Department of Labour, NEDLAC & CCCMA Quarter 1 & 2 performance

Meeting report

Minimum Wage Amendment Bill
The Chairperson said the Minimum Wage Amendment Bill required some adjustment.
 
Ms S Van Schalkwyk (ANC) proposed the amendment of the agenda to include deliberations on the Wage Amendment Bill.
 
The Chairperson said the first term programme was based on a decision taken at a meeting on 16 January to advertise the Minimum Wage Amendment Bill for three weeks. The earliest time to consider the request would be the following week as Parliament was currently having joint sittings and this would push the Committee’s plans back one week and the adverts need to be adjusted to be for two weeks only.
 
Ms Van Schalkwyk made a formal request to suspend the three-week rule and make it two weeks.
 
The proposal was supported.
 
Ms Van Schalkwyk made a further proposal that the Committee’s decision to place adverts - which would have appeared in the Sunday papers - also be included in the daily newspapers.
 
This proposal was also supported.
 
The Chairperson said he had received a letter inviting the Committee to attend the fourth industrial revolution exhibition in the parliamentary precinct.
 
Department of Labour Late documents and Acting positions
The Chairperson said that it was problematic that documents were sent to the Committee very late. Documents should be available on the Thursday prior to the meeting. Documents were still not available by Tuesday. He also noted the many acting positions in the delegation.
 
Mr Thobile Lamati, Director-General, Department of Labour, said the Department’s reports were late because of IT system challenges and it was also battling to process claims. He said the problems lay with SITA and that the late submission of reports was not intentional.
 
He said that Mr Sam Morotoba, DDG Public Employment Services was the acting CEO of SEE, as the CEO’s contract had expired, and the post would be advertised. He said Mr Teboho Thejane was made the Acting National Executive Director of NEDLAC because the previous national executive director was suspended pending the outcome of the disciplinary process against him. The same applied to the acting CFO post at NEDLAC where the CFO was also suspended.
 
Ms Marsha Bronkhorst, COO, Department of Labour, said the overall performance of the Department for Q1 was 80%, up from the 53% attained in Q1 of 2017/18. In Q2 the overall performance of theDepartment was 80%, up from the 56% attained in Q1 of 2017/18.
 
On Programme 1: Administration, she said there had been irregular expenditure of R5 846 in Q1 and R255 740 in Q2 and Fruitless and Wasteful Expenditure of R48 969 in Q1 and R376 842 in Q2.
 
On Programme 2: Inspection and Enforcement Services, she said the target for Q1 was 43 746 inspections and 49 041 were done. Of those inspected 40 109 were found compliant and 5 295 were non-compliant. The target for  Q2 was 65 620 inspections and 61 751 inspections were conducted. Of those inspected 50 032 were found compliant and 11 917 were non-compliant.
 
She spoke to sectors reviewed for Employment Equity (EE) compliance and said there were consultative forums that were not properly constituted. Junior staff were assigned as Senior EE Managers and they did not have the necessary authority or resources to execute their mandate. Employers were preparing EE Plans that were not informed by a proper audit and analysis. EE Plans did not comply with the requirements and where plans were complaint, there was no implementation of the plans. There were no communication strategies in place to inform employees of the EE Act. There was a failure to keep the required records. In Q1, a total of 4 616 inspections were conducted against a target of 4 301. Of the total number of inspections done, 2 941 (63.7%)  were compliant. In Q2, a total of 6 137 inspections were conducted against a target of 6 906. Of the total number of inspections done, 3 823 (62.3%) were compliant.
 
On non-compliance with the Basic Conditions of Employment Act, she said that of those workplaces inspected in Q1, 5 295 were found to be non-compliant. Major non-compliance was found in the Wholesale and Retail Sector; Hospitality Sector; Agricultural Sector; and Community Services Sector. In Q2, 6 251 were found to be non-compliant. Major non-compliance was found in the same sectors as in Q1 as well as the Private Security Sector.
 
On Programme 3: Public Employment Services (PES), she said all targets were met. She said
62% (148 999) of registered work seekers were young people aged 16-35 years and 38% ( 90 182) were adults aged 36 years and above.
 
She said the performance of SEE was of concern. The problem was that SEE was not  getting enough work for people with disabilities hence the poor performance indicators.
 
On Programme 4: Labour Policy and Industrial Relations, she provided a breakdown of the applications for trade union registration and the number of members.
 
Discussion
The Chairperson and Mr L Khorai (ANC) asked for clarity on the figures for trade union applications given on slides 35/36.
 
The Chairperson asked if it was normal for the Agriculture and Forestry sector to have  a large change from Q1 of 293 members to 3 075 recorded for Q2, for example.
 
Mr Lamati said that the Department registered trade unions and that when trade unions membership increased, the unions had to inform the office of the registrar. 293 applications for registration were refused. Some of these applications were because organisations were posing as trade unions so that they could be classified as NGOs or in other instances the registrar picked up that the trade union actually had no membership and was bogus.
 
On the issue of health and safety, Ms L Theko (ANC) commented on the collapsing of school buildings and called for the Department to inspect all Gauteng school buildings and bridges. On the basic conditions of employment, she said the farmworkers and  private security personnel numbers differed from other sectors in Q1 and Q2 and asked if this was because of the introduction of the national minimum wage.
 
Ms Van Schalkwyk welcomed the Department’s impact analysis reports. However, she was concerned when looking at the audit outcomes and the issues it raised. She was concerned about the plans that were supposed to be in place yet noted there was an increase in irregular and fruitless and wasteful expenditure. She wanted the turnaround strategies to be implemented. She welcomed the improvement in inspections and enforcement performance services especially. Regarding the employment equity plans and its continuous non-implementation, she said the Committee had been harping on this for the past four years. What remedy was the Department proposing regarding repeat offenders of the non-implementation of employment equity plans? She was also concerned about non-compliance of the Basic Conditions of Employment Act, especially in the vulnerable sectors as it was also these sectors that were not complying with the national  minimum wage. She said the less said about SEE, the better. She would like to propose amendments to the legacy report to include recommendations for the next parliamentary committee, as action needed to be taken on SEE, especially around the skilling of disabled people. On the refusal of applications across trade union sectors, specifically agriculture and hospitality, she was concerned that those were the sectors where non-compliance was high because of poor trade union numbers and the Department needed to look at why these trade unions were non-compliant and assist them to become compliant.
 
The Chairperson asked if there was any trend the Department was picking up on why there was a high number of applications for trade union registration.  He asked how the Department differentiated job seekers from job hoppers.
 
Mr Lamati said the issue of health and safety around buildings and bridges collapsing concerned the Department. There were challenges with a number of government buildings. Inspectors had issued a number of reports to government departments. A number of government offices, including the Department’s, were closed down because they did not comply with regulations. The maintenance of state buildings was a serious problem and was the responsibility of the Department of Public Works (DPW). A section 32 investigation was underway regarding the collapse of a pathway at a high school. He said investigations were reactive and prevention was the aim, and this was the responsibly of the DPW.  
 
On whether non-compliance would affect the national minimum wage, he said the national minimum wage had been structured to make it easy for workers to get assistance. Workers could go to the Department or the CCMA directly. To speed up the processing of enquiries or complaints, the Department and CCMA was geared to deal with all the enquiries. TheDepartment was ready, and all systems were ready.
 
On the increase in irregular expenditure, he said that in government there was self-insurance which meant that if there was an accident there was no insurance funds and so funds were taken from the budget allocation. This was not planned for and therefore the huge irregular expenditures. A second issue was that people were not showing up when hotel bookings had been made for them. Work had been done to recover the money spent from people who did not show up.
 
The Chairperson asked if there were any challenge taking the money from a person’s salary, if he was booked for travel and accommodation and did not show up.
 
Mr Lamati said that one would be going against the law, as in the previous year a judgement was passed which meant that one could not deduct money from an account without a person’s agreement or else one had to get a court order.
 
He said the SEE entity was struggling and the post of CEO would be advertised soon. Even when there was work for SEE, the entity could not deliver on time. Since Mr Morotoba was placed at SEE in an acting capacity, there had been improvement in the factories it operated.
 
On the refusal of trade union applications, he said that the system could sift those that did not have workers interests at heart. He said employer organisations tried to register as a trade union so that it could access the CCMA. He said a large number of trade unions that were refused registration did not take the Department to court. The proliferation of trade unions were because of political fallouts in trade unions led to members breaking away to form their own trade unions.
 
On job seekers versus job hoppers, he said the system picked up whether someone was employed and therefore a job hopper.
 
On non-compliance with employment equity, he said 15 to 17 cases were referred to court and many were settled out of court. One judgement had set a value of R250 000, so most judges followed this figure. The legislation set a maximum amount of R1m and not a minimum amount and this needed to be changed.
 
The Chairperson asked if the legislation or regulations needed amendment. 
 
Mr Lamati said the penalties were prescribed in the act, so it needed an amendment to the law.
 
On job seekers versus job hoppers, Mr Morotoba said there were instances where people who had a job would register in the hope of getting a better job. Regulations would be published soon which would assist the Department in cleansing the data base.
 
On the SEE, he said there had been a dramatic improvement in the employment of people with disabilities. In the Eastern Cape, SEE had secured a R112m contract and a contract was secured with the Department of Health to work at hospitals nationally and this put pressure on SEE to expand. The income from the two contracts would surpass the target of R68m for the year set for SEE.
 
The Chairperson said that a meeting should be scheduled to take a closer look at SEE’s operations and functionality on March 6.
 
Ms Van Schalkwyk asked that the Committee Secretary include the item in the draft Committee programme. She requested that the Department give a brief overview of the financial expenditure report for Q1 and Q2.
 
Mr Bheki Maduna, CFO, Department of Labour, said the Department spent R683m in Q1, which was 20% of the annual budget. The Department was employee intensive and under expenditure was because annual increases had not yet been processed. The low expenditure for capital assets was payments to the DPW who had not invoiced the Department.
 
For Q2, the Department spent R1.4b which was 42% of the annual budget. He said that under compensation of employees was because of the vacant posts in the Department.
 
The Chairperson asked why there were different reasons given for the under compensation of employees in Q1 and Q2.
 
Mr Maduna said that in Q1 the DPSA took long to pronounce on employee increases applicable for that year, however with the vacancy rate of the Department expanding it meant that the under compensation kept escalating.
 
Ms Van Schalkwyk asked what the vacancy rate was at the end of Q2 and what the status of the Department currently was as she was concerned with the underemployment. She said there were a number of areas where there had been vacancies especially finance and supply chain management and IT posts. Were the IT posts filled, given that the DG had mentioned that IT systems had been down? What led to the IT systems being down?
 
Ms F Muthambi (ANC) said that the Committee was assured in November that the vacancy rate would be addressed. It was currently the end of the fourth quarter. What was the status of underemployment?
 
Mr Khorai wanted clarity where the vacancies lay. Was it at the top or middle management?
 
Ms Bahumi Matabesi, DDG Corporate Services, Department of Labour, said the vacancy rate at the end of April 2018 was 12% and was currently at 9.3%. There were no vacancies at top management level, it was mostly at middle management level.
 
The Chairperson asked the Department what stopped it from attaining a 0-4% vacancy rate. He said the Department should ensure that its employment adverts were not contradictory, claiming that no experience was necessary yet upon application there were requirements that had to be met.
 
Ms Matabesi said the Department was aware of the mistake mentioned by the Chairperson and the advert was withdrawn. The job profile of the position needed to be changed and the post would be re-advertised.
 
On the speed at which vacant posts were filled, she said the unfilled vacancies ranged from three to six months which was an acceptable level.
 
She said the IT posts had been filled.
 
She said the unavailability of the IT systems was because of connectivity problems between the Department and SITA and the Department was busy resolving the matter with SITA.
 
Mr Lamati said that the Department took the issue of vacancies seriously as the Department should not have vacancies. The Department received thousands of applications for a post  because of high unemployment and sifting through the applications manually created problems for the Department. The Department was hoping that this challenge would be overcome with the automation of the process. One job advert could attract 20 000 responses.
 
Briefing by NEDLAC
Mr Teboho Thejane, Acting National Executive Director, NEDLAC, said he started in his post on 1 February 2019. 

Overall performance in Q1 was 77% and in Q2 81%. The challenges were the targets that were not achieved which were around quarterly performance appraisals that were not conducted; annual performance improvement plans that were not developed; that an unqualified audit opinion was obtained, that there was no progress reports to MANCO on the Decent Work Country Programme (DWCP) because the MANCO meeting was turned into an exco meeting; no progress reports were submitted to FINCOM because information from Constituencies was not received timeously, there was insufficient budget allocation  resulting in cost pressures, unfunded mandates such as the Presidential Jobs Summit and Financial Sector Summit activities, a shortage of Human Resources, and a lack of employee benefits e.g. Medical Aid. Total income was R17.9m. There was over expenditure in Q2 because of the jobs summit, the national minimum wage and the financial sector summit projects, which were not budgeted for. At the end of Q2 the implementation of the audit action plan overally, stood at 56%.
 
Discussion
The Chairperson asked why the CEO and CFO were suspended. He said slide 27 on the implementation of the audit action plan was not helpful as the numbers were meaningless. He wanted further information provided in future.
 
Ms Muthambi said the audit action plan was requested previously, but had not been received. If the status at Q2 was 56%, what was the status currently? What was the improvement in compliance as mentioned on slide 13? The issue of unfunded mandates would lead the organisation to have a qualified audit finding. How was the organisation going to address this? On the quarterly appraisal, where appraisals were not conducted because of an emergency ascribed to maternity, she said maternity could not be accepted as an emergency as it could be planned for.
 
The Chairperson asked when the audit cycle started and how was it connected to the previous audit outcomes.
 
On the CEO and CFO, Mr Lamati said that the national executive committee of NEDLAC had sanctioned an investigation which revealed areas of concern in the supply chain management and financial malmanagement off the institution. Subsequently the CFO and National Executive Director were suspended by the national executive committee.
 
Mr Thejane said NEDLAC had an audit action plan and he would send the Committee a copy of it.  
 
He said the audit cycle would have resolved and dealt with any audit queries.
 
On the funds for unplanned projects, he said that NEDLAC had followed financial processes to request funds. The jobs summit was a decision from the Presidency and NEDLAC was requested to coordinate the process, but there was no money in its budget for this.  
 
On performance management, he said the reasons people gave for being absent from work was discussed and moving forward this would be dealt with and management had to apply due diligence.
 
Mr D America (DA) asked who conducted the investigation, whether there was a report on the investigation and whether it was available.
 
Mr Lamati said the national executive committee acted on the basis of the report and the national executive director acted against the CFO. The national executive director himself was suspended as he was also implicated.
 
Ms Muthambi asked if the matter was in the Annual Report.
 
Mr Lamati replied that to a large extent it was.
 
The Chairperson asked when the acting CFO was appointed. He said that R391 000 was not disclosed and was picked up by the  Auditor-General and that the institution was struggling to get a clean audit. He said the acting CFO had to bring sanity to the organisation and not allow monies to be disbursed for projects that had no money allocated to it.
 
Ms C Simpson, Acting CFO, NEDLAC, said she was appointed on 22 October 2018. NEDLAC had been sensitised to the PFMA requirements and financial misconduct by the audit and risk committee. She said  that if NEDLAC did not get firm commitments in writing for projects that had not been budgeted for, then it would not act on such projects.
 
On the jobs summit, she said NEDLAC proceeded, based on Presidential commitments in the SONA address, but NEDLAC also submitted requests for additional funding to the Department and Treasury. It had received R12m in October so NEDLAC’s finances were in deficit in Q1 but were liquid currently because the R12m had been received. NEDLAC would not overcommit to any projects that were not funded or where written commitments were not given.
 
On the unqualified audit opinion, she said it was around supply chain management and all findings of the audit were included in the action plan and there had been progress.  The APP had been reviewed and made smart. She said the findings on the finances were mainly because of a lack of oversight. NEDLAC had produced interim financial statements and had asked the AG to review them so that the institution could be more ready to get an unqualified audit opinion and if there was non-compliance, NEDLAC would try to remedy this before the end of the financial year or disclose it.
 
Briefing by CCMA
Mr Xolani Nduna, Commissioner, CCMA, said that in Q1 overall achievement was 75%.  One transformation of workplace relations project was not delivered as it was an ongoing project which would be completed in Q2. This was a huge and important project which was also a project that was implemented for Parliament. He said he would encourage that these projects be done in all workplaces in the country and would ensure that there were no unnecessary referrals to the CCMA and improve workplace relationships. The target of hearing 98% of all registered cases' first event within 30 days could not be determined and therefore an underperformance was registered. This was because the CCMA received cases where it did not have the jurisdiction to decide and this skewed the numbers. He said the CCMA did 13 162 trainings to empower people to know their rights and 46% of jobs of employees facing retrenchment were saved. The private security sector was an area where the CCMA had to intensify its campaign to make employees aware of the national minimum wage.
 
In Q2, performance was 80%. The first of the underperformed targets was the same as that of Q1, namely the target of hearing 98% of all registered cases' first event within 30 days could not be determined and therefore an underperformance was registered. The second target was to send 98% of arbitration awards to parties by the 14th day after completion of the arbitration process. The percentage performance of arbitration awards could not be determined therefore an underperformance was recorded as the figures represented on awards sent to parties by the 14th might be overstated. He said the case management system was 22 years old and so in his view a new system was needed, and it would not be cheap. He said action had been taken against commissioners who were not compliant with giving their submissions within 14 days. He said the CCMA did 23 936 trainings to  empower people to know their rights and 45% of jobs of employees facing retrenchment were saved. He said the second annual shop stewards and union officials conference was held in KZN in September 2018 and there would be another conference on 14/15 March 2019 on the national minimum wage.
 
Ms Ntombi Boikhutso, CFO, CCMA, said total income at the end of Q2 was R975m and spending was R475m. The variance in income was 1% and in expenditure was 9%. She said the high variance in Capex spending, which was 67% under budget, was because of a delay in spending but this had been reduced to date. There was a 34% under-spend on case disbursement administration costs due to time lags and to variable costs.
 
Discussion
The Chairperson asked why there was no explanation for the variance in slide 27.
 
Ms Boikhutso said that it was variable costs incurred in the training and the development of training and also dispute management activities courses and the time lag in incurring the expenses.
 
Mr Nduna said that the CCMA was continually appointing commissioners and at the moment was recruiting 104 commissioners who would have to be trained.
 
An official of the CCMA said that since the inception of the national minimum wage on 1 January, the national case load had increased by six percent on the normal case load. The total referrals of disputes were 22 650 and 1 670 of these cases were related to the national minimum wage and this translated to 7% of the total case load.
 
Mr Nduna said that this meant that the projected impact of the national minimum wage should reach 6m and showed how much more people the CCMA still needed to reach.
 
The Chairperson asked when the statistics on the national minimum wage be reflected by the Department or Statistics SA.
 
Mr Khorai said the Commissioner had not recognised the members of parliament at the CCMA conference and this had felt hurtful.
 
Ms Muthambi, speaking of complaints, noted the issue of a racist email where the Commissioner said he would investigate the source of the email.
 
Mr Nduna said he was embarrassed to apologise for not recognising the member of parliament at the conference.
 
On the complaints matter, he said it was before the human resources committee of the CCMA. One member was responsible for the distribution of the email to the Citizen newspaper and it was established that the matter was fake and that there was no evidence that the allegations were true. The commissioner responsible for the distribution of the email was found to be related to the Citizen newspaper journalist. This commissioner was vague in his own defence and offered no denial that he had sent the email. The CCMA was awaiting the outcome of disciplinary action to be determined by the Board. He said the person and the house of the commissioner alleged to be racist was put at risk because information was disclosed unlawfully, and such behaviour needed to be stamped out. When the matter was concluded the CCMA would report back to the Committee. He said the commissioner who allegedly sent the email wanted to leave the organisation.
 
The Chairperson asked if the paperwork and systems around the national minimum wage were ready.
 
Ms Muthambi said the awareness and outreach programmes of the national minimum wage was important because people might not be aware of it.
 
Mr Lamati said data on the impact of the national minimum wage would come from the CCMA and the Departments complaints investigations cases and from Statistics SA and this information would be made available to the Committee.
 
He said the paperwork and systems were in place and working.
 
Ms Aggy Moiloa, DDG: Inspection and Enforcement Services, Department of Labour, said 1 392 inspectors were committed to the national minimum wage representing 70% of the inspectorate and 117 000 workplaces had been visited with R300 000 being recovered.
 
On the matter of outreach, she said the national minimum wage roadshow project meant that wherever inspectors went to inspect they also did advocacy work.
 
Outstanding Minutes
The minutes of 21 November 2018 and 5 December 2018 were adopted.
 
The meeting was adjourned.