Employment and Labour Budgetary Review and Recommendation Report (BRRR)

Meeting report

Budgetary Review and Recommendation Report of the Portfolio Committee on Employment and Labour

Ms C Mkhonto (EFF) referred to the point made about the Commission for Conciliation, Mediation, and Arbitration (CCMA) under paragraph 3.1.6 on page ten of the report. She said her understanding is the Committee requested additional funding be made available to the CCMA to enable it to fully implement its statutory obligations according to the National Minimum Wage, Basic Conditions of Employment Act, and Labour Relations Act. The full response can be found under paragraph 3.1.6.
She quoted the following part of the response under this paragraph: ‘It should be noted the current budget cuts are found across all government departments and this is owed to a tight fiscal envelope government has to operate within.’ She said the quoted response is discouraging. She asked if the budget for the CCMA is going to be cut and if so, if the CCMA cases from previous financial years are being considered.  

The Chairperson asked if there is any Member who wants to respond to Ms Mkhonto’s question.

Mr M Nontsele (ANC) said he wants to make a proposal regarding funding of the CCMA and to deal with the unintended consequences. He also said the heading on each page should be read to make sure Members can follow with ease.

On the issue of the CCMA, the Chairperson said Ms Mkhonto raised a point which shall be taken as an observation. Mr Nontsele also observed the same.

Dr M Cardo (DA) referred to paragraphs 4.1 under the Department of Employment and Labour (DEL) on page 17of the BRRR, particularly paragraph 4.1.2 which read as follows: ‘A process of repatriating the Public Employment Programmes from all over the places to a single point of coordination and importantly an impact may have to be seen moving, with Department of Employment and Labour playing a major role.’ He said he does not understand the point conveyed.

The Committee content advisor said the points outlined under paragraph four are generally recommendations made earlier in the year, and there is nothing the Members can change at this moment.

The Chairperson thanked the content advisor and said the BRRR comprises of the Committee’s recommendations as stated under paragraph four.

Mr M Bagraim (DA) said he also does not understand the point conveyed by paragraph 4.1.2.

Ms Mkhonto said as she is reading paragraph 4.1.2., she is gaining a little understanding of the statement. She is however confused by the point, and asked for it to be explained further.

The Chairperson asked if there are further comments on paragraph 4.1.2., before she makes a ruling on it.

Mr Nontsele said paragraph 4.1.3 is helpful as it is more specific than paragraph 4.1.2. Paragraph 4.1.3 reads as follows: ‘Public Employment Services branch needs to undergo restructuring which should enable it to be one of the depositories of some or all of the Public Employment Programmes.’
He said these paragraphs seem to be saying the same thing except paragraph 4.1.2 has a confusing end.

The Chairperson said these are recommendations adopted by the Committee. The Committee must be more precise and draw lessons from this for purposes of avoiding ambiguity.

Mr Bagraim said paragraph four can be skipped as Members cannot comment, or rather change, any contents of paragraph four.

The Chairperson disagreed with Mr Bagraim’s approach. She thanked Dr Cardo for his vigilant eye, because it is a lesson for tabling clearer recommendations in future.  She further asked if the Members have any input regarding paragraph ten, which contains the observations the Committee made.

Mr Bagraim referred to paragraph 10.1.1, which reads as follows: ‘the Department achieved an overall performance of 79% and spent 93.7% of the final appropriation during the year under review. The under-expenditure of the Department amounted to R217.3 million.’ He said DEL is not doing anything. Its functions were moved to entities, particularly the major service, being to assess underpayment for members of the public. He said where one would lay a compliant under the DEL in the past about being poorly remunerated, the public now does so under the CCMA. The contents of the aforesaid paragraph are misleading as the services of the DEL have mostly been delegated. He said he is not sure what the DEL does now. He mentioned the aforesaid percentages should be indicated with reference to the various entities, not the DEL, as its services are delegated.  

The Chairperson asked if anyone has further input to what Mr Bagraim said.

Dr Cardo said Mr Bagraim’s statement can be tabled as a recommendation rather than merely an observation. He further directed the Committee to deal with the overall philosophical observation about unemployment in South Africa. It is a priority policy to solve.

The Chairperson asked if Members want to provide input about the unemployment issues in South Africa.

Ms Mkhonto said the core mandate of the Committee is the employment of the public. She agreed with Dr Cardo’s point.

Mr Nontsele said the stance of each Member will be different as it will inevitably be linked to the ideological approach of the Member’s affiliated party. For this reason, the Committee must provide in-depth analysis, so the Committee can move on the same understanding. Regarding the point about paragraph 10.1.1., together with the points raised by Mr Bagraim, it is not true the DEL is not doing anything and its functions and services are all delegated. It has a defined mandate. COVID-19 could influence the under expenditure, amongst other things, which can be clarified with the DEL. Essentially, Mr Bagraim’s points are hollow until further justification is provided.

Dr Cardo said it should be incumbent upon the Committee dealing with the prioritised policy issue in South Africa, being unemployment, to make an observation about this issue. However, it does not mean the Committee should draw any conclusions about what the state should be doing about unemployment. The Committee should simply use this section to highlight statistics of unemployment and then make an observation about DEL’s duty to address the unemployment issue.

Ms Mkhonto said before the Committee takes a stance on the issue of unemployment, it must be discussed and analysed by the Committee.

The Chairperson said she is making a ruling on the unemployment issue. Members of the Committee must at least observe the state of unemployment and the relevant statistics. Ideologies will be raised at a later stage during debate.  There is a view from Mr Bagraim and a counter view from Mr Nontsele regarding funding issues on paragraph 10.1.1. She said Members must please feel free to add to this point.

Ms Mkhonto said Mr Baigraim’s understanding is not completely incorrect, although he did not fully agree. She said the state of expenditure patterns by different entities must be made clear for a better understanding about paragraph 10.1.1.

The Chairperson said DEL already provided a breakdown of its expenditure, together with other relevant entities.  

Mr Bagraim asked if the subject should not be raised, and the Chairperson answered, no.

He also raised an issue regarding paragraph 10.1.5 which reads: ‘AGSA could not find sufficient and appropriate evidence disciplinary steps were taken against officials who incurred irregular expenditure; and fruitless and wasteful expenditure as required by the PFMA.’ The word ‘find’ was included to make the sentence read better. Regarding paragraph 10.2.2, which reads as follows:  ‘the total revenue of Supported Employment Enterprises (SEE) increased from R145 896 439 in 2018/19 to R153 036 119 in 2019/20 financial year. This improvement in financial performance was attributed to an increase in sales revenue.’  He said he noticed revenue increased. He asked if the Committee does not want to analyse which jobs were performed.

The Chairperson replied to Mr Bagraim’s point, and said it should have been raised while DEL made the presentation. She humbly asked the Members to make observations on issues raised and replied to.

Mr Bagraim said he was stopped halfway while addressing questions. If he was stopped there, and now, he will raise issues elsewhere.

The Chairperson said lengthy issues must be raised in writing to the DEL. Mr Bagraim was indeed stopped from further questions when the DEL was providing the brief, as other Members must also be given a chance. To factor further questions, it must be addressed in written communication to the DEL.

Mr Bagraim disagreed with the Chairperson.

Mr Nontsele referred to SEE in the earlier part of the report, and said there is a point which raises an intention to expand SEE’s ability to engage the general public. It is a point omitted under observation in the BRRR. Under paragraph 10.2.2., it should be noted there is a deliberate direction to expend services beyond the public sector into the private sector, as part of its market. This is captured under paragraph 8.1.1.

Mr S Mdabe (ANC) agreed with Mr Nontsele regarding SEE expanding its services from the public sector to the private sector. He said this issue must be included under observations.

Dr Cardo said he would like to comment on paragraph 10.3.2., which reads as follows: ‘NEDLAC’s total employee costs amounted to R24 827 931. This constitutes a very high proportion of NEDLAC’s total expenditure at 56%. The average personnel cost per employee is R800 901.’  He said this is not the key observation. The key observation was addressed by the Director of NEDLAC when she said personal expenditure is a high percentage of NEDLAC expenditure. This is a key observation around employee costs.

The Chairperson asked Members for comments on Dr Cardo’s point. Paragraph 10.3.2., must be amended to fit the utterances of the Director of NEDLAC.

Mr Bagraim referred to paragraph 10.4.1 which reads as follows: ‘Productivity SA’s overall performance improved from 54% in 2018/19 to 100% in 2019/20 financial year.’ The World Bank deems productivity in South Africa to be one of the worst in the world. Therefore, he said his observation is there is no use saying it improved, if it is still one of the worst in the world.

Dr Cardo agreed with Mr Bagraim.

Ms Mkhonto said she does not agree with the statement being included in paragraph 10.4.1, as such research was not presented to the Committee. The only research which is worth considering should be the research conducted by people authorised by the Committee.

Ms H Denner (FF+) said the concern of ProductivitySA being a going concern should be emphasised in the report.  

The Chairperson agreed with Ms Mkhonto as such research is not authorised. She asked if there were further comments regarding Ms Denner’s input.

Mr Mdabe said he remembers the Director-General of DEL raised the issue of State-Owned Enterprises (SOEs) using consultants at a higher rate than what was charged by ProductivitySA. This should be an observation and a recommendation.

The Chairperson said Ms Denner and Mr Mdabe’s points should be included as observations, since it was raised and replied to by the Director General.

Members agreed.

Mr Nontsele referred to the CCMA under paragraph 10.5. He said the observation which should be included under this section relates to unintended consequences. Levy fees for workers who bring issues to the CCMA, however, not everyone will be able to afford.

Mr Bagraim said the diminishing budget of the CCMA is going to destroy its ability to perform. This should be an observation.

Dr Cardo referred to paragraph 10.5.1., reading as follows: “the overall performance of the CCMA deteriorated from 95% in 2018/19 to 84% in 2019/20 financial year. The entity spent 99% of its final appropriation by the end of 2019/20 financial year.’  The Committee needs to spell out what the percentage terms mean exactly. Secondly, questions of the budget cuts must be addressed, for example, noting it will have a serious impact on case management and no longer allow walk-ins.

Nr Nontsele said Dr Cardo’s points are fine, but regarding introducing levy fees, the focus should be on the response of DEL. This means a large number of workers who cannot afford fees will be excluded.

Ms Mkhonto referred to paragraph 10.5.1, and said the entity is underfunded when one looks at the funds spent and the performance target. Regarding 10.5.2, it received an unqualified report, showing it can be trusted with more funds. Moreover, depriving work-ins will not work, as people cannot afford data.

Mr Bagraim referred to the Minister saying the Ministry is doing away with conciliation due to budget cuts. This is going to be detrimental for enforcing rights of workers as arbitration will be overburdened.

Mr Mdabe said he is covered by Ms Mkhonto and Mr Nontsele.

The Chairperson said the impact of the CCMA budget cuts and its impact on people without money is at the centre of everything.  Regarding the ultimate recommendations from page 49, the Chairperson asked the content advisor to show which recommendation points were reworked, deleted, and so on.

The content advisor said the Committee should go back to the observations. On DEL under paragraph 10.1., it was proposed a broad statement on unemployment rates in South Africa should be looked at, and DEL was refigured in 2019.

Under the reported enterprises, expansion of services from public to private sector was included.
National Economic Development and Labour Council (NEDLAC) raised the point of cost per employee, and said it should also be included under paragraph 10.3.2., within the context of what the Director General addressed. Regarding productivity in SA, there was a point raised about this being worse when compared to other countries. However, this point was not supported. Further, there was a point raised about ProductivitySA continuing as a going concern. There was a point raised about the unintended consequences regarding budget cuts of the CCMA, and removing the conciliation part of the process for the general public, particularly for those without money.

The Chairperson said the Committee will move into recommendations under paragraph 11.      

Mr Nontsele asked for a reformulation of paragraph 11.2.3., in line with page nine under paragraph 3.1.5.

Members agreed.

Dr Cardo referred to paragraph 11.3., and said the Committee’s recommendation should be to develop an action plan on how to address high expenditure for salaries. The Committee must monitor this as highlighted by the Director of NEDLAC.

Members agreed.

Dr Cardo said NEDLAC is looking at addressing its governance issues.

Mr Mdabe said what Dr Cardo is raising is what is currently raised as a recommendation on paragraph 11.3.1 ‘The government task team which was established to review NEDLAC structures should table its report for consideration without further delay.’

Regarding ProductivitySA, Ms Denner formulated the response in the chat section. It reads: ‘Concerns about ProductivitySA are noted by the Committee regarding the entity as a going concern. Funds were allocated by DEL to the entity toward its turnaround strategy, and the situation will be monitored closely’.

Members agreed with Ms Denner.

Dr Cardo referred to the CCMA recommendation. He asked how the Committee is going to affect paragraphs 11.5.10 and 11.5.2. Reformulated sections must read the budget cuts should not affect vulnerable workers.

Members agreed with Dr Cardo.

Mr Nontsele said he does not understand Dr Cardo’s formulation on the CCMA’s recommendations.

The Chairperson said the issue of fee levies and monitoring walk-ins should be factored in under paragraph 11.5.1 and 11.5.2.

Mr Bagraim noted the Commissioner said there will be a cut in arbitrators, meaning there will be too many cases.

The Chairperson said the scribers should also include this issue under the CCMA.

Mr Nontsele said on page 22, DEL speaks about extreme underspending. It needs to deal with the budget reprioritisation in DEL to fund CCMA and other relevant entities.

Members agreed.

The Chairperson said the additions, deletion, and other amendments must be settled. She asked for a formal move to adopt the observations and recommendations.

Mr Nontsele said he formally moves to adopt the BRRR with amendments.

Ms Mkhonto seconded the motion.

The Chairperson said in future, recommendations should be tabled with absolute clarity and without ambiguity.

Committee minutes
Minutes dated 2 September 2020
The minutes were adopted without amendment.

Minutes dated 4 September 2020
The minutes were adopted without amendment.

Minutes dated 7 October 2020
The minutes were adopted without amendment.

Minutes dated 14 October 2020
The minutes were adopted without amendment.

Minutes dated 21 October 2020
The minutes were adopted without amendment.

Minutes dated 28 October 2020
The minutes were adopted without amendment.

The meeting was adjourned.