Productivity SA & CCMA 2021/22 Quarter 2 Performance

Meeting report

Productivity South Africa: Second Quarter Performance Report
Prof Mthunzi Mdwaba, Chairperson, Productivity South Africa (PSA), took the Committee through a detailed report on its second quarter performance. Due to signal issues, a few comments were not captured.

(See the attached detailed report).

Economic challenges.
He indicated that the pandemic continued to impact business operations, with a number of businesses scaling down to stay afloat and others closing down or retrenching workers. Small, medium and micro enterprises (SMMEs) were impacted the most, with 53% suggesting that they would remain operating for the next six months, and 38% indicating that they had to retrench workers. Most retrenchments occurred in the micro enterprises (48%) followed by medium and small enterprises at an equal distribution of 24%.

He added that the total number of liquidations increased by 46.2% in the second quarter of 2021 compared to the second quarter of 2020.

Prof Mdwaba said that the overall productivity growth in South Africa was of great concern. It was a key driver of long-term competitiveness and economic performance. The overall growth was low, with labour productivity and capital growth registering declines in growth. The multi-factor of productivity in the same period recorded no growth. With the decline in economic activity in 2020, the growth in productivity was expected to regress.

Mr Mxolisi Dludla, Chief Financial Officer, PSA, took the Committee through the financial section of the report.  

(See attached document for details of the quarter’s performance). 

Discussion

Ms C Mkhonto (EFF) made an example of grade 12 learners failing and educators that were held accountable. She then said that PSA could not be held accountable for low competitiveness in SA. The Minister needed to be held accountable, and the Committee should revisit its debates in Parliament. She asked PSA what the budget allocation was for the compensation of employees (COE) and goods and services. She urged the PSA to change its strategy on competitiveness because it had not achieved all of its targets.   

Mr M Nontsele (ANC) asked what engagements the PSA had with the public sector. How could the Committee assist with the challenges in the public sector because too much emphasis was placed on the private sector?

The Chairperson said she would consult the rule book to determine if the comments made by PSA were in order, and would deal with the comments made at an appropriate time. She commended PSA for achieving a clean audit and asked how it planned to assist other entities or Departments to achieve this target.

She urged PSA to adjust its reporting style and provide more detail on the 73 entities it assisted. The Committee would be in a better position to conduct its oversight and determine the impact of PSA interventions. It was the right of the public servants to conduct random oversight visits. She recommended that the next presentation of PSA reflect its engagements with the Department of Employment and Labour (DEL). She also recommended that PSA identify an entity or department and educate the workers on the importance of productivity in the public sector.

PSA's response

Prof Mdwaba commended the Committee for its oversight work. He referred to the comments made about the Committee being a ‘sweet-heart committee,’ and apologised if it was offended by them. The transparency of the Committee drove the PSA to reach its targets.

He responded to the question on the entity's engagements with the public sector, saying that it engaged with departments. He had visited a Department of Home Affairs (DHA) branch and was not satisfied with the efficiency of the service. PSA had engaged with the Minister of the DHA on how productivity could be improved, and the Minister had welcomed the recommendations. PSA was a government entity, but not many government entities and departments were aware of it. It did a lot of work trying to make government entities and departments aware of the work it does.

He said PSA noted the recommendation made by the Committee on engagement with the DEL. The PSA had a number of trade union representatives on its board, but it was missing one business representative and awaited communication from the Ministry on the matter. It conducted an annual general meeting (AGM) which the Committee could attend. During the AGM, all stakeholders were invited and could provide feedback on the work PSA does.

The Committee would be provided with a detailed report on the 73 entities it assisted.

He responded to the comments made about the clean audit, saying that the PSA had worked hard to achieve this target. It would gladly provide entities and departments with strategies to achieve clean audits.

Responding to comments made by Ms Mkhonto that it was self-critical, he said it accepted the critiques made by the Committee because 25% of the entities it did not reach were a large number. PSA always worked actively on improving the work it did. The PSA could not do it alone -- it would need the help of all stakeholders to improve the strategies of entities and departments. It had a responsibility to always provide the Committee with transparent progress reports.

Mr Mothunye Mothiba, Chief Executive Officer (CEO), PSA, responded to the question on the COE and goods and services. The COE constituted 53%, and goods and services 47%, of the allocated budget. The budget for the COE was high because it was a service provider. The bulk of PSA employees were business practitioners in order to reach the entire country. It was structured in three regions which covered three provinces each and invested more in individuals than other resources.

He responded to the question on the entity's limited access to interactions within the public sector. It had recently engaged with the Sector Education and Training Authority (SETA). It planned to engage with the Department of Public Service and Administration (DPSA) because it was the custodian of the public sector. It would continue to pursue relationships with the DPSA and SETA to intervene in government programmes where it was needed. The PSA engaged with provincial stakeholders because it facilitated integrated development plans (IDPs). It identified weaknesses in the programmes and implemented a programme called ‘productivity champions’ to address these weaknesses. It was done to ensure efficiency with metros and districts. Workplace milestone events (WPMEs) were held in every province to ensure that political and administrative leadership worked with PSA. Every year, it increased its participation in the WPME.

He responded to the comments made about the clean audit and indicated that PSA had engaged with departments on improving audit outcomes.

Mr Mothiba urged the Committee to conduct oversight visits to the 73 entities that PSA assisted. The Committee had indicated that it would invite the PSA to assist entities in its constituency. He added that it still awaited communication and would assist where it was needed. He invited the Committee to an event it would host in July, which would allow the Committee to identify the entities it assisted and the challenges of the entities.

He commended the recommendations made by the Committee and said that PSA would adhere to them.

The Chairperson said that she had not referred earlier to the comments made by the CEO, but to comments that had been made in the Parliament debate.

She thanked the PSA for its presentation and allowed the delegation to exit the meeting.

Commission for Conciliation, Mediation and Arbitration: Second Quarter Performance Report

Mr Cameron Morajane, Executive Director, Commission for Conciliation, Mediation and Arbitration (CCMA), took the Committee through the non-financial section of the presentation.

(See the attached detailed report).

He said that during the second quarter, a total of 37 877 referrals were received by the CCMA. This was a decrease of 1 953 (5%) referrals compared to the 39 830 referrals in the first quarter of the same financial year. The CCMA achieved all targets for the quarter under review.

Ms Kedibone Mashaakgomo, CFO, CCMA, took the Committee through the financial section of the presentation.

She indicated that the cash and cash equivalents as of 30 September 2021 amounted to R111 million, which included cash-on-hand of R53 300, a bank balance of R25 million, and short-term deposits of R85.8 million. The cash cover ratio was 1.6 times, which indicated that the organisation had sufficient cash to cover its short-term liabilities in the foreseeable future.

Total current assets of R616 million were available to cover total current liabilities of R70 million. The total current liabilities were R70 million, which included trade payables of R64.1 million, provisions of R254 000, an operating lease liability of R4.5 million and a financial lease of R738 000. The liquidity ratio was 8.9:1. The CCMA had the ability to cover its short-term obligations, making use of assets that could be quickly converted to physical cash.

Net assets for the period under review had increased from R544.7 million to R579.1 million. The increase was due to grants receivable from the DEL, which would be liquated in the third and fourth quarters of the financial year.

Ms Mashaakgomo added that as of 30 September 2021, the DEL had paid the first and second quarter tranches in line with the drawdown agreement, to the value of R495.9 million. An amount of R398 800 had also been received for conscientious objector funding. The income received from services rendered as of 30 September 2021 amounted to R2.1 million, with 42% collected from training and advisory services and 58% from other revenue-generating services. The interest received was R2.8 million, and other revenue generated was R563 000, which consisted of insurance, bursary recoveries etc.

Total active invested funds were R82.5 million, with R378 million matured, and interest earned was R2.8 million. The interest from investments yielded an average of 3.9% for actively invested funds, in line with the investment policy.

She said that there were no new cases of irregular expenditure identified during the second quarter. As of 30 September, two cases to the total value of R1 188 959 million had been identified and were currently being processed by the loss and control committee to confirm non-compliance. Of this balance, R1.1 million was interest and penalties levied by the South African Revenue Service (SARS) on the non-payment of value added tax (VAT) on services rendered by a foreign supplier. A request for a waiver for this amount had been submitted to SARS, and the CCMA was awaiting feedback on the request.                    

Discussion

Mr M Bagraim (DA) enquired about the strikes that were happening in the country. The CCMA and trade unions had indicated that Section 150 of the Labour Relations Act (LRA) needed to be revisited. He asked how the CCMA envisaged this process to proceed. Section 113 of the Labour Relations Act (LRA) indicated that the CCMA was an independent entity. He urged the CCMA to make the public aware that it was an independent entity, because the country was facing strikes.

He commended the work done by the CCMA on the re-opening of its offices. He had visited various offices and was impressed with their efficiency, and asked if the number of citizens it assisted reflect this.

He asked if the management was requesting ‘ballots’ and if the CCMA reviewed disputes in the country that were not referred to it.

He highlighted essential services, and urged the CCMA to educate civil groups that workers in the essential services could go on strike. The government would not want all essential group members to go on strike and neglect essential services. 
   
Ms Mkhonto referred to slide 17 of the CCMA presentation, and said that it was not aligned with the demographic numbers of the country. She asked the CCMA to elaborate on the demographics it had used in its presentation. National Treasury (NT) had been summoned by the Standing Committee on Public Accounts (SCOPA) about deviations regarding expenditure. It had been found that the CCMA was an entity with a lot of deviations, and asked it to provide the Committee with a detailed report on the issue.

CCMA's response 

Mr Morajane responded to the concerns about strikes. He highlighted Section 150 of the LRA -- paragraphs A to D that had been amended -- and said that aspects of the Section were not being implemented. He had submitted a report on the cases it advised to the Court of Arbitration. The CCMA did not know the reasons the process had been delayed, because it would be beneficial to revisit the LRA regarding the strikes it dealt with. Section 150 was very important, because it would allow the CMMA to succeed in the cases it was involved with.

He responded to the question on ballots, saying that trade unions had requested ballots. The biggest request it had dealt with involved the Sibanye Stillwater Mine (SSM). The CCMA had been approached by the Association of Mineworkers and Construction Union (AMCU), which had indicated that it had reached a deadlock with workers and that they would embark on a strike. As an independent entity, the CCMA had been asked to intervene with the balloting of the SSM. The CCMA had deployed its commissioners to conduct the balloting to avoid the strikes. There had been no incidents of any violence and the commissioners were never threatened. He commended the commissioners for the work done to prevent the strikes. The ballot count indicated that the workers could proceed with the strikes. It continued to provide the SSM and AMCU with assistance in terms of Section 150 of the LRA.

He added that the CCMA would continue to provide assistance to any entity that requested it in terms of Section 150. It was important for the CCMA to identify and deploy the correct commissioners, because the work and community environment was often unknown in dispute cases. He also highlighted the dispute cases that it was currently conducting with South African Revenue Service (SARS).

He responded to the question on the CCMA offices, indicating that a lot of workers had visited its offices. The case load had not increased significantly. It would create public awareness that the offices were open and that it would deal with the cases of workers.

He responded to the comments made by Ms Mkhonto that it in its outreach programmes, it dealt with workplace mediation and relations. To be successful on the proactive side and the resolution side of cases, it would need more resources. In terms of Section 115 of the LRA, the CCMA was required to invest more in proactive measures to avoid labour disputes. The statistics presented were not a true reflection because the CCMA held its interactions on an online platform due to the hard lockdown regulations.

He invited the Committee to an international conference it would host in September. The leading practitioners and commissioners would attend the conference.

He agreed with the comments made by the Members, and said that the CCMA needed to be proactive to prevent strikes due to the current state of the economy in South Africa. The global economy must also be considered. The CCMA was aware of the possible civil strikes, and engagements had begun after the Constitutional Court judgment. It would develop an Integrated Resolution Dispute Programme (IRDP) to find a synchronised strategy to deal with labour disputes. This would ensure that all aspects before, during and after dispute negotiations were covered. Due to a lack of resources, the CCMA could not respond quickly to every dispute case.

He responded to the question on essential services to which the Disaster Management Act made reference. The CCMA had received a number of queries from industries regarding what constituted an essential service. There was a published paper that stated what an essential service was.

The CCMA wanted to reach out to more stakeholders, but its resources were limited. It educated sectors about essential services, but workers still violated their rights. The challenge lay with the enforcement of the Essential Services Committee's (ESC’s) regulations.

He responded to the question on demographics, saying that the CCMA operated differently during the hard lockdown. He confirmed that the current outreach programmes were not reaching all their targets. The CCMA did attempt to address the issue of demographics. The demographic statistics would positively change due to the re-opening of CCMA offices.

He requested that the Committee assist the CCMA in terms of the Constitution to have access as a tribunal. It planned to have access to all state-owned entities (SOEs) without any financial implications, to access its users. Users must be able to visit any SOE and submit a claim in order to refer it to the CCMA.

He responded to the question on deviations in the budget, saying that he was not aware that the number was high. The CCMA would provide the Committee with a detailed report regarding deviations in the budget.

Closing comments                 

The Chairperson requested the CCMA to provide a detailed report on its strike prevention measures. A lengthy strike would be devastating because workers had dependents. The role of the CCMA was important because a strike was a constitutional right. She said that she was impressed with the work ethic of the CCMA officials. The Committee would continue to conduct oversight visits to identify offices that were not doing well.

The meeting was adjourned.