ATC170610: Report of the Portfolio Committee on Labour on the First and Second Quarterly Reports regarding the Performance of the entities reporting to the Department of Labour, dated 10 May 2017

Labour

Report of the Portfolio Committee on Labour on the First and Second Quarterly Reports regarding the Performance of the entities reporting to the Department of Labour, dated 10 May 2017

 

The Portfolio Committee on Labour, having considered the First and Second Quarterly Report on the performance of the entities reporting to the Department of Labour (DoL) in meeting their strategic objectives for 2016/17, reports as follows:

 

  1. Introduction

 

The Portfolio Committee on Labour considered the First and Second Quarterly Report on the performance of the entities reporting to the DoL in meeting their strategic objectives for 2016/17 as presented in the meetings held on 15 and 22 February 2017.

 

This report gives an overview of the presentations made by the entities, focusing mainly on their achievements, output in respect of the performance indicators and targets set for 2016/17 and the financial performance. The report also outlines the observations and recommendations of the Committee relating to the entities’ performance.

 

  1. The entities of the Department

 

Below are the entities that report to the DoL, which are:

 

  • Commission for Conciliation, Mediation and Arbitration (CCMA);
  • National Economic Development and Labour Council (NEDLAC);
  • Productivity South Africa (PSA);
  • Compensation Fund (CF);
  • Unemployment Insurance Fund (UIF); and
  • Supported Employment Enterprises (SEE).

 

The CCMA and NEDLAC receive funds from Labour Policy and Industrial Relations programme of the DoL. The PSA, CF and UIF receive funds from the Public Employment Services of the DoL. SEE is a sub-programme of the Public Employment Services programme, which transfers funds to subsidized workshops for the blind and subsidized work centres for people with disabilities.

 

 

  1. Performance per entity

 

3.1.       Commission for Conciliation Mediation and Arbitration

The activities of the CCMA are structured into four programmes, namely:

  • Social Services;
  • Institutional Development;
  • Administration; and
  • Corporate Governance.

 

The overall performance of the CCMA per programme in the first quarter was reported as follows:

Table 1

PROGRAMME

ACTUAL OUTPUT - VALIDATED

OVERALL PERFORMANCE %

 

NO. OF PLANNED TARGETS IN Q1

ACHIEVED

NOT ACHIEVED

 

SOCIAL SERVICES

7

6

1

86

INSTITUTIONAL DEVELOPMENT

2

2

0

100

ADMINISTRATION

1

0

1

90

CORPORATE GOVERNANCE

8

4

4

50

TOTAL NUMBER OF TARGETS

18

12

6

67

OVERALL PERFORMANCE

100%

67%

33%

Source: Presentation by the CCMA to the Portfolio Committee on Labour on 15 February 2017

3.1.1.    Statement of Financial Position and Financial Performance for Q1

The financial position and statement of financial performance were reported as follows:

  • The net assets for the first quarter amounted to R724 million, with an accumulated surplus of R616 million increasing the Prior Accumulated Surplus from R51 million.
  • The material surplus for the quarter is as a result of recognition of the total grant receivables from the DoL.
  • The total revenue from rendering of services amounted to R1.6 million.
  • The recognised revenue is mainly from the information provision services for the annual Case Management System licensing renewal fees.

 

3.1.2.    Statement of Financial Position and Working Capital for Q1

The statement of financial position and working capital were reported as follows:

  • The total active invested funds as at 30 June were R340 million, with total earned interest income of R2.4 million on total funds invested effective beginning of the financial year.
  • The interest from investments yielded an average of 7.7 % which was in line with the average rates offered during the quotation process.
  • The Cash and Cash Equivalents closed at R250 million which is equivalent to 3.8 months’ cash turnover ratio.
  • The liquidity ratio was 2.3: 1, which exceeds the target of 1: 1.

 

The overall performance of the CCMA per programme in the second quarter was reported as follows:

 

Table 2

PROGRAMME

ACTUAL OUTPUT - VALIDATED

OVERALL PERFORMANCE %

 

NO. OF PLANNED TARGETS Q2

ACHIEVED

NOT ACHIEVED

 

SOCIAL SERVICES

6

5

1

83

INSTITUTIONAL DEVELOPMENT

3

3

0

100

ADMINISTRATION

1

1

0

100

CORPORATE GOVERNANCE

9

 

4

5

44

TOTAL NUMBER OF TARGETS

19

13

5

68

 

OVERALL PERFORMANCE

100%

68%

32%

Source: Presentation by the CCMA to the Portfolio Committee on Labour on 15 February 2017

 

3.1.3.    Statement of Financial Position and Financial Performance for Q2

The statement of financial position and financial performance was reported as follows:

  • The net assets for the second quarter amounted to R542 million, with an accumulated surplus of R437 million.
  • The material surplus for the second quarter is as a result of recognition of the total grant receivables, this is due to timing difference which will even out by the end of the financial year.
  • The total revenue from rendering of services as at end of the quarter amounted to R2.5 million. The recognised revenue is mainly from the Dispute Management Training as well as the Information Provision services for the annual Case Management System licensing renewal fees.
  • As at the end of second quarter, the total expenditure was under the total quarterly budget by 0.1 %. The variances were mainly due to timing differences which will even out at the end of the financial year.

 

3.1.4.    Statement of Financial Position and Working Capital for Q2

The statement of financial position and working capital was reported as follows:

  • The total of active invested funds as at 30 September was R474 million, with total earned interest income of R8.9 million on total funds invested effective beginning of the financial year.
  • The interest from investments yielded an average of 7.7 % which was in line with the average rates offered during the quotation process.
  • The Cash and Cash Equivalents closed at R247 million which is equivalent to 3.6 months’ cash turnover ratio.
  • The liquidity ratio was 3.8: 1, which exceeded the target of 1:1.
  • The accumulated surplus as at 31 March 2016 of R50.6 million were approved for a rollover to the current financial year.
  • The accumulated surplus resulted from additional funding over the three year MTEF period which ended in 2015/16 which was utilised for: the implementation of the Employment Law Amendment; opening of the new offices; establishment of the Employment Security Unit; and the roll out of the web enabled Case Management System. All the provinces have been successfully commenced and are in various phases of implementation.
  • The approved budget was adjusted with the approved rollover amount during the mid-term budget review.

 

3.1.5.    Progress towards achievement of 2016/17 annual targets

The CCMA reported on progress towards achievement of 2016/17 annual targets as follows:

  • The CCMA has an established monitoring and evaluation system with performance and service delivery being tracked regularly, including early warning mid-quarter reports.
  • The Strategic Risk Register and the Operational Risk Register are closely monitored.
  • The CCMA’s Internal Audit vets and validates the reported quarterly performance reports and supporting evidence to provide assurance of the credibility of the reports. The quarterly performance reports also get tabled to the Audit Committee for approval prior to submission for final approval by the Governing Body.
  • The CCMA anticipates an overall 2016/17 annual performance above eighty five percent.

 

3.1.6.    Challenges confronting the CCMA

The following challenges were reported to confront the CCMA:

  • The average case load have increased by five percent and shows no sign of plateauing – this puts a strain on the finances and human resources of the organisation.
  • Large scale retrenchments continue to place significant strain on organisational capacity.
  • Additional resources required to enable the CCMA to be accessible to outlying areas.
  • Governance and compliance processes can still be enhanced.

 

Issue(s) raised by members of the Committee to be followed up

 

It was noted that the CCMA did not follow Treasury Guidelines on financial reporting. The CCMA undertook to do presentations in accordance with Treasury Guidelines in future.

 

 

3.2.       National Economic Development and Labour Council

 

The activities of NEDLAC are structured into the following programmes:

  • Administration
  • Core-Operations
  • Constituency Capacity Building Funds

 

The overall first quarter performance of NEDLAC per programme was reported as follows:

 

Table 3

Programme

Annual Planned Indicators

Targets reporting in Q1

Achieved

Not Achieved

Overall Achievement

%

Administration

14

9

8

1

89

Core Operations

34

10

9

1

91

Constituency Capacity Building Funds

3

3

3

0

100

Summary of Performance

51

22

20

2

91

Source: NEDLAC presentation to the Portfolio Committee on Labour on 15 February 2017

 

The overall second quarter performance per programme of NEDLAC was reported as follows:

 

Table 4

Programmes

Annual Planned Indicators

Indicators with targets reporting in Q2

Achieved

Not Achieved

Overall Achievement

%

Administration

14

14

10

4

71

Core Operations

34

21

16

5

76

Constituency Capacity Building Funds

3

3

3

0

100

Summary of Performance

51

38

29

9

76

Source: NEDLAC presentation to the Portfolio Committee on Labour on 15 February 2017

 

3.2.1.    Budget Source and Budget Allocation per programme

 

The total budget of NEDLAC amounts to R30. 9 million, from the following sources:

Table 5

Description of Income

Amount

Grant from Department of Labour

R30 317 000

Interest Received

R420 000

Sundry income

R132 000

Total Income

R30 869 000

Source: NEDLAC presentation to the Portfolio Committee on Labour on 15 February 2017

 

The budget was allocated per programme as follows:

 

Table 6

Programme

Budget Allocation

Administration

R21 030 000

Core Operations

R5 921 000

Constituency Capacity Building Funds

R3 918 000

Source: NEDLAC presentation to the Portfolio Committee on Labour on 15 February 2017

 

The expenditure per programme as at the end of the second quarter was reported as follows:

 

Table 7

Programme

Annual Budget

Actual to Date

Expenditure to date %

Administration

R21 030 000

R10 127 522

48

Core Operations

R5 921 000

R2 667 632

45

Constituency Capacity Building Funds

R3 918 000

R1 154 863

29

Source: NEDLAC presentation to the PC: Labour on 15 February 2017

 

Issue(s) raised by the members of the Committee to be followed up

 

A concern was raised regarding low expenditure of 29 percent on Constituency Capacity Building Funds programme at the end of the second quarter. NEDLAC explained that this was corrected in January and should therefore reflect on the third quarter performance report.

 

 

 

 

 

3.3.       Productivity South Africa

 

The work of PSA is structured in accordance with the following programmes:

  • Administration
  • Productivity Organisational Solutions
  • Value Chain Competitiveness
  • Workplace Challenges
  • Turnaround solutions

 

3.3.1.    Total Budget of the PSA

 

The total budget of the PSA for 2016/17 was as follows:

 

Table 8

Source

Budget

Money appropriated by Parliament (DoL)

R47 944 000

Grants (UIF)

R97 807 000

Grants (DTI)

R8 523 000

Income earned from services rendered

R37 188 000

Other income

R200 000

Total

R191 662 000

Source: Adapted from PSA presentation to the Portfolio Committee on Labour on 15 February 2017

 

3.3.2.    Strategic Objectives of the PSA

 

The strategic objectives of the PSA are to:

  • Support initiatives aimed at preventing job losses (TAS);
  • Develop relevant productivity competencies (POS);
  • Undertake productivity relate research (VCC Research and Knowledge Management);
  • Facilitate and evaluate productivity improvement and competitiveness in workplaces (VCC WPC);
  • Promote a culture of productivity in workplaces (Marketing and Comm); and
  • Human Resources Management.

3.3.3.    Performance per Strategic Objectives

 

The performance of the PSA per strategic objectives was reported as follows:

 

Table 9

Strategic Objectives

Annual Performance Indicators

Planned Indicators

Achieved

Not achieved

Overall Performance per quarter %

Semester Performance

%

 

 

Q1

Q2

Q1

Q2

Q1

Q2

Q1

Q2

 

TAS

7

1

4

0

3

0

3

0

75

60

POS

5

3

5

5

4

0

1

167

80

112

VCC Research & Knowledge Management

6

6

6

5

5

1

1

83

83

83

VVC WPC

8

7

7

4

3

3

4

57

43

50

Marketing & Comm

7

6

7

4

5

2

2

67

71

69

HRM

7

5

4

2

3

3

2

40

75

55

Overall Performance

4

28

33

2

23

11

15

69

71

70

Source: Productivity SA presentation to the Portfolio Committee on Labour on 15 February 2017

 

Issues raised by the members of the Committee to be followed up

 

Late transfer of funds from the UIF to the PSA led to delay in starting of work. Implementation of an agreement concluded between PSA and UIF to ensure timely transfer of funds must be monitored.

 

PSA to report back to the Committee in the next quarter on progress with regard to appointment of the part-time economist.

 

The PSA reporting is not aligned to the Treasury Guidelines. It does not show percentage achievement per programme. It also does not show financial report in terms of expenditure in monetary and percentage terms per quarter. This has to be rectified in the next quarter report.

3.4.       Compensation Fund

 

3.4.1.    Performance per Strategic Objectives

 

Performance per strategic objective was reported as follows:

 

Table 10

PROGRAMMES

Quarter 1

Planned Indicators

Achieved

Not Achieved

Overall Performance

Provide an effective and efficient client oriented support services

5

2

3

40%

Provide faster, reliable and accessible COID services by 2020

8

4

4

50%

OVERALL PERFORMANCE

13

6

7

46%

Source: Compensation Fund’s presentation to the PC: Labour on 22 February 2017

 

3.4.2.    Performance per programme

 

Performance per programme was as follows:

 

Table 11

PROGRAMMES

Quarter 1

Planned indicators

Achieved

Not Achieved

Overall Performance

Programme 1: Administration

5

2

3

40%

Programme 2: Operations

3

1

2

33%

Programme 3: Provincial operations

5

3

2

60%

OVERALL PERFORMANCE

13

6

7

46%

Source: Compensation Fund’s presentation to the PC: Labour on 22 February 2017

 

3.4.3.    Overall Performance in first quarter

 

The overall performance was reported as follows:

  • A total of 147 842 active registered employers were assessed by end of quarter.
  • 100% of the R978.7 million of approved benefits were paid within 5 days.
  • 58% (20 183 of 34 764) of registered claims were adjudicated by end of quarter.
  • 96% (4 491 of $ 676) of the received compensation benefits were finalized.
  • 78% (111 124 of 142 137) of the received medical invoices were finalized.
  • 100% (20 183 of 20 182) of the registered compensation claims were adjudicated within 60 working days.

 

3.4.4.    Second Quarter Performance

 

3.4.4.1. Performance per strategic objective

 

Table 12

PROGRAMMES

Quarter 2

Planned Indicators

Achieved

Not Achieved

Overall Performance

Provide an effective and efficient client oriented support services

6

0

6

0%

Provide faster, reliable and accessible COOID services by 2020

10

8

2

80%

OVERALL PERFORMANCE

16

8

8

50%

Source: Compensation Fund’s presentation to the PC: Labour on 22 February 2017

 

3.4.4.2. Performance per programme

 

Table 13

PROGRAMMES

Quarter 2

Planned Indicators

Achieved

Not Achieved

Overall Performance

Programme 1: Administration

6

0

6

0%

Programme 2: Operations

5

4

1

80%

Programme 3: Provincial operations

5

4

1

80%

OVERALL PERFORMANCE

16

8

8

50%

Source: Compensation Fund’s presentation to the PC: Labour on 22 February 2017

 

3.4.4.3. Overall Performance for the second quarter

 

The overall performance for the second quarter was as follows:

  • 100% of the R2.1 billion of approved benefits were paid within 5 days.
  • Compensation benefits adjustments for 2017/18 have been finalized and recommended by the CF Board to the Minister.
  • Consultations with medical stakeholders were conducted and still continue for the annual review and approval of medical tariffs.
  • The chronic medication distributer has been appointed, contract signed with the services provider (Pharmacy Direct) and first distribution executed.
  • Project schedule for the electronic case management system that would ensure improvement in the management of litigation cases, hearings and objections has been developed and agreed upon with project management office.
  • 84 % (66 184 of 78 771) of the registered claims were adjudicated by end of the quarter.
  • 95% (6 618 of 6 994) of the received compensation benefits were finalized.
  • 85% (305 075 of 359 208) of the received medical invoices were finalized.
  • 92% (60 997 of 66 184) of the registered compensation claims were adjudicated within 60 working days.
  • 93% (284 446 of 305 075) medical invoices were finalized within 60 working days.

 

3.4.5.    Injuries per Industry, Type and Gender in the Second Quarter

 

The information for this section was obtained by anlysing 20 industries with high injuries per gender and types of injuries.

 

  • Food Retail was the industry with the highest number of injuries at 7521. Livestock farming reported the lowest number of injuries at 1973.
  • Food Retail industry reported that 4440 male and 3081 female workers were injured in the second quarter. Livestock Farming reported 1479 male and 494 female workers injured.
  • Multiple superficial injuries were the highest injury type reported. Most of these injuries were reported in the Security Services followed by Food Retail industries. The lowest number of injury type reported was contusion of the ankle. The highest number of these type of injuries was reported in Food Retail, followed by Security Services industry.

 

3.4.6.    Total Number of Claims Processed

 

A total of 3 billion claims were processed in 2016/ 2017, which can be categorized as follows:

 

  • Medical: 2 260 935 574
  • Compensation: 117 902 274
  • Pension: 675 392 794

TOTAL: 3 054 230 642

 

Response of the DoL/ CF to issues raised by members

 

The claims date back to the 1990’s. CF has dealt with 34 000 claims so far. Attempts were made to trace some beneficiaries through radio. CF is in the process of sourcing services of a tracing agency, since they don’t have the capacity internally. Even the DoL does not have the tracing function. The employers are responsible for reporting incidents/ injuries. If the employer cannot provide sufficient information to can be able to trace and locate claimants, there is little that the CF can do.

 

The overlapping use of different Case Management Systems also pose a problem since a claim may appear not finalized while finalized in another system.

 

CF is planning some programmes with the IES branch of DoL to address low reporting in the farming Industry.

 

Ten of the nineteen findings by the AG have already been addressed. The Internal Audit Unit looks at Quarterly Performance Reports before they are brought before the Committee. There is also progress with addressing vacancies in the Audit Unit.

 

The internal Case Management System should be operational from 1 July 2017.

 

The process of finalizing appointments of medical doctors is ongoing.

 

Head Office of the CF is still assisting the provinces with coordinating the adjudication of claims.

 

Consultancy use has been significantly reduced and they are used mainly risk management function.

 

Mining Industry falls under Sub-class 4 and reported 4 138 injuries in the second quarter.

 

Quarterly targets are cumulative and as a result , the fourth quarter report is the Annual Report.

 

On its next appearance before the Committee, the CF will reflect the partially achieved targets and resources employed.

 

The Minister has approved the functional restructuring of the CF. The revised structure is to be forwarded to the DPSA. Feedback to the Committee on restructuring to be forwarded by end of March 2017. Consultation with organized labour is ongoing.

 

 

3.5.       UNEMPLOYMENT INSURANCE FUND

 

3.5.1.    Strategic Objectives of the UIF

 

The strategic objectives of the UIF are to:

  • Improve financial management (FM)
  • Improve service delivery (SD)
  • Improve compliance to the unemployment insurance act (UIA)
  • Fund poverty alleviation schemes (PAS)

 

3.5.1.1. Performance per strategic objectives

 

Table 14

Strategic Objective

Planned Indicators

Achieved

Not Achieved

Overall Performance

Planned

Achieved

Overall

Q1

Q2

Q1

Q2

Q1

Q2

Q1

Q2

SEMESTER 1

FM

3

3

2

3

1

0

66%

100%

3

3

100%

SD

2

2

1

1

1

1

50%

50%

2

1

50%

UIA

4

4

3

3

1

1

75%

75%

4

3

75%

PAS

3

3

1

2

2

1

33%

67%

3

2

67%

Overall

12

12

7

9

5

3

58%

75%

12

9

75%

                         

Source: Unemployment Insurance Fund presentation to the PC: Labour on 22 February 2017

 

3.5.2.    UIF Recommendations

 

The following recommendations were proposed by UIF:

  • The top 10 industries which constitute +60% of the claims would require further investigation on the levels of compliance.
  • Compliance and inspections strategies should be informed by areas of high claims.
  • Current and future LAP, TAS, TLS interventions should consider embarking on campaigns to increase take-up in these sectors.
  • Job saving campaigns and other related campaigns should consider these sectors.
  • Further investigations on compliance levels in these industries should be investigated.

 

Responses by DoL/ UIF to issues raised by members

 

The Filing system is being modernized to reduce the number of people going to Labour Centres.

 

The Data Centre environment should be functioning well in July thus reducing the down-time. The UIF has opted for data-hosting in view of rapid change in technology and costs involved.

 

The UIF is talking to the Department of Public Works to provide workplace exposure to learners on UIF sponsored programmes. UIF is involved in training of youth in solar geyser installation. The UIF has negotiated with the Energy Department to provide work experience. The youth will be used in maintenance of solar geysers.

 

The UIF applications must be done within six months of losing employment.

 

The Department is helping the Productivity SA (PSA) to put proper accounting systems in place before transferring funds so that the allocated funds can be properly accounted for. The PSA’s current accounting systems are weak. The PSA CFO and two accounting personnel had to resign as a result of forensic audit outcome.

UIF beneficiaries are encouraged to opt for training programmes rather than accepting full UIF pay-out.

 

Detailed information on artisan development programme will be provided on request.

 

The UIF has agreements with different SETAs who do training. Detailed information on Labour Activation Programme will be ready by 27 February 2017.

 

 

3.6.       Supported Employment Enterprises (SEE)

 

3.6.1     Vision

 

To operate a national network of factories and factory outlets that contribute to the economic empowerment of people with disabilities.

 

3.6.2.    Mission

 

To provide employment and training opportunities to people who have been excluded from work as a result of their disability and to support their transition into mainstream employment.

 

3.6.3.    Functions of the SEE as per the Employment Services act 4 of 2014

 

The functions of SEE are to:

  • Facilitate supported employment;
  • Provide work opportunities for persons with disabilities; and
  • Develop and implement programmes that promote the employability of persons with disabilities, including persons with permanent disablement as defined in the COIDA, in the light of their evolving needs in a changing economy; and
  • Perform any other functions as may be prescribed by the Minister.

 

3.6.4.    First and Second Quarterly performance of the SEE

 

SEE achieved 63 and 75 per cent on its performance targets for the first and second quarter of 2016/17 respectively.

 

This is a significant improvement from the 2015/16 year end performance of 20 per cent.

 

It was reported that the entity did not manage to acquire big contracts and therefore could not take more people with disabilities. The CEO of SEE recommended that the entity becomes a stand-alone entity in order to be able to fulfill its mandate.

 

 

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