 10.5 seeks to say, that they must conclude the exercise of the single funding model.
Mr America said he does not have that recommendation. He said that the recommendation he has relates to the funding challenges of Productivity SA to be timeously addressed. The Committee knows the reason why. There was alleged fraud that took place. That resulted in a delay of transfer of funding from the UIF. Under normal circumstances they would not have those challenges. He did not think the Committee should put it in as a recommendation.
The Chairperson asked Mr America to look at what the observation seeks to say. The biggest challenge was expecting to be funded by UIF, DTI, Transnet and the Department. Productivity SA will have a single funding model in terms of its presentation. The members are now saying they must finish that exercise in order to fulfil their mandate and avoid the same problems next year.
Mr America said he could not understand the link between the observation and the recommendation. He said they simply have to do it, namely, go from multi to the single funding model.
The Chairperson remarked that the Committee is not correcting 10.5. He indicated that the Committee’s recommendation was to just say “The Committee notes this”.
The Chairperson proposed the Committee ask Productivity SA to do it timeously so that it can meet its mandate. Productivity SA may do it over the next two or three years and then defeat its funding requirements.
The Chairperson asked if there were any changes to the recommendation.
Mr America suggested removing the financial challenges and said the funding of Productivity SA should happen timeously to address the funding requirements.
Ms Van Schalkwyk agreed with Mr America. She proposed to say the new funding mechanism of Productivity SA is to be implemented “timeously” to fulfil its mandate
Mr America proposed the wording to be “addressed expeditiously.”
The Chairperson read the wording, the “funding mechanism of Productivity SA is addressed expeditiously”. He said that will enable it to fulfil its mandate.
Ms Van Schalkwyk proposed the wording “The new funding mechanism… to be implemented timeously to fulfil its mandate”
The Chairperson asked for the understanding of the Content Advisor.
Mr Ngobo proposed for 10.5 that the wording be “the funding of Productivity SA is timeously addressed in line with its proposed single funding mechanism to enable it to fulfil its mandate”.
Members agreed to the wording.
The Chairperson proposed to deal with 10.6. 9.6 says Labour policy and Industrial Relations Programmes spent 98.4% of its allocated budget but achieved 38% of its pre-determined targets. A portion of its Programme Budget goes to transfers and subsidies, mainly transfers to the CCMA. He said that they understand the second sentence has been removed. He added that the recommendation must be adjusted as this talks to the CCMA which has been removed. He asked for assistance on what is the new crafted 10.6.
Mr Ngobo said CCMA falls under Programme four which is Labour Policy and Industrial Relations. The Committee needs to move the second sentence as it falls under the programme Labour Policy and Industrial Relations.
The Chairperson assented. He suggested when one removes the second sentence then the observation is, “the total money allocated to the entity has been spent but then it achieved half of what it was supposed to do”. He said the recommendation must deal with that disparity – should the Committee remove the sentence that talks to the major portion of the programme’s budget being transferred to CCMA. He said the transfer to the CCMA was the reason why they were not able to perform on the indicators.
Mr America said he did not think it was an issue to leave it in there.
The Chairperson said they must change the sentence under the observation. The recommendation must talk to that. He reminded the Committee that the biggest challenge has been the introduction of the National Minimum Wage, the Basic Conditions of Employment (BCE) Act, and the Labour Relations Act. These bring additional work to the CCMA. The CCMA must be properly funded so that one does not have funds transferred to the CCMA by the Department. The CCMA has written many letters to the Department for additional funding.
The Chairperson asked if the members are satisfied with 10.6. He said the Committee needs to insert “Labour Relations” at the end.
Mr Rawula said if the Committee leaves the sentence as it is, it creates the impression it only relates to the CCMA. He suggested the Committee retain the whole sentence and at the end of “CCMA” probably insert “as a result of the amendments to the Basic Conditions of Employment Act and the introduction of the National Minimum Wage” to understand why those transfers and subsidies took place. He said the whole point is to qualify why one wants the additional funds. He would have a new sentence.
The Chairperson says he understands the substance of Mr Rawula’s input. Mr Rawula wants the Committee to indicate this is because of the National Minimum Wage, and BCE Act. The drafters will sort it out.
Mr America asked for clarity to have a new sentence.
The Chairperson said it is correct to tweak that sentence to show the reason why.
Ms Van Schalkwyk said it must be borne in mind that the Committee always requests the Department or entity to ensure that financial expenditure must speak to actual performance. She suggested the members insert that “the financial expenditure must reflect the actual performance of the entity”. She said tomorrow it will be another entity that will spend 98% of the budget and their actual performance is 20%.
The Chairperson proposed that 10.6 must have another recommendation that states the financial resources are to reflect performance. This is based on the additional responsibilities brought about by the National Minimum Wage.
Mr Ngobo said he is not sure 9.6. The Committee has included the amendments. In terms of 9.6, the amendments to the Bill have not been implemented yet. He proposes a recommendation that the responsibilities will increase as a result of these Bills.
The Chairperson said he understands this, but fails to understand what happened, or what reason they gave. The Committee can see that they took the money for the National Minimum Wage but they did not perform on their indicators. What was 98% of the money spent on?
Mr Ngobo explained that with the programme: Labour Policy and Industrial Relations, a portion of its budget goes to transfers and subsidies. Two entities fall under this programme, CCMA and NEDLAC. With the budget allocated for this programme, the bigger portion goes to CCMA. He added that that CCMA is saying the budget is not enough when the Bills come into effect. The bigger portion of this programme is spent on transfers and subsidies so that is why expenditure is so high. He said more than half of the budget is transferred to the CCMA. The expenditure is so high because of transfers which are a reported as expenses. He does not know why the CCMA achieved so little.
The Chairperson said that as the National Minimum Wage was delayed, the CCMA did not perform.
The Chairperson referred to Supported Employment Services (SEE). He indicated that the current organisational structure of SEE is been reviewed. The SEE is having problems as other departments are not recognising it for its business to be successful.
The Chairperson asked if the Committee is satisfied, and if so he would ask the Content Advisor and Committee Secretary to bring the updated document for approval.
Mr America mentioned unemployment with the failure of the Department to respond to those challenges. He said that when one goes through the report, one gets an outline of the findings of the research by quarterly labour surveys, and Statistics South Africa (Stats SA) which speak to the unemployment in the country. He said the Jobs Summit seeks to address unemployment. He asked, with the unemployment in the country and recognising a lot of work opportunities provided by Small, Medium and Micro Enterprises (SMMEs), what was the possibility of putting a recommendation that the Department investigate having a code of good practice as an addendum to the Labour Relations Act for SMMEs in order to aid more people to be employed?
The Chairperson said the responsibility of creating jobs is not solely on the DOL. The possibility of reducing the cost of business is not only on the shoulders of the DOL. There are multiple players; labour, business, and communities together with government tackling job creation. The creation of job opportunities is limited by investment. He said the Jobs Summit will lead to the Investment Summit. He indicated the need for a protocol and for the Committee to have a discussion on the Jobs Summit. All the Department can do is make conditions conducive for investment so that job opportunities are created. Whatever the Committee puts forward has to be doable by the Department. He recommended asking NEDLAC to speak to the Committee.
Ms Van Schalkwyk said one of the mandates of the Department is to create an enabling environment for job creation. She said the economic cluster consisting of departments also have a mandate along with stakeholders who also have a role to play. She adds that it is her belief that the committee should not include it as part of the recommendation.
The Chairperson said all members agree that government should create conditions for investment, for job opportunities to be created. He said there is Home Affairs with visas; from Finance, the tax regime, all need to play their role. He said when NEDLAC appears before the Committee there should be open debate on how to stimulate job and how the Job Summit is going to assist the Committee.
Mr America said he will suspend his recommendation until then.
The Chairperson said the drafters should assist with drafting the document, make photocopies, and the Committee can consider the whole report.
Consideration of Minutes
The minutes of 12 September 2018 were moved for adoption by Mr Bagraim and Ms Van Schalkwyk seconded.
The minutes of the 10 October 2018 were moved for adoption by Mr America and seconded by Ms Van Schalkwyk
The minutes of 11 October 2018 were moved for adoption by Mr America and seconded by Ms Theko.
Consideration of BRRR report
The Chairperson asked for some guidance on the BRRR report. He proposed to go through only the pages relating to observations and recommendations to see if they reflect what the Committee talked about.
Mr America asked what the possibility of agreeing to the outcomes the Committee discussed; if the Committee can adopt the report with the changes which were recommended.
Ms Van Schalkwyk proposed the adoption of the BRRR report with the amendments.
Mr Bagraim said the “we” are abstaining.
The Chairperson said that Mr Bagraim should say he is abstaining, and not that “we” are abstaining as these proposals in front of the Committee were proposed by Mr America. In principle the move to adopt the BRRR report was made by Mr America and the others have agreed to it.
Mr America clarified that he did not propose this recommendation, but maybe the members should continue doing it.
The Chairperson asked if Mr America wants the members to move. Mr America agreed.
Ms Van Schalkwyk stated that she moves the recommendation made by Mr America.
Ms Theko seconded the approval of the BRRR.
The Chairperson confirmed the proposal was moved by Mr America to approve the report as it is, Ms Van Schalkwyk agreed to it, then Ms Theko seconded it, which solves the problem.
Mr Bagraim asked when the members were to vote on the BRRR.
The Chairperson asked why the members should vote as it is not the norm.
Mr Bagraim said that he does not accept it. He asked if the members could note that he does not agree with it.
The Chairperson said the proposal was made and then it was seconded. He said that Mr Bagraim should have pressed the button if he had any contrary view.
Mr Bagraim said he did not agree with the observations and recommendations.
The Chairperson proposed that the members deal with the oversight report. He indicated that the members dealt with the oversight report last week. All that was left was that they did not have a quorum to approve it. He said he wanted to place the report in front of the members for adoption.
The Committee went through the document.
Ms Theko moved for the adoption of the oversight report. Ms T Tongwane (ANC) seconded the motion.
The Chairperson asked if there was any contrary view.
Mr America mentioned a correction in the second line on page five under six. The second sentence in the second paragraph: “Sibanye Gold” must be “Sibanye Stillwaters”.
There was no objection from the Committee. It was duly agreed to.
Committee programme 4th Term 2018
The Chairperson said the briefing on the budgetary programme of the UIF needs to be moved forward, to week three.
The Chairperson suggested that the Labour Activation Programme be moved to week three, on 24 October 2018.
Ms Van Schalkwyk suggested moving the programme of the UIF to week four. If the UIF is not available in week four, then we should keep it in week three.
The Chairperson proposed that members be certain as the UIF was supposed to be ready this week. He proposed that the Labour Activation Programme be allocated to week three on the 24 October. He enquired about week four and week five.
Ms Van Schalkwyk proposed week four on 31 October 2018 to get a briefing on the outcome of the Job Summit.
The Chairperson stated that government is represented at NEDLAC by the Minister of Labour. He indicated that the Minister can come and make an input on the Job Summit on 31 October 2018.
Mr Scheenum , Chief of Staff, DOL confirmed the Minister will not be here this week. She will be out of the country. The Minister will be here the following week, 7 November 2018.
The Chairperson asked if the Committee can shift the Minister to 7th November 2018.
Ms Theko raised the issue of Labour centres coming to brief the Committee and wanted to find a space for the them.
The Chairperson proposed that the Labour Centres be allocated in week four, on 31 October 2018, saying that the Labour Centres cannot say they are not ready to appear. With the Labour centres, the Chairperson clarified that what the Committee wants to know is where Labour centres are located, their capacity, and the appropriateness in terms of serving the people, and asked members what else they want to know.
Ms Theko said she wanted to know what other provinces they serve, and if Mpumalanga is one of them.
The Chairperson said that is why he referred to the appropriateness of the location of the Labour centres and confirmed needing to know their availability or presence of the Labour centres, their capacity, and the appropriateness of their location.
Ms Van Schalkwyk asked if the Committee can include in the briefing the mobile centres as there is an outcry in terms of them improving.
The Chairperson confirmed that at the briefing they must come with a complete report spelling out the number of offices, what is their view on where the offices are located, whether the positions in those offices are all filled, and vacancy rates.
Ms Theko said that she knows of two provinces where the SEE does not have infrastructure. She called for the status of service delivery in each province.
Ms Van Schalkwyk requested the Department to incorporate the SEE as part of their presentation in the briefing on 28 November 2018.
The Chairperson said the briefing of the Labour centres is too far on 28 November 2018, just two days before Parliament goes into recess. He enquired as to why it cannot be done on 31 October 2018.
The Chairperson mentioned all the other items; the Legacy report which the Secretariat is working on, on the 7th of November 2018. And then on the 14th of November the Committee hears a problem with the horse racing trainers. Then there is the Legacy report on 21 November, and the Quarterly report on 28 November.
The Chairperson wanted to assure the members that if there is anything that is not practical on the programme, it is possible to negotiate amendments. Some of these briefings will occur during the BRRR plenaries. The Committee may find that Parliament is scheduling plenaries on the day of the Committee’s meeting. He added, if it looks like there is any item the Committee will not be able to do, then it will be necessary to make changes to the programme. He asked for assent with the changes.
Mr Korai moved that the Committee has agreed the changes, and Ms Theko seconded the motion.
The Chairperson mentioned the last two matters not for discussion but for information, the first being receipt of a letter from the CCMA for additional funding. He said the Committee will have a discussion as and when the time comes. He indicated that the Department is working on a response to the CCMA. The other letter was received from the EFF whereby GS4 was refusing to make a dividend in terms of their agreement. The Chairperson indicated that the letter which refers to the matter Ms Theko was raising, relates to the DTI. He confirmed that the letter in question has been referred to the DTI and Committee for processing. He wrote a letter back to Ms Theko that the letter in question has been referred to the DTI for processing and the view of the AG on the outcomes of the letter.
Pages 41 to 43 of the draft report were circulated to the members. The Chairperson asked if the members were satisfied with the changes on the report and that it represents the desired outcomes. He asked for agreement on pages, 41, 42 and 43.
The Committee agreed on these pages.
The Chairperson adjourned the meeting.
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