Umsobomvu Youth Fund, Commission for Conciliation, Mediation & Arbitration, National Productivity Institute Annual Reports

LABOUR PORTFOLIO COMMITTEE
31 October 2006
UMSOBOMVU YOUTH FUND, COMMISSION FOR CONCILIATION, MEDIATION AND ARBITRATION, NATIONAL PRODUCTIVITY INSTITUTE ANNUAL REPORTS

Chairperson: Ms O R Kasienyane (ANC)

Documents handed out:
Umsobomvu Youth Fund Presentation to Portfolio Committee on Labour Annual report 2005/6
UYF Delivery Channels and other UYF Product and Service Access Points
Commission for Conciliation, Mediation and Arbitration Annual report 2005/2006 [available at www.ccma.org.za]
Commission for reconciliation, mediation and arbitration Annual report 2005/2006 presentation
National Productivity Institute 2005/20006 Annual Report presentation to the Portfolio Committee on Labour
National Productivity Institute 2005/20006 Annual Report [available at www.npi.co.za]

SUMMARY
Umsobomvu Youth Fund briefed the Committee on the work of the Fund. Unemployment was a major challenge, with a youth unemployment rate of 70%. The Fund approached development through counseling, skills development and transfer, business development, enterprise financing, capacity building, research, and communications. It tabled the achievements per province across the various areas of its business. The financial statements for the 2005/6 year were tabled. The surplus for the year was R7.07 million. Total assets were around R785 million, and unencumbered cash stood at R169,63 million. Challenges included compliance with the Public Finance Management Act, turnaround on approval of deals and inadvertent non-compliance resulting in an emphasis of matter on the Group Audit Report. Application had been made to the minister for an exemption under Section 54 of the Public Finance Management Act. There was a need to capacitate the finance staff. Achievements were tabled, as were targets and figures for the next three years were tabled. The number of regional offices would be increased. Spending for 2007/8 was projected at a total of R400 million, including R26.2 capital expenditure.

Members noted with concern that not many youth seemed to know about the Fund, and questioned whether it was really achieving its targets. They asked how outreach was being achieved. Further questions were raised on the late submission of figures from North West, the fact that the targets of 90 schools had not been reached, and that the Fund was not doing enough for disabled youth. Coordination of activities with other youth organisations was raised. There were questions also on the issues raised in the Audit Report, and the monitoring of service providers.

The Commission for Conciliation, Mediation and Arbitration briefed the Committee on its structure and funding. Service delivery took place through dispute resolution, dispute management, institution building and registry. Measurable achievements were tabled in respect of each of these functions. Challenges remained with postponements and there were major interventions in three areas. The ten-year reflection showed continuously high settlements of labour disputes through mediation, ten years of relative industrial peace, and capacity to address a high volume of cases at high speed. Conciliations were dealt with in an average of 26 days, arbitrations averaged 50 days, awards averaged 9 days and the year-end carry-over caseload was about 20%. Members raised questions on the postponement policy, the public’s regard for the Commission, whether the skills development problems had been inherited, and what plans were in place to address issues.

The National Productivity Institute aimed to achieve unparalleled service excellence, to be equity driven in all interventions, to challenge existing assumptions through innovation and creativity and be fully socially aware. Focus areas were productive and competitive enterprises, sustainable micro-small enterprises, public sector productivity, knowledge management and research, and strategic leadership on productivity. The Institute was aligned with the Minister of Labour’s programme of action. The objectives and programmes were outlined, and an overview was given of some case studies. Interventions had been made in the private sector, the public sector and state owned enterprises. Training targets had been exceeded. The various partnerships and alliances were listed. It had achieved an unqualified audit report and was fully compliant with the Public Finance Management Act. It had sound risk management processes in place. Members asked questions on whether the funding was sufficient, payment of consultants, skills retention within the organisation, and the style of reporting, which had not matched the targets with the strategic plans. Further questions related to the training of municipalities, skills development and education, and the Institute’s collaborative approach with management and labour to address problems.

MINUTES
Briefing by Umsobomvu Youth Fund
Mr Malose Kekana, Chief Executive Officer, Umsobomvu Youth Fund (UYF) stated that UYF had been in existence for five years, and had built an effective organisation, a network of service providers, a strong brand and had achieved ISO9001 certification. He presented the statistics for youth employment, nothing that the unemployment was a major challenge, and that the overall unemployment rate was 26%, with a youth unemployment rate of 70%. UYF approached development through a number of pillars, including counseling, skills development and transfer, business development, enterprise financing, capacity building, research, and communications. Achievements per province were tabled in each of these areas. A budget of R268.2 million had been set for the following year. In the past five years, around 52 000 young people had accessed exit opportunities. Business consulting services had reached 9 531 beneficiaries and had created 17 167 jobs. The Business Opportunity Support Services (BOSS) had managed to attract five partners. A graduate database had been set up. Enterprise finance had assisted 7 964 micro businesses and 155 small and medium enterprises. Contact information comprised information disseminated, intermediary training, advocacy and development of new channels. Skills development included school-to-work skills development, promotion of self-employment, support to the National Youth Service Unit, and entrepreneurship education. Business development and youth entrepreneurship had resulted in 6 851 sustained jobs and 6000 delegates had attended workshops. External funding had been obtained to about R82 million.

The financial statements for the 2005/6 year were tabled. The surplus for the year was R7.07 million. Total assets were around R785 million, and unencumbered cash stood at R169,63 million.

Challenges included compliance with the Public Finance Management Act (PFMA), turnaround on approval of deals and inadvertent non-compliance resulting in an emphasis of matter on the Group Audit Report. Application had been made to the minister for an exemption under Section 54 of the PFMA. The International Financial Reporting Standards (IFRS) implementation had been costly in time and effort, and UYF needed to capacitate its finance staff. Achievements included the certification, the implementation of a “one stop” centre in Tshwane, the upscaling of micro-lending activities, establishment of new partnerships, and exceeding budgeted targets.

Targets and figures for the next three years were tabled. The number of regional offices would be increased, there would be 298 offices in all, including partnerships, and 260 kiosks. Spending for 2997/8 was projected at a total of R400 million, including R26.2 capital expenditure.

Discussion
The Chairperson commented that many youth did not know of the existence of UYF. She asked for specific comments on some of the findings recently expressed by Mr L Maduma on youth unemployment.

Mr Kekana replied that there were 200 to 500 thousand pupils that would leave the school system, would not go to tertiary institutions and would not get jobs. There was an unrealistic expectation that an institution in existence for only five years, and with a limited budget, could address the failure of the system. He insisted that it was impossible to accommodate all of these issues, and that they needed more funds.

The Chairperson said that she did not want Mr Kekana to make that excuse because last year he also said they needed more funding. The Committee was aware of that.

Mr Kekana replied that he had raised this point as a comment.

Ms S Rajbally (MF) asked why the UYF was not advertised by the media. It would seem more sensible to publish more information about the organisation.
 
Mr Kekana replied that UYF had found it to be more effective to go to the communities and work with youth forums and youth structures, in addition to using some advertisement. He also said that it was expensive to advertise in the media and media advertisement tended to create unnecessary expectations that loans would be available.

Ms Rajbally, referring to the 298 offices in partnership with others, asked how well known and how accessible were these offices to the community and the youth.

Mr Kekana replied that their offices had outreach to schools and communities and UYF planned to make sure they were more visible.

Ms T Lishivha (ANC) referred to the statement by Mr Kekana that the North West province did not submit the figures on time. She asked what UYF were doing to ensure that in future figures were on time.
Mr Kekana replied that the reason why the North West province figures were not yet available was that the service provider in that province was dismissed because of unsatisfactory performance and service. It was now difficult to obtain information from that provider because it was no longer under contract. However, UYF was pressuring the provider.
 
Ms Lishivha referred to the report that UYF trained 30 schools in three provinces. The target had been to train 90 schools in 6 provinces. She asked for an explanation of the delay.

Mr Kekana stated that the figures of 90 schools and 6 provinces were mentioned at the time that contracts had not been signed, and they did not reflect as commitments.
 
Ms H Weber (DA) said that she was concerned, both from reports heard on the ground, and from the lack of mention in the report, that UYF was not doing enough for young disabled people. She asked for specific comments on this issue.

Mr Kekana replied that UYF had not provided figures on people with disabilities and that was something UYF would ensure did appear in the next report. He added that all UYF projects had an inclusive approach to working with young people with disabilities, especially the entrepreneurship programmes, but agreed that this was an area that needed improvement.

Mr S Siboza (ANC) asked how the UYF coordinated with Youth Commission and National Youth Council to make sure there was no duplication and misunderstanding, and to make sure that the resources were correctly directed to solve the unemployment issue.

Mr Kekana replied that UYF were in the process of signing an agreement with National Youth Commission (NYC). In terms of this, UYF would focus on the implementation side while the NYC would focus on policy issues and youth strategies in general.

The Chair remained to Mr Kekana that the Committee already knew that UYF was concerned with funding and loans for the Youth.

Mr C Lowe (DA) asked Mr Kekana to address the issue reported in the Auditor General’s report that UYF did not inform Treasury and the Minister of Labour about an investment. He asked why this had happened as it seemed to be against the rules.

Mr Kekana replied that UYF had a certain limit. Any transaction above that limit it was called material, and for such transactions UYF would have to make application to the Treasury, except if it was in line with normal business operations. He insisted that the transaction was in line with their normal business, but the Auditor General saw otherwise. UYF had now applied for exemption to the Minister and this application was being considered.

Mr O Mogale (ANC) asked how the accreditation was going to be more effective in letting UYF reach areas it had not reached before. He asked how UYF could influence the National Qualification Framework (NQF) as this did not seem to assist those applying for jobs.

Mr Kekana replied that in terms of visibility they had 31 access points and that they would work with municipalities because municipalities had offices and infrastructure and would assisted UYF to employ people. He added that they had sent through a proposal to all municipalities but only 56 municipalities responded to their request. UYF had opened offices in those 56. He also said that the cost of setting up offices outside the municipalities ran into millions, if all factors were taken into consideration, whereas sub-leasing would cost considerably less. He added that from now on UYF would be working more with municipalities, so that the cost would be shared with the Department of Labour and municipalities. He also said that UYF would put in place their service providers in Butterworth.

In reply to the question on NQF, this was not an issue on which there had been any focus by UYF before, but from a policy point of view they would work with structures such as this.

Mr Mogale asked about two payments that were reflected as “irregular payments” and asked Mr Kekana to clarify why they were made and whether the responsible person had been called to account.

Mr Kekana stated that one of the people UYF worked with was in an accident, but UYF’s insurance had refused to pay. That was why the amount was referred to as “irregular”.

The Chairperson asked Mr Kekana how UYF monitored service providers, as there was an outcry about them.

Mr Kekana replied that UYF monitored service providers in terms of performance, through binding service agreements, and in terms of targets they should reach.

Mr L Maduma (ANC) asked Mr Kekana if the service providers had delivered what they had promised

Mr Kekana replied that UYF would open another office, at request, in Tsomo and other municipalities. There would be no offices opened if the municipalities did not apply.

Mr M Mzondeki (ANC) said that Umsobomvu’s invisibility was a serious problem and asked how many young people had stable business that UYF would assist with. He also asked for more information on the graduate database. and asked in which sector this was based and which provinces.

Mr Kekana replied that there was a lack of employment after training that generally took up to 6 months to correct, but there were stable jobs, as well as assistance given to self-employment. He added that UYF needed to create more local skills and avoid importing skills and agreed with the ANC Youth League’s view that there should be a strong youth development institution.

Briefing by Commission for Conciliation, Mediation and Arbitration
Ms Nerine Kahn, Director, Commission for Conciliation, Mediation and Arbitration, (CCMA) set out the Governing body personnel and structure of the CCMA. She noted that there was a National Registry, National and ten regional offices. The original finance allocation was R188 million, and additional funding was obtained of R10.6 million. She set out an allocation of workload to resources, noting that the projected caseload for the next year would not change, and that the budget adjustment was only 5.3%, which was an inflationary and VAT adjustment only.

Governance of the CCMA was carried out by three subcommittees dealing with human resources, finance and accreditation and subsidy, and there was also an audit committee and an essential service committee. Service delivery took place through dispute resolution, dispute management, institution building and registry. She set out the measurable achievements in respect of each of these, stating that 77% of matters had been finalized in one event, that 93% of cases met the statutory time limits, and more than 90% had resulted in awards rendered in 14 days. Challenges remained with postponements and there were major interventions in three areas. Institutional building had three main areas; accreditation of bargaining councils, administering of subsidies and enforcement of awards. Registry aimed to achieve employment equity, wellness programmes, education and training, public awareness and customer service. The ten-year reflection showed continuously high settlements of labour disputes through mediation, ten years of relative industrial peace, and capacity to address a high volume of cases at high speed. Conciliations were dealt with in an average of 26 days, arbitrations averaged 50 days, awards averaged 9 days and the year-end carry-over caseload was about 20%.

Discussion
The Chairperson asked Ms Kahn to elaborate on postponements.

Ms Kahn replied that CCMA did not allow postponements, and sometimes this policy would backfire on employees who were fired needed their help. That was the reason that it was listed as a challenge, as sometimes it disadvantaged those who the CCMA was trying to help.

The Chairperson asked Ms Kahn to elaborate on the position of the Labour Court.

Ms Kahn replied that the labour court could review the CCMA report. She added that CCMA was very gender representative. She was proud of this, and of their education system. In the following year CCMA would be undertaking a public awareness campaign.

Mr Siboza (ANC) asked whether CCMA was experiencing disrespect from the employee or employer’s side

Ms Kahn replied that the disrespect could emanate from either side. Sometimes the employee would be dismissed on reasonable grounds and would then argue that the CCMA was incorrect in its ruling.

Mr Maduma asked if the public was satisfied with the service from the CCMA.

The Chairperson replied that the public was not satisfied because they frequently had complained that there were not helped.

Ms Kahn replied that CCMA had a public forum to deals with their challenges and achievements and currently it was receiving a positive response.

Mr Lowe asked if the skill development problem was an inherited or a new problem, and asked about actions to address that.

Ms Kahn replied that she would not say the problems were inherited, but they had been in existence for the past three years. She was proud that CCMA was doing a great deal to achieve skills development and was well on track..

Briefing by the National Productivity Institute
Mr Bongani Coka, Executive Manager, National Productivity Institute, (NPI), reported that the Institute had the responsibility of improving productivity in all sphere of economic and community life. It was governed by a tripartite advisory council drawn from labour, government and business. It aimed to achieve unparalleled service excellence, to be equity driven in all interventions, to challenge existing assumptions through innovation and creativity and be fully socially aware. Focus areas were productive and competitive enterprises, sustainable micro-small enterprises, public sector productivity, knowledge management and research, and strategic leadership on productivity. The NPI were aligned with the Minister of Labour’s programme of action.

Mr Coka outlined the objectives and programmes under each of the focus areas, and gave the Committee an overview of some case studies during the year. 116 companies had been assisted in improving productivity, and 38 workshops were conducted. 9 Change Facilitators had been trained. 91 company future forums were established to implement turnaround strategies and over 10 000 jobs had been protected. The sector had been assisted through expansion of the Load Accreditation Programme, and the second phase of the Forestry Productivity initiative had been completed. In the field of micro-small enterprises, there had been a partnership set up with the Small Enterprise Development Agency (SEDA), development of productivity coaches and a “100 Incubation” project. In the public service area, there were interventions to Government departments, state owned enterprises and provincial and local government. Training targets had been exceeded. Reports had been completed on world competitiveness and on productivity statistics analysis. A concise productivity handbook was under way and the knowledge management framework was being set up. Leadership on productivity had achieved school debates, National Productivity awards, media coverage and partnerships with the Chambers of Commerce and The Asian Productivity Organisation. The various partnerships and alliances were listed.

NPI had achieved an unqualified audit report and was fully compliant with the Public Finance Management Act. It had sound risk management processes in place.

Discussion
Mr Siboza (ANC) mentioned the report that R23 million had not been enough. He asked if it was possible to spend less on some areas. 

Mr Coka replied that the cash outflow was greater than cash inflow, which had resulted in a loss. NPI would not spend more than it had received in a particular period. There were many challenges; one of the greatest was retention of staff. NPI was trying to ensure that knowledge remained within the organisation even if people resigned.
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Ms L Moss (ANC) said that the report had not addressed the targets for the strategic plans,  and had not aligned those with overall performance. She also asked how NPI would deal with the high consultants’ fees.

Mr Coka replied that NPI had noted the comments and would try to improve their next report to at to comply with those requirements mentioned. In addition, they would focus more on disabled people.

Ms Weber asked if NPI were training municipalities, and if so, whether they would be training officials or service providers, because it was a widely held view that municipalities were nonfunctional.

Mr Iggy Sathekge, Executive Manager: Strategic Leadership on Productivity, NPI, replied that the Development Bank of South Africa would often partner with NPI on training, and the Bank would oversee the officials’ training.

The Chairperson asked if NPI had engaged in skills development and education. She also asked how they had planned to minimize job losses.

Mr Coka replied that NPI had  decided to follow a sector approach, in which they identified the sectors that shared the most jobs,  and to discuss with the stakeholders in that sector how best to minimize job loss.

Mr E Mtshali (ANC) asked what Mr Coka meant when he talked about collaboration between management and labour

Mr Coka replied that NPI believed that both the management and the labour force had particular skills or knowledge that the other did not have. Both sides would be examined and questioned so as both viewpoints could assist in turning around a business.

The meeting was adjourned.