ATC141029: Budgetary Review and Recommendation Report of the Portfolio Committee on Labour, dated 28 October 2014

Labour

The Budgetary Review and Recommendation Report of the Portfolio Committee on Labour, dated 28 October 2014

The Portfolio Committee on Labour, having considered the performance and submission to National Treasury for the medium term period of the Department, reports as follows:

1. Introduction

1.1. Mandate of Committee

In terms of the Constitution of the Republic of South Africa, portfolio committees have a mandate to legislate, conduct oversight over the Executive and facilitate public participation.

The mandate of the Portfolio Committee on Labour (the Committee) is governed by Parliament’s mission and vision, the rules of Parliament and Constitutional obligations. The mission of the Committee is to contribute to the realisation of a developmental state and ensure effective service delivery through discharging its responsibility as a committee of Parliament. Its vision includes enhancing and developing the capacity of Committee Members in the exercise of effective oversight over the Executive Authority. The Committee is charged with the responsibility of holding the Executive and related entities accountable through oversight of objectives of its programmes; scrutinising its budget and expenditure (annually); and recommending through Parliament what actions the Department should take in order to attain its strategic goals and contribute to service delivery.

Furthermore, s ection 5 of the Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009 (the Act) provides that the National Assembly, through its committees, must annually assess the performance of each national department and these Committees must annually submit Budgetary Review and Recommendation Reports (BRRR) for tabling in the National Assembly. These should be submitted to the Minister of Finance and the relevant Ministers.

1.2. Description of core functions of the Department.

The mandate of the Department is to regulate the labour market through policies and programmes developed in consultation with social partners, which are aimed at:

· Improved economic efficiency and productivity;

· Creation of decent employment;

· Promoting labour standards and fundamental rights at work;

· Providing adequate social safety nets to protect vulnerable workers;

· Sound labour relations;

· Eliminating inequality and discrimination in the workplace;

· Enhancing occupational health and safety awareness and compliance in the workplace; and

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

1.3. Purpose of the BRR Report

The Act set out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department. In October of each year, portfolio committees must compile BRRR that assess service delivery performance given available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations of forward use of resources. The BRRR are also source documents for the Standing/ Select Committees on Appropriations/ Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS). The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process.

1.4. Method

The Committee in reviewing the work of the Department for the 2013/14 financial year placed emphasis on the following aspects:

· An overview and analysis of the Department’s strategic priorities and measurable objectives;

· An overview of the overall performance of voted funds: Vote 18;

· Consideration of the Auditor-General’s activities in relation to the Department;

· Committee key findings; and

· Recommendations.

The Committee, in undertaking this process used a number of source documents, including the 2014-2019 Strategic Plan of the Department, Annual Report, Financial Statements, 2014 Estimates of National Expenditure (ENE), briefings by the Department and its entities during the course of the year, presentation by Researchers from the Appropriations Committee, as well as the State of the Nation Address. The Committee also used the Constitution as its basis.

The Committee held meetings with the Department and its entities to receive presentations on their performance against their annual plans. It also invited the Auditor-General to brief it on its assessment of performance of the Department and its entities. These meetings were held a week prior to the one set for compilation and adoption of BRR reports.

The limitation of this report is that it could not assess the impact of the Department’s initiatives to the government priority of job creation since the Department is involved in creating a conducive environment for job creation rather than directly creating jobs.

1.5. Outline of the contents of the Report.

This report is comprised of the broader government policy, which is enshrined in the National Development Plan. It reviews the initiatives taken by the Department to ensure that the priorities of the plan are realised. Furthermore, the report reviews the recommendations made in the previous year’s BRRR to ascertain whether they have been acted upon. It also looks at the recommendations made by the Committee regarding the 2014/15 budget. The report assesses the financial as well as service delivery performance to ascertain whether the budget allocated to the Department was spent as envisaged in the Annual Performance Plan. Finally, it summarises the observations made by the Committee after considering all necessary documents, presentations and oversight visits before making recommendations aimed at improving service delivery.

2. Overview of the key relevant policy focus areas

The National Development Plan (NDP) has been identified as a roadmap to a South Africa where all will have access to services and jobs.

The economy and employment related priorities of the NDP, include increasing employment through economic growth; reduce inequality; improve skills development and education.

Another relevant focus area for the Committee is the reduction of income inequality, which involves an investigation to the national minimum wage. The Committee has already initiated this process through workshops on national minimum wage, which involved experts in this area. The Committee intends following up with public hearings to be held on a national scales to ascertain the views of the public on this subject matter.

Improvement of UIF benefits to better the lives of beneficiaries, especially women, is another key focus area relevant to labour. These include:

· Increased benefits to beneficiaries;

· Increased benefits period from eight months to 12 months;

· Women on maternity leave to be paid at an income replacement rate from 38 per cent to 66 per cent; and

· Increase in the time for claiming UIF from six months to 18 months for death benefits and 12 months for other benefits.

Amendments of the Unemployment Insurance Fund Act are due for tabling in Parliament in a near future.

3. Summary of previous key financial and performance recommendations of Committee

3.1. 2013/14 BRRR recommendations [1]

Having assessed the performance of the Department in 2013/14, the Committee recommended that the Minister should:

· In view of the fact that 57 per cent of indicators were not well defined, it is recommended that the Minister ensures that the Department develops clear policies and procedures for collection, collation and reporting of key findings.

· The Minister ensures that the Department investigates the reason for failure to achieve the significant number of its targets and put together a plan to address such failures.

· The Minister should ensure that the vacant posts are filled with suitably qualified persons within 12 months as required by the Public Service Regulations.

· The Minister should ensure that the Treasury Regulations are strictly adhered to, particularly the Supply Chain Management regulations and that there are consequences for failure to comply.

· The Minister should ensure that the Department and its entities adhere to the Framework for Managing Programme Performance Information (FMPPI) in developing its performance indicators.

· The Minister should ensure that sufficient resources are made available to the Department, especially Inspection and Enforcement Services programme, to ensure that compliance to legislation is monitored and enforced.

· The Minister should ensure that the Department implements its Performance Management System and performance bonuses are awarded accordingly.

· The Minister should ensure the smooth hand over of the IT services to the Department. In this regard, the Department is required to report progress to the Portfolio Committee on a quarterly basis.

· While the role of the Department through the CCMA in facilitating the resolution of labour disputes is acknowledged, it should be encouraged to play a more proactive role. It is therefore recommended that the Minister ensures that the CCMA is financially capacitated to play a more proactive role in dispute resolution.

· The job creation initiative of the Unemployment Insurance Fund (UIF) and the Industrial Development Corporation (IDC) is commended. Further, the Minister should ensure that in its report, the UIF reports on sustainability of jobs created in order to assist the Committee to ascertain the impact of this initiative.

· The Minister should ensure that the call centre of the DoL and its entities is capacitated and its efficiency monitored.

· The Minister should ensure that the increase in the time for claiming UIF benefits is translated into an increase in payment of benefits.

· The Minister should ensure that the Department devises a mechanism to bring the businesses owned by foreign nationals in line with the labour legislation.

· The Minister should monitor the implementation of the turn-around plan put forward by the Compensation Fund and report to the Committee regarding progress with implementation of the plan.

3.2. 2014/15 Committee Budget Report

After receiving the presentation of the Department of Labour, the Committee recommended that the Minister of Labour gives consideration to:

· Expediting the process of building internal Information and Communications Technology (ICT) capacity without delay;

· Briefing the Committee on progress regarding the organizational review and recommendations ( Shanduka ) project;

· Ensuring that all vacant funded posts are advertised and filled in compliance with the Public Service prescripts; and

· Capacitating the Inspection and Enforcement Services programme so as to ensure that the Department fulfills its decent work mandate.

With regard to the Compensation Fund, the Committee recommended that the Minister of Labour gives consideration to:

· Reporting to the PC on Labour on progress with regard to the implementation of Umehluko claims processing system before the end of the second term (September 2014);

· Briefing the PC on Labour on progress with regard to the implementation of the decentralized structure before end of the third term (December 2014); and

· Building internal capacity so as to reduce spending on consultants.

After receiving the presentation on the UIF, the Committee recommended that the Minister of Labour gives consideration to:

· Investigating the possibility of using the reserves of the UIF for job creation initiatives;

· Investigating the possibility of using the reserves of the UIF to improve on the benefits payable to beneficiaries as well as the duration of payments, particularly better maternity benefits;

· Reporting to the PC on Labour on the number of unemployment insurance beneficiaries trained;

· Briefing the PC on Labour on projects funded through the UIF Social Responsibility Investments and beneficiaries on a quarterly basis; and

· Conducting advocacy campaign to make people aware of the UIF benefits.

After listening to the presentation made by the CCMA, the Committee recommended that the Minister of Labour gives consideration to:

· Briefing the Committee with regard to progress on the establishment of the fund to assist workers in enforcing the CCMA awards.

· Ensuring that when planning to open new offices, consideration is given to access by the disadvantaged users of the services of the CCMA.

· Ensuring that the Commission reports on case postponement statistics and reasons for such postponements in its annual report.

· Ensuring that the CCMA offices are accessible to the physically disabled users of the CCMA services.

· Financially capacitating the CCMA so as to accomplish its mission to be the best dispute management and dispute resolution organization trusted by its social partners.

In respect of NEDLAC, the Committee recommended that the Minister of Labour gives consideration to:

· Strengthening community constituency by ensuring that the interests of the unemployed and the most vulnerable groups are accommodated in decisions taken at Nedlac;

· Financially capacitating Nedlac to effectively play its role as a forum for social dialogue.

After receiving the presentation of the Productivity SA, the Committee recommended that the Minister of Labour gives consideration to:

· Ensuring that funds are made available for Productivity SA to be able to extend its services to areas where they are currently not operating, marketing purposes and to ensure the entity is rendered more visible.

· Encouraging Productivity SA to work with other entities of the Department, such as Nedlac and CCMA, in job saving projects.

4. Overview and assessment of financial performance

4.1. Overview of Vote allocation and spending (2010/11 to 2015/16)

Programme

R million

2010/11

2011/12

2012/13

2013/14

2014/15

2015/16

Audited

Audited

Audited

Main

Adjusted

Revised

Main

Estimates

Administration

682.5

704.3

687.7

820.8

840.4

840.4

787.7

829.9

Inspection and Enforcement Services

329.4

375.7

395.6

425.3

440.2

439.2

403.2

433.1

Public Employment Services

289.3

332.2

331.7

246.0

400.1

400.1

466.5

489.2

Labour Policy and Industrial Relation

525.2

594.9

619.7

111.6

764.5

765.4

869.9

926.2

Total

1 826.3

2 007.1

2 034.6

1 603.7

2 445.2

2 445.2

2 527.3

2678.4

The Department was allocated R1.6 billion in the 2013 financial year for operational expenditure. The budget was adjusted upwards to R2.4 billion. The increase in the overall budget was significantly as a result of upward adjustment of the budgets for Public Employment Services and Labour Policy and Industrial Relations programmes. The Public Employment Services and the Labour Policy and Industrial Relations programme were increased from R246 million to R400 million as well as R111 million to R764 million respectively.

In the 2014/ 15 financial year, the Department received a total budget of R2.5 billion. The Labour Policy and Industrial Relations programme received the largest share at R869 million. It was followed by the Administration programme at R787 million.

4.2. Financial performance 2013/14

The Department of Labour had a 2013/14 available appropriation of R2.4 billion which represented a nominal increase of R305.7 million or 14.3 per cent from 2012/13.

Transfers and Subsidies accounted for R823.4 million of the available budget and of this amount the Department transferred R823.4 million or 100 per cent mainly to departmental agencies and accounts. The total of R18.1 million of the budget was for payment for financial assets, of which the Department spent R18.1 million in respect of debts written off. This meant the Department had an available budget of R1.6 billion for operations. Of this, the Department had spent R1.5 billion or 95.4 per cent, the majority of which had been used on compensation of employees as well as goods and services.

The largest element of operational expenditure in 2013/14 was R776.2 million spent under the Administration programme mainly on goods and services as well as compensation of employees. The next largest element was R410.7 million under the IES programme, followed by R246 under the PES programme, primarily for compensation of employees whilst the Labour Policy and Industrial Relations (LPIR) programme spent R97 million in 2013/14.

Operational expenditure has grown at a nominal rate of 11.7 per cent or R160 million, when compared to the previous financial year. Rand value expenditure growth was greatest in the Administration programme, mainly driven by increased spending on goods and services. The PES and IES programmes showed the next highest growths primarily due to increased spending on compensation of employees.

Programme 1: A total of 50.7 per cent of operational expenditure in 2013/14 was on Administration, representing R776.2, mainly for goods and services and compensation of employees. Expenditure under this programme increased by R96.2 million or 14.1 per cent when compared with the previous financial year, primarily due to additional spending on goods and services.

The other main cost drivers under this programme include operating leases under goods and services and payments for capital assets due to the unbundling and reclassification of the IT-Public Private Partnership to machinery and equipment for computers.

Programme 2: Inspection And Enforcement Services – Operational expenditure in 2013/14 was R410.7 million, the majority of which was spent on compensation of employees. Expenditure under this programme has increased by R16.1 million, or 4.1 per cent, when compared with the previous financial year primarily due to additional spending on these items. The reason for the increase in expenditure is due to an additional funding of R32 million in 2013/14 appropriated in the 2011 MTEF for professionalization of the inspectorate, mainly for the employment of specialist inspectors. Although on a quarter to quarter comparison spending is high, the department has not filled all the specialist inspector posts. As at the end of the fourth quarter, there were still 118 vacant posts mainly Pupil Inspectors, Generalist Inspectors, Specialist Inspectors and Principle Inspectors. Funding for these unfilled posts was reduced in the 2014 Budget due to the delays in filling these posts over the past 3 years.

Programme 3: Public Employment Services – Operational expenditure in 2013/14 was R246 million, the majority of which was spent on compensation of employees. Expenditure under this programme has increased by R38 million, or 18.3 per cent, when compared with the previous financial year primarily due to additional spending on these items. This is due to new appointments made and upgrades from salary level 8 to level 9 for career counsellors.

Programme 4: Labour Policy and Industrial Relations – Operational expenditure in 2013/14 was R96.9 million, the majority of which was spent on compensation of employees and goods and services. Expenditure under this programme has increased by R9.7 million, or 11.1 per cent, when compared with previous financial year primarily due to additional spending on these items, with the additional spending under goods and services mainly on business and advisory consultancy services, and stationery, printing and office supplies. Increased spending is not due to additional allocations but to slow spending in the previous financial year. There are delays each month in obtaining invoices from Travel with Flair as a result of inefficiencies in the process which delays payments. Spending for research projects done by consultants is higher as some projects run over two financial years.

Auditor-General’s Report

The Department received an unqualified audit opinion. However, the AGSA raised a matter of emphasis relating to material underspending of the budget. The Department underspend the budget to the amount of R73 803 000 or three per cent. The underspending on current payments was mainly attributable to less than anticipated payments under Administration programme to the Department of Public Works (DPW), as incorrect invoices received from DPW were returned to be corrected and not received back in time for payment. These invoices amounted to R62 757 000, while less than anticipated payments under IES programme for compensation of employees, amounted to R10 857 000.

The AGSA also reported that the Accounting Officer of the Department did not take effective steps to prevent irregular expenditure as required by section 38 (1) (h) of the PFMA and the Treasury Regulation 9.1.1. The Accounting Officer was found to not have effectively exercised oversight of IT security management controls. There was also a finding of over reliance on the IT service provider and inadequate development of business continuity plan and disaster recovery plan.

4.3. Financial performance 2014/15

The Department received an appropriation of R2.5 billion in 2014/15, which represents a nominal increase of R20 million, or 3.4 per cent from 2013/14.

Transfers and Subsidies account for R942.4 million of the available budget and of this amount the Department has so far transferred R446.1 million, or 47.3 per cent, mainly to departmental agencies and accounts. This means the department has an available budget of R1.6 billion for operations. Of this, the Department has spent R314.9 million, or 19.9 per cent, the majority of which has been used on compensation of employees.

The largest element of operational expenditure to the end of the first quarter in 2014/15 was R121.4 million spent under the Administration programme mainly on compensation of employees as well as goods and services. The largest element was R101.2 million under the Inspection and Enforcement Services (IES) programme, followed by R71.5 million under the Public Employment Services (PES) programme, primarily for compensation of employees. At the end of the first quarter, R85.5 million (27 per cent) was spent on compensation of employees under IES whilst PES spent R65.6 million (27.6 per cent) respectively.

Operational expenditure has grown at a nominal rate of 8.6 per cent, or R25 million, when compared to the same period in the previous financial year. Rand value expenditure growth has been greatest in the PES programme, mainly driven by increased spending on compensation of employees. The Administration and IES programmes show the next highest growths primarily due to increases in spending on compensation of employees as well as goods and services. Spending under the Labour Policy and Industrial Relations (LPIR) programme has decreased mainly due to lower spending on goods and services as well payments for capital assets.

A total of 38.5 per cent of operational expenditure from April to June was on Administration, representing R121.4 million, mainly for compensation of employees and goods and services. Expenditure under this programme has increased by R5.6 million or 4.9 per cent when compared with the same period last year primarily due to additional spending on these items

The main cost drivers under this programme include compensation of employees due to capacitating the office of the Chief Information Officer in order to establish and enhance the IT operating model. The Department has started to run its own ICT services in-house following the closure of the IT-PPP contract. Under goods and services, spending is mainly driven by consultants who are used mainly for specific technical tasks such as the implementation of the new IT operating model, the organisational review and redesign project, and business advisory services to the Chief Financial Officer.

Programme 2: Inspection And Enforcement Services – Operational expenditure to the end of quarter 1 was R101.2 million, the majority of which was spent on compensation of employees. Expenditure under this programme has increased by R4.1 million, or 4.2 per cent, when compared with the same period last year primarily due to additional spending on these items. The increase in expenditure is as a result of filling vacant inspector posts. At the end of the first quarter, there were 127 vacant posts mainly for Pupil Inspectors, Generalist Inspectors, Specialist Inspectors and Principle Inspectors. The Department may be unable to fill all the vacant posts due to the funding being reduced by R68.5 million in the 2014 Budget. The budget cut was as a result of delays by the department in filling these posts over the past 3 years.

Programme 3: Public Employment Services – Operational expenditure to the end of quarter 1 was R71.5 million, the majority of which was spent on compensation of employees. Expenditure under this programme has increased by R15.3 million, or 27.2 per cent, when compared with the same period last year primarily due to additional spending on these items. This increase is as a result of the agency arrangement for the payment of the salaries of staff from Supported Employment Enterprises (previously named Sheltered Employment Factories) on PERSAL following the absorption of these staff into the public service.

Programme 4: Labour Policy and Industrial Relations – Operational expenditure to the end of quarter 1 was R21 million, the majority of which was spent on compensation of employees. Expenditure under this programme does not reflect major changes when compared with the same period last year primarily due to lower spending on goods and services and payments for capital assets. Low spending resulted from major events and workshops that have not taken place such as the Employment Equity roadshows , and Child Labour Day which are scheduled for July. This affects spending on travel and venues. Research projects which are budgeted for under consultants have not been undertaken due to delays in the procurement process. Thus, spending will start to reflect from the third quarter. Spending on capital assets is centralised within the Administration programme and for the first quarter, no major purchases for office furniture and equipment have been made.

4.4. 2015/16 MTEF financial allocations

The main allocation for 2015/16 is expected to increase to R2.6 billion, from R2.5 billion in 2014/14. The Labour and Industrial Relations receives the largest allocation at R926.2 million, from R869.9 million in 2014/15. It is followed by the Administration programme, which increases from R787.7 to R829.9 million from 2014/15 to 2015/16 respectively.

4.5. Concluding comments on financial performance

The Department received an unqualified audit opinion in 2013/14 financial year. The matter of emphasis raised by the AGSA was material underspending of three per cent of the budget. According to National Treasury, the Department spent the majority of its budget on compensation of employees as well as goods and services. The largest spending item was the compensation of employees at 56.6 per cent followed by goods and services at 39.4 per cent.

By the end of the first quarter of 2014/15 financial year, the Department had already spent 76.8 per cent of its operational budget on compensation of employees and 23.2 per cent on goods and services. A total of 58.6 per cent of expenditure was under transfers and subsidies and payments for financial assets.

5. Overview and assessment of service delivery performance

5.1. Service delivery performance for 2013/14

5.1.1. Administration

The Administration programme set itself a target of having 90 per cent final reports issued as per timeframes indicated in the approved annual audit plan. The target was partially achieved since 87 percent (27 of 31) reports were issued. There was a deviation of 13 per cent from the planned target.

The programme also set itself a target of compiling four strategic risks monitoring reports within 30 days after the end of each quarter. This target was achieved.

A 90 per cent of fraud cases received and detected and finalised per year target was not achieved. Instead, a total of 40 cases were received and 70 per cent finalised. This amounts to a deviation of 25 per cent.

The programme set itself a target of conducting 8 exhibitions per annum for profiling services of the Department. This target was achieved.

A total of 12 opinion pieces were published as planned. A target of publishing 12 newsletters was not achieved. Instead, 11 newsletters were published.

The target of reducing the vacancy rate by 6 per cent was not achieved. However, at the end of March 2014, the vacancy rate was 12.9 per cent. This translates to a deviation of 6.9 per cent.

The target of training 85 per cent of staff in line with the workplace Skills plan was achieved. A total of 4 542 employees were trained against a planned target of 5 152.

The programme planned to finalise 77 per cent of misconduct cases in line with applicable prescripts. Sixty seven per cent of misconduct cases were finalised translating to 157 cases finalised out of a total of 233.

5.1.2. Inspection and Enforcement Services

This programme set itself a target of conducting 120 employment equity inspections in the public sector but managed to conduct 158. The private sector target was 220 and 277 inspections were conducted. This translates to a variance of 57 inspections.

The programme planned to inspect 90 000 workplaces to determine compliance levels. It managed to conduct 129 259 workplaces. Of those inspected 75 per cent complied. A total of 31 733 workplaces did not comply.

The programme planned to resolve 75 per cent of labour complaints within 14 days of receipt at Registration Services. However, it managed to resolve 66 per cent within the specified period. This translates to a variance of nine per cent.

A total of 59 700 workplaces were targeted for auditing to determine their compliance levels in terms of Occupational Health and Safety legislation. Only 35 174 were actually audited. Of those audited, 74 per cent complied.

5.1.3. Public Employment Services

This programme planned to register 500 000 work seekers on the ESSA system. It exceeded its target by registering 618 092 work seekers. This translates to a variance of 107 228.

A target of providing 50 per cent of registered work seekers with employment counselling was set but only 41 per cent work seekers were counselled. A total of 15 570 registered work seekers were placed in registered employment opportunities against a target of 19 000. A total of 98 829 work seekers were referred to registered work opportunities against a target of 76 000. A total of 448 124 work seekers were referred to other services against a target of 120 000. This translates to a variance of 328 124.

A total of 2 427 employers registered their vacancies on ESSA against a target of 1000. This translates to a variance of 1 427. 309 employment agencies were registered against a target of 500. This is a negative variance of 191.

5.1.4. Labour Policy and Industrial Relations

The target of amended EEA and its regulations promulgated and implemented by March 2014 was partially achieved. The amended Act was only assented into law on 14 January which resulted in delays in finalising the regulations. Public comments and NEDLAC deliberations on the amended regulations could not start prior to the EE Amendment Act being assented to.

The target of having amended BCEA and its regulations promulgated and implemented by March 2014 was partially achieved. The amended BCEA was assented into law on 4 December 2013. The BCEA regulations were finalised in line with the amended Act. The regulations have not yet been promulgated.

The programme managed to review two sectoral determinations, which are for the Hospitality Sector and the Funeral Undertaking Sector.

The programme compiled and submitted five reports to the ILO in terms of Article 19 ( unratified ) and Article 22 (ratified) Conventions.

The programme partially achieved the target of having the amended LRA and its regulations promulgated and implemented by March 2014. The amended Act was not assented, resulting in slow process on regulations.

The target of extending 17 collective agreements to non-parties within 60 days was achieved.

The target of producing and disseminating four labour market trends reports by September was also achieved.

5.2. Service delivery performance for 2014/15

This section is based on the presentation by the Department to the Committee on its first quarter performance.

In terms of strategic objectives, the Department reported that it has achieved a score 24 out of 49 planned for the 8 indicators, translating to 49 per cent achievement.

The overall performance on its strategic objectives is as follows:

· Contribution to employment creation: 64 per cent

· Promoting equity in the labour market: 67 per cent

· Protecting vulnerable workers: 40 per cent

· Strengthening multilateral and bilateral relations: 0 per cent

· Strengthening social protection: 50 per cent

· Promoting sound labour relations: 100 per cent

· Monitoring the impact of legislation: 100 per cent

· Strengthening the institutional capacity of the Department: 50 per cent

The overall performance per programme was as follows:

· Administration: 50 per cent

· Inspection and Enforcement Services: 55 per cent

· Public Employment Services: 36 per cent

· Labour Policy and Industrial Relations: 57 per cent

The Department reported its overall performance during the first quarter to be 49 per cent. They identified the following indicators as needing urgent and immediate attention:

· Number of service delivery points branded and signage displayed per selected province;

· Number of entities audited per year in terms of the OHSA; and

· MOAs concluded with eligible designated organisations, performance monitoring and funding transferred.

5.3. Other service delivery performance findings

Some of the service delivery challenges identified by committee members during oversight visits include:

· Shortage of staff, especially labour inspectors in Labour Centres.

· Shortage of cars for labour inspectors, which makes it difficult for them to execute their duties.

· Labour inspectors are not provided with proper quality uniforms so that they can be presentable and respectable representatives of the Department.

· They are not provided with other tools of trade, including but not limited to, laptops and 3G cards.

· COIDA; performance delivery has been identified by the Auditor-General as being negative.

· UIF services are still centralised resulting in delay in processing and payment of claims.

5.4. Concluding comments on service delivery performance

There is a lot of room for improvement in terms of service delivery. The Committee members identified constraints in terms of staffing and tools of trade at service delivery points during oversight visits.

6. Finance and Service delivery performance assessment

6.1. Administration

The Administration programme has 24 programme performance indicators. Of these 24, 18 were achieved, 4 partially achieved and 2 not achieved. In terms of percentages, 75 per cent of performance indicators were achieved.

According to the information received from the National Treasury, this programme was allocated R785.3 million, which was adjusted upwards to R820.8 million. It managed to spend R776.2 million, which is 94.6 per cent of its available budget.

6.2. Inspection and Enforcement Services

Inspection and Enforcement programme identified 17 programme performance indicators. Of the 17, 13 were achieved, 3 partially achieved and 1 not achieved. This translates to 76 per cent of the performance indicators achieved.

The programmes main appropriation was R465 million and came down toR425 million after adjustments. The programme spent R410 million or 96.6 per cent of its available budget.

6.3. Public Employment Services

This programme set itself 14 programme performance indicators. Of the 14, 13 were achieved and 1 was partially achieved. This translates to 92.8 per cent achievement.

The Public Employment Services main appropriation was R229 million and was adjusted upwards toR246 million. The programme spent the 100 per cent of the available funds.

6.4. Labour Policy and Industrial Relations

The Labour Policy and Industrial Relations programme set itself 24 programme performance indicators. Of the 24, 17 were achieved or 70 per cent and 7 were partially achieved.

The programme’s main appropriation was R116.4 million and was adjusted down to R111.6 million. It spent R96.9 or 86.9 per cent of the budget.

It is evident from the above that the Labour Policy and Industrial Relations programme spent and achieved the least.

The upcoming NEDLAC summit on labour matters is welcomed and the Committee looks forward to outcomes to improve labour relations.

7. COMMITTEES Observations and response

7.1. Technical issues

The Department and all entities tabled their reports as per requirements. There were no technical errors identified in the reports. The information in the reports was found to be of required quality and there were no complaints of inaccessibility of any kind.

7.2. Governance and operational issues

The Committee is concerned with the position of the Head of the Department (Director- General) not being filled. It has noted that it takes long for the Department to fill crucial positions. An example is the position of the Labour Policy and Industrial Relation programme’s Deputy Director-General. The incumbent left this position some years back but there is still no permanently appointed incumbent. The fact that top management positions are occupied by incumbents in acting capacities is a cause for concern. This issue needs to be given the urgent attention it deserves.

Another issue of concern is the failure of the IT system of the Department. The Department has been struggling with this issue since the period of the Public-Private-Partnership, which did not lead to transfer of skills to the Departmental staff. The Committee noted that the Department extended the EOH contract by another six months (until 30 May 2014) after the initial contract had expired in November 2013.The Committee hopes that the transfer of this crucial function back to the Department is going to result to improvements.

The Committee noted that the CCMA faces external challenges of volatile labour markets as well as unpredictable cases arising from amendments of labour laws.

7.3. Service delivery performance

The Committee acknowledges the achievements of the Department in terms of service delivery. Achievements such as exceeding targets in employment equity inspections are noted. The excellent performance on workplaces inspected to determine compliance levels is also recognised.

However, there are still some concerns in areas like failure to reduce the vacancy rate. It is not clear whether this is as a result of lack of suitably qualified applicants. Another area of concern is the failure to finalise misconduct cases in line with applicable prescripts.

The Committee also noted the inability of the Productivity SA to establish itself nationwide due to infrastructural shortcomings.

7.4. Financial performance including funding proposals

The Committee commends the Department for once again receiving an unqualified audit opinion. However, the Committee would like to encourage the Department to address the issues raised by the AGSA under matters of emphasis. The Committee also acknowledge the Unemployment Insurance Fund for its excellent performance over the past few years.

8. Summary of reporting requests

Reporting matter

Action required

Timeframe

Status of the IT systems in the Department

Briefing Presentation

During the fourth quarter of the 2014/15 financial year.

Performance and governance of the Compensation Fund

Briefing Presentation

5 November 2014

Financial Expenditure of Nedlac

Written report

October 2014

Special report on irregularities within the Nedlac

Briefing presentation

November 2014

9. Recommendations

9.1. Financial performance including forward funding recommendations.

The Minister should consider the following:

· Productivity SA and the UIF must speedily resolve delays in funding transfers as this has impact on the entity’s key programme.

· The CCMA has to establish appropriate supply chain management policies and ensure that sufficient measures are in place to detect and prevent supply chain management irregularities.

· The Department and all its entities must report quarterly to the Committee to ensure that the quarterly expenditure improves.

· The Department must monitor and ensure that Inspection and Enforcement programme’s expenditure increases to ensure that more inspectors are hired and are provided with appropriate tools of trade such as vehicles and laptops.

· The Department must report to the Committee on a quarterly basis on progress made with regard to filling of vacant funded posts.

9.2. Performance related recommendations with financial implications.

· In view of the challenges faced by the Compensation Fund, it is recommended that the Minister ensures that the entity comes back within three weeks to brief the Committee on plans to remedy its problems. A tentative date of 5 November 2014 was identified.

· The Minister ensures that the CCMA services are accessible to the most vulnerable people in rural and other outlying areas.

· The CCMA’s job saving functions, through the Training Lay-off Scheme, must be extended to rural areas to curb growing rural unemployment rates. The Department must simplify the procedure for accessing the Training Lay-off funds.

· The CCMA and the Department must ensure that Labour Centre staff is suitably trained to render advice on services offered by the CCMA.

· The Minister should ensure that Nedlac provides a thorough briefing on the special audit report on irregularities within the entity.

· NEDLAC must report back to the Committee on its detailed financial performance for 2013/14 and also present on its 2013/14 quarterly performance.

· The Department must engage Treasury to consider increasing the Productivity South Africa’s budget in order to address challenges of ageing IT infrastructure and the funding of its turnaround solutions programme, given that this programme is key in employment creation as it assists companies in distress.

· The Committee is urging the Department to urgently resolve the discrepancy with Treasury and organisations representing the disabled so that people with disabilities receive benefits due to them.

· Due to the challenges faced by vulnerable groups, we propose that the number of inspectors in different categories should be increased.

· The Committee further recommends that the budget cut for IES be reversed and the Committee will request the Department to table a detailed plan with time frames as to how the money will be spent.

10. Appreciation

The Committee appreciates the cooperation it received from the Minister, the Department and its entities. The Committee also acknowledges the assistance of the Auditor-General and National Treasury in providing information necessary for compiling this report.

Report to be considered.



[1] These should include any follow-up recommendations from the 2013/14 BRRR

Documents

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