Umsobomvu Youth Fund, Productivity South Africa & Commission for Conciliation Mediation & Arbitration: Strategic Plans & budgets 2008/09

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Employment and Labour

24 March 2008
Chairperson: Ms O Kasienyane (ANC)
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Meeting Summary

Umsobomvu Youth Fund gave a presentation to the Committee on the 2008/09 strategic plans and priorities. It aimed to strengthen partnerships with various stakeholders. Since there had been reduced funding, the Fund could not hope to deliver the same level of services. The programmes up to the end of December 2007 were described and explained. The Fund had already initiated and made commitments to the various programmes, which would be curtailed by the lack of funding in the next financial year. The R41 million rand operating expenses were funds generated from the interest returns from the loans paid out by the Fund. Challenges included a crucial need to invest funds over 3 to 4 years, and to measure outcomes only after that longer period. Without funding, many of the third year students would be unable to complete their training. There was mismatch between the State of Nation Address and budget, with insufficient allocations to youth, particularly unemployed youth. Comments were made on the proposals for the merger of National Youth Commission (NYC) and the Fund, and the three proposals were outlined. Internal and external communication would be imperative to ensure a successful merger. Members asked about the impact of the merger on the youth, the partnerships, training projects, the other work of the Fund, the low placement and training rates, and details of the programmes. Details were also requested of the loans and jobs, the sustainability of training, the response to the electricity shortage, the training programmes for teachers, and the dropping of the funding, which Members felt would warrant a specific briefing at which National Treasury, the Department of Labour and the Fund were present, that would also address the possible staff implications.

Productivity South Africa (PSA) gave a presentation to the Committee on the three-year strategic plan and the 2008/09 business plan. The work of the PSA was divided into various campaigns, whose details were outlined. Training was taking place to improve productivity of Small and Medium Enterprises.
Key focal areas of training of public benefit organisations included the health services and education system. Capacity building of youth was being assisted by collaboration with the National Youth Commission. There would be an 18 month mentorship programme for 50 unemployed graduates, in the field of industrial engineering. The budget and sources of revenue were explained. Members stressed that the Committee needed to be invited in good time to the World Productivity Congress, and that documents should be delivered in good time to enable members to prepare for meetings. Questions were asked around the Board, and the problems identified in the payment of employees late, the poor management of pension and medical schemes, and negotiations with the employees’ union. It was noted that conflicting information was provided on the matters in the version of the PSA and the Congress of Trade Unions. Information was requested therefore in writing, to be analysed further by the Committee.

The Commission for Conciliation Mediation and Arbitration (CCMA) presented the 2008/09 budget and Work plan, focusing on 2008/09 budget methodology and policy, the budget proposal and challenges. The CCMA was now in the second year of the Tsoso Strategy, and the goals set out in that Strategy were explained during the meeting.
There was a 2% increase projected in the grant received for the 2008/09 year, and a 6% increase for the two financial years to the end of March 2011. The CCMA would be able to meet its short term obligations. It had a policy position to have cash on hand at all times to meet two months worth of obligations. This budget would enable the Commission to carry out its mandate, but additional funding would assist in addressing the need to implement digital recording for arbitration hearings, to improve geographic access, open new offices, implement the full staff complement and instal solar energy. The allocation was R273 million. CCMA aimed to reposition itself in the labour market to be an established ‘quality control’ role player and provider of continuous professional development through education, training and skills development services. There was limited time for questions, but CCMA was asked whether it would be able to cope with a wider mandate of alleviating the Labour Court case roll.

Meeting report

Umsobomvu Youth Fund (UYF) Strategic Plans 2008-9 presentation
Mr Malosi Kekana ,CEO, Umsobomvu Youth Fund and Mr M Mtshali, Head of Operations, Umsobomvu gave a presentation to the Committee on the 2008/09 strategic plans and priorities.

Mr Mbongeni Mtshali set out the strategic priorities and commented that of paramount importance was the strengthening of partnerships between various stakeholders and the UYF. Service delivery would obviously be less in the upcoming financial year due to the smaller amount of funding allocated to the UYF. The strategic priorities included the Apex priorities from the President’s State of the Nation Address (SONA). Other priorities included the opening of
new Youth Advisory Centres (YACs) to increase the total number of UYF operated YACs to 19 thereby increasing young people’s access. There would be a Take a Person with Disability To Work campaign. UYF would also be positioned to support the volunteer programme for the 2010 FIFA World Cup, and discussions were ongoing with the Local Organising Committee.

Mr Mtshali explained that the UYF had run a number of programmes up to the end of December 2007. The Community Service Programme aimed at equipping the youth with skills whilst they provided community services. Entrepreneurship Education was aimed at skills geared towards a change in Entrepreneurial attitudes and behaviour.
The Graduate Development Programme aimed to provide unemployed graduates with skills required for employment (job preparedness training). The Business Development Services programme ran a BDS Voucher Scheme, which was aimed at providing Business development support to both newly-starting and existing enterprises to enable them to be more profitable and sustainable. This included a Volunteers in Action  (VIA) Mentorship Service. Business Opportunities Support Services were aimed at linking young entrepreneurs with
business opportunities. In the area of
Enterprise Finance, the programme aimed to provide micro finance to young people and women of between R1000 to R100 000. SME Funding aimed at providing young entrepreneurs with loans ranging from R100 000 to R5 million. The volunteers indicated in the presentations included established and experienced entrepreneurs.

Mr Mtshali then outlined a slide entitled “Performance at a Glance” which detailed the year on year increase in activities by the UYF. In summary the UYF initiated and made commitments to the various programmes mentioned, which would be curtailed by the lack of funding in the next financial year. However, the performance expected was based on ratios of allocation.

Mr Kekana commented that R356 million of the R400 million allocated last year was already committed to various programmes. The R41 million rand operating expenses indicated in the budget expenditure were funds generated from the interest returns from the loans paid out by the UYF. The Medium Term Economic Framework (MTEF) targets had been based on the requested R400 million, which was denied. Only R5 million had been allocated.

Mr Kekana commented on the challenges being faced by the UYF. There was a crucial need to invest funds over 3 to 4 years, after which the outcomes would then be measured, as opposed to investing funds every single year. The UYF was working with poor communities, and the redressing of their challenges needed investment over several years, with outcomes and impact of the programmes being measured after a longer period of time. Most of the students enrolled in the UYF programmes were in their third year of studies but would be dropped because of the lack of funding. The Harvard Group review of Accelerated Shared Growth Initiative for South Africa (AsgiSA) clearly indicated that the economic growth experienced by the country had not significantly impacted on the high unemployment rate. He said that there was a
mismatch between the National Budget and State of Nation Address. The actual support to unemployed youth out of school was relatively small, as the bulk of the allocations to education were focusing on the Schools, Further & Higher Education, and the employed youth were targeted by the National Skills Development Learnerships. More was allocated to youth in prison than to the unemployed youth. It was envisaged that with resources available the UYF could only reach 40%-50% of planned activities.

Mr Kekana commented on the National Youth Commission (NYC) and UYF merger. There was a meeting held with the Minister in the office of the Presidency, Dr Essop Pahad, which focused on addressing the lack of funding to the UYF, the programmes being run by the UYF, and the possible options to ensure the continuation of the UYF programmes and mandate in the event of dissolution of the Fund. Dr Pahad convened a task team to address the merger of the National Youth Commission (NYC) and the UYF. The task team included representatives from the Unemployment Insurance Fund (UIF), NYC, UYF, the Presidency, the National Treasury and the Department of Labour. The first meeting resulted in three possible options to address the situation. Firstly there was agreement that there would definitely be formation of a National Youth Development Agency (NYDA). The first option for the formation of the NYDA was to incorporate the UYF and NYC directly into the NYDA, as the work of the entities was already similar, and then to provide more funding. The second option was to integrate the UYF into the NYC. The third option was to merge the two entities into the NYDA. Further meetings would be conducted by the task team in three weeks. It was clear already that internal and external communication would be imperative to ensure a successful merger, and the establishment of structures to ensure that the 150 900 students currently enrolled in programmes were not deregistered or lost. A further paramount issue would be securing sufficient funding to keep up the momentum of the programmes already in place. It was forecast that a budget of R10 million would be required.
 

Discussion
The Chairperson commented that the Committee was less concerned about the merger process itself but rather the impact it would have on the youth. Clearly there were limited funds allocated to the UYF and the biggest concern was the committed programmes and the continuation of the broad youth programmes that were already unfolding.

Ms S Rajbally (MF) referred to page 3 of the presentation and asked for clarification on strengthening partnerships with 19 organisations.

Mr Kekana replied that the slide referred to strengthening already existing partnerships with government departments. The figure of 19 referred to 19 government departments. The government departments, such as the Department of Public Works, contributed materials whilst the UYF contributed the funding. There had been discussions with organisations such as the Water Sector Education and Training Authority (SETA) on providing training. Some of the programmes being run with the government departments - for example the military skills development programme – would be assessed. If these were seen to qualify and meet the UYF criteria, they could be strengthened and intensified through partnerships.

Ms Rajbally asked where the training of prisoners by the Department of Correctional Services took place and what would happen to the inmates on completing the training programmes.

Mr Kekana replied that information on the training projects would be provided in writing. He commented that the R31 billion allocated to the development and after care training was not equivalent to the attention being provided to the unemployed youth.

Ms A Dreyer (DA) referred to page 5 of the presentation and asked to know what would happen to the 57 000 people who participated in the National Youth Projects, the 15 000 students who completed the entrepreneurial education programme and the 700 000 unemployed youths indicated in the presentation.

Mr Kekana replied that the National Youth Projects entailed enrolment into one broad education /technical skills training programme that led to a National Qualification Framework (NQF) qualification. This essentially meant that the training programme would involve one week in the classroom and another on the job. The trainees or students would essentially gain basic numeracy skills as well as practical skills. He added that the training differed from other forms of training. Training in public works would involve maintenance work. Furthermore the youths served their communities in through the training. For example 100 youths were trained in Diepkloof, following which GroupFive employed all of the youths to work with local employers on housing projects in those communities lacking housing. The Youth Service Alumni programme came and briefed the Committee on their progress, such as the Home Based care activities. He added that there was also a programme being run in conjunction with the Department of Education (DOE) and University of Witwatersrand, whereby students at the university would tutor at underprivileged schools in the community. These youths benefited from the training, and contributed back to their communities. Furthermore there was a big brother / big sister programme for mentoring 2 000 orphans and previously vulnerable children. In December the UYF worked with Arrive Alive in cleaning beaches, hospitals and so forth.

Ms Dreyer referred to page 6 of the presentation and commented that the 55% placement rate and the 447 individuals who underwent training were very low figures, and asked for elaboration.

Mr Kekana concurred with Ms Dreyer that the figures were indeed low. He indicated that the programme involved taking graduates who had been unemployed for three years or more due to lack of computer literacy and driving skills. The 447 in the Youth Advisory programmes were being taught how to write CVs and apply for jobs. It was a programme of four months duration.

Ms Dreyer referred to page 8 of the presentation and asked whether the R253 million allocated for the benefit of entrepreneurs was only for 768 individuals. She asked for elaboration on the programmes

Mr Kekana replied that the programme involved the UYF approaching companies and lobbying for the employment of young graduates. He added that the UYF had approached the Department of Trade and Industry over the possibility of including young unemployed graduates under designated groups. The Committee could possibly assist the UYF in that regard. He added that business development services programme had involved taking youths from Soweto who had been earning nothing, but were now earning R4 000 per month through selling ice cream and other Nestle products

Ms Dreyer asked for clarification on the R14 000 micro-loans and the 11 000 jobs created through these.

Mr Kekana replied that some of the enterprises or businesses that had received the micro loans did not create any jobs, as they were already existing businesses.

Mr B Labuschagne (DA) asked for clarity whether the increase in advisors and the performance at the labour centres meant that the 18 advisors would be added to the current 13 advisors at the labour centres.

Mr Labuschagne asked for clarification on the Apex priorities indicated in the presentation, particularly the UYF response indicated next to programme 4.

Mr Kekana replied that Eskom had been campaigning on saving electricity. The UYF response to this involved having young people go into homes and inform the residents about the Eskom electricity saving interventions, and show them how exactly to implement the interventions, such as showing the residents the power-saving light bulbs.

Mr Labuschagne referred to page 5 of the presentation and asked to know what participation meant, and whether it led to something tangible like a certificate or qualification.

Mr Labuschagne asked for more elaboration on how the teaching programme was run by UYF.

Mr Kekana replied that the programme involved training teachers on how to properly educate and train.

Mr Labuschagne asked for more information on the bridging programme for individuals after graduation.

Mr Labuschagne and Mr G Lekgetho (ANC) aired their concern over National Treasury dropping the allocation to only R5 million from the expected R400 million, and asked to know on what basis National Treasury had resolved to reduce the funding allocation.

The Chairperson commented that the Department of Labour (DoL) representatives in the meeting should be in a position to clarify the reduction in funding, and needed to do so.

Mr N Nene (ANC) asked if there was any monitoring on the sustainability of the entrepreneurial business supported by the UYF.

Mr Kekana replied that 85% of the Small and Medium Enterprises (SMEs) were repaying the loans. Two years ago there was R5 million bad debt, although this had decreased and entrepreneurs were paying back. There were now 2 000 franchises owned by youths, signifying the progress that had been made.

Mr Kekena added that the young people involved in the entrepreneurial programme were in grades 11 and 12 and were being taught how to start and run a business. He added that a focus group in the programme had begun with 100 students. Although less than 20% had indicated at the start of the workshop that they would be interested in running their own business, that number rose to more than 90% after the workshops were conducted.

Mr Nene commented that he thought the UYF had come to present recommendations to resolve the challenges, for instance through workshops. He asked to know if merger of the UYF with NYC would resolve the challenges and problems affecting the UYF.

The Chairperson commented that the UYF had indicated in its presentation that it had R341 million in its reserves and R397 million had been paid out or utilised. She asked for clarification on these figures.

Mr Nene asked if the drastic reduction in funding was decided upon because of the lack of utilisation or under usage of existing funds.

Mr Kekana replied that the UYF had been having interactions with National Treasury. An indication had been given by the Department of Trade and Industry (dti) that the micro finance programme run by the UYF was not sustainable in terms of generating income. The UYF responded that the sustainable investment alternative, according to the standards of the dti and National Treasury, would be to invest the funds in financial firms like Old Mutual. Furthermore the UYF indicated that broad and universal interventions would take time, and the proper assessment of the outcomes and impact of the interventions would also need to be done only after a reasonable amount of time and not simply after a single year. In comparison to the Industrial Development Corporation (IDC), its finance programme had been sustainable because it received returns on funds invested a long time ago. The UYF could not commit to new projects without injection of new funds, as the commitments and investments made would only reap benefits later on.

The Chairperson commented that the Committee needed to engage NYF because the information given by the Mr Kekana meant the UYF would not be able to make commitments for economic empowerment without any funds.

Mr Jeff Du Preez, Chief Director: Skills Development Funding, Department of Labour, commented that Mr Kekana had alluded to the key motivations for extra funding, but the DoL did not agree with this. The DoL had held consultations and engaged with the UYF, although the ultimate decision to provide this level of funding was that of the National Treasury. He added that the bid for MTEF funds involved interactions with the Minister of Labour. The capital injections were decreasing and consultations were taking place with regard to the government as an investor and how funds would be returned after the UYF programme had ended. Those consultations were still continuing. There had been a suggestion that the UYF change from micro-financing to skills development. This was before the decision to develop the NYDA. The DoL was not happy with the process suggested that the UYF should be continuing with its mandate and funding should be provided if it stuck to that mandate The UYF was instructed to make commitments with the already-existing funds.

The Chairperson commented that the Committee needed a briefing on the merger and the possibility of losing crucial staff during the process.

Ms Rajbally requested that the UYF forward the details of the committed programmes to the Committee.

Productivity South Africa (PSA) 2008/9 Strategic and Business Plan Briefing
Mr Bongani Coka, Chief Financial Officer, Productivity South Africa gave a video and powerpoint presentation to the Committee on the three-year strategic plan and the 2008/09 business plan. He noted that Productivity SA was holding seminars in various provinces to improve service delivery in government departments, which included the Department of Housing, Department of Social Services, and the DoL because of the large impact they made in the communities.

He indicated that the work of the PSA was divided into various campaigns. The Productivity Campaign aimed to inspire
South Africans to play a role in improving the country’s productivity, and to empower policymakers and decision makers with productivity information and knowledge that supported them in planning and evaluating productivity improvement strategies. Furthermore it would provide tools, training and support infrastructure. The National Awareness Campaign formed a key part of this, and there would be dissemination of information through media and publications.

Productivity in Industry aimed to provide decision-makers with information and knowledge on the dynamic interplay between economic policies, productivity and competitiveness. The key focal areas were set out. Productivity in enterprises would enable enterprises to improve their productivity and competitiveness for sustainability and growth. Key focal areas included the small and micro enterprises, solutions for the turnaround of distressed enterprises and the enhancement of enterprise competitiveness.

The Senior managers in government Departments indicated a problem in terms of the structured way that service delivery was implemented. The hindrance identified was the single type of service delivery by the government departments

A member of the delegation indicated that Productivity SA had also realised that the viability of the Small and Micro Enterprises (SMEs) sector was ultimately dependent on the performance of the SMEs. In response to this, training was taking place with the SMEs in the rural areas to improve productivity. The competencies would include 1 800 emerging entrepreneurs, 120 skills development facilitators and 530 managers and workers.

Public Benefit organisations would enable efficient and effective service delivery
in public benefit organisations. Key focal areas included the health services and education system. There would be training of educators to train learners in schools, and the holding of productivity seminars/workshops for public service officials. There would further be workflow optimisation solutions in government departments and institutions. The targets for 2008/09 included that 360 senior officials were to attend seminars and workshops, and there would be improved awareness of productivity impact on service delivery.

In the area of Corporate Services, PSA aimed to create an enabling environment that continuously ensures the alignment of human resources to organisational strategy. Projects to build the capacity of staff were run in partnership with Japanese centres. Capacity building of youth was being assisted by collaboration with the National Youth Commission in mentoring opportunities and knowledge. There would be an 18 month mentorship programme for 50 unemployed graduates, in the field of industrial engineering.

Mr Coka tabled the programme budget for 2008 / 09, and the sources of revenue, in pie chart form, indicating the allocation between the various categories (see attached presentation for details).
 
Discussion
The Chairperson indicated that there was limited time in the meeting. She added that the invitation of the Committee to the World Productivity Congress needed to be done to ensure the necessary preparatory arrangements could be made in time.

The Chairperson commented that the Committee was experiencing the problem of receiving documents late. Parliament required that documents were received one week before the meeting in which they were to be presented.

Ms Dreyer aired her concern that the Productivity SA board’s term had expired and been extended for a further four months. She asked for clarification from the Acting Chairperson of the board.

Mr Du Preez , Chairperson of Productivity SA board, replied that the extension of the board’s term had been granted by the DoL. Nonetheless the new board had now been appointed.

Ms Dreyer referred to page 6 of the CEO’s report and page 36 of the Annual Report indicating the need to grow and improve trust in order to improve competitiveness and productivity. She commented that in order to successfully implement these initiatives and principles, Productivity SA needed to be performing well and practising these initiatives. This appeared to be not the case, as Productivity SA was facing problems. These related in particular to paying its employees late, poor management of the pension and medical schemes and the late payment of pension funds. She added that all these problems had been indicated in the media. She asked whether these problems truly existed.

Mr Du Preez  replied that that Productivity SA was fully aware of these accusations although they could not deny or confirm them as full information had not been provided and the report had been taken out of context.
  
Mr Coka added that the management was currently in negotiations with the employees’ union . Productivity SA strongly encouraged employee-manager interactions. The incident with the Pensions Fund occurred three years ago, when funding was provided by the DoL. The Service Level Agreement (SLA) had just been signed and the new Director-General was just taking office. As a result the pension funds were only received in June instead of April. This was not done deliberately, although there were indeed problems in the pension fund scheme and the medical aid funds due to the transfer of grants from the DoL.

Mr Coka commented that Productivity SA prioritised its employees’ salaries, and that the payment of salaries was only late by one day in March 2007. This was an isolated incident.

Ms Dreyer replied that the Pension Fund incident did not occur three years ago, according to the information that she had. The S A Congress of Trade Unions Secretary General indicated that it had occurred in October 2007. The information provided to the Committee certainly contradicted the responses provided by Productivity SA.

Mr Coka replied that there was a Bargaining Council of which both SACTU and Productivity SA were members. She added that the letter that Ms Dreyer had received was written after a meeting between the Bargaining Council and SACTU.

Mr M Mzondeki (ANC) suggested that all the relevant information be provided to the Committee by Productivity SA in writing, as there was not enough time to address the issue. After the information had been analysed by the Committee, further meetings could then take place to address the issues.

Mr Du Preez commented that the Board had taken note of the issues in the week before the current meeting and had concluded that the correct channel to handle the issues was for both parties to go back to the Bargaining Council. He indicated that the Board would undertake any necessary investigations and steps to resolve the matter. He also confirmed, in his capacity as Chairperson of the Board, that some of the problems had indeed been resolved.

The Chairperson commented that the Committee expected a report on the problems indicated and would analyse them and convene another meeting with Productivity SA.

Commission for Conciliation Mediation and Arbitration (CCMA): 2008 / 09 Budget and Workplan Briefing
A delegation from the CCMA, led by Ms Nerine Kahn, Director, CCMA, gave a presentation to the Committee on the 2008/09 budget and Work plan. The Presentation focused on the 2008/09 budget methodology and policy, the budget proposal and challenges. It was indicated that the 2008/09 plans included the Tsoso Strategy, which was the CCMA’s Three-Year National Plan, which would be entering its second year in this financial year. The Tsoso, (meaning “Re-awaken”) strategy document had been provided to the Committee.

Ms Khan indicated that the budget used a z
ero based budgeting methodology adopted in line with Government’s Medium Term Expenditure Framework (MTEF). There was a 2% increase projected in the grant received for the 2008/09 year, and a 6% increase for the two financial years to the end of March 2011. For all other expenditure items the projection was an average 6% increase for the two financial years to end March 2011. There was an accumulated surplus for the MTEF projections of 6% for 2007/08, which was one percent higher than the organisation’s policy on the issue. The CCMA would be able to meet its short term obligations. It had a policy position to have cash on hand at all times to meet two months worth of obligations, which translated to R45 million.


Ms Khan noted that the budget would enable the Commission to carry out its mandate, but warned that additional funding would assist in addressing challenges. These included the need to implement digital recording for arbitration hearings, to improve geographic access, to open new offices in Benoni and Rustenburg to improve access to the public, to implement the full  staff complement of 495 full time staff, and to show support for the power crisis by installing solar energy.  The allocation was R273 million, which was R2 million less than the allocation received from the DoL last year.

Ms Khan noted that the Tsoso strategic plan indicated the strategic goals. The goals were guided by a specific score card against which performance would be measured. Some of the 2010 goals had been revised. She added that now that the first year of the strategic plan had ended, a review was taking place in order to provide guidance and partly inform the second year of the plan. The goals included
promoting social justice through the professional delivery of services, while ensuring compliance with legislation at all times, ensuring user-friendly, quality services that were delivered with speed, and operational effectiveness while ensuring that services were cost effective
.

Ms Khan noted also that there would be a repositioning of the CCMA in the Labour Market, where social justice and restoring dignity were a focus of the processes. She outlined the measures of success for the goals, indicating that by 2010 the CCMA aimed to an established ‘quality control’ role player and provider of continuous professional development through education, training and skills development services. Details of the mediation, capacity outreach and operational plans for the forthcoming year were fully set out in tabular form.

Discussion
The Chairperson commented that during the public hearings on workplace discrimination, there had been proposals that the mandate of the CCMA be extended beyond conciliation in order to alleviate the Labour Court case rate. She asked if the CCMA had the capacity to take on this role.

Ms Khan replied that the CCMA was capacitated and well placed to deal with the cases. It had qualified staff that would be able to handle the matters. However the CCMA was of the view that more research needed to be conducted on workplace discrimination cases. The costs of taking such cases to the Labour Court were also high.

The Chairperson indicated that unfortunately there was not enough time to engage in further discussions. The Committee would analyse the presentation and assess if there was a need to have further meetings.

The meeting was adjourned.

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