Nedlac Workplan and Budget 2008/09

Meeting report

National Economic Development and Labour Council (NEDLAC) Work Plan and Budget
Mr Herbert Mkhize (Executive Director: NEDLAC) commenced saying that NEDLAC was often mistaken for organisations that had no relationship or resonance with NEDLAC. It was a representative and consensus-seeking body where parties to the Council would reach agreement through negotiation and discussion based on proper mandates.

NEDLAC influenced and shaped the law but was not the ultimate law-maker. The institution delegated law and policy enforcement to the appropriate agencies, provided legal frameworks to collective bargaining agencies and workplace dispute resolution agencies and provided legislative and strategic frameworks for implementation agencies.

NEDLAC was about building enduring partnerships, addressing urgent challenges and lending a hand. To meet these objectives, NEDLAC engaged in negotiations, consultations, information sharing, research and resolving socio-economic disputes. Even with the growth in the economy, it was difficult to improve employment and deal with poverty.

The 2008/09 work programme indicated that the first work stream was NEDLAC’s 2008 Annual Summit. The key focus would be to evaluate progress on the implementation of the work programme and identify priorities for the year ahead. It would also look at employment creation and poverty alleviation. The second work stream focused on its Executive Council. Four Executive Council meetings would be held in the current financial year. Some of the strategic objectives would include finding convergence on fiscal policy imperatives, addressing electricity and energy challenges, focusing on employment and poverty eradication, the challenge of food prices and monetary policy. The Management Committee work programme was to sign-off on policy issues for referral to the Executive Council, oversee the institution, and deal with human resource issues and financial reports.
 
Within the Labour Market policy work stream, the key focus areas would include demarcation, improvement of the relationship between the Commission for Conciliation, Mediation and Arbitration (CCMA) and the Labour Court, the Insolvency Bill, the changing nature of work in South Africa, the Social Plan Review, the Superior Courts Bill, the Medical Aid Bill, the Single Public Service Bill, the Labour Market Policy Review, employment equity, the Skills Development Amendment Bill and social security.

The Trade and Industry work stream would focus on labour-intensive sectors, sector strategies/summits, industrial development financing, Broad-Based Black Economic Empowerment (B-BBEE), the role of SA in integration of African Trade and Industry, trade negotiations, the Companies Bill, Customs Act, and Competition Policy amendments.

The Development Chamber work stream would focus on such items as social security, local government, Co-operative Development Strategy, Expanded Public Works, land, public transport, the Higher Education Act Amendment Bill and the Municipal Systems Act.

The Public Finance and Monetary Policy Chamber would focus on Development Finance Institutions (DFIs), the National Budget processes, education and promotion of savings, administered prices and import parity prices, social security and retirement funds reforms and implementing the finance protocol for rural development and renewal nodes.

NEDLAC budgetary income was received from grants, rental income and interest. Expenditure was incurred from capital expenditure, communication and special projects, capacity support, administration and staff costs.

Key challenges they faced were mostly in the area of social dialogue. There were growing numbers of new entrants into the labour market and mandates received from Cabinet were too tight to allow space for trade-offs. The timeframes within which issues had to be finalised was tight and there was little flexibility from some departments. Policy coordination was still a major problem and parallel processing at times defeated the primary objectives. There was also the issue of staff retention and attracting a high calibre of skills to the organisation.  

Discussion
The Chair stated that the presentation was very informative, as the Committee now knew how NEDLAC was going to allocate its funds. The report spoke of the improvement in the relationship between the CCMA and the Labour Court, which was an issue that the Committee had worried about. Also, were NEDLAC plans aligned to the State of the Nation Address? They would have to look at whether the budget was sufficient to cover these programme. She asked what role social partners played in their budgetary matters.

According to Mr Mkhize, some of the Bills that were finding their way to Cabinet spoke to some of the issues raised in the State of the Nation Address. By virtue of the NEDLAC mandate, they expected the executive to take the issues to NEDLAC before tabling them in Parliament. A similarity in objectives was the mention of the “poverty line” in NEDLAC’s presentation and the announcement by the Finance Minister in the Budget Speech, that the government would set an official "poverty line" as a tool to help measure progress in the fight against the poverty. The key issue in the State of the Nation Address was the war on poverty. The Deputy President of South Africa had instructed NEDLAC to start looking at a poverty eradication accord. The institution would report back on what they had done on this. The issue of unemployment came up quite strongly in the State of the Nation Address. In NEDLAC, the Growth and Development Summit was dealing with job creation. A review was being conducted of the GDS. However, NEDLAC, through the GDS, had not created the number of jobs required to make a visible dent in unemployment.

NEDLAC was looking at the Irish model of social accord. This accord had resulted from the economic crisis that was experienced in Ireland. The Irish authority called all their key stakeholders together to find a solution to the economic problem. They spoke about what businesses could do and what they would have to sacrifice in order to address the problem. So if the President spoke about the Irish model of social accord, it would mean looking at what labour could sacrifice in order to deal with unemployment and poverty. As economic growth was no longer an issue, the President was asking businesses what they needed to sacrifice to create employment.

There were two budgets. The constituencies were involved in the NEDLAC budget and submitted budget plans. The government, as the budget provider, listened to the other constituencies to see what they wanted. The Department of Labour was very consistent in asking them what they wanted. Priorities in the labour constituencies changed all the time.  

Mr M Mzondeki (ANC) noted that there was quite a lot of work to be done before Parliament came to a close at the end of March. He was concerned, as he did not know how much work had been done already and most of the time frames that were set for projects were approaching. Parliament’s schedule would be very tight this year and he was not sure how much work could be completed. He asked for clarification on NEDLAC’s role in the Apex priorities. One of the obvious challenges was the capacity constraint of some of the constituencies such as the community constituency. He was not sure why the money was not being spent on improving capacity. NEDLAC needed strong participation from the communities. He asked about the social plan and whether it was working. The social plan needed to be prioritised and completed by the end of the term.

Mr Mkhize stated that he was not talking about the first quarter of the year but was referring to the end of June. With the community constituency, there was a capacity issue. They were using the money and capacity to the best of their ability but not at the rate that they should be. Mr Mkhize was happy with the way the community constituency was dealing with the issue. There was nothing wrong with the social plan. It was being implemented and NEDLAC was working closely with Productivity South Africa. According to Mr Mkhize, it was working well.  

Mr B Mkongi (ANC) also focused on the legislative time frames. He wanted to know if it was possible that the Skills Development Amendment Bill would be tabled in Parliament by June. Also, did the Bill include the utilisation of state-owned enterprises in driving skills development in the country? The Bill should tackle the issue of the closed down centres of excellence. NEDLAC spoke about constituencies but they did not include the South African Youth Commission as one of them. Also, were the Ministers working with the NEDLAC principals or did they delegate those responsibilities to other people within their ministries? Would the 2010 World Cup assist the government with promoting Small Medium Enterprises (SMEs)? There was an outcry that small businesses were not being contracted in this process.

Mr Mkhize replied that skills development was up for review and that it was a very technical issue. There was tension between industrial skills development and formal education. The Bills were an attempt to find a degree of harmony at the formal education system level and the industry-based skills development level. He suggested having a discussion with the Minister of Labour concerning state-owned enterprises. State-owned enterprises were involved in some skills development projects.

He said NEDLAC did not foresee any disagreements with Bills and hoped to complete the policy process by the end of April. There was no reason not to meet the time frames that were set.

Mr Mkhize felt that he was not competent enough to answer the question concerning the involvement of youth in employment equity. The Youth Commission was qualified to answer the question.

The Minister of Finance had come to NEDLAC twice last year, which was a record. The Minister of Trade and Industry came once and the Minister of Labour was always at NEDLAC engagements. Mr Mkhize was happy with the attendance of Ministers.

With 2010, those issues were discussed because arrangements were difficult. FIFA had given the World Cup to us, but South Africans just served as project managers. There were limitations in terms of what could and could not be done. Community constituencies were driving the issue of hawkers. NEDLAC was in the process of negotiating the framework. 

Mr T Anthony (ANC) asked about the deficit that would be reflected in NEDLAC’s next report. He asked about the extent to which the deficit would impact on the Department of Labour’s report. There was a major problem with the Department, as their audit report had been qualified for the past three years.

He continued that many departments were reporting that there was a problem with skills retention. The Minister had reported that there were posts available in the Department but many were not funded and therefore they could not be filled. NEDLAC had many vacancies, and the research positions were of utmost importance. He wanted to know how long it would take to fill those vacancies. It was so problematic to retain skills and he wondered if there was a skills plan in place to assist with the problem. All components of NEDLAC would have to engage on the salary structure, as it would prevent people from moving from one department to another.

Lastly he noted that NEDLAC was in the process of fast-tracking the land reform issue. He asked when the institution would have its land reform activities in place.

Mr Mkhize replied that the deficit would not have any material impact on the NEDLAC plan. They were merely taking the money from the reserves. In terms of good bookkeeping, it would have to be reflected in the income statement for the year. The income statement would show a deficit but the balance sheet would still be positive. The Treasury had also indicated that it was not a major problem; it was a paper deficit.

On the matter of skills retention within NEDLAC, Mr Mkhize explained that the institution was a very tight unit. There were 23 people including the executive director. People were employed for a specific skill that was needed. Career prospects in NEDLAC were severely limited and many people left for personal growth reasons. Changing the salary structure was a possibility but constituencies stole employees from NEDLAC.

Mr Mkhize pointed out that the land reform process happened outside of NEDLAC. If NEDLAC was included in land reform, there could be “different results”. If it was brought into NEDLAC, they could make some headway.

The Chair asked why there was a disparity in the budgeting for research between the 2008/09 financial years and the 2009/10 financial years. Also, why was there a budget disparity in the promotion of social dialogue? She asked if the R1.5 million that was allocated to capacity support was to build capacity in the constituencies or the NEDLAC staff.

Mr Umesh Dulabh (CFO) replied that both the research and social dialogue budgets were trimmed down for 2009/10 because there were certain key projects and activities planned for that year. As a result of this, NEDLAC had to streamline some of the other line items. It was an exercise of compromise. 

Mr L Labuschagne (DA) stated that it was clear that NEDLAC was not an executive or implementing body; they were fundamentally a research, negotiating and mediating body. He asked if NELAC initiated research or if they reacted to legislation that was sent to the institution. He also wanted to know if the reports were made public or if they were kept within NEDLAC. How did they decide who the constituencies were, specifically on the community side? The Member needed clarification on Section 77 of the Labour Relations Act. He asked if NEDLAC’s reports were used before or after the Bills were drafted and before or after public participation? If NEDLAC’s input was given at an early stage, what happened when the departments did not listen to their report?      

Mr Mkhize replied that if there were new policies included in government announcements, NEDLAC relied on government officials who serve in NEDLAC to inform them. It would be disrespectful for other constituencies to bring those issues to NEDLAC when they received them from government. NEDLAC waited for government to come to them.

There were instances when NEDLAC was reactive or responded to issues brought forward by the government. When the government raised issues in the agenda, then NEDLAC would react. There were also instances when the institution was proactive. NEDLAC initiated research when there was issue-driven research work. The government had never asked NEDLAC to perform research on its behalf because government had its own in-house capacity.

There were times when NEDLAC was involved in issues very early on in the process. There were government departments that involved NEDLAC in the process at an early stage. Not everything that NEDLAC commented on was included in the final product. In a typical NEDLAC report, there areas of agreement, areas of disagreement and areas of reservations. 

The Chair stated that the report was very informative and Members had to study the new information about legislation that was in the pipeline. She was relieved that employment equity was a key focus area in the Labour Market Policy work stream, as it was a major concern to the Committee. Members were reminded about the social security conference. There was an outstanding response from Parliament about employment equity. The Committee would have to apply the rules by writing a letter or seeking legal advice. Parliament did not submit the report that the Committee needed.

The meeting was adjourned.