Appropriation Bill: Department of Employment and Labour; with Deputy Minister

Standing Committee on Appropriations

25 May 2022
Chairperson: Mr S Buthelezi (ANC)
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Meeting Summary


The Standing Committee on Appropriations met with the Department of Employment and Labour on the 2022 Appropriation Bill in a virtual meeting.

The Deputy Minister of Employment and Labour told the Committee that the tough economic conditions call upon everyone to be extraordinarily creative and innovative. Even though the Department of Labour and Employment is trying to be innovative and creative, it was tough in the last financial year due to huge budgetary cuts occasioned by the sluggish economy and the Covid-19 pandemic. The huge cuts in the Department were more pronounced in one of the entities, particularly the Commission for Conciliation, Mediation and Arbitration (CCMA), which was the hardest hit. Therefore, it makes sense for the Department to start there when it gets any money whatsoever. In the 2022/2023 budget, an additional R39 million was made available for the CCMA from the R120 million allocated over the medium-term expenditure period. These funds will also be utilised to increase part-time commissioners' allocation, but it should be noted that they may not be restored to the pre-Covid-19 levels. Despite the funding allocated to the CCMA, the Department is still “deep in the forest” because there still remains a lot of prioritisation and reprioritisation. Creativity is needed for the little the Department has.

The Committee was given an update on the Temporary Employee/Employer Relief Scheme. The Department has spent over R60 billion on the Scheme to rescue the situation. It was revealed that mostly the big businesses, particularly white-owned businesses, benefited from the Scheme. The Scheme was not without challenges, as there were individuals who defrauded it and employers who claimed from the Scheme but never disbursed the funds to the employees. There is a unit that is responsible for following and recovering that money. Such employers have indeed been brought to book. Many cases have come to the fore and many people have been arrested. A case in point is that of a chartered accountant named Mr Mark Foster from East London, who the Hawks arrested for fraud and money laundering. He defrauded the Department by claiming TERS of over R800 000. The Department has recovered just above R1 billion by following the money.

On job creation, the Department said 800 000 opportunities are under review that are not necessarily permanent, even though there are some that are permanent. Most of them are temporary, from three months to six months, especially the assistant teachers. This is a very good project that can slightly help deal with the unemployment crisis. The Deputy Minister questioned why, if 350 000 to 400 000 assistant teachers are employed for three months and the contracts have to be renewed, they are not be fully employed because they are needed anyway. She said that the Department, which checks and coordinates all the employment in various departments, must talk to the Department of Basic Education and National Treasury about locating the budget because a permanent budget is needed for such a programme.

Members commented that National Treasury should consider the rollovers so that the entities can complete whatever was not attended to. The Committee has seen budget allocation, so the rollovers will enable the entities to meet their demands in areas of services to fulfil the mandate of the Department.

Although Members welcomed and commended the report, they expressed concern over differentials in salaries giving the example of the Chief Executive Officer of Sibanye, who gets paid R300 million per annum, but the company is refusing to give the employees an increase of only R1 000 per month. The Committee also expressed concern on the issue of the recurring disclaimers on the financial statements of the Compensation Fund, referring to it as a serious crisis. 

Meeting report

The Chairperson opened the virtual meeting, welcoming the Members and guest delegates from the Department of Employment and Labour (DEL), led by the Deputy Minister.

Apologies were announced, including that of the Minister, who could not attend due to the Cabinet meeting taking place at the same time.

Deputy Minister’s Opening Remarks

The Deputy Minister of Employment and Labour, Ms Boitumelo Moloi, told the Committee that the previous day was the budget vote debate in the National Assembly, through the mini plenaries. Today, the Department is invited by this Committee, a parliamentary committee empowered by the Money Bills Amendment Procedure and Related Matters Act, to give a briefing on what the budget is buying [for the Department]. She appreciated how these budget events flowed from one to the next. As the relevant entity, the Committee also meets with the Commission for Conciliation, Mediation and Arbitration (CCMA). She will only touch on the CCMA and the rest of the matters will be handled by the Director-General (DG), Mr Thobile Lamati.

The DM said that the tough economic conditions call upon everyone to be extraordinarily creative and innovative. The DEL tried, but it was tough in the last financial year due to huge budgetary cuts that were occasioned not only by the sluggish economy and the Covid-19 pandemic. The huge cuts in the DEL were more pronounced for one of the entities, especially the CCMA, which was the hit the hardest. In the DEL, one person who was not getting any sleep was the accounting officer, the DG. The DG had many stakeholders calling him, enquiring about the CCMA money.

In this meeting, the DEL is asked whether the proposed additional allocation of R120 million over the MTEF is sufficient to address the ever increasing caseloads within CCMA. At least the entity was being asked about the additional funds and not the budget cuts. One of the expenditure areas that were hardest hit was the remuneration of commissioners within the CCMA and everything connected with that. Therefore, it makes sense for the Department to start there when it gets any money whatsoever. In the 2022/2023 budget, an additional R39 million was made available for the CCMA from the R120 million allocated over the MTEF period. These funds will also be utilised to increase part-time commissioners' allocation, but it should be noted that they may not be restored to the pre-Covid-19 levels. Despite the funding allocated to the CCMA, the DEL is still “deep in the forest” because there still remains a lot of prioritisation and reprioritisation. Creativity is needed to work with the little the Department has. Other areas will still be affected, like the Sheriffs Board processes.

Briefing on the 2022 Appropriation Bill

Mr Thobile Lamati, Director-General, DEL, briefed the Committee on the 2022 Appropriation Bill.


Budget Allocation: Vote 31

- There will be increases to the baseline across the medium-term are, mainly in respect of a newly introduced allocation for the Government Technical Advisory Centre (GTAC) and an increased allocation to the Commission for Conciliation, Mediation, and Arbitration (CCMA).


Pressures created by the budget reductions for 2022/2023

-Transport equipment\vehicles: fewer vehicles will be procured for the provincial offices and labour centres; thereby affecting inspections, as vehicles will be limited.

-Furniture: as a result of this cut, the Department will not be able to procure all the required furniture for the newly built and renovated labour centres.

-Capital projects (new labour centres): The Department still has outstanding projects like the new Standerton Labour Centre, the renovation of the Ulundi Labour Centre, and the installation of JoJo water tanks and generators that should be finalised urgently.

-Other machinery and equipment: limitations in the acquisition of laptops and desktops for newly appointed officials for the financial year 2022/23


Progress on Youth Employment Initiatives

- The Committee was appraised on overall possible service delivery implications of the proposed allocation of R11.7 billion over the 2022 MTEF relative to the 2021 budget estimates.

-The Committee was appraised on the degree of effectiveness and efficiency in the utilisation of funds allocated towards the first and second phase of the Presidential Youth Employment Initiative (including expenditure report);

-It was further appraised on the effectiveness of plans and allocations linked to the proposed budget allocation towards the third phase of the Presidential Youth Employment Initiative;

-These components are coordinated by the PMO in the Presidency and implemented by different line departments. The Department is a core partner in this process, and it is specifically responsible for implementing the PMN (a core component of the PYEI).

-The Committee was told that the Presidential Employment Stimulus is coordinated by the PMO in the Presidency and implemented by different departments and agencies. It is one of the key interventions under the Economic and Reconstruction and Recovery Plan. It has thus far, since October 2020, created over 850 000 opportunities through a combination of job creation, job retention, and livelihoods support programmes.

-85% of the jobs created by the Presidential Employment Stimulus have gone to youth. This includes over half a million young people placed as school assistants since the inception of the stimulus.

Budget Allocation: CCMA

During the 2022/23 budget preparation, an additional R39 million was made available to the CCMA from the R120 million allocated over the MTEF. These funds will be utilised as follows to address some of the challenges faced by the CCMA, including the increase in part-time commissioners' allocation, although not fully restored to pre-COVID levels and the resuscitation of the refresh process on the ICT infrastructure.

Impact of budget limitations on the activities of the CCMA

Despite the additional funding provided to the CCMA, in response to the budget reduction that was experienced in the prior year, the following remain challenges:

– Unfunded vacancies were placed on hold as part of the reprioritisation measures, and a limited number of days were allocated to part-time Commissioners in hearing cases.

– Implementation of the Enforcement Strategy to execute CCMA awards and enhance social justice; consequently, the Sheriffs Board process will be affected.

Inability to implement the information technology strategy to improve the business process and deliver services; the CCMA’s discretionary mandate has been severely reduced.

- Due to the complexity of the geographic areas that impact the CCMA in conducting the cases outside the provincial/ regional offices, variable costs per case increased for costs such as venue hire, travel, accommodation, and subsistence costs due to the increase in fuel and other maintenance costs. Most of the travel costs in case disbursement are influenced by the vast travel distances and remoteness of the venues to conduct cases. This is seen mostly in provinces such as Free State, Northern Cape, Limpopo, and Eastern Cape.

See presentation for further details


Mr Z Mlenzana (ANC) expressed his appreciation of the presentation, which he said was a very clear narration of the Department's work. He also appreciated that the entity’s programmes, which he said have a clear attachment of numbers on intervention on issues mostly affecting the youth. So, one way or the other, the Department is assisting government in reducing the unemployment crisis in the country. He asked the DM if the entity's expenditure met the cash flow projections. The Department is talking of figures in terms of money; is it able to catch up on spending the money as projected? Does it have enough capacity to spend, so to speak? The Department is somehow ‘crying’ about the budget cuts in its presentation. Does it have some justification that the little it has been given has been spent accordingly? He said that the Commission has heard from a distance, particularly during the peak of the Covid-19 pandemic, that there would be allegations of mismanagement, corruption, and other things, particularly by those who would always cry foul about corruption. He did not want to be a racist chairperson hence he is trying to glide over this particular question, but if the Chairperson feels that he is gliding too much, he will have to dig deeper for the DM to understand.


Ms M Dikgale (ANC) welcomed the presentation, which she said was specific and time-bound. She noted that the presentation talked about 850 000 opportunities that were created. She then asked where these were happening and in which provinces. What are these people doing? Is it a six-month employment term, EPWP or any of those programmes? If it is these six-month job opportunities, how will we then develop a plan or idea of assisting these people in having a permanent job? Lastly, she commended the Department on the programme of the CCMA because she has noticed, especially in her constituency, that people would run to the CCMA whenever they have challenges. They will come out with their stress removed. 


Mr X Qayiso (ANC) said that National Treasury should consider the rollovers so that the entities can complete whatever that was not attended to. The Committee has seen budget allocation, so the rollovers will enable the entities to meet their demands in areas of services to fulfil the mandate of the Department. He was referring specifically to the issue of unfunded vacancies, goods, and services, which are very key for service delivery, such as training and the number of areas of attention needed to complete. It is very important to have training or workshop that are taking place on the ground, from time to time, to ensure that there is always good relations at the workplace level between the employers and employees. So, the absence of such training or intervention will create a very serious unstable labour practice. The Committee needs to consider that quest.


On affirmative action, how has the Department been able to confidently say that this practice has been smooth-running, as far as the Department's information filtering is concerned? He has a feeling that some unscrupulous private employers have been violating this continuously. What percentage of statical information supports that there has been good or very bad compliance? Who are the culprits? Have you had the capacity to monitor that all along, even before the Amendment Bill came to the fore? This is important because it is one of the cornerstones of our legislation that will promote transformation in the workplace.


On the Expanded Public Works Programmes (EPWP), what does the Department do not to replace ordinary public works jobs with the EPWP such that people can be permanent in their jobs? Given the high levels of unemployment and poverty in the country, one would readily look for something that could sustain incomes for families. So, such opportunities will provide a better life for people, especially those that do not have jobs if they are employed permanently. He also expressed concern over the CEOs, both in the private sector and some state-owned entities, earning exorbitant salaries yet denying workers a living wage. Is there any way that the Department could intervene in that particular situation? This thing of the CEOs earning exorbitant salaries, such as the one of Sibanye Mine, whose CEO is earning over R300 million per annum, but workers cannot be given any reasonable increase, is unfair. At what point will this matter be attended to because it destabilises the workplace and work environment?


Mr Mlenzana told the DM that there had been allegations flowing out there that have never been formally made to the Committee relating to your service providers – about some companies that exploited the country's desperation during the peak of Covid-19. Some claims were made in the Department, which has been unfounded. He asked the DM to clarify this. Did it happen that some companies exploited the Department and took advantage of what the country was faced with? If yes, was the Department able to pick those up? What is it currently doing, not necessarily in following the normal Departmental procedures, but in naming and shaming? He said this is because if Members were caught in this type of shenanigans, their names would be published, but the Department is not doing the same. He was unsure if it was because of the skin colour. The Covid experience revealed that corruption knows no colour or race. Everyone is capable of corrupt tendencies.


Ms Dikgale noted that the presentation talks about transporting, whereby Khayelitsha was given as an example, and where there is a new labour centre. Can this be clarified? Will the labour centre end up in all the villages in the constituencies?


The Chairperson said that priority number two is economic transformation and job creation. So, as far as economic transformation is concerned, how do you do it, and what would be considered? What would you consider to be the successes? What are the challenges, and how are you going to address them?


On localisation, which was identified as one of the main things as far economic reconstruction and recovery plan is concerned, how is the Department helping this localisation process? Related to that is the question of broad-based black economic empowerment (BBBEE), which is a policy of this government to try and redress what apartheid did to the black people of this country. What is the Department doing to ensure that the policy is attained in this country? How will this be measured?


What does Productivity South Africa (PSA) do? What do you consider to be its successes? What does the Department consider PSA’s drawbacks, and what are they doing about that? It is very important to find out what the country derives from these institutions. How much did the Department underspend or overspend in its whole budget in the financial year that just ended in March? What were the causes of that underspending or overspending and what is the Department doing about that? What should be the Committee’s expectations in the current financial year?


What is the status of employment equity in the country? Does the Department do any research, and what does it do with the research outcomes? On the recruitment of young people, especially around the Presidential Employment Initiative, where does it employ these people? When one goes into the rural areas, young people who are qualified with degrees and diplomas say that they always hear about these initiatives but do not have access to them. Please share the Department’s involvement in the rural areas providing these young people, based on the figures the Department shared with the Committee. Can the DEL share the areas it has been to and the programmes that have touched the young people? He lamented that the Committee always asks for this information or answer but the answers are usually not readily available, and the Department requests to come back at a later stage with a well-informed response.


He moved to TERS and asked the entity to share the Scheme's successes, what was spent, and the companies that have benefited. Also, being in South Africa, he asked the entity to share the black companies that have benefited from this Scheme, women-owned companies, youth-owned companies, and rural businesses that have benefited from the TERS. What challenges have been encountered in the process? The Chairperson said his questions were informed by allegations that some companies claimed on behalf of the employees but never gave employees their benefits. That is fraud and criminal activity that call for appropriate action. What has the Department done about that? Are there any cases that have been opened, and what is the status of those cases? He asked that Department also share with the Committee what is happening there.


On assets under management in the Compensation Fund, what were the audit outcomes in the past five years? The Fund has been receiving the disclaimer audit opinions; please confirm that? If that is true, that is very gross for an organisation such as the Compensation Fund. What have been the main concerns of the Auditor-General on the Fund? What is the Department doing about those concerns? The disclaimer means that the AG is saying he cannot form an opinion. This cannot be normal when people are given that responsibility and the AG says that he cannot have an opinion on their financial statements. What is happening about that?


The Chairperson also asked about the What was the level of compliance of companies with the Act, and what is the Department doing about that?

Department's Responses

The Deputy Minister said that Members had raised various and comprehensive questions, especially those posed by the Chairperson.


On the COIDA Amendment Bill, the DM said that the Department has brought this Bill to Parliament and was then referred to the NCOP for concurrence. The Department got feedback that the NCOP has just concluded its work on this piece of legislation. She said that the Department brought the COIDA to protect the domestic workers, following the case that was concluded at the Constitutional Court – of Ms Mhlangu, who died after falling into a swimming pool of her employers. There was subsequently no compensation for her death, and her daughter took the matter as far as the Constitutional Court, where it was concluded. Hence, the Bill is meant to include domestic workers under the category of employees. The DEL also includes a chapter that provides the rehabilitation and reintegration framework for injured employees or those who may have contracted occupational diseases at work. It also reviews the benefit structure to improve the benefits payments to both employees and their beneficiaries.

In response to the question on employment equity, the DM said there is currently the Employment Equity Amendment Bill because employers have been given ample time to regulate themselves. They were literally given a blank cheque to regulate themselves over the years, and they have not been able to come to the party. The Department felt that it should ensure that there is equity and that the designated groups are not left behind by amending the Equity Act to empower the Minister and the DEL to regulate these sectors' specific employment equity targets. The Department is in consultations with relevant sector stakeholders and will be awaiting advice from the Commission of the Employment Equity. The Department is targeting big employers because there is a tedious process that has to be undergone. So, the small employers will be exempted from complying with this administrative process of employment equity of analysing their workplaces, preparing employment equity plans, and submitting the reports. So, the Amendment Bill aims to create a conducive environment for investment and for small businesses to grow and create jobs. If one regulates, small businesses may be stifling them. The amendments are meant to promulgate Section 53 of the Employment Equity Act, which deals with the issue of the Employment Equity Compliance Certificate as a prerequisite for access to state contracts or to conduct business with any organs of the state. The big businesses play devil’s advocate because they do not want to comply or be regulated, but they want to continue to benefit from the state contracts. The Department has put prerequisites that anyone who wants to do business with government or any organ of the state should comply with the Employment Equity Act. This is critical in ensuring that financial benefits from the state are only accrued to organisations committed to and willing to contribute to the transformation agenda in this country. The state cannot continue to financially incentivise organisations and employers who are anti-transformation and those who resist compliance with the country’s labour laws.

On the issues that were raised by Mr Mlenzana, especially the question on the employers who have claimed fraudulently on behalf of their employees: she confirmed that there are employers who claimed from TERS but never disbursed the funds to the employees. She indicated that a unit is responsible for following and recovering that money. She confirmed that such employees have indeed been brought to book. Many cases have come to the fore and many people have been arrested. A case in point is that of a chartered accountant named Mr Mark Foster, from East London, who the Hawks arrested for fraud and money laundering. He is currently out on an R10 000 bail. He defrauded the Department by claiming TERS of over R800 000. The Department has managed to recover just above R1 billion by following the money. In a nutshell, this is what the Department has done. There are many more other cases of people arrested -both staff members and the members of the public who may have participated in fraudulent activities. She said there is a report on that, which can be shared with the Committee.  

On whether the Department can spend, the DM confirmed that it can. She said the question is interrelated to that of the Chairperson on the report about underspending and overspending. The Department will explain more on that report when it reports to the AG. It will also overemphasise other expenditure that incurred because some activities were planned for but material conditions on the ground did not enable the Department to spend on what prepared it for. For example, the recently held Child Labour Conference, which was held from 15 April to 20 April in Durban, was supposed to have been held last year but postponed indefinitely due to some unforeseen. Based on the report that was shared with the Committee, the Department requested some condonement from Treasury. As one government, the departments and institutions are supposed to be aware of the activities of each other. It is unfair that another government department can deny this Department a certain element that can enhance its performance, particularly the issue of condonement. But, the Department does have the capacity spent.

She responded to Ms Dikgale’s question, saying the Department can provide a breakdown report indicating the opportunities province by province and districts and towns. Rural areas are also included in the towns. For example, if one says eMount Frere, one will say ilali yaseMount Frere. There is a tendency to attach the village of that particular town. The Department's system can dissect that kind of information and will be able to provide a report on these opportunities.

Regarding the Department's ability to take the labour centres to rural areas, the DM said it is sometimes costly to open a labour centre where the beneficiaries are few. That is why the Department has visiting points where it can go to a village. In some villages, the Department goes once a month and, in some, weekly – based on the number. The Department may go to a village at a particular time because of the numbers it will be expecting to get. For instance, it may get 150 beneficiaries visiting the mobile labour centre. The Department has come up with the labour buses and would like to give the Members a tour of those labour buses in different provinces where they operate. The Department has partnered with some banks that go with the bus wherever it goes, such as First National Bank and Standard Bank. The Department is currently engaging other banks so that if a client or beneficiary due to receive any funds needs to have a bank statement to show that they have opened a bank account, those banks can issue such a letter with a stamp and can open an account on that spot for that beneficiary. She had witnessed an incident when a beneficiary came with a finger cut. When his status was checked in the system, he got the money instantly. She invited the Members and committed to providing them with the bus schedule so that they could come and see their services in different provinces.

She said some of the 800 000 opportunities under review, which were spoken about, are not necessarily permanent – even though some are permanent. Most of them are temporary, from three months to six months, especially the assistant teacher roles. This is a very good project, and it can slightly help deal with the unemployment crisis. If 350 000 to 400 000 assistant teachers are employed for three months, and the contracts have to be renewed, why can they not be fully employed because they are needed anyway? It speaks to the fact that the inter-governmental relations are not enforceable to the extent that they need to be talking to each other, not working in silos like they used to. The DEL, which checks and coordinates employment in various departments, must talk to the Department of Basic Education and National Treasury about locating the budget and where to get the budget because a permanent budget is needed for such a programme. It goes together with the issue of the EPWP, which was not initially meant to be a permanent EPWP project. It was supposed to be a project where people are trained and capacitated to take other possible employment later where such opportunities exist. But the EPWP project has now been made something of a temporary permanent arrangement. This needs to be reviewed because the EPWP is sometimes found under the Public Works Department; in other provinces, it is under the Premier's office and in some areas, it is under COGTA. The Department needs to consolidate projects such as the Community Works Programme, for instance, and other important projects – to determine where they fall because the services are needed.

In response to Mr Qayiso’s question, she said that the Minister recently spoke at length on the issue of Sibanye. How does the CEO of Sibanye get R300 million per annum but the company refuses to give employees an increase of R1000 per month? This is a moral question that needs to be answered at some point. The matter is being discussed, and Minister [of Mineral Resources and Energy] Gwede Mantashe is suggesting that Parliament needs to review the Sibanye licence. It might not necessarily be Sibanye only; Departments, through inspections, should review some of the licences of some of these companies that are not compliant.

On the question raised by the Chairperson, on priority number two, which deals with transformation, localisation, underspending, and overspending: the DM said that the Department could not complain any further about the austerity measures because, whether it likes it or not, the country currently has a stagnant economy. Therefore, the DEL cannot be making any demands for further budget allocation. The DEL is trying to adapt to working with what it is given to do more with it. In implementing austerity measures, other units that are very key, like the CCMA, are suffering. It is not just the CCMA, but many other units of the Department are also suffering because of the austerity measures. Maybe this is the right platform to lobby this Department because the DEL has factories across all the provinces except for Mpumalanga. These factories deal with PPEs, linen for hospitals, school furniture, and many others, but Treasury regulations make it impossible for the Supported Employment Enterprises (SEE) to operate to their full potential. Her team will elaborate on what the hold up with Treasury is, that the Department is unable to utilise what it has. The factories are only employing disabled individuals, including those who are intellectually challenged. These individuals are recruited from their special schools. Thus, this is an important and delicate division within the Department that she thought government would support, especially Treasury.

The DM said the Department has spent over R60 billion on the TERS scheme to rescue the situation. She agreed with the Chairperson's concern. Even if he did not disclose that out of the R60 billion, not even ten percent benefited black-owned, women-owned and youth-owned businesses. It is mostly the big businesses, particularly white-owned businesses, which benefited from the Scheme.

In response to the Chairperson’s question on the employment equity, she said the Department has a full Employment Equity report that was launched on 25 June 2021, which states that in top management, Africans are trailing at 15.8%, Coloureds at 5.7%, Foreign Nationals at 3.1%, Indians at 10.6% and whites at 64.7%. This report can be made available to the Committee upon request. These figures indicate that the country is not doing well.

On the issue of disclaimer financial statements, the DM said the Department has a disclaimer team that deals with the issues raised by the AG, which are either repeat offences or repeat disclaimers. That team will respond in detail on the matter.

Mr Bheki Maduna, Chief Financial Officer, DEL, first responded to the question on the capital expenditure meeting the cash flow projections. On a cumulative basis for a financial year, the cash flow meets expenditure save for some timing differences monthly during a financial year where maybe the delivery is slightly late. Hence the expenditure does not take place as projected. However, the challenge comes with the expenditure, which is not within the Department’s control. This refers to capital projects undertaken by the Department of Public Works, where the DEL is struggling and has suffered in allocating capital projects. As the Department has a national footprint for labour centres across the country, both government and lease buildings, when colleagues in the provinces encounter problems with the buildings for some capital works to be undertaken, the challenges will be experienced now but the expenditure only occurs three to four years down the line. This is where the Department has a huge challenge on the cash flow and expenditure being managed. Perhaps through the DG, a joint response with the Department of Public Works on this one will assist in future capital projects because of the time it takes from the time the request is made to the time it takes for the expenditure to come through.

On localisation, he said that the Department's operational expenditure is very low, as seen in the presentation on the finances. It covers the normal travelling expenses for the inspectors and officials' overseas trips for the International Labour Organisation (ILO) duties. The goods and services included in the presentation refer to the accommodation and the ICT expenditure, which takes a big chunk of money out of the little money left for operational expenditure. The balance is mainly left for paying for accommodation and travel expenses for the officials. Apart from the ICT cost, accommodation is a local one and the travel costs, but he will need to give the Committee some information in graphs and the amount for each category. Since he is reviewing the financial statements for presentation to the Audit Committee in a few days, the easier one is the underspending in this particular case for the Department for the 2021/2022 financial year that has just been concluded. The expenditure is 15% against past under expenditure of about six to seven %. This time around, the contributing amount to such a high under expenditure is the amount not spent for pathway management, which is about R238 million. The next high amount is the compensation of employees due to a vacancy rate of R155 million variants. This was followed by the R45 million budgeted for the Child Labour Conference, which was earmarked to happen within the financial year, but unfortunately happened early in this financial year. The Department requested a rollover for the R45 million that was earmarked. At this stage, the indication is that its application is not favourable, so the Department has that R45 million that was earmarked for the Child Labour Conference. The next high amount is the R20 million for the Inspection and Enforcement Services (IES) project. This is followed by R18 million for injuries on duty, which were not paid to the Compensation Fund due to late reconciliation on those invoices. These are just the high amounts; the balance is only the small amounts, probably on goods and services and capital works that were not undertaken, contributing to the 15% underspending in the budget.

Mr Sam Morotoba, Deputy DG: Public Employment Services, responded to the question of the 850 000 youth saying in terms of the breakdown of where they participated. The Department can provide that information because the projects were not only limited to the DEL; they happened across different government departments. The DM gave an example of the teacher assistants. In the Department of Environmental Affairs, they had people doing different projects. He said the Department could provide all that information, including where these programmes took place, their nature, the localisation, etc. This information can be provided later because it is not readily available.

On the R258 million, which is the R20 million and the 238 million that the CFO spoke about, the R20 million was for hiring interns. This money came in October 2021, and the Department had to set up a governance framework, the administrative process in place, and the administration. As a result, the money could not be spent. The DG said that, by the time the recruitment was done, it was towards the end of the year, and the entity chose a long programme that was a year-long to provide those young people with the necessary skills. They were given six R6 667, which is slightly above the DPSA set, i.e., R5 700. This programme is extensive because these young people assist other young people throughout all the labour centres. The Department is not incurring any administration costs because it uses existing staff the allocation in place to administer and support these people in the internship programmes. The entity has also submitted to Treasury. It believes that this is one of the areas where they should also look favourable because it will put the Department under tremendous pressure if it does not get this allocation. It means that resources will have to be sourced within the Department to carry these young people. He believes that, in the Medium Term Strategic Framework (MTSF), the entity has made a plea to run it in line with the Pathway Management over the years, but the allocation was just for a year. The R238 million was also affected by the same – the Department has made a submission to Treasury to consider a rollover as systems to roll out the Pathway Management were underway. The Department is currently funding some aspects from the 2022/2023 allocation. It believes that if it receives the R238 million or a proportion of that, it will be able to catch up and increase the number of the young people that it is assisting. The role of Productivity SA includes productivity promotion. This programme is funded at around R64 million, which goes towards staff salaries and office rentals, and leaves very little for productivity promotion. No wonder the Minister and everyone are concerned that the entity occupies almost second position out of 63 countries on productivity, because the productivity concept is not well embraced or understood throughout the country. The entity hopes that, with more injection, there the work of productivity, like in other countries, will occupy its rightful place.

The second programme is the Work Place Challenge programme funded by the Department of Trade and Industry, costing them more than R30 million; the funding is only R10 million. The entity cannot do enough in this area and there is high demand for that programme. The DEL has also intervened and spoke to the UIF to fund the turnaround solutions to assist companies that are not productive to turn around their focus. This is a very good programme; it is just that it is funded on a programme basis, and the entity is unable to make long-term plans because it depends on project funding and cannot have people employed permanently, as there is no guarantee for tomorrow on the project.

On PathWay versus EPWP, he does not think PathWay is replacing the EPWP because it is part of PathWay, the Presidential Youth Initiative Programmes. The entity just makes a distinction in terms of the age of people in EPWP below 35 years of age and above, but the intention was never to replace it. They are counted as part of PathWay Management. The role of the DEL so far in assisting the graduates of these programmes into permanent employment includes registering them on the Public Employment Services (PES) database, which can be accessed throughout the country through cell phone internet. The DEL also registers opportunities from companies, and it works with CAPS and other organisations. It matches young people, including workers that were retrenched from various companies, with opportunities that exist and provide them with counselling and facilitates their placement in those companies through a shortlisting in line with the requirements of those companies. The DEL provides a list to those companies, and they make the final appointment from the provided list.

Ms Carmel Marock said that the Department is already coordinating with all government departments that have signed an MOU. This includes the Department of Public Works, as key opportunity holders, the Department of Trade and Industry and the Department of Higher Education and Training to ensure there is linking of skills, among other things. As part of that coordination process, the stakeholders meet quarterly to reflect on how people are joining, whether through EPWP programmes, Presidential Employment Stimulus,  or any of the channels of the PathWay Management network,  depending on what works best for the programme. A key thing that is being recognised is that young people are not staying in one opportunity; this makes the question of why the teaching assistant is not a permanent position complicated. The programme introduced may be sustained, but the young people jump to other opportunities. For example, the current cohort is the teaching assistant programmes joined through the PathWay network. The entity tracks how many of them have been placed in other opportunities. The results are not what the entity would like them to be, but the initiative certainly indicates what percentage of those teaching assistants are resuming further studies because they are excited about the learning they got through the process, which ones have gotten into other employment opportunities, and which ones are still looking. That information is available and can be shared with the Committee if it can be useful. That is something that the DEL is building into all of the programmes, and it will be able to report on it later. Some broader aspects of the stimulus, such as geography, which is broader than the Path Way network, are already available on the Presidency website with a breakdown of allocations.

Similarly, for the PathWay Management network, by 16 June 2022, the entity will be able to have on its website transparently the information about which young people have joined the Path Way programme, where they have joined, and including where those who have been in short programmes have accessed. The Department is also working closely, including through a live activation programme with the Department of Higher Education and Training, to look at a few key strategic programmes, where it is ensured that the young people who have gone through opportunities have access to learning opportunities to continue what they have developed, and can access further opportunities. This is also part of what the DEL is coordinating at the moment.

Mr Teboho Maruping, Unemployment Insurance Fund (UIFCommissioner, said that, given the extent of the question and the details required, he would give a high-level response; he committed to giving a detailed response by the coming Friday. On the payments to date, he said that, on the Covid-19 TERS benefits, the Department has paid out R64.3 billion to 248 000 employers, benefiting 4.9 million employees. Over time, as the entity learned and its control tightened, it has paid directly to 660 000 employees a total of R2.7 billion. There has been a lot of collaboration, particularly with the banks, the Hawks, NPA, SIU, and SAPS. This has led the entity, for example, the Asset Forfeiture Unit, to arrest and recover R133 million through the function of the unit. With the SIU, the entity has given R22.3 million; this was behind 750 cases of the Covid-19 TERS that were reported. To give the highlights, the arrest of Mark Foster has been mentioned, but other bookkeepers are under investigation. Some of them have been arrested, and the entity cannot disclose the details at this stage. Several syndicates throughout the country are also being investigated. Some accounts were frozen to prevent movements in those accounts due to the entity's collaboration with the banks. Six convictions can be confirmed, and some cases are still on trial. Last week, there was a case of a couple that was supposed to be sentenced, but the judge requested additional information on their payment arrangement with the UIF before sentencing was confirmed. He said that one of the greatest successes was of one company that was arrested after it was paid over R113 million, and UIF was able to recover the whole amount with the help of the bank. The collaborative work has had a higher impact on the arrest and recoveries. The entity also employed the work of ‘Follow the Money’, as the DM mentioned. Through that process alone, the entity has recovered R918 million. The ‘Follow the Money’ has triggered an additional R2.5 billion that has been paid back to UIF by companies who were shaken by the court cases that were reported in the media about arrests. They started paying back the money to the UIF. On the business types owned by the previously disadvantaged groups, he said a detailed response would be included in the report to be shared on Friday.

Mr Vuyo Mafata, Compensation Fund Commissioner, responded to the question on the assets of the Compensation Fund under management. As of 31 March 2022, the total assets are at R92 billion and the net assets after considering the liabilities, both for pensions and future claims. The entity has a net asset of about R48 billion. The audit outcomes of the Compensation Fund have been a disclaimer opinion for several years now. The Fund has been dealing with several systemic issues related to weaknesses in systems controls, processes around management of claims, and collection of revenues. Several action plans were developed and adopted by the Fund and the Department to correct weaknesses identified. This resulted in newer systems that have now been implemented and some legislative changes to correct the Compensation Fund's policy environment and operational environment to allow for a better audit outcome. In the current year, the DG appointed specialists working with management of the CF to assist now that it corrected the systems to deal with issues that have occurred in the past but continue to find themselves in the Fund's financial statements. This is a work-in-progress. The entity is anticipating that, for the 2022/2023 financial year, there will be a slight improvement in the audit outcome. Although it will not take the CF to the clean audit outcome yet, it is working towards that. There is an action plan that is being tracked and monitored. This has been presented to the PC and government structures within the Department – the progress made in implementing the clean audit action plan. 

On the levels of compliance among the employers in the CF, he said it is concerning because it is very low. There is a compliance level of just below 50 percent of registered employers. The CF has created a specialised payroll inspections unit within the entity’s inspection and enforcement branch to address this problem. The CF also took over the occupation health inspections to ensure increased capacity. These are initiatives that will also help the Fund improve compliance of the employers both with regards to registration, payment of claims, and ensuring that the workplaces are kept safe. Where there are breaches in the control measures that have been implemented, there should be a timely and adequate reporting of incidents to enable the Fund to attend to those injured at work.

Mr Lamati said that the Department is part of the economic cluster, which allows it to see what other government departments are doing about policy development and implementation. Its role is to ensure that whatever policies are developed are geared toward ensuring that as the economy grows, that growth is inclusive and encourages the absorption of people in employment. In the past, the economy was growing at around five to six percent, yet a high unemployment rate still plagues the country. That is why the question around localisation is very important because the country should not be importing things that can be manufactured locally. “Our role has been to work closely with other government departments to ensure that localisation is implemented,” he added. This is part of the social compact that the President has been speaking about. On the sector master plans, the Department is part of those engagements.

The second instrument that the Department is using is employment equity. Part of what the DEL is bringing to Parliament is the promulgation of Section 63 of the Employment Equity Act, which was delayed a long time ago because the DEL had allowed employers to do what is best for the country. They asked for self-regulation and were allowed to do so, to set their target in terms of employment equity. Over the years, as the report from the Employment Equity Commission revealed, there is just no will to transform. On the successes, he gave the example of the Department's agreement with Huawei, when it analysed the company's employment equity reports versus the employment equity plans. It was realised that they were not close to what they said they would do. The company was 95% Chinese and was even flaunting the investment threshold of 60%. So, the Department put the company to court and then asked for an out-of-court settlement. Part of that settlement includes that, by a certain time, they will have appointed 50% South Africans.

What is more exciting for the Department is that the company has undertaken that it will take several IT graduates in, train them and then employ them full time. They will take young people who do not know anything about IT, take them through a training programme, and provide them with an opportunity to learn within the company. The Department got what it wanted; all it needed to do now was monitor the agreement's implementation. 

The other thing that contributes immensely to job creation besides the legislation that has been put in place is ensuring that the labour market is stable. Without that, the investors invited to the country, and the investments that have been pledged, will not be feasible. That is why the CCMA is working tirelessly through a strategy called Imvuselelo, where it works closely with the companies to prevent disputes. This dispute prevention strategy is working very well. So far, there have been fewer compared to what the country used to have previously. The annual reports that were previously published, and the industrial action report, show that there is some good work that the Department and some entities are doing.

The challenge is that companies are paying lip service to the whole concept of economic transformation. The Department is hoping that the Employment Equity Bill and government power in terms of procurement of goods and services will be an instrument to force the companies who want to do business with the government to comply. These are the sentiments he will share on broad-based economic empowerment. The Department is working very closely with the Commission that deals with broad-based economic empowerment. The two entities use the same logic in structuring the employment equity, that the Commission uses the Department's report in some of the reports it generates. The Department wants to focus on income differentials, as raised by one of the officials of the Sibanye mine. It is absurd that there are huge gaps in what management is earning compared to what workers are earning. Workers are only asking for an increment of R1 000 a month, and the company is refusing, even though it pays the CEO around R300 million per annum. These are the things the Department is looking at working closely with the Employment Equity Commission to ensure that such behaviour is called out and that the companies are taken to task to address such things. The Department does research, and the Employment Equity Commission is responsible for that. As the DM indicated, the DEL issues annual reports.

On the role played by the supported employment enterprises, he said they are meant to empower disabled people to participate in employment activities through these factories. These factories are meant to empower disabled people. In the olden days, they enjoyed preferential procurement status, which means that government departments were procuring furniture, amongst other things, from this entity. There were never issues relating to them running out of money or having to be bailed out now and then. The mindset that these factories will have to generate more income needs to change because the type of people that work there when they need a break has to be given that break because of their disabilities. So, when measuring the time of delivery, one does not use the same principles used when dealing with a normal company because of their disability. So, the Department has only been getting support from the Western Cape provincial government, which has been sustaining these factories and the annual allocation received from National Treasury.

On the Productivity SA, the point he raised is that government does not want to use these entities; it would rather go out and use private companies, whereas a government entity spends money paying remuneration every year. There is a resource within the government, and yet government does not want to use it. That is why the competitive ranking has dropped because government departments do not listen to one another.

The Deputy Minister thanked the Committee for the opportunity to brief Members and committed to ensuring the Department will share with the Committee the details of the outstanding response by Friday. She said that the Department would continue to support the work of the Committee and provide assistance whenever it is needed.

The Chairperson thanked the DM and her Department for taking the time to interact with the Committee and released them. Just for completeness, the SCOA is dealing with the 2020 Appropriation Bill, which is the allocation of money among the national government departments. He said the Department has interacted and provided very valuable information and requested that it submits the outstanding information as promised. He said two issues reside with the Executive. For instance, the entity is making an issue about other departments not supporting it on some of its initiatives through the entity's institutions. This is a valid point, but there are many forums, like the DG's Forum, Cabinet's Forum, etc. The entity must let the Executive deal with its issues, as it does not want to give the impression that it is operating in silos or overreaching.

The matters among Departments must be resolved at that level. Ultimately, those issues should be elevated to the head of the Executive, the President, to be resolved. The Chairperson said that the Committee will still have an engagement with the Compensation Commission because there cannot be an institution managing R90 billion getting disclaimers. This is a crisis, and it cannot be business as usual. The Commission needs to get to the bottom of that because, as Parliament, the Committee is responsible for overseeing the funds of South Africa's people. Thus, the Commission will also engage the Compensation Commission and the Department leadership because a disclaimer is the worst audit opinion that can be found, where the AG says he cannot form an opinion on over R90 billion. Of course, this is not their fault because it has been a recurring issue over the years – an abnormal situation that has been normalised. Most departments do not have so much money under their management. At a political level, the Committee will engage the Department leadership but will surely engage the Compensation Commission as well to get a better understanding of the situation to assess how the public funds are managed.

The Chairperson thanked the DM and the Department and released the officials. Committee announcements were made and Chairperson thanked everyone for attending.

The meeting was adjourned.


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