ATC190313: Report of the Portfolio Committee on Labour on the First and Second Quarterly Reports regarding the Performance of the Department of Labour and its entities in meeting Strategic Objectives for 2018/19, dated 13 March 2019

Labour

logoReport of the Portfolio Committee on Labour on the FIRST AND SECOND Quarterly ReportS regarding the Performance of the Department of Labour and its entities in meeting Strategic Objectives for 2018/19, dated 13 MARCH 2019
 

The Portfolio Committee on Labour, having considered the First and Second Quarterly Reports on the performance of the Department of Labour (DoL) and its entities in meeting strategic objectives for 2018/19, reports as follows:

 

  1. Introduction

 

The Portfolio Committee on Labour considered the First and Second Quarterly Reports on the performance of the Department of Labour and its entities in meeting strategic objectives for 2018/19 as presented in the meetings held on 13 and 20 February 2019.

 

This report gives an overview of the presentations made by the Department of Labour (Department) and its entities, focusing mainly on its achievements, output in respect of the performance indicators and targets set for 2018/19 and the financial performance. The report also provides the Committee’s key deliberations and recommendations relating to the Department’s and entities’ performance.

 

  1. Performance per Strategic Objective

 

The Department reported on its performance per strategic objective as follows:

 

Table 1: DoL Performance per Strategic Objective in Q1

Strategic Objectives

Overall Achievement %

2017/18

Q1

Overall Achievement %

2018/19

Q1

Strengthen occupational safety and protection

This strategic objective is covered in terms of indicators that are applicable in protecting vulnerable groups

Promote equity in the labour market

0%

100%

Protecting vulnerable workers

40%

60%

Strengthen multilateral and bilateral relations

-

100%

Contribute to employment creation

100%

100%

Promote sound labour relations

0%

67%

Monitoring the impact of legislation

100%

100%

Strengthening the institutional capacity of the Department

50%

75%

Overall Performance

53%

80%

Source: Presentation to the Portfolio Committee on Labour dated 13 February 2019

 

The overall achievement per strategic objective increased from 53% in the first quarter of 2017/18 to 80% in the first quarter of 2018/19. The major contributors to this increase were Promotion of equity in the labour market; Strengthening of multilateral and bilateral relations and Promotion of sound labour relations at 100%; 100% and 67% respectively. Protecting vulnerable workers and Strengthening the institutional capacity of the Department improved from 40% to 60% and 50% to 75% respectively.

 

Table 2: DoL Performance per strategic objective in Q2

Strategic Objectives

Overall Achievement %

2017/18

Q2

Overall Achievement %

2018/19

Q2

Strengthen occupational safety and protection

This strategic objective is covered in terms of indicators that are applicable in protecting vulnerable groups

Promote equity in the labour market

LP&IR: No Q2 target

0%

Protecting vulnerable workers

40%

75%

Strengthen multilateral and bilateral relations

100%

0%

Contribute to employment creation

100%

100%

Promote sound labour relations

33%

33%

Monitoring the impact of legislation

0%

100%

Strengthening the institutional capacity of the Department

50%

100%

Overall Performance

56%

80%

Source: Presentation to the Portfolio Committee on Labour dated 13 February 2019

 

The overall achievement in the second quarter increased from 56% in Q2 of 2017/18 to 80% in Q2 2018/19. Achievement in Strengthening multilateral and bilateral relations’ strategic objective declined from 100% in Q2 of 2017/18 to 0% in Q2 of 2018/19. Achievement in Monitoring the impact of legislation objective increased from 0% in Q2 of 2017/18 to 100% in Q2 of 2018/19. Achievement in Protecting vulnerable workers’ objective increased from 40% in Q2 of 2017/18 to 75% in Q2 of 2018/19. Achievement in Strengthening the institutional capacity of the Department objective increased from 50% in Q2 of 2017/18 to 100% in Q2 of 2018/19.

 

  1. Performance per Programme

 

The overall performance per programme was reported as follows:

 

Table 3: DoL Performance per Programme in Q1

Branch

Q1 2017/18

Q1 2018/19

Planned indicators

Achieved

Not Achieved

Overall Achievement

%

Planned

Achieved

Not Achieved

Overall Achievement

%

Administration

4

2

2

50%

4

3

1

75%

Inspection and Enforcement Services

4

1

3

25%

4

3

1

75%

Public Employment Services

4

4

0

100%

4

4

0

100%

Labour Policy and Industrial Relations

8

3

5

38%%?

8

6

2

75%

Overall Performance

20

10

10

50%

20

16

4

80%

Source: Presentation to the Portfolio Committee on labour dated 13 February 2019

 

Table 3 reflects an increase in performance from 50% in Q1 of 2017/18 to 80% in Q1 of 2018/19. Performance of the Administration programme improved from 50% in Q1 of 2017/18 to 75% in Q1 of 2018/19. Inspection and Enforcement Service’s programme performance improved from 25% in Q1 of 2017/18 to 75% in Q1 of 2018/19. Labour Policy and Industrial Relations programme improved from 38% in Q1 of 2017/18 to 75% in Q1 of 2018/19. Public Employment Services programme performed at 100% in both quarters.

 

Table 4: DoL Performance per programme in Q2

Branch

Q2 2017/18

Q2 2018/19

Planned indicators

Achieved

Not Achieved

Overall Achievement

%

Planned

Achieved

Not Achieved

Overall Achievement

%

Administration

4

2

2

50%

3

3

0

100%

Inspection and Enforcement Services

4

2

2

50%

4

3

1

75%

Public Employment Services

4

4

0

100%

4

4

0

100%

Labour Policy and Industrial Relations

6

2

4

33%

4

2

2

50%

Overall Performance

18

10

8

56%

15

12

3

80%

Source: Presentation to the Portfolio Committee on labour dated 13 February 2019

Table 4 reflects an increase in overall performance from 56% in Q2 of 2017/18 to 80% in Q2 of 2018/19. The Administration programme’s performance improved from 50% in Q2 of 2017/18 to 100% in Q2 of 2018/19. Inspection and Enforcement Services’ performance improved from 50% in Q2 of 2017/18 to 75% in Q2 of 2018/19. Labour Policy and Industrial Relations’ programme performance improved from 33% in the Q2 of 2017/18 to 50% in Q2 of 2018/19.

 

  1. Programme performance in Q1 and Q2 of 2018/19

 

4.1.       Administration

The irregular expenditure increased from R5 846.00 in Q1 to R255 740.12 in Q2 of 2018/19. Fruitless and wasteful expenditure increased from R48 969.73 in Q1 to R376 842.84 in Q2 of 2018/19. There was no unauthorized expenditure reported.

 

Increase in irregular expenditure was attributed mainly to third party liabilities and to people not showing up for booked hotels. It was also reported that it is a challenge to recoup money from staff who do not show up because applicable statutes prohibit deduction from the salary of an employee without his/her concern.

 

4.2.       Inspection and Enforcement Services

Programme target for overall inspections increased from 43 402 in Q1 of 2017/18 to 43 746 in Q1 of 2018/19. The programme conducted 43 306 inspections in Q1 of 2017/18, which was an under-achievement by 96 inspections. Of those inspections conducted in Q1 of 2017/18, 35 548 were found to be compliant and 7 758 or 18% were non-compliant. The programme conducted 49 041 inspections in Q1 of 2018/19, which was an over-achievement by 5 295 inspections. Of those inspections conducted, 40 109 were compliant and 5 295 or 11% were non-compliant as a result were issued with enforcement notices.

 

The target for overall inspections in Q2 of 2018/19 was 65 620, which was an increase of 518 from 65 102 target of Q2 in 2017/18. The programme conducted 61 751 inspections in Q2 of 2018/19, which was an under-achievement by 3 869 inspections. Of those inspections conducted, 50 032 were found to be compliant and 11 917or 18% were non-compliant as a result were all issued with enforcement notices.

 

The employment equity inspections target increased from 259 in Q1 to 388 in Q2 of 2018/19. The programme conducted 330 inspections in Q1 of 2018/19, which was an over-achievement by 71 inspections. Of those inspections conducted, 194 were compliant and 133 were non-compliant.

 

The programme conducted 413 employment equity inspections, resulting in over-achievement by 25 inspections in Q2 of 2018/19. Of those inspections conducted, 243 were found to be compliant and 170 were non-compliant.

 

Non-compliance to employment equity legislation was attributed to:

  • Consultative forums not properly constituted as required by S16 read with S17 of the EE Act.
  • Assigned EE managers are junior staff who do not have the necessary authority or resources to execute their mandate as required by S24.
  • Employers are preparing EE plans that are not informed by a proper audit and analysis as required by S19.
  • EE plans prepared do not comply with the requirements of S20 and no implementation where there is compliance.
  • EE reports (EEA 2) as required by S21 are not informed by an EE plan and submitted to the DG without proper consultation.
  • There are no communication strategies in place to inform the employees of the EE Act.
  • Failure to keep records as required by S26.

 

Of the cases that were found to be non-compliant to EE legislation, 15 and 17 were referred to court in Q1 and Q2 respectively. However, most of these cases are settled out of court. Further, since the EEA only provides for maximum penalties, most judges issue a penalty of R200 000 as a result of a precedence set in another case. This amount is too low to be a deterrent for non-compliance.

 

A total of 4 616 health and safety inspections were conducted against a target of 4 301 in Q1 of 2018/19. That was an over-achievement by 353 inspections. Of the total number of conducted inspections, 2 941 or 63.7%were found to be compliant. A total of 6 137 inspections were conducted against a target of 6 906 in Q2 of 2018/19. That was an under-achievement by 769 inspections in Q2 of 2018/19. Of the total number of OHS inspections conducted, 3 823 or 62.3% were found to be compliant. Members raised concerns regarding safety of buildings and bridges. DoL acknowledged challenges regarding buildings, especially government buildings. However, DoL pointed out that Department of Public Works (DPW) needs to play its role with regard to maintenance of government buildings. Furthermore, DoL acknowledged that inspections of buildings are reactive to, usually, complains by organized labour.

 

Of those workplaces inspected for BCEA compliance in Q1 of 2018/19, 5 295 were found to be non-compliant. Major non-compliance was found in the following sectors:

  • Wholesale and Retail Sector;
  • Hospitality Sector;
  • Agricultural Sector; and
  • Community Service Sector.

 

Of those workplace inspected for BCEA compliance in Q2 of 2018/19, 6 251 were found to be non-compliant. Major non-compliance was found in the following sectors:

  • Wholesale and Retail Sector;
  • Hospitality Sector;
  • Farmworker Sector;
  • Community Services Sector; and
  • Private Security.

 

DoL pointed out that it relies on complains from workers or organized labour with regard to BCEA non-compliance. DoL further reassured the members of the Committee of its readiness, together with the CCMA, to enforce the National Minimum Wage Act.

 

  1. Public Employment Services

 

  1. PES performance per strategic objective

The PES programme contributes to outcome 4 of the Medium Term Strategic Framework (MTSF) 2014-2019, which is decent employment through inclusive economic growth. The DoL strategic objective 1 is contribution to decent employment creation.

 

Table 5: PES performance per strategic objective

KEY PERFORMANCE INDICATORS

Q1 TARGET

PROGRESS

Q2 TARGET

PROGRESS

No. of work seekers registered on ESSA

151 000

212 287

174 000

239 181

No of employment opportunities registered on ESSA per year

18 700

34 903

42 500

71 285

No. of registered work-seekers provided with employment counselling per year

48 000

59 050

104 738

124 182

No. of registered employment opportunities filed by registered work-seekers per year

9 352

9 455

21 252

22 212

Source: Information obtained from the presentation to the PC: Labour dated 13 February 2019

 

Table 5 reflects that the programme achieved all its targets for both Q1 and Q2 of 2018/19. In Q1 of 2018/19 the programme registered 212 287 work-seekers on ESSA against a target of 151 000. In Q2  239 181 work-seekers were registered against a target of 174 000.

 

In Q1 34 903 employment opportunities were registered on ESSA against a target of 18 700. In Q2 71 285 employment opportunities were registered on ESSA against a target of 42 500.

 

Table 5 reflects that 9 455 registered employment opportunities were filed by registered work-seekers against a target of 9 352 in Q1. In Q2, 22 212 registered employment opportunities were filed by registered work-seekers against a target of 21 252.

 

In response to question by members on differentiation between job-seekers and job-hoppers, members were informed that regulations to clean the ESSA database will be finalized at the end of February.

 

  1. Supported Employment Enterprises

 

SEE did not achieve all of its targets. Failure to achieve on its strategic objectives was attributed to challenges at the leadership level, which resulted in failure to deliver on time. However, some improvement has been reported since the appointment of the acting CEO. The vacant post of the CEO is to be advertised soon.

 

The acting CEO informed the members of the Committee that the Minister of Labour, Minister of Health and the Presidency had to intervene at some stage to facilitate the procurement of hospital linen from SEE.

 

4.4.       Labour Policy and Industrial Relations

 

The total number of trade union applications for registration by sector and number of members increased from 8 204 in Q1 of 2018/19 to 9 054 in Q2 of 2018/19. The Agriculture and Forestry sector applications increased from 293 in Q1 to 3 075 in Q2 of 2018/19.

 

Of the 8 204 and 9 054 applications by sector and number of members in Q1 and Q2, 7 705 and 8 248 were declined respectively. All the Q1 and Q2 applications from Agriculture and Forestry sector were declined.

 

In response to a question by members as to why there was such a high number of new applications to form trade unions, members were informed that most applications are not as a result of genuine interest to form trade unions to represent workers’ interest. Moreover, members were informed that the programme received a high number of applications to form employer organisations with ulterior motives, which were refused. The system used by the programme has an in-built mechanism to identify genuine applications.

 

5. Financial Report

 

5.1.       Expenditure information per programme in Q1

 

Table 6: DoL Expenditure Information per programme in Q1

Branch

Final Appropriation

2018/19

R’000

Actual Expenditure 2018/19

R’000

Available Over/Under

2018/19

R’000

%

Administration

906 631

151 112

755 519

16.7%

Inspection and Enforcement Services

592 223

112 210

480 013

18.9%

Public Employment Services

580 574

123 070

457 504

21.2%

Labour Policy and Industrial Relations

1 203 442

296 870

906 572

24.7%

Total

3 282 870

683 262

2 599 608

20.8%

Source: Presentation to the Department of Labour dated 13 February 2019

 

The final appropriation of the Department amounted to R3.3 billion in 2018/19 financial year. The actual expenditure at the end of Q1 was R683.3 million. In percentage terms, the Department spent 20.8% of its allocated budget by the end of Q1. The Labour Policy and Industrial Relations programme received the largest share of the Department’s budget at R1.2 billion. This programme spent R296.9 million or 24.7% of its final appropriation at the end of Q1. However, it must be noted that the larger portion of this programme budget goes to Transfers and Subsidies. Commission for Conciliation Mediation and Arbitration received the larger portion of this programme’s budget. Administration programme received the second largest share of the Department’s budget at R906.6 million in 2018/19 financial year. It spent R151.1 million or 16.7% at the end of Q1. Inspection and Enforcement Services received R592.2 million and spent R112.2 million or 18.9% of its budget allocation by the end of Q1. Public Employment Services received R580.6 million and spent R123.1 million, translating to 21.2% expenditure by the end of Q1.

 

Table 7: Expenditure Information by Economic Classification in Q1

Economic Classification

Final Appropriation

2018/19

R’000

Actual Expenditure 2018/19

R’000

Available Budget

2018/19

R’000

% Expenditure

Compensation of Employees

1 293 058

260 395

1 032 663

20.1%

Goods and Services

592 257

87 733

504 524

14.8%

Transfers and Subsidies

1 287 983

330 993

956 990

25.7%

Payments for Capital Assets

109 572

4 129

105 443

3.8%

Payment for Financial Assets

-

11

11

100%

Total

3 282 870

683 261

2 599 609

20.8%

Source: Presentation to the Portfolio Committee on Labour dated 13 February 2019

 

In terms of Economic Classification, the larger portion of the budget went to Compensation of Employees at R1. 3 billion. Of that appropriation R260.4 million was spent by the end of Q1 of 2018/19, translating to 20.1% of expenditure. The second largest allocation went to Transfers and Subsidies at R1.3 billion. Of this amount, R330.9 was spent, translating to 25.7% of expenditure.

 

Total allocation less transfers amounted to R1.99 billion in 2018/19. A total of R352.3 million was spent by the end of Q1, translating to 17.7% expenditure at the end of Q1 of 2018/19.

 

5.2.       Expenditure information per programme in Q2

 

Table 8: DoL expenditure information per programme in Q2

Branch

Final Appropriation

2018/19

R’000

Actual Expenditure 2018/19

R’000

Available Over/Under

2018/19

R’000

%

Administration

906 631

335 800

570 831

37.0%

Inspection and Enforcement Services

592 223

244 948

347 275

41.4%

Public Employment Services

580 574

250 608

329 966

43.2%

Labour Policy and Industrial Relations

1 203 442

570 457

632 985

47.4%

Total

3 282 870

1 401 813

1 881 057

42.7%

Source: Presentation to the PC: Labour on 13 February 2019

 

The Department spent a total of R1.4 billion or 42.7% of its annual budget by the end of Q2 of 2018/19 financial year. The Labour Policy and Industrial Relations programme spent R570. 5 million or 47.4% of its budget in Q2. The Administration programme spent the least at R335.8 million or 37.0% of its budget. The Public Employment Services and the Inspection and Enforcement Services programmes spent R250.6 million or 43.2% and R244.9 million or 41.4% of their budgets respectively. The total available budget at the end of Q2 was R1.9 billion.

 

Table 9: DoL expenditure by Economic Classification in Q2

Economic Classification

Final Appropriation

2018/19

R’000

Actual Expenditure 2018/19

R’000

Available Budget

2018/19

R’000

% Expenditure

Compensation of Employees

1 293 058

556 018

737 040

43.0%

Goods and Services

592 257

206 839

385 418

34.9%

Transfers and Subsidies

1 287 983

628 944

659 039

48.8%

Payments for Capital Assets

109 572

8 899

100 673

8.1%

Payment for Financial Assets

-

1 113

(1 113)

100.0%

Total

3 282 870

1 401 813

1 881 057

42.7%

Source: Presentation to the PC: Labour on 13 February 2019

 

A total of R556.0 million or 43.0% of the budget was spent on Compensation of Employees at the end of Q2 of 2018/19 against an allocation of R1.3 billion. Goods and Services spent R206.8 million or 34.9% of its budget against an allocation of R592.3 million at the end of Q2 of 2018/19. Expenditure on Transfers and Subsidies amounted to R628.9 million or 48.8% of the allocated budget of R1.3 billion at the end of Q2 of 2018/19 financial year. Expenditure less Transfers and Subsidies amounted to R772.9 or 38.7% of the budget by the end of Q2 of 2018/19 financial year. The available budget less Transfers and Subsidies was R1.2 billion at the end of Q2 of 2018/19 financial year.

 

In response to a concern raised by the members of the Committee regarding under-expenditure on Compensation of Employees, the Department attributed under-expenditure to the vacancy rate. Vacancy rate was reported to be 12% at the end of Q2, which is higher than the government standard of 9.9%. Vacancies were reported to be mostly at middle management level. However, at the time of the presentation, the vacancy rate was reported to be 9.38%.

 

6.         Q1 and Q2 PERFORMANCE OF ENTITIES OF THE DEPARTMENT OF LABOUR (2018/19)

 

The entities that report to the Department of Labour are:

  • National Economic Development and Labour Council (NEDLAC)
  • Commission for Conciliation Mediation and Arbitration (CCMA)
  • Compensation Fund (CF)
  • Unemployment Insurance Fund (UIF)
  • Productivity South Africa (PSA)

 

6.1.       National Economic Development and Labour Council (NEDLAC)

 

6.1.1.    NEDLAC Performance per programme

 

NEDLAC reported its performance per programme as follows:

 

Table 10: Performance per programme in Q1

Programmes

Total No. of annual indicators

Indicators with targets reporting in Q1

No. of Q1 targets achieved

No of Q1 targets not achieved

Overall performance %

Administration

10

7

7

0

100%

Core-Operations

24

9

7

2

78%

Constituency Capacity Building

6

6

3

3

50%

Overall Performance

40

22

17

5

77%

Source: Presentation to the PC: Labour dated 13 February 2019

 

Of the 40 NEDLAC annual targets, 22 reported in Q1 of 2018/19. Of the 22 targets reporting in Q1, 17 were achieved translating into an overall performance of 77%. The Administration programme achieved all of its targets in Q1 of 2018/19. Core-operations and Constituency Capacity Building programmes achieved 78% and 50% respectively.

 

Table 11: Performance per programme in Q2

Programmes

Total No. of annual indicators

Indicators with targets reporting in Q2

No. of Q2 targets achieved

No. of Q2 targets not achieved

Overall Performance%

Administration

10

10

7

3

70%

Core-Operations

24

15

15

0

100%

Constituency Capacity Building

6

6

3

3

50%

Overall Performance

40

31

25

6

81%

Source: Presentation to the PC: Labour dated 13 February 2019

 

Of the 31 targets reporting in Q2, 25 were achieved translating into an overall achievement of 81%, which is an improvement from the 77% achieved in Q1. Core-operations programme achieved 15 of its target reporting in Q2, translating to 100% performance. Administration and Constituency Capacity Building achieved 70% and 50% of their targets reporting in Q2 respectively.

 

  1. NEDLAC Comparative Performance per Strategic Objective in Q1 and Q2

 

NEDLAC reported its performance per strategic objective as follows:

 

Table 12: Performance per strategic objectives in Q1 and Q2

Strategic Objectives

2018/19

Q1

2018/19

Q2

Planned targets

Achieved targets

Overall achievement %

Planned targets

Achieved targets

Overall achievement %

Effective governance and strategic leadership

1

1

100%

2

2

100%

Provision of efficient and reliable back office support services

1

1

100%

1

1

100%

Improved risk management and financial oversight

2

2

100%

3

2

67%

Improved facilities management

1

1

100%

1

1

100%

Office administration systems enhanced and monitored

1

1

100%

1

1

100%

Strengthening organizational culture and performance

1

1

100%

2

0

0%

Effective engagement on draft policy and legislation within the framework of the NEDLAC Act, Constitution and Protocols

5

4

80%

10

10

100%

Conclude matters under consideration within the framework of the NEDLAC protocol

N/A

N/A

N/A

1

1

100%

Conclude matters under consideration within the framework of the Section 77 Protocol

N/A

N/A

N/A

1

1

100%

Promote social dialogue through communication, information and capacity building

4

3

75%

3

3

100%

Compliance with the NEDLAC policy on Constituency capacity Building Budgeting and Expense

6

3

50%

6

3

50%

Overall Performance

22

17

77%

31

25

81%

Source: Presentation to the PC: Labour dated 13 February 2019

 

The entity achieved 17 of the 22 planned targets, translating to an achievement of 77% of its strategic objectives in Q1 of 2018/19. In Q2, NEDLAC achieved 25 of the 31 targets translating to an achievement of 81%, which is an improvement from the 77% achieved in Q1 of 2018/19.

 

  1. Challenges experienced and remedial action

 

NEDLAC obtained a qualified audit opinion in respect of undisclosed irregular expenditure amounting to R391 809.00 on the financial statements. As a remedial action, NEDLAC reported that it is in the process of improving compliance with the relevant statutory requirements and effective and timeous implementation of audit action plans.

 

The entity had a challenge of insufficient budget allocation resulting in cost pressures. To correct this, the entity submitted funding requests to the DoL and National Treasury with the MTEF submissions. The entity also put in place cost containment measures to manage spending.

 

NEDLAC had a challenge of unfunded mandates such as the Presidential Jobs Summit and Financial Sector Summit activities. To address this situation, the entity submitted additional funding requests to the DoL and National Treasury and made requests from other alternative private funding sources.

 

NEDLAC reported that it received additional funds of R12 301 226 in Q3 from the DoL specifically to fund the activities of the Job Summit.

 

  1. NEDLAC expenditure in Q2

 

  1. NEDLAC expenditure per programme in Q2

 

Table 13: NEDLAC expenditure per programme in Q2 of 2018/19

Programme

Budget

2018/19

Q2

Actuals

2018/19

Q2

Variance

(Over)/ Under

Q2

Administration

R11 757 500.00

R12 867 715.00

(R1 110 215.00)

Core-operations

R3 277 500.00

R5 450 194.00

(R2 172 694.00

Constituency Capacity Building Funds

R2 179 500.00

R1 480 951.00

R698 549.00

TOTAL

R17 214 500.00

R19 798 860.00

(R2 584 360.00)

Source: Presentation to the PC: Labour dated 13 February 2019

 

NEDLAC reported that it had budgeted to receive a total income of R17 214 500.00 for Q2 of 2018/19. This resulted in a positive variance of R755 566.00, which was caused by more than expected sundry income received as at the end of Q2. NEDLAC used a total of R19 798 860.00 at the end of Q2, resulting in over-expenditure of R2 584 360.00. As a result of the positive variance of R755 566.00, NEDLAC had a deficit of R1 828 794.00 by the end of Q2.

 

  1. NEDLAC expenditure per economic classification in Q2

 

Table 14: NEDLAC expenditure per economic classification in Q2

Economic Classification

Budget

2018/19

Q2

Actual

2018/19

Q2

Variance

(Over)/ Under

Q2

Compensation of employees

R7 188 058.00

R7 825 090.00

(R637 032.00)

Goods and Services

R10 026 442.00

R11 973 770.00

(R1 947 328.00)

Payment for Capital Assets

0

0

0

Payment for Financial Assets

0

0

0

TOTAL

R17 214 500.00

R19 798 860.00

(R2 584 360.00)

Source: Presentation to the PC: Labour dated 13 February 2019

 

NEDLAC spent R7 825 090.00 on Compensation of Employees against a budget of R7 188 058.00, resulting in over-expenditure of R637 032.00. It spent R11 973 770.00 on Goods and Services against a budget of R10 026 442.00, resulting in over-expenditure of R1 097 328.00. The total over-expenditure in Q2 of 2018/19 amounted to R2 584 360.00.

 

  1. Implementation of the Audit Action plan as at the end of Q2

 

NEDLAC reported of progress with the implementation of the audit action plan as follows:

 

Table 15: Implementation of the Audit Action Plan

Department/ Performance Area

Percentage

Finance

35%

Human Resources

43%

Information Technology

100%

Performance information (Planning and Reporting)

46%

Overall Percentage

56%

Source: Presentation to PC Labour dated 13 February 2019

 

Table 15 indicate that NEDLAC had implemented 56% of targets outlined in the Audit Action Plan.

 

  1. Commission for Conciliation Mediation and Arbitration (CCMA)

 

  1. CCMA 2018/19 Q1 and Q2 Performance per Strategic Objective

 

Table 16: CCMA Performance per Strategic Objective in Q1 and Q2 of 2018/19

Strategic Objectives

Annual Planned Targets

Q1 Targets

Achieved

Q1 Overall Achievement %

Q2 Targets

Achieved

Q2 Overall Achievement

%

Enhancing the labour market to advance stability and growth

5

2

2

100%

2

2

100%

Advancing good practices at work and transforming workplace relations

5

1

0

0%

2

2

100%

Building knowledge and skills

1

1

1

100%

1

1

100%

Optimising the organization

8

4

3

75%

5

3

60%

Total number of targets

19

8

6

75%

10

8

80%

Source: Presentation to the PC: Labour on 13 February 2019

 

Table 16 reflects an overall achievement of 80% on performance per strategic objectives of the CCMA in Q2 of 2018/19, which is an improvement from the 75% achieved in Q1. The entity improved from 0% to 100% in advancing good practices at work and transforming workplace relations’ strategic objective. On optimizing the organisation’ strategic objective, the performance of the entity declined from 75% in Q1 of 2018/19 to 60% in Q2 of 2018/19. Compared to Q2 of 2017/18, the entity’s performance improved from 56% to 80% in Q2 of 2018/19.

 

The entity had one target reporting in Q1 under the strategic objective Advancing good practices at work and transforming workplace relations. This target was not achieved resulting in a 0% achievement on this strategic objective in Q1. CCMA reported that the Q1 target will be achieved in Q2 of 2018/19. Table 16 reflects that there were two targets for this strategic objective and they were both delivered resulting in 100% achievement on this strategic objective in Q2 of 2018/19.

 

CCMA intended to hear 98% of all registered cases’ first event within 30 days, excluding agreed extensions. Performance in this regard could not be determined due to system re-configuration that needed to take place. In order to correct this situation, DoL reported that management has embarked on a process to re-configure the system to ensure that the system inputs and outputs the correct performance information, in line with the Annual Performance Plan technical indicator description. In Q2 non-performance on this target (86% against a target of 98%) was reported to be due to that the performance measurement should only be for cases which the CCMA has jurisdiction to conciliate only not all registered cases.

 

  1. CCMA 2018/19 Q2 Dashboard

 

The entity reported that 48 664 cases were referred during Q2 of 2018/19, compared to 47 311 cases in Q2 of 2017/18 financial year. A total of 22 250 cases have been referred from the beginning of 2019 to February 13 of 2019, of which 1 670 were National Minimum Wage referrals. This translates to a year-on-year increase of 10% of referrals as a result of the introduction of the National Minimum Wage Act. Blitz inspections were conducted on compliance to National Minimum Wage Act and non-compliance was found to be 8%.

 

On average, the CCMA took 24 days to deal with conciliation cases as compared to the legislated target of 30 days. The entity took 54 days to deal with arbitration cases against a target of 60 days. The CCMA settled 96% (51 out of 53) public interest matters (Section 150). The entity’s settlement rate in Q2 of 2018/19 was 76%.

 

The CCMA reported that it conducted 613 outreach services during which 23 936 people were capacitated to better understand the law and their rights. Of the 20 917 referrals to CCMA for possible retrenchments, 9 322 or 45% of jobs were saved. The Second Annual Shop Stewards and Union Officials Conference 2018 was held on 27-28 September 2018 in Durban, KwaZulu-Natal. The CCMA received 100 complaints during the Q2 of 2018/19, compared to 103 complaints received in Q1 of 2017/18 financial year. It reported that all complaints were investigated and responded to.

 

  1. CCMA Expenditure for the period ending in Q2 of 2018/19

 

  1. CCMA Expenditure per Programme in Q2 of 2018/19

 

Table 17: CCMA Expenditure per Programme in Q2

Programme

Budget

R’000

Actual

R’000

Variance

R’000

Variance

%

Administration

R272 713

R240 106

R32 608

12%

Institution Development

R18 333

R11 128

R7 205

39%

Corporate Governance

R3 810

R2 471

R1 339

35%

Social Services

R226 714

R222 056

R4 658

2%

Total

R521 571

R475 761

R45 810

9%

Source: Presentation to the PC: Labour dated 13 February 2019

 

The Administration programme received the largest allocation at R272.7 million. It spent R240.1 million at the end of Q2 2018/19, resulting in a variance of R32.6 million or 12% of the programme budget. CCMA reported that the variance resulted from unfilled vacancies and variable administrative expenses that are on demand basis as well as the procurement of once off ICT projects. It was followed by the Social Services programme, which received R226.7 million and spent R222.1 million, resulting in a variance of R4.7 million or 2% of the programme budget. The spending on this programme was in line with the projected expenditure. The Institution Development programme spent R11.1 million of the R18.3 million it received, resulting in a variance of R7.2 million or 39% of the programme budget. The entity reported that the variance resulted from bursaries’ costs as well as training course fees and material costs, which would be utilized as and when the interventions happen. Corporate Governance spent R2.5 million of the R3.8 million received, resulting in a variance of R1.3 million or 35% of the programme budget. The variance was reported to have resulted from unfilled vacancies as well as training course fess, travel costs and fess which were planned for Governing Body members. The overall expenditure of the entity was R475.8 million of the R521.6 budget, resulting in the variance of R45.8 million or 9% of the budget.

 

  1. CCMA expenditure per Strategic Objective in Q2

 

Table 18: CCMA Expenditure per Strategic Objective in Q2

Strategic Objectives

Budget

R’000

Actuals

R’000

Variance

R’000

Variance

%

Enhancing the labour market to advance stability and growth

R8 110

R5 804

R2 306

28%

Advancing good practices at work and transforming workplace relations

R7 998

R3 271

R4 727

59%

Building knowledge and skills

R13 584

R8 384

R5 200

38%

Optimising the organization

R491 880

R458 303

R33 577

7%

Total

R521 571

R475 761

R45 810

9%

Source: Presentation to the PC: Labour dated 13 February 2019

 

The strategic objective that received the largest allocation of the budget was optimizing the organization, which received R491.9 million and spent R458.3 million resulting in a variance of R33.6 million or 7% of its budget. The variance was reported to be mainly as a result of unfilled vacancies, as well as other administrative expenses that are on demand basis. It was followed by building knowledge and skills strategic objective, which received R13.6 million and spent R8.4 million, resulting in a variance of R5.2 million or 38% of its budget. This variance was reported to be as a result of variable costs of training and development activities with cost saving measures implemented. Enhancing the labour market to advance stability and growth strategic objective received R8.1 million budget and spent R5.8 million, resulting in a variance of R2.3 million or 28% of the budget. The variance was reported to be mainly as a result of implementation of cost containment measures on travel and subsistence. Advancing good practices at work and transforming workplace relations received R7.9 million and spent R3.3 million resulting in a variance of R4.7 million or 59%, which was the largest variance. The entity reported that the variance was a result of vacancies and cost containment measures implemented on dispute management activities.

 

  1. CCMA Expenditure by Economic Classification at the end of Q2

 

Table 19: CCMA Expenditure by Economic Classification in Q2

Item

Budget

R’000

Actuals

R’000

Variance

R’000

Variance

%

Compensation of Employees

R258 486

R256 377

R2 110

1%

Transfer Payments

R3 000

R2 511

R489

16%

Goods and Services

R233 374

R208 147

R25 227

11%

Total OPEX

R494 860

R467 034

R27 825

6%

CAPEX

R26 711

R8 727

R17 984

67%

Total Expenditure

R521 571

R475 761

R45 810

9%

Source: Presentation to the PC: Labour dated 13 February 2019

 

Of the total budget of R521.6 million allocated to the CCMA, R258.5 or 49.6% went to Compensation of Employees. Of the R258.5 allocated for Compensation of Employees, R256.4 was spent by the end of Q2 resulting in under-expenditure of R2.1 million or 1% of the budget. This spending was in line with the budget.

 

The second largest allocation went to Goods and Services at R233.4 million or 44.7% of the total budget.  A total of R208.1 million was spent on Goods and Services by the end of Q2, resulting in under-expenditure of R25.2 million or 11% of the allocated budget. The entity reported that the variance related mainly to case disbursements and goods and services that are on demand basis.

 

Of the R3 million allocated for Transfer Payments, R2.5 million was spent by the end of Q2, resulting in a variance of R489 000 or 16% of the budget. CCMA reported that the variance resulted from less inflow of Bargaining Council claims submitted that related to awards rendered and settlement agreements.

 

A total of R26.7 million was allocated to Capital Expenditure, of which R8.7 million was spent by the end of Q2 resulting in a variance of R18.0 million or 67% of the budgeted amount.

 

  1. The Compensation Fund

 

  1. Compensation Fund Performance per Programme in Q1 and Q2 of 2018/19

 

Table 20: Compensation Fund Comparative Analysis per Programme for Q1 & Q2 2018/19

Programmes

Quarter 1

2018/19

Quarter 2

2018/19

 

Q1 planned targets

Achieved

Achieved %

Q2 planned targets

Achieved

Achieved %

Programme 1:

Administration

1

1

100%

1

1

100%

Programme 2:

Compensation for Occupational Injuries and Diseases Services Operations

3

2

67%

3

2

67%

Programme 3:

Medical Services

2

2

100%

2

2

100%

Programme 4:

Orthotic and Rehabilitation Services

1

1

100%

1

1

100%

Total

7

6

86%

7

6

86%

Source: Presentation to the PC: Labour dated 20 February 2019

 

As in Q1, the Compensation Fund (CF) achieved six out of seven planned targets reporting in Q2, translating to an overall achievement of 86%. The entity achieved 100% in all programmes, except Compensation for Occupational Injuries and Diseases Services Operations. CF achieved two of the three planned targets reporting in Q1 and Q2, translating to an achievement of 67 % under COID Services Operations programme.

 

  1. CF Performance per Strategic Objective in Q2 of 2018/19

 

Table 21: CF Performance per Strategic Objective in Q2 of 2018/19

Strategic Objectives

Annual Planned Targets

Indicators with Targets Reporting in Q2

Achieved

Not Achieved

Overall Achievement %

Provide an effective and efficient client oriented support services

3

1

1

0

100%

Provide faster, reliable and accessible COID services by 2020

6

6

5

1

83%

Total

9

7

6

1

86%

Source: Presentation to the PC on Labour dated 20 February 2019

 

CF had one target reporting in Q2 under the strategic objective “to provide an effective and efficient client oriented support services”, which was achieved, translating to 100% achievement. The entity achieved five of the six indicators with targets reporting in Q2 under the strategic objective “to provide faster, reliable and accessible COID services by 2020.” This translated to an achievement of 83% under this strategic objective.

 

  1. CF Performance per Indicator in Q1 and Q2 of 2018/19

 

Table 22: CF Performance per Indicator in Q1 and Q2 of 2018/19

Performance Indicator

Annual Target

Q1 Target

Q1 Achievement

Q2 Target

Q2 Achievement

% implementation of the approved annual risk-based audit plan

85%

15%

25%

45%

60%

% of approved benefits paid within 5 working days

98%

98%

100%

98%

100%

% of active registered employers assessed annually by 31 March 2019 (excl. exempted employers)

75%

40%

35%

55%

38%

% of claims adjudicated within 40 working days of receipt

90%

90%

92%

90%

95%

% of medical invoices finalized within 60 working days of receipt

85%

85%

99%

85%

94%

% of pre-authorisation requests responded to within 10 working days

85%

85%

87%

85%

90%

% of compliant requests for assistive devices responded to within 15 working days of receipt

85%

85%

91%

85%

89%

Source: Presentation to the PC on Labour dated 20 February 2019

 

Table 22 reflects that CF implemented 25% of the approved annual risk-based audit plan against a Q1 target of 15%. In Q2 the entity implemented 60% of the approved annual risk-based audit plan against a target of 45%. The annual target for the implementation of the approved annual risk-based audit plan was 85%.

 

CF paid all approved benefits in Q1 and Q2 within five working days against a target of 98%. It assessed 35% and 38% of active registered employers in Q1 and Q2 against targets of 40%and 55% respectively. This is the only indicator where the entity registered an under-achievement.

 

The entity adjudicated 92% and 95% of claims in Q1 and Q2 within 40 working days of receipt against the target of 90% for both quarters. It finalized 99% and 94% of medical invoices in Q1 and Q2 within 60 working days of receipt against the target of 85% for both quarters.

 

CF responded to 87% and 90% of pre-authorisation requests within 10 working days in Q1 and Q2 against a target of 85 % for both quarters. It responded to 91% and 89% of compliant requests for assistive devices within 15 working days of receipt in Q1 and Q2 against a target of 85% for both quarters.

 

  1. CF Performance linked to Budget in Q2 of 2018/19

 

Table 23: CF Q2 Programme Performance linked to Budget

Programmes

Planned Indicators

Achieved

Not Achieved

Overall Performance

Budget

R’000

Actual Spent

R’000

Variance

R’000

% Spent

Programme 1

1

1

0

100%

2 403 477

549 218

1 854 259

23%

Programme 2

3

2

1

67%

1 025 917

144 724

881 193

14%

Programme 3

2

2

0

100%

3 106 081

1 382 540

1 723 541

45%

Programme 4

1

1

0

100%

2 450

54

5 396

2%

Overall Performance

7

6

1

86%

6 537 925

2 076 536

4 461 389

32%

Source: Presentation to the PC on Labour dated 20 February 2019

 

The CF spent R2.1 billion or 32% at the end of Q2 of the R6.5 billion annual budget for 2018/19, resulting in a variance of R4.5 million. Programme 3: Medical Benefits received the largest allocation of R3.1 billion and spent R1.4 billion or 45% by the end of Q2, resulting in a variance of R1.7 billion. Programme 1: Administration received the second largest allocation of R2.4 billion and spent R549 million or 23% by the end of Q2, resulting in a variance of R1.9 billion. Programme 2: COID Services received R1.0 billion and spent R144.7 million or 14% by the end of Q2, resulting in a variance of R881.2 million. Programme4: Orthotic and Rehabilitation Services received the least allocation of R2.5 million and spent only R54 000 or 2% by the end of Q2, resulting in a variance of R2.4 million. The Commissioner informed the members of the Committee that this is a new unit that is currently staffed by only the Chief Director.

 

Table 24: CF Q2 Expenditure by Economic Classification

Economic Classification

Revised Allocation

2018/19

R’000

Actual Expenditure

Q2: 2018/19

R’000

Variance

Under/ (Over)

R’000

Spent %

Compensation of Employees

R843 370

R390 808

R452 562

46%

Goods and Services

R1 197 112

R248 962

R948 150

21%

Capital Expenditure

R82 251

R9 307

R72 944

11%

Total Admin Budget

R2 122 734

R649 077

R1 473 656

31%

 

 

 

 

 

Compensation Claims

R1 315 191

R52 440

R1 262 751

4%

Medical Claims

R3 100 000

R1 375 019

R1 724 981

44%

Total Benefits

R4 415 191

R1 427 459

R2 987 732

32%

 

 

 

 

 

Total Budget

R6 537 925

R2 076 536

R4 462 389

32%

Source: Presentation to the PC on Labour dated 20 February 2019

 

A total of R6.5 billion was allocated to the CF in 2018/19 comprising R2.1 billion for Administration and R4.4 billion for Benefits. By the end of Q2, R694.1 million or 31% of the Administration budget was spent resulting in a variance of R1.5 billion. A total of R390.8 million or 46% of the Compensation of Employees budget was spent by the end of Q2, resulting in a variance of R452.6 million.

 

Goods and Services received the largest share of the Administration budget at R1.2 billion and spent R248.9 million or 21% of the budget, resulting in a variance of R948.1 million. The CF provided reasons for low expenditure on Goods and Services but stated that it is expected to pick up in the following terms.

 

Medical Claims received the largest share of benefits budget at R3.1 billion and spent R1.4 billion or 44% by the end of Q2 resulting in a variance of R1.7 billion. A total of R52.4 million or 4% of the R1.3 billion allocated to Compensation Claims was spent by the end of Q2, resulting in a variance of R1.3 billion. The CF explained that the process for budgeting for medical and compensation benefits was reviewed based on prior actual expenditure and this resulted in the compensation benefits budget amount being significantly reduced.

 

  1. Top 20 injuries, industry sector and companies

 

The report reflects Multiple Superficial injuries as the most common injuries at workplaces, followed by Superficial injury of wrist and hand. Food Retail sector reported most of the injuries, followed by Tillage and Forestry sector. The National Departments and Provincial Departments were reported to be sixth and twentieth respectively, of the top twenty sector list. Shoprite, Pick n Pay and Western Cape Department of Health reported the highest number of injuries at the workplace. Shoprite alone accounted for 42% of all reported injuries on duty.

 

  1. Unemployment Insurance Fund

 

  1. Performance of the UIF

 

  1. Performance per Strategic Objective

 

Table 25: UIF Performance per Strategic Objective

 

 

Strategic Objectives

2018/19 Q1

2018/19 Q2

2017/18 Q2

Planned indicators

Achieved

Overall Achievement

Planned indicators

Achieved

Overall Achievement

Planned Indicators

Achieved

Overall Achievement

Ensure financial sustainability

3

3

100%

3

3

100%

3

3

100%

Strengthen institutional capacity of the Fund

1

1

100%

1

0

0%

-

-

-

Provide easy to use services through multiple access points

2

1

50%

2

0

0%

-

-

-

Improve service delivery

6

3

50%

6

4

83%

5

2

40%

Collaborate with stakeholders to improve compliance with UIF Act

2

1

50%

2

2

100%

2

1

50%

Enhance employability of UIF beneficiaries, enable entrepreneurship and preserve jobs

2

1

50%

2

1

50%

2

1

50%

Overall Performance

16

10

63%

16

10

63%

12

7

58%

Source: Presentation to the PC: Labour dated 20 February 2019

 

The UIF performance was 63% in both Q1 and Q2 of 2018/19, which is an improvement from the 58% achieved in Q2 of 2017/18. On Ensuring Financial sustainability strategic objective, the entity achieved 100% in Q1 and Q2 of 2018/19, as well as in Q2 of 2017/18. On Strengthening Institutional capacity of the Fund, it declined from 100% in Q1 to 0% in Q2 of 2018/19. The entity declined from 50% in Q1 to 0% in Q2 on Provide easy to use services through multiple access points strategic objective. It improved from 50% in Q1 to 83% in Q2 on Improve service delivery. The entity had achieved 40% on this strategic objective in Q2 of 2017/18. The UIF improved from 50% in Q1 to 100% in Q2 on Collaborate with stakeholders to improve compliance with UIF Act. The entity had achieved 50% on this objective in Q2 of 2017/18. The entity registered an achievement of 50% on Enhance employability of UIF beneficiaries, enable entrepreneurship and preserve jobs strategic objective in Q1 and Q2 of 2018/19 as well as in Q2 of 2017/18 financial year.

 

  1. Performance per Programme

 

Table 26: UIF Performance per Programme

Programme

Q2 Target

Actual Performance

Variance

Overall Performance %

Administration

6

3

3

50%

Business Operations

8

6

2

75%

Labour Activation Programmes

2

1

1

50%

Total

16

10

6

63%

Source: Presentation to the PC: Labour dated 20 February 2019

 

The Administration programme achieved three out of six Q2 targets translating to an achievement of 50% on this programme. It achieved six out of eight targets reporting in Q2 under Business Operations programme translating to an achievement of 75% on this programme. On Labour Activation Programme, the entity achieved one of the two Q2 targets, translating to an achievement of 50%.

 

  1. UIF Financial Performance in Q2 of 2018/19

 

  1. UIF Expenditure per Programme

 

Table 27: UIF Expenditure per Programme in Q2 of 2018/19

Programmes

Budget

R’000

Actual

R’000

Variance

R’000

Spent

%

Administration

R1 093 416

R393 233

R700 182

38%

Business Operations

R7 233 477

R6 163 214

R1 070 262

85%

Labour Activation Programmes

R475 853

R31 736

R444 118

7%

Total

8 802 746

R6 588 183

R2 214 562

75%

Source: Presentation to the PC: Labour dated 20 February 2019

 

The UIF budget for 2018/19 amounted to R8.8 billion, of which R6.6 billion or 75% was spent by the end of Q2 resulting to a variance of R2.2 billion. The larger share of the budget went to Business Operations at R7.2 billion, of which R6.2 billion or 85% was spent by the end of Q2 resulting to a variance of R1.1 billion. The 15% underspending was attributed to benefits payments, compensation of employees and the SARS Commission.  The benefit payment budget was compiled based on the expected economic conditions and past events in South Africa. However, lesser claims were received than initially projected. The programme underspent on compensation of employees due to newly created posts that are in the process of being filled. The Fund continued to limit spending in accordance with the cost containment circular. SARS Commission depends on revenue collected and less revenue was collected than the budgeted amount. The budget for revenue is based on a revenue indicator developed for the Fund, which utilizes a combination of projected CPI and GDP to determine the likely rate of growth in the revenue of the Fund.

 

The Administration programme received R1.1 billion and spent R393.2 million or 38% by the end of Q2 resulting to a variance of R700.2 million. The factors that contributed to underspending on this programme are compensation of Employees (Head Office), depreciation and management fees. The programme underspent on compensation of employees due to overtime and merit awards circulars and newly created posts that are in the process of being filled. The Fund continued to limit spending in accordance with the cost containment measures. Management fees were reported to have been less than the budgeted amount due to new mandate that was estimated higher due to the fact that initial commitment capital fees of new instruments are substantially higher than subsequent management fees. Trading activity in the portfolio also decreased due to unfavourable market conditions. The Fund was reported to be in the process of filling the vacant positions.

 

The Labour Activation Programmes received a budget of R475.9 million and spent R31.7 million or 7% by the end of Q2 resulting to a variance of R444.1 million. It was reported that the unemployment alleviation schemes contributed to 93% underspending. This was due to delays on the finalization of the evaluation process and inadequate supporting documents submitted by service providers.

 

Table 28: UIF Expenditure by Economic classification

Economic Classification

Budget

R’000

Actual

R’000

Variance

R’000

Spent

%

Compensation of Employees

R772 467

R600 983

R171 484

78%

Goods and Services

R999 540

R437 688

R561 851

44%

CAPEX

R131 200

R37 746

R93 454

29%

Transfers

R6 899 539

R5 511 766

R1 387 773

80%

Total

R8 802 746

R6 588 183

R2 214 562

75%

Source: Presentation to the PC: Labour dated 20 February 2019

 

In terms of Economic Classification, the larger share of the budget went to Transfers at R6.9 billion. Of this amount R5.5 billion or 80% was spent by the end of Q2 resulting to a variance of R1.4 billion. Goods and Services received the second largest allocation at R999.5 million. Of this amount R437.7 million or 44% was spent by the end of Q2 resulting to a variance of R561.9 million. A total of R772.5 was allocated for Compensation of Employees and R600.9 or 78% was spent by the end of Q2 resulting to a variance of R171.5 million. Of the R131.2 million allocated for Capital Expenditure, R37.7 or 29% was spent by the end of Q2 resulting to a variance of R93.5 million.

 

  1. Productivity South Africa (PSA)

 

  1. PSA Performance per Programme in Q1 and Q2 of 2018/19

 

Table 29: PSA Performance per Programme in Q1 and Q2 of 2018/19

 

 

 

Programme

Annual Planned indicators

2018/ 2019

Q1

2018/19

Q2

Planned Indicators

Achieved

Performance

%

Planned Indicators

Achieved

Performance

%

Corporate Services

2

0.5

0.5

100%

0.5

0.5

100%

Human Resources Management

1

n/a

-

-

-

-

-

Marketing and Communication

1

n/a

-

-

1

0

0%

Productivity Organisational Solutions

2

2

1

50%

2

1

50%

Value Chain Competitiveness

4

2

1

50%

1

1

100%

Turnaround Solutions

3

3

0

0%

3

0

0%

Overall Performance

13

8

3

37%

8

3

37%

Source: Presentation to the PC: Labour dated 20 February 2019

 

The PSA had 13 annual targets and eight targets reporting in Q1 and Q2. It achieved three of the eight targets reporting in both Q1 and Q2 translating to an overall achievement of 37% in both Q1 and Q2. The Corporate Services programme achieved 100% in Q1 and Q2. It managed to pay all SMEs within 30 days.

 

The entity achieved 0% on Marketing and Communications programme targets in Q2. It hosted six productivity awards and regional milestone workshops against a target of nine. The productivity awards were not held in Free State, Northern Cape and KwaZulu-Natal provinces. PSA reported that the productivity awards for Free State and KwaZulu-Natal will be held in Q3 and for Northern Cape in Q4.

 

Productivity Organisational Solutions achieved 50% of its targets in Q1 and Q2. It supported 1 491 and 839 SMEs and co-operatives through Productivity and operational efficiency enhancement programmes in Q1 and Q2 against targets of 950 in Q1 and 1 350 in Q2 respectively. Productivity Organisational Solutions trained 17 and 70 productivity ambassadors in Q1 and Q2 against a targets of 60 in both quarters.

 

The Value Chain Competitiveness programme achieved 50% and !00% of programme targets in Q1 and Q2 respectively. It capacitated 16 companies to improve productivity and business efficiency against a target of 25 in Q1. In Q2 it achieved a target of publishing one statistical report on productivity and competitiveness.

 

PSA did not achieve its targets on Turnaround Solutions for both Q1 and Q2. The target was to save 2 500 jobs in Q1and 5 000 jobs in Q2 in companies facing economic distress, which was not achieved. It planned to support 50 and 100 companies facing economic distress through Turnaround Strategies to retain jobs in Q1 and Q2. This target was not achieved in both quarters. The programme did not manage to train 150 and 300 workplace future forum members on productivity improvement solutions in Q1 and Q2 respectively.

 

  1. PSA Performance per Strategic Objective inQ1 and Q2 of 2018/19

 

Table 30: PSA Performance per Strategic Objective in Q1 and Q2 of 2018/19

 

 

 

Strategic Objective

Annual Planned indicators

2018/ 2019

Q1

2018/19

Q2

Planned Indicators

Achieved

Performance

%

Planned Indicators

Achieved

Performance

%

Strengthen the institutional capacity of PSA to deliver on its mandate and be financially sustainable

4

1

1

100%

1

1

100%

Provide support to programmes aimed at sustainable employment and income growth

2

2

1

50%

2

1

50%

Provide support to companies facing economic distress to retain jobs

3

3

0

0%

3

0

0%

Contribute to employment and income growth through research, information generation and dissemination

2

1

1

100%

n/a

-

-

Promote social dialogue and a culture of productivity and competitiveness in the workplace and community life

2

1

0

0%

2

1

50%

Overall Performance

13

8

3

37%

8

3

37%

Source: Presentation to the PC: Labour dated 20 February 2019

 

PSA achieved all its planned targets in Q1 and Q2 under the strategic objective of strengthening the institutional capacity to deliver on its mandate and be financially sustainable. It achieved 50% in both Q1 and Q2 under providing support to programmes aimed at sustainable employment and income growth. The entity did not achieve all three performance targets related to the strategic objective to providing support to companies facing economic distress to retain jobs. PSA did not achieve the target it set itself for Q1 under the strategic objective to promote social dialogue and a culture of productivity and competitiveness in the workplace and community life. In Q2 it achieved 50% on the same strategic objective.

 

  1. PSA Financial Performance for Q2 of 2018/19

 

  1. PSA Expenditure per Proramme in Q2

 

Table 31: PSA Expenditure per Programme in Q2

Programme

Budget

R’000

Actual

R’000

Variance

(Over)/ Under

R’000

Expenditure

%

Administration

R23 732

R24 176

(444)

102%

Productivity Organisational Solutions

R6 080

R5 821

R259

96%

Value Chain Competitiveness

R5 693

R4 367

R1 326

77%

Workplace Challenges

R54 354

R2 527

R51 827

5%

Turnaround Solutions

R8 494

R6 294

R2 200

74%

Total

R98 353

R43 185

R55 168

44%

Source: Presentation to the PC on Labour dated 20 February 2019

 

PSA was allocated R98.4 million budget and spent R43.2 million or 44% of its budget by the end of Q2 resulting to a variance of R55.2 million. The Administration programme was allocated R23.7 million and spent R24.2 million by the end of Q2 resulting to over-expenditure of R444 000. Workplace Challenges was allocated R54.4 million and spent R2.5 million or 5% of its budget, resulting to a variance of R51.8 million. Productivity Organisational Solutions spent 96% of its budget by the end of Q2. Value Chain Competitiveness programme was allocated R5.7 million and spent R4.4 million or 77% of its budget resulting to a variance of R1.3 million. Turnaround Solutions programme spent R6.3 million or 74% of the allocated R8.5 million, resulting to a variance of R2.2 million.

 

  1. PSA Expenditure by Economic Classification at the end of Q2 of 2018/19

 

Table 32: PSA Expenditure by Economic Classification at end of Q2 of 2018/19

Economic Classification

Budget

R’000

Actual

R’000

Variance

R’000

Expenditure

%

Compensation of Employees

R34 990

R32 909

R2 081

94%

Goods and Services

R63 363

R10 276

R53 087

16%

Total

R98 353

R43 185

R55 168

44%

Source: Presentation to the PC: Labour dated 20 February 2019

 

A total of R63.3 million or 64% of the PSA budget was allocated to Goods and Services. Of this amount, R10.3 million or 16% was spent by the end of Q2. This resulted to a variance of R53.1 million. A total R34.9 million or 36% of the PSA budget was allocated to Compensation of Employees. Of this amount R32.9 million or 94% was spent by the end of Q2. This resulted to a variance of R2.1 million.

 

  1.  Committee Observations

 

The Committee made the following observations:

  1. The irregular expenditure of the Department increased from R5 846.00 in Q1 to R255 740.12 in Q2. Fruitless and wasteful expenditure increased from R48 969.73 in Q1 to R376 842.84 in Q2. There was no unauthorized expenditure reported.
  2. The Department registered low expenditure on Compensation of Employees at the end of Q2 of 2018/19, which was attributed to vacancy rate.
  3. NEDLAC obtained a qualified audit opinion in respect of undisclosed irregular expenditure amounting to R391 809.00 on the financial statements.
  4. CCMA reported that variance in expenditure on Administration programme resulted from, amongst others, unfilled vacancies.
  5. Orthotic and Rehabilitation Services programme of the CF had a budget allocation of R2.5 million and spent only R54 000 or 2% by the end of Q2, resulting in a variance of R2.4 million. The Commissioner of the CF informed the members of the Committee that this is a new unit that is currently staffed by only the Chief Director.
  6. PSA achieved 37% of its performance targets and spent 44% of its budget by the end of Q2 of 2018/19. The entity’s performance was 0% on Turnaround Solutions programme in both Q1 and Q2 of 2018/19 financial year. The CEO of PSA informed the Committee that the entity has no funding for the remainder of 2018/19.

 

8.         Committee Recommendations

 

The Committee recommends that the Minister ensures that:

 

8.1.       The irregular and fruitless and wasteful expenditure are investigated and corrective measures taken.

8.2.       The investigations into the conduct of members of the executive management of NEDLAC are timeously expedited to provide leadership to the entity.

8.3.       The vacant post of the Chief Executive Officer of the Supported Employment Enterprises and all other vacant posts are speedily filled with suitably qualified candidates.

8.4.       All government departments are encouraged to use ESSA database to source candidates for entry level posts.

8.5.       The Department of Labour works with the Department of Public Works to ensure that all buildings that are occupied by government department and entities comply to safety standards.

8.6.       The Department seeks legal advice on Schedule 1 of the Employment Equity Amendment Act of 2014, which makes provision for maximum permissible fines that may be imposed for contravening the Act.

8.7.       The funding challenges of Productivity South Africa are timeously resolved.

 

The Department of Labour should report to the Portfolio Committee on Labour on progress made with regards to the above recommendations within one month after the report has been adopted by the National Assembly in the 6th Parliament.

 

 

Report to be considered.

 

 

Documents

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