Seaton Legislative Proposal to Amend the Remuneration of Public Office Bearers Act, Dreyer Proposal to Amend Employment Equity Act

Meeting report

Mr P Gerber (ANC) was elected as Acting Chairperson.

Adv P Swart (DA) raised the matter of the Kellerman petition. He wished that it be recorded that the Committee was still waiting on the Minister of Finance and pointed out that since this matter had been outstanding for some time the Committee must urge a response.

Mr Gerber agreed, and noted that there were other proposals and issues that clearly would not all be dealt with before Parliament rose at the end of the year. The Committee must prioritise those to be pursued to finality this year. 

Dreyer Legislative Proposal to Amend the Employment Equity Act
Ms A Dreyer (MP) presented her legislative proposal to amend the Employment Equity Act No. 55 of 1998.
The proposal simply called for an amendment to the Employment Equity Act so as to include, in the definition of the designated groups to whom affirmative action measures applied, the new generation of South Africans that started their schooling in 1994. The effect of this amendment would be that a sunset clause be introduced to the Employment Equity Act, because every year another generation would be added to those in the designated group from 1994 onwards. That meant that over time everybody would be included in the designated groups, thereby making it redundant.

The motivation had to do with the skills crisis South Africa was experiencing, caused by the massive brain drain or loss of skills and the huge vacancy levels, especially in the public service. It also derived from the International Labour Organisation (ILO) definition of affirmative action, which implied that a sunset clause should be a temporary measure to address certain issues in society, rectify them, and then be phased out.

While there were noble intentions behind the Employment Equity Act, unfortunately it also produced many unintended consequences. Ms Dreyer referred to the brain drain, whereby many thousands of well qualified young South Africans left South Africa with their valuable skills as IT specialists, engineers, accountants, and doctors, which were all skills that the country needed.  The reasons for leaving were firstly fears about the crime situation, and secondly a belief that affirmative action limited their career prospects in South Africa, so that they should look for a better life elsewhere. South Africa could not afford this emigration and resultant loss of skills. Not only were the skills themselves lost, but it was estimated that ten other people whom the skilled would otherwise employ in their small businesses or private practices would also lose out on employment.

South Africa had already invested in the education of this new generation and it was essential to keep those people here to receive the returns on that education investment. She believed that this legislative proposal would send a message to these people that they were welcome in South Africa and that they had equal opportunities to realise their talents and fulfil their dreams

Mr A Ainslie (ANC) suggested it would be very useful to get information on any surveys that had been undertaken to back up Ms Dreyer’s assertion that people were leaving the country in droves because of the Employment Equity Act. Black and coloured people were also leaving. He suggested a more scientific survey because the most employed and employable people in the country were white people.

Mr Gerber asked Ms Dreyer to provide the survey as requested by Mr Ainslie. He explained that the Committee’s role was to decide whether it was desirable or not desirable for the proposal to proceed through the Parliamentary process.

Ms Dreyer responded she could refer the Committee to the poll conducted by Professor Pierre du Toit of Stellenbosch University, as well as another by the South African Institute of Race Relations on skilled people leaving the country.

Adv Swart submitted that the proposal seemed to put something in place to make provision for people at school going age in 1994, which meant that the information, surveys and polls would be indicative that the young people would be between the ages of 18 and 24 and finishing school. He agreed that it would be useful to get information on that.

Seaton Legislative Proposal to Amend the Public Office Bearers Amendment Act
Ms Seaton re-presented her proposal, having made the changes that she mentioned the previous week.

She also brought a presentation she had put before her caucus last week and also a copy of a document indicating that she had put forward proposals of a 20% minimum increase because salaries affected pensions. This document showed the effect of the Moseneke Commission proposals. She explained that in one calculation a set of salaries incorporated a R80 000 pensionable allowance, as opposed to the original R40 000. The extra R40 000 showed salary increases at 11%. In fact the increase, taken over the whole salary, amounted to 5.4%, plus the additional R40 000. The second set of calculations dating back to December last year had suggested a 7.5% increase, but this was not acceded to.  The final offer by the Moseneke Commission was actually less than was offered in the original document in April 2007, which she thought was appalling.

Ms Seaton then tabled the proposal, and the document entitled “Pension Proposals” (see attached document). She explained that this had worked on certain assumptions of pensionable salaries, gave an indication of what the amounts would be after tax deductions, taking into account there was no gratuity payable at this stage.

Ms Seaton then said that last year it had been indicated that judges retired at age 70, or after twelve years service, whichever was earlier, and that on retirement at age 52 a judge could retire on full pension, with 100% of his salary. Judges did not contribute themselves to a pension fund. In addition, then could get a gratuity equivalent to 206.7% of their highest salary earned during office. She compared this position to an MP entering parliament at age 45 and retiring at age 60. She noted that judges earned more than double what the MPs earned, and did not have to make own contributions to pensions or medical aid. They were allocated cars in addition to their salaries.

Ms Seaton stated that she was worried about the way in which MPs were being treated. The Moseneke Commission indicated that there was a substantial increase, when in fact the gratuity was re-worked back in to the increase. It was purely that gratuity that would be “topping up” the pension. One third of salaries could be spent on travelling. She indicated that MPs, in terms of Moseneke proposals, should have been brought in line with judges. The Speaker was not on the same level as a judge, because of the latter’s benefits in terms of car, non-contributory pension and free medical aid. A Judge did not have the right to determine his or her pension but in terms of the Act merely had the right to propose or recommend the upper limit of the contribution by the State.

She believed that the current situation showed total disrespect for Members of Parliament and the time had come to rectify that through her proposal.

Adv S Sigodi, Head: Legal Investigating Services, Office of the Presidency, said from a purely legal perspective people should not determine their own salaries, and that was the reason for the independent Commission to determine salaries. The Act and Constitution in relation to judges stated that in terms of section 219 the upper limit must be determined by Act of Parliament. That should establish the framework. She was not sure whether what Ms Seaton was proposing was a framework only, as an independent commission must make recommendations to Parliament. This Commission would obviously play a major role in the determination of salaries, pensions and gratuities. The question was whether pensions and gratuities fell within the definition of an allowance. There were legal ramifications that needed to be correctly interpreted. The amounts would have to be determined by Treasury, who would establish whether the State could afford to pay. She would imagine that the Commission had dealt with Treasury and determined how much the fiscus was able to pay.

Adv Swart did not see this proposal as in any way trying to impact or determine salaries for MPs, which he felt would be incorrect. He would consider this proposal as putting forward the framework for a move away from a dedicated pension to a pensionable salary. He believed it should be argued further and the legal framework should be looked into. He did not see this as interfering with the ambit of the Commission.

Ms S Rajbally (MF) felt that a one-hour meeting was not enough; this proposal needed more time. The Speaker should be invited. This issue had been going back and forth for some time and there was a need to draw the line. MPs made rules and regulations for the country but could not take care of themselves.

Ms Seaton said in terms of the Constitution and the Remuneration of Public Office Bearers Act, it was correct to have the Commission that looked at salaries. However the Commission itself was not one hundred percent certain it should be looking at pensions. She questioned whether a judge would be regarded as a public office bearer.  The Act said that the Commission may make recommendations on the upper limits of pensions, but this did not necessarily mean that it could spell out gratuities and those details. She believed they were entitled to look at the proposal. She had merely looked at judges’ salaries by way of comparison.  A legal opinion from a Constitutional Lawyer, Adv Coetzee, indicated that MPs were perfectly in their rights as Parliament to determine pensions of themselves. She hoped to make further submissions, as there were some other technical issues, such as the reference to widows or widowers to be changed to life partners.

Mr Gerber urged members when they met on Friday to prepare themselves to deal with this matter. He noted that the Moseneke proposals only were applicable from age 50.

The meeting was adjourned.