ATC121022: Report of the Portfolio Committee on Labour on the study tour to Germany, dated 11 September 2012
Employment and Labour
Report of the Portfolio Committee on
Labour on the study tour to
The
Portfolio Committee on Labour, having conducted a study to
1.
Introduction
The Portfolio
Committee on Labour undertook a study tour to
The Committee met with the following
institutions: Confederation of German Trade Unions (DGB), Friedrich-Ebert-
Stiftung
Foundation (FES), Confederation of German
Employers (BDA),
Federal
Ministry for Social and
Labour Affairs, Parliamentary group for Committee of Labour and Social Affairs,
Institute for Employment Research (IAB) and German Public Employment Services.
2.
Delegation
Mr ME
Nchabeleng
,
Chairperson (ANC) (Leader of the delegation)
Ms L Makhubela-Mashele
(ANC)
Ms H Line (ANC)
Mr E
Nyekemba
(ANC)
Mr T
Maserumule
(ANC)
Mr S
Motau
(DA)
Mr D
Kganare
(Cope)
Mr L
Nxelewa
(Committee Secretary)
Ms S
Mkhize
(Committee Researcher)
3.
Day
1, 20 March 2012
3.1
Meeting with the Confederation of German
Trade Unions (DGB)
The DGB is an umbrella organisation
for eight German trade unions. The union represents approximately 6.3 million
employees across the country, and the number varies from sector to sector.
However, the representation of the union is
dominant in the metal and car industry. The DGB coordinates joint demands and
activities within the German trade union. It represents and coordinates
activities of member unions with the government authorities, political parties
and employers union. The DGB has close relations with the National Union of
Metalworkers of South Africa (NUMSA), and thus has relations with
To minimise impact of this
challenge, unemployment benefits were released to employees whilst still at work
and simultaneously skills of employees were being upgraded so as to
re-integrate them (employees) back into the labour market. To address the
challenge of skills shortage, post secondary school learners would be submitted
for training to a particular employer. After the training, the employer would
determine whether or not to employ the trainee permanently. For the purposes of
re-integrating employees into labour market, the employer is responsible for
further training of employees. There is a special training offered to disabled
person in order to integrate them into the labour market.
The contributions to the
unemployment insurance are self administered. The Government has no control
over the manner within which unemployment benefits should be managed. There is
a board responsible for determining distribution of social benefits.
The legal framework in
Compared to
Labour agencies in
The Confederation of German Trade
Union (DGB) is not in support of the system of private employment agencies
based on following grounds:
·
there is a lack of transparency in the process;
·
private labour agencies advertised all jobs through the internet,
which some people do not have access to, particularly those residing in remote
areas;
·
the fact that there is a private deal between the employer
and the employee implies that there is a lot of secrecy in the system, and that
contradicts the
DGBs
principle of openness;
·
private labour agencies focus on precarious jobs whilst
there is a high rate of unemployment;
·
Many private labour agencies are selling temporary
employment to the people.
3.2
Meeting with Friedrich-Ebert-
Stiftung
(Ebert Foundation)
The Friedrich-Ebert-
Stiftung
is a German political foundation associated with
the Social Democratic Party of Germany, yet independent of it. It was
established as the political legacy of Friedrich Ebert.
It is the oldest German organisation formed
to promote democracy, political education and promote students of outstanding
intellectual abilities and personalities. Today, the main goal of the organisation
is to promote political and societal education of people from all walks of life
in the spirit of democracy and pluralism, and to work towards international
understanding and cooperation.
According to the organisation,
The organisation proposed that to
maintain economic stability, Public Employment Agencies and Private Employment
Agencies should coexist in order to complement each other. It indicated that
should the Private Labour Agencies be abolished, that would compromise the
principle of competitiveness in the labour market, and the public employment
system could be open to abuse.
For the
Private Employment Agency to function better, it needs strict regulations.
For example, agencies should strictly deal
with placements of jobseekers and there should be no contract between employee
and the private agent. In order to address challenges of abuse of workers,
private agencies must adhere to strict regulations in turn setting very high
standards. The organisation indicated that
3.3
Meeting with Confederation of German
Employers (BDA)
The BDA is the umbrella organisation
of private sector employers in the manufacturing industry, commerce, banking, insurance,
small scales crafts, agriculture, transport and the newspaper industry. It
affiliates the central trade associations and the multi-industry land
associations. It represents about 1 million businesses that represent about 20
million workers.
According to the organisation, in
Following the major labour market
reforms of 2005, the German social security system is divided in two. Firstly, there
is the unemployment insurance which is collected through contributions from
both employers and employees, and which caters for workers who lose their jobs.
This is similar to the South African unemployment insurance benefits that are administered
by the Unemployment Insurance Fund (UIF).
The social benefits are generated by deducting
3% from the gross salary of the employee. Currently, the balance is 40 billion
in the unemployment insurance fund.
Funds generated by the system are
administered by the Public Employment Services (PES) situated in Nuremburg.
More social benefits are allocated to people with children and the unemployed.
The Federal Government has a final say in terms of spending funds in support of
the labour market. There are 186 local agencies that process placements and
unemployment insurance benefits payments.
Regarding negotiating labour policy,
the Minister of Labour lays down the foundation for the legislation. The Federal
Government drafts legislation and invites employers organisations and experts
to make comments. There would be some kind of agreement amongst stakeholders
prior to passing the legislation. The employers organisations convene informal
meetings to identify challenges in the legislation drafted. In the legislative
process, the employers organisation has no effective power to negotiate,
government decides but they can influence implementation of the legislation. In
Private employment agencies do not
play a prominent role in the German labour market in that not even 2% of employment
is facilitated by them. The challenge in
The Confederation of German
Employers always reminds its members about the responsibility to re-skill
unemployed people. Due to the shortage of skills, the retirement age has been
lifted to 67 years in
The Confederation of German
Employers (BDA) does not support the wide-ranging minimum wage policy that has
been introduced in
4.
Day
2, 21 March 2012
4.1
Meeting
with the Federal Ministry of Social and Labour Affairs (
Bundesministerium
für
Arbeit
und
Soziales
)
The Federal Ministry of Social and
Labour Affairs is a top-level agency of the federal agency of the
In terms of the Ministry, the German
labour market policy is based on the following principles:
·
Transparency in labour market related activities;
·
Active labour market policy;
·
Qualifications are most important in stimulating active labour
market.
In
While the majority of European
countries had rising unemployment figures,
In strengthening the German economy,
the Federal Ministry considers the following critical:
·
Recognising the growing demand for skills in
·
More investment for
skilling
women
to access more job opportunities in the labour market;
·
Minimise the number of young people who cannot
complete vocational training;
·
Acknowledge qualifications of immigrants in order to absorb
qualified people from other countries;
·
Allocate more funds to qualify young people;
·
Craft law that makes job training to be compulsory.
Whereas the majority of countries
are faced with the crisis of youth unemployment,
4.2
Meeting
with the Parliamentary Group within the Committee of Labour and Social Affairs
Instruments that the German Parliament
proposed during the economic downturn:
·
Reduction of the working hours (short time scheme);
·
Job training by Federal Employment Services;
·
Provision of social security to unemployed people;
·
Central objective to ensure that people do not lose
employment;
·
Ensuring skills and mobility.
Tripartite burden sharing as means
of stimulating economy entails the employer paying 90% of salaries and government
paying the remainder. Working hours were reduced and simultaneously workers
were entitled to social benefits. Now that economy stabilised, employers no
longer contribute to the social security system.
During the recession, a short-term work
scheme cushioned employees from being laid off. The companies had to apply to the
Federal Employment Agency to implement the short-time scheme. Most companies
had financial interests in short time scheme. If the company failed to apply
for implementation of the scheme, its reputation would be on the brink of being
tarnished, and that would also invoke the Industrial Relations Act. The short-time
scheme applied to all employees until the economy picked up.
5.
Day
3, 22 March 2012
Meeting
with the Research Institute of the Federal Employment Agency (IAB)
Founded in 1967 as a research institute of the German Federal Labour
Office, the IAB studies the labour market in order to advise on active labour
market policy making. Its organizational proximity to the Federal Labour Office
enables scientific information to flow directly into political opinion making
and labour market policy.
The IAB was been commissioned by the government to conduct research on the
labour market from the perspective of a variety of disciplines in order to
enable a better understanding of the labour market, and to develop solutions to
those challenges.
Currently,
the institute is not confined only to assess the effects of instruments aimed
at promoting employment, but also the effects of the basic income support
scheme for job seekers. The mandate of the institute emanates from the Social
Code.
The IAB conducts research on the
labour market on the basis of the two statutory mandates that are specified for
the area of unemployment insurance in the Social Code Book. It also conducts
research on the basic income support scheme for those in need of the income
support and capable of working. The social code contains parts of the social
security law which is financed out of tax money as state welfare benefits, and
which do not have the character of insurance.
The statutory mandate of the IAB to
conduct labour market and occupational research was initially formulated in the
Employment Promotion Act. However, section 280 of the Social Code currently
stipulates that the IAB must conduct labour market and occupational research.
The Federal Agencys role is to:
·
monitor, examine and evaluate the status and developments in
employment and labour market according to the specific occupations;
·
monitor
effects of the active
employment creation, which is done by compiling statistics, conducting labour
market and occupational research and producing reports.
In defining the substance, nature
and extent of labour market and occupational research, the Federal Employment
Agency must consider its own needs for information, and that of the Federal Ministry
of Economy and Labour. It must also take into account the needs of the Federal Ministry
of Health and Social Security in as far as
this concerns
the occupational inclusion of people with disabilities or severe disabilities.
The Federal Employment Agency must communicate the need for the research with
the Federal Ministry Economy and Labour at least once a year, with the
participation of the Federal Ministry of Health and Social Security. Moreover,
the IAB is entrusted with the task of conducting the research. Examining the
effects of the Employment promotion is the central focal point of the labour
market research.
The research should be
conducted well in advance, and it constitutes an ongoing task for of the
IAB.
In addition, the analysis must be
carried out according to different regions to understand the dynamics involved.
Part of the institutions work
includes projects on the effects of activation policy and basic income support
reforms and the
extent to which activation
is really being implemented in practice and if the desired economic and
societal objectives are being achieved
. Where it is deemed appropriate, impact research may
be delegated to third parties. With this, a link to the previous working area
of the IAB has been established. Where it is deemed appropriate, impact
research may be delegated to third parties. With this, a link to the previous
working area of the IAB has been established. Extensive synergies with the
research can be achieved in particular with regard to the impact analysis of
labour market policy instruments, research on specific groups of persons such
as the young and the elderly, as well as analysis of regional and macroeconomic
effects.
The research of the IAB also focuses
on examining the dynamics and structures of low income households that are
receiving transfers in accordance with the Social Code Book and other public
transfers. The research analyses the impact of household composition, its
income resources, and the labour market participation of its members on the
amount and duration of benefit reception.
The analysis of the employment and benefit history of needy households
forms part of the analysis of individuals within the system and their capacity
to earn their own living. The IAB is building a large database on benefit and
employment histories of households in need stemming from administrative data
available through the Federal Employment Agency.
The study also makes use of national micro
data on population characteristics and income like the Labour Force Survey,
Social Assistance Survey and the Income and Consumption Sample to explore the
social background of low-income households and their labour market
participation.
In order to address youth
unemployment,
6.
Day
4, 23 March 2012
6.1
Meeting with the German Public
Employment Services
The German Public Employment
Services (PES) or the
Bundesagentur
für
Arbeit
(BA) is the labour
markets biggest service provider and as a public body with self-governance. It
acts independently but within the framework of applicable law. The PES is made
up of the head office in
The main duties of the German Public
Employment Services are:
·
placement in training centres and workplaces;
·
vocational guidance;
·
employer counselling;
·
promotion of vocational and further training;
·
promotion of professional integration of people with
disabilities;
·
benefits to retain and create workplaces;
·
compensation for reduced income;
·
conducting
labour market and
occupational research.
There is a Federal Board of Governors
that forms the core of the structure of self-governance.
Representatives of employees, employers and
public institutions serve without remuneration in the governing bodies.
The role of the bodies becomes evident through
their suggestions for changes in organisational goals and decisions on major
activities. Members of the board are also expected to provide the German Public
Employment Services management with ideas for new solutions that reach beyond
the immediate needs of the day.
Currently, the German Public
Employment Services focuses on the following topics:
·
The challenge of an aging population and its effects on the
labour market;
·
Shortage of a skilled labour force, particularly in
electronics and health sector;
·
Considerable number of people who are dependant on social
security programmes and not available to participate in the labour market;
·
The electronic filing is the major topic that the German
Public Employment Services is currently considering. This entails all the
social security files being archived electronically. Currently, the PES has 3
billion hard copies of files that will be scanned and converted to electronic documents.
The German Public Employment
Services is responsible for the social security benefits and is being
distributed through 156 local offices.
The social security system is designed to provide benefits to the unemployed
people. The social security system is financed through 3% contribution by the
employers and employees that is approximately 30 billion annually. Given the
history of divisions between East and
The active labour market policy
entails a process where PES intends to assist job seekers to get employment by assessing
the profile of such a person for current and future employment. Subsequent to
that, sufficient time is allocated for assistance of the job seeker by the job
counsellor.
Alternatively, a meeting
would be set up on-line between the job seeker and job counsellor to save
travelling costs. Approximately 43 minutes is allocated for the first interview
of the job seeker. The main objective of this system is to ensure that the
counsellor spends as much time as possible with the client. This is quite
different from the South African labour centre setup where clients spend
maximum time in the queues and minimum time with the counsellor.
There are PES local offices that have
their own strategies to implement active labour market policy because of the
different dynamics involved. German Public Employment Services local offices
were also responsible for allocating their own budget based on their needs and objectives.
The head office of the German PES monitors the performance of the local offices
and continually ensures efficiency through service level agreements by holding
monthly engagements with local centres.
Previously there was no competition
between PES and private labour agencies but due to reforms, the competition was
emphasised in order to stimulate the labour market. However, in some cases the
German Public Employment Services can seek cooperation with Private Employment
Agency. One way is the granting of a placement voucher. It enables the job seeker
to get support in finding a job from private placement agents. If the private
placement agent successfully places the unemployed into a new job, then the
placement voucher will be paid. For the first half, 1000 will be paid as soon
as employment has been going for six weeks.
For the second half, another 1000 will be paid after the employment has
run for six months. The unemployment grant will be denied if the unemployed
person:
·
does not cooperate actively in seeking a new job;
·
does not accept a decent offer;
·
refuses
further training to gain
employability.
In
The German PES has contributed to
improving the transition from school to working life in terms of professional
orientation, counselling, financial support and matching for positions as
apprentices. In terms of the German PES the young unemployed person must get
employment within the period of 14 days and this will be reflected in the
system. Disabled people are referred to special training in order to be
integrated into the labour market. Being the first person to register for
employment does not necessarily mean getting first preference. The employer has
the discretion to appoint a suitable candidate for a job. However, the job
counsellor would also make a recommendation to the employer, based on his or
her assessment of the job seeker.
The German PES confirmed the fact
that private agencies play a minor role in the German labour market, and its
market share is estimated at 2%. In contrast, the PES has a market share of
approximately 98%. The big population of
6.2
Recommendations
of the German Public Employment Services to the Portfolio Committee
The German Public Employment
Services recommended that:
·
there is a need for cooperation among employers, employees
and trade unions in order to resolve labour disputes expeditiously and to avoid
unnecessary industrial action;
·
allocation of resources should focus on continuous
improvement of the labour market system;
·
the
Portfolio Committee should
facilitate international assistance for the Department of Labour in order to
address the issue of the problematic information technology system (IT). In
this regard, the German PES committed to provide assistance in terms of availing
IT experts if it is requested;
·
the Department of Labour should have a clear strategy in
outlining what it seeks to achieve;
·
the
Department of Labour should develop
methods of dealing with the massive number of people that are in the informal
sector. In addition, government should ensure that people in the informal
sector also benefit from some form of social security net;
·
compulsory
and good education should
be introduced in order to keep children out of the streets and prepare them for
future employment. This calls for more investment in good education in order to
enhance participation in the labour market.
7.
Observations
by the Committee
The Committee made the following
observations:
·
Firstly,
·
Secondly,
·
Thirdly, whereas
8.
Additional
issues for consideration
The following additional issues were
raised:
·
Whether, similar to
·
Whether the PES will draw expertise from the private sector
to place the hard-to-place jobseekers, like in
·
How will the PES recruit and retain skilled professionals
and how will it ensure efficiency of the labour centres? In
·
How will labour centres prepare statistical data for the PES?
·
Whether, similar to
9.
Recommendations
of the Portfolio Committee
The Committee made the following
recommendations:
·
The South African Public Employment Services Bill will have
to take into account the needs of and the disparities within the countrys
population, not only based on skills shortages, but geographic disparities
between urban and rural areas. Therefore, it should be able not only to identify
these gaps but also address them while still efficiently providing quality
service.
·
Skilled job seekers should be able to access self-service
for employment opportunities from labour centres. Self-service for employment
opportunities can be used for the newly unemployed people and people who are
capable of looking for jobs on their own. However, provision for unskilled and
illiterate work-seekers should be considered and this group must have
efficiently trained personnel to assist them.
·
One of the successes of the German PES and the labour market
has been the ability to collect accurate labour market-specific data in order
to make a correct diagnosis and apply appropriate measures to deal with those
challenges. Based on the engagements with various organisations, the Committee
recommends that in developing a suitable PES model for
·
There should be a link between the PES with the Further
Education and Training (FET) colleges. Similar to
Report to be considered.
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