Rationalisation: briefing

Meeting report

DEFENCE PORTFOLIO COMMITTEE
07 March 2000
RATIONALISATION: BRIEFING

Relevant document
Salut magazine (the issue referred to in this meeting is not yet available on this website but should be appearing shortly)

SUMMARY
The Department of Defence's proposed Rationalisation Strategy was presented to the committee. It provides for preliminary contingency planning in terms of various support services. The Voluntary Severance Package and the Employer Initiated Retrenchment Package were discussed. Certain fundamentals, in the committee's view, had been overlooked such as the lack of Cabinet approval and insufficient focus on the criteria for rationalisation. There was concern about the fate of retrenched persons with only military experience and a lack of other skills and the inadequate role played by the Service Core in this regard.

MINUTES
Brigadier General R Reich, the Director of Personnel Separation in the Human Resource Support Centre gave the presentation on the Rationalisation of the Defence Force.

About two and a half years ago, Gen A Ismail, the previous Chief of Policy and Planning at the Secretariat of the Department of Defence had informed Gen Reich that a rationalisation strategy was needed. The Department was embarking on a transformation process which would result in restructuring, since it seemed as though there would be more people than could actually be accommodated from a structural point of view.

Gen Reich then compiled a position paper. A special committee was put together and members of political parties were invited as well as employer organisations and unions. The position paper on personnel rationalisation strategy went through a discussion process.

Following this process, a Rationalisation Strategy based on the various inputs was compiled by Gen Reich. Subsequently, the strategy was presented to the Defence Staff Council and approved by them. The previous Minister (Mr J Modise) was happy with it. The present Minister, Mr P Lekota, also appeared to be happy with it.

In terms of the legal basis for the Personnel Rationalisation Process, only two persons can approve the separation of people from the Department of Defence, namely the Minister of Defence or the Secretary for Defence. Gen Reich's job was to separate people:
1. in terms of the voluntary severance package,
2. who were medically unfit
3. who have been involved in legal proceedings which were detrimental to the department and their services had to be terminated.

These separations had to go up via the Chief of the Defence Force, to the Secretary for Defence and eventually to the Minister.

With the Rationalisation Strategy certain assumptions had to be made. It was hoped that an Employer Initiated Retrenchment Package (EIR) would be on the table this year or the next. The Department of Public Service & Administration (DPSA) would play an important role in this regard.

The approval of the Core design and Core structure for the DOD has not yet been finalised. Thus it was uncertain whether a Defence Force of perhaps 65000 or 70000 or somewhere in between was the target. The finalisation of this issue was critical to the proposed strategy that they wanted to achieve.

With the integration of the statutory and non-statutory forces, the SANDF peaked at 102 000. Now, by means of natural attrition, the voluntary severance package (VSP) and resignations, the figure has come down to about 83000 today. This was still quite far away from Gen Reich's "ball park planning figure of 70000"

The new EIR would be financially less viable than the VSP. The DPSA has emphatically stated that it would be a political imperative that the new Retrenchment Package be financially less viable than the current VSP so that the total public service would be in a position to finance rationalisation from a public service perspective.

Contingency planning is being done with various role players during this preparatory phase. There are various forums for different services - the airforce, navy, military and health services, as well as other role-players. A monthly meeting is being held with these structures in preparation for possible rationalisation, once finalised and approved. Approval had to be obtained at Cabinet level as well. There was thus a gearing towards this eventuality in order to be able to handle the process and the various role-players had been receiving training in this regard.

The Rationalisation Strategy aimed to start rationalisation by 1 April, but since there was neither an Employer Initiated Retrenchment Package in place nor a force design and force structure, this was highly unlikely.

The reintegration of personnel back into civil society was focused on in the Rationalisation Strategy as well as an after-care process which involved veterans organisations and suchlike. Assessment and monitoring of how successful people were in obtaining other jobs would occur. With an emotive issue such as rationalisation, one had to be careful how one treated those likely to be affected, since they would probably perceive being rationalised in various ways.

Retrenchment review boards had to look at the personal cases of candidates identified for possible retrenchment, and assess the person on service or staff division level. Next there was a DOD separation Board which sat and decided on the matter. People had the right to appeal, via an appeal board. After this process there was still the possibility of having the matter heard by the Defence Special Tribunal. The applicable Labour legislation could also be used to take the matter further.

In terms of the reintegration of military people - ex combatants - into civil society, there has been discussion with the World Bank regarding a grant to assist with a socio-economic profile analysis (SEPA). The grant has been approved by the World Bank. Should there be a go-ahead in terms of rationalisation, the SEPA would be initiated at the start of the process. In this regard the Centre for Conflict Resolution would be the NGO managing the grant for the Department of Defence.

A concern was that a large number of the possible rationalisation candidates were unmarried persons only with military experience, and without matric. It would be very risky to take someone with this sought of background and simply put him out in civil society without giving them value-adding vocational and other skills perhaps through the Service Core in the DOD which was geared towards this need. Hopefully they would thus recieve a soft landing in finding alternative employment. One possible area where this could occur was in the police service, which was expected to recruit this year. Intra and inter- departmental transfers were however very limited since the rest of the public service was facing a similar situation in terms of rationalisation.

In terms of the criteria for rationalisation, physical ability would not be taken as the only aspect in considering a person for retrenchment. More than one aspect would be looked at in determining whether it was worthwhile keeping a person in service. Promotion of representivity was one of the criteria. Domestic circumstances were also considered, for example, if both the husband and wife were in the SANDF.

Discussion
Mr V Ndlovu (IFP) asked whether a person had a choice in taking the EIR or VSP? He also wanted to know what arrangements would be made in terms of housing subsidies of those being retrenched or relocated.

General Reich said that a person did not have a choice. With regard to the EIR this was employer initiated. The only method of separation that a person had a choice on was the VSP and the employer - the DOD - still has the right to say yes or no. With the EIR, it was totally departmentally initiated thus the person had no choice.

In terms of the housing issue Gen Reich said that certain people qualified for a state guarantee in order to purchase a house for the first time. Since he was not sure what the EIR detail would be, he could not answer the question since it was unknown whether such a person would get any housing benefits or lose those benefits. This had to be addressed since there were those people who may be retrenched who currently do have subsidies or state guarantees.

The Chairperson, Ms T Modise, said she was a bit confused since the general had said that the EIR and VSP would run concurrently. Thus why would the person not have the choice?

General Reich said that the reason the EIR and VSP would run concurrently for a time was that where people were refused a VSP by the department, and they found themselves in a supernumerary capacity months later, and have to be retrenched then they could take the department to court for refusing to allow them to initially take the VSP. The reason for running the VSP concurrently with the EIR for a certain period of time, was to stop this sort of litigation taking place.

The chairperson followed up by asking why the Department would initially refuse applications for VSP on the grounds that the applicant had skills and expertise that were needed, but were subsequently fine with letting such people go.

General Reich said that in the DOD, the VSP had started four years previously. At that stage the DOD was only just thinking of a transformation process. At this stage an applicant for a VSP who had a certain post as well as certain expertise would have been considered a necessary asset. After transformation with a new design and new posts, one could find that the situation that was valid four years ago was no longer valid. This was why the VSP was allowed to run concurrently with the EIR.

The chairperson was dissatisfied this. She said that four years ago the DOD had agreed on the retention of certain capabilities and expertise. Today the DOD states that because of the transformation, it had found that it needed to let go of these skills. Unless the DOD advanced another reason, the chairperson was not satisfied with the answer.

Mr S Makwetla (ANC) observed that according to the presentation, after integration there was a Defence Force of 102 000. Currently there was about 83 000. This meant that since integration the Defence Force had already shed nearly 20 000 jobs. He could not understand why there was now such a grand plan of rationalisation to take out only 10 000 people. This matter had to be considered in view of the costs involved.

Mr T Motumi, current Chief of Policy and Planning in the DOD, said that the basic motivation for the Rationalisation Strategy to move ahead in terms of the 10 000 or so excessive persons was that the Force Design, which was accepted in the Defence Review by Parliament as well as this committee, could not be funded with the current budget. The Auditor General in the 1999 report indicated that he could not see how the DOD would meet the 40: 30: 30 ratio (40% personnel; 30% operating cost, 30% capital) in respect of its expenditure on the basis of the approved Force Design.

Mr Ndlovu wanted to know, in a case where a budget was not adequate to implement a policy, whether it was the prerogative of the DOD to change the policy to suit the budget or vice versa?

General Viljoen (FF) said that it was not up to Parliament to tell the DOD that they should have a force of 70 000 or 68 000 or whatever. The government had to approve a policy, initiated by the DOD, which would need a certain budget. Because the DOD were the experts, they should say what size the SANDF should be. Thus the DOD had to come up with a firm policy in this regard to be considered by government. To retrenchment 10 000 or 12000 people was a grave decision to make and had to based on a firm policy.

Whilst General Viljoen acknowledged the need for representivity, he wished to add another criteria - that the DOD should strive for excellence. This was an opportunity for the DOD to carefully pick their employees to ensure that they have the right people for the right tasks. Thus merit had to be considered along with representivity.

Mr Makwetla pointed out that the reason advanced by General Reich for the rationalisation process not having started was that the force structure and design was not finalised yet. He was taken aback by this statement since he felt that the force structure and force design had been concluded when the Defence Review had been adopted, where several options were put to the committee and the committee had agreed on a particular option regarding capacity.

General Reich said that 13 000 people would be rationalised. However one could not simply move ahead on the implementation plan if you do not have a firm base. A person could not be classified as a candidate for retrenchment until one has gone through all the other steps in terms of the strategy such as persons first being offered re-training and inter and intra-departmental transfers.

Mr Makwetla also asked about the criteria for rationalisation. Would the different criteria be weighted against one another, or would each hold the same weight.

General Reich said that the criteria for rationalisation had not been weighted. A single criteria would not be used in isolation. For example it would be very unfair to put a large weight on physical capacity and a smaller weight on social circumstances.

Mr Makwetla said that whilst the Gen Reich mentioned the promotion of representivity as a criteria in this presentation, in an article by General Reich, appearing in the current issue of "Salut" where the Personnel Rationalisation Strategy Document (PRSD) had been quoted, this criteria was omitted. Mr Makwetla said that paragraph 51 of the Document contained the criteria but the promotion of representivity had been omitted in the article.

General Reich said that there must have been an error in the printing of the article since the PRSD did in fact contain the criteria of promotion of representivity.

Mr Ndlovu said that an important aspect of the criteria had been omitted. The fact that a government subsidised book, which was distributed publicly, did not contain such a crucial point meant quite a bit. He said that this issue had to be looked at rationally. It had to thus be asked whether this omission had been deliberate or not. If it was a mistake then fine, everyone makes mistakes. But if it was deliberate, then the reasons should be known.

Mr Motumi said that the error was recognised. It would be taken up with the chief of corporate communications.

General Viljoen was also concerned with the basis of the rationalisation. There had been lots of effort put into determining the right size and shape of the Defence Force. As a result certain policy on this issue had been approved. Was the intended rationalisation strategy in line with this policy or was it a new policy and if so, has it been approved by Cabinet? Putting weapons-trained soldiers out on the streets was a serious matter, and this could have an effect on the crime situation. Such a big rationalisation programme should have a clear Cabinet-approved policy.

General Reich said that there was a great deal of frustration when he as a planner, trying to do contingency planning, did not have a firm base from which to move. This would be a National Policy in terms of an EIR and the Defence policy was quite clear. In the Defence Review it dealt with the division of the defence budget : 40% personnel; 30% operating cost, 30% capital.

G Motumi said that the DOD had been seeking government approval of a rationalisation policy since 1995 with the integration of the various forces into the SANDF. The committee had to consider the proposed Rationalisation Strategy now on the table and perhaps give the go-ahead to start implementation as soon as possible and to enable an EIR to be initiated as well.

General Viljoen felt that a government policy had to be submitted to the committee. It could not approve a strategic plan which was not based on a properly considered Cabinet approved policy.

An ANC member commented that he was very uncomfortable with the PRSD. He said that despite the support services mentioned in the document, after seeing the de-mobilisation process in 1994, it was clear that rationalisation was an extremely difficult process and at the end of the day, despite all the support services, most of the retrenched would sit without jobs. In terms of the representivity question, the member wanted a breakdown of how this criteria would apply, since one could also refer to representivity in terms of demographics. Also in terms of the training of persons by the service core. This training should not simply involve training for the sake of training but had to be geared towards specific goals.

General Reich said that the training would indeed be focused on developing entrepreneurial skills for example and other specific skills.

Mr Ndlovu felt that the committee could not accept the proposed strategy of the DOD who would have to go back to the drawing board.

Mr Motumi said that the seeking of political and policy approval for the Rationalisation Strategy was in fact the first phase. This being the case it was decided nevertheless to go ahead with preliminary planning, hence the presentation to the committee. Once there had been Cabinet approval for the proposed Rationalisation Strategy it would look forward to coming back to the committee.

The Chairperson said that the DOD would have to return to explain issues auch as how they had arrived at the rationalisation criteria. The presentation did not in fact go into the criteria in great depth. This had to be done at a later stage. The issue of the Service Core was another concern. She was not convinced that this was the best forum to deal with re-training. It should be better structured and its curriculum was inadequate. In conclusion, what the committee wanted to see was the DOD's policy on rationalisation as approved by Cabinet, the Employer Initiated Retrenchment Package and finally the curriculum of the Service Core.