Department of Labour Annual Report: briefing

Meeting report

LABOUR PORTFOLIO COMMITTEE
26 October 2004
DEPARTMENT ANNUAL REPORT: BRIEFING; COMMITTEE REPORT ON SETAS

Chairperson: Ms O Kasienyane (ANC)

Documents handed out:
Department PowerPoint presentation of Annual Report
Draft Committee Report on meeting with SETAs
Department Annual Report 2004

SUMMARY
The Department of Labour’s Annual Report was presented to the Committee. Discussion revolved around underspending, the effectiveness of SETAs (Sector Educational and Training Authorities) and the under-utilisation of the training facility, Indlela. Service delivery, especially by the Unemployment Insurance Fund, was also a concern raised.

MINUTES

Department briefing
The Acting Director-General, Dr V Mkosana, said that they would be giving a broad overview of their annual report. The presentation would mainly cover the financial results and a report on the Department’s various programs He then asked the Chief Financial Officer, Mr C van der Merwe, to do the presentation.

Mr van der Merwe explained that the total underspend by the Department was R41.8 million which amounted to 3.97% of the total budget. The biggest underspend was in the area of land and buildings. This was because there had been some problems with respect to the corporate imaging of the Department. GCIS had issued a document which had halted the initiatives for corporate imaging as they (GCIS) were trying to get a standardised imaging within the public service. The work on land and buildings was on track again as the imaging process sorted out. In explaining the adjustment of R236.96 million that was made to the budget, he said that Treasury had approved a rollover that had come from the 2002/2003 budget. An amount of R250 million had also been given to bail out the UIF, as it had problems The UIF however had improved its situation and had a surplus, which then meant that the R250 million was not needed and was then relinquished. The present rollover was also partly due to the fact that the Department had to work through the Department of Public Works for repairs and maintenance that tended to cause a delay. In effect, the Department had managed its budget within 5% of its target.

He explained further that the levies collected from the Skills Development Act did not form part of their budget vote as this was collected by SARS and then given to the SETAs and the National Skills Fund. He pointed out that the Auditor General’s report was unqualified, but did contain some concerns. One of these concerns was around transport. Many of the employees who used the subsidised transport did not conform to the 70/30 as required by the Department of Transport. This ratio required that 70% of transport be for business while 30% for private usage. The problem arose because many of the inspectors, especially in the urban areas, did inspections relatively close to the base so that it was not possible to attain this ratio. This was being attended to. The other concern was that the account of Imperial Fleet Services should have come down according too the Auditor General. This however did not happen partly due to inaccuracies in the billing system. This was also being addressed. They were considering the possibility of appointing forensic auditors to investigate this.

 The other area of concern was around IT equipment. This was because three activities normally happened at centres namely, Department of Labour, UIF and the Compensation Commissioner. On occasions, computers of one agency were used by the other. The Auditor General felt that the different IT assets should be differentiated. Each and every computer was presently being identified. The Auditor General also felt that that testing and accommodation fees at the Institute for the National Development of Learnerships, Employment Skills and Labour Assessment (INDLELA) was too low. The Department felt that fees must not be made too high so that it was accessible to everyone. He added that the Department would be installing plasma screens in all the labour centres and regional offices that would aim at informing people about all the services provided. When completed, 140 screens would have been installed.

The Chair said that in future the Department should make the documents available beforehand.

Discussion
Prince N Zulu (IFP) asked for more clarity around the issue of transport problems in the provinces with long distances. He was also concerned that the Auditor General’s report had found that the training centre was under utilised. It seemed as if certain people were not doing their jobs.

Mr C Lowe (DA) referred to the R6 million surplus which the UIF had and asked when they would be able to interrogate this. The problems raised by the Auditor General were old ones. He asked when these would be resolved. It was also a concern that the training centre was under utilised. It seemed strange that plasma screens were being installed yet the public complained that telephones were not being answered. He also asked if the research papers that the Department was doing addressed the problem of unemployment and labour policy. He added that his party had ideas around these issues.

Dr Mkosana said that he would ask various members of the delegation to respond to the questions.

Ms N Xaba, DDG Corporate Services, explained that various measures were being put in place to address the transport problems. Subsidised vehicles were being made available to employees to use in their work. Services would also we taken to the people. She explained that there were twenty mobile units that would go to the people as labour centres. Three more labour centres would also be opened in the present financial year. Regarding inspectors, she said that a new model was being developed in which inspectors were being asked what their core business was and focusing on this. Inspectors should therefore spend more of their time in the field than in the office. The model says that four days of the week, inspectors should be in the field. One day would then be spent in the offices. Inspectors would be given hand-held computers instead of desktop computers. In this way they can do most of their work in the field and send their reports to the office through these hand-held computers. Only a few desktop computers would be used in the centres for inspectors when they were not out in the field. The installation of the plasma screens were part of the Department’s communication strategy. These screens informed the public about their rights, services, etc. The fact that plasma screens were being installed, did not mean that the concern around response to calls was not being addressed. These programmes were running parallel and were being addressed. There was an approval in 2003 from the budget advisory committee in which ITC convergence was being looked at. The current IT contract, however, was a very narrow one. To bring a call centre into this would have been a contravention of the contract. A feasibility study was done to find the best way to do this. One of the options was to have a private public partnership. It was hoped that the call centre would be operational in the current financial year.

Mr L Kettledas, Deputy Director-General: Labour Policy and Programmes, explained that he would address the issue around the UIF. He pointed out that the UIF’s benefits were distributed through 14 centres throughout the country. On average, 50 000 to 60 000 claims were received per month. For the month of September 2004, 54 744 claims was received and 47 247 of these were finalised. The fund had achieved its target of capturing 100% of its claims on the system within six weeks. A monthly operations report is made available from the various offices so that levels of service delivery could be ascertained. Currently, 613 918 domestic households were on the systems, which covered just under 500 000 domestic workers. In the commercial sector, 453 000 employers were on the system which covered just under 6 million workers. The number of companies in the system had therefore grown tremendously since the introduction of the new law. Claims were being managed and finalised as soon as possible. There was room for improvement though. The five centres which handled most of the claims, viz. 58.5% was the Western Cape, KwaZulu- Natal, Gauteng South (Johannesburg), Mpumalanga and Germiston. Some benefits were settled electronically. A project was also piloted in the Limpopo Province where a bank card was given to beneficiaries which could be used at any ATM so that they could access their benefits. This scheme would be reviewed in February 2005. The possibility of rolling this out to the rest of the country would then be examined.

With regard to labour policy, he said that the research papers were around worker co-operatives and employment creation. Quite a number of initiatives were happening in this regard. The Department of Trade and Industry was also spearheading this by means of the Co-operatives Bill. The research done had been conducted in the Western Cape, Eastern Cape, Mpumalanga and KwaZulu-Natal. The impact of the present labour legislation was continuing and no new adjustments were envisaged at the moment. Enhancement of the implementation of the policy framework was the focus at present.

Ms A Bird, DDG Employment and Skills Development Services, explained to the Committee that the under utilisation of INDLELA was not the under utilisation of a training facility. INDELELA was a testing facility that had been used in the past for the testing of apprentices. The core function at present remained the testing of apprentices. The apprenticeship system had faced many challenges. In the early eighties it had been very popular as it gave certain tax breaks for companies who took on apprentices. At that time the number of apprentices was approximately 25 000. This system excluded blacks. Over the years the numbers declined to around 10 000. One of the reasons for this was the passing of the Manpower Training Act in 1980 that introduces a system of decentralised testing. The tax incentives had also changed which further caused numbers to decrease. The industry training boards were also overseeing many of the testing. INDLELA was therefore testing mainly government apprentices at present. In 1995 the SAQA Act was passed, in 1998 the Skills Development Act and in 1999 the Levy Act. In 2000 the SETAs were established. Since then the system of learnerships had put in place. The National Skills Development Strategy had set a target of 80 000 learnerships by March 2005. At the end of the first year only 3000 were in learnerships. At the end of March 2003 there were 25 000. At the end of March 2004 there approximately 68 000. The Department was hopeful of exceeding the target of 80 000 by March 2005. It was hoped that in future INDLELA would be able to provide a service to the sectors. Under the SAQA Act, the SETAs are responsible for assessments. The bulk of SETAs however do not have the facilities for this. The aim was that the SETAs would enter into partnerships with INDLELA to do assessments. Other additional services are also being planned where INDLELA would be used. One of these was the assessment and recognition of prior learning. There were also pilot projects for this in Alexandra and Thembisa. Another project was the master artisan project. This would give an advanced trade to people who were already qualified in a trade. It would be higher education but of a more practical nature. It had three components to it namely, advance technical skills, advanced pedagogic skills with and business skills. Discussions were taking place with the Department of Science and Technology to see how it could be brought in on this. It was also hoped that the facility could be used with SMMEs. It was therefore true that the facility was not used as it should be, but with these activities it was hoped that it would return to full utilisation.

Dr Mkosana, said that the Department’s mission was to fight unemployment. The very first objective in the Department’s strategic plan was to address the issue of unemployment. In this regard, partnerships would be important. This area however was not only limited to South Africa. It was one of the millennium goals for the whole world. The only area however which had shown that it would not be able to half its unemployment numbers was sub-Saharan Africa. This meant that all the countries in this region had a duty to address this.

Mr G Oliphant (ANC) said that the Department was very thorough. He added however that when oversight visits were made to the provinces, the expectations from the public were much higher even though they were doing well. There was therefore no room for complacency. He felt that they had to strengthen their resolve of activism. In some Multi Purpose Community Centres (MPCC) the Department officials did not know what they were there for. This had become clear on oversight visits. There was also a concern about the high level of vacancies in the Department across the provinces. He asked for a clear rollout plan, for example places and dates, for the mobile unit. He suggested that the MPCCs be used more effectively and that learnerships be strengthened. He asked for the Department’s report on the casualisation of workers. Inspectors’ visits should also be integrated and the transport problems be attended to. He also questioned the Department’s capacity to spend. He referred to the R6.6 million rolled over from the ten-year celebrations.

Mr O Mogale (ANC) asked Mr Lowe to present a paper on job creation that he always referred to. He asked the Department what criteria they used to give money to civil society. He also asked if the research papers on the co-operatives, the reports on strikes, work seekers and waste settlement could be circulated to Members. Information on the poverty alleviation projects was needed, especially the provinces in which this was being done. He also wanted to know what yardstick was used to evaluate the SETAs and which ones had been identified as under performing.

Mr L Maduna (ANC) asked how communities were identified for training and what kind of co-ordination there was between the different departments.

Ms T Lishivha (ANC) asked where the silicosis workshops were held and hat had been done to reduce the number of stolen vehicles.

Ms N Ngcengwane (ANC) said that the number of inspections in the agriculture sector was low. It had emerged during their oversight visit that farmers wanted inspectors to make appointments with them and were not in favour of blitz visits. She asked if the Department was aware of this. Members had also become aware of exploitation of workers during their visits. This was taking place particularly in companies run by foreigners e.g. Chinese, Taiwanese and Pakistanis. When they were taken to court they claimed that they could not speak English. She wondered if the Department was aware of these as well and what action it was taken.

The Chair emphasised that the problem of exploitation was a serious one and asked how the labour centres could be assisted to deal with this.

Dr Mkosana replied that the concerns that had been raised had been noted. The comments around the MPCC and vacancies had also been noted. The problem around inaccessible roads was being addressed and where possible 4x4 vehicles were being used. The casualisation report and the research papers would be available to Members. As far as the co-operatives were concerned, he said that they worked in clusters with other departments. The co-operatives were handled by the Department of Trade and Industry. The silicosis workshops were held in the Western Cape and the Eastern Cape. He added that the Department pays strict attention to Occupational Health and Safety. In 2003 they had decided to spend a month on advocacy and a month on inspections. It had emerged that farmers were not as negative as they had thought. Most of them that had been sampled were found to be complying with legislation. Some farmers had indicated that they were threatened by criminals, for this reason they had asked inspectors to inform them of visits. An arrangement had been made with farmers about this. He admitted that some farmers did abuse this arrangement.

Mr van der Merwe said that National Treasury had approved an amount of R6 million to be rolled over for the ten year celebrations. Some of this money had been spent while some still had to be spent on further events. He said that the Department had the capacity to spend, but there were constraints that had to managed. Personnel savings and vacancies were probleMs It was policy that vacancies were advertised in the Department first. The result of this was that an incremental increase would take place when a post was filled by an incumbent in the Department. Added to this was the fact that the budget had to watched so that any savings which were carried through, were not used. These carry through amounts were monitored and at the same time the establishment was expanded. The once off expenses, which were reasonable, also had to be monitored so that there was no carry through.

Ms Xaba added that at July 2004 there had been 1175 vacancies. At present 700 had been filled. Of these 640 had been in the provinces. Concerning the rollout of the mobile units, she said that the details would be given to Members. At present, the tendering specifications for this project were being finalised. They were also looking at sponsors from the motor industry. She added that the money for the ten-year celebrations, had come in the third term of 2003. Some monies had been spent in April and some on Workers Day.

Mr Kettledas said that funds were given to civil society by application. It was given to organisations that promoted and understood the legislation. Some examples were organisations such as Ditsela that gave trade union education, the Sexual Harassment Education Project (SHEP) and the Network against Child Labour. Various legal advice centres also received funds to do work among farm workers. Some of this work was done on labour law, training of shop stewards and negotiation. The assessment had been that these programs had helped to empower workers. The problem was that the demand for funds exceeded the funds available.

Ms Bird said that the performance of the SETAs were measured against the National Skills Development Strategy which had twelve indicators of success which were measurable. The income of the SETAs together with some contextual factors used. A part of the targeted 80 000 learners was then assigned to each SETA. The SETA was then evaluated against this. The vast majority had done well. The two who had under performed was the Defence and Trade and Local Government and Water SETAs. Referring to poverty alleviation, she said that 20% of the funds collected through levies went to the National Skills Fund. A third of this money went to the Social Development funding window and was allocated to the provinces. In 2003, R217 million was allocate to the provinces, of which 83% was used. The number of people trained had increased from 90 000 in the previous year to 140 000. Of these 70% were placed after training. Nearly 5000 were placed in the formal economy, 4000 in self-employment, 5000 in further training and 78 000 in social development projects.

Mr L Ntuli, Chief of Staff, said that the nodal points identified by the President had been the areas of focus for poverty alleviation. The Ministry had also had discussions with the EU in which they had agreed to fund some strategic projects. The areas that had been identified was the Free State, Limpopo and the Northern Cape.

Dr Mkosana said that many of the poverty alleviation results were indirect as they would train people and then they would become self-employed. He said that the problem regarding exploitation was an area in which they had encountered problems It was true that many of these employers claimed that they could not speak English or would disappear when inspectors arrived there. The Department however was developing experience to deal with this. It was important that there was partnership between the Department, business and labour. It was through this that companies complied because it was the right thing to do.

SETAs Committee Report
The Committee was given the report on the SETAs. The Chair asked Members to read through the report so that it could be adopted later. She informed Members that there would be a hearing on the Joint Budget Committee the following week. She also asked the Members to complete the questionnaire regarding the training that Members felt was needed.

The meeting was adjourned.