ATC120424: Report Budget Vote No 18 – Labour & the Strategic Plan for 2011-2016 , dated 24 April 2012

Employment and Labour

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 24 April 2012

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 24 April 2012


The Portfolio Committee on Labour, having considered Vote No 18 – Labour and the strategic plans of the Department of Labour and entities reporting to the Department, reports as follows:


1. Introduction


The budget vote of the Department of Labour (the Department) was referred to the Portfolio Committee on Labour (the Committee) on 7 March 2012 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 determine whether the funds allocated were in line with the objectives as reflected 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, National Economic Development and Labour Council ( 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:


a) Contributing to decent employment creation through employment services legislation;

b) Promoting equity in the labour market through employment equity implementation and strengthened enforcement mechanisms;

c) Protecting vulnerable workers by improving capacity to monitor and enforce compliance with labour legislation;

d) Strengthening social protection through health and safety implementation and strengthened enforcement mechanisms;

e) Promoting sound labour relations by managing the implementation of the Labour Relations Act;

f) Monitoring the impact of legislation by detecting changing labour market trends;

g) Strengthening multilateral and bilateral relations through participation in the International Labour Organisation ILO governing body and the ILO conference; and

h) Strengthening the institutional capacity of the Department through improved organisational performance.


2.2 Government outcomes


In the medium term, the Department of Labour will focus on three outcomes, namely outcomes 4, 11 and 12. Outcome 4 entails decent employment through inclusive economic growth. Outcome 11 talks to the creation of a better South Africa and contribution to a better Africa and World. Outcome 12 emphasises an efficient, effective and development-oriented public service and an empowered and inclusive citizenship. To realise these strategic outcomes R2 billion has been allocated to the Department for the 2012/13 financial year. Moreover, the Department has identified the following strategic objectives in order to discharge its duties:


a) Implementing the Decent Work Country Programme.

b) Rebuilding Public Employment Services. This would be realised through promoting a policy environment to provide public employment services which will enable Government to maintain a database of job seekers and job opportunities.

c) Strengthening of the Department of Labour’s inspectorate.

d) Strengthening social security, including reintegration of workers into the labour market and restructuring Sheltered Employment Factories.

e) Giving value to social dialogue in the formulation of sound and responsive legislation and policies to attain labour market flexibility for competitiveness of enterprises, this is balanced with the promotion of decent employment.

f) Strengthening institutional capacity of the Department to improve service delivery quality and access.


2.3 Programmes


In responding to the Department’s outcomes, four programmes have been developed as listed below:


2.3.1 Programme 1: Administration


The purpose of this programme is to provide management, strategic and administrative services to the Ministry of Labour and the Department. The projected allocation for the 2012/13 financial year is R732 606 000.



2.3.2 Programme 2: Inspection and Enforcement Services


The purpose of the above-mentioned programme is to realise decent work by regulating non-employment and employment conditions through inspections and enforcement in order to achieve compliance with all labour market policies.


The 2012/13 strategic objectives of the Department in relation to the programme are to:

a) ensure transformation of the labour market by inspecting 200 workplaces in order to achieve 80% compliance with employment equity legislation;

b) ensure decent work principles are adhered to by conducting 130 000 inspections and achieving 80% compliance within 90 days by 2012/13;

c) minimise incidents in the four high-risk sectors, namely iron and steel, construction, chemical and agriculture, through 20 audits per sector, conducting one blitz inspection per sector and one seminar per year;

d) develop and implement competency-based and education programmes;

e) participate in the relevant ILO and Nedlac structures to ensure the ratification of relevant ILO conventions.


The Department projected an allocation of R429 181 000 for the 2012/13 financial year.





2.3.3 Programme 3: Public Employment Services


The objective of the programme is to provide assistance to companies and workers to adjust to changing labour market conditions and to regulate private employment agencies.


The programme as it relates to the strategic objectives entails the following:

a) Provides career counselling and employability enhancement programmes for 50% of the referred work seekers;

b) Contributes to the implementation of the framework response to the economic crisis by implementing the training layoff scheme and social plan programme;

c) Facilitates the employment of 500 people with disabilities and/or veterans per year;

d) Ensures that Sheltered Employment Factories’ orders or sales are increased by 30% annually;

e) Facilitates the achievement of employment equity targets for disability through training 600 learners with disabilities for employment in the mainstream economy annually;

f) Provides life skills support programmes for people identified to participate in small business and cooperatives.


The Department projected an allocation of R322 021 000 for the 2012/13 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 support to institutions that promote social dialogue.


In relation to the strategic objectives, the programme entails the following:


a) Reviewing the working conditions of vulnerable workers in nine different sectors by amending the sectoral determinations for these sectors by consulting with various stakeholders through a process of public hearings, Employment Condition Commission deliberations and advising the Minister of Labour on appropriate wages and conditions of employment of these sectors by March 2016;

b) Investigating the establishment of a medical scheme for the private security sector by March 2012;

c) Investigating the establishment of a provident fund for domestic workers and farm workers by March 2012;

d) Addressing developments in the labour market, including labour broking and legislative compliance and enforcement, by tabling at Nedlac and in Parliament amendments to the Labour Relations Act (1995), the Basic Conditions of Employment Act (1997) and the Employment Equity Act (1998) by March 2012.


The Department projected an allocation of R635 918 000 for the 2012/13 financial year.


2.4 Budget analysis


The total budget for the Department of Labour in 2012/13 is R2 billion, a 5 per cent nominal increase compared to previous financial year. However, in real terms its budget declined by R15.8 million. In relation to other sectors, the labour sector is one of the least funded, even when compared to other departments such as the Department of Arts and Culture. This is in contrast to government’s priorities as stated in the National Development Plan (the Plan).


In order to reduce poverty and inequality, the Plan emphasises the role of the Public Employment Services to match job-seekers to vacancies and highlights the role of the Commission for Conciliation Mediation and Arbitration (CCMA), labour migration regulation, etc. Furthermore, the President referred to the role of social dialogue in improving cooperation between business, labour and government, i.e. the fundamental mandate of the National Economic Development and Labour Council ( Nedlac ). Some of the main budget expenditure drivers over the medium term include protecting vulnerable workers, reintegrating work seekers into the labour market and ensuring decent work. In addition, the Labour Policy and Industrial Relations programme’s main focus will be making transfer payments to address financial constraints at the CCMA and Nedlac .


Over the MTEF period, the additional funding for entities is as follows:







R3.4 million

R5.9 million

R6.6 million

Productivity SA

R783 000

R1.3 million

R1.5 million


R176 000

R290 000

R311 000

Compensation Fund

R4 million

R5 million

R6 million



2.5 Findings


The Committee pointed out the following areas of concern:

a) In terms of the previous year’s Budgetary Review and Recommendation Report (BRRR), the Committee recommended that the strategic plan of the Department should have measurable objectives that were quantifiable for the Committee to exercise its oversight duty effectively but that was not reflected in the current strategic plan.

b) Although the Inspection and Enforcement Services programme highlighted sectors that would be inspected it did not indicate how working conditions, productivity, capacity and credibility of inspectors would be addressed.

c) The strategic plan did not indicate how the Sheltered Employment Factories (SEF) would be restructured to reflect the racial demographics of the country.

d) The strategic plan did not reflect the method within which the sales of the SEF would be maximised.







2.6 Recommendations


The Committee recommended that the Minister of Labour give consideration to the following:

a) Systems relating to service delivery should be strengthened at both head office and regional level. In this regard, the operating manuals should be allocated that will guide provinces and labour centres on the collection, storage and reporting on service delivery information.

b) The Department should improve on its reporting capacity, starting with the strategic plan and other reports that will follow later in the year.

c) The Department is commended for having received unqualified audit opinion in the previous financial year (2011/13)

d) The Department’s budget and spending patterns should be reflective of the Decent Work Country Programme’s objectives of a need to regulate and enforce labour laws.

e) The Department should ensure that the allocation is effectively disbursed for improvement of Inspection and Enforcement Services and that the budget is not shifted to other programmes that are not as critical later in the year.

f) The Department should ensure that labour inspectors conduct follow-up visits to workplaces, particularly to farms, to determine whether challenges identified during the last inspections were addressed.



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 R491 447 million to the CCMA for the 2012/13 financial year.


The CCMA’s strategic objectives for 2012/13 are to:


a) enrich the role of the CCMA in the labour market;

b) build-up skills for staff and social partners to achieve professionalism;

c) deliver excellent service rooted in social justice, ensuring a balance between quality and quantity;

d) enhance and entrench internal processes and systems for the optimal deployment of resources;

e) align the structure that will enable optimal implementation of the strategy; and

f) entrench an organisational culture that supports the delivery of the mandate.





3.1.1 Observation


Owing to the upcoming amendments to labour legislation, the mandate of the CCMA will be expanded and funds will be requested to cover the expanded mandate.



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 R3.6 million for 2012/13 to the entity.


The strategic goals of Productivity South Africa for 2012/13 are as follows:

a) value chain competitiveness;

b) workplace challenge;

c) organisational productivity solutions; and

d) turnaround solutions.


3.2.1 Recommendations


The Committee recommended that the Minister of Labour give consideration to the following:


a) The Committee recommended that Productivity South Africa should be visible, particularly in rural and remote areas, so that people became aware of its existence.

b) With the growing challenges faced by small, medium and micro enterprises ( SMMEs ) in the country, Productivity South Africa should strengthen its support for SMMEs through its turnaround solutions programme.

c) The Department’s poor-performing entities should use Productivity South Africa’s programmes in order to improve performance and to ensure that these entities deliver their service delivery mandates as stated in their strategic plans.



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 of Labour because it generates its own funds. The entity has generated an amount of R8.2 million for 2012/13.


The strategic objectives of the UIF for 2012/13 are to:

a) encourage compliance through enhanced service delivery;

b) improve governance;

c) strengthen institutional capacity of the UIF;

d) improve stakeholder relations; and

e) fund poverty alleviation schemes.


3.3.1 Recommendations


The Committee recommended that the Minister of Labour give consideration to the following:


a) The UIF should reduce the amount of overpayments that occur by improving its controls.

b) The UIF should increase its investments on schemes that will promote youth employment and skills development.



3.4 Compensation Fund


The main objective of the entity is to provide compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees, or for death resulting from such injuries or diseases, the rehabilitation to workers, and to deliver continuous value to all stakeholders. The Department transferred an amount of R15 million to the entity.


For 2012/13, the strategic objectives of the Compensation Fund are to:

a) provide an efficient social safety net;

b) provide professional, efficient and client-oriented human resources;

c) strengthen corporate governance;

d) integrate the Fund with the comprehensive social security reforms;

e) promote policy advocacy;

f) improve financial viability;

g) improve corporate support and services;

h) enhance quality and access to Compensation of Occupational Injuries and Diseases Act (COIDA) services and information.



The capital expenditure amount as approved by the Minister is R30 538 875. Compensation of employees in respect of 2012/13 is estimated at R526 645 777, claims at R3 777 696 882, and goods and services at R4 256 869 212.


3.4.1 Recommendations


The Committee recommended that the Minister of Labour give consideration to the following:


a) The Compensation Fund should continuously assess its capacity to influence workplace relations and shape the labour market.

b) The turnaround time in the processing of compensation should be shortened and would be realised through expeditiously migrating from manual to electronic processing of cases.

c) The Fund should promptly resolve claim backlogs which have cost an estimated R800 million in value.

d) The Compensation for Occupational Injuries and Diseases Act, No 130 of 1993 (COIDA), must be aligned with the Labour Relations Act, No 66 of 1995, to address issues of unfair dismissals where workers are injured.

e) The Fund must ensure that senior managers receive related training to improve their performance.

f) The Fund should strive towards a clean audit report for 2011/12.

g) In the decentralisation of the Fund’s services to provinces, the Fund should ensure that related unions and staff are consulted during the process.



3.5 National Economic Development and Labour Council ( Nedlac )


In terms of the National Economic Development and Labour Council Act, Nedlac shall:

a) strive to promote goals of economic growth, participation in economic decision-making and social security;

b) seek to reach consensus and conclude agreements pertaining to social and economic policy;

c) consider all proposed labour legislation relating to labour market policy before introduction in Parliament;

d) encourage and promote the formulation of coordinated policy on social and economic matters.


The Department made a transfer of R777 000 to Nedlac for the 2012/13 financial year.


The strategic objectives of Nedlac for 2012/13 are as follows:

a) Effective leadership and governance which would bring about strategic conversation, engagement and ownership and promotion of institution.

b) Effective delivery on core mandate which entails effective engagement and coordination in chambers.

c) Promotion of social dialogue which entails information, communications and research and strengthening stakeholder capacity.

d) Organisational renewal for high performance that entails appropriate resources and structure with high performing competent and motivated staff.


3.5.1 Challenges


Nedlac is faced with challenges to discharge its duties effectively as indicated below:

a) Poor adherence to Nedlac protocol.

b) Long delay in finalising issues, partly attributed to constituency representatives who are over-stretched.

c) Nedlac secretariat is under resourced.

d) Poor perception and understanding of the institution.

e) Proliferation and complexity of issues.

f) Poor policy coordination, sequencing and prioritisation.

g) Capacity of the institution.


3.5.2 Recommendations


Based on the challenges, the Committee recommended that the Minister of Labour give consideration to the following:


a) Nedlac should promptly implement the identified recommendations in order to strengthen its capacity to deliver on its mandate.

b) Furthermore, the entity should report back to the Committee on progress in the following quarter.


4. Conclusion


The 2012/13 budget allocation to the Department has not shown significant change from the previous 2011/12 budget. However the Committee endorses the budget based on the overall government priorities. The Committee also endorses the additional allocations to the CCMA, Nedlac , Productivity South Africa and the Compensation Fund. In addition, the Committee will closely monitor the performance of the Department and its entities through quarterly reports to ensure that the budget serves the set government mandate.




Report to be considered.





No related documents