Presentation by Ditsela & Briefing on Compensation Fund Annual Report by Department

Meeting report

LABOUR PORTFOLIO COMMITTEE
19 May 1998
PRESENTATION BY DITSELA & BRIEFING ON ANNUAL COMPENSATION FUND REPORT BY DEPARTMENT

Documents handed out:
Annual Report 1997 Compensation Fund (See appendix)
Ditsela Submission to Portfolio Committee - 19 May 1998 (See appendix)

1. The Labour Minister, Tito Mboweni, was present and spent about ten minutes discussing the decisions reached between Parliament and NEDLAC on the Employment Equity Bill. Negotiations are complete and the bill is now with the state law advisors; it is ready but not yet printed. It is hoped that the bill will be passed in June. There is one point of difference: the 80%/20% split of funding. Business is objecting to the 20% allocated to the National Skills Authority. A 1% levy has been agreed on but the wage gap has yet to be sorted out. Minister Mboweni suggested that a Labour Portfolio Committee meeting be held on June 12^th to discuss the work covered.

2. A presentation was then given by the Development Institute of Support and Education of Labour (Ditsela). The Chairperson of Ditsela, Shele Papane, and Director, Chris Bonner, discussed the various objectives and programmes of the organisation.

Questions of the Committee:
It was confirmed that Ditsela networks with over 30 NGOs. One member noted the small percentage of women who are participating. Another asked about the impact of training on the continual changing of shop stewards. Ditsela responded that some of the stewards have been promoted due to training. A suggestion was made that some follow-up statistics be collected. The issue of farm workers and domestic workers was referred to. The reply was that farm worker unions are involved without their payment but domestic workers are not yet involved. Ditsela indicated that there are other unions involved in addition to Cosatu and Fedusa.

Ditsela reported that a conference is anticipated to be held later in the year. Questions were raised about funding and accountability as 3.1 million rands of state money was allocated last year to set up the structure and do its work. Questions were also raised about the ½ million rands coming from the private sector. Ditsela discussed the training courses held. Director-General Sipho Pityana was present and suggested that graduates of courses be recorded and given certificates.

3. The next item for discussion was the Compensation Fund. It was reported that all high ranking officials seem to be "acting" and the various vacant posts were announced.

Although the law states that accidents must be reported within seven days, few are. The majority are reported between 90 and 180 days, which holds up the processing considerably. It was asked whether casual workers have the same rights as full time workers do. In addition, questions were raised as to why there is so much overtime and why there is a 1.5% increase in the pension account.

Telephone reporting of accidents is now allowed, which will speed up the process. Often accidents are not reported by employers and are first made known when an employee phones in to inquire about his claim. Also, the compensation claims office is now on the Internet. It was asked why administration costs have increased by 36%; the response was that it was due to the integration of the TBVC states.

Annexure 1:
Report of the Compensation Fund for the financial year ended 28 February 1997

Executive Summary By Sipho M. Pityana Director General
Department of Labour

Tuesday 19 May 1998

Introduction
This Report of the Compensation Fund is for the financial year 1 March 1996 until 28 February 1997.

The Office of the Compensation Commissioner (CC) embarked on a Strategic Organizational Development Programme as part of the overall departmental organisational transformation which was structured into five main sub-projects, with each focused to achieve the change objectives of the organization.
· Revenue Generation
· Claims Streamlining
· Financial System
· Human Resource Management
· Computer Infrastructure

Revenue Generation Improvement Project
Prior to the project the processing of invoices had a serious impact on the cash flow of the Fund. The Revenue Generation Systems was developed and implemented within seven months. Since the Organisational Development Programme started, the following improvements were realized:
· Assessments are now calculated more accurately'
· Assessments are now levied at least twice a week
· Earnings return are now managed by a Workflow Engine
· Enquiries are now on-line

· The system accommodates changes in work methods

Financial System Project
Computron was selected as an off the shelf but widely proven financial package with the following benefits
· Improved bank reconciliation
· Direct bank transfers (Account Clearing Bureau - ACB) to pensioners and other clients
· Management information by the press of a button
· Direct posting from the accounts receivable and accounts payable to the general ledger
· Debtors collection and control has improved significantly

Claims Streamlining Project
Through an information technology intervention strategy the following benefits resulted:
· ACB payments to the bank accounts of claimants
· Internet inquiry facility improved client communication

Further developments will see the decentralization of I.T services to provincial level.

Computer Infrastructure Project
Our Master System Plan introduced strategic I.T. planning which resulted in the following benefits:
· Standard networking technology such as Internet Accident Reporting, Claims Application etc.
(http ://www.wcomp.gov.za)
· Relational Database Management Systems introduced to replace legacy-type transaction processing.
· Computer downtime has since been kept to the absolute minimum.

Finance
The measures to improve debt collection included the introduction of monthly debtor statements in addition to the final reminders usually sent. The Notice of Assessment has also been re-designed to include a deposit slip. This allows employers to deposit their assessment directly into the fund's bank account. This is not only good for the Fund's cash flow, it also saves the employer interest that he would otherwise he charged with while the cheque is in the post until it is received by the Fund. It also helps to reduce the possibility of cheque fraud and avoid all the problems experienced through the post office. The Office would like to reduce the amount of cash and cheques handled by the Department's personnel. Therefore, other measures are being sought for the expenditure side. These will be included in the next annual report.

Rates and Assessments
The number of registered employers has increased by 4,03% to 226 226. Earnings declared on wage returns, on which assessments are based has increased by 21,01% to R118,5 billion. The average assessment rate per R100,00 of earnings rose from R1,38 for 1995/96 to R1,39 for 1996/97; an increase of 0,59%. The 271 310 assessments raised during the 1996/97 financial year was 13,42% higher than the 239 205 raised during the 1995/96 financial year.

Medical
The increase in medical aid towards hospitalization remained at 25%. Negotiations with the Hospital Association of S A (HASA) started in 1995 to address the problem.

Changes in treatment patterns over the past five years resulted in the establishment of new providers that the Compensation Fund had to take notice of. Multidiscipline practices are formed aimed at rehabilitation specifically.

During 1996/97 negotiations were held with the Medical Association of South Africa (MASA) and the Chiropractic Association of South Africa (CASA)as well as with the Hospital Association of South Africa, the Physiotherapy Association of South Africa, the Occupational Therapists Association, the Dental Association and the Association of Orthotic and Prosthetic Private Practitioners.

Medical accounts settled within 30 days represents 68% of all payments. The pressure by private hospitals prompted the Office to make provisional payments to the amount of R45 million to some hospital groups. These payments have, however, been set off against individual outstanding accounts.

Accidents
Number of accidents
A total of 242 424 accidents occurred during 1993, 0,83% more than 1992

Reporting of accidents
The Act requires employers to report injuries on duty within seven days. During 1995/1996 employers took 98 days on average to report an injury on duty/occupational disease. The average figure for the financial year 1996/1997 is 107 days. To reduce the delay to a more acceptable period, a two-way approach was adopted. Reporting of accidents/occupational diseases by telephone are very promising and implementation during the 1997/1998 financial year is seriously considered. Collaboration interviews with employers from ten of the main industries were conducted

Pensions
Pensions paid out during the financial year represents an increase of 18,27% over the previous year. The Pension Account from which pension payments are made, increased by 21,51% to Rl 858 575 000. Compensation pensioners now have a choice to receive their benefits directly into their bank accounts or by cheque. The Office, however, encourages pensioners to take the first choice as it ensures that their payday is consistent every month and it will not be lost in the post office mail.

Awards made for injuries on duty
The number of awards increased by 17,35% compared to the 7,56% of the previous year. This increase was mainly in the number of medical awards, which rose from 725 349 to 862583, an increase of 18,92%. The number of awards for compensation increased by 5,69% from 97 339 to 102 879. Medical awards constituted 89,34% of all awards. The total value of all awards increased by 19,69% to an amount of R782 856 036. Medical expenses made up 54.91% of the total value of awards.

Cost of accidents
The figures for 1992 and 1993 have been given as most of the claims relating to those years have been finalized and a realistic cost per claim is presented. It would be misleading to present the cost of later accidents which claims have not been finalized. However, the cost of compensation on these have been reflected elsewhere in the report. The increase in the average costs for the Compensation Fund of accidents that occurred during 1993 was 4,76% as against the increase of 32,02% during the previous year. The average costs per claim for the 1993 accidents amounted to ~ 580,95, as against the ~ 463,70 of the previous year.

Loss of man-days
The number of man-days lost in respect of the 1993 accidents was 22 227 041 as against 22 007 169 in respect of the 1992 accidents. This represents an increase of 1,00% as against the decrease of 4,98%

Severity of accidents
Accidents that resulted in no disability and for which only medical costs were paid made up 53,28% of all accidents that occurred in 1993.

Injuries according to parts of the body
Injuries to fingers still constitute the most cases of permanent disablement. In 1993, 57,12% of all cases of permanent disablement resulted from injuries to fingers, compared with 56,85% the previous year.

Legal proceedings and objections
Third Party Claims
Where a compensatable accident is caused by a third party, the Commissioner has the right, for the recovery of compensation paid. An amount of R6 612 000 was recovered during the financial year.

Court orders
1 242 court orders, involving an amount of R8 224 000 were issued against employers for failure to pay assessments due.

Penalties and interest
The net yield from penalties and interest payable amounted to R37 364 000

Objections - section 91
Any person affected by a decision of the Commissioner has a right to lodge an objection within 90 days. Six hundred (600) persons have availed themselves of their rights to lodge objections in comparison of 498 objections the previous year, an increase of 20%.

Applications for additional compensation - section 56
The Act introduced compensation to an employee in the event of his/her injury or disease having been caused through the negligence of the employer. Such negligence can be as a result of a patent defect in the condition of the previous, plant or machinery. Additional compensation is based on pecuniary losses. One hundred and eighty nine (189) applications have been received and 108 cases had still to be finalized.

Rehabilitation under the auspices of the Office History of the two rehabilitation centres
Two rehabilitation centres were established on the initiative of this Office to provide occupational and physiotherapy to injured employees The entire costs for both centres was carried by the Fund. The centre in Durban is accommodated in the St Augustines' Hospital. In Johannesburg the centre was situated in what was known as the Brenthurst Clinic and is now know as the Millpark Hospital. This hospital was sold to Clinic Holdings due to dwindling of patients Since then rehabilitation was continued initially at Main Reef Hospital on the West Rand but due to the lack of sufficient patients as economic developments spread faster to the East Rand, activities were shifted to Rand Mutual Hospital but again because of the same problem, the services to be rendered by the Rehabilitation Association for Injured Workmen dwindled to zero.

Developments during 1996/97
It was decided better to provide for a facility closer to the industrial areas of the East Rand . Property opposite to the Glynnwood Hospital and which is also in close proximity of a number of other medical providers was bought. The purchase of the property was made possible by utilizing funds that the Association did received form selling the building to Clinic Holdings.

Staff and general administration
Fifty-one officials resigned/went on early retirement/made use of the package offered by the Pubic Service. The affirmative action policy of the Department of Labour was followed 95% throughout the appointments of vacant entry level positions. 134 new officials were appointed during the financial year. The representivity policy of the Department of Labour will be followed as in the past until the recommended figures of representivity are met.

The integration of the Funds from the TBVC states and new appointments have changed to composition of the staff and management complement. At 28 February 1997, 44% of the staff were black and 56% white: 76% were female and 24% were male.

Amendments
After consultation with the Compensation Board, the Draft Bill was amended to make provision for the Director-General of Labour to be accountable and responsible for the administration of the Compensation for Occupational Injuries and Diseases Act. After several delays the amendments were accepted for implementation from 1 March 1998.

Annexure 2:
Submission to the Portfolio Committee on Labour by DITSELA
19 May 1998

Introduction
DITSELA, the Development Institute for Training, Support and Education for Labour, will brief the Portfolio Committee on Labour on Ditsela's objectives, role and activities.

As an institution primarily funded by public money via the Department of Labour's strengthening of Civil Society Fund, we feel it is important for the Committee to be fully briefed and kept up to date on Ditsela's activities and progress.

Background
Ditsela was formed as a result of lengthy discussion and negotiations between COSATU, FEDUSA AND NACTU, and between the three federations and the Department of Labour. It began operating in January 1997.

Unfortunately NACTU did not take up its seats on the Board due to disagreement around representation. Ditsela is therefore a joint project of Cosatu and Feuds. It has been set up as a not-for-profit Section 21 Company with its Board of directors being appointed by the two federations. It has kept open seats on the Board to allow for Nactu's participation in the future. It provides services primarily to Cosatu and Fedusa. but has taken a policy decision that other unions will not be excluded. subject to space availability and Board approval.

Aims and Objectives
Ditsela was set up to enhance the capacity of labour to deal with the new challenges facing the labour movement, politically. socially and economically. Its primary aim is to contribute to the building and maintaining of a strong labour movement through education and training of union staff and worker leadership, and to provide developmental and support services for organisation development.
It also has a major role to play in rationalising programmes and resources through building a network of union educators inside the trade unions and in labour service organisations. guided by common principles, goals and frameworks. An annual educator conference has been instituted and a network of educators is being developed.

Programmes
Ditsela has divided its work into four interlinked programmes:
· Education and Training of unionists
· Support for Unions
· Resources and Information for trade union educators
· Research and Development - curriculum, method and policy

Progress
Infrastructure
Ditsela set up offices and administrative systems. which are subjected to constant development. It is currently investigating the longer- term project of setting up a Trade Union Education Centre as well as regional delivery mechanisms.

Ditsela currently employs eight staff members, supplemented by a part-time accountant, a student project coordinator/researcher and from time to time contract consultants.

Resources and Information
The Resource and Information Centre has been set up, but requires further work.
It is however, already being well utilised by Ditsela staff, union educators and LSQS.

Support for Unions
Three major projects are underway:
Organisational development support. Ditsela has built a network of unionists and OD practitioners and has conducted three workshops around the development of OD support services for unions. This is an exciting project which is charting new ground. A number of OD interventions are underway and these will be recorded and shared through a case study approach
· Support for Shop Steward Training. Ditsela is developing new basic shop steward materials and is working with poorly resourced unions to set up shop steward training within those unions.
· Facilitator/Educator development This is linked to the education programme. Unions lack skilled education capacity. Ditsela is training union educators and facilitators so that they can run their own education programmes

Education and Training
The following table gives an overview of Ditsela's Education and Training work for the year ending 28 February 1998.

Our focus in 1998 is on developing more advanced courses which deepen skills and form a link with the formal education system. A programme of five, year-long, certificated courses is currently being run, with 130 participating trade unionists.

DITSELA COURSES 1997
Courses: Participants
Applying the LRA: 686
Arbitration Skills: 319
Pilot courses
Advanced Labour Law: 22
Leadership & Management for Worker Office Bearers: 19
An introduction to Economics for Unionists: 18
Information Skills for Union Negotiators: 17
Strategy and Tactics for Union Negotiators: 19
Managing Trade Union Staff effectively: 20
Short Workshops
Labour Court Procedures and LRA (1997): 170
Labour Court Procedures (1998): 20
The Trade Union Education Accreditation system in UK: 15
Total Number of Participants: 1 325

DEVELOPMENT WORKSHOPS
Labour Relations Act Training Course Development: 20
Women Leadership: 25
Organisational Development in the Trade Unions: 20
Trade Union Educators - Competencies and Standards: 12
Total number of Participants: 77

FACILITATOR DEVELOPMENT
National Training for LRA Course Facilitators: 40
Arbitration Skills Facilitators: 15
Natal Region Facilitator Training: 17
National Training for new educators/facilitators: 9
Total Number of Participants: 81

Funding
Ditsela received funding of 3.1 million from the Department of Labour for its first 14 months of operation. It received donations of R516 000 from trade union related organisations. In 1998 a heavily subsidised user fee has been introduced n a move towards sustainability and funding diversification. It is hoped that user fees will make an increasing contribution to Ditsela's future budgets.
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Contact Details
4th Floor Norvic House
93 De Korte Street
Braamfontein, 2017
P0 Box 32289, Braamfontein, 2017
(011)4032155 (011)4031055
[email protected]
http://ditsela.org.za