Economic Recovery, Support & Livelihoods: MECs briefings
Adhoc Committee on Covid-19 (WCPP)
15 May 2020
Chairperson: Ms M Wenger (DA)
Video: Ad Hoc Committee on Covid-19, 15 May 2020, 14:00
The presentation set out the Department of Economic Development and Tourism’s (DEDAT’s) role, which is to support approximately 1000 informal traders, general dealers, bakers, butchers and hawkers through a co-funding arrangement with the Department of Small Business Development (DSBD) / Small Enterprise Finance Agency (Sefa). Another role is to identify wholesalers in metro and non-metro areas as distribution points.
The estimated loss to the Western Cape Government because of the lockdown is approximately R1 billion per day. This is however the loss which would have happened if the Province continued under Level Five contingents. It became less because of the switch to Level Four. The Department is constantly readjusting its last position, analysing data, and taking relevant facts into account.
DSBD said the rationale was to ensure SMMEs did not close down completely and were supported with working capital to ensure jobs are retained in the economy.
DEDAT said most shops are closed. This actually led to liquidity challenges and eventually depended on how long the lockdown will last in whichever levels. It causes liquidity and solvency issues, which basically means businesses are no longer viable and will shut down. Ultimately this will cause a supply issue, as fewer products are available to customers. Even when global supply chains are opened, it causes supply chain challenges which has a knock on effect for inflation. This kind of vicious circle impacts unemployment. The recovery plan takes all these issues into consideration.
National government will adopt a phased approach to relaxing the lockdown. It is evident in the Premier’s replies to questions raised in the House Sitting the day before this meeting, the economy must be opened in a safe manner, preventing the spread of the virus in the workplace. The Department has been working tirelessly to open up the economy in a safe manner.
The Committee noted Ms L Botha’s (DA) apology.
All the Members mics were muted to avoid background noise. Points of order were flagged with the chat function. The three presentations had to be presented within one hour. This left time for a two hour discussion session. The briefing was based on questions individual Members posed to the relevant Departments, beforehand.
Western Cape Government: Economic Development and Tourism: Economic Cluster Presentation on Economic Recovery, Support and Livelihoods
Mr Rashid Toefy, DDG: Economic Operations, Department of Economic Development and Tourism (DEDAT), said the Economic Cluster was formed on 9 March 2020 to support the most vulnerable sectors of the economy at the time of the initial outbreak.
Risk-adjusted strategy industry lobbying
- Directly engaged with 445 economic stakeholders, across business and industry in the Western Cape, and received over 40 submissions which were forwarded on to the Department of Cooperative Governance and Traditional Affairs.
Enablement of informal trading
- Support includes operationalising engagement forums & communications platforms with municipalities.
Spaza shop & general dealer support scheme
- Department of Small Business Development (DSBD) in partnership with Nedbank will provide financial support to spaza shops and general dealers/traditional grocery stores in townships and villages.
- Supporting approximately 1000 informal traders, general dealers, bakers, butchers and hawkers through a co-funding arrangement with DSBD/ Small Enterprise Finance Agency (Sefa)
- All 30 municipalities engaged.
- DEDAT conducted a survey with 2150 respondents from across all districts, in April 2020, to assist the Western Cape Government to better understand the impact of COVID-19 on business and how government can best support business for planned recovery.
Impacts on Agriculture
Short-term shortage of goods on domestic markets:
- Domestic supply of food still intact
- More result of “panic buying” than actual shortages
Long-term shortage of goods on domestic markets:
- May have impact on next season’s harvest.
Food insecurity in vulnerable communities:
- Concern job losses (and inability to pay for food) rather than availability
- Direct interventions (food parcels) are important
- But it should be supplemented by a food voucher or coupon system.
Support to small scale agriculture
- DEDAT supportive of Department of Agriculture initiatives in capacitating Small Scale Farmers
- Involves facilitating Market Access both domestically and globally
Logistics impact on wine industry
- Wine industry frustrated by Flip Flop on Export of Wine and its impact on jobs
- Lead to outlook for the SA wine industry showing that R9 billion export value could decrease by a cumulative percentage of between 41% and 72% in the next three years or a cumulative loss of between R3,7 billion and R6 billion in foreign revenue
- Could lead to significant job losses within the wine industry, amounting to a loss of between 4 335 to 8 505 jobs in the next five years while amounting to a loss of between 13 830 and 27 440 jobs in the total value chain in the next five years
- Wine is now allowed to be transported for export purposes under level 4 regulations.
DEDAT digital economy unit
- #GoDigitalWC strategy
- A campaign by the Digital Economy unit of the Western Cape Government to equip businesses for the digital world.
Jump for entrepreneurs (Digital business toolkit)
- Jump formally launched the free app version in April 2020.
Work & skills programme
- The economy experienced a sudden decrease in demand and salaries to households
- The economy is in the process of shedding more than 240,000 jobs this year and the impact to salaries is deeper than the 10% loss in employment
- The economy will be resistant to employ additional workers
- The Work and skills programme pay stipends of between R2500 to R3000 per month for up to 12 months
- Incentivising firms to take on learners for experiential learning is critical to supporting a skilled workforce
Workplace safety & hotspot management
- Reduce community infection spread
- Enable business to stay open through reducing workplace infections
Workplace: Industry engagements
Call to industry:
- Request industry support throughout – partnership
- Reminding businesses to ensure compliance
- COVID-19 Business Safety Complaint Form
Tourism sector support to COVID-19 response
Quarantine and Isolation Accommodation
- Task team was formed to deal with queries 7 days a week
- Accommodation Establishments were encouraged to assist with housing isolation cases, quarantine cased, housing stranded tourists while they await repatriation and the housing of essential services workers.
- Co-ordinated support in terms of utilising the Cape Town Stadium through tourism network.
- More than 5000 foreign nationals have been repatriated from Cape Town since 3 April 2020.
Economic recovery plan
- The phased economic recovery plan has been developed on the understanding that National Government will be adopting a phased approach to the relaxation of the lockdown
- The plan focuses on the economy and workers, and understands the critical necessity of income for households
- Phases of the plan are not necessarily linear, and we may move fluidly between the phases.
- An estimated R1 billion per day is lost for each day of lockdown in the Western Cape. Results-driven and Solution focused
- The Economic Recovery Plan is a “work in progress” and is based on various scenarios and modeling of economic situations depending on the length of lockdown and epidemiological outcomes
Department of Small Business Development: Implementation Update on COVID-19 Response Programmes
Mr Mzoxolo Maki, Chief Director: Enterprise and Supplier Development, Department of Small Business Development (DSBD), said the rationale was to ensure Small Medium and Micro Enterprises (SMMEs) do not close down completely and are supported with working capital to ensure jobs are retained in the economy. It is applicable to companies in business on 29 February 2020.
The elements of working capital covered through the Scheme:
- Payroll assistance assists employers whose employees do not qualify for UIF Relief, on condition those employers register the employees with UIF/ or made arrangements with UIF to fulfil outstanding obligations. Payment is directly to employees’ bank accounts but applications are done by employers.
- Rental assistance (facility or equipment) assists businesses to pay rental obligations for either working tools and facilities or business premises.
- Utilities, to assist with municipal bills for 3 months, this also alleviates pressure from municipalities who are facing severe financial constraints and yet must continue to deliver basic services.
All SMMEs qualify to apply on the set criteria except for businesses in the informal sector as a dedicated programme is designed for the sector.
Business growth facility
Rationale for the facility: The funding will give local manufacturers and suppliers an opportunity to produce and strengthen its place in the market, which may lead to long term contracts post the COVID-19 pandemic.
(See presentation on attached powerpoint)
Department of Employment and Labour: Assistance provided during COVID-19 lockdown
Mr Sam Morotoba, DDG: Public Employment Services, Department of Employment and Labour, said the following pieces of legislation were enforced during the lockdown period:
- Occupational Health and Safety Act of 1993
- Hazardous Biological Agents Regulations
- COVID-19 OHS Directives; launched by the Minister on 29 March 2020
Leave provisions during the lockdown period
- The National disaster declared by the President does not suspend the current legislation in place therefore the leave regime as set out in the Basic Conditions of Employment Act (BCEA) still applies.
- The BCEA sets two criteria on leave (1) it should be taken in terms of an agreement and (2) where there is no agreement the employer based on his operational requirements can determine when leave must be utilised.
- An employer is therefore within his right in the absence of an agreement to determine when an employee can take leave.
Future of work and technology
- The current COVID-19 environment has triggered a lot of debate and innovation on how work can be done.
- This environment forms part of the 4th Industrial Revolution and Future of Work that has been discussion within the International Labour Organisation (ILO).
(See presentation of attached powerpoint document)
Ms D Baartman (DA) asked the following:
- She referred to the tourism sector statistics, and helping businesses grow with webinars, and asked how Wesgro reaches businesses or companies to be part of webinars and the mental campaign.
- She asked if there is data to show how many volunteers really partnered with Wesgro.
- The presentation said R1 billion is lost per day in the Western Cape alone because of the lockdown. She asked if it meant Western Cape has lost R49 billion already.
- She asked for the Department’s advice on how regulations and legislation can be amended to allow the economy to recover faster.
- She wanted to understand how the Department assisted the Department of Education to help students gain tangible skills in the digital economy, and helps them move forward innovatively.
- She addressed the DSBD, saying the President spoke about a support and recovery package, but when browsing the funds it became less of actual relief and more of loan operations. Many businesses indicated there was no way it could repay the loans. She asked in what ways businesses and the informal sector were actually assisted.
Ms N Nkondlo (ANC) asked:
- What the ideal compliance levels during lockdown are.
- She asked if the number of infections, especially in the retail sector, can be defined as injury at work. If this is so, she asked, if compensation can be awarded from compensation funds.
- She wanted more information about UIF payments.
- Addressing the DSBD, she said she was told around 2203 informal trader payments were given by the different municipalities. She asked for clarity about the fact that most informal traders were not registered with permits.
- She said she knew for a fact the City of Cape Town (CoCT) did not issue permits because individuals did not have what it called pre-existing permits or concessionary letters. She asked for clarity about this.
Mr M Xego (EFF) said:
- He could not understand how the Department of Employment and Labour went from 24 000 to 1 041. He asked for clarity around this and asked about challenges with such a low number.
- He wanted to know the rationale behind the compensation fund, where some form of amnesty is given to employers who did not comply to lockdown regulations.
- Lastly, he wanted to understand the turnaround time related to queries, and how the Department ensured people were assisted.
Mr B Herron (GOOD) said:
- The Minister and members of the Department were aware he raised several concerns around assistance to informal traders to reduce red tape, especially in accessing permits. He said he would love to be proved wrong, but he was disappointed. The chaos and bureaucracy which the change in regulations caused for the most vulnerable of small businesses, was not anticipated. Those who are really suffering a loss of income need to be assisted much faster. It takes individuals over three weeks to get a permit, queuing from 5am, sent from one place to another. After raising the issue, he got an email from the CoCT assuring permits were provided, which was not true as the Legal Resource Centre are currently suing the CoCT around informal trading permits.
- He said there was a blockage between spaza shops accessing assistance, as there was no way only 23 spaza shops applied for assistance, when many are operating under vulnerable circumstances.
- He asked for more information about hotspot management, and how the Department responded to the high number of infections occurring within the Western Cape. He gave the example of the food factory in Malmesbury, where infections were reported on 30 April, yet no steps were taken and within the last week more infections occurred at the factory.
Mr F Christians (ACDP) asked:
- He wanted an explanation as to why the UIF requested paperwork and forms from companies and businesses, yet maybe only paid two workers, when in fact there were ten workers.
- He asked if it was true if UIF issued payments according to race.
- People are frustrated with the UIF as many issues and excuses are always popping up from them regarding payment of money.
- The President announced, at the end of the month the government will decide which provinces move to Level Three. He asked what the impact will be if the Province stayed on Level Four, and what the possible impact will be to move to Level Three.
- The 104 000 job losses in the tourism industry amounts to almost 60% of the total amount. With Cape Town being a tourist attraction, this is extremely concerning. He asked if a recovery plan was developed.
Mr P Marais (FF+) said legislation during the national disaster did not adhere to basic conditions of employment. He told the Minister of Employment and Labour, he did not see why employees had to utilise leave, and asked what the plan was for using local goods and services, to substitute produced goods and trade industries lost due to the lockdown, possibly forever.
Mr David Maynier, Western Cape MEC for Finance and Economic Opportunities, replied that the online campaign aimed at the tourism sector showcases districts and tourism highlights within the Province. It does so virtually. This has the added advantage of using local tour guides and keeps the idea of the destination alive. This really speaks to the innovation field. There are approximately 140 to 150 volunteers. The Department is asking businesses to identify themselves, to be matched by the Department, with volunteers.
On economic recovery, he said it is evident in the Premier’s replies to questions raised in the House Sitting yesterday, the economy must be opened in a safe manner, preventing the spread of the virus in the workplace. The Department has been working tirelessly to open up the economy in a safe manner.
There are some successes in wine exports. The President and Premier both mentioned there are talks to reduce South Africa to Level Three lockdown. Managing hotspots will be considered when dealing with the decision of which lockdown level the Western Cape must be moved to.
About reducing red tape, the 837 queries Members wanted more detail on, are issues set out in the presentation, dealing extensively with the interpretation of regulations and access to permits.
The Department of Health found and determined, in specific geographic areas there is a higher rate of transmission. DEDAT has specific responsibilities in those hotspots as well. Replying to the queries and complaints of workplace safety, MEC Maynier said an online form was established the previous week where members of the public could submit complaints, where employees felt protocols were not implemented. There are approximately 42 complaints from last week’s report. DEDAT and its partners, particularly the Department of Labour are endeavouring to reply as fast as it can. The tourism sector is a big concern and National Government funding schemes are approached to get access to various forms of support.
Mr Solly Fourie, Head of DEDAT, replied to the estimated loss of R1 billion. This is the loss that will happen if the province continued under Level Five contingents. Because of Level Four it became less. He said the Department was constantly readjusting its last position, analysing data, and taking relevant facts into account.
On permits he said only existing permit holders could get permits. The approach has changed and all traders can now apply for it.
Mr Tim Harris, Chief Executive Officer: Wesgro, said two weeks ago Wesgro launched an innovative zoom background featuring destinations from around the Western Cape. To deal with unemployment, it used virtual tour guides. The first version was released yesterday, on the West Coast, with local tour guide Jeremy Howard. It is an innovative way not only to help out tour guides, but also to help potential travellers see what there is to do in the Western Cape. When Travel Returns, is also a podcast Wesgro is in the process of launching on Spotify next week. In general it is working to make sure South Africa, and the Western Cape particularly, remains a bucket list destination for travellers around the world. Wesgro ran ten webinars in conjunction with the Province. Four more are in the pipeline, with hundreds of participants on those webinars, dealing in everything from employee relations to cargo movements, to business tourism. It helped channel support on offer from the private sector and the public sector with the support finder tool. It built the tool to support businesses in the Western Cape, but in reality out of the ten thousand businesses which used the tool, four thousand of those came from the rest of South Africa.
Ms Helen Davies, Chief Director: Green Economy, DEDAT, said the Department was working closely with the CoCT, the environmental health team, urban management teams, as well as wastewater. It needed a coordinated approach not just for the economic side, but also for components such as community health, transport, and human settlements. This is because it has to ensure it manages infections or the potential spread of infections.
A non-compliance complaint line and online form was established online a week ago already. It also received email complaints. DEDAT has 118 reports as of just before the current meeting began. It had a call centre going live on Monday. The 118 reports varied, focused mainly on disregard for the regulations. She said there is an increasing need to work with employees to help clarify regulatory requirements. Issues were such as social distancing in canteens and such, was picked up, and dealt with. Collaboration is the key to building bridges to correct the situation.
Mr Maki said the principle of blended finance was used where it provided both loans and grants to businesses, depending on the size of the business. Informal businesses are mainly supplied with grants. While DEDAT would like to issue grants to every business, it simply is not possible and is not sustainable. Those who can afford loans will most likely get it over those who cannot. Interest is seriously reduced because of the situation currently. DEDAT is in discussions with Standard Bank, who is onboard to increase its footprint in the access points.
Speaking about SARS, he said, SARS wants to use the situation to encourage the formalisation of businesses and compliance. It told businesses it will assist them. This will take informal businesses from the informal status and help it grow with the support of financial and non-financial resources and data provided into middle sized businesses. DSBD has always supported informal businesses through one of its programs called the informal and micro-enterprise development program.
Mr Mawele Ntamo, Chief Director: Western Cape Provincial Operations, Department of Employment and Labour, said the Department was currently at a 57% compliance rate and the goal indeed was 100% compliance. Companies in the risk assessments did not incorporate the coverage of regulations. This meant those companies only really had 7% compliance. The Department issues notices and companies are given the shortest time frames to respond. While many retail shops are closed in the Province, most opened within the last two days. Inspectors who issued the notices went back after companies replied and investigated compliance. Employees or workers are covered by the Compensation Fund if tested positive for Covid-19.
The Department ensures money reaches workers. Within the last week the UIF enhanced its systems to enable workers themselves to view the employers’ applications. The workers used their own identity documents to access the system and check if they were covered.
Mr Morotoba said there could be a number of reasons for employers not complying. This is why, when the Department approached the UIF or Compensation Fund, it took a conscious decision to say it was not the fault of the employee. During the current times the employee should not, be without any income provided by government, simply because the employer did not comply.
Before, people shouted about supplying applications to the Department and not yet being paid. Now people could go to the Department of Labour’s website, to the Covid-19 section, put the company number down, are able to see how far the application went, if they qualified or not, and what was due to them. While some employers would not necessarily pay for a holiday, the employer agreed if employees contracted the virus within the workplace, the Department’s compensation fund had to pay. Businesses need to be in good standing with its books. This is the reason why there were extensions of deadlines. In the event an employee contracted the disease in the workplace, the employee was covered by the Compensation Fund.
Ms Baartman asked why companies deducted an amount from normal salaries, after companies applied and received money. According to her understanding this was not the correct procedure. She said the regulations set out and money had to be handed over to employees within two working days after it was received. The relevant department and individual had to be notified. She wanted to know what was done about the situations where some companies had not even paid the money after 21 days. This is money accruing interest.
Ms Nkondlo asked:
- About the assistance of companies, she asked what the enforcement capacity of the Department was.
- She asked how many enforcement officers were from the Department of Employment and Labour within the province.
- She wanted to know how many miles were covered and visited to where infections broke out.
- On food security she asked about the Department of Agriculture’s supply chain and situation of economic recovery. She specifically asked if there are any particular innovative plans in development.
- She asked if there is any engagement to help sanitise spaces currently operating.
Mr Xego said:
- Regarding labour inspectors, he wanted to understand the seriousness for lack of them and if information was saved after inspectors visited areas.
- He asked for more information about the serious challenges the Department of Labour faced or which might face, specifically around labour inspectors ensuring companies are monitored.
Mr Herron said:
- He was expecting the red tape production unit to be a unit which does not get stuck in the weeds of bureaucracy, but rather to actually destroy the weeds and clear the path for businesses to flourish no matter the size or the formality or informality.
- He said a lot more detail is needed on the economic recovery plan presentation.
- He asked if he was right in saying those plans were still being developed. Maybe the Departments could come back and give more details on the economic recovery plan.
- He wanted to understand what the Department meant by wanting to prevent open supply constraints in the economic recovery or economic growth period post Covid-19.
- Lastly, on the state guaranteed loan schemes administered through commercial banks, he asked if the scheme was managed through the DSBD because it seemed it took at least three to four weeks before commercial banks actually understood what the loan scheme was about and how it would work.
Mr Christians said a company in Macassar was reported for not adhering to the regulations. People panicked as infections were reported. He asked if there was a concerted effort to get the percentages down. Some companies told employees they were generally laid off. Told them if they found a job they could apply for it, and take it if they got it. But the employer then got back to the employee about the severance packages.
MEC Maynier said DEDAT developed a very strong partnership with the Department of Labour. Together the two entities worked on the 118 complaints. Capacity will be shortly increased. He said he set himself a personal goal of interacting with as many chamber associations and foreign forums in the formal and informal economy as possible. Within the last two weeks he interacted with the Chamber of Commerce, and spent some time, virtually, with the West Coast Chamber. He is going to work through chamber associations and forums out there.
The red tape production unit was committed to dealing with issues of concern to Members. The recovery plan is very much still at an early stage. A regional model assessing the impact of Covid-19 on the economy in the Western Cape is currently being peer reviewed.
Mr Harris said most of the work described was run through the support business website which was a neutral platform. The Department collaborated with the Province and the CoCT in building a space not linked to one entity or another. The latest tool built onto the platform was the marketplace. Last week it launched the market place and within the first 3 hours had 50 vendors registered. Right now it is significantly beyond that number. The demand on the site is so significant it spent the last few days updating the server and moving it onto a much bigger infrastructure.
Mr Toefy said there were a number of issues related to food security. It was a challenge for importing products, and also because of the limitations on the usual practice of supplying goods needed in the medium and short terms. It is all about protecting the value chain from a logistical point of view. The situation creates an opportunity for the creation of jobs through the localisation of products and using local goods.
Ms Jo-Ann Johnston, DDG: Economic Coordination and Stakeholder Engagement, DEDAT, said most shops were closed. This actually led to liquidity challenges and eventually depended on how long the lockdown will last in whatever levels. It caused liquidity and solvency issues, which basically meant businesses were no longer viable and would shut down. Ultimately this will cause a supply issue as less products are available to customers. Even when global supply chains are opened, it will cause supply chain challenges which has a knock on effect for inflation. This kind of vicious circle impacted unemployment. The recovery plan takes all these issues into consideration.
Mr Maki said the government guarantee scheme was a skill conceptualised by the National Treasury and will be implemented through its mechanisms. Replying to a question by Mr Maki, he said, control measures are put in place to dissuade companies from going rogue.
Mr David Esau, Provincial Chief Inspector and Specialist, Department of Employment and Labour, said the Department put boxes in front of the Labour Centres allowing individuals to drop forms in the boxes to get claims processed. This is because Labour Centres were closed. Challenges faced were mainly a result of social distancing, which had to be adhered to because of Covid-19. He is aware of the issue concerning signing of certain loans against Covid-19 payments. He strongly discouraged workers from signing any loan agreements with employers.
Speaking on enforcement capacity, he said the Department of Labour had approximately 100 vacant spaces some time ago and the Western Cape had 16. Appointments are currently being made. There should not be a capacity issue going forward
There was talk about the Department of Labour possibly working with other law enforcement to get assistance with the high number of matters raised. The Department also spoke to the Department of Agriculture and to environmental health practitioners of the City to get assistance in identifying non-compliant employers. Stores located in malls were no exceptions to social distancing practices and risked being closed by the Department if compliance was not met. The Department established mechanisms to collectively identify places to ensure compliance, places like Macassar, which Members spoke about.
Mr G Bosman (DA) raised a point of order and asked for clarification on the initial complaint from Ms Burger, who emailed the Department of Labour on the 1st March. The email was also sent to Mr Esau. On 3 April he said he emailed Mr Esau and is yet to receive a response. He asked what the time frame was in getting a response from the Department. It seemed nobody was getting through to the Department and no one replied to the email he sent.
Mr Esau said the names and contact numbers of all the Labour Centres in the Western Cape are on the Department’s website. Due to the influx, it was not only about receiving applications and queries but also processing it, which was done by people.
The Chairperson thanked the Committee and the delegation for participation and the hard work it is currently doing under immense strain. The delegation was dismissed. Members with further questions were asked to pose it to the Procedural Officers, to be forwarded to the relevant Departments.
The Chairperson thanked Members for their engagement.
The meeting was adjourned.
Wenger, Ms MM
Allen, Mr R
America, Mr D
Baartman, Ms DM
Bosman, Mr G
Christians, Mr F
Herron, Mr BN
Kama, Mr M
Lekker, Ms P
Mackenzie, Mr R
Marais, Mr PJ
Marran, Mr P
Maseko, Ms M
Mitchell, Mr D
Nkondlo, Ms ND
Philander, Ms W
Sayed, Mr MK
Smith, Mr D
Xego, Mr M
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