Employment and Labour Budgetary Review and Recommendations Report 2019

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Employment and Labour

23 October 2019
Chairperson: Ms M Dunjwa (ANC)
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Meeting Summary

Employment & Labour BRRR

The Committee met to adopt the 2019 Budgetary Review and Recommendations Report on Employment and Labour. There was a prolonged discussion on whether the mandate of the Department already encompassed employment and whether to include concerns about the Department creating a suitable environment for job creation. The Compensation Fund dismal performance and the need for a skills audit were discussed. The CCMA's additional obligations in terms of the National Minimum Wage would require additional funding was also raised. The Report was adopted with amendments.

The Committee adopted its programme and brought forward its meeting with the Compensation Fund.

Meeting report

Employment and Labour Budgetary Review and Recommendation Report 2019
The Chairperson asked if Committee members had all received the document two days prior to the meeting.  After ensuring this, she said that the Committee would revise the Report one page at a time.

On the Committee reaching the BRRR Observations and Recommendations, the Chairperson said that it would go through them point by point. The Committee is free to give commentary and to suggest corrections.

Mr M Bagraim (DA) suggested that the Committee's first observation should emphasise that the Department of Employment and Labour has failed, and the document should state that this is the worst crisis in the history of employment. He noted that referrals to the Commission for Conciliation Mediation and Arbitration (CCMA) are going up by 35%, which has not been included in the budget.  There is a need for the Committee to do an overview.

Mr Bagraim said that he firmly believes that the Committee needs to focus on the President's statements on job creation, something that the Department has failed to do.  The Department of Employment and Labour is at the helm of creating an environment that is fit for job creation.

The Chairperson pointed out that the Department has always been the Department of Labour and that within the current administration the Department was then reconsidered to be that of Employment and Labour. The Chairperson questioned if it would be fair to state that the Department has failed in these last four months to create jobs. The Chairperson asked the Committee to discuss the comment given by Mr Bagraim. 

Ms N Nkabane (ANC) referred to 9.11 of the Observations which stated that the expanded mandate incorporated Employment. The Committee cannot measure the performance based on employment. In the next financial year, the Committee can measure the performance of employment. The department has only now been reconfigured to incorporate employment.

Dr M Cardo (DA) said that it is for the Committee to reflect on the severity of the unemployment crisis in South Africa. The Committee needs to state that they have observed the scale of the unemployment crisis and that the Committee observes the employment mandate which has been incorporated into the Department of Labour.

Mr S Mdabe (ANC) agreed with Mr Cardo that the Committee needs to reflect on unemployment as it was raised by Statistics South Africa (Stats SA). The Committee will have to look at this in the following financial year but Employment cannot be attached as this Department is still being reconfigured. Unemployment cannot be a matter of observation as it does not reflect the current or the previous financial year.

The Chairperson stated that the Department is currently in transition and that Employment will only be reflected in the next financial year. When the Department comes to present to the Committee, the Committee should state what is to be expected of the Department. The responsibility of the Department is to ensure that it creates a conducive environment.

He agreed that the Committee needs to rephrase the statement to state that the Committee has observed the high rate of unemployment and that the Committee hopes that it can assist the Department in ensuring that the level of unemployment is addressed.  This statement needs to be incorporated so that the Committee does not seem as if it is unconcerned by the high rate of unemployment.

Mr Bagraim said that the Committee needs to point out that over the last six years the Department has spent close to R100 million on job creation and that every quarter job creation was the Department's primary goal. It is disingenuous of the Committee to state that job creation is not a part of the Department's mandate. Over the last twenty years it has been the Department's primary goal and the Department has done absolutely nothing about unemployment. The Committee needs to point this out. It was disingenuous for the President to rename the Department of Labour as its mandate has not been altered. The mandate just happened to fail over the last twenty years. 

Mr Bagraim said the computer systems created by the Department were said to be fantastic and R1 billion was spent on these systems. The systems failed on numerous occasions, and the Department is currently requesting an additional R300 million for this.

The Chairperson stated that the Committee is not being fair towards the Department and that she would not like to personalise the comments given by Mr Bagraim. The Department presented to the Committee and none of these issues were raised.

Mr Bagraim said that these issues were in fact raised in all of the Committee meetings.

The Chairperson said that none of these issues had been raised with the Department. It was never stated that the Department has not been doing its job in terms of its mandate. The issues being raised need to be raised at the appropriate time with the Department. It is important to interact with the Department.

Mr Bagraim said that he has raised this with the Department every time it has been present. These statements can be found in the Committee reports. It was raised that the Department lacks the ability to create the environment necessary for job creation. This was raised in the Committee and the Department never had answers.

The Chairperson asked that these concerns be raised at the appropriate time when the Department is present. The Committee has noted the statements by Mr Bagraim

Mr Nontsele said that what was being raised by Committee members is not isolated to the Department. Employment creation is in fact a broader responsibility. The Department deals with its regulation. Mr Bagraim insists on the view that the Department is to hold responsibility for employment and job creation. It is fine for Mr Bagraim to make this statement but it cannot be imposed on the Committee and should not be insisted upon. There is no point in debating this because the views will not change. The point being made by Mr Bagraim is not in any way sustainable.

The Chairperson said everyone was in agreement with the amendment of the Observation statement.

Dr Cardo said that the observation on the Compensation Fund is not the most important observation. An important observation would be the report received from the board which was woeful. The Committee needs to observe that the Compensation Fund is in dire distress. When the Committee approaches the recommendations section the Committee can discuss how we can deal with the situation.

The Chairperson questioned if the Observation at 9.3 was being reworked.

Dr Cardo suggested that it would be better to start the observation with a general comment. The observation plunges into a very specific observation regarding personnel. The Committee should make a broader observation about the state of the compensation fund and then specific comments.

Ms Nkabane suggested that they should make the observation stand alone. Another point should state that the Committee has observed the Compensation Fund over the years. There has been a forensic investigation and another conducted by the Public Protector. There were a number of investigations conducted by the Fund to try and understand the state of the Fund’s financial challenges.

Mr Bagraim said that the Compensation Fund report mentioned that they had failed for nine years. The Committee should include that in the observation. The Committee should observe how much was spent in the Department, because they spent half a million rand on computer systems, yet the Department would like additional funding for the CCMA. The Compensation Fund spent half a billion rand and R400 million was spent on new systems and now the Department stated that the Department will spend R360 million on the next system. The observations about the Compensation Fund need serious introspection. 

Mr Nontsele agreed with Ms Nkabane comment and said that 9.1 was scattered and that an additional point should be put in to add on about the Compensation Fund. He proposed that the Committee secretary supply an additional point that flows from the initial point on the Compensation Fund. Point 9.1 should be incorporated into number 9.4. This will be a fair reflection on the areas concerned.

The Committee agreed.

Mr Bagraim said that 9.5 was an understatement with regards to the skills of Compensation Board members. The Committee needs to make an observation stating that the Compensation Board members do not have skills. The Board has failed horrifically and there is a need to have an auditor or a systems analyst on board. The funding for the Compensation Fund is currently R30 billion. There is a need for a systems analyst on the Board to ensure that there is no disaster. It is an understatement to state that the skills mix should add value.

Dr Cardo suggested that under Observations the Committee should group the specific entities under one banner. All of the Compensation Fund observations should be under one section.

The Chairperson said that the Committee needs to see an audit done on the skills; however this does not imply that the Compensation Board does not have any skills. The Committee cannot come to conclusions without having the proof of the skills and once the necessary information is at hand only then can the Committee deduce the level of skills. He agreed that each entity will have its own section with a heading. He asked if the Committee had any comments on the Unemployment Insurance Fund (UIF).

Dr Cardo said that the Committee needs to comment on the Auditor General's findings on the internal control deficiencies with financial management in the UIF. The Committee needs to comment on the national minimal wage and the consequences thereof on the CCMA. The observations do not reflect on the CCMA.

The Chairperson agreed.

Mr Bagraim said that the Minister of Employment and Labour is pushing for employment equity and enforcing government departments to buy and only do business with people who are compliant with the employment equity plans and the Preferential Procurement Policy Framework Act (PPPFA). However, it should also be urging government to do business with the Supported Employment Enterprises (SEEs). The Department emphasises equity, however, it is not helping the SEEs.

Mr Mdabe said that the Committee needs to keep in mind that there are preferential procurement policies in place and that the Committee has to ensure that the department adheres to the minimum requirements of these policies.

The Chairperson agreed saying that there is legislation. The Committee needs to amend the recommendation that there is regulation in place. When it is appropriate, the Committee can see if amendments can be made.

Ms N Hermans (ANC) said that the Committee should be able to state that a percentage of procurement of government departments must come from the SEEs. The Committee needs to look into the Act, because it is disadvantaging the SEEs.

The Chairperson said that the interpretation of the Act is in legal hands and that suggestions for amendments to the Act can be discussed in the next round of the BRRR.

Mr Nontsele said that there is a need for engagement with the National Treasury and the amendment of the Act cannot be delayed further.

The Chairperson said that this will fall under the Committee's recommendations.

Mr Bagraim questioned why Point 9.11 on the expanded mandate has anything to do with the capacitation of its inspectorate. The expanded mandate is to create an environment for job creation. This statement: "There is a need for a greater budget allocation for the Department for capacitation of its inspectorate and to expand its inspectorate" has nothing to do with its expanded mandate.

Ms Nkabane suggested that the sentence state that the expanded mandate on employment for the Department on Employment and Labour will require budget allocation to enable an environment for job creation and then continue to speak about the capacitation of its inspectorate.

The Chairperson asked for agreement.

The Chairperson proceeded to the Recommendations and stated that these were to be in line with the Observations.

Dr Cardo suggested that the recommendation should state that the Minister and the Department are to give an explanation on what the expanded mandate of employment is, the mechanics of the expanded mandate and the various entities that will be used to enhance job creation.

Mr N Hinana (DA) suggested that in the Recommendations the word "must" should be used. 

The Chairperson agreed that the Minister should explain.

Ms Hermans said that the Committee's observations should align with the recommendations and that 9.1 is to reflect on the expanded mandate. It must be the Committees first point.

Mr Nontsele said that at 10.1 the Committee needs to take the Compensation Fund as it currently stands because it is clustered.  The Committee needs to deal with principle, and it must talk about the short-term areas. The issues of investigation and the outcomes and all the action plans must encompass that. The Department must have action plans and they have to speak about all the areas we have reflected on. They have to state what the timelines are and what the Department is to do.

Dr Cardo said that in the Committee needs to isolate the entities that need to be better funded. The recommendations have to speak about the CCMA which is in dire need of additional resources. The CCMA needs additional funding.

The Chairperson replied that all entities need additional funding; even the Department itself, not only selected entities.

Dr Cardo said some entities need additional funding more than others. The CCMA is one of them.

Mr Nontsele said that Productivity South Africa is grossly underfunded and unable to fulfil its mandate. The Committee cannot de-emphasise the problem.

The Chairperson said that it is not being implied that other entities do not need additional funding.

Mr Nontsele said that at 9.6 nothing speaks to CCMA but we can have separate lines that speak to separate entities.

Mr Bagraim said that the Committee is discussing budget. The CCMA stated that they will take on 25% more cases, but their budget has been dropped by 3 to 4% and that this will not allow for it. It is the Department's most functional entity. The CCMA should be the forefront of the Committee's recommendations.

The Chairperson said that the issues being raised now were not raised when the Committee went through the Observations. This was not highlighted as an observation. We cannot have inconsistency. What is in the Observations must reflect in the Recommendations. Additional funding will be implied for all the entities, not just the CCMA.

Mr Nontsele said that the Committee has to decide as a collective and the Committee has already decided what the Committee's observations are.

The Chairperson agreed.

Mr Bagraim asked if the Observations can be altered in order to accommodate this recommendation. He is not sure what the Committee has agreed on.

Mr Mdabe said that the Chairperson stated that under 10.1 Productivity South Africa will be included in the need for additional funding as well as funding needed by the Department.

Mr Bagraim said that he does not agree with the recommendation. All the other entities do not need money. The CCMA needs a budgetary increase. The other entities do not have the same concerns.

The final report stated recommended: "Additional funding is made available to the 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 Chairperson asked if the Committee was in an agreement with the point on the SEEs.

Ms Nkabane said that this document can be accessed by everyone. The Committee will be seen as interfering with processes. We did mention that the Committee is going to engage with National Treasury to come up with the best methodology. There could be an issue with outside departments seeing this engagement as lobbying.

Mr Nontsele said that there is a need to engage with the National Treasury and agreed with Mr Nkabane with regards to lobbying.

The Chairperson agreed to a new formulation: "The Department engages with National Treasury regarding preferential procurement by government departments and State-owned Enterprises (SOEs) from SEE".  

The Committee adopted the Report with amendments.

Committee Programme
The Chairperson said that the Compensation Fund meeting would be moved from 20 November to 30 October 2019.

The Committee agreed.

Mr Bagraim suggested that the Committee does its oversight on a week day for the SEEs. Projects such as the ones presented by the SEEs are good but it would be better if the Committee could do oversight at the CCMA or the Compensation Fund. Oversight does not have to happen at the SEEs. He noted that it was stated that the 4 December might be a day reserved for plenary.

Mr Mdabe asked if there was an alternative date to do oversight than 4 December. He suggested they do oversight where most workers encounter injuries such as the agricultural industry or the mining industry.

The Chairperson said that they are to do oversight in the Western Cape and the Committee would get clarification on the Parliament programme. The Chairperson asked if anyone would second the suggestion made by Mr Bagraim.

Dr Cardo seconded the suggestion.

Mr Mdabe said that it is important the Committee understand the functionality and productivity of all entities.

Ms Hermans said that at the Compensation Fund one would most likely find the majority of challenges are administrative.

The Chairperson said that it is important to ensure that the various entities are doing as they say and that the Committee visited all of them. She requested that Members ensure that they attend the 30 October meeting as it is important in understanding the Compensation Fund.

The Committee programme was adopted.

The meeting adjourned.



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