ATC200604: Report of the Portfolio Committee on Employment and Labour on Budget Vote 31: Employment And Labour, the Strategic Plan of the Department and Entities 2020/21 – 2024/25 and the Annual Performance Plan of the Department and Entities 2020/21, Dated 29 May 2020

Employment and Labour

Report of the Portfolio Committee on EMPLOYMENT AND LABOUR on Budget Vote 31: EMPLOYMENT AND Labour, the Strategic Plan of the Department AND ENTITIES 2020/21 – 2024/25 AND the ANNUAL PERFORMANCE PLAN of THE DEPARTMENT AND ENTITIES 2020/21, dated 29 may 2020

 

The Portfolio Committee on Employment and Labour, having considered the budgets of the Department and its entities in line with their 2020 - 2025Strategic Plansand Annual Performance Planswhich were presented on 7, 12, 14 and20 May 2020, reports as follows:

 

1.         INTRODUCTION

 

The Department of Employment and Labour derives its legislative mandate from the Constitution, particularly the Bill of Rights. Some of the relevant sections include section 9-Equality; section 10-Human dignity;section13-Slavery, servitude and forced labour; section 16-Freedom of expression; section 17 - Assembly, demonstration, picket and petition; section 18-Freedom of association; section 22-Freedom of trade, occupation and profession; as well as section 23-Labour relations. These Constitutional rights are given effect through various pieces of legislation, including the Labour Relations Act (1995); the Basic Conditions of Employment Act (1997); the Employment Equity Act (1998); the Occupational Health and Safety Act (1993);the Employment Services Act (2014); and the National Minimum Wage Act (2018).

 

This report covers the Strategic Plan of the Department 2020-2025, Annual Performance Plan 2020/21 and the Budget Review of the Department and its entities. It is based on presentations made to the Portfolio Committee on Employment and Labour on 7, 12,14 and 20 May 2020.

 

2.         THE STRATEGIC PLAN OF THE DEPARTMENT OF EMPLOYMENT AND LABOUR 2020- 2025

2.1.       Programmes and entities of the Department

The functions of the Department are structured into four programmes, namely:

  • Programme 1: Administration
  • Programme 2: Inspection and Enforcement Service
  • Programme 3: Public Employment Services
  • Programme 4: Labour Policy and Industrial Relations

 

The following entities report to the Department:

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

 

2.2.       The Department and Medium Term Strategic Framework (MTSF)

In the medium term the Department will contribute to the following government service delivery MTSF priorities:

  • Priority 1: A capable, ethical and developmental State
  • Priority 2: Economical transformation and job creation
  • Priority 3: Education, skills and health
  • Priority 4: Consolidating the social wage through reliable and basic services
  • Priority 6: Social cohesion and safer communities
  • Priority 7: A better Africa and a better world

 

2.3.       Strategic plan per government MTSF priorities

 

2.3.1.    Priority 1: A capable, ethical and developmental State

The outcome for this priority is to have a functional, efficient and integrated government. The five-year target is to fill all funded vacant posts within 4 months of becoming vacant. The current vacancy rate for the Department is 10%.

 

With regard to ICT, the Department aims to ensure 95% system availability through acquisition, maintenance and improvement of ICT services. The availability of ICT system currently stands at 90%. The ultimate target of the Department is to have 100% system availability.

 

2.3.2.    Priority 2: Economic transformation and job creation

The first outcome for Priority 2 is more decent jobs created and sustained, with youth, women and persons with disabilities prioritised. The five-year target is to monitor and report on the target of creating 275 000 jobs per year, which was set by the Presidential Job Summit agreement. To create 256 050 jobs for the youth in contribution to the Job Summit Agreement target of creating 1 million jobs through the Presidential Comprehensive Youth Employment interventions by 2024. Furthermore, the Department plans to have the Employment Policy finalised and implemented by 2024. The policy aims to regulate employment of foreign nationals, without being xenophobic.

 

The second outcome for this government priority is to invest for accelerated inclusive growth. The five-year target is to inspect 18 420 workplaces, inclusive of 1 820 DG reviews and ensuring that these workplaces are transformed.

 

The third target is to ensure increased economic participation, ownership, access to resources, opportunities and wage equality for women, youth and persons with disabilities. The five-year target is to inspect 838 560 workplaces to enforce compliance with the National Minimum Wage Act and the Basic Conditions of Employment Act.

 

2.3.3.    Priority 3: Education, skills and health

The five-year target for this objective is to inspect 421 620 workplaces for compliance with Occupational Health and Safety legislation. The Department plans to conduct 23 844 inspections in the current financial year and 397 776 in the 2021/22 to 2024/25 financial years.

 

2.3.4.    Priority 4: Consolidating the social wage through reliable and basic services

The outcome for this priority is to have comprehensive social security coverage. This would be achieved through enforcement of compliance to Unemployment Insurance Act, Unemployment Insurance Contributors Act and Compensation for Occupational Injuries and Diseases Act. The five-year target is to inspect 131 580 employers so as to improve coverage for employees.

 

2.3.5.    Priority 6: Social cohesion and safer communities

The outcome for this government priority is to achieve equal opportunities, inclusion and redress. To this end, the Department is in the process of amending the Employment Equity Act, so as to set sector targets. The ultimate aim is to have the Employment Equity Act amended, enacted and enforced by 2024.

 

The Department’s five-year target is to achieve at least 50% representation of Africans at middle and senior management levels and 2.5% representation of persons with disabilities in employment by 2024.

 

The Department also aims to develop and implement anincomedifferential data collection tool (EEA4 form) for designated employers by 2022.

 

2.3.6.    Priority 7: A better Africa and a better World

The five-year target for this government priority is to fulfil 90% of the country’s obligations to SADC and AU as well as ensuring that South Africa’s participation in international organisations is secured to advance national interest.

 

2.4.       The Annual Performance Plan of the Department of Employment and Labour

 

Table 1: Budget allocation of the Department 2020/21

Programme

Revised Estimates

Medium Term Expenditure Estimate

R-thousand

2019/20

2020/21

2021/22

2022/23

1.

Administration

961 959

1 011 652

1 072 964

1 113 559

2.

Inspections and Enforcement Services

631 583

676 893

720 493

747 683

3.

Public Employment Services

619 612

643 467

685 905

711 437

4.

Labour Policy and Industrial Relations

1 220 045

1 305 737

1 377 790

1 437 168

Total

3 433 199

3 637 749

3 857 152

4 009 847

Economic Classification

 

 

 

 

Current Payments

2 043 811

2 177 557

2 320 190

2 417 014

Compensation of Employees

1 363 725

1 490 476

1 588 919

1 658 025

Goods and Services

680 086

687 081

731 271

758 989

Transfers and Subsidies

1 329 204

1 391 364

1 467 473

1 520 189

Payment for Capital Assets

60 184

68 828

69 489

72 644

Total

3 433 199

3 637 749

3 857 152

4 009 847

Source: Presentation to the joint meeting of PC and SC on Employment and Labour dated 7 May 2020

 

2.4.1.    Annual Performance Plan forProgramme 1

The budget allocation for Programme 1 amounted to R1 billion in 2020/21 financial year. This is the second highest programme budget allocation after Programme 4.

 

The annual performance plan of the programme includes:

  • Filling 80% of the vacant funded posts within 4 months of becoming vacant.
  • Completing phase 1 of the SAP roadmap implementation in acquisition, maintenance and improvement of ICT services.
  • Ensuring that the ethics governance structure is in place and complete the rollout of the ethics management plan.
  • Resolution of 90% of reported incidents of corruption in government.
  • Compile one Annual Financial Statement by 31 May 2020 and three Interim Financial Statements 30 days after each quarter. The financial statements must comply with guidelines issued by the National Treasury.
  • Reduction of irregular expenditure by 25% from the baseline of R3.4 million and 26 reported cases.
  • Reduction of fruitless and wasteful expenditure by 25% from the baseline of R4.4 million and 336 reported cases.

 

2.4.2.    Annual Performance Plan for Programme 2

The budget allocation for this programme amounted to R676.8 million in the2020/21 financial year.

 

The annual performance plan of this programme includes:

  • Inspecting 221 556 employers in 2020/21 financial year to determine compliance with employment law. Of these inspections, 47 520 and 44 436 will be conducted in Gauteng and KwaZulu-Natal respectively. The majority of the inspections (167 712) will be to determine compliance to the Basic Conditions of Employment Act.
  • Serving 90% of non-compliant employers with notices in terms of relevant labour legislation within 14 calendar days of the inspection.
  • Referring 65% of non-compliant employers for prosecution within 30 calendar days.
  • Conducting 4 seminars and 2 conferences in 2020/21 financial year to enhance awareness of employment law.

 

2.4.3.    Annual Performance Plan for Programme 3

The budget allocation for this programme amounted to R643.4 million in the 2020/21 financial year.

 

The annual performance plan of this programme includes:

  • Registering 750 000 work-seekers on the Employment Services of South Africa (ESSA) database. Of these, 195 000 and 127 500 work-seekers will be registered in Gauteng and KwaZulu-Natal respectively.
  • Registering 95 000 employment opportunities on ESSA. Of these, 18 200 and 15 000 opportunities will be registered in Gauteng and KwaZulu-Natal.
  • Providing 220 000 work-seekers with employment counselling in 2020/21 financial year. Of these 45 396 and 27 938 work-seekers provided with employment counselling will be in Gauteng, KwaZulu-Natal and Eastern Cape respectively.
  • Filling 47 500 registered employment opportunities with registered work-seekers. Of these, 9 100 and 7 500 registered employment opportunities will be filled with registered work-seekers in Gauteng and KwaZulu-Natal.
  • Concluding 30 partnership agreements with various stakeholders.
  • Developing and finalising the Employment Policy. Phase one of the policy was reported as completed. The policy on Labour Migration sub-theme was reported to be in the government mandating stages. The Employment Schemes/ Reconfigured LAP is also reported to be at an advance stage.

 

Supported Employment Enterprises (SEE) is not a stand-alone entity, but reports under Programme 3: Public Employment Services of the Department.

 

2.4.4.    Annual Performance Plan for Programme 4

The budget allocation for this programme amount to R1.3 billion in 2020/21 financial year. This is the highest programme budget allocation of the Department of Employment and Labour.

 

The annual performance plan of this programme includes:

  • Tabling the amendments to the Employment Equity Act in Parliament by 31 March 2021.
  • Publishing the 2019-2020 Annual Employment Equity Report and Public Register by 30 June 2020.
  • Developing 2020-2021 Annual Employment Equity Report and Public Register by 31 March 2021.
  • Developing draft Code of Good Practice on elimination of harassment and violence in the world of work by 31 March 2021.
  • Developing income differential data collection tool (EEA4 form) for designated employers by 31 March 2021.
  • Reviewing the National Minimum Wage level by 30 June 2020.
  • Assessing and verifying 100% of collective agreements within 180 working days of receipt by 31 March 2021.
  • Approving or refusing 100% of labour organisations’ applications for registration within 90 working days of receipt by 31 March 2021.
  • Having the bilateral cooperation and multilateral obligations signed off by the Minister by 30 April 2020. The annual implementation report will be signed off by the Minister by 30 April 2020 and the mid-term implementation report signed off by the Minister by 31 October 2020.
  • Producing four annual labour market trend reports on the impact of labour legislation by 31 March 2021.
  • Producing and submittingto the Deputy Director General: LP & IR three research reports on the impact of labour legislation to the market in line with the Research, Monitoring and Evaluation (RME) Agenda.

 

The entities reporting to the Department of Employment and Labour made their presentations to the joint meeting of the Committees responsible for Employment and Labour in the order outlined below.

 

3.         ENTITIES OF THE DEPARTMENT OF EMPLOYMENT AND LABOUR

 

The entities reporting to the Department are:

3.1.       Commission for Conciliation Mediation and Arbitration (CCMA)

3.2.       National Economic Development and Labour Council (NEDLAC)

3.3.       Productivity South Africa (PSA)

3.4.       Unemployment Insurance Fund (UIF)

3.5.       Compensation Fund (CF)

 

3.1.       Commission for Conciliation Mediation and Arbitration (CCMA)

The CCMA has moved from the “Senza uMehluko” strategy of 2015/16-2019/20, which means making a difference to “iMvuselelo” or revival strategy. The iMvuselelo strategy is based on the spirit of Ubuntu, which is “I am because you are”. The new strategy is anchored on Batho Pele or People First principles.

 

The expanded focus of the entity in the 2019/20 to 2023/24 period involves facilitation of land disputesin terms of section 25 of the Constitution. The strategic foundation has three tiers, which are labour market stability, dispute resolution and enforcement and post-dispute support. Key success factors for labour market stability are dispute prevention strategy, dispute management strategy and transformed workplace model strategy. Key success factors for dispute resolution and enforcement are accessibility, efficiency, effectiveness and quality strategy. It also involves enforcement strategy and 4IR strategy. Key success factors for post dispute support is the post dispute support strategy. The three aspects of the strategy are dispute prevention, dispute management and dispute resolution.

 

The three pillars of the strategy are to optimise the organisation, enhance labour market stability and support strategy implementation and good governance.

Optimising the organisation involves organisational configuration to respond to the changing needs of the labour market to enable the CCMA to improve its effectiveness and efficiency. The organisational structure must be fit for purpose to support the delivery of the strategy, with its staff being continuously supported and capacitated to deliver service excellence.

The labour market stability pillar will be grounded by the entity’s proactive and relevant labour market interventions. This strategic pillar will be focused on ensuring that a post-dispute analysis is conducted in order to generate labour market intelligence and influence legislative reform.

Support strategy implementation and good governance focus will be oriented on supporting organisational service excellence to support the achievement of the strategic intent. To support strategy implementation and service excellence, strategic forecasting and anticipatory risk will be emphasised in order to ensure that proactive and relevant labour market interventions are delivered in a timeous manner, and that the CCMA is responsive to the needs of the labour market. Strategic partnerships and collaborations will be intensified for synergised efforts in solving common challenges and for greater impact.

 

3.1.1.    Strategic Plan of the CCMA per Programme

 

Table 2: Overview of the CCMA 2020/21 Budget and MTEF

Programme

Approved Budget

Medium Term Estimates

2019/20

(R’000)

2020/21

(R’000)

2021/22

(R’000)

2022/23

(R’000)

1.

Administration (High Performance Institution)

500 814

537 036

566 755

587 518

2.

Proactive and relevant labour market intervention

37 097

25 597

27 013

28 019

3.

Special mediation interventions and support

16 399

12 550

13 245

13 738

4.

Efficient and quality dispute resolution and enforcement services

395 490

429 591

453 351

470 238

5.

Effective strategy management and governance

53 377

49 682

52 429

54382

TOTAL

1 003 176

1 054 457

1 112 792

1 153 896

Source: Presentation to the joint meeting of PC and SC on Employment and Labour dated 12 May 2020

 

The CCMA has five programmes to support its strategy, which are High performance institution (Administration); Proactive and relevant labour market intervention; Special interventions and support; Efficient and quality dispute resolution and enforcement services; and Effective strategy management and governance.

 

3.1.1.1. High Performance Institution/ Administration

The purpose of programme 1 is to successfully deliver on the objectives of the CCMA through cohesive, well-structured organisation, in which people, processes and systems perform optimally. This programme is allocated R537 million in the 2020/21 financial year.

 

The planned strategic objectives for this programme are to:

  • enhance financial viability for organisational sustainability;
  • improve organisational culture in a bid to make the CCMA an employer of choice;
  • improve employee turn-over rate;
  • concentrate on talent and succession planning;
  • reform and modernise the organisation through technology; and
  • implement internal programmes that support the environment and contributes to climate change initiatives.

 

3.1.1.2. Proactive and relevant labour market intervention

The purpose of programme 2 is to respond appropriately and timeously to labour market developments through focused proactive and reactive labour market interventions for successful dispute prevention and management and workplace transformation whilst promoting and supporting dialogue, democratisation, best employment practices and relationship building in workplaces. This programme is allocated R25.5 million in the 2020/21 financial year.

 

The planned strategic initiatives for this programme are:

  • Targeted workplace interventions through the implementation of the CCMA’s Dispute Management and Prevention strategy.
  • Collective bargaining facilitation processes conducted with strategically identified users.
  • Social protection through social dialogue, advocacy and outreach.
  • Capacitating, training and building knowledge and skills in the labour market.
  • Offering support and advisory services to the labour market as and when required.
  • Promoting democratisation and best employment practices in workplaces in order to transform workplaces.

 

3.1.1.3. Special Interventions and Support

The purpose of programme 3 is to respond to special mediation and arbitration requests that support economic development and labour market stability. This programme is allocated R12.5 million in the 2020/21 financial year.

 

The panned strategic initiatives for this programme are to:

  • continue to support Presidential TERS and
  • implement phase 2 of CCMA/BUSA Web tool.

 

3.1.1.4. Efficient and quality dispute resolution and enforcement services

The purpose of this programme is to advance accessible, efficient and quality resolution and enforcement mechanisms. The budget allocation for this programme amount to R429.5 million in the 2020/21 financial year.

 

The planned strategic initiatives for this programme aim to:

  • comply with legislative prescripts in dispute resolution;
  • improve access to CCMA services;
  • improve the quality of service delivery;
  • intensify employment security measures;
  • provide better support to bargaining councils and agencies;
  • implement the CCMA Enforcement Strategy;
  • improve the effectiveness and efficiency of the Essential Services Committee (ESC) legislated mandate;
  • proactively intervene with the aim of promoting effective dispute resolution in essential services;
  • conclude the review of the old designations;
  • ensure that assist parties, when negotiating Minimum Service Agreements (MSAs), would continue to direct parties to conclude MSAs when making new designations;
  • develop programmes and interventions to ensure protection of the vulnerable and promote accountability, aimed at promoting behavioural change amongst the role players in essential services; and
  • create awareness to the beneficiaries of essential services, in order to promote accountability on the part of the providers of essential services.

 

3.1.1.5. Effective strategy management and governance

The purpose of this programme is to provide a catalytic environment for successful strategy implementation, operational excellence, innovation and good governance. The budget allocation for programme 5 amount to R49.6 million in 2020/21 financial year.

 

The strategic initiatives of this programme are to:

  • generate business intelligence through environmental scanning (strategic hindsight and foresight) to keep abreast of changing nature of work to enable appropriate response and impact by the organisation;
  • embed good governance in order to protect organisational value by mitigating governance failure, anticipate and respond to the changing contextual environment and legislative reforms and achieve a clean administration;
  • better anticipate strategic risks to enable the organisation to mitigate timeously;
  • ensure the organisation complies to all applicable legislation and policies; and
  • intensify strategic partnerships and alliances to support strategy delivery.

 

3.1.2.    Annual Performance Plan of the CCMA per Programme

 

3.1.2.1. Administration/ High performance institution

Programme 1 aims to enhance financial viability for organisational sustainability.

Its 2020/21 annual target is to achieve 1% net surplus and 3.6 ratio of safety to cash margins.

 

The programme also aim to improve employee turn-over rate. In order to achieve this, it plans to implement 100% of the Human Resource plan.

 

This programme annual target for 2020/21 is to automate and integrate 25% of case disbursement and implement 85% of uptime ICT critical systems.

 

3.1.2.2. Proactive and relevant labour market intervention

Programme 2 annual plan is to enhance dispute management and prevention. In order to achieve this, it will conduct six collective bargaining and support processes for strategically identified users. It will also conduct three pre-collective bargaining conferences for strategically identified users.

 

This programme also plans to improve workplace relations in 2020/21. In order to achieve this, it will engage 12 targeted workplaces, deliver 12 vulnerable sector projects to targeted users and attain 60% positive rating on the post intervention survey.

 

The programme plans to have effective essential services dispute management, prevention and resolution in 2020/21. In order to achieve this, it intends to:

 

Conduct 15 interventions to promote effective dispute resolution in essential services; engage four stakeholders to make inputs on legislative changes; and conduct 126 interventions to ensure that there are minimums to be maintained during industrial action in essential services. It will also monitor eight essential services designations, minimum service agreements, minimum service determinations and/ or maintenance service determinations for compliance and observance. The programme will also conduct 12 awareness sessions on essential services designation.

 

3.1.2.3. Special interventions and support

Programme 3 aims to provide effective support to Presidential projects. This programme will process 100% Employer Employee Relief Strategy (ERS) applications and implement 100% phase2 of the CCMA/BUSA web tool.

 

3.1.2.4. Efficient and quality dispute resolution and enforcement services

Programme 4 aims to improve service quality. In order to achieve this, it will hear 98% of conciliation cases within 30 days at first event; send 98% of arbitration awards rendered within 14 days of the conclusion of the arbitration proceedings; resolve 58% of disputes of interests; conduct 100% of section71 of the LRA cases; conduct 100% of section 73 of the LRA cases; conduct 100% of section 75 of the LRA; and conduct two self-initiated cases in order to determine whether or not the whole or part of any service is an essential service. This programme will also achieve 98% quality of awards index.

 

The 2020/21 annual performance plan of this programme includes improving access to CCMA services. In order to achieve this target, it will reach 70 760 users who access CCMA services from identified sectors and implement 100% of advocacy campaign plan.

 

This programme aims to improve compliance with arbitration awards by issuing 2% of section 143 in applications.

 

The programme annual target includes to save 35% of jobs compared to employees likely to be retrenched as per cases referred to the CCMA and achieving 10% of return to work index.

 

Programme 4 also plans to settle 58% of mutual interest matters, thus reducing potential for industrial action.

 

3.1.2.5. Effective strategy management and governance

In the 2020/21 financial year, programme 5 plans to optimise the level of governance. The programme will conduct one strategic forecasting and situational analysis to generate business intelligence.

This programme will implement 100% Compliance Management Plan to sustain level 5.00 compliance maturity and implement 100% of the Governance Plan to achieve a level 3.00 governance maturity level. The programme will implement 100% of the Risk Management Plan to sustain level 5.00 risk maturity level. Programme 5 will also identify and implement one service delivery enabling project in collaboration with relevant strategic partner(s).

 

3.2.       National Economic Development and Labour Council (NEDLAC)

The National Economic Development and Labour Council (NEDLAC) was established through the National Economic Development and Labour Council Act, Act 35 of 1994, and it operates in terms of its constitution and protocols. NEDLAC’s objectives are to:

  • strive to promote the goals of economic growth, participation in economic decision-making and social equity;
  • seek to reach consensus and conclude agreements on matters pertaining to social and economic policy;
  • consider all proposed labour legislation relating to labour market policy before it is introduced in Parliament;
  • consider all significant changes to social and economic policy before they are implemented or introduced in Parliament; and
  • encourage and promote the formulation of coordinated policy on social and economic matters.

 

NEDLAC identified the following government priorities as relevant to it for the Medium Term Strategic Framework (MTSF) 2019 – 2024:

  • Priority 1: Economic transformation
  • Priority 2: A capable, ethical and developmental State.

With regard to priority one, NEDLAC’s goal is to contribute to the achievement of decent work and the economic growth targets, as set out in the National Development Plan (NDP) and the New Growth Path (NGP), and contribute to the reduction of social inequity, as measured by the Gini-coefficient.

With regard to priority two, NEDLAC aims to improve governance, leadership and secretariat performance as measured by a reduced number of relevant audit findings, and increased levels of stakeholder satisfaction.

 

3.2.1.    Strategic Plan of NEDLACper Programme

 

Table 3: 2020/21 NEDLAC Budget Information

Programme

2020/21

Original Budget

Allocation in percentage

2019/20

Original Budget

Allocation in percentage

R’000

%

R’000

%

1.

Administration

35 177

55.9%

30 853

74.5%

2.

Core-operations

22 921

36.4%

6 080

14.6%

3.

Capacity building

4 851

7.7%

4 599

11.1%

 

TOTAL

62 949

100%

41 532

100%

Source: Presentation to the joint meeting of Employment and Labour dated 14 May 2020

 

The total NEDLAC budget allocation for 2020/21 financial year amounted to R62.9 million, which is an increase of R21.4 million from the R41.5 million allocated in 2019/20 financial year. More than half of the budget, which is R35.1 million or 55.9% is allocated to the Administration programme. However, this is a decrease in terms of percentage from the 74.5% allocated in 2019/20 financial year. Programme 2 received the second highest budget allocation of R22.9 million or 36.4% of the total budget of the entity. This is an increase in percentage allocation from the 14.6% allocated in 2019/20 financial year. Capacity building programme received the least budget allocation of R4.8 million or 7.7% of the total budget of the entity. This represents a percentage decrease from the 11.1% allocated in 2019/20 financial year.

 

3.2.1.1. Programme 1: Administration

The five-year targets of the Administration programme are to:

  • obtain an unqualified audit opinion by 31 August each year;
  • have the performance of NEDLAC considered by the Summit by 31 March each year;
  • convene four executive committee meetings by 31 March each year; and
  • submit four monitoring and evaluation reports to governance structures by 31 March each year.

NEDLAC believes that the programme plan will contribute to an ethical and transparent organisation which will consequently lead to improved trust by the public. NEDLAC will adopt a holistic approach to manage its corporate identity by ensuring that it remains credible, transparent and maintain regular interactions with its stakeholders.

 

3.2.1.2. Programme 2: Core Operations

This programme contributes to the achievement of the National Development Plan’s Priority 1: Economic transformation and job creation.

The five-year targets for this programme are to:

  • have each chamber convene two chamber sessions by 31 March each year;
  • have one engagement session on Annual National Budget by 31 March each year;
  • have one engagement session on the Medium Term Budget Policy Statement by 31 March each year;
  • conclude all NEDLAC reports on draft legislation or policy within six months from date of tabling at the relevant structures except where stipulated exclusions apply;
  • submit four progress reports to Trade and Industry Chamber on Technical Sectoral Liaison Committee (TESELICO) activities by 31 March each year;
  • submit four progress reports to Labour Market Chamber on Decent Work Country Programme (DWCP) by 31 March each year;
  • conclude 100% of section 77 notices final reports within five working days from the date of resolution of all section 77 notices; and
  • consider four reports on the implementation of the Presidential Jobs Summit Framework Agreement by 31 March each year.

 

The enablers to achieve the above targets will be the commitment and availability of all NEDLAC social partners to engage effectively on all the labour, social and economic matters under consideration at NEDLAC. The availability of both financial and human resources will also be a significant enabler for the achievement of the set targets.

 

3.2.1.3. Programme 3: Capacity building Funds

This programme contributes to the achievement of the National Development Plan’s Priority 6: A capable, ethical and developmental State.

The five-year target for this programme is to:

  • submit four financial reports to governance structures by 31 March each year.

The purpose of this target is to ensure prudent utilisation of the capacity building funds by business, community and labour constituencies. It serves to enable governance structures to have oversight on the spending of capacity building funds for constituencies. Furthermore, the report entails progress on capacity building initiatives undertaken by business, community and labour constituencies.

 

3.2.2.    NEDLAC Annual Performance Plan for 2020/21 financial year

 

3.2.2.1. Programme 1: Administration

The annual targets for the Administration programme are as follows:

  • Unqualified audit opinion obtained by 31 August 2020.
  • Consideration of performance of NEDLAC Annual National Summit by 31 March 2021.
  • Executive Committee meeting convened by 31 March 2021.
  • Four monitoring and evaluation reports submitted to structures.

 

Emerging issues as a result of Covid-19:

  • Shift away from physical meetings to online meetings will require a shift of resources from airfares and catering to quality online resources and data for constituencies.
  • Social partners also asked that NEDLAC play an enhanced role in communicating NEDLAC decisions/ work to internal and external stakeholders via a newsletter, upgraded website and social media.

 

3.2.2.2. Programme 2: Core operations

The annual targets for programme 2 are as follows:

  • Two Chamber sessions convened by each Chamber by 31 March 2021.
  • One engagement session on annual budget by 31 March 2021.
  • One engagement session on annual Medium Term Budget Policy Statement (MTBPS) by 31 March 2021.
  • Four progress reports submitted to Chamber on the Decent Work Country Programme (DWCP).
  • All NEDLAC reports on draft legislation or policy concluded within six months from date of tabling at relevant structure at NEDLAC except where stipulated exclusions apply.
  • Four progress reports submitted to Trade and Industry Chamber on Technical Sectoral Liaison Committee (TESELICO) activities Chamber by 31 March 2021.
  • Section 77 final reports concluded within five working days from date of resolution of all Section 77 notices.
  • Four progress reports considered on the implementation of the Job Summit Framework Agreement by 31 March 2021.

 

Work of NEDLAC Rapid Response Team

Since the 17thMarch 2020, a Covid-19 NEDLAC Rapid Response Team has met regularly to focus on:

  • Avoiding dismissals
  • Protecting livelihoods
  • Mitigating distress of workers and companies
  • Enabling health and safety
  • Achievements include agreements on:
    • Covid-19 TERS
    • Health and Safety at Workplaces Directive
    • Best practice guidelines for retirement funds under distress
  • Other work has included input into and engagement on lifting of the lockdown, relief provided by finance institutions, and social protection measures.

 

The following issues are emerging as new agenda items for NEDLAC as a result of the Covid-19 pandemic:

  • Health and Safety in the workplace.
  • Revision of Job Summit Agreements to focus on employment centred economic reconstruction.
  • Comprehensive and aligned approach to relief for workers and small businesses (Unemployment Insurance, CCMA, Productivity SA, etc.)
  • Increased urgency to ensure NEDLAC is fit for a new purpose.

 

3.3.       Productivity South Africa

 

Productivity South Africa (Productivity SA) is a schedule 3A public entity of the Department with the responsibility to fulfil an economic and social mandate of government – to promote employment growth and productivity thereby contributing to South Africa’s socio-economic development and competitiveness.

The Employment Services Act places Productivity SA in a strategic position to lead a productivity and competitiveness driven, inclusive and sustainable growth and development agenda.

The entity should, through its Enterprise Support Programmes, unlock the productivity of South Africa by addressing productivity and competitiveness of the economy at all levels- national, sector and enterprise levels.

The Enterprise Support Programmes are designed to promote a productivity and entrepreneurship culture and consciousness to promote decent work, which involves opportunities for work that is productive and delivers fair income.

 

The core functions of Productivity SA in terms of section 32 of the Employment Services Act are to:

  • promote a culture of productivity in the workplace;
  • facilitate and evaluate productivity improvement and competencies in workplaces;
  • measure and evaluate productivity in workplaces;
  • maintain a database of productivity and competitiveness systems and to publicise these systems;
  • undertake productivity related research; and
  • support initiatives aimed at preventing job losses.

 

The strategic focus of the entity is on:

  • Enterprise competitiveness and sustainability.
  • Preventing job losses.
  • Providing productivity and competitiveness related value-added information and statistics, best practices and systems through research and innovative activities and databases.
  • Promoting a productivity culture and mind-set as well as driving accountability for productivity performance across sectors (national, sector and enterprise level) and segments of society.

 

Businesses to be assisted by Productivity SA should meet the following criteria:

  • be operational – proof of transactions such as invoices and orders must be provided.
  • be regulatory compliant.
  • provide financials.
  • have operating premises.

 

The change agenda over the MTSF 2020 – 2024

The focus of the productivity interventions should be premised on four strategic pillars, which are:

  • An integrated training and skills development ecosystem to create a workforce of the future.
  • An integrated enterprise ecosystem to improve the competitiveness and sustainability of enterprises, with a focus on SMMEs.
  • An integrated research and innovation ecosystem to ensure the provision of productivity and competitiveness related value-added information and statistics to inform evidence-based planning as well as monitoring and evaluating the impact of interventions of the entity.
  • A national productivity movement to promote a stronger culture of productivity and accountability thereof at all levels – national, sector and enterprise levels, and build awareness of the importance of and new mind-set about productivity in South Africa, which could pave the way for many more – and more highly paid jobs and ultimately a more inclusive society.

 

3.3.1.    Priorities over the MTSF 2020 – 2024

In the medium term, Productivity SA will contribute mainly to the following two priorities of the 6th MTSF government priorities:

  • Priority 1: Economic transformation and job creation.
  • Priority 6: A capable, ethical and developmental state.

 

Priority sectors/ industries

Productivity SA will prioritise the following sectors/ industries:

 

  1. Manufacturing

The focus area for manufacturing will be:

  • Automotive products and components;
  • Clothing, textiles, footwear and leather;
  • Forestry; paper and pulp; and furniture;
  • Metals fabrication; and
  • Plastics and chemicals.

 

  1. Agriculture value chain

The focus area for agriculture value chain will be:

  • Fruit and vegetables, dairy, meat and grains; and
  • Beverages and tobacco.

 

  1. Mining value chain

The focus area for mining value chain will be:

  • Downstream mineral beneficiation, and
  • Mining.

 

  1. Green and energy saving industries

The focus area for green and energy saving industries will be:

  • Renewable energy;
  • Energy efficiency; and
  • Waste management and recycling.

 

  1. Electro-technical/ ICT services sector

The focus area for this sector will be:

  • Electronics and electrical engineering.

 

3.3.2.    Productivity SA Budget for 2020/21 – 2022/23

 

Table 4: Productivity SA Budget 2020/21 – 2022/23

Revenue

 

Budget

2020/21

R’000

Budget

2021/22

R’000

Budget

2022/23

R’000

Appropriation from Parliament

57 069

60 210

62 428

Unemployment Insurance Fund

104 571

110 845

117 496

Dti-WPC Programme

10 284

10 850

11 371

Ledet

450

450

450

Consulting Services

40 889

43 702

47 877

Total Revenue

213 263

226 057

238 622

 

 

 

 

Operational Expenditure

213 263

226 057

239 622

Compensation of Employees

84 445

88 822

93 249

Goods and Services

128 818

137 235

146 373

Surplus/ (Deficit)

-

-

-

Source: Presentation to the joint meetingof the PC and SC on Employment and Labour on 14 may 2020

 

The total revenue of Productivity SA amounts to R213.2 million in 2020/21 financial year, which is an increase of R96.1 million or 82% from the R117.1 million received in the previous financial year. The major contributor to this significant increase was the budget allocation of R104.5 million from the Unemployment Insurance Fund, which did not allocate any funds to the entity in 2019/20 financial year. There was also a major increase in revenue from consulting services. This revenue stream contributed R40.8 million in 2020/21 budget, which was an increase of R29.2 million or 250% from the R11.6 million of 2019/20 financial year. Appropriation from Parliament decreased by R8.9 million, from R66.0 million in 2019/20 financial year to R57.0 million in 2020/21.

 

In the 2020/21 financial year R128.8 million or 60% of the R213.2 million budget goes towards Goods and Services. Compensation of Employees receives R84.4 million or 40% of the total budget for 2020/21 financial year. It is the first time in the recent history of the entity that the Goods and Services budget exceeds the Compensation of Employees budget.

 

3.3.3.    Productivity SA Budget per Programme in 2020/21 – 2022/23

 

Table 5: Budget per Programme

Programme

Budget

2020/21

R’000

Budget

2021/22

R’000

Budget

2022/23

R’000

1

Administration

58 699

62 221

65 955

 

Compensation of Employees

38 406

40 396

42 408

 

Goods and Services

20 293

21 825

23 547

2

Research Innovation and Statistics

12 593

13 347

14 148

 

Compensation of Employees

9 547

10 038

10 535

 

Goods and Services

3 046

3 309

3 613

3

Business Turnaround Recovery

104 571

110 845

117 496

 

Compensation of Employees

8 716

9 167

9 624

 

Goods and Services

95 855

101 678

107 872

4

Competitiveness Improvement Services

37 400

39 644

42 023

 

Compensation of Employees

27 776

29 221

30 682

 

Goods and Services

9 624

10 423

11 341

Total

213 263

226 057

239 622

Source: Presentation to the joint meeting of the PC and SC on Employment and labour dated 14 May 2020

 

The total Productivity SA budget allocation for 2020/21 financial year amount to R213.2 million. The larger share of the Productivity SA budget, which is R104.5 or 49% goes to programme 3/ Business Turnaround Recovery programme. In terms of economic classification, R95.8 million or 91% of the programme 3 budget will be spent on goods and services. This is the only programme of the entity that allocates the lion’s share of its budget to Goods and Services. The programme that received the second highest budget allocation is the Administration programme. This programme received R58.6 million or 28% of the total entity budget in 2020/21 financial year. Administration programme allocated R38.4 million or 65% of its budget to Compensation of Employees in 2020/21 financial year.

 

The entity reported one outstanding audit finding.

 

3.3.4.    Productivity SA focus per Strategic Objective for 2020/21

 

Table 6: Productivity SA targets per Strategic Objective

Government Priority

Strategic Objectives

Programmes

Targets

Priority 1:

A capable, ethical and developmental State

Strategic Objective 1

To strengthen the institutional capacity of Productivity SA to deliver on its mandate and be financially sustainable

Programme 1:

Administration/ Corporate Services

100% of SMMEs paid within 30 days of receipt of statement

 

10% reduction of fruitless and wasteful expenditure

 

Implement 75% of planned training interventions

Priority 2:

Economic transformation and job creation

Strategic Objective 2

Enterprise competitiveness and sustainability: To support government programmes aimed at sustainable employment and income growth

Programme 2:

Competitiveness improvement services

3130 SMMEs and other enterprises supported through competitiveness improvement services

Strategic Objective 3Jobs preservation:

To support enterprises facing economic distress and initiatives aimed at preventing job losses

Programme 3:

Business turnaround and recovery

Programme on suspension

Strategic Objective 4

Evidence-based planning, monitoring and evaluation:

Generation and dissemination of productivity related research and statistics

Programme 4:

Research, innovation and statistics

Four research and statistics reports published

Strategic Objective 5

Productivity culture and accountability: To promote a culture of productivity and competitiveness in the workplace and community life

Programme 1 & 2

10 productivity awards and regional milestone workshops hosted

 

323 Productivity champions capacitated to promote a culture of productivity

Source: Presentation to the joint meeting of the Employment and Labour Committees dated 14 May 2020

 

3.3.5.    Productivity SA focus per Programme for 2020/21

 

Table 7: Productivity SA Strategic Objectives per Programme

Programme

Programme specific Strategic Objective

KPI

Targets

Programme 1:

Administration/ Corporate Services

Payment of SMMEs within 30 days of receipt of statement

% of SMMEs paid within 30 days of receipt of statement

100%

Elimination of fruitless and wasteful expenditure, detected per financial year, reported to the Accounting Officer

% reduction of fruitless and wasteful expenditure

10%

Training interventions implemented to capacitate the workforce

% implementation of planned training interventions

75%

Programme 2:

Competitiveness improvement services

Enterprise competitiveness and sustainability improvement

Number of SMMEs and other enterprises supported through competitiveness improvement services

3130

Programme 1: Administration/ Corporate Services (Marketing and Communication)

 

Promote the productivity and competitiveness mind-set and culture in the workplace

Number of productivity champions capacitated to promote a culture of productivity

323

 

Number of productivity awards and regional milestones workshops hosted

10

Programme 3: Business turnaround and recovery

Support enterprises facing economic distress and initiatives aimed at preventing job losses

Number of jobs saved in companies facing economic distress

8700

Number of companies facing economic distress supported through turn-around strategies to retain jobs (nurturing)

174

Number of workplace/ future forums trained and capacitated on productivity improvement solution

522

Programme 4: Research, innovation and statistics

Undertake productivity-related research on priority sectors

Number of research reports and publications on priority sectors published and disseminated

4

Collate productivity related statistics

Number of statistical reports on productivity and competitiveness published

2

Source: Presentation to the joint meeting of the Employment and labour Committees dated 14 May 2020

 

 

3.4.       Unemployment Insurance Fund (UIF)

 

The Unemployment Insurance Fund (UIF) contributes to the following government priorities:

  • Priority 1: A capable, ethical and developmental State.
  • Priority 2: Economic transformation and job creation.
  • Priority 4: Consolidating social wage through reliable and basic service.
  • Priority 6: Social cohesion and safe communities.

 

3.4.1.    Strategic Plan of the UIF 2020/21 – 2024/25

 

3.4.1.1. Five year indicators and targets per government priority

 

Productivity SA presented indicators and targets for Priority 1 as follows:

 

Table 8: Indicators and targets per Priority 1

Outcome Indicator

Baseline

Five year target

Improved audit opinion obtained from the Auditor-General

Obtained a qualified audit opinion in 2018/19

Clean audit opinion obtained by March 2024

Wasteful, fruitless and irregular expenditure reduced

  • Fruitless and wasteful expenditure: R79 897 326.14 as at January 2020
  • Irregular expenditure (confirmed): R92 777 as at January 2020

100% elimination of wasteful and fruitless expenditure and 75% reduction of irregular expenditure by March 2024

Improved turnaround time to pay suppliers

99.98% (4 540/4 541) within 30 calendar days as at December 2019

100% valid invoices paid 30 calendar days after receipt by March 2025

Improved resolution of reported incidents of corruption in UIF

69.5% (16/23) as at January 2020

95% resolution of reported incidents of corruption in UIF by March 2024

Functional ethics structure and adequate capacity

No baseline information

Ethics committees established and terms of reference adhered to by March 2024

Sustainable administrative expenditure

12% (652 870/5 226 879) as at December 2019

≤15% by March 2025

Improved return on listed investments

Benchmark: 6.12%

Performance: 6.40%

0.28% achievement as at December 2019

Percentage returns on listed investments ≥ the benchmark by March 2025

Improved human resource capacity

Vacancy rate was 7.5% (45 posts/602 establishment) by the end of January 2020

≤5% by March 2025

Source: Presentation to the PC: Employment and Labour dated 20 May 2020

 

Productivity SA presented indicators and targets for Priority 2 as follows:

 

Table 9: Indicators and targets per Priority 2

Outcome Indicators

Baseline

Five year target

UIF assets and management funds set aside for funding employment creation schemes

Budgeted R7.6 billion for next three years

10% set aside by March 2025

Source: Presentation to the PC: Employment and Labour dated 20 May 2020

 

Productivity SA presented indicators and targets for Priority 4 as follows:

 

Table 10: Indicators and targets per Priority 4

Outcome Indicator

Baseline

Five year target

Integrated Claims Management System (ICMS) implemented, support and maintenance provided

Development, testing and deployment of SAP release 1 reports not done

Support and maintenance of the ICMS by March 2023

Improved social security coverage

  • Employees: 593 201 as at December 2019
  • Employers: 45 365 as at December 2019

4 895 000 new employers and employees registered by march 2024

99% within 2 working days (UI54) (44 092/ 45 365) as at December 2019

100% of new companies created with registration document (UI 54) within 5 working hours by March 2022

94% (6 356/ 6 792) within 10 working days as at December 2019

100% of applications with complete, accurate and verified information issued with compliance certificates, tender letters or non-compliance letters within 48 working hours by March 2022

  • Unemployment benefits: 94% (607 813/ 644 648) within 15 working days as at December 2019
  • In-service benefits; parental, illness and adoption benefits: 93% within 10 working days (95 698/ 102 858) as at December 2019
  • Deceased benefits: 92% within 20 working days (11 396/ 11 912) as at December 2019

98% of benefit claims with complete, accurate and verified information approved or rejected within 7 working days by March 2022

100% within 6 working days

(2 442 140/ 2 454 410) as at December 2019

99% of benefit payment documents created after receipt within 3 working days by March 2022

Source: Presentation to the PC: Employment and Labour dated 20 May 2020

 

Productivity SA presented indicators and targets for Priority 6 as follows:

 

Table 11: Indicators and targets per Priority 6

Outcome Indicators

Baseline

Five year target

Improved representation of the designated groups across occupational levels

87% (69/79) as at February 2020

75% of Africans in middle and senior management level by March 2024

2.7% (15/557) of employees with disabilities employed within the Fund as at January 2020

2.5% of persons with disabilities between the age of 15 and 65 employed by March 2024

 

 

3.4.2.    Annual Performance Plan2020/21 of the UIF

 

Table 12: 2020/21 Budget and MTEF Estimates

Programme

Revised Estimate

Medium Term Expenditure Estimate

2019/20

2020/21

2021/22

2022/23

R’000

R’000

R’000

R’000

1.

Administration

2 577 782

3 175 645

1 927 411

2 029 404

2.

Business Operations

1 744 909

1 913 331

2 029 349

2 148 550

3.

Labour Activation Programme

3 144

3 280

3 444

3 609

Total

4 325 835

5 092 256

3 960 204

4 181 563

Source: Presentation to the PC: Employment and Labour dated 20 May 2020

 

Annual Performance Plan 2020/21 per Programme

 

3.4.2.1. Programme: Administration

The purpose of the Administration programme is to provide management, strategic and administrative support services to management. This programme received a budget of R3.1 billion in 2020/21 financial year.

 

The annual performance targets for this programme are to:

  • commit 1.6% of UIF funds to funding employment creation schemes;
  • create 5 000 jobs through UIF funding and investment activities;
  • reduce fruitless and wasteful expenditure by 15%, which was R79 897 326.14 as at January 2020 (2020/21 target = R67 912 727.22);
  • reduce irregular expenditure by 10%, which was 92 777 as at January 2020 (2020/21 target = R83 499.30);
  • resolve 100% of internal and external audit findings;
  • finalise 95% of fraud and corruption cases within 90 working days;
  • establish ethics and transformation committee and produce reports;
  • keep the administrative expenditure (excluding capex) as compared to revenue at ≤ 15%;
  • pay all suppliers with valid invoices within 30 calendar days after receipt;
  • achieve ≥2.62% return on listed investments;
  • maintain a vacancy rate of ≤10%;
  • have 2% of persons with disabilities employed within the UIF;
  • have 75% representation of Africans in senior and middle management levels; and
  • develop and test SAP Financial Accounting System (FAS).

 

3.4.2.2. Programme 2: Business Operations

The purpose of this programme is to collect contributions and pay benefits. This programme is allocated R1.9 billion in 2020/21 financial year.

 

The annual performance targets for this programme are to:

  • increase the number of newly registered employers from 59 984 to 71 000;
  • register 700 000 new employees in 2020/21 financial year;
  • register 95% of new companies with complete, accurate and verified information within one working day;
  • issue 95% of applications with complete information with compliance certificates, tender letters or non-compliance letters within 10 working days;
  • create 95% benefit payment documents within five days of receipt of complete, accurate and verified documents;
  • approve or reject 92% of valid claims (Unemployment benefit) with complete, accurate and verified information within 15 working days;
  • approve or reject92% of valid claims (In-service benefits; Maternity, illness and adoption benefits) with complete, accurate and verified information within 10 working days; and
  • approve or reject 92% valid claims (Deceased benefit) with complete, accurate and verified information within 20 working days.

 

3.4.2.3. Programme 3: Labour Activation Programme

The purpose of this programme is to enhance employability, enable entrepreneurship and preserve jobs through labour market integration measures that seek to retain or reintroduce contributors into employment. This programme is allocated R3.2 million in the 2020/21 financial year.

 

The annual performance targets of this programme are to:

  • increase the number of youths participating on Public Employment Programmes for enhanced employability to 12 210;
  • approve or reject 90% of Temporary Employer Employee Relief Scheme (TERS) applications within 15 working days;
  • provide 40 700 UIF contributors with learning opportunities; and
  • support 30 cooperatives and 15 SMMEs.

 

3.5.       The Compensation Fund (CF)

 

The functional structure of the Compensation Fund (CF) has three governance components, which are COIDA Services, Medical Benefits and Rehabilitation Services. COIDA Services comprise: Claims Registration; Pensions; Accident Insurance Pay-outs (TTD and PDs); Employer Registration; Return of Earnings and Assessment; and Compliance and Audits. Medical Benefits comprise: Medical Services (Procedure Authorisations, specialised claims processing etc.); Medical Claims Processing and payments; and Managed Care Services. Rehabilitation Services comprise: Vocational Rehabilitation programmes; Clinical Rehabilitation programmes; and Social Rehabilitation programmes.

 

The CF was established in terms of section 15 of the Compensation for Occupational Injuries and Diseases Act (Act 130 of 1993). Amendments to this Act were approved by Cabinet in March 2020. Changes to the COIDA include: Removal of the express exclusion of domestic workers as employees in conformity with international labour standards; and that negligence (contribution by the employee in occurrence of an accident) on the part of the employee will no longer be considered in accepting liability and assessment of disability whether there is serious disablement or not; strengthening governance; compensation benefits in the form of pension will continue to apply to the surviving dependents; introduction of penalties for non-compliance by employers in reporting incidents; broadening the scope of the medical advisory panel to include occupational injuries; and introduction of rehabilitation and return to work.

 

The CF contributes to the following government priorities:

  • Priority 1: A capable and developmental State.
  • Priority 2: Economic transformation and job creation.
  • Priority 4: Consolidating the social wage through reliable and basic services.

The CF’ssix strategic priorities in the next MTSF are classifiedinto five components, which are:

  1. Financial Management

Improve the system of internal control and maintain financial soundness.

  1. Customer Services

Ensure appropriate benefits are delivered to intended beneficiaries, efficiently and at a reasonable cost.

Contribute to employment and economic growth through rehabilitation and re-integration.

  1. Organisational Capacity

Develop the capacity of the Fund to deliver according to its mandate.

  1. Internal Business Process

Improve operational efficiency through process reengineering and technological innovation.

  1. Anti-fraud and corruption elimination

Improved ethic and zero tolerance to fraud and corruption.

 

3.5.1.    Strategic Plan of the CF 2020/21 – 2024/25

 

The CF presented five-year indicators and targets for Government Priority 1 and 4 (CF Priority 1) as follows:

Table 13: Outcome indicators and five-year targets per Government Priority 1 and 4

Outcome Indicator

Baseline

Fiver Year Target

Improved assessment on the return of earnings

55% (219 050/401 536) of active registered employers assessed

95% of received return of earnings assessed

Increased assets

R70.4 billion

10% increase in assets per annum

Improved audit outcome through stringent controls and implementation by all Programme Heads

Disclaimer

Unqualified audit opinion obtained by 31 March 2024

Wasteful and fruitless expenditure eliminated

R488.875 million

100% elimination of wasteful and fruitless expenditure by 31 March 2024

Reduced irregular expenditure

R769.878 million

75% reduction of irregular expenditure by 31 March 2024

Percentage resolution of reported incidents of corruption in the Fund

89 cases

95% resolution of reported incidents of corruption by 31 March 2024 via disciplinary and criminal investigations

Improved ethical culture within the Fund

Draft terms of reference

Established ethics committees and adhere to terms of reference

Source: presentation to the PC: Employment and labour dated 20 May 2020

 

The CF presented five-year indicators and targets for Government Priority 2 and 4 (CF Priority 2 and 3) as follows:

 

Table 13: Outcome indicators and five-year targets for Government Priority 2 and 4

Outcome Indicator

Baseline

Five Year Target

Improved support of assets managed by black asset managers

Reviewed PIC mandate for the empowerment of black asset managers

20% of assets managed by black asset managers supported

Improved human resource capacity

Vacancy rate 16,43%

5% vacancy rate by March 2025

Performance of Mutuals monitored and evaluated

Licence issued by the Minister

Service agreements signed with the Mutuals and fully implemented

Number of jobs created through the Presidential Comprehensive Youth Employment Intervention

9 314

4 000 by 31 March 2025

Number of decent jobs created through job summit initiatives (Investment activities)

0

7 000 by March 2025

Integrated Claims Management System (ICMS) implemented

0

Support the implementation of the ICMS by 31 March 2023

Improved finalisation of compensation benefits

98%

95% of compensation claims adjudicated

100% of compensation benefits paid within 5 working days

95% of compensation benefits finalised

Percentage implementation of the accessibility and visibility programme

Approved visibility and accessibility strategy for the Fund

80% implementation of the visibility and accessibility programme by 31 March 2024

Improved medical benefits

85%

95% of medical benefits finalised

Improved rehabilitation and reintegration of injured workers

0%

90% of severely injured workers enrolled into rehabilitation programmes

Source: Presentation to the PC: Employment and Labour dated 20 May 2020

 

3.5.2.    CF Annual Performance Plan 2020/21

 

CF Budget

Budget per item

  • Revenue: R14 1 billion
  • Benefits: R4.1 billion
  • Administration expenses: R2.9 million

 

Budget per programme

  • Programme 1: Administration-R1.6 billion
  • Programme 2: COID Services-R1.1 billion
  • Programme 3: Medical Benefits-R3.1 billion
  • Programme 4: Orthotic and Medical Rehabilitation-R220.1 million

 

3.5.2.1. Programme1: Administration

Programme 1 is allocated R1.6 billion in the 2020/21 financial year.

Annual performance targets for programme 1 are to:

  • allocate 4% of assets under management to black asset managers;
  • create 1400 jobs through investment activities;
  • create 800 jobs through the Presidential Comprehensive Youth Employment Interventions;
  • increase total assets by 10%;
  • reduce matters affecting the audit opinion by 60%;
  • eliminate 25% of wasteful and fruitless expenditure;
  • reduce irregular expenditure by 15%;
  • implement 20% of programmes in the approved visibility and accessibility strategy;
  • investigate 60% of reported cases;
  • implement the ethics governance structure;
  • reduce the vacancy rate by 10%; and
  • report to the Fund, in4 quarterly reports and one annual report on monitored performance of Mutuals.

 

3.5.2.2. Programme 2: COID Services

Programme 2 is allocated R1.1 billion in the 2020/21 financial year.

Annual performance targets for programme 2 are to:

  • assess 80% of received return of earnings;
  • adjudicate 85% of claims within 20 working days of receipt; and
  • pay 100% of approved benefits within five working days.

 

3.5.2.3. Programme 3: Medical Benefits

Programme 3 is allocated R3.0 billion in the 2020/21 financial year.

Annual performance targets for programme 3 are to:

  • finalise 90% of requests for pre-authorisation of specialised medical interventions within 10 working days;
  • enrol 60% of identified high value and complex medical cases into Case Management Programmewithin seven working days; and
  • finalise 85% of accepted medical invoices within 30 working days of receipt.

 

3.5.2.4. Programme 4: Orthotic and Rehabilitation Services

Programme 4 is allocated R20.1 million in the 2020/21 financial year.

Annual performance targets for programme 4 are to:

  • finalise 85% of compliant requests for assistive devices within 15 working days;
  • fund 500 students enrolled at Post School Education and Training (PSET) in priority qualifications; and
  • fund 100 persons with disabilities enrolled in vocational rehabilitation programme through PSET institutions.

 

  1. COMMITTEE OBSERVATIONS

 

Having engaged with the Department and its entities, the Committee made the following observations:

 

  1. Department of Employment and Labour
    1. The Department of Labour(DoL) was reconfigured and reconstituted in 2019 with an extended mandate that included a focus on job creation. What has been implicit in the erstwhile Department of Labour (DoL) has been made to be explicit in the Department of Employment and Labour, and that is Employment. The process of reconfiguring the Department is underway.
    2. There are numerous Public Employment Programmes (PEPs) that are housed in various departments and entities, that were intervening in a crisis before the current crisis. COVID-19 may demand a repositioning of them.
    3. Shape, form, content, value and location of various skills training programmes were being looked at before COVID-19, clearly it is for that body of work to be cleaned up and smartly put into action to mitigate this compounded situation that the country finds itself in.
    4. The Department of Employment and Labour is currently developing an Employment Policy.
    5. One of the branches that Department of Employment and Labour has, is the one named, Public Employment Services (PES) and this is where Supported Employment Enterprises is housed
    6. PES gives assistance to unemployed work-seekers, actively source all available opportunities, especially demand led activities, undertaken to stimulate employment or work activity.
    7. In an attempt to reach out to employers in order to create jobs PES has planned to have at least 30 partnerships agreements concluded in this current financial year.
    8. There is also an Inspection and Enforcement Services (IES) branch which inspects to determine compliance with employment law. It also conducts formal awareness advocacy sessions to increase awareness of employment law.
    9. IES branch inspects adherence to rules and regulations in the workplace, ensuring among others, the implementation of health and safety protocols.
    10. Workplaces far outstrip the number of Inspectors, which is why the Department planned, recruited and appointed additional 500 labour inspectors.
    11. COVID-19 Occupational Health and Safety (OHS) Directives issued by the Executive Authority, not only accentuated and heightened but demanded speed and precision and the 500 new recruits labour inspectors came in handy.
    12. The importance of the Inspection and Enforcement Services branch of the Department as the country moves down from level 5 to lower levels of the lockdown was realised.

4.1.13.  The Public Employment Services (PES) branch of the Department has been struggling to fill the employment opportunities with the work-seekers on the ESSA database because of a mismatch between available jobs and skills.

4.1.14.  The Supported Employment Enterprises (SEE), which is an entity under PES branch, is struggling financially as a result of a lack of support from other government departments. This entity has been re-purposed to produce Personnel Protective Equipment (PPE).

 

4.2.       Commission for Conciliation Mediation and Arbitration (CCMA)

4.2.1.    There are challenges encountered with the exercise of rights by the vulnerable workers such as domestic workers and farm workers. Among the challenges is access to the workplace by officials, which is regarded as private property.

4.2.2.    The CCMA is struggling to take its services to where people are, especially when people who need their services are in rural areas. This problem is compounded by the ICT challenges in areas that are in outskirts of towns.

4.2.3.    CCMA has stepped into the emotive land question to facilitate land disputes in terms of Section 25 of the Constitution.

4.2.4.    CCMA has an enforcement strategy.

4.2.5.    Compliance with arbitration awards is one of the challenges, but CCMA aims to improve that by issuing Section 143 in application.

4.2.6.    CCMA is grappling with the changing nature of work.

 

4.3.       NEDLAC

4.3.1.    NEDLAC plays a pivotal role in the coordination of policies on social and economic matters and Labour legislation relating to Labour Market Policy are shaped at NEDLAC before they get their passage through Parliament.

4.3.2.    NEDLAC’s Programme 2, is named CORE OPERATIONS, and this programme contributes to the achievement of the National Development Plan’s Priority 1, Economic Transformation and Job Creation. NEDLAC is also working towards embracing a rounded approach to manage, its corporate identity by ensuring that it remains sincere, transparent and maintain regular interaction with its stakeholders.

4.3.3.    The unemployment rate is expected to increase significantly as a result of large scale retrenchments amid the Covid-19 national disaster.

4.4.       Productivity South Africa

4.4.1.    The core function of ProductivitySA is to promote a culture of productivity in the workplace.

4.4.2.    The Enterprise Support Programmes of ProductivitySA are designed to promote a productivity and entrepreneurship culture and consciousness to promote decent work which involves opportunities for work that is productive and delivering fair income.

4.4.3.    ProductivitySA supports initiatives aimed at preventing job loses, and also undertakes productivity related research.

4.4.4.    Productivity SA has been struggling financially due to the lack of a sustainable funding model. The situation was made worse in the 2019/20 financial year, when it did not receive funding from the UIF. However, it received R104.5 million from the UIF and doubled its revenue from consulting services this year.

 

4.5.       Unemployment Insurance Fund (UIF)

4.5.1.    There are employers who are not contributing to UIF, many of which have been found wanting during this COVID-19 pandemic. UIF is planning to increase the number of newly registered employers from 59 984 to 71 000 in this financial year.

4.5.2.    In this 2020/21 Financial Year, UIF plans to register 700 000 new employees.

4.5.3.    UIF has committed funds into funding employment creation schemes.

4.5.4.    There are plans to create 5 000 jobs through UIF funding and Investment activities.

4.5.5.    UIF has planned to support 30 cooperatives and 15 SMMEs.

4.5.6.    There is a plan by UIF to increase the number of youth particularly on Public Employment Programmes for enhanced employability to 12 210.

4.5.7.    The Labour Activation Programme of the UIF is responsible for, amongst others, the preservation of jobs in distressed companies. The Covid-19 national disaster and consequent lockdown has put many companies in this category. However, the budget of this programme for the 2020/21 financial year is the lowest at R3.3 million.

 

4.6.       Compensation Fund (CF)

4.6.1.    The governance components of the Compensation Fund are COIDA Services, Medical Benefits and Rehabilitation Services.

4.6.2.    COIDA Services has six areas of operation, namely, Claims Registration, Pensions, Accident Insurance Pay-outs, Employer Registration, Return of Earnings and Assessment and lastly Compliance and Audits.

4.6.3.    Operations in Medical Benefits, include Medical Services, which are Procedure Authorisation and Specialisation Claims Processing. In Medical Benefits you also have Medical Claims Processing and Payments as well as Managed Care Services.

4.6.4.    Rehabilitation Services, refers to Vocational Rehabilitation Programmes, Clinical Rehabilitation Programmes and Social Rehabilitation Programmes.

4.6.5.    The CF, therefore, is one of those that have complex operations. Its functions need varied skills and expertise. The professionals the CF so desperately needs are not easy to assemble in the Public Sector. The other area is that the CF’s operations cannot be performed manually. A high performing ICT is what could simplify most complicated operations, which is the reason CF started its modernisation journey and came up with Compensation Made Easy for the clients, in short known as COMPEASY.

4.6.6.    Before COMPEASY, the CF was using a claims management system called UMEHLUKO, which was weak in controls leading to opportunities for both internal and external parties to defraud the CF. It was easy for any user to gain access to the system and create fictitious claims and medical invoices and it even allowed medical service providers to submit invoices with non COID rates and in some cases duplicating claims resulting in overpayments to providers.

4.6.7.    In the COMPEASY system, rules have been built into the system to prevent invalid and inaccurate invoices from entering the system.

4.6.8.    In COMPEASY system, only authenticated and duly delegated users can submit claims and incomplete submissions do not result in a claim being registered and are not assigned a claim number. Therefore, Medical Service Providers are not able to submit medical invoices on such.

4.6.9.    Some of the challenges that were encountered in COMPEASY included incorrectly configured automatic workflows which resulted in work flowing to incorrect internal users. Also, external users were affected by the SITA down-time for about four weeks between November and December 2019, which prevented them from accessing the system.

4.6.10. The workflows issues were resolved in January 2020.

4.6.11. COMPEASY currently is fully functional.

4.6.12. The Entity is still unable to take itself out of the trouble of Disclaimers in as far as the Audit outcomes.

4.6.13. Compensation Fund has the Action Plan as a tool, to among others, turn around poor audit outcomes.

4.6.14. The entity is also closing gaps in relation to some pieces of legislation.

4.6.15. The Cabinet in March 2020 has approved Compensation for Occupational Injuries and Diseases Act (COIDA).

4.6.16. The changes to the COIDA include the removal of the express exclusion of Domestic Workers as employees in conformity with the International Labour Standards.

 

5.         COMMITTEE RECOMENDATIONS

In view of the above observations, the Committee recommends that the Minister of Employment and Labour considers the following:

 

5.1.       Department of Employment and Labour

5.1.1.    The Department must provide a clear plan on how the employment focus will be incorporated into the Department’s formal structures and programmes.

5.1.2.    A process of repatriating the Public Employment Programmes from all over the places to a single point of coordination and importantly an impact may have to be seen moving, with Department of Employment and Labour playing a major role.

5.1.3.    Public Employment Services branch needs to undergo restructuring that should enable it to be one of the depositories of some or all of the Public Employment Programmes.

5.1.4.Skills Training Programmes need to also move to the Department of Employment and Labour for the country to have a clearer picture and a better grip, more importantly for the positive impact.

5.1.5.In relation to the development of Labour Migration Policy and Employment Policy, the Department of Employment and Labour may have to generate better speed.

5.1.6. The Department must continue to inspect and enforce the adherence to all labour laws.

5.1.7. COVID-19 means that joint operations with other departments and entities should be regularised to ensure effective coordination.

  1. The Department should ensure that the newly appointed labour inspectors are thoroughly trained and deployed to provinces based on needs. Their immediate focus should be to monitor compliance to the Covid-19 Directives issued by the Minister of Employment and Labour.
  2. The Department should ensure that the mismatch of skills is correctly matched and addressed throughinternships by reskilling, training, mentoring and coaching, among others. The new socio-economic situation the country is entering into, makes this one of the focal duties.
  3. Other government departments, entities of government and other levels of government should be informed and encouraged to use the ESSA resource to source unemployed work-seekers.
  4. In relation to procurement of goods and materials,like furniture, hospital linen and PPEs, the Department must rush to conclude its discussions with National Treasury and other parties, giving first preference to those produced by the SEE.
  5. The Department and its entities should give first preference to the SEE when procuring PPEs and market the service of the SEE to other government departments
  6. There are Departments and possibly entities that the Department of Employment and Labour ought to partner with, given its now explicit Employment element. Those departments are Department of Trade and Industry, Higher Education, Science and Technology, among others, which the Portfolio Committee is interested to see partnership taking shape in action. Also, the DEL may have to work closer with Statistics South Africa (STATSSA) among others.

 

5.2.       Commission for Conciliation, Mediation and Arbitration (CCMA)

5.2.1.    In dealing with vulnerable workers like domestic workers and farmworkers, the CCMA needs to adopt an integrated approach that includes Inspection Services of the Department.

5.2.2.    Means must be devised to capacitate and empower vulnerable workers through workshops, roadshows and outreach programmes, among others.

5.2.3.    The Department should make space available for the CCMA to conduct its business in labour centres for free instead of paying to use privately owned buildings.

5.2.4.    In the advancing and deepening of digitalisation CCMA should develop clear and concise strategy in such a manner that ensures agility of this entity to the changing world.

5.2.5.    Monitor the implementation of CCMA’s Enforcement Strategy.

5.2.6.    Monitor the progress that shall be made to improving compliance with arbitration awards.

 

5.3.       NEDLAC

5.3.1.    The government task team that was established to review NEDLAC’s structure should table its report for consideration without further delay.

5.3.2.    NEDLAC partners should develop an employment centred economic recovery plan.

5.3.3.    NEDLAC may have to ensure that decisions taken on its platform do filter through and down to the ground.

 

5.4.       Productivity South Africa

5.4.1.    Productivity SA should focus on marketing its consulting services as a sustainable revenue generating stream.

5.4.2.    ProductivitySA should be utilised and encouraged to work with other entities to intervene in submerging State Owned Entities and others that are struggling to stay afloat.

 

 

 

 

5.5.       Unemployment Insurance Fund (UIF)

5.5.1.    In the normalisation of the new normal UIF should not only be repositioned and repurposed but must also be reinforced and further capacitated to effectively play a role in social security net.

5.5.2.    Electronic systems aimed at rendering services to the clients must be effectively developed, administered and utilised in order to meet their intended missions.

5.5.3.    UIF must improve its communication with the fellow South Africans it serves.

5.5.4.    Investments that are developmental in nature must be the ones to be considered.

5.5.5.    In view of the anticipated large-scale retrenchments, the budget allocation of the LAP has to be revised.

 

5.6.       Compensation Fund (CF)

5.6.1.    Compensation Fund (CF) must ensure that it does not slide back, but keep on improving.

5.6.2.    Commit to closely monitor the implementation of the CF Action Plan.

5.6.3.    Provide an appropriate investigation and probe the recurring audit outcomes that are dismal and depressing at the CF.

5.6.4.    All the Supply Chain Management findings should be investigated.

5.6.5.    Ensure that a systems support is available and that staff is adequately trained for the newly introduced COMPEASY ICT system.

5.6.6.    CF must improve its communication with the fellow South Africans it serves.

5.6.7.    Investments that are developmental in nature must be the ones to be considered.

 

Having satisfied itself in its engagement with the Department of Employment and Labour and its entities on their budgets, Annual Performance Plans and Strategic Plans, the Committee recommends that the House approves Budget Vote 31: Employment and Labour.

 

The Democratic Alliance, the Economic Freedom Fighters and the Freedom Front Plus indicated that they object to the Report on Budget Vote 31: Employment and Labour.

 

Report to be considered.

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