Department 2005/2006 Annual Report: briefing

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Employment and Labour

23 October 2006
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Meeting report

 

LABOUR PORTFOLIO COMMITTEE
24 October 2006
DEPARTMENT 2005/2006 ANNUAL REPORT: BRIEFING

Chairperson: Ms O R Kasienyane (ANC)

Documents handed out:
Department of Labour 2005/06 Annual Report (available at www.dol.gov.za)
Department of Labour 2004/05 Annual Report (available at www.dol.gov.za )
Department of Labour Presentation: Part1, Part2 & Part3

SUMMARY
The Department of Labour presented its 2005/2006 Annual Report to Members. The Department had received a qualified audit report from the Auditor General, for the third consecutive financial year. The Department explained that this qualification was due to, among others, lack of proper management and monitoring framework for the monitoring of subsidized vehicles and adherence to certain regulations of the National Treasury. This resulted in irregular spending patterns.

The Committee expressed their dissatisfaction at the inefficiencies apparent in the Department. These included the lack of qualified staff in the financial and auditing services, the high number of vacancies within the Department as well as the effectiveness of the internal business systems. These deficiencies were also mentioned in a recently table Standing Committee on Public Accounts (SCOPA) report. Members urged the Department to finalize the status of the Sheltered Employment Factories. A monitoring system had to be developed to ensure that the Department could monitor the career progress made by graduates of learnership programmes.

MINUTES
Department of Labour 2005/2006 Annual Report: presentation
Dr Vanguard Mkosana (Director General) presented the 2005/2006 Annual Report of the Department of Labour to the Committee. The Department received a qualified audit report for the third consecutive year.

Key achievements were highlighted which included the acceleration of the process of decentralization of functions and levels of decision making from the national offices to the labour centers. A code of Ethics for Wellness Champions had been developed and a Departmental Peer Education Programme had been launched. An Integrated Planning, Budgeting and Reporting system had been commissioned that would ensure that strategic planning, budgetary and expenditure information were aligned. Siyaya, a claims management system for the Unemployment Insurance fund had been completed and had been implemented from April 2005.

The Department outlined the key problems highlighted in the Audit Report of the Auditor general as well as its Annual Report. The Auditor General recognised the need for a proper asset management unit. The national treasury would assist to address systemic constraints and the Department had in consultation with these two institutions, devising alternative systems that could be immediately implemented. The Department failed to submit the PERSAL and BAS travel and subsistence expenditure-reconciliation. These had subsequently been submitted. Reconciliations would henceforth be done on a monthly basis.

Regarding the National Skills Fund (NSF); its legal status was currently being addressed and proposed legal amendments would be presented to parliament in due course. System options were currently being reviewed that would comply with the directives of national Treasury. These included the development and purchasing of accrual accounting system. The Department favoured the listing of the national Skills Fund as a public entity.

Discussion

The Chairperson requested members to focus the first round of question on the human resource and other programmes. The issues of the report by the auditor general and annual financial statements would be dealt with subsequent to this discussion.

The Chairperson commented that she had expected the Department to focus on Human Resource Management and Development, as this was a problematic area identified in the Auditor General’s Reports of the last two financial years. The Committee sought clarity on key issues such as the above.

Ms S Rajbally (MF) raised her concerns regarding the status of employment of those individuals that have graduated from learnership programmes initiated by the Department. She said that the Annual Report had indicated that 77 percent of these individuals have found were either in part-time or full-time employment. Could the Department supply what proportion of this figure comprises full-time and part-time employment? Related to this, what were the chances of the part-time employment be translated into full-time employment?

Dr Mkosana answered that the Department had not differentiated between those in part-time and full-time employment. The Department improving it’s ability to monitor the progress made by trainees subsequent to their placement in employment. This was a new development that would still be improved on. The research unit of the Department also assisted this endeavor.

Ms Rajbally requested further clarification regarding the underspending of the department.

Dr Mkosana explained that the under-expenditure regarding the National Skills Fund was due to the lack of time for implementing its yearly programme. He added that the department had released a report regarding the first phase of the national skills development.

The Chairperson commented that the Department had mentioned the development of a Human resource Development strategy during its presentation, given the context of the lack of specialized skills within the Department as well as within the labour market. What progress had been made regarding this issue?

Dr Mkosana replied that the Human Resource Strategy of the Department was central to its strategic Plan. On the advice of the Auditor General, the Department had reviewed its Human resource plan and had developed its key aims in line with the exiting skills capacities and needs in both the country as well as the Department.


Mr S Siboza (ANC) requested further clarification regarding the assessment of the Sectoral Education Authorities (SETAs). Only sixteen of these had received satisfactory assessments. What were the reasons for the remaining seven’s unsatisfactory assessment?

Dr Mkosana answered that certain SETAs lacked adequate capacity to perform its duties and functions efficiently. The causes of these inefficiencies were being investigated, and an initial finding was that irregular activities hampered the work of these authorities. These had been subsequently dealt with. Some of these issues were reflected on the Auditor-General’s report

Mr Morotoba answered that the Department assessed SETAs based on the standards, procedures and agreements jointly agreed upon by both parties. Performance was not only assessed by the meeting of targets, but also on the assessments of the needs of each sector. The Department also issued recommendation of how to improve performance.

Mr Siboza asked said that the Department was required to have spent 80 percent of the budget of the National Skills Fund. Why had it only managed to utilize 57.8 percent of the funds?

Mr Siboza wondered whether the Department was in a position to achieve the 2014 target of halving poverty through job creation, given the high rate of unemployment. What was being done in this regard?

Dr Mkosana responded that the Department noted the incremental improvement in employment creation. 544000 new jobs had been created in the previous financial year. If this growth persists, the Department would be able to reach its 2014 target. In this regard an employment services system had been developed. This system would encourage career development, monitor the needs of the labour market, track the placements of graduates and other skilled persons especially those who benefited from learnership programmes. The relationship between employers and employees as well as social and job security would also form a central part of the system

The Accelerated and Shared Growth Initiative of South Africa (ASGISA) was a central national programme in the area of job creation. The Department was developing a skills database. These efforts were coordinated with those of other departments such as the Department of Environmental Affairs and Tourism as well as the Department of Trade and Industry. The Department of Labour also acted as government coordinator in NEDLAC. The Department was thus optimistic that coordinated initiatives such as these would have a positive effect on job creation.

Mr B M Mkongi (ANC) said that trends in the report suggested that there were 1009 existing vacancies in the Department. Why was the Department loosing personnel? Did the Department have a strategy in place to ensure that it retained its staff? The retention of staff was critical as the skills developed during the training of staff could be lost. The high levels of vacancies in particularly the lower skilled levels of 1-2. This rate was currently at 16.2 percent. What could be the reasons for this high level?

Ms Xaba said that the Department aimed to retain its staff members though its extensive training programmes. The structure of the Department ensured a different position formation than the structures of sister departments. DoL staff were frequently "poached" by other departments, and the department was not in a financial position to match salary packages made. It also tried to promote people on a regular basis, but these created further vacancies in the lower level positions.

The current vacancy level at the Department was 6.96 percent. This was a moving target. This figure included the vacancies caused by retirement, resignation or transfers. The Department had embarked upon an extensive recruitment drive, and those working in the national office had been employed on a contract basis. Full time appointments would be made in labour centers where services were closer to communities. This was part of the decentralization envisaged in the Integrated Business Strategy. More people as well as resources would be filtered to the provinces. The Department would assess its needs subsequent to the completion of Vulindlela process when the vacancies and skills shortages were establishments. The inflated figure of 80 percent in the annual report was due to the lack of full time appointments made at the head office and had to be understood in the context of decentralization.

Mr T. G Anthony (ANC) requested clarity and further information regarding the Integrated Planning, Budgeting and Reporting (IPBR) system.

Dr Mkosana replied that the IPBR was a relatively new project, which had not yet been adopted by all government departments. The Department could supply the committee with more information. This would address the issue of better coordination and decentralization of services to labour centers. Currently, there was too much emphasis on the role of national offices rather than the importance of labour centres.

Mr Anthony asked said that there were three additional Labour Centres in Mount Ayllif, Jane Furse and Kuruman. Was a second Labour Centre opened in Kuruman or did the presentation refer to the existing one.

Mr S Mkhonto (Deputy Director-General: Service Delivery) responded that the additional labour centre had been established in Randburg and not Kuruman. This was an error in the report.

Mr C M Lowe (DA) thanked the Director General and the representatives of the Department for their presentation. The member raised his concerns regarding the number of vacancies and thus the shortage of expertise in areas such as management, finance and statistics. He asked how many vacancies exited within the department currently. What measures were in place to eradicate this problem especially within the National Skills Fund? He raised his concerns regarding the difference between the number of programmes people enrolled in the learnership and the 44 percentage pass rate.

Mr Lowe wondered whether the Department could confirm that the average age of artisans in South Africa currently, was 54 years. His seemed to indicate the lack of skilled artisans. The impact could be scene in the railway sector as the retired railway artisans were not replaced. How would the Department act to ensure that its training programmes ran effectively?

Mr S Morotoba (Acting Deputy Director-General) explained that artisans were not organized into professional bodies and therefore insufficient information existed to establish the average age of these workers. The total number of skilled artisans was also difficult to establish. The employment services system would assist the department in monitoring the whereabouts of workers and thus also the geographical spread and level of skills. This system would also linked to the South African Revenue Service system, Statistics South Africa, Department of Home Affairs as well as the Unemployment Insurance Fund.

He continued to explain that the Department was part of the Jipsa Joint Task Team. The Department was confident that targets set in Asgisa could be met if not exceeded, if a comprehensive plan was followed. The Department would make a presentation regarding such a plan late this week. A growing number of learners were participated in learnership programmes, but these learners had to be sufficiently supported through apprenticeships. Therefore the relationship between apprenticeships and learnerships remained a challenge. The skills of those individuals who have been active participants in the work force for more than 20 years had to be updated through relevant training programmes. Employers did not necessarily want to comply with the training of their workers and thus also the salary adjustments.

It had to be noted that skills suitable for other sectors of the economy had to be developed at the same time as the number of artisans increased. Although artisans did not traditionally drive the economy, these workers were needed in the construction, engineering as well as manufacturing sectors to encourage economic growth. He stressed that other sectors of the economy had to be supplied with the equivalent number of skilled persons. Workers had to become flexible to suit ever changing technological needs.

Mr O M Mogale (ANC) commented that the passing of the Sectoral Determination Bills by Parliament, aimed at improving the lives of all South Africans, including those that were most vulnerable. How had this legislation impacted on the livelihoods of those in the taxi industry, farm workers and the hospitality sector? What progress had been made in such wage determination of these sectors?

Mr Les Kettledas (Deputy Director-General: Labour Policy and Labour Market Programmes) explained that the aim of the Sectoral Determinations was to extend protection to vulnerable workers. This protection covered minimum conditions of employment as well as minimum wages.
As the workers in certain sectors were not unionized and did not have significant bargaining power within bargaining councils, the state had to extend legislative protection. The wages and conditions of employment of various sectors had been promulgated.

The sectoral determination of farm workers had been published this year and no wage regulating measure had existed previously. The farm workers’ sectoral determination was amended and provided for the establishment of single wage structure over a period of two years. The wage structure differentiated between three areas: big cities, squalor, towns and rural areas. The amendments allowed for a single wage structure for the entire country. This would greatly improve the situation further farm workers.

The wholesale and retail sector determination was reviewed in February this year. The wage schedules had been simplified and a higher hourly rate for workers who worked shorter hours per week had been determined. Again, this had been published for three years but had been reviewed and improved so as to further improve the conditions of workers.

The taxi sector sectoral determination was published in April last year and the deadline provides a wage set for drivers, rank marshals and for administrative staff. The taxi sector was the most unregulated sectors in South Africa. The introduction of the sectoral determination a minimum flow of ranks and conditions of employment had been created for workers in the taxi sector.

The domestic workers sectoral determination had also been reviewed in November last year and there again wage increased had been set down within that sectoral determination for the next three years. This would ensure that there was a regular inclusion to the wages that were paid to domestic workers. Every year for the next three years wages will be improved. This was also a sector where workers had not significant bargaining rights and this would ensure that there was certainty in conditions of employment that should be supplied.

Sectoral determinations dealing with the hospitality sector and there have the researched the sector and within the sector there were four subdivisions: accommodation establishments, restaurant, etc. The aim of this sectoral determination was to consolidate that. Research had been conducted as well as public hearings held and now the report was being finalized on the outcome of the consultations and needed to conduct further consultations in November regarding the demarcation and how the sector would be demarcated as well as job grading and categories. The outcome would then, and the report would be complied and submitted to the Hospitality commission for finalization. The long terms solutions would be that the trade union movement would also places emphasis unionizing the vulnerable workers so that they are able to collectively bargain in those sectors. There was limited union organization in some of the sectors. There were domestic workers unions but these were not strong enough to have a hold on collective
Mr Mogale raised his concerns regarding the grading system within the sectoral determination. He asked the reasons for this grading system. It would not make sense for members of parliament to make laws that would not benefit all South Africans.

Mr Kettle explained that in terms of the division of labour requirements five categories of guards had been established and had recently been amended to include on four. This was as a result o a collective agreement of all involved in the sector. The issue of differentiation was based on the affordability of employers in certain areas. When the Commission on employment Conditions consider a sectoral determination, the affordability of employment is taken into account. Other factors were the interest of small and medium term enterprises, the cost of living and the alleviation of poverty as well as the impact of employment. Each Sectoral Determination rested against those five criteria.

He explained that employers argued that that those businesses located in rural areas could not afford to pay wages than those of the urban areas and thus utilize the affordability argument to a large extent. Farmers and government had reached an agreement that national standard wage baseline be set .He stressed that the criteria for differentiation had to be negotiated by different stakeholders.


Mr M Mzondeki (ANC) raised his suspicions regarding the reliability of the information gathered by the inspectors of the Department of Labour, during the process of wage sector determination of the farm workers. He said that although inspectors were required to consult with both the farmers and farmworkers, many failed to engage farmworkers about their working conditions as well as to inform them about their rights. Measures had to be put in place to ensure that inspectors consult both farmers and farm workers.

Mr T Made answered that in most cases, inspectors consult both the employers as well as employees on farms. This had been confirmed during the recent process of the People’s Assembly in Oudtshoorn. He urged members to bring any irregularities in this process to the Department’s attention. Mr Mzondeki commented that members may have to repeat some of the questions as these too linked up to the qualification in the Auditor General's audit report. The progress made under the administration was covered in the Auditor General's report and therefore do not reflect the good work of the Department.

Mr Mzondeki raised his concerns regarding the lack of access to banking facilities in the rural areas. This was a serious problem. He said that in light of the strides made to access banking facilities by those who get grants for the Unemployment Insurance Funds and maintenance grants. Was this the similar case in the rural areas?

Mr Mkhonto answered that Department had achieved almost a 100 percent accessibility of banking facilities by those receiving UIF grants. The Department remained in consultation with the banking sector to ensure that access to banking could be further extended. He said that an agreement reach between the Department and First National Bank would ensure those who applied for an unemployment grant could open an account automatically. Banking facilities would also be extended through the post office banking system. He said that the Department also had to ensure that the grant money received was not used to pay off other debts.

Mr Mzondeki asked what the status of the Integrated Health and Safety Policy was. This strategy cut across all departments and the reasons for any delay in its implementation and finalization had to be offered.

Mr Mkosana explained that the current Occupational Health and Safety Interventions were outdated and not in operation. This was quite a contentious area as different stakeholders had to reach agreement on important standards of operation. Complex legislation such as the Mineworkers Act as well as the Compensation Act had to be utilized. The minister had met with the advisory council that dealt with occupational and safety and another meeting would be held in due course. The subsequent recommendations would be submitted to Cabinet. The Department had experienced problems related to the details of the establishment of an Occupational Health and Safety Authority.

Mr Mzondeki wondered whether the Special Focus Units in the Departments had been appropriately staffed. Had the management of the department been appointed at director level?

Dr Mkosana said that although the Department had a tracking system in place it was not comprehensive. Therefore the department had moved away from this strategy. He reiterated that this was an international challenge, and therefore the department had decided to have a system that was designed to address the issue. The research unit would research this issue and would develop a comprehensive strategy that would address such issues.

The Special Directorate for Gender, Disability and Youth was at a directorate level and had been operating without a dedicated staff. A deputy director had been appointed and a director would be appointed in due course.

Dr Mkosana added that those staff members in lower ranked positions had been upgraded to position level four. The department also advertised extensively and on a regular basis, in leading newspapers. The department also advertised extensively internally via the Internet.

Mr Mzondeki responded that said that the positions within the Special Directorate had to be people familiar with the issues of its constituencies. An office for these issues at the level of the presidency had been appointed, as this would elevate the issues around gender, youth and people with disabilities. The appointment of directors, who were not familiar with the challenges of these constituencies, would erode the significant successes made in the struggle for the improvement of the live and status of these constituencies. As a result the units established in departments were rendered ineffective.

Dr Mkosana responded that the Department would be sensitive to the issues raised when considering candidates. He stressed that all relevant stakeholders gad to be involved when making such appointments. Specialists in the field of gender, disability and youth issues would support the director of this unit.

Ms Xaba answered that the Department had initially coordinated activities that would receive focused attention on a consistent basis. A special directorate focusing on employee wellness, gender and disabilities, had subsequently been established. It then created a directorate from which these activities were coordinated and to ensure that these projects were sufficiently resourced. An executive manager currently managed the unit but the position would be elevated to director level. The Department would ensure that this unit was adequately staffed.

The Chairperson asked whether the Department had a strategy in place to address the issue of asset management.

This question was not answered.

Ms N Moss (ANC) said that the Committee had voiced its concerns regarding the status of the Sheltered Employment Factories (SEF) on numerous occasions. What mechanism would the Department employ to resolve the status and functions of these entities? Were their operations informed by the necessary legislation such as the Public Finance Management Act.

Mr Kettledas explained that the Minister of Labour, Mr Membathisi Mdlalana, had approved a turnaround strategy for the SEFs. As SEFs were borne out of a 1953 Cabinet Memorandum and not mandated by legislation, its legal status had to be resolved. The Department had to decide whether to classify this as a Section 21 company, transfer operations to specialized managers, transfer to the private sector where these would operate as a profit making business or it could be transferred to a public enterprise. The Auditor General had subsequently advised that the SEFs be listed as a trading entity within the guidelines of the Public Finance Management Act. The Department was in regular consultation with the National Treasury regarding the detail of such a transformation and the next meeting was scheduled for 13 November.

These factories had been historically the main suppliers of furniture and other equipment to state departments. This preferential procurement status had been withdrawn in 1998 and point systems, to take into account the employment equity requirements of persons with disabilities. This process had not been completed. Additionally, the Department considered the current supply chain management system of the National Treasury as well as the potential manipulation of the point system as possibly excluding the SEFs from government and provincial business. For example the SEFs scored zero for Historical Disadvantaged Individuals (HDI) equity ownership, disability ownership, women ownership.

Mr Kettledas further explained that an integrated business function had to be developed in order to market the products. Human resources had to be developed to ensure that appropriate skills would be developed. The overall operations as well as materials required for production, had to be adequately managed. The research and development abilities as well as Information Technology support services would also be strengthened.

The Department, in consultation with the relevant stakeholders, had defined the key business concepts and orientations of the factories, additional positions as well as the job descriptions had was in the process of being developed. Auditable policies and procedures had also been developed, and financial as well as procurement policies had been completed. A chief financial officer for the SEFs would be appointed in due course and the work of this official would be vigorously reviewed. These factories would be required to implement an occupational health and safety policies and standards as well as a suitable human resource policy. Currently the factories were not utilizing its capacity optimally and the department hoped to increase the current 40 percent to 100 percent storage capacity. An increase in the production levels was thus necessary and this held the potential of additional employment opportunities.

He concluded that the strategy required the better utilization of state assets such as transport, information technology. An acting chief executive officer of the SEFs was responsible for implementing this strategy and the Department was regularly updated on the progress made.
He added that the Auditor General had raised additional concerns regarding the SEFs in its audit report.

The Chairperson raised her concerns regarding the delays in finalizing the status of SEFs. The reasons for this delay had to be investigated. Additionally, she wondered whether the responsibility of these factories were not the responsibilities of the Department of Social Development.

The Chairperson expressed her concerns that targets were not reached. This was problematic. Ms Moss added her concerns and proposed that the Committee be briefed on a regular basis regarding the progress made by the Department on various activities and programmes.

Mr Mogale shared the Chairperson’s concerns. He said the Department had envisaged these entities to be restructured by March 2006. As part of its oversight role, Parliament had to ensure that targets set within strategic plans were adhered to. The PFMA was very clear about holding Departments accountable.

Mr E Mtshali (ANC) wondered whether these factories could be established in all provinces, as it could potentially be a source of employment for ex-combatants.

The Chairperson cautioned the member that the SEF was aimed at people with disabilities. Such a decision would hold implications for the Department.

Mr Mtshali responded that it needed to be explained why this was done so that the need and necessity could be highlighted.

Mr Len Larson (Acting CEO: SEFs) commented that 2.3 million South African live with some form of disability. Of these individuals, 10-15 percent needed a controlled environment in order to contribute to the economy. Presently, these factories employed 1500 people and this number could increase significantly in future. Twelve factories were located in seven of the nine provinces (excluding Mpumalanga and Limpopo province)

He stressed that although the restructuring process would take a long time, the PFMA and another related regulations would be applied as company policy. The financial policy had been created around the PFMA and another regulations. He was prepared to regularly update the Committee n the progress made and targets set, and SEFs produced monthly reports of the progress made. These were presented to the SEF management committee.

Dr Mkosana said that the Department was currently seeking to learn from the best international examples of SEFs and how to proceed with the restructuring. The current turnaround strategy was a revision of the previous strategy, hence the delay. Copies of the review of work done prior to the development of the turnaround strategy could be supplied to members.

The Chairperson wanted to know what the Department was doing to combat child labour.

Mr Kettledas said that said that its child labour programme formed part of the national action plan to combat child labour. This was an interdepartmental endeavour that included the department of Safety and Security, which focused on the commercialization of sexual activities, and child trafficking. A comprehensive plan was submitted to cabinet in October. The Department was currently in the process of costing the all activities of the different departments to ensure that these costs were adequately budgeted for. A clamp down on the most exploitative forms of child labour would be implemented. This would assist the Department in establishing the extent of exploitation of children. Related pilot projects had been finalized and would be launched in due course. A comprehensive awareness raising strategy would be launched that would raise greater awareness of child labour and exploitation. Minimum working conditions would also be investigated. He stressed that organized business was also participating in such projects. The Committee could be supplied with further details of these projects, if deemed necessary.

Mr Mzondeki asked how this guiding principle affected those BEE companies that needed the initial capital to buy the equipment to start the project. Was assistance given to such companies? If this was not the case, the tendering process was biased towards those who already have the funds.

Mr Morotoba said that the member raised a critical point. The Department had been in discussion with loan corporations such as Khula, to extend grants to companies who do not have the start-up capital to kick start projects. Additionally, a company’s eligibility for advances could be assessed through the quality of business plans. The Department had been negotiating with the National treasury as well as the Auditor general to arrange such capital arrangements within the Framework of the PFMA. An agency focused on the provision of such capital could be established.

Mr Mkondi asked what happened to the learners who do not complete the learnership programmes. Conversely, what happened to those who fail to secure employment subsequent to the completion of learnerships? How were these developments monitored?

Mr Morotoba replied that the lack of monitoring systems was an international challenge. A number of institutions grappled with regularly updating their databases. The employment services system and its links to SARS as well as Unemployment Insurance Fund would enable the Department to track the movement of people and skills.

As an interim measure, the research unit and especially the labour market policy research section conducted a study to establish the number of graduates from learnerships. It revealed that 70 percent of these learners secured placements. These placements were defined in terms of formal placements; the joining of cooperatives, placement in social projects as well as placements in terms of further learning. It was found that 30 percent of those learners who have initial degrees, and were enrolled in a learnership programmes, would leave before completion of course due to finding employment. The employment services system would allow the Department to ascertain knowledge of the progress made by these graduates. He said that the advancement of skills should be encouraged.

The Chairperson stressed that mechanism had to be devised to ensure that learners complete their learnerships. Mr Mogale suggested that these learners be "blacklisted" to ensure that the dropout rates for such learnerships decrease.

Mr Anthony questioned the usefulness of the number of systems the Department had developed for its organization. He said that the Standing Committee on Public Accounts (SCOPA) recognized the inefficiencies of these systems and the possible duplication of certain functions.
These systems were therefore not coordinated to effectively execute functions such as effective data and information capturing. SCOPA had also identified the lack of proper financial administration practices. He concluded that the Department’s submission made to the Committee had not identified similar problems identified by both SCOPA and the Auditor General.

Dr Mkosana answered that the challenges identified by SCOPA had been discussed with the Auditor General (AG). Internal deficiencies had been relayed to the audit committee and these brought to the attention of the AG. The Department had therefore shared information with the relevant agencies and a report had been compiled regarding this process.

Ms M Xaba (Deputy Director General: Corporate Services) responded that the different systems in the department related to the imperatives of its different business practices. The Integrated Business Strategy envisaged a sufficiently coordinated service delivery systems and therefore the alignment of all business activities was a necessity. The Department recognized that the various systems had to support the particular environments these operated in. It therefore had to establishment of effective employment services, as well as integrates special enforcement services. Each service or contract rendered were structures around work packages. For example a work package for administration would be based on human resource requirements as well as financial management. She added that the Department utilized the management information service extend information across departments within government as well as divisions within the Department itself.

The Chairperson asked whether there had been a saving on personnel due to these vacancies?

Ms Xaba answered that the Department Had registered an under spend.

Mr Anthony asked whether decentralization would address the problem of vacancies in the department. Why had vacancies not been filled? Was it not impacting negatively on the operations of the Department?

Dr Mkosana replied that decentralization ensure that a level of decision-making would reside with the skilled personnel at the labour centers. He assured that the Department would not assign more responsibilities to personnel without developing the necessary skills. The budget would thus be planned according to the staffing needs of the labour centers. Decentralization would thus have a positive impact.

Mr Mkondi suggested that the salaries offered by other agencies could be the reason for the high number of vacancies in the Department. How could this be explained?

Mr Mkosana replied that the staff was trained in order to retain personnel. However, took up better paying jobs either in the private sector or other sister departments.

Mr Mkondi asked where the Department had employed individuals specialized in the issues around employment equity? This process related to understanding and familiarity of critical pieces of legislation as well as an ability to debate these with those from the legal fraternity.

Mr Kettledas answered that staff employed at the National office were experienced and skilled in receiving company submissions annually. The current reporting cycle ended on 1 October. These reports were currently being analyzed and would then be forwarded to the Commission on Employment Equity. A report on this cycle would then be released. A DG review system was also in place through which identified those companies who had provided inadequate details about the levels of equity reached.

The Chairperson asked how far the investigation into irregularities at a Bloemfontein SEF was.

Mr Larson answered that the investigation had been completed and a draft report had been finalized. The factory manager had been suspended and a decision regarding the charges would be finalized in the next two to three weeks.

Mr Lowe asked why the Committee should be convinced that the Department would work towards receiving an unqualified audit report, in light of their failure to do so for the passed three years.

Mr Lowe requested clarification on the fines and penalties amounting to almost R200 000, the Department had to pay.

Mr Lowe wondered which employees had received employment bonuses totaling R6 million. Could reasons be given for this expenditure? In light of the third consecutive qualified AG report, why were these performance bonuses paid?

Dr Mkosana clarified that bonuses paid on compensation fund had been discontinued. The Chief Financial Officer said that there had been an error in the initial financial statements, thus the department had paid R49.6 million was for bonuses paid to the Department, UIF as well as Compensation Fund. When the recovery was made, the Department had paused the payment of bonuses to the Compensation fund.

Mr Lowe asked why the accumulated debt of employees had been written off?

The Chief Financial Officer answered that the debts amounted to R11000 and not R11 million. The AG expressed concerns that the staffers debt could have been overstated. Debts had to be written off due to death, etc. According to the PFMA guidelines, debts could only be written off, if there was no probability of recovering the funds. Therefore although debts were formally written off, debtors were still expected to repay.

Dr Mkosana answered that National Treasury Guidelines were utilized to manage the write-offs. In line with this policy, these debts had to be written off if these funds could not be recovered. The Department had recently developed a comprehensive strategy regarding these situations.

Mr Lowe asked for further clarification regarding R927 000I irregular expenditure. Were disciplinary steps underway and would criminal action be taken?

The Chairperson asked why there had been an increase in the spending on driver’s licences of 51.5 percent in 2005.

The Chairperson asked why there had been a decrease in the expenditure on staff development?

Dr Mkosana answered that the Department had identified longer terms training through tertiary institutions and learnerships were more sustainable and less costly than short and sporadic training courses. Accredited institutions as well as Universities of Free State, Witwatersrand and Cape Town conducted training.

Mr Mogale asked whether the department had conducted a study regarding the impact of HIV/Aids on South African labour market?

Dr Mkosana replied that 12 percent of its current staff was infected with HIV/Aids.

Mr Mzondeki asked how the Department would address issues around the lack of skilled personnel in areas such as fiancé and auditing? This was also mentioned in the AG’s report.

Ms Rajbally asked what impact the level of vacancies had on performance and productivity levels.

Mr Mkosana said that personnel tended to be overextended. This was not a practice the Department sought to perpetuate but was an outcome of the level of vacancies in Departments. This could have a detrimental impact on levels of productivity. The Department tended to involve all levels of staff in the management of projects.

The Chairperson thanked the Department for their presentation.

The meeting was adjourned.







 

 

 

LABOUR PORTFOLIO COMMITTEE
24 October 2006
DEPARTMENT 2005/2006 ANNUAL REPORT: BRIEFING

Chairperson: Ms O R Kasienyane (ANC)

Documents handed out:
Department of Labour 2005/06 Annual Report (available at

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