ATC100310: Report Budget Vote 17: Labour and the Strategic Plan of the Department & its public entities

Employment and Labour

Report of the Portfolio Committee on Labour on Budget Vote 17: Labour and the Strategic Plan of the Department of Labour and its public entities, dated 19 March 2010


1.       Introduction


The budget and strategic plan of the Department of Labour was referred to the Portfolio Committee on Labour for consideration and report.  The Committee scrutinised the Strategic Plan of the Department and its entities to establish whether the funds requested are aligned to the objectives as stated in the respective strategic plan documents.  This process was participative and engaging.


2.   Department of Labour


2.1       Aim of the Department


The aim of the Department of Labour is:


·              to regulate the labour market,

·              to assist the integration of the unemployed into the labour market,

·              to ensure compliance through enforcement of all labour legislation, and

·              to provide protection to the unemployed and the injured.


2.2     Government Outcomes


In relation to the government outcomes for the Medium Term Strategic Framework (MTSF) priorities, the following key outcomes are prioritized to define the department’s areas of focus over the next five years:

·               Live long and healthy lives,

·               Ensure decent employment for people by facilitating and contributing to inclusive economic growth,

·               Create a better Africa and a better world- make contribution to global relations,

·               A public sector capacity that is efficient, effective and worthy of a developmental state.


2.3     Programmes


The Department of Labour has four sub-programmes as listed below:


2.3.1     Programme 1: Administration


The purpose of this programme is to provide overall management, strategic support and advisory support services to the Ministry and the Department.  In this programme the department has added programmes such legal services, security and the Chief Information directorates. 


The projected allocation for 2010/11 is R649 997 million.


2.3.2     Programme 2: Inspection and Enforcement Services (IES)


The purpose of the above-mentioned programme is to ensure implementation of and compliance with the Department of Labour and policies and programmes through monitoring, evaluation and inspections. One of the measurable objectives is to ensure that decent work principles are adhered to by improving compliance by 80% with Labour Legislation by employers by 2011, through regular inspections.  The department is conducting blitz inspections in high risk and problematic sectors.  It anticipates implementing professionalization of the inspectorate.  This would be implemented in phases and based on funding availability.


The department projected an allocation of R356 603 million for 2010/11.


2.3.3     Programme 3: Public Employment Services


The aim of the programme is to provide Public Employment Services to assist companies and workers to adjust to changing labour market conditions and to regulate private employment agencies.  One of the measurable objectives of this programme is to facilitate the entry and re-entry of job seekers into the labour market through proactive measures to address unemployment and poverty by finalising the public employment services policy.  The Public Employment Service Bill will provide for amendments to the current Skills Development Act (1998) and the Unemployment Insurance Act (2001).


The department projected an allocation of R280 420 million for 2010/11.


2.3.4     Programme 4: Labour Policy and Labour Market Programmes


The purpose of this programme is for the establishment of an equitable and sound labour relations environment and the promotion of South Africa’s interests in international labour matters through research, analysing and evaluating labour policies. 


The department projected an allocation of R496 869 million for 2010/11.


3.   Budget analysis


The Department of Labour received an allocation of R1.783 billion for the 2010/11 MTEF period from which transfers to departmental public entities allocations have been made as follows: Sheltered Employment R62 559 million, Productivity South Africa R31 155 million, NEDLAC R15 868 million and Commission for Conciliation, Mediation and Arbitration (CCMA) R373 817 million.  The total of transfers to departmental entities amounts to R483 399 million.  The transfer of functions to the Department of Higher Education has resulted in the slow increase in the budget of 4.3 percent in nominal terms. 


The department reported that it has spent 64 percent of its budget on service delivery programmes and 36 percent has been spent on administration.  


4.   Findings


a)        The Department does not give clarity in terms of challenges facing the department and how it is planning to respond to government priorities. There is no clear indication of what priority gaps are.


b)        There is lack of outlined short-term and long-term priorities; the department should outline such priorities to give the Committee an insight regarding the department’s progress in achieving such objectives.


c)        With regard to labour schools, the Committee raised a concern with regard to the fact that there is only one labour school in Durban.


d)        The department should ensure that the inspection and enforcement services are effectively capacitated in order to monitor the implementation of the labour regulatory framework.


e)        The Committee noted on the working conditions of inspectors, and noted that there should be improvement in their conditions of employment.  The Committee is of the view that department’s inspectorate should operate in the same manner as road traffic inspectors.






5.            Recommendations


·              In order for the department to respond to the government priorities in particular “decent work” as mentioned by the President during the State of the Nation Address, the Committee emphasized that necessary support should be provided in order to achieve this priority and recommended that additional funding should be allocated to the programme on Inspectorate and Employment Services (IES). 


·         The department should also increase its unannounced inspectorate visits as this will assist in enhancing their role.  The issue on inadequate remuneration structure of inspectors is still a worrying factor and the department should pay attention to this aspect.


·              The Department of Labour should consider extending the labour schools to other provinces.


·              The Department of Labour should develop strategic plans that would clearly respond to the government priorities. 


·              The department should consider amending the Unemployment Insurance Fund Act to address the issues of people who resigned from employment due to intolerable working conditions (constructive dismissal). 


·              The department should amend the Occupational Health and Safety Act in order to include provisions that will enable inspectors to conduct their inspection duties effectively.


6.   Public Entities


The Committee also considered the strategic plans of the following public entities: Compensation Fund, Unemployment Insurance Fund (UIF), National Economic Development and Labour Council (NEDLAC), Commission for Conciliation, Mediation and Arbitration (CCMA) and Productivity South Africa. With regard to Compensation Fund and NEDLAC, the Committee wishes to report as follows:


6.1     Compensation Fund


The main objective of the above-mentioned entity is to provide compensation for disability, illness and death resulting from occupational injuries and diseases.  The budget allocation of the entity indicated that they spent R3 638 882,500 million on their total budget.  Compensation of employees amounted to R323 969,025 million, claims R2 709 284,055 million.  There is an increase of R40 million towards goods and services which totalled R3 290 559,693 million.


The following concerns were raised by the Committee:


  • Whilst acknowledging the Fund’s efforts to address existing challenges on their systems, there is a concern with the number of individuals who continue not to receive their payments after approval due to delays.


  • The current strategic plan does not specify how the entity is planning to improve on delays in payments and also to improve on the current process of assessment.  The entity should in their future strategic plans provide information on companies being assessed, and measures to improve on delays in payments.


  • The waiting period for payments to claimants should be reduced from 90 days to 30 days.


  • There is a concern around the Fund’s non-capacity to track claimants and an improvement is required in this regard.


  • The Committee raised concern in relation to the reporting structure and accountability of the Chairperson of the board who is also the Commissioner of the fund.  The concern is also around issues of conflict of interests that might be posed by this arrangement.


  • The department should play an active role in assisting the Fund in conducting education and awareness campaigns to the public.  They should draw up a strategic plan that would clearly outline their objectives.


  • There should be decentralisation of services to other outstanding provinces where the services of Compensation Fund are not provided. The Committee requested the Fund to provide on continuous basis, a report pertaining to this issue.


6.2     Unemployment Insurance Fund (UIF)


The main objective of the UIF is to contribute to the alleviation of poverty in South Africa by providing short-term unemployment insurance to all workers who qualify for unemployment related benefits. 


The Department of Labour should assist the Fund regarding taxi recapitalization and other processes and the Directors-General of the Departments of Labour and Transport should work closely to attend to issues of registration of UIF, and Compensation Fund and they should develop strategies that would encourage taxi drivers and taxi owners to register.

The fund should intensify its marketing strategies to promote awareness of the public in its services.


The Department of Labour in conjunction with the Department of Transport should ensure that taxi drivers and taxi owners are covered in the UIF and Compensation Fund Acts.


6.3     Commission for Conciliation, Mediation and Arbitration (CCMA)


The aim of the entity is to promote social justice and fairness in the workplace by delivering ethical, qualitative, innovative and cost effective dispute management and resolution services, education, training and development and efficient administration. 


There is an allocation of R373 817 million and the entity has dealt with approximately 3 million cases.  The department highlighted that the entity is in need of additional funding.


6.4     National Economic Development and Labour (NEDLAC)


The mandate of the entity is to promote the goals of economic growth, participation in economic decision-making and social entity and to consider all proposed legislation relating to labour market policy before it can be introduced to Parliament.  For 2010/11, the department has made a transfer of R15 868 million towards this entity.


The department reported that the allocated budget is insufficient and indicated that another allocation of R15m would ease the budgetary constraints faced by this entity.  Among the special projects reported by the entity, the Committee emphasized on the importance of the special project named Service Delivery through Social dialogue at provincial level.



The Committee recommends that the entity should consider establishing social dialogues at local government level.


6.5     Productivity South Africa


The vision of the entity is to lead and inspire a productive and competitive South Africa.  The department has made a transfer of R31 155 million to this entity. 


The Committee advised the entity to facilitate the appointment of the Chief Executive Officer as the position is vacant and viewed it as a strategic position.


7.            Conclusion


The Committee having listened to the department’s budget and strategic plans is of the view that, less emphases has been made regarding the alignment of the strategic plans to the issues raised by the President in his State of the Nation Address and recommends that the budget be supported.


Report to be considered.



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