ATC110412: Report Budget Vote No 18 – Labour and the Strategic Plan of the Department of Labour for 2011-2016 and its entities
Report of the Portfolio Committee on Labour on Budget Vote No 18 – Labour and the Strategic Plan of the Department of Labour for 2011-2016 and its entities, dated 12 April 2011
The Portfolio Committee on Labour, having considered Vote No 18 – Labour and strategic plans of the Department of Labour and entities reporting to the Department of Labour, reports as follows:
The budget of the Department of Labour was referred to the Portfolio Committee on Labour on 9 March 2011 for consideration and report. The strategic plans of the Department and its entities were tabled in Parliament on the same day. The Committee perused the strategic plans of the Department and its entities to ascertain whether the funds allocated were in line with the objectives as stated in the strategic plans. The entities that are reporting to the Department are the Commission for Conciliation, Mediation and Arbitration (CCMA), Unemployment Insurance Fund (UIF), Compensation Fund, Nedlac and Productivity South Africa.
2. Department of Labour
2.1 Aim of the Department
In responding to government priorities, the Department’s objective for the next five years is to focus on the following areas:
- Decent work;
- Public employment services;
- Promoting employment inspection and enforcement services to effectively monitor and enforce compliance with the associated legislation;
- Strengthening social security; and
- Strengthening the institutional capacity of the Department.
2.2 Government outcomes
In relation to the Medium Term Strategic Framework (MTSF) priorities, the central outcome is decent employment through inclusive economic growth. To realise this goal, policies and programmes will have to be put in place. The following are other key outcomes that are prioritised to define the Department’s areas of focus over the next five years:
· A skilled and capable workforce to support an inclusive growth path;
· Vibrant, equitable and sustainable rural communities with food security for all;
· Environmental assets and natural resources that are well protected and continually enhanced;
· To create a better South Africa and contribute to a better and safer Africa and World; and
· An efficient, effective and development-oriented public service and empowered and inclusive citizenship.
In responding to the Department’s outcomes, four programmes have been developed as listed below:
2.3.1 Programme 1: Administration
The objective of this programme is to provide overall management, strategic support and advisory support services to the Ministry and the Department. Further, the programme’s objective is to capacitate the office of the Director-General and Chief Operations Officer of the Department.
The projected allocation for the 2011/12 financial year is R697 228 000.
2.3.2 Programme 2: Inspection and Enforcement Services
The purpose of the above-mentioned programme is to ensure implementation of and compliance with the Department’s policies and programmes through monitoring, evaluation and inspections. Measurable objectives of the programme are to:
· Enhance equity in the workplace;
· Protect vulnerable workers;
· Strengthen social protection; and
· Strengthen institutional capacity of the Department.
The Department projected an allocation of R386 726 000 for the 2011/12 financial year.
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. The programme’s main measurable objective is to contribute towards employment creation.
The Department projected an allocation of R296 146 000 for the 2011/12 financial year.
2.3.4 Programme 4: Labour Policy and Industrial Relations
The purpose of this programme is to establish an equitable and sound labour relations environment, to promote South Africa’s interests in international labour matters through research, analysing and evaluating labour policies and to provide statistical data on the labour market, including providing support to institutions that promote social dialogue. The programme’s central measurable objective is to review the working conditions of vulnerable workers in nine different sectors by amending sectoral determinations for these sectors.
The Department projected an allocation of R601 358 000 for the 2011/12 financial year.
2.4 Budget analysis
The Department received an allocation of R1.981 billion for the 2011/12 financial year. The transfers to departmental public entities are projected as follows: Productivity South Africa R34 059 000, Nedlac R23.915 million and Commission for Conciliation, Mediation and Arbitration (CCMA) R448.104 million, and Compensation Fund R9 605 000. The UIF is financed by a tax payable by both employers and employees at a rate of 1% of earnings, up to a threshold of R12 478 a month, hence the transfer from the Department is not indicated. However a total of R9.361 billion revenue was collected for the period ending January 2011. The Compensation Fund has collected a total of R6 252 703.
· The strategic plan does not reflect an improvement when compared to the previous strategic plans, which was evidenced by the small increase in new employer registrations.
· The Committee was not comfortable with the 5% target set by the Department in relation to the Compensation Fund.
· The Committee was not convinced that 30 applications of companies in distressed sectors were being processed within 30 working days from the date of the application.
· There were no timeframes attached to the programmes to facilitate the oversight duty of the Committee.
· The Committee recommended that the Department’s strategic plan should outline detailed information on planned performance indicators by giving specific numerical targets (where applicable) in order for Parliament to exercise proper oversight effectively and efficiently over planned targets.
· The Committee further recommended that the Department should monitor the entities’ strategic plans more closely in order to ensure that targets are stringent and not lenient.
· The Committee acknowledged that some duties within the Department and the entities required specialised skills, which government cannot afford if housed permanently within these institutions. As a result, the Committee recommended that the use of consultants by the Department and its entities should be monitored closely in order to avoid excessive use of these skills without building internal capacity.
· The Committee noted that the Department’s vacancy rate targets of 8% were below the acceptable national targets of 6% and therefore recommended that they should be aligned in future.
3. Public entities
The Committee also considered the strategic plans of the following public entities: Commission for Conciliation, Mediation and Arbitration (CCMA), Productivity South Africa, Unemployment Insurance Fund (UIF), Compensation Fund and the National Economic Development and Labour Council (Nedlac).
3.1 Commission for Conciliation, Mediation and Arbitration (CCMA)
The purpose of the CCMA is to promote social justice and economic development in the world of work and to be the best dispute management and dispute resolution organisation trusted by its social partners. The Department made a transfer of R448 104 000 to the CCMA for the 2011/12 financial year.
For 2011/12, the CCMA’s strategic objectives are to:
· Build skills to achieve professionalism;
· Deliver excellent service rooted in social justice to ensure a balance between quality and quantity;
· Enhance and entrench internal processes and systems for optimal deployment of resources;
· Align the structure that will enable optimal implementation of the strategy; and
· Entrench an organisational culture that supports the delivery of the mandate.
Based on the Committee’s findings, it was recommended that the entity should improve the drafting of its strategic plan by incorporating budget information and measurable targets.
3.2 Productivity South Africa
The aim of Productivity South Africa is to improve productivity by advertising, implementing, monitoring and evaluating solutions aimed at South Africa’s competitiveness. The Department made a transfer of R34 059 000 to the entity.
The strategic goals of Productivity South Africa for 2011/12 are:
· Value chain competitiveness;
· Positioning and brand management;
· Organisational productivity solutions; and
· Turnaround solutions.
Based on its findings, the Committee recommended that Productivity South Africa should be allocated more funds for it to be more visible to other provinces. Owing to the seriousness of the challenge, the Committee committed itself to engage the Minister of Labour and the National Treasury to ensure that sufficient funds are allocated to the entity. In this regard, Productivity South Africa was requested to submit a business plan reflecting why funds were urgently required. The Committee was very concerned about the vacant post of Chief Executive Officer since 2009, and strongly advised the entity to expedite the process of appointment.
3.3 Unemployment Insurance Fund (UIF)
The UIF strives 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 UIF does not receive transfers from the Department because it generates its own funds.
The strategic objectives of the UIF for 2011/12 are to:
- Encourage compliance through enhanced service delivery;
- Improve governance;
- Strengthen institutional capacity of the UIF;
- Improve stakeholder relations; and
- Fund poverty alleviation schemes.
Based on its findings, the Committee recommended that:
- The UIF should furnish additional detailed information on the Training Lay-off Scheme.
- The UIF should ensure that upon completion of training, retrenched workers are reabsorbed back into the labour market.
- Capacitating the UIF would be a continuous discussion as it is responding to the Presidential call of creating decent jobs.
- Labour centres should be suitably located to ensure that information is disseminated to the rural communities effectively.
- The UIF and the Department should prepare amendments to accommodate benefits for seasonal workers, especially since the matter has been with the Department for a while.
3.4 Compensation Fund
The main purpose of the Compensation Fund is to provide compensation for occupational injuries, diseases and the rehabilitation to workers, and to deliver continuous value to all stakeholders. The Department transferred an amount of R9 605 000 to the entity.
For 2011/12, the strategic objectives of the Compensation Fund are to:
- Strengthen the skills and human resource base;
- Improve the health profile of the nation;
- Intensify the fight against crime and corruption; and
- Build a developmental state, including the improvement of public services and the strengthening of democratic institutions.
The capital expenditure amount as approved by the Minister is R33 075 000. Compensation of employees in respect of 2011/12 is estimated at R494 503 077, claims at R3 808 722 262, and goods and services at R 4 283 150 663.
The Committee recommended that:
- The Compensation Fund should speedily finalise addressing all matters raised by the Auditor-General during the 2009/10 financial year, as these matters will impact on future audit outcomes.
- The Commissioner should hastily address all internal administrative challenges, as reported in the strategic plan presented to Parliament.
- The entity should devise a tangible strategy to deal with the proposed internships to 400 youths between the 2011/12 and 2014/15 financial years as this will contribute to the transfer of skills and employment of young people.
- The entity should consider the inclusion of domestic workers as beneficiaries under the Compensation for Occupational Injuries and Diseases Act, No. 130 of 1993.
- The entity should shorten the application process in order to expedite payment to claimants.
3.5 National Economic Development and Labour Council (Nedlac)
The mandate of Nedlac is to promote the goals of economic growth, to seek consensus and conclude agreements pertaining to social and economic policy, and to consider all proposed legislation relating to labour market policy before their introduction in Parliament. The Department made a transfer of R23.915 million to Nedlac for the 2011/12 financial year.
The strategic objectives of Nedlac for 2011/12 are:
· Labour-absorbing growth;
· Youth unemployment;
· International competitiveness;
· Cost structure of the South African economy;
· To support small businesses; and
· Public works programme.
Nedlac informed the Committee that once a policy is engaged with at national level, no further consideration was being given at provincial level. To address this challenge, Nedlac indicated that it wanted to take the dialogue to the provincial level to consider the dynamics of the provinces.
The Committee acknowledged the broadened mandate of Department and its entities in order to actively address unemployment, poverty and inequality within the labour market. As such, the Committee was concerned with the understatement of certain targets by the Department and some of the entities, which lead to little contribution to this broadened mandate. The Committee also acknowledged and endorsed additional budgets of the CCMA and Nedlac whose continued contribution during the economic crisis and recession led to underfunding. However, it also cautioned against the notion that government institutions are revenue driven. Although the UIF and the Compensation Fund generate revenue, their mandates of cushioning workers in periods of hardship should not be overtaken by the obsession to generate revenue. These entities should rather extend coverage to uncovered workers and unemployed people where possible.
Report to be considered.
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