The Compensation Fund showed a decline in performance for Quarter 1. Changes were being implemented to the Fund’s system following recommendations from the Auditor General and as a result, provincial performance will only start picking up by the end of the year. Reasons for over and under performance in each province were provided. The Compensation Fund has since appointed professionals that can be deployed from the head office to provinces that are having challenges with capacity and volumes.
Members asked questions about rumours of victimization and of R800 million owing in claims but the Fund said this was not true. The Fund was implementing a new system with stricter controls. Committee members raised a concern on some provinces consistently lagging behind and the Fund’s performance trend showing a decline. The Fund assured members that it was focusing on the underperforming provinces and that the sharp decline is not a huge concern as it is largely due to the Fund needing an adjustment period to implement the new system. Members requested more detail on the performance indicators a financial report in future.
NEDLAC achieved over and above its set targets. A risk that it identified was that its founding documents were misaligned with the current operating environment but a review of the Act and its constitution is underway. Another risk was its IT systems and remedial action had been put into place. Internal controls and the monitoring of financial and operational aspects of the institution have been the areas where the institution has been found wanting and has expressed an intention to improved upon.
Members spoke about allegations that NEDLAC is a closed shop. NEDLAC replied that challenges to its legitimacy would be responded to as NEDLAC reviews its founding documents. NEDLAC clarified its role is to develop policies and does not go so far as to implement them. Members were concerned about NEDLAC’s performance as well as constitution in terms of transformation goals. They requested an organogram and asked for a more comprehensive report as this only gave the Committee a bird’s eye view. NEDLAC assured the Committee that recruitment processes is underway for a new CEO and CFO and that work is continuing despite the consequence management process.
The Unemployment Insurance Fund achieved 73% of its targets which was a comparative 10% increase. There are four areas where the fund did not meet its targets: payment of invoices, vacancy rate, Integrated Claims Management System and new companies registered within one working day. In total, of the R4.12 billion budgeted, 104% was spent with the overspending largely caused by the UIF Amendment Act improving benefits. A revised budget will iron this out. The report outlined the disruptors that aim to improve strategic risk areas. The UIF spoke about the Labour Activation Programme which aims to train people for employment.
After questions, the UIF clarified that the Labour Activation Programme was decentralized to all nine provinces. The R100 million spent on 2000 people was a cause for concern and the UIF was asked about the follow up by the UIF on successful post-training job placements. The Fund replied that it was looking at cutting out intermediaries and it outlined its selection process and criteria for training. It was introducing automation of its systems to allow for biometric identification to tighten up controls to prevent fraud. It replied that 4IR is a key focus for one of its development projects and that underperforming provinces were being looked at closely. The Fund said that it was able to meet the demand created by looming retrenchments.
Compensation Fund Quarter 1 Performance
Mr Vuyo Mafata, Compensation Fund Commissioner, said the Compensation Fund’s two strategic priorities are to provide faster, reliable and accessible Compensation for Occupational Injuries and Diseases (COID) services by 2020 and to provide efficient client oriented support services. The performance indicators are based on disability care and rehabilitation; medical benefits and compensation; and pension benefits.
The Compensation Fund achieved an overall 33% of the annual planned indicators. The programmes with 0% achievement are Programme 1 Administration and Programme 4 Rehabilitation. Quarter 1 showed a decline in performance trends for the Compensation Fund (CF).
The performance standard for claims is for 90% of claims to be adjudicated within 30 working days of receipt. All provinces met this performance standard and in total 93% of claims were adjudicated within 30 working days, showing 40 477 claims adjudicated of the 43 395 registered for Quarter 1.
The performance standard for medical invoices was 85% to be finalized within 40 working days of receipt. This was not achieved as only 60% were finalized within 40 working days, showing 155 722 finalized of the 260 152 invoices received. The Commissioner explained that this was due to the adjustment period for a change in the system. Traditionally, the CF has a two step validation process, which has now been abandoned and changes were implemented after recommendations from the Auditor General. As a result performance of many of the provinces will only start picking up by the end of the year. This is the main reason for the poorer performance.
The performance standard for pre-authorization was 85% responded to within 10 working days on previously finalized cases. All provinces were able to achieve this target and in total 97% of pre-authorizations were responded to and finalized within ten working days.
The performance standard for assistive devices was 85% of assistive devices requests to be responded to within 15 working days. Seven provinces achieved the target and the two non-achievers were the Eastern Cape and Gauteng leaving 83% overall achievement. Eastern Cape and Gauteng had lower performance due to capacity. Gauteng deals with the bulk of claims in comparison to other provinces.
Reasons for over and under performance in each province were provided. The CF has since appointed many professionals that can be deployed from head office to provinces having performance challenges with volumes.
Ms Jordaan (FF+) raised questions on the payment of claims. There was a story in the media yesterday about the payment of claims to medical service providers. Sources shared with her that there are apparently 14 000 claims outstanding to the value of R800 million. The media article noted the Compensation Commissioner’s response was that about R200 million in claims were paid but that was to three main intermediaries. Service providers are saying they have not been paid since August which has a direct influence on jobs. The question is why are the claims not being paid out or taking so long? Moreover there are rumours of victimization of medical service providers by the Fund. The Commissioner can hopefully provide clarity on that.
Mr N Hinana (DA) raised a concern about provinces that consistently lag behind whilst others perform well. Is the disparity this big because of capacity or is there another reason. On slides 12 and 24, Eastern Cape comes up again as a red flag with 36% achievement. What are the contributing factors for such a poor performance?
Mr T Mulaudzi (EFF) raised a concern about the performance trend of the CF. Quarter 1 in 2018/19 shows 86% whilst Q1 for 2019/20 is 33%. What steps have been taken to minimize this decline and what assurances can the Commissioner give in making a turnaround in Quarter 2?
Looking at slide 18 and 19, 97% of the total pre-authorization claims were responded to within ten working days meaning that 3% were not assisted. It should maximize performance and aim to get to 100%. The Fund can be commended but it should strive for 100% as achieved in Free State, Limpopo and Northern Cape on slide 20.
Slide 21 shows that Gauteng is experiencing a problem as it has declined in performance to 57% for assistive devices. He heard the reasons given but was not satisfied. How can the DG allow Gauteng to continue without having capacity to respond to the claims being made? Gauteng must be attended to as soon as possible as the Committee is looking forward to improvement. This is a highly populated province but it needs highly skilled people to improve the services there. Looking at slide 23, reasons are mentioned for over and under performance, but what are the plans to avoid these factors in the next quarter?
Mr S Mdabe (ANC) commented that the report in its current format did not give a clear picture of the situation at the Compensation Fund. It states 267 invoices were forwarded for payment, but the report does not elaborate on how this relates to compliance inspections. Which industries are the most injuries? It would be better if the report elaborated on such things so that the Committee can discuss. Secondly, there is no financial performance report which gives the Committee a challenge as it is not clear what the financial implications are.
Ms N Nkabane (ANC) said that everyone needs to be appreciated for good work done so they remain motivated and work to improve. Looking at slide 20, the Fund has done very well with preauthorization responded to within ten working days where all the provinces achieved this target. On slide 13, she asked for reasons for the non-achievement of the targets in programme 1 and 4. On slide 17, the performance shows a sharp decline and she requested the causes.
The reasons provided by the Commissioner for non-performance in the EC and GP were not satisfactory on slide 21. The approach to this challenge is deploying personnel from head office but this is a reactive approach. This should be addressed more proactively than relying on these intervention visits. There should be another strategy since these provinces are huge.
The Chairperson noted an arithmetic mistake on slide 20 where the totals do not tally with the individual numbers. The Committee should have no reason to doubt the integrity of the financials. She requested further reasons for the sharp decline on slide 17 which is quite alarming.
Mr Thobile Lamati, Director-General: Department of Employment and Labour (DEL) appreciated the motivation from the Committee to keep up the good work. The main area where the Fund has not done well is with disability and rehabilitation on slide 19. When DEL came before the Committee before, it said that a number of things would be done in provinces to ensure enough capacity and one of those was ensuring that the structure at the head office is mirrored in provinces. The provinces that have done well are those that have disability managers because they can perform faster. The rest rely on the help of head office which can be delayed because they generally have other responsibilities. The performance in Quarter 2 will not be the same.
The fact that the Compensation Fund achieved 33% is talking to the deadline and not whether or not those processes were completed. The rest would have been completed outside the set time-frame.
There are two reports, this is a cold report showing numbers and a second report showing impact analysis is available. This is not attached as DEL was not sure if that is what the Committee wanted. In the second report it outlines, for example, the top 20 companies where there is a higher rate of injuries aggregated together with age and the number. He apologized for not including this in the presentation.
For Quarter 1 some adjustments to the system needed to be made which produced these uncomfortable results. Since this adjustment has been made, the DG is confident that the performance will look better. He agreed that there is indeed a mistake in the numbers on slide 20.
The advantage that Gauteng has is that they are close to head office and can tap into head office resources more effectively when they have capacity challenges. A number of officials performing the disability work are sitting at head office even as they do the Gauteng work. Disability managers had not been appointed but they have now and so DEL is expecting improvement in performance.
The Commissioner responded to payment of claims. The Fund previously reported to the Committee about the challenges in the old system and a project for the new system was started in September 2018 and development was completed in August 2019. It migrated to the new system on 12 September. The new system has much tighter controls. Part of the new system is that you have to go through a three stage process of approval if one says one is a third party agent appointed by a company. To cleanse the system, the Fund announced that everyone will have to register afresh. Those who failed to meet the requirements published in the government gazette and notices on the website were not given access to the system. The system was not released all at once: 14 October for internal users; 20 October for external users; 1 November for medical service providers. Work is continuing despite the challenges in adjusting to the new system.
Many claims that come into the Fund come through intermediaries, where professionals use switching to cover their administrative functions. When the Fund pays then it would pay through the intermediary and there is no victimization through this process either. The CF is merely stricter and tightening up previous controls.
The DG apologized for the absence of financials and promised a supplementary report would be provided.
Follow up Questions
Ms H Jordaan (FF+) appreciated that the job to clean up an inherited mess is not an easy one. She requested confirmation if there is a timeline for the payment of outstanding claims and for the turnaround strategy mentioned. She asked for the Fund to provide the comprehensive action plan.
Mr M Nontsele (ANC) raised a concern at slide 19, if one turns the total number of invoices into warm bodies, one can say its 260 000 warm bodies. What is the impact on productivity levels and what steps is DEL taking to ensure health and safety compliance? Is this information shared with the enforcement side of DEL and is there a mutual relationship that is transparent and collaborative?
The DG replied that the claims information is given to the inspectorate . The inspectorate is able to say that X number of companies in certain industries are classified as high risk sectors such as the construction industry which has two fatalities a week. The inspectorate has the construction industry on radar because of this. The retail industry is also one that has a high number of claims. The Fund has a preventative budget which in part is meant to assist advice offices or NGOs in their health and safety work. The Act itself provides that the inspectorate should be involved in this process.
The turnaround strategy does have timeframes attached as this was previously requested by the Committee. There are timeframes and DEL knows which activity is going to be done and by when. DEL is calling it an action plan so that it can compel the CF to act and this action plan has all the timeframes.
The Commissioner responded that the deployment of the new claims system was at the core of the action plan and now the CF is able to focus on other things.
On outstanding payments, the new claims system introduced more complex rules where a lot of invoices are rejected before they even get into the system. The Fund works with medical service providers when payments have been rejected to resolve the unmet requirements.
The Commissioner replied that the CF is not owing R800 million. If there are any outstanding claims it would not be in the region of R800 million.
The Chair said the Committee is interested in what communication is used to keep stakeholders informed.
The Commissioner replied that communication challenges were identified and changed four years ago. The CF now organizes a number of programmes to engage with stakeholders, organized business and organized labour regularly to inform them about the Fund. Apart from official notices, many programmes were preceded by a road show.
NEDLAC Q1 performance
The DG introduced the NEDLAC team and noted the Acting Executive Director due to a consequence management process underway at NEDLAC where the previous incumbent is suspended.
Mr Thembinkosi Mkalipi, Acting Executive Director: NEDLAC, spoke about Nedlac involvement in the consideration of law and policy on social and economic matters. What counts as a socio-economic matter or impact and what does not is often up for debate.
In Quarter 1, NEDLAC had 13 targets and achieved all including an additional one that was not originally planned for. Programme 1 targets achieved are primarily administrative in nature and Nedlac was happy to receive an unqualified opinion on its finances. Programme 2 targets are primarily on core operations which were achieved through successful engagements on legislation. Programme 3 targets are primarily aimed at managing Nedlac funds. NEDLAC received quarterly reports from three constituencies to fulfill the implementation of more efficient monitoring tools.
One of the important aims of NEDLAC in Quarter 1 was the implementation of the commitments made at the 2018 Jobs Summit. Quarter 2 will reflect on questions such as what jobs have been saved, what jobs were created, what decisions were taken that will create jobs in the future. NEDLAC organized intensive engagements with project owners across social partners to ascertain the progress on commitments made at the Jobs Summit.
The major risk identified is that founding documents guiding the work of NEDLAC have not undergone a comprehensive review leading to a misalignment with the current operating environment and demands of the country. The NEDLAC Act is in the process of review together with the NEDLAC constitution to ensure better inclusiveness in NEDLAC. When NEDLAC is seen as a closed shop because it excludes organizations like SAFTU, it risks neglecting the voices of major stakeholders and lacking a buy-in on its decisions.
Another major risk is inefficient and ineffective information technology (IT) platforms and an inability to create and enabling and safe working environment through occupational health.
Mr Jonas Shai, Acting CFO of NEDLAC, gave a financial overview of Quarter 1 of 2019/20. NEDLAC had a total income of R10.48 million in Quarter 1. This money was split between the three programmes of Administration, Core Operations and Capacity Building. Total expenditure for the quarter amounted to R7.62 million. Salaries accounted for 58% of this expenditure. Leave pay-outs have been processed in line with the consequence management process. Constituency spending accounted for 6% of expenditure.
Under expenditure was R2.86m in Quarter 1. The implementation of the employee benefits scheme accounts for a large portion of this under expenditure. Unfortunately, in the past NEDLAC did not have an employee benefits scheme and for 2019/20 going forward this scheme has been funded. NEDLAC has an implementation target date of 1 January 2020 with R5 million odd set aside for this budgeted scheme.
Dr M Cardo (DA) raised a question on the challenges to the legitimacy of NEDLAC. During the Nedlac annual summit, Business Unity SA President, Sipho Pityana, questioned whether NEDLAC is still fit for purpose or whether it should be delegated to the scrapyard of history. There have been a number of challenges over the recent years including this controversy about the inclusion of SAFTU and the impression that NEDLAC is a closed shop.
There seems to be a broader philosophical reflection on NEDLAC underway. When will that review process be completed? If the DEL cannot discuss the likely recommendations, the Committee is interested in what areas DEL will be focusing on. Is NEDLAC giving serious contemplation to exactly what role it plays in conquering the unemployment crisis in South Africa?
Mr Hinana asked that DEL provide the Committee with the NEDLAC organogram. The major concern of the Committee was transformation. We should not subscribe to the idea that intelligence is only held by men and the delegation should not be men only.
He asked for clarity on the trade union threshold for NEDLAC membership. Who qualifies to be a member of NEDLAC because there are many stakeholders who are excluded when seemingly they should be included? One of the responsibilities of NEDLAC is to promote and strive for growth and economic participation. What is NEDLAC's take on the strike by unions at SAA? Everyone knows that we have an unemployment crisis. What has been achieved by NEDLAC in the implementation of the Jobs Summit 2018 recommendations? We know that the rate of unemployment recently increased by 0.1% from 29%? What is the relevance of the Job Summit and what are the ways that NEDLAC can remain relevant?
Mr S Mdabe (ANC) thanked DEL for the report. The report in its current format give a bird’s eye view of NEDLAC’s situation. The Committee would benefit from it unpacking the indicators so that the Committee can understand better what is happening. On financial performance, is the transfer and expenditure a quarterly indicator or an annual one?
Ms A Zuma (ANC) asked about the outreach programmes NEDLAC has to empower rural communities to access funding to grow their businesses.
Mr T Muladzi (EFF) applauded NEDLAC for 100% achievement on Quarter 1 programmes. He raised a concern about the risks mentioned on slide 12 and 13. Who is responsible for assisting with this as the risk highlighted needs to be completely avoided especially in light of 4IR? He asked for clarity on the R67 000 income labeled Sundry, on the consequence management process and the timeframes for filling positions.
The DG replied about the acting positions, that it is well on the way and is hoping to finalize the recruitment process before the Christmas holidays.
Nedlac identified the risks on slides 12 and 13 and put in steps to mitigate those risks. The importance of the risk management exercise is becoming aware of what could happen. The fact that the risks are flagged does not indicate that they will happen. In the NEDLAC offices they have all they need to comply with health and safety for example.
On IT funding, DEL gives NEDLAC an allocation on a yearly basis and it is up to NEDLAC to decide on spending. If there is a need for a specific IT project, NEDLAC will make DEL aware of this so that the necessary resources to enable them to do their work are provided.
On the questions on the 2018 Job Summit, one of the objectives of NEDLAC is to seek consensus and agreement on matters relating to social and economic policies. The Job Summit originated from NEDLAC and it was decided that this Jobs Summit would be different from the ones before. This is why there are monitoring systems. We all know that the economy is not doing well and whatever we do is going to be affected by the state of the economy. NEDLAC plays an important role in ensuring that investors are still attracted and that South Africa can have economic growth. All relevant constituencies should be represented in NEDLAC. This includes big business, small business, and labour federations who should have a voice in trying to find solutions to the unemployment crisis.
Mr Mkalipi, NEDLAC Acting Executive Director, replied that the NEDLAC Act is in the process of being reviewed which amendments will be brought to this Committee. Secondly the parties that form NEDLAC are members in terms of the NEDLAC constitution and this is being reviewed to see if there are provisions preventing optimal performance of NEDLAC. The principle in this review is how easy is it for an outsider to be able to come into NEDLAC. Business, labour, community and government are the four constituencies forming NEDLAC and no other entry is allowed as per the law. Whether there is a reason to open more doors will reveal itself as we go through the process of review.
The Job Summit is a NEDLAC creation but we all know that we do not have a magic wand for creating jobs, this is a process. As an example, at the Job Summit, business is asked why they are not investing and they respond that they are delayed by a government department- these are discussed to try and solve these challenges. It will take time for our commitments to reflect as real job creation.
NEDLAC does not have much impact on the SAA strike. NEDLAC sets up policies and frameworks for dispute resolution but the actual institution dealing with disputes would be the CCMA and other institutions and government departments.
The importance of unpacking the performance indicators and providing an organogram in the quarterly report is noted and this will be done better in future reports. He clarified that the indicators in the report are quarterly indicators.
He reminded Members that NEDLAC develops policies but does not implement them and so it would not be able to assist small businesses directly to access funding but simply in the policy review and formulation.
On the identified IT system risk, funding has already been set aside for the plan for system upgrades.
The cases of the NEDLAC CFO and Executive Director are still continuing at the CCMA but there is no reason for NEDLAC to stop operating. It is going forward with the filling of the posts.
The note about sundry income refers to an amount that comes from an employee who left early owing bursary money. The note on the transfer explains they have received transfers twice. The finance report speaks to Quarter 1 in terms of budget.
Mr X Ngwezi (IFP) commented on the allegation that NEDLAC is a closed shop. He said that NEDLAC should not evaluate itself . He does not believe that NEDLAC can do the investigation internally and come up with an independent view. He suggested that there should be an independent body to do this. He asked how far it is on mitigating the IT systems risk.
The Chairperson noted that NEDLAC has been clear that its founding documents are under review and that it will return to the Committee before these are finalized. SAFTU is one organization that does not fall within the threshold. Committee members will thus be able to deliberate on the threshold and the rules.
She raised a concern on the resources deployed for the constituencies, particularly for community. When we talk about capacity building, hopefully the entities are not working in silos. It should be NEDLAC’s concern to observe the capacity in the trade union irrespective of its integration into NEDLAC. The Committee would like to have a country whose employer and employee environment is relatively stable for the benefit of the economy. It is not to say that NEDLAC is not able to do its work.
The DG commented on capacity building. We would love to have a situation where there is a very strong employer organization and a strong organization for labour with a good culture of collective bargaining. When we have this, we have a situation where sectors are able to decide what they want – taking away this pressure from government. If the organizing of employees and employers is weak then this affects the resources available. Besides what NEDLAC does in terms of capacity building, NEDLAC has a Strengthening Civil Society Fund. Part of that is to fund two institutions that are responsible for capacity building called Ditsela and the Workers' College. The difficulty that NEDLAC faces relates to its need to play a very neutral role as a platform. If business and organized labour do not want to adapt to the new changes in the market locally and globally then they are going to perish. It is all about being able to adapt.
Unemployment Insurance Fund (UIF) Q1 performance
Mr Teboho Maruping, Commissioner: Unemployment Insurance Fund (UIF), assured members that the UIF Fund was dealing with its performance information and they had conducted an internal audit to this end. All the targets for Quarter 1 were deemed satisfactory by the internal audit. There are three areas of concern that the internal audit raised. One of these was misalignment between the two systems used to process claims.
The UIF Fund has also subjected its Quarter 1 performance report to a risk assessment to identify any risk of targets not being met and the implications of that risk. This aspect of the report will be available in the Quarter 2 report. The comparative analysis of 2018/19 Q1 and 2019/20 Q1 shows that the UIF has achieved 73% of its strategic objectives which constitutes a 10% increase. The UIF intends to continue on this trajectory of improving.
There are four areas where the UIF has missed targets. One is the percentage of valid invoices paid within 30 calendar days of receipt. One of the 484 invoices received was paid after 36 days. The vacancy rate target was below 10% and it was actually 11% in Quarter 1. The aim is to get to below 5% and the UIF is currently at 8% for Quarter 2. Another missed target was finalizing requirements of SAP Release 1 of the Integrated claims Management System. The last target missed was percentage of new companies registered within 1 working day which was targeted at 95% and performed at 93%. Quarter 2 will show that this gap has also been closed.
The target for valid UIF claims with complete information approved or rejected was 90% within 15 working days. Last year the UIF achieved 91% and it improved in Quarter 1 to 93%. There are areas where the performance is not satisfactory, a good example being Limpopo. One of the interventions is to have a rapid response team in each province. Gauteng province has the best rapid response team in the country, as even though they are the highest volume drivers they are sitting at 98% for Quarter 1. This team will be sent to Limpopo to do investigative work and support the Limpopo team to improve their performance. Another area being watched closely is the head office which has been facing challenges with the online platform.
The target for valid in-service benefits; maternity; illness; and adoption benefits claims with complete information approved or rejected was 90% within ten working days. Last year in Quarter 1 the UIF achieved 89% and it increased to 93% in this Q1. The percentage of valid deceased benefit claims was targeted at 90% within 20 working days. The UIF improved by 8% from Q1 last year to 95% achievement in the current Q1.
Last year in Quarter 1 the UIF paid R2.7 billion in claims and the current Q1 shows R3.6 billion in claims has been paid due to improved benefits introduced in the UIF Amendment Act.
The UIF is underspending on programme 1 (26%) because of the enhancements of the system. Programme 2 shows great improvement at 137% of the budget spent owing to the improved benefits currently being implemented. The reason for the overspending is the budget was approved last year and has since been revised for the Amendment Act.
In Quarter 1 the UIF did not perform in terms of the labour activation programme. Quarter 2 will show improvement on this 4% because of the funding agreements currently being implemented in the UIF.
88% of the compensation of employees budget has been spent, which also reflects the vacancy rate alluded to earlier in the presentation. The UIF is looking at this closely and is confident that there will be improvement in Quarter 2. 37% of the goods and services budget has been spent. This unspent budget is linked to maintenance of systems and so with the current implementation plans, the UIF is expecting improvement in the second quarter. 126% of the transfers budget has been spent, showing that the UIF is overspending on benefits and labour activation. The revised budget will come into effect in Quarter 3 and this should be resolved.
In total, of the R4.12 billion budgeted, 104% was spent with the overspending largely caused by the Amendment Act.
The DG continued with the presentation from slide 37, showing the strategic risk register. As at Quarter 1 the UIF put in place an intervention. The impact of this will be more visible in Quarter 2.
The Audit Action Plan was discussed in the previous meeting. The UIF has now set up a clean audit committee led by the COO to ensure that on a monthly basis, there is direct focus and attention on the 2018/19 audit findings to improve the audit opinion.
The Q1 outlines the disruptors from slide 47. The main objective of these disruptors is to improve the strategic risk areas identified. One example of the disruptors is the queue management system which have been rolled out to 112 sites to manage long queues at the labour centres and improve reporting. Another example is the UIF App and USSD which is finalised for the provision of multiple channels for clients to access UIF services in the comfort of their own space.
One of the disruptors not mentioned in the presentation is the programme of mobile buses which have been approved. Their objective is to allow to go to rural areas to provide services there as an intervention to address a strategic risk on service delivery.
Labour Activation Programme (LAP) briefing
The UIF Commissioner spoke about an exit strategy for the unemployed. The UIF picked one project it is running for discussion. The training programmes that the UIF has engaged with involving 2161 learners at a cost of just over R100 million. The training programmes vary from mixed farming; cooking/catering; hair, beauty and nail technology; game farming; property valuing and assessing; performing arts; and building and civil construction.
The JLD Institute approached Nedbank during the commencement of the 2019 funded skills development programmes with a proposal for a partnership as part of the interventions for an exit strategy. The focus of the Nedbank training was to train all the learners in personal and co-operative financial management, so that they can conduct their own businesses professionally and sustainably, should they wish to open businesses. The majority of the people trained were plugged into co-operatives and part of the training was to open accounts for their co-operatives.
The JLD Institute also partnered with Evaluation Property Intelligence, which has already committed to employ permanently 50 learners who will be dealing with property audits for Eskom and another 50 learners dealing with rural development and land reform. Through this programme they take home a total of about R6150 per month, to manage their expenses and secure their employment.
The Evaluations Property Intelligence company has employed a 136 LAP learners for evaluation of properties at different levels.
One of the other co-operatives forming part of the exit strategy is the Chef, Beauty and Nails Technology LAP learners. This is an area of expertise that has been overcome by foreign professionals in South Africa. This programme is trying to change this. The training programme includes giving the tools of trade so that they can start this at home. Over and above this, 40 of the learners in this programme will be employed as chefs and 50 as nail and beauty practitioners by Terra Analytics Restaurants in Umhlanga. An additional 50 learners will be employed by the Evaluations Company within its Beauty and Spa in Umhlanga.
Part of the training programme was for the Institute to canvass for employment opportunities for the learners. The Institute has also engage Home Affairs, which has taken 150 learners to be trained at the Home Affairs Academy for period of 12 months and a possible placement.
This gives the Committee a sense of one of the shining lights of the programmes in the Labour Activation Programme and what it can do. Not all the projects are this comprehensive and the UIF is engaging with the training providers to say that they need to do more so that learners have a job opportunity once they have been trained.
The Chairperson emphasized that these programmes should be spread and not concentrated in one province and asked if this is a pilot project.
Mr Mulaudzi raised a question on the non-achievement of Quarter 1 filling of vacancies. On the remedial action the UIF previously indicated that they would be able to fill the vacancies by August 2019 and start on the call centre budget by mid July. He asked for feedback on what has happened, particularly on Treasury approval.
He appreciated the good work being done in Gauteng and commended the strategy to have Gauteng officials assist the Limpopo team. He asked for clarity on the financials, where are these transfers going to?
He asked if the Labour Activation Programme is being rolled out nationally. The Committee would like to find out the plan of the UIF in following up on the placement of those trained. It should not be taken for granted that they will be absorbed. Finally, what is the bilateral agreement between DEL and Small Business to avoid working in silos and duplication?
Mr Ngwezi commented on the training programmes. The focus seems to be on Kwa-Zulu Natal. It is good to decentralize to avoid people hijacking tenders. This programme should be decentralized but perhaps the more important question is what informs the decision to implement in certain districts and leave out the rest. There is training at Kwa Mkhwanazi Traditional Authority in six or seven wards which means it is leaving out about 26 wards in that municipality. If these 281 learners were decentralized across the municipality then the programme could touch more people. How do people get information about recruitment for this very good programme.
Dr Cardo spoke about a former UIF employee convicted of fraud because he started a company and registered ghost workers so he could claim UIF benefits on their behalf. He asked what mechanisms are there to police such potential misconduct? A few years ago the UIF was using its substantial surplus funds for investments in digital networking, renewable energy and the ocean economy. Is this still the case and is there information on what the UIF is doing with the coming 4IR in terms of investment and scaling up opportunities.
Mr M Bagraim (DA) asked when considering risks, if the UIF has taken into account the potential closure of SAA and about 10 000 employees from Eskom who would be making claims. He questioned the amount of R100 million spent on training 2000 people. If the same R100 million was invested then those people would be able to be employed for the rest of their lives. He commented that the Labour Activation Programme has been around for several years and perhaps it can be collapsed into what the President is doing in terms of labour activation so that departments can start working together.
Ms Zuma questioned the decision to take all these LAP programmes to King Cetshwayo District Municipality. What criteria was UIF using to select people who participate in the programmes? They are supposed to bring the project to the Committee so that the Committee can discuss where to take these projects in the process of decentralizing. She raised concern on whether learners were being placed into job opportunities after training.
Mr Mdabe thanked the Commissioner for the presentation and said it was a commendable report as it is comprehensive. This gives us hope that others will emulate what the UIF has done. Slide 13 shows underperformance and the reason given was the outsourced or external assistance. What is the plan to absorb them internally or will it stay this way and how will that affect the performance going forward?
Mr M Nontsele (ANC) congratulated the UIF’s good performance but said that there is major room for improvement as well. On the reporting of fraud, is it not helpful that this forms part of the report even as a supplementary part of the report? He agrees that with service delivery the more it improves, the more problems it creates in terms of demand. The call for it to be extended speaks to what the Committee wants to see. It will be helpful to profile the activities so that it also empowers service providers on the ground.
The Chairperson congratulated UIF on its work. She referred to slide 23 showing performance, and said the Committee would benefit from seeing the figures and not just the percentages. The indicators should be unpacked so that members can deliberate more specifically.
Mr Maruping said that it will make available the full report to the Committee by Friday as today the aim was to give a snapshot. KZN was an example but it is not the only place where the programme has been rolled out.
On selection, a call for proposals was advertised in the media. Applicants were taken through an adjudication process and finally selected. The fuller report will show the type and number of applicants accepted. The focus is on UIF beneficiaries that are sitting at home unemployed and the policy is that 30% of the learners will be non-UIF beneficiaries. He assured the Committee that the programmes have been decentralized and go to all the provinces.
On fraud cases, as picked up in Witbank and other provinces, the problem is due to some of the control gaps. The interventions that are indicated as disruptors include automating the UIF process and introducing a biometric identification system.
On the investment portfolio and the 4IR, the department launched a project development partnership of about R2 billion. In those projects 4IR is a key focus. This is not limited to this investment portfolio alone so that the Department remains relevant.
National Treasury has indeed approved and the UIF has appointed a service provider and is in the process of doing a handover for the whole department for self-implementation.
On following up on placements, the UIF is involved in engagements for this purpose.
The Fund does not have an agreement with small businesses yet but this is one of the initiatives that the DG is embarking on and is currently outlining the terms of reference. This would include relevant funding instruments as well.
The DG covered the remaining questions. On the looming wave of retrenchments, the CCMA is dealing with this and trying to minimize the number of retrenchments. Not all of the number of people announced by a company to be retrenched are finally retrenched due to interventions. Nonetheless, the Fund is in a healthy place to deal with those issues.
The DG responded to the comment about the R100 million spent on 2000 people. The Fund has decided consciously to invest in people and is expecting social returns. The Fund has begun to relook at the cost of training and noted that it has artificially been increased because intermediaries are getting a cut as a management fee. One of the interventions is that the UIF is trying to cut out the middleman.
The Department has been given a responsibility to coordinate all employment issues and it is starting to be able to do this. The Employment Policy which will be presented to the Committee is increasing the UIF’s ability to do this work. Next week the Minister and the Deputy Minister will be presenting the National Youth Employment Strategy to Cabinet which will then be brought to the Committee.
Deputy Minister remarks
Deputy Minister of Employment and Labour, Ms Boitumelo Moloi, said that the Quarter 1 reports of the entities to a great extent reflect the efforts and commitment towards the Fifth Parliament Committee's recommendations to the DEL. There is some progress from the last presentation.
Communication to beneficiaries of the Compensation Fund has not been optimal and this is a shortcoming of DEL and the Fund itself. Advice will be taken to communicate plans to stakeholders, beneficiaries and relevant stakeholders. She thinks the Compensation Fund should at some point present a more comprehensive report.
Deputy Minister Moloi said that we should all be concerned about the SAA strike. The Department is receiving consistent updates but currently there is no outcome. She is hopeful that there will be a resolution soon as the matter is receiving the necessary attention.
She was pleased to report that the DEL is tabling amendments to COIDA which was embroiled in a pending Constitutional Court case. This gives the Department a good opportunity to address the High Court decision that is COIDA unconstitutional to the extent that it excludes domestic workers. A comprehensive strategy is already on the table at Parliament. As alluded before, the Department is ready to present to the Committee on this Amendment Bill.
She said that it was agreed at the NEDLAC summit that the Act, protocols and constitution of NEDLAC needs to be reviewed. NEDLAC is not running away from anybody, people who would like to get involved must simply comply with the protocols. NEDLAC is checking and verifying information as per the protocols and work is continuing.
In closing, slide 6 of the presentation showed that there was a target achieved which was not necessarily planned on programme 2 of the core business of NEDLAC. She thanked Members for the tough love and assured the Committee that they are committed to this process as excruciating as it can sometimes be.
The Chairperson requested that DEL give the Committee a reflection on the impact of retrenchments through the CCMA. She also requested a breakdown of the indicators to get a clearer picture, particularly indicators that show transformation efforts.
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