UIF & Compensation Fund Annual Reports 2007/08: deliberations

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Employment and Labour

20 January 2009
Chairperson: Ms O Kasienyane (ANC)
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Meeting Summary

After being briefed the previous day by the Unemployment Insurance Fund Presentation and Compensation Fund on their 2007/08 Annual Reports, the Committee deliberated on their performance and challenges. They commented that the UIF was doing very well and had improved on its audit reports. The challenges were noted. These included the poor registration of taxi drivers and the lack of timeous declaration of employees by employers, leading to delays in processing claims. The use of agencies to claim UIF on behalf of women on maternity leave was discussed. It was suggested that the use of such agencies was prompted by poor service delivery. There was a proposal of the use of public-private partnerships with agencies. The possibility of using the surplus funds to increase benefit days from 238 to 275 days was discussed. The UIF's efforts in taking their services to businesses embarking on large-scale retrenchments were commended. It was noted that the Annual Report did not talk to its equity report on gender and disability representivity.

The Committee stated that the Compensation Fund had given a very honest presentation that emphasised that the Fund was an entity under re-construction. They discussed their capacity problems, the large number of acting positions, the lack of a unified information system, the lack of decentralisation, the vacancy rate and the large proportion of contract workers employed. The Fund had reported tenders issued for accounting services, the risk management function and internal audit function. Notably, the Fund reported R400 million of unclaimed benefits. On this point the Committee suggested that their offices may offer investigative assistance in tracing beneficiaries.

The Committee’s recommendations included: a proposed intervention from the Department of Labour and the Public Service Commission to expedite the filling of posts and that the Compensation Fund provide more frequent progress reports during this period of re-construction. In view of the backlogs dating back to 2000, a special task team was proposed to bring the backlog to within one year. The use of outside contractors during this period was seen as a problematic but accepted. However, service level agreements were suggested to promote the accountability of these contractors. An interim measure for people in urgent need of their payments from the Compensation Fund was suggested. It was not possible to adopt their Committee Report on these Annual Reports as the attending members did not constitute a quorum.

 

Meeting report

Committee Programme
The Chairperson briefly reported to the Committee that she had called the Department of Labour (DoL) to appear on 3 February 2009, but that the Department had asked for the date to be shifted. However, the Committee would be mmeting with the National Economic Development and Labour Council (Nedlac) and the Commission for Conciliation, Mediation and Arbitration (CCMA) on 4 February 2009. As the Committee was trying to finish their work before the National Assembly dissolved, she did not see how this request could be accommodated. The only alternative would be for the Department to attempt to swop dates with Nedlac and the CCMA.

Unemployment Insurance Fund Annual Report: deliberations
The Chair asked Mr Mzondeki to provide a summary of the previous day's proceedings, as she had been absent and he had been Acting Chairperson.

Mr M Mzondeki (ANC) reported that the UIF had presented a good picture and were doing very well.
He did, however, note the challenges raised by the UIF delegates as well as the members in the subsequent discussion. It was acknowledged that the trend of unemployment, due to the global economic crisis, might pose challenges. Among the biggest issues was the poor UIF registration by taxi owners, with a figure of only 5000 registered taxi owners. One of the reasons offered by the UIF was that the driver / owner overlap created problems, as the driver was often also the owner of the taxi. The delay regarding employers reporting information to the UIF and the timeous declaration of employees needed attention as it negatively affected claimants.

The use of agencies used by new mothers to access their UIF during maternity leave was raised. The treatment of the agencies at the labour centres was noted as a problem. The UIF's main problem with these agencies was that part of the mother’s UIF income was going to the agencies - for what was meant to be a free service. They were of the opinion that this was not beneficial to the claimant.

The balance between profits and benefits drew challenge from the members and there was a suggestion  that the surplus funds be used to increase UIF payments. The UIF's efforts in taking their services to businesses experiencing large-scale retrenchments was commended.

Mr Mzondeki noted that the briefing did not talk to the UIF staff’s equity report, especially gender and disability representivity.

Ms A Dreyer (DA) elaborated that the UIF had said that they did not want to pay funds into the agents' accounts and wanted to make payments directly into the beneficiaries' accounts. The UIF also noted a problem with the agents taking a cut. She was of the opinion that it was not up to the UIF to decide for people. If they wanted to pay the agent a cut in exchange for removing the inconvenience of long queues at UIF offices, that was their choice. She stressed that they should not take away the choice of the individual.

Mr L Labuschagne (DA) clarified that the UIF implied that they could not make special arrangements for the agents.

The Chair asked if the agencies had asked for such an arrangement.

Ms Dreyer explained that agencies had a number of clients and queued with many files and documents for those clients. They would therefore require more time to process the agent.  On the other hand, the agencies, doing this professionally, would have all their documents ready for processing. This might mean that they take less time than most people who either do not have their forms filled in properly or do not have the required supporting documents. The agencies could therefore help the Fund by speeding up the process.

Mr Mzondeki pointed out the matter of inequality, which could arise, as only those with the means to pay would be able to afford these agencies.

Mr W Spies (Freedom Front Plus) stated members should be careful not to end up in a situation where they justified underperformance, forcing the public to be satisfied with underperformance. Service delivery should be such that there should not be queues so long that an agent should be necessary. The reason why these agencies appeared was that mothers of young babies could not see their way clear to stand in the queues.
It was not an issue of these people being able to pay. They were actually sacrificing part of their benefit to pay the agencies. The current situation was not the fault of the agent, rather it was the fault of the UIF. He suggested that the principle of public-private partnership could be applied to make service delivery more accessible. If they stopped seeing agencies as potential threats and saw them rather as partners in service delivery, they could then actually solve the problem.

The Chairperson asked if this was the advice given to the UIF.

Mr Spies responded that he would propose that the UIF investigate the principle of a public-private partnership with agencies to improve their service delivery. Such partnerships have been used by government in many other areas with much success.

The Chairperson responded that she felt this was good advice and asked Mr Spies to make a proposal to use public-private partnerships to improve service delivery.

Mr Labuschagne stated that it was interesting that the UIF was considering extending benefit payments due to its favourable financial situation. This would be a possible increase in the number of benefit days (238 days to 275 days) toextend the social security net. He thought this a welcome consideration that should be supported. He added that the Committee should give them credit for their record of clear audits and the fact that they were recognised as one Department of Labour's best entity.

The Chair agreed that the credit was deserved. While she had taken account of all the points raised and suggestions made, she did not know if the suggestions would be supported by the programmes within the UIF and the Department of Labour.

Mr Mzondeki referred to the difficulties the UIF experienced with registration of taxi drivers. He reported that the UIF had requested members to provide assistance in discussions with the taxi industry, availing themselves within their constituencies.

The Chair thought that members would be prepared to assist and asked the members if there was any problem with that suggestion. The Committee readily agreed to the suggestion.

Mr Mzondeki also suggested an ongoing campaign promoting employers’ declaration of employee information to the UIF timeously.

Compensation Fund Annual Report: deliberations
Mr Mzondeki reported that the members had found it to be a very honest, up front presentation. The briefing had emphasised that the Compensation Fund was an entity completely under new construction. They had informed the committee of their capacity problems. A notable capacity issue was that there were many acting positions. To address these capacity problems in the interim construction phase, the Compensation Fund had issued tenders for accounting services, the risk management function and internal audit function. These tenders were due to be finalised by the end of March 2009.

Mr Mzondeki continued summarising their briefing:
- The Compensation Fund’s manual system caused many delays and due to technological constraints, they were unable to have a unified information system. This caused much time-consuming to-ing and fro-ing. The Fund expressed the opinion that they were not decentralised as well as they should be.
- There was R400 million of unclaimed benefits and the Fund was unable to trace the people to whom the payments were due, causing a challenge in distribution of the benefits.
- The Fund had emphasised a need to improve their image through means of media but members had suggested that they should, instead, concentrate on service delivery as this would automatically lead to an improvement in their image.
- The question of vacancy rate was raised. The Fund had a very lean permanent staff complement and have been using outside contractors. Very few permanent staff were, therefore, available to provide a service to the many claimants and the use of contract workers also raised questions of accountability.

Ms Dreyer agreed with Mr Mzondeki’s summary. She emphasised that the contract staff were not part of the permanent staff. An additional issue was the protracted verification process that delayed the appointment of people in permanent positions. She was of the opinion that this was the real problem. She had sympathy with the bureaucracy involved in appointing more staff.

Regarding the difficulties with the current information system, she pointed out that Siemens, with whom the Fund was contracted for their information system, had reported that the work on the Fund’s IT systems could take up to two years. This would cause considerable delay in payments. The recommendation was therefore made that there should be an interim measure for people in need of their payments from the Compensation Fund.


Mr Labuschagne had three recommendations:
- The Committee should ask the Department of Labour and the Public Service Commission to expedite the filling of posts.
- The frequency with which the Compensation Fund Commissioner reports to the Committee should be increased. He proposed that the Fund present an interim report every six months on their progress.
- In view of the backlog back to 2000, a special task team should be appointed to bring the backlog down to within one year.

The Chairperson felt that the use of outside contractors was a real problem. She asked what the Committee thought about the use of contractors being totally stopped.

Mr Labuschagne responded that he did not have problem with the use of contractors in view of the number of job vacancies. He added that there did not seem to be a tremendous shortage of staff. He reiterated that, in order to eliminate the backlog, there should be a dedicated task team to address the backlog and if outside contractors were necessary, they should go that way.

The Chairperson agreed with this recommendation.

Mr Mzondeki agreed with the recommendation of a backlog task team. He felt that it would not be advisable to immediately appoint staff. The Compensation Fund still needed to evaluate what positions were necessary in their new organisational structure. They would therefore need outside contractors in the interim and needed these contractors to be accountable. He suggested that perhaps service level agreements be used to promote such accountability, as the Fund worked toward establishing permanent staff.

The Chairperson noted delays in verification by the DoL being the cause of the delays in appointments. She stated that the Committee would take that up with the DoL at their scheduled meeting, as this problem affected capacity.

Mr Labuschagne reported that according to a quick calculation he had done, the additional contract posts in ratio to the staff establishment came to about 40%. He therefore needed clarification of the additional posts in their next report, especially pertaining to the functions of the staff.

Mr Mzondeki responded that this clarification should be reported in the interim progress report in six months. He agreed with the need to push the public service to speed up the appointment of staff.

The Chairperson referred to the frequency of more regularly reporting and suggested a quarterly report be provided, should the Committee call the Compensation Fund to do so.

The Chairperson queried the structure of the Fund’s risk management function.

Mr Mzondeki responded that they had issued a tender to address that issue. They currently have applicants, and were in the process of finalisation with a target of March 2009 by which to secure these services. He added that their capacity problems were due to their lean structure and the Fund needed to quickly work toward a permanent structure so that the Committee can see the vacancy rate change.

The Chairperson reported that they could not adopt their Committee Reports as insufficient members were present. She added that members could add further comments and recommendations in writing as well as raising further questions during their engagement with the Department of Labour

Mr Mzondeki referred to the matter of the R 400 million of unclaimed payments and asked if the parliamentary constituency offices could play a role in investigating that. He asked if it would be possible for the task team to look at that issue as well.

Mr Mzondeki made a special request that the Committee finalise their programme in a timely manner to accommodate members currently busy with other political responsibilities.

The meeting was adjourned.

 

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