ATC130520: Report of the Portfolio Committee on Labour on Budget Vote 18: Labour and on the Strategic Plans of the Department of Labour (2013 – 2018) and its Entities, dated 17 May 2013
Employment and Labour
Report of the Portfolio Committee on
Labour on Budget Vote 18: Labour and on the Strategic Plans of the Department
of Labour (
2013 2018
) and its Entities, dated 17 May
2013
The Portfolio Committee on Labour,
having considered Budget Vote 18: Labour and the Strategic Plans of the
Department of Labour (
2013
2018
) and its entities,
reports as follows:
1. Introduction
In terms of the Public Finance
Management Act, No. 1 of 1999, accounting officers must provide Parliament or
the relevant legislature with their respective institutions Medium-Term Strategic
Plan (MTSP) and, where applicable, with its Annual Performance Plan (APP). The Budgets
and Strategic Plans of the
DoL
and its entities were tabled
in Parliament in February and March 2013 respectively and were referred to the
Portfolio Committee on Labour for consideration and report. In performing its
constitutional mandate, the Committee scrutinised the alignment of strategic plans
(2013-2018) of the
DoL
and its entities taking into account
the following:
-
State-of-the-Nation Address;
-
Government priorities and key
policies to develop programmes;
-
National Development Plan (NDP);
and
-
New Growth Path (NGP).
The above fundamental principles
served as governments underlying programme of action. The Committee wanted to establish
whether the funds allocated would help transform programmes to actual service
delivery within the workplace and especially to protect vulnerable workers.
The
Money Bills Amendment Procedure and Related Matters Act, No. 9 of 2009, grants
Parliament the power to either reject or recommend budgets of departments.
2. Department of Labour (
DoL
)
2. 1 Mandate of the
DoL
The Department of Labour derives its mandate from the Constitution of
the
2.2 Strategic and Annual Performance
Plans of the Department
Table1: Budget allocation per programme
Programme
|
Budget
|
Nominal
|
Real
|
Nominal % change
|
Real % change
|
|||
R million
|
2012/13
|
2013/14
|
2014/15
|
2015/16
|
2012/13-2013/14
|
2012/13-2013/14
|
||
Administration
|
764.6
|
785.4
|
833.4
|
877.5
|
20.8
|
-
20.9
|
2.72 %
|
-2.73 %
|
Inspection and Enforcement Services
|
399.0
|
465.2
|
494.4
|
522.5
|
66.2
|
41.5
|
16.59 %
|
10.41 %
|
Public Employment Services
|
334.3
|
400.1
|
438.2
|
461.8
|
65.8
|
44.6
|
19.68 %
|
13.34 %
|
Labour Policy and Industrial Relations
|
636.0
|
764.5
|
867.5
|
923.7
|
128.5
|
88.0
|
20.20 %
|
13.83 %
|
TOTAL
|
2 133.9
|
2 415.2
|
2 633.5
|
2 785.5
|
281.3
|
153.2
|
13.18 %
|
7.18 %
|
Source: National Treasury 2013
The
DoLs
Strategic Plan
(SP) 2013 2018 and the Annual Performance Plan (APP) 2013/14 which were
published and tabled in Parliament during March 2012, had shortcomings
identified in relation to:
-
Proposed corrections not having been effected;
-
Misalignment between the SP and APP;
-
Some Indicators and Strategic Objectives not
fulfilling the SMART principles; and
-
Some Indicators being too operational and not
strategic.
Subsequent adjustments were made to
the SP and APP and an Erratum approved by the Minister was tabled in Parliament.
In response to the Departments
Strategic Objectives, four programmes have been developed with achievements
noted on selected indicators and outcomes.
During the 2012/13 financial year,
the Department received a total of R2.1339 billion. In the 2013/14 financial
year, this budget was increased to R2.4152 billion. This is a nominal rand
increase of R281.3 million but a real rand increase of R153.2 million. In
nominal terms, this is 13.8 per cent increase in the budget and in real terms,
this is a 7.18 per cent increase.
2.2.1 Programme 1: Administration
The administration programme
received a total of R785.4 million for the 2013/14 financial year. This is a
nominal increase of R20.8 million from the previous 2012/2013 financial year.
However, in real rand change, that is a R20.9 million decrease. In real
percentage terms, it is a 2.73 per cent decrease.
The programme consists of the
following sub-programmes: Ministry, Management, Corporate Services,
Office
of the Chief Financial Officer and Office Accommodation.
According to the Department, the key focus areas of this programme will be on;
·
Unbundling
the public private partnership unitary fee to fund the implementation of the
new IT operating model;
·
The
organisational review and redesign project;
·
The
procurement of new departmental fleet of vehicles as the department will not be
extending the contract with the previously contracted car hire company; and
·
There
will be a significant increase in the number of personnel as the Department
will absorb 46 IT staff following the conclusion of the Siemens IT PPP in
November 2012.
2.2.2 Programme 2: Inspection and Enforcement Services (IES)
The Inspection and Enforcement
programme received a total of R465.2 million in the 2013/14 financial year.
This is a nominal rand increase of R66.2 million. In nominal percentage change,
this budget has increased by 16.5 percent. Whereas in real terms, i.e.
effecting inflation, the budget has increased by 10.4 per cent.
Over the MTEF period, the focus will
be on effective and efficient registration of labour relations and occupational
health and safety incidents. Compensation of employees has been the main reason
for the budget increase for this programme and two-thirds of spending relates
to staff employed in the Compliance, Monitoring and Enforcement sub-programme.
These are inspectors who ensure that employers and employees comply with labour
legislation. According to the Department, improving the inspectors
remuneration will ensure that the Department is able to retain them, and
creating new specialist labour inspector posts.
2.2.3 Programme 3: Public Employment Services (PES)
The Public Employment Services programme
received a total of R400.1 million during the 2013/14 financial year, compared
with the previous years R334.3 million.
The 2013/14
PESs
budget increased by R65.8 million in nominal terms.
However, in real terms, this was a R44.6
million increase in the budget. In nominal percentage terms the PES budget has
increased by 19.7 per cent, whereas in real percentage terms that was an
increase of 13.3 per cent. This programme has the second highest budget
allocation. Although this is in line with the Departments objectives of
promoting the PES to reduce unemployment through registration and placement of
the work-seekers, when compared with the projected resources that are needed to
promote this programme, the budget falls short.
Sub-programmes include Management
and Support Services, Work Seeker Services, Employer Services, Designated
Groups Special Services, Sheltered Employment Factories and Subsidies to
Designated Workshops, Productivity South Africa, Unemployment Insurance Fund
and the Compensation Fund. The Departments expenditure focus will be on
enhancing the Departments capacity to implement the Employment Services Bill
and the public employment service projects once the bill is promulgated, and on
managing the implementation of the turnaround strategy of the Sheltered
Employment Factories.
2.2.4 Programme 4: Labour Policy and Industrial Relations (LP&IR)
The Labour Policy and Labour
Relations programme received a total of R764.5 million in 2013/14 financial
year compared with the R636 million in 2012/13 financial year. This is a R128.5
million nominal rand increase and a R88 million rand increase in real terms. In
nominal percentage terms, the 2013/14 budget has increased by 20.2 per cent but
in real percentage terms, the budget has increased by 13.8 per cent.
Sub-programmes include Management
and Support Services; Strengthening Civil Society; Collective Bargaining;
Employment Equity; Employment Standards; Commission for Conciliation, Mediation
and Arbitration (CCMA); Research Policy and Planning; Labour Market Information
and Statistics; International Labour Matters; and National Economic Development
and Labour Council (Nedlac).
The CCMA has the biggest budget
share when compared with other sub-programmes. It received R594.4 million in
the 2013/14 financial year, which is an increase of R115.7 million in nominal
terms from the previous year allocation of R478.7 million.
An additional R20.6 million from the
Department is earmarked for improved conditions of service. A further R380
million is allocated for the expansion of services. This is to deal with
additional caseload arising from the implementation of amendments to labour
legislation and the rollout of the web based management system to labour
centres and bargaining council, a new office in the
Vaal
Reefs area in
2.3 The National Development Plan
(NDP)
According to the National Development Plan (NDP),
one of the key
elements in
accelerating the more inclusive growth is to ensure that the labour market
improves on its performance to reduce tension and ease access to young,
unskilled work seekers. In its analysis, the NDP identifies the following
challenges; low levels of competition for goods and services, large numbers of
work seekers who cannot enter the labour market, low savings and poor skills
profile. It further argues that uncompetitive labour markets keep new entrants
out and skew the economy towards high skills and high productivity sector.
The
NDPs
2030 vision for employment and growth includes:
·
A
fall in the strict unemployment rate from 25 per cent to 14 per cent in 2020
and to 6 per cent in 2030;
·
A
rise in the labour force participation rate from 54 per cent in 2010 to 65 per
cent; and
·
About
11 million additional jobs by 2030.
In order to achieve these targets,
the rate of investment in Growth Domestic Product (GDP) is expected to rise
from 17 per cent to 30 per cent by 2030. The real GDP will have to more than
double, i.e. average growth of 5.4 per cent between 2011 and 2030. At this rate
of growth, there will still be substantial reliance on very low-income
employment, survivalist activities and public employment schemes.
The proposals of the NDP may well be
ambitious given the current rate of economic performance and other challenges
that are not of the countrys making. As a small open economy and with the Euro
zone being South Africas largest trading partner, the prevailing financial
crisis has reduced demand for South Africas goods and has, to some extent,
driven away potential and existing investors from riskier emerging market
assets, as they become more risk averse in their investment behaviour. As a
result, the South African economy is expected to grow by around 2.7 per cent in
2013, 3.5 per cent in 2014 and 3.8 per cent in 2015. This is far below the
hoped for 5.4 per cent by the NDP. It will take time for
To achieve set targets, the NDP
further suggests that there needs to be social cohesion, because if
3. Public Entities of the
DoL
3.1 Compensation Fund (CF)
The
Compensation Fund (CF) is a public entity of the
DoL
which administers the
Compensation
for Occupational Injuries and Diseases Act, No. 130 of 1993, as amended by the
COIDA,- No. 66 of 1997
. The main objective of the Act 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, and provide for matters connected therewith.
The Department transferred an amount of
R15.6 million
to the entity.
For 2013/14, 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; and
h)
enhance
quality and access to Compensation of Occupational Injuries and Diseases Act
(COIDA) services and information.
3.1.1 Recommendations
The Committee
recommended that the Minister of Labour gives consideration to:
a)
A further briefing to the Portfolio Committee by the Compensation
Fund on outstanding issues as tabulated in a list of questions forwarded to the
entity;
b)
Strengthening the re-training of workers affected by occupational
injuries and diseases;
c)
Addressing the growing number of cases not adjudicated by the
Compensation Fund; and
d)
Providing a progress report on the turnaround strategy by the task
team appointed by the Minister.
3.2 National
Economic
Development and Labour Council (Nedlac)
Nedlac
is a statutory body which is governed and mandated by the National Economic
Development and Labour Council Act, No. 35 of 1994.
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; and
d)
encourage
and promote
the formulation of coordinated policy on social and economic matters.
The
Department made a transfer of
R26.5 million
to Nedlac for the 2013/14 financial
year.
The
strategic objectives of Nedlac for 2013/14 are as follows:
a)
Administration
·
Improved systems and operations.
·
Effective governance and oversight.
·
Provide leadership and strategic direction.
b)
Human
resource management
·
Strengthen organizational culture and performance.
c)
Finance
·
Improved resources management.
d)
Nedlac
chambers
·
Conclude matters under consideration within the
framework of the Nedlac protocol.
e)
Communications
and outreach
·
Promote social dialogue through communication,
information and capacity building.
·
Promoting social dialogue through institutional
collaboration and building networks.
3.2.1 Recommendations
The Committee
recommended that the Minister of Labour gives consideration to:
a)
Additional
budget allocation for Nedlac in order for them to effectively implement their
mandate;
b)
Continuously
improving
the turnaround times on cases addressed
by Nedlac;
c)
Strengthening
community constituency by ensuring that the interests of the unemployed and the
most vulnerable groups are accommodated in decisions taken at Nedlac.
3.3.
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
R594.4
million to the CCMA for the 2013/14
financial year.
The
CCMAs
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.
3.3.1 Recommendations
The Committee
recommended that the Minister of Labour gives consideration to:
a)
Ensuring
that the CCMA concentrate on measures to reduce the workload such as guidance
and training to employers and employees in order to avoid unnecessary referral
of disputes.
3.4.
Unemployment Insurance Fund (UIF)
The
UIF strives to contribute to the alleviation of poverty in
The
strategic objectives of the UIF for 2013/14 are to:
a)
encourage
compliance through enhanced service delivery;
b)
improve
governance;
c)
strengthen
institutional capacity of the Fund;
d)
improve
stakeholder relations; and
e)
fund
poverty alleviation schemes.
3.4.1 Recommendations
The Committee
recommended that the Minister of Labour gives consideration to:
a)
The
DoL
to consider ways in which the
reserves of the UIF can be used for job creation initiatives; and
b)
Ensuring that the high reserves of the UIF lead to improved benefits
payable by the UIF, particularly better maternity benefits.
3.5
Productivity
The
aim of Productivity South Africa is to improve productivity by advertising,
implementing, monitoring and evaluating solutions aimed at
The
strategic goals of Productivity South Africa for 2013/14 are:
a)
value chain competitiveness;
b)
workplace challenges;
c)
organisational productivity solutions; and
d)
turnaround
solutions.
3.5.1 Recommendations
The Committee
recommended that the Minister of Labour gives consideration to:
a)
Ensuring funds are made available for Productivity SA
i.
to be able to extend its services to areas where they are
currently not operating; and
ii.
for marketing purposes and to ensure the entity is rendered more
visible;
b)
Developing the capacity of Productivity SA to position itself as a
consultant of first choice in improving productivity rather than the service
provider of last resort for entities on the brink of bankruptcy.
4. Overall Recommendations
The
Committee, therefore, recommends that the Minister of
Labour gives
consideration to:
a)
A further briefing to the Portfolio Committee by the Compensation
Fund on outstanding issues as tabulated in a list of questions forwarded to the
entity;
b)
Strengthening the re-training of workers affected by occupational
injuries and diseases;
c)
Addressing the growing number of cases adjudicated by the
Compensation Fund;
d)
Providing a progress report on the turnaround strategy by the task
team appointed by the Minister;
e)
Additional
budget allocation for Nedlac in order for them to effectively implement their
mandate;
f)
Continuously
improving
the turnaround times on cases
addressed by Nedlac;
g)
Strengthening
community constituency by ensuring that the interests of the unemployed and the
most vulnerable groups are accommodated in decisions taken at Nedlac;
h)
Ensuring
that the CCMA concentrate on measures to improve or reduce the workload such as
guidance and training to employers and employees in order to avoid unnecessary
referral of disputes;
i)
The
DoL
to consider ways in which the
reserves of the UIF can be used for job creation initiatives;
j)
Ensuring that benefits payable by UIF are used to improve peoples
lives e.g. through maternity benefits;
k)
Ensuring that funds are made available for Productivity SA:
i.
to be able to extend its services to areas where they are
currently not operating; and
ii.
for marketing purposes and to ensure the entity is rendered more
visible;
l)
Expanding the capacity of Productivity SA to enable the entity to
position itself as a consultant of first choice in improving productivity
rather than the service provider of last resort for entities on the brink of
bankruptcy;
m)
Capacitating the Inspectorate of the
DoL
taking into consideration the coming legislation;
n)
linking up the
DoL
with the tertiary
institutions to build up its capacity e.g. to acquire specialized skills;
o)
Addressing the continuing ICT challenges including down-time
affecting services of the Labour Centres and the Compensation Fund;
p)
Capacitating the call centre of the
DoL
and its entities; and
q)
Improving the planning and reporting capacity of the Department,
including the Strategic Plans and Annual Performance Plans.
5.
Conclusion
The
Committee was generally not satisfied with the
DoLs
Strategic
Plan for 2013-2014.
The 2013 budget has greatly
reflected the governments NDP policy. In order to achieve governments
objectives in fighting poverty, inequality and unemployment, the NDP
emphasises
the importance of collaborative dialogue between
business, labour, government and the community to make the Plan work. However,
even though it has received positive feedback from certain sectors of society,
it also received criticism from organised labour.
Of
great concern to the Committee was the issue of the Compensation Fund which has
a potential of becoming dysfunctional due to a number of unresolved issues with
regards to claims. The Committee was concerned that the Department of Labour
was allocating and transferring funds to an entity that was not doing what it
was mandated to do.
It is also important to note that,
the past few decades have witnessed the economic and geopolitical rise of a
number of large middle-income countries around the world, which have to varying
degrees embarked on a rapid path to economic development. Even during the
recent global crisis, these emerging economies such as
Report to
be considered.
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