Department Budget: briefing

Meeting report

LABOUR PORTFOLIO COMMITTEE
15 March 2005
DEPARTMENT BUDGET: BRIEFING

Chairperson: Ms O Kasienyane (ANC)

Documents handed out:
Ministerial Programme of Action 2004-2009
Department budget briefing: PowerPoint Presentation
Labour Budget

SUMMARY
The Department of Labour presented its budget for 2005/2006. This included outlining the challenges and objectives of the Ministerial Programme of Action for 2004 to 2009. Following this, the Department discussed its expenditure for 2004/2005. It was noted that the Department’s divisions had been allocated a budget of R1 228 697 000 for 2004/2005, and had spent R970 268 000 thus far.

The Department then outlined its budget for 2005/2006. Their divisions would be allocated R1 313 977 000, which was a 6.9% increase. The Sector Education Training Authorities (SETAs) would receive a budget of R4 billion, and the National Skills Fund would be allocated a budget of R1 billion. The Department then outlined the projects that its divisions would be undertaking in 2005/2006. These related to improving service delivery, supporting and interacting with the SETAs, and undertaking labour market research.

In the ensuing discussion, Members had various questions and concerns. Members specifically enquired about the Unemployment Insurance Fund (UIF), the Department’s capacity to deliver efficient services, its planned 20 mobile office units, and issues surrounding sheltered employment. Members also questioned whether the Department had contact with communities and trade unions around its HIV/AIDS programme. A Member also enquired about the Department’s future policies towards small and medium sized enterprises (SMMEs) and their compliance with labour legislation. Finally, the Committee also questioned why the Department had not fully spent the budget allocated to its divisions and projects for 2004/2005.

MINUTES

Department budget briefing
Dr V Mkosana (Acting Director General) began by presenting the Department’s Ministerial Programme of Action 2004-2009. This included outlining some of the challenges that the Department would face during this period. These challenges included addressing the high levels of poverty; the changing nature of work; structural unemployment; the inequalities in the economy; the problems of migration; the work skills shortages; and HIV/AIDS in the workplace.

He stated that the Ministerial Programme of Action consisted of ten strategic objectives. These included contributing to employment creation; enhancing skills development; promoting equity in the labour market; protecting vulnerable workers; strengthening multilateral and bilateral international relations; strengthening social protection; promoting sound labour relations; strengthening the capacity of labour market institutions; monitoring the impact of legislation; and strengthening the institutional capacity of the Department.

Mr C Van der Merwe (Chief Financial Officer) noted that the Department was divided into five divisions:
1) Administration, which was responsible for the overall management of the Department.
2) Service Delivery, which was responsible for protecting workers through ensuring that labour legislation was implemented and enforced in workplaces.
3) Employment and Skills Development Services (E&SDS)/Human Resource Development (HRD). This division was responsible for ensuring that the equity targets and strategic objectives of the National Human Resources Development strategy were met.
4) Labour Policy (LP) and Labour Market Programmes (LMP), which was responsible for promoting sound labour relations in South Africa, undertaking research into the labour market and furthering South Africa’s interest in international labour matters, and
5) Social Insurance, which was responsible for the Unemployment Insurance Fund (UIF) and the Compensation Fund.

Mr Van der Merwe provided an overview of the Department’s expenditure for 2004/2005. The Department’s five divisions combined had received R1 228 697 000 in 2004/2005. They had spent R970 268 000 to date, leaving a balance of R 258 429 000 that had not yet been spent. The SETAs had received R3 440 000 000 in 2004/2005, and had spent R3 493 282 000 thus far. The National Skills Development fund was allocated R860 000 000, and had spent R873 322 000 to date. The total budget allocation to the Department for 2004/2005 was R5 528 697 000. It had spent R5 336 872 000 during 2004/2005.

Mr Van der Merwe proceeded to outline the 2005/2006 Department budget. He discussed the amounts that each division would be allocated:
- Administration would receive R274 282 000;
- Service Delivery would be allocated R539 274 000;
- E & SDS/HRD would receive R147 179 000;
- LP & LMP would receive R315 351 000; and
- Social Insurance would be allocated R21 540 000.

The overall budget for the five divisions stood at R1 313 977 000, which was a 6.9% increase from 2004/2005. The SETAs would also receive an increase to R4 billion, while R1 billion was to be allocated to the National Skills Fund.

Ms M Xaba (Deputy Director General: Corporate Services) discussed the projects that the Department’s five divisions would be undertaking in 2005/2006:
- Administration would launch 20 mobile office units by the end of April 2005 to ensure that the Department would be able to service rural areas. It would also be implementing various learnership and internship initiatives in the Department. Added to this, it would be forging a partnership with Siemens Business Services to provide an Information Technology system to the Department.

– E & SDS/HRD would be responsible for guiding the skills development implementation for the National Skills Development Strategy (NSDS) from April 2005. It would also be compiling a report on the achievements of the NSDS for 2004-2005. Added to this, it would also be providing Certificates of Establishment to SETAs for the next five years, and it would also be offering these SETAs support. It would also be involved in implementing the SETA Grant and Service Level Agreement regulations. E & SD/HRD would also be involved in transforming INDLELA into an institute of excellence, and furthering the aims and performance of the National Skills Development Fund.

- LP&LMP would be conducting labour market research studies. It would also be involved in international relations, for example, it would be undertaking technical co-operation initiatives with counterparts in Cuba and China. The LP&LMP division would also be involved in strengthening civil society, through such initiatives as the Trade Union capacity development programme.

-Services Delivery would be implementing the LESEDI case management system. It would also be establishing a career information and guidance system at labour offices for learners. Furthermore, it would be undertaking an inspection and enforcement services mobility project.

Discussion
The Chairperson enquired why the National Qualification Framework (NQF) had not been allocated any money in the Department’s 2005/2006 budget.

Mr Van der Merwe responded that the NQF would be on the budget for 2006/2007. Currently, however, the expenditure of the NQF was the responsibility of the Department of Education. Mr Mkosana added that discussions were underway between the Department of Labour and the Department of Education regarding who would be responsible for the NQF. The outcome of these discussions would determine where the budget of the NQF would be situated.

Prince N Zulu (IFP) noted that under the old legislation, civil servants who had not contributed to the UIF, or had stopped contributing to the UIF by 1998, lost their UIF benefits. He asked whether these people would be compensated, as the UIF was now on a sound financial footing.

M S Mkonto (Commissioner for the UIF) answered that employees who had been defined as temporary civil servants under the old dispensation were redefined as full time employees in 1996. It was at this point that they were no longer required to contribute to the UIF. However, they did not completely lose their UIF contributions prior to 1996. If they left the employment of government they could not claim UIF immediately, but if they went into another sector and then lost that job they could claim UIF, which would include the history of the UIF payments that they had made before 1996.

Mr J Mzondeki (ANC) enquired if migrant mine workers from neighbouring states were covered by UIF.

Mr Mkonto replied that these workers were covered by the UIF. However, their families could not claim death benefits if these workers died in South Africa, because one needed a South African identity document to claim the death benefits. The Department was examining how this could be altered.

Prince Zulu enquired whether those sections of the Labour Relations Act that allowed trade unions to enforce a closed shop under certain circumstances were still necessary.

Mr S Morotoba (Acting Deputy Director General: Human Resource Development) replied that he could not give a direct answer. An answer to the question would come out of the process of social dialogue and through the National Economic Development and Labour Council (NEDLAC).

Mr Mzondeki questioned whether the 20 mobile office units would be well equipped, specifically in relation to personnel and equipment. He also asked in which areas these mobile office units would be deployed. They needed to be deployed in the rural areas.

Mr P Mothiba (Acting Deputy Director General: Service Delivery) replied that the mobile units were properly equipped. There would be two per province. They would also accompany the Minister on his Imbizo tours to rural communities.

Mr Mzondeki enquired whether the Department had contact with communities and trade unions regarding its HIV/AIDS programme.

Mr Mothiba responded that the Department had consulted COSATU and other social partners around issues of HIV/AIDS, and on programmes related to HIV/AIDS in the workplace.

Mr Mzondeki enquired about the problems experienced by the National Productivity Institute (NPI). He felt that many people were still unaware of the NPI and its work.

Mr Morotoba acknowledged that the profile of the NPI was not as high as the Department wished it to be. There were also a number of problems with the NPI. It received funding from the Department, the Department of Trade and Industry, and from consulting fees. Due to this, NPI mainly focused on consulting. Mr Morotoba said he was going to approach the Board about this issue.

Mr Mzondeki asked which entities were taking the leading role in the process of aligning the Provincial skills plans with the Provincial Growth Development Strategies.

Mr Mothiba commented that the Department of Labour, in partnership with the Premiers’ offices, was taking the leading role in this process. There were also a number of provincial consultative conferences held in 2004 to decide how the process should go forward.

Mr Mzondeki noted that, in his experience, the Department’s awareness campaigns amongst vulnerable workers had not succeeded in certain rural areas. It appeared as if some workers in rural areas were still not completely aware of their rights. He enquired what the Department was doing to strengthen its awareness campaigns.

Mr Mzondeki asked the Department to explain what its International Labour Organisation (ILO) obligations were.

Mr Mkosana responded that South Africa was obligated to pay membership fees to the ILO. It was also responsible for complying with the ILO conventions.

Mr C Lowe (DA) commented that Department had only spent 33% of its Capital Assets budget in 2004/2005. He asked why this was the case. Was it due to a problem with the Department of Public Works?

Mr Van der Merwe responded that the problem of under spending on Capital Assets stemmed partly from the long lines of communication that existed between the Department of Labour and the Department of Public Works. For example, the Department of Labour’s provincial offices would identify a need for a new building. They would have to communicate this with the Department of Labour’s Head Office. The Head Office would then contact the Department of Public Work’s Head Office, who would contact a local office to source a building or site. This often caused a breakdown in communication. Another problem related to the contractors. Contractors were awarded tenders to maintain the Department’s buildings at a certain prescribed standard. This meant that improvements on the building could not be made because this would complicate the terms of the maintenance agreement. The Department had, therefore, held back on alterations on many buildings until the maintenance contracts ended in 2005. This accounted for the budget not being fully spent. There would, therefore, be a budget rollover in Capital Assets. However, Capital Assets would not be the only rollover as there were also rollovers in other projects, such as Service Delivery.

The Chairperson stated that she was concerned about the budget rollovers. She felt that a joint meeting with the Department of Labour and the Department of Public Works was necessary. She noted that the communication lines between the Departments needed to be improved.

Ms Xaba responded that the two Departments were meeting to discuss the communication problems.

Mr Lowe noted that because there were fewer claims, the Department had not fully spent its 2004/2005 Compensation Commission budget. He enquired whether statistics were available to compare the number of employees who claimed for injuries in the private sector with the number of public workers who claimed for injury from the Compensation Fund. This would possibly allow for better budgeting.

Mr Van der Merwe replied that he was unaware of the existence of such statistics.

Mr Lowe highlighted that the President had stated that there was a possibility that a review would take place on how small and medium sized enterprises (SMMEs) were required to interact with labour legislation. Mr Lowe noted that perhaps the Department’s plan to bring more SMMEs under collective bargaining agreements was counter to the President’s sentiments. He asked what the Department was planning to do with regards to labour legislation and SMMEs.

Mr Morotoba noted that an answer to this question would also arise out of social dialogue and NEDLAC. Unfortunately, it would be a long process. Mr Mkosana added that Labour would have to be involved in deciding how workers in SMMEs were to be treated in the future. The Department also had to maintain a balance between people that demanded the maintenance of regulations for SMMEs, and people who wanted deregulation.

The Chairperson questioned why the Department had not allocated money to skills development advice under its E&SDS division. She also noted that the budget for the SETAs had increased drastically. She enquired how the performance of the SETAs would be monitored.

Mr Morotoba replied that INDLELA, and the apprentice testing it undertook, consumed a large portion of the Department’s SETA budget. The rise in the SETA budget was partly due to this. Mr Morotaba also responded that skills development planning had been relocated to the research arm of the LMP. It was, therefore, no longer situated under the E&SDS division.

Mr L Maduna (ANC) noted the Department planned to increase the number of employers that complied with labour legislation in the upcoming years. He asked how the Department was going to get the employers of domestic workers to comply. Due to a lack of capacity and infrastructure, especially in rural areas, it made registering domestic workers with the Department difficult. He also asked whether the Department planned to streamline the process so people could register their domestic employees. He further enquired whether the Department’s mobile units would visit rural areas to address such problems. The Chairperson enquired about the details of the 70% employers compliance target that the Department had set.

Mr Mothiba responded that the mobile units were being rolled out to address this situation. The Department also planned to establish satellite offices in rural areas. The Department would also be stationing officials at the multipurpose community centres. Mr Mkonto added that the Department had established call centres, which could be contacted between 7:30 am and 4pm. People could register their domestic workers for UIF through these call centres.

Mr Mothiba highlighted that over the last three years the Department had increased its inspections from 60 000 per year to 180 000 employers per year. During 2005/2006, this would increase to 200 000 inspections. The Department was also planning to strengthen its ability to enforce legislation. This would be achieved through follow up inspections to encourage compliance. It would also be taking cases of non-compliance to the Labour Court. These measures would ensure that the Department met its 70% compliance target.

Mr Maduna noted that illegal migrant workers from neighbouring states were crossing the border and working on South African farms for very low pay. Whilst they were being exploited, they were also taking job opportunities away from South Africans. He asked how the Department planned to solve this problem. He also enquired whether the Department had a relationship with its counterparts in neighbouring states to deal with this problem. Furthermore, he asked how the Department was ensuring that the migrant workers were covered by South African labour legislation.

Mr Mkosana responded that the Department aimed to have all workers in South Africa covered by labour legislation, no matter where they came from. However, illegal workers could not be covered because they were not legally in South Africa. Those workers that were illegal would be deported and the employers who had hired them would be prosecuted. The Department did have a relationship with their counterparts in neighbouring states, which examined the problems surrounding illegal immigrants and illegal workers.

Mr Mogale noted the money allocated to strengthen civil society had been allocated to DITSELA. He asked how this would assist civil bodies that fell outside of DITSELA. Previously, the Department had also funded other organisations.

Mr Morotoba responded that the Department mainly funded DITSELA because it would be very difficult to provide funds for training to all the independent trade unions. NACTU and COSATU were the main beneficiaries of DITSELA, while FEDUSA operated outside of it. This had allowed COSATU and NACTU to undertake worker training programmes through DITSELA. The Department had also funded programmes, such as sheltered employment projects. Indeed, it had recently also funded other civil society organisations through the National Skills Development Fund, which included certain NGOs and SETAs. He noted that the Department would also be launching an information manual that outlined the types of projects that the Department would be willing to fund. This would include information on how to apply for funding. Mr Mkosana added that in strengthening the Civil Society Fund, the Department needed to be sensitive to the needs of civil society. The Department, therefore, needed to re-examine how its funding of civil society operated.

Mr G Anthony (ANC) enquired how the Administration division would deliver on its programmes.

Ms Xaba replied that the Programme of Action took place over a five-year period. From this, an annual work plan was developed. In doing so, project teams were established to reach the goals set out in the Programme of Action and the annual work plan. This was undertaken in order to ensure effective delivery.

Ms L Moss (ANC) commented that people often came into the Parliamentary Constituency Offices (PCOs) seeking advice and help on matters such as their cases at the Commission for Conciliation, Mediation and Arbitration (CCMA). In the light of this, was the Department planning to assist the PCOs in helping such people?

Mr Mothiba answered that the Department worked closely with a PCO in the Free State. He had encouraged other offices of the Department to begin working closely with other PCOs countrywide.
The Chairperson noted that the amount allocated to sheltered employment projects in the 2005/2006 budget had decreased.  What were the reasons for this? Mr Mzondeki also asked whether the Department monitored the impact of sheltered employment projects on disabled peoples. Were they being subjected to unfair labour practices?

Mr Van der Merwe noted that sheltered employment projects had been funded with R50.2 million in 2004/2005, which would drop to R43.6 million in 2005/2006. However, the sheltered employment projects had initially been allocated R38 million in 2004/2005. This was insufficient, so the Department had to supplement the funding. This resulted in the figure of R50.2 million for 2004/2005. It was also likely that the 2005/2006 figure of R43.6 million would have to be supplemented, as it too would probably be insufficient. Mr Morotoba added that the Department was currently examining a new policy framework for the sheltered employment projects, which would determine how they were funded in the future.

Mr Mzondeki felt that disabled workers needed to be integrated into the economy. They should not be isolated in sheltered employment projects.

The Chairperson asked that the Department return to brief the Committee about its meeting with the Standing Committee on Public Accounts.

The meeting was adjourned.