Nedlac; Productivity SA & CCMA 2022/23 Annual Performance Plans

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Employment and Labour

23 March 2022
Chairperson: Mr M Nontsele (ANC)(Acting)
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Meeting Summary

Annual Performance Plans 2022/23

The Portfolio Committee met virtually for Annual Performance Plan briefings by Productivity South Africa (PSA), Commission for Conciliation, Mediation and Arbitration (CCMA) and the National Economic Development and Labour Council (NEDLAC).

Committee members asked Productivity SA about liquidations which had increased by 46.2% since mid-2020; the worst-hit sectors and strategies to improve condition; the state's capacity to improve its productivity; how productivity champions would be employed to bring improvements in districts and metros; how unemployment could be improved given its dismal ranking as 62 out of 64 countries in the 2021 Global Competitiveness Report. The need for single-source funding was flagged as a concern by both Members and Productivity SA.

Members asked the CCMA when it would reopen its offices for in-person contact as the CCMA digital platform was not serving everyone. They were concerned about its capacity. They asked the Department to assist the CCMA to prevent information from being lost and frustrating beneficiaries. Members asked about the nature of case referrals during COVID-19 and if those job losses were within the ambit of the law.

Members asked if NEDLAC was intervening to solve the ban on public sector procurement by the Minister of Finance until the Constitutional Court clarifies if the existing Preferential Procurement Regulations are still valid.

Meeting report

Productivity SA Annual Performance Plan 2022/23
Prof Mthunzi Mdwaba, Productivity SA Chairperson, CEO Mr Mothunye Mothiba and CFO Dr Sibusiso Sabela presented its mandate; governance and organization structure; regional footprint; its functions; enterprise development and support programmes; macro environment; MTSF 2019-2024 priorities; 2022/23 Annual Performance Plan and Budget and its strategic risks.

It noted that liquidations increased by 46.2% in the second quarter of 2021 compared with the second quarter of 2020, and an increase of 30.7% was recorded in the first six months of 2021 compared with the first six months of 2020. In Quarter 3: 2021, the unemployment rate rose to 34.9%, reaching the highest jobless rate on record since 2008, as the number of unemployed people increased to an all-time high of 7.6 million. The unemployment rate according to the expanded definition of unemployment increased by 2.2 percentage points to 46.6% in quarter 3 2021 compared to quarter 2 2021.

In the 2021 Global Competitiveness Report ranked South Africa 62 out of 64 countries – a drop from 59 in 2020. SA regressed in all four broad competitiveness factors – Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure.

Discussion
Mr S Mdabe (ANC) asked for clarity on the total number of liquidations which had increased by 46.2%. He asked which sectors were most affected and what intervention strategy was used in resuscitating those sectors, taking into account that the Department has an extended mandate i.e. employment. He noted the R117 million budget for Productivity SA's Business Turnaround and Recovery programme. He asked if there was a plan to refocus the budget for implementation of the extended mandate. He asked if Productivity SA participated in the NEDLAC forums. NEDLAC participation should be amongst its functions. Proper analysis of structural reform of the economy for growing jobs while preserving what exists, should be undertaken. In his constituency in KwaDukuza in Ilembe District in KZN, he was planning for Productivity SA to participate in engagements and asked if this was possible.

Mr Mothiba replied it was important to understand that once the manufacturing sector was doing badly, this affected other sectors. The financing and insurance business services have also been hard hit. The productive sectors are identified and then more jobs are created as required. PSA was working with the Department to support those enterprises which have the multiplier effect. There is an employment mandate and a re-appropriation of funds. The reality is that the COVID-19 pandemic has created more challenges that have impacted employment and related matters. The Department of Employment and Labour is looking at reconfiguration of the department – it is of the view that the employment mandate must be focused on as through productivity, competitiveness can be improved. PSA does participate in NEDLAC and has established various committees for this. It also participates in the Job Summit processes. It is sometimes invited to table a report at the Nedlac Trade and Industry Chamber to engage in productivity interventions. PSA would attend the session planned in Mr Mdabe’s constituency.

Ms C Mkhonto (EFF) referred to PSA's analysis of the broad socio-economic challenges in the macro environment and emphasised "how things are not good". Productivity is important and South Africa is faced with many challenges. Are the current economic policies suitable to improve the productivity and competitiveness of the country or would some policies need to be amended? She was aware that productivity and competitiveness were not only about the state but involved many stakeholders. She asked if the state had the capacity to bring about improvements. She referred to its concept of Productivity Champions in the metros and asked how PSA would go about this given the current compensation offered to employees in the budget. Will PSA encourage districts and metros to hire employees or will PSA hire the Champions and allocate them to the districts? The Department should look into assisting with this. Very few people in government are aware of the purpose of Productivity SA’s existence.

Mr Mothiba replied that the top-performing countries all had productivity strategies and policies in place and South Africa is far off from this. Productivity and growth should be placed at the centre of what we do. Learning from other countries, we can establish appropriate responses to our policy challenges. In its MTSF Priority 1, there is recognition that the state does not have the capability to effectively implement productivity and PSA is currently working with the public service sector and the Department of Public Service and Administration to ensure that it helps with productivity tools for the purpose of intervention in government. The School of Governance will also come to the table to empower the DPSA to help other sectors. Districts and metros should take over the Productivity Champion project and work with PSA to communicate what it needs. The Department of Trade and Industry has allocated funding for the Productivity Champions. PSA believes that numbers can increase. It has intervened in the clothing and textile industry with Productivity Champions. Sasol has agreed to offer funding.

Mr N Hinana (DA) asked for clarity on the Global Competitiveness index where South Africa ranked third last. Why is its rating so bad in comparison to other countries? Why is the unemployment rate at 34.9%? What can South Africa do to improve the inequality and unemployment it faces?

Mr Mothiba replied that South Africa's competitiveness ranking is low. In all four categories measured, South Africa is weak and shows a high unemployment rate as well as poverty. South Africa is dismally non-competitive. Targets can only be increased with resources but this can be mitigated by engaging the private sector and agencies such as the National Empowerment Fund. PSA is in discussions with the Departments of Trade and Industry and Small Business Development for collaboration. When a small company is facing distress, our hands are tied. Towards the end of the 2020/21 financial year over a hundred companies reflected on our books.

Ms A Zuma (ANC) asked what PSA had planned to ensure the improvement in the targets it achieved. What were the criteria for selecting companies and cooperatives which were not SARS compliant? Has the new funding model been completed by PSA?

Mr Mothiba replied a single source was required for funding – productivity and funding outcomes should be linked.

Prof Mdwaba said that Committee Chairperson had previously asked that PSA break things down and simplify them for the Committee. As a South African patriot, it was painful and hard to tell the truth without people wanting to offer the rules of patriotism. There was no reason for South Africa to be so uncompetitive. He had gifted President Ramaphosa a book for his birthday on global competitiveness and noted that at the same time that the index is improved for ease of doing business in South Africa; we need to start improving our global competitiveness. Ease of doing business does not automatically improve competitiveness. Single source funding was promised to PSA, but this never happened. He said he was emotional about dealing with such issues because it seemed as if meetings were fruitless. The political will of the country was needed as South Africa was very capable. On the structural flaws of the country, our economy is flawed and we cannot proceed on the same basis as we have done in the past and hope for different outcomes.

The Chairperson wished Professor Mdwaba the best for his trip to Geneva and said the Committee would compile a report on the issues raised during the engagement.

CCMA Annual Performance Plan 2022/23
Mr Cameron Morajane, Director of CCMA, presented its strategic focus; the Imvuselelo Strategy and strategic programmes; programmes and priorities; data forecasts; projected provincial demand for CCMA services in 2022/23; strategic risks and resource allocation.

Discussion
Mr M Bagraim (DA) appreciated the interesting report. He remarked that the public is desperate for the CCMA to invite people into its offices again which is why its numbers were down – as people were unable to refer their disputes. He asked how the referral figures have improved and if this has changed back to pre-Covid numbers.

Mr Bagraim said part-time CCMA Commissioners were entitled only to three days per dispute per month and this creates a problem for disputes to be heard. He had referred some disputes to private agencies as the CCMA Commissioners were not willing to allocate more than two days in a month to hear a dispute that required more days. He applauded the CCMA for pulling through the last two years.

Mr Morajane replied that CCMA decided that the offices would be opened on 1 May for walk-ins. He acknowledged that it was difficult for people to refer cases as technological access was a challenge and most CCMA platforms were digital. The CCMA is responding to this. He confirmed that case increases without doubt will be expected. People feel much better when they can explain in person. When an explanation is needed online for why an application is late, a domestic worker or a construction worker may only write four or five lines are written on a document. Sometimes 90% of the required information is not reflected which can result in the case being dismissed. However, often these complainants can present the relevant documents in person and condonation is granted. Certain vulnerable workers cannot tell the full story on an online platform. A Facebook session will be held on how online cases should be handled. The CCMA is expecting long queues when they open the offices.

The CCMA has increased the part-time Commissioner caseload especially now in February and March 2022 to almost 100% depending on the region and province. In 2021, it had to choose between two devils – that of underspending or overspending – as the CCMA would have run out of money by the third quarter of 2021/22. The CCMA has now survived the fourth quarter of 2021/22. The CCMA will increase the number of cases to part-time Commissioners in the new year. It is taking the risk to go between 80% to 90% caseload for part-time Commissioners and assess in six months' time. Thereafter they will adjust and may go to 100%. This increase has to be based on a month to month assessment purely out of caution to avoid overspending. However, they will double the part-time Commissioner caseload.

CCMA is getting back to pre-Covid numbers. When they reopen on 1 May there will be queues. We have 327 vaccination cases already and he is sure there will be many more.

Mr Mdabe asked if there was statistical information available on disputes by former land redistribution and restitution employees. He was told that almost 9 000 job losses occurred in one of the districts in Kwa-Zulu Natal over a period of two to three years. Taking into account socio-political challenges that existed between beneficiaries, Communal Property Associations and trustees he asked for comment on this.

Mr Morajane replied that there was an attempt for the CCMA to be involved in the land redistribution as the CCMA appeared in Chapter 3 in the Land Claims Bill but it was subsequently excluded in the Act. More details would need to be gathered on the 9 000 job losses.

Ms Mkhonto said she did not hear how the Committee or Department could intervene to prevent information from being lost and frustrating beneficiaries. How can the CCMA be assisted to prevent this? He noted the situational analysis and the influx of case referrals during the COVID-19 era, but what was the exact nature of the referrals and were there any job losses. She asked if this was done within the ambit of the law. She asked how many employers retrenched workers but claimed the temporary employer-employee relief scheme (TERS) as well.

Mr Morajane replied that the infrastructure has aged and continues to age. National Treasury intervention would be helpful. Tailor-made solutions should also be considered. Some dismissals have been considered substantive and fair. He could not comment on TERS claims during the COVID-19 pandemic and the Department could answer that.

Nedlac Annual Performance Plan 2022/23
Ms Nobuntu Sebisi, NEDLAC Executive Manager: Programmes, focused on its Strategic Plan and Theory of Change; the 2022/23 Budget and the Annual Performance Plan noting performance indicators for Administration, Programmes and Capacity Building.

Discussion
Mr Mdabe asked about the Minister of Finance advising that no new tenders be advertised until the Constitutional Court clarifies if the suspension of the order of invalidity of the Preferential Procurement Regulations is still valid after it expired in November 2021. Has NEDLAC looked into this matter and how has it been dealt with considering the transformative nature of the economy? If the matter has not been addressed, is there a plan to engage on it?

Ms Sebisi replied that this was an important matter within NEDLAC in terms of economic recovery. NEDLAC has not dealt directly with the judgment, but this is linked to public sector procurement and the Minister of Finance has committed to tabling this at NEDLAC.

DEL Director-General, Mr Thobile Lamati, added that National Treasury has moved swiftly and has applied to the Constitutional Court to explain the judgment and confirm that the order of invalidity is suspended. Amendments have been made to the invalid Preferential Procurement Regulations and published for comment.

The Director-General explained that single source funding is not an easy matter to deal with. Productivity SA knows this very well. The Department cannot tell the UIF to send certain amount of money to the Department account as it has a different accounting process that needs to be followed. DEL is trying to find the best way to assist the entity to ensure financial obligations are met. However, Productivity SA also needs to manage its resources better. For example, 40% of the R117 million budget for its Business Turnaround and Recovery programme goes to compensation of employees alone which presents a challenge. The Department continues to work closely with its entities and stakeholders.

The Chairperson thanked everyone and the meeting was adjourned.
 

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