CCMA, Nedlac & Productivity SA 2019/20 Annual Reports; with Deputy Minister

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Employment and Labour

18 November 2020
Chairperson: Ms M Dunjwa (ANC)
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Meeting Summary

2019/20 Annual Reports

Video: Portfolio Committee on Employment and Labour, 18 November 2020

The Committee convened to be briefed by Nedlac, Productivity SA and the Commission for Conciliation, Mediation and Arbitration (CCMA) on their 2019/20 Annual Reports.

Nedlac had 25 planned performance indicators for the 2019/20 financial year as per the annual performance plan (APP). 23 planned indicators were achieved, representing 92% achievement. Two targets were not achieved.

Nedlac received an unqualified audit opinion for the second year in a row, with no material findings on predetermined objectives. Material findings related to R7 710 199 irregular expenditure incurred, majority of which stems from the travel management contract. There was also fruitless and wasteful expenditure of R550 319 relating to penalties and interest incurred on late payment to the South African Revenue Services (SARS).

ProductivitySA indicated that it achieved 100% of its annual targets overall. It is worth noting that the entity was able to generate additional revenue despite operating at 70% capacity, given the moratorium on employee recruitment due to lack of funding. Employee costs were contained within 4% which is made up of the 5.1% annual salary increase plus savings from the moratorium currently in place. Goods and services were also below budget due savings initiatives implemented by the entity. It achieved an unqualified audit opinion.

ProductivitySA’s current funding model does not allow adequate achievement of its national mandate of leading and inspiring a competitive and productive South Africa. The entity is also under-resourced in human capacity, which hinders its ability to make a meaningful and desirable nationwide impact.

The CCMA’s 2019/2020 audit outcome is consistent with the prior three years, with unqualified findings on compliance. There has been an improvement in the overall quality of the submitted financial statements and performance information. During the 2019/20 financial year, approximately 59% of all case referrals were related to unfair dismissal and this represents a reduction of 12% compared to the 2018/19 financial year, and nine percent of cases were related to unfair labour practice disputes, which is a two percent increase from the previous financial year.

The 2019/20 financial year was the last year for the implementation of the Senz’umehluko Strategy with the entity having achieved almost 84% of strategic targets. About 42% of jobs of employees that were likely to be retrenchment were saved.

Members asked if CCMA if they have handled all the complaints they received. He asked about the referrals that are dealt with CCMA and how they were coping since there were budget cuts.

Members also asked about the collaboration between CCMA and Productivity SA – if the collaboration dealt with large-scale mining and if they had provided assistance in the retrenchments.
 

Meeting report

Nedlac Annual Report 2019/20

Ms Lisa Seftel, Executive Director, Nedlac, started by thanking the Committee for inviting them to the meeting and affording them an opportunity to make a presentation. She said the Report summarises Nedlac’s annual performance report for the 2019/2020 financial year. The end of the financial year coincided with the beginning of the Covid-19 pandemic and a very different set of activities for Nedlac. Majority of performance targets were met and the entity received an unqualified audit.

 

Highlights of the year are the establishment of structures including a Presidential Working Committee to ensure that the commitments of the Presidential Job Summit are implemented. There were Progressing Job Summit Agreements, including in respect of water use licences, expansion of business processing, unblocking visas for tourism, improving the efficiency of the Temporary Employer/Employee Relief Scheme. There was an ongoing processing of legislation and policy on issues including in respect of land and energy. The entity was also concluding a number of key internal policies and strategies relating to ICT, supply chain and facility management.

 

Ms Seftel said that Nedlac had 25 planned performance indicators for the 2019/20 financial year as per the annual performance plan (APP). Twenty-three planned indicators were achieved, representing 92% achievement. Two targets were not achieved.

 

She also gave a summary of key achievements and these included;

Through CCMA facilitated processes, 21 846 jobs were saved. TERS is now managed by a Single Adjudication Committee with payments processed within 16 days from the point of adjudication. The Minister of Finance announced in the budget speech that the government is aware that unfair trade practices have put some key industries under pressure. However, no change has happened to date. Pilot launched on the 25th November in Kenya and completed. The system was to be tested in India, Nigeria and China but this was affected by the Covid-19 pandemic. There was a directive issued, stating that unabridged birth certificates are not required for visa exempt countries.

 

The progress in terms of the Presidential Job Summit included a blended finance scheme (BFS) for land redistribution. The Department has committed R2 billion to pilot the implementation of the BFS over the 2020-24 Medium-Term Expenditure Framework. For this, about R200 million was from the Department of Rural Development and Land Reform, R880 million from the Department of Agriculture, Forestry and Fisheries as well as R1 billion from Land Bank. Several initiatives have been underway to understand how best the timeframes for addressing backlogs in the regulation of new drugs can be reduced on pharmaceuticals. Waste exclusion authorisations were issued by the Minister of DEFF during January and February 2020, enabling the initiation of waste beneficiation projects. South Africa's Automotive Master Plan (SAAM) and the post-2020 APDP amendments have been finalised and are now being implemented.

 

During quarter three, the social partners started negotiating a framework agreement out of recognition that the resolution of the energy crisis is one of the most important challenges facing South Africa. The social compact sets out short-, medium- and long-term steps that each social partner will take to stabilise Eskom so that there can be an efficient, reliable and affordable supply of energy, which will enable sustainable job creation and inclusive economic growth. It includes the social partners working together to identify and support innovative and cheap funding mechanisms that aim to reduce Eskom’s debt, access fresh capital where required and preserve the integrity of the financial system.

 

Ms Seftel said that two targets were not achieved. About 60% of developmental training courses identified in line with the organisational workflow assessment were attended by staff, based on available budget. The achievement of this target depended on having the organisational workflow assessment concluded in quarter two and subsequently, 60% of developmental training was conducted in quarter four.  Nedlac had initially planned that the organisational workflow assessment would be conducted by an external service provider. It was then identified that the workflow assessment needed to be aligned to the outcome of the review of Nedlac’s role and founding documents by the governance Task Team, which had not been concluded by the end of the financial year and it is still underway. The process to review founding documents, organisational workflow assessment and staff training will be expedited in the 2020/21 financial year. The Nedlac Report on Companies Amendment Bill could not be concluded within six months. This target was not achieved as due to coordination challenges encountered internally and subsequent delays during the sign-off stage of the report.

 

Nedlac received an unqualified audit opinion second year in a row, with no material findings on predetermined objectives. Material findings related to R7 710 199 irregular expenditure incurred, majority of which stems from the travel management contract. This contract concluded on the 31 March 2020. There was also fruitless and wasteful expenditure of R550 319 relating to penalties and interest incurred on late payment to the South African Revenue Services (SARS). This is due to difficulties experienced in transferring the profiles from previous employed personnel to the current. This matter has been escalated to the highest offices in SARS and a resolution has been tabled.

Productivity South Africa Annual Report 2019/20

Mr Mothunye Mothiba, CEO, ProductivitySA, said the 2019/20 annual performance is at 100%. Of the seven indicators reported on, all were achieved. It should be noted that since 2018 the entity experienced funding challenges, which resulted in the Board deciding to suspend the Turnaround Solutions (TAS programme; this decision is regrettable given the scale of retrenchments and job losses. However, the TAS objective (without targets) remained on the APP even though the Programme was suspended. The funding challenges for the TAS Programme (renamed Business Turnaround and Recovery) have been resolved with the allocation of R104m in the 2020/21 financial year.

 

The highlights and key achievements for Productivity SA were as follows:

The entity achieved 100% of its annual targets overall. It should be noted that the approved Strategic Plan and APP 2019/20 included the TAS Programme. However, no targets were set against this because the programme remains suspended. Productivity SA generated over R11m in additional revenue during the 2019/20 financial year compared to over R10m in the 2018/19 financial year; this reflects about a nine percent increase. It is commendable that the entity was able to generate additional revenue despite operating at 70% capacity, given the moratorium on employee recruitment due to lack of funding. Employee costs were contained within four percent which is made up of the 5.1% annual salary increase plus savings from the moratorium currently in place. Goods and services were also below budget due savings initiatives implemented by the entity.

 

The enterprise competitiveness and sustainability programme provides productivity awareness and business improvement workshops to cultivate a productivity mindset and behaviour among cooperatives and emerging entrepreneurs. Some 4 031 beneficiaries, including emerging entrepreneurs/cooperatives, education, training and developments (ETDs) and skills development facilitators (SDFs), were capacitated in 2019/2020 to improve productivity and business efficiency. Through the Workplace Challenge Programme, the entity provided competitiveness improvement services to 100 companies with three Industrial/Sector Clusters established (Forestry, Footwear & Leather, Metal and Engineering), six Kaizen Clusters (Geographical), 22 companies supported in the special economic zones and 17 companies supported in the Industrial Parks. The enterprises supported through the programme are capacitated to adopt world-class productivity enhancement best practices focusing on products, processes and people. Through these interventions the entity was able to preserve over 6 170 jobs.

 

Despite the suspension of the TAS Programme, the entity continued participating in the Presidential Jobs Summit initiatives to implement interventions to preserve jobs and mitigate the retrenchment of workers. The Single Adjudication Committee for Temporary Employer Employee Relief Scheme (TERS) is in operation and has recommended 22 enterprises employing a total of 4 101 employees  and total rand value is R145 211 225.41 (numbers might change due to Unemployment Insurance Fund confirmations) for accessing benefits through the scheme. Plans are afoot to increase the pipeline through intense national advocacy campaigns in the 2020/21 financial year. During the year under review, the entity signed a Memorandum of Understanding with the International Labour Organisation (ILO) with the objective of advancing inclusive growth and to promote and create an environment for entrepreneurship and sustainable enterprises. Together with these partners, the entity commenced with the implementation of the ILO’s global Sustaining Competitive and Responsible Enterprises (SCORE) programme in the clothing and textile sector.

ProductivitySA’s current funding model does not allow adequate achievement of its national mandate of leading and inspiring a competitive and productive South Africa. The organisation is also under-resourced in human capacity, which hinders its ability to make a meaningful and desirable nationwide impact.

ProductivitySA achieved an unqualified audit opinion in 2019/20 with zero irregular expenditure. There was a 5.8% decrease in the accumulated deficit and 0.4% increase in the total revenue (funding).

 

Commission for Conciliation, Mediation and Arbitration (CCMA) Annual Report 2019/20

Mr Cameron Morajane, CEO, CCMA, started by thanking the Committee for the opportunity to present.

 

He highlighted that priority one of CCMA contributes towards outcome 14: Transforming society and uniting the country. The CCMA received 221 547 referrals during the 2019/20 financial year and heard 145 611 conciliations within 30 days, which is 98% compliance rate. A total of 21 963 of arbitration awards were sent to parties by the 14th day after completion of the arbitration process, which is 99% compliance rate. During the 2019/20 financial year, approximately 59% of all case referrals were related to unfair dismissal and this represents a reduction of 12% compared to the 2018/19 financial year, and nine percent of cases were related to unfair labour practice disputes, which is a two percent increase from the previous financial year.

 

The business professional services sector remained the highest referring sector, with 29% of total referrals. The safety and private security sector showed an increase of 2%, contributing 14% to all referrals, whilst the domestic sector showed a 1% decline to 6%, from 7% in the previous year. Referrals received from retail, building and construction, agriculture/farming, food/beverage and mining sectors remained unchanged when compared to the 2018/19 financial year.

 

The CCMA continued to support the 35 accredited bargaining councils and private agencies as well as three accredited private agencies to ensure proper monitoring and evaluation of their dispute resolution performance, subsidy payment management and to ensure that effective stakeholder relations are maintained. CCMA also provides support and monitors collective bargaining across the various industries.

 

There has been great interest from the public to enquire about their rights relating to the new legislative changes. During the 2019/20 financial year, the CCMA received 35 767 referrals relating to the Basic Conditions of Employment Act (BCEA) and the National Minimum Wage Act (NMWA). This constitutes 16.1% of the total referrals received. The majority of these referrals, 28 514, were for claims alleged to outstanding monetary payments. The CCMA continued to strive to meet its legislative mandate, notwithstanding the soaring increase in referrals and fiscal constraints.

 

Through the Essential Services Committee, observance of 12 Essential Service Designations (ESDs), Minimum Service Agreements (MSAs), Minimum Service Determinations (MSDs) and/or Maintenance Service Determinations were monitored for compliance. Three self-initiated cases were conducted in order to determine whether or not the whole or a part of any service is an essential service. Zero percent of Section 71 cases were investigated as and when referred.

 

He said that of the 144 public interest matters dealt with, the CCMA settled 114 public interest matters, resulting in a 79% settlement rate. This is due to the CCMA’s ongoing proactive monitoring, support and guidance provided to the labour market in respect of collective bargaining matters. The CCMA contributed in resolving various high-profile disputes: Anglo Platinum, Impala Platinum and Sibanye Stillwater; the National Education, Health and Allied Workers’ Union (NEHAWU) and SARS; NUMSA and Road Accident Fund; South African Airways (SAA) and the National Union of Metalworkers of South Africa (NUMSA), among others. A total of eight collective bargaining support processes in respect of wage facilitation were proactively conducted with the following institutions: Sentech and NUMSA; NUMSA and Barloworld; National Union of Public Service & Allied Workers (NUPSAW) and Public Investment Corporation; National Union of Mineworkers (NUM) and Harmony Gold Mine; Kungwini Amalgamated Workers Union (KAWU) and Security Association of South Africa; Wholesale and Retail SETA; SACCA; SAA and SAA Technical.

The CCMA has adopted a zero tolerance approach to fraud and corruption. The CCMA has established a complaints and ethics management function that is aligned with the Public Sector Integrity Framework. A total of 423 complaints were received across all platforms for the 2019/20 financial year. A total of 387 complaints received were investigated, responded to and closed. As per the CCMA annual training plan, as at March 2020, 71 interventions have been delivered to internal staff to capacitate the workforce for efficient and effective delivery of the CCMA mandate.

The 2019/20 financial year was the last year for the implementation of the Senz’umehluko Strategy with the entity having achieved almost 84% of strategic targets. About 42% of jobs of employees that were likely to be retrenchment were saved. The CCMA Connect, which is a mobile application, was successfully launched in order to assist and enable Users to connect with the CCMA in a more convenient and quicker way. This mobile application has added value to all CCMA users by increasing accessibility to case related information.

 

Mr Morajane told the Committee that the 2019/2020 audit outcome is consistent with the prior three years, with unqualified with findings on compliance. There has been an improvement in the overall quality of the submitted financial statements and performance information. CCMA has deployed steps to prevent irregular expenditure by addressing the root causes that lead to the irregular expenditure in order to improve audit outcomes.

 

The Chairperson thanked all the presenters and opened the floor for Members to ask questions on the presentations.

 

Discussion

Mr M Bagraim (DA) acknowledged the presentations and asked if the CCMA if they have handled all the complaints they received. He asked about the referrals that are dealt with CCMA and how they were coping since there were budget cuts. Mr Bagraim was also interested in hearing the comments from CCMA about the issue of arbitration cases and mediation. He wanted to know the actual number of people who were walk-ins at CCMA and those who were making use of online services due to Covid-19 and the lockdown.

 

He was also not pleased with the numbers of CCMA that they had presented to the Committee about the cases that they had resolved. He referred the Committee to slide 21 of the presentation about the national minimum wage and said that the number referred to did not exist. How has the staff of CCMA been affected because they were under enormous pressure? Mr Bagraim wanted to know why the CCMA was spending a lot of money on part-time commissioners.

 

Ms H Denner (FF+) applauded the CCMA for the great work that they have been doing well considering the way in which they have been dealing with referrals. She wanted to know what mechanisms are in place should disputes not be resolved within 14 working days; she also asked if there are any ways in place that try to accommodate such groups of people whose disputes take longer to resolve.

 

Ms Denner asked the Productivity SA why it is not financially viable and what the turnaround strategy is.

 

Dr M Cardo (DA) said that it is no secret that Nedlac has been having difficulties. He asked about the outputs and recommendations that have been achieved by the government task team that was put in place to deal with issues at Nedlac. Dr Cardo asked for a comment from Nedlac about them being referred to as toothless and not being able to take tough decisions. He wanted to know how seriously the decisions at Nedlac are taken. What is being done to reassess the situation in terms of expenditure at Nedlac?

He asked ProductivitySA on why their recommendations are not focused on small businesses instead of small ideas so as to foster productivity in the country.

Mr N Hinana (DA) said that the country was informed about the power shortages early this year and one of the issues was that power shortages were to be categorised into three different categories.

He then referred to slide number 16 of Nedlac presentation and asked how far the issue of redistribution, generation and transmission of electricity was. He wanted to know what is being done to fix the electricity crisis in the country.

Mr S Mdabe (ANC) appreciated the three presentations. His first question was directed to Productivity SA, asking about the ranking of the country in terms of competitiveness. He wanted to know what Productivity SA is doing to make sure that regression does not happen. He was of the view that there was nothing mentioned in the recommendations by Nedlac. Mr Mdabe also said that one of the countries priorities is economic transformation and one would be of the view that Productivity SA would align their objectives with the countries goals; he wanted to know what they were doing to assist in reaching such goals.

Mr Mdabe also asked the CCMA about referrals because he said that there was not enough data to show who the main contributors to referrals were. He asked for more clarity and, if possible, to get the numbers of each sector in terms of referrals.

He asked about the collaboration between CCMA and ProductivitySA – if the collaboration dealt with large-scale mining and if they had provided assistance in the retrenchments. He also said that some of the percentages presented by CCMA did not have sectors and it was difficult to determine which sectors were covered.

Responses by CCMA

Mr Morajane said that there is a procedure that is followed to deal with national minimum wage matters and they have not yet received any complaints at the CCMA. He also said that the issue of slide three was difficult because the mandate for CCMA was becoming difficult due to the budget not matching what is expected of the CCMA, and the backlog is increasing. There are further reductions in the budget and as CCMA do not know what to do at the moment; the achievements are not going to be good looking because of the budget cuts.

 

Mr Morajane said that the most of the people who make use of CCMA services are the walk-ins but because of the pandemic, that has changed. He also said that not all cases are referred to the CCMA because it is a choice of the parties to go to the CCMA in terms of the legislation; it is not mandatory. He said that the additional burden on the CCMA requires resources and having more cases without resources will result negatively because the CCMA can only do so much. The staff at CCMA is under tremendous pressure due to the high numbers in cases that are being referred to the CCMA. It is a difficult period because the CCMA is almost on the financial breaking point and it is giving them sleepless nights.

Mr Morajane said that they make use of part-time commissioners and resources are critical because they assist in dealing with the cases timeously. He said that CCMA would send a breakdown report on the sector that was having more unfair dismissals.

In terms of the mining sector, he indicated that there was no agreement developed. On the 74% settlement rate, the CEO said that they strive to secure a return to work in most cases as supported by the Labour Relations Act (LRA).

Mr Marius Kotze, Senior Commissioner, CCMA, added on the question about walk-ins and said that the number has gone down as compared to last year because more people are making use of online services like fax and email to lodge cases with the CCMA. There is a three-tier policy for dealing with complaints so as to ensure that cases are dealt with thoroughly. He also said that there has been an improvement in the sending out of awards as compared to last year. There has been an increase in the number of cases that are being lodged at the CCMA.

Responses by Nedlac

Ms Seftel said that there has been progress from the government task team and the outputs will determine the revised version. She said that there have been significant efforts by the government and they have taken the views of Nedlac seriously and have taken the Committee’s recommendations into consideration.

 

In terms of personal expenditure, she said that it was because of the nature of the work being done by Nedlac.

 

On the question about electricity, Ms Seftel said that the social compact is negotiated and it still has to be put into effect and she is not in a position to answer the question because there are other stakeholders like Eskom who have a better understanding on the issue.

Responses by ProductivitySA

In responding to the questions raised by Members, Mr Mothiba said that they have to cut on service delivery because of the budget cuts and they cannot risk expanding their capacity because there is no guarantee that they will get more funding, although there have been engagements with the Department ensure that ProductivitySA has one funding source. The Director-General has written off one of the debts. It is true that labour productivity is low in South Africa and it is due to the lack of skills. ProductivitySA is trying to have an integrated approach with other government sectors in dealing with the issues in the country so as to act collectively in life skills programmes. ProductivitySA aims to identify challenges that are faced with employees and the entity is working with Japanese counterparts on improving this.

 

On the issue raised by Mr Mdabe, Mr Mothiba said that ProductivitySA was ranked 59 out of 69 countries this year and they have done some tracking of the competitiveness of their efforts and the rankings have been dropping from 2010. He said that competitiveness ranking of a country is measured in four areas and ProductivitySA does not have authority in some of the sectors to intervene because they can only intervene in one sector. They have proposed an integrated enterprise programme where different institutions that are assisting small entrepreneurs work together to make sure that efficiency and productivity is attained. Most of the small and medium enterprises are in the rural areas but because of the limited resources, ProductivitySA can only assist a certain number, hence they are asking for more funding from the government so that there can be more interventions.

Follow-up questions

Mr Bagraim appreciated the responses given by the presenters. He then asked for a comment on the fact that CCMA deals with more walk-ins and considering the lockdown not everyone can do walk-ins while not everyone has access to online services. How is the CCMA handling this?

 

Dr Cardo wanted to know how the projections on budget cuts at the CCMA are going to affect their caseloads.

Responses

Mr Morajane said that there is a possibility of losing walk-ins and because of the lockdown there has been tremendous pressure on the staff due to the increasing number of rising cases since lockdown has been eased. It is difficult to maintain social distancing when people are queuing outside the offices and it leads to cross infections. CCMA has spent more money on sanitising the officers and in some instances it was difficult to deep clean the offices. The biggest office in Johannesburg was closed because authorities said it was not complying with the regulations and once there is an infection at the office it means that the offices must be closed and deep cleaned. The closure of offices means that cases will be piling up and staff will be exposed to infections as they will be at high risk.

The biggest component of the CCMA is relying on part-time commissioners and having budget cuts will have a negative impact on the work done by the CCMA. He said that the year ahead will be difficult because of the huge budget cuts and the entire CCMA community is going to be affected. CCMA is looking at a loss of more than R 600 million on cuts and this will be a big blow.

Deputy Minister of Employment and Labour, Ms Boitumelo Moloi, thanked the Chairperson for inviting them to the meeting and said that they request the Committee to support them so that they can achieve their goals. She mentioned that the issue of budget cuts is difficult to deal with because it is not sustainable for the entities to be run under budget cuts.

Closing Remarks by the Chairperson

The Chairperson said that it would be a sad story if there are constant criticisms towards the CCMA but then there are no solutions on how the entity can be supported because once it closes it means that workers will not have access to representation. She thanked everyone for attending the virtual meeting.

The meeting was adjourned.

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