ATC200610: Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour on Budget Vote 31: Employment and Labour, the Strategic Plan And The 2020/21 Annual Performance Plan of the Department of Employment and Labour, Dated 9 June 2020

NCOP Trade & Industry, Economic Development, Small Business, Tourism, Employment & Labour

Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour on Budget Vote 31: Employment and Labour, the Strategic Plan and the 2020/21 Annual Performance Planof the Department OF EMPLOYMENT AND LABOUR, dated 9 June 2020

 

1.Background

 

The Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour, having considered Budget Vote 31: Employment and Labour, the Strategic Plan and the 2020/21 Annual Performance Plan of the Department of Employment and Labour tabled by the Minister of Employment and Labour, and in terms of the Public Finance Management Act of 1999 (PFMA), as well as the Money Bills Amendment Procedure and Related Matters Act, 2009, reports as follows:

 

2.Introduction

 

The Committee considered the2020/21-2024/25 Strategic Plan, and the 2020/21 Annual Performance Plan, Budge allocation, Budget Vote 31, and further observed the spending plans of the departmental entities. The Committee engaged the Department and its entities on 7, 12, and 14 May 2020, respectively. The Department submitted that the current strategic plan, and annual performance plan are aligned to the Medium Term Strategic Framework (MTSF).

 

It was further submitted that the strategic plans were crafted pre-COVID-19 outbreak in South Africa. The Committee noted that the 2008-09 financial crisis it was like a “small-scale rehearsal” in disrupting the socioeconomic system. South Africa economic growth is anticipated to decline between 6 and 7 per cent in 2020, and the significant decline of the national economy is supported by the International Monetary Fund, Reserve Bank and the Organisation for Economic Cooperation and Development. The resultant negative impact of the pandemic on the economy and to the fiscus would necessitate reprioritisation of the spending plans to accommodate policy responses to COVID-19.

 

Further, the Department indicted that the pandemic has caused huge disruption in global economy, and national economies. The damage to the travel and tourism sectors was reported to be more pronounced. Retail (excluding food), automotive, hotels and restaurants, airlines, travel operators, arts and entertainment, and personal services like hairdressing, firms and workers were mostly affected including manufacturing.

 

When South Africa entered the COVID-19 outbreak phase it was already experiencing weak fiscal position. Coupled with repeated funding support to state owned companies, which have huge hole in terms of their balance-sheet. Further, global rating agencies have downgraded the economy to an unattractive investment level and that would increase the cost of government borrowing. The currency weakness continues to rise. 

 

It was noted that rising unemployment remains a challenge, further declining real GDP per capita, and low business sentiment are some of the risks that need to be addressed. Depressed household finances would likely affect livelihoods. Unskilled, and semi-skilled workers are projected to be hit hard by the COVID-19 pandemic. It was reported that some of the businesses would not survive, and even those, which will survive would lay-off workers. COVID-19 pandemic will certain result to an increase to unemployment. Mainstream media reports have indicated that unemployment could reach 50 per cent. The functional role of the Commission for Conciliation, Mediation and Arbitration (CCMA) would need to be enhanced, thus it will need resources to address tensions relating to the industrial relations.

 

The Committee recognised the depth of the unemployment crisis presented by the COVID-19 pandemic. Further, the Committee emphasised that preservation of jobs, and employment creation should be at the centre of economic and social policies in a post COVID-19 phase. Partnerships amongst social partners should be enhanced. Further, the National Economic Development and Labour Council’s (NEDLAC) strategic and functional operations should be repurposed to tackle the current and emerging socio-economic issues.

 

 

 

 

 

3. Overview of the Legislative and Policy Mandate of the Department 

 

The Estimates of National Expenditure articulates that the purpose Department is to play a significant role in reducing unemployment, poverty and inequality by pursuing the objectives of decentwork for all throughemployment creation and enterprise development. Further, it aims to set the standards and theprotection of rights at work, including the facilitation of equal opportunities and social dialogue, and theprovision of social protection.

 

Apart from the Constitution of the Republic, the legislative framework which informs the work of the Department constituted by the Labour Relations Act (1995), the Basic Conditions of Employment Act (1997), the Employment Equity Act (1998), the Occupational Health and Safety Act (1993), and the Employment Services Act (2014). Further the Bill of Rights is pivotal section in the Constitution which find expression through various acts that regulate labour matters in South Africa.

 

It was reported that some of the funds earmarked to preserving the economy, including protecting jobs were also sourced from the Unemployment Insurance Fund. Current, the UIF has set aside R40 billion to meet government socio-economic commitments in response to COVID-19.

 

Over the medium term, the Department and its entities will focus on the following policy mission:

 

• Improve economic efficiency and productivity;
• Facilitate the creation of decent employment;
• Promote labour standards and fundamental rights at work;
• Provide adequate social safety nets to protect vulnerable workers;
• Promote and enforce sound labour relations;
• Further, to promote equity in the workplace;
• Eliminate inequality and unfair discrimination in the workplace;
• Enhance occupational health and safety awareness and compliance in the workplace;
• Give value to social dialogue in the formulation of sound and responsive legislation and policies to attain labour market flexibility for the competitiveness of enterprises, balanced with the promotion of decent employment.

 

The Committee noted the critical policy strategy plans that informed the formulation of the current strategic plans, and other spending plans. Further the Committee recognised the effect of the COVID-19 to the Medium-Term Strategic Framework including the National Development Plan 2030. The COVID-19pandemic will affect the economy, and has the direct negative impact to employment. The duration of the pandemic remains unknown, and the depth of the damaged not yet clearly quantified. It has been accepted that the impact of the pandemic would ravage the economy, and affect jobs and cause strain to households and many companies. The Committee noted that the current situation would necessitate further withdrawals of the UIF reserve funds invested in various portfolios. Further, unemployment rate increase has the potential to erode the UIF reserve funds.

 

 

4. Budget Policy Area

 

The vision of the Department is to strive for a labour market which is conducive to investment, economic growth, employment creation and decent work.The Department reported that over the medium term it will continue to implement the National Development Plan.Over the 2020 medium term, the Department emphasised that resources will be allocated to fulfil the following spending priorities:

• Supporting work seekers;
• Increasing safety and fairness in the workplace;
• Regulating the workplace to establish minimum working conditions and fair labour practices;

 

Further the work of the Department is functional structured to respond to the following Medium Term Strategic Priorities:

• Priority 1: A Capable, Ethical and Developmental State;
• Priority 2: Economic Transformation and Job Creation;
• Priority 3: Education, Skills and Health;
• Priority 4: Consolidating the Social Wage through Reliable and Basic Services;
• Priority 5: Spatial Development, Human Settlements and Local Government. This priority has been identified by the Department that it does not have direct impact to its policy functional area.
• Priority 6: Social Cohesion, Safer Communities;
• Priority 7: A Better Africa and a Better World;

 

Over the medium term the Department reported that create 256 050 youth jobs as a response to the Presidential Comprehensive Youth Employment initiative. Public Employment Services is expected to lead by creating 190 000 jobs, and through the Labour Activation Programme, 61 050 jobs will be created and the Compensation Fund initiatives will create 4 000 jobs.In addition, the Public Employment Services is expected to develop Employment Policy.

 

In terms of meeting Employment Equity Act objectives, the Department submitted that it will conduct over the medium term 18 420 workplaces inspections. With regard to the implementation of the National Minimum Wage Act and the Basic Conditions of Employment Act, the Department indicated it will visit 838 560 workplaces over the next five years.

 

Another pivotal area over the medium term is the spending on health and safety taking into account certain health and safety measures that companies need to take to protect workers in workplaces in response to COVID-19 pandemic. The Department submitted that it will inspect 421 620 over five years, in year it will inspect 23 844 workplaces. However, this target does not take into account COVID-19 demands.

 

Further, the Department reported that it will visit 131 580 employers to ensure that they comply with Unemployment Insurance Act, Unemployment Insurance Contribution Act and Compensation for Occupational Injuries and Diseases Actlegislative requirements. Over the medium term the Department submitted that employment equity initiative will be accelerated, starting with the legislative amendment of the Employment Equity Act.  According to the 2018 Employment Equity Report, Africans constituted 23,2 per cent and 40,2 per cent at senior and middle management levels as reported by designated employers.

 

The Department has set a target to facilitate a progressive increase (2 per cent annually increase) of representation of Africans in senior and middle management levels. Further, persons with disabilities’ interest will also be place at the centre of government transformative agenda. Current, Persons with disabilities constitute 1 per cent of the of the total workforce in both public and private sector, this is according to the 2018 Employment Equity Report. The Department intends to increase the representation of Person with disabilities to 2.5 per cent both in the private and public sector.

 

Further, the Committee noted the spending amount which is approximately R88.5 million set aside for the departmental international labour commitments in the International Labour Organisation and African Regional Labour Administration Centre. This spending commitment seeks to respond to the departments contribution to the government global commitment to create A better Africa and a better World.

 

As already stated elsewhere in the report that the current strategic plan of the Department was crafted in a different policy context, which did not take into account the Covid-19 pandemic. The current budget policy context will necessitate the Departmentto revise the spending plans to accommodate policy responses to the Covid-19 pandemic.

 

 

4.1 Overview of the Departmental Spending

 

It was reported that the Department is anticipated to spend R3,6 billion for the 2020/21 financial year. In terms of spending per functional policy programme, in 2020/21 financial year, Administration is anticipated to spend approximately R1 billion, Inspection and Enforcement Services to spend R677 million, Public Employment Services to spend R644 million and Labour Policy and Industrial Relations is expected to spend approximately R1,3 billion. Most of the spending in Labour Policy and Industrial Relations is made of transfers to departmental entities.

 

In 2020/21 financial year, approximately R2.2 billion is expected to be spent on current payments, of which Goods and services (R687 million) and Compensation of Employees (R1,5 billion), and Transfers and Subsidies anticipated to spend approximately R1,5 billion. Spending on Compensation of Employees over the 2020 medium term is expected to represent 40.8 per cent of the total budget spending, followed by Transfers and Subsidies recording 38.2 per cent and Goods and Services expected to register R 19,1 per cent. In 2020 financial year, approximately R1 billion is transferred to the CCMA. The Commission for Conciliation, Mediation and Arbitration aims to promote social justice and economic development in the world of work, and to be the best dispute management and resolution organisation.

 

The other entity that is expected to receive allocation to spend on current payments is the National Economic Development and Labour Council. NEDLAC plays a critical role to ensure that organised labour, organised business community‐based organisations and government to work as a collective to promote the goals of economic growth, and social and economic equity. In 2020/21 financial year, NEDLAC is expected to receive R62 million. Whilst the Productivity South Africa, which aims to improve the productive capacity of the economy through interventions that encourage social dialogue and collaboration between government, labour and business. In 2020/21 financial year, Productivity South Africa is expected to receive R57 million.

 

Another pivotal departmental entity is the Unemployment Insurance Fund. The aim of the entity is to alleviate poverty by providing effective short‐term unemployment insurance to all workers who qualify for unemployment and related benefits, as legislated in the Unemployment Insurance Act (2001). It is expected in the 2020/21 financial year for the fund to review all claims affected by the changes created by the retrospective implementation date of the Unemployment Insurance Amendment Act (2016). The Department submitted that an estimated 1.7 million claimants have lodged claims between 19 January 2017 and 31 December 2018 that were assessed and paid at a lower rate based on the old Act need to be reassessed and paid based on the amended act. As a result, expenditure on the payment of claims is expected to be R30.6 billion in 2020/21, R24.9 billion in 2021/22 and R27.4 billion in 2022/23.

 

To ensure the retention and smooth re‐entry of contributors into employment, the fund has budgeted an estimated R7.5 billion over the medium term for the implementation of labour activation programmes such as training and business development aimed at enhancing the employability of contributors. To reduce the time spent by clients in labour centres, the fund has set aside R6.7 million per year over the medium term for the maintenance of the queue management system.

 

In 2020/21 financial year the UIF is expected to use a self‐service application that can be used on smartphones and unstructured supplementary service data, and the self-service application is projected to cost R2.3 million in an effort to enable clients to use the fund’s services without having to visit its offices. A further R10 million has been allocated in 2020/21 for the digitalisation of documents, and R85 million for the implementation of systems applications and products in data processing. Further, an estimated 20 per cent of the fund’s investment portfolio (R33 billion) has been set aside for socially responsible investment in employment creation initiatives in agriculture, education, renewable energy, financial services, health, housing, agro‐processing, mining and beneficiation, construction, petroleum, student accommodation, road infrastructure and technology.The Public Investment Corporation manages this investment on behalf of the UIF. 

 

The UIF is financed through contributions from employees and employers, as legislated in the Unemployment Contributions Act (2002), and through interest earned on investments. Over the medium term, the fund expects to receive an estimated R66.8 billion of its total revenue through unemployment contributions. Income earned through returns on investments is expected to increase from R11 billion in 2019/20 to R13.9 billion in 2022/23.

 

However, the Committee noted the impact of COVID-19 to the strategic plan and operations of the UIF. It is reported elsewhere in the report that unemployment rate increase as result of the effects of COVID-19 pandemic has the potential to erode the UIF reserve funds. Current, the UIF has set aside R40 million to tackle challenges that affect companies, and to preserve jobs.

 

In 2020/21 financial year, Supported Employment Enterprises(SEE) is anticipated to receive R153 million.The entity was established in 1943 as the Sheltered Employment Factories, for the sole purpose of creating employment for ex-serviceman and women who could not secure employment in the labour market due to barriers that prevented their participation. The Department reported that the entity now has 13 factories located in 8 of the 9 provinces, with Mpumalanga Provincecurrently being the only province without a factory. The Employment Services Act 4 of 2014 now establishes the entity as the Supported Employment Enterprises to promote work and employment opportunities for persons with disabilities. The SEE now employs just over 1024 persons with disabilities across 13 factories, with the capacity to collectively employ an additional 2000.

 

The factories can be found across the country and are located in industrial part outside major cities as follows: Kwa-Zulu Natal: Durban and Pietermaritzburg; Eastern Cape:East London and Port Elizabeth; Western Cape: N’dabeni and Epping; Northern Cape:Kimberley; Free State: Bloemfontein; North West: Potchefstroom; Limpopo:Seshego; Gauteng: Silverton (Pretoria) and Rand (Johannesburg) Springfield.

 

It was reported that the Western Cape Department of Health placed an order of bed sheets, surgical gowns, theatre pants, doctors’ shirts, operation gown as part of material that will be used in response to the COVID-19. The project value approximately R9 million in total.

 

The Committee noted that the capacity and capability of the SEE should be prioritised in order it can be able to maximise its revenue generation thus it should improve sales and expand to new markets. Financial sustainability of the SEE should be prioritised. Further, SEE should leverage the current funding instruments to source private sector financing.

 

The Compensation Fund(CF) is expected to receive approximately R18 million in 2020/21 financial year. The Compensation Fund is mandated to administer the Compensation for Occupational Injuries and Diseases Act (1993), which makes provision for the compensation of employees who are disabled as a result of occupational injuries or sustain or contract diseases, or the compensation of the nominated beneficiaries of employees who die from such injuries or diseases.

 

Over the medium term the CF is expected to improving its operational efficiency. Further, expenditure on claims and pension benefits is expected to increase from R946.3 million in 2019/20 to R1.3 billion in 2022/23 at an average annual rate of 10 per cent. Total expenditure on benefits is expected to increase at an average annual rate of 7.2 per cent, from R3.8 billion in 2019/20 to R4.7 billion in 2022/23. Included in this amount is expenditure for 4 200 university bursaries and 800 bursaries to technical and vocational education and training colleges to upskill unemployed workers who have suffered occupational injuries.

It was submitted that the cost of administering the fund, paying compensation benefits and medical expenses, and rehabilitating and reintegrating injured and diseased workers is funded through levies paid by registered employers and revenue earned from investments. The fund’s total revenue in 2019/20 is expected to be R13.2 billion, increasing at an average annual rate of 5.4 per cent to a projected R15.4 billion in 2022/23.

 

It was noted by the Committee that the Department would need to focus to addressing challenges to its own operations brought on by Covid-19. Further the Committee recognised that the national budget is strained, and that would have an effect to the departmental budget, and thus affects spending priorities. As a result, other policy priorities might be scaled-back.Further additional funding may be required to assist the Department to carry tasks in response to COVID-19 pandemic. The role of National Treasury in assisting the Department to meet occupational and health support measures including public employment support measures and to minimise industrial relations conflict in response to the COVID-19 pandemic, was stressed by the Committee.

 

Table 1 shows on what the Department is expected to spend funds over the 2020 medium term. The Department has organised its expenditure into four functional policy programmes, which comprise of Programme 1: Administration, Programme 2: Inspection and Enforcement Services; Programme 3: Public Employment Services and Programme 4: Labour Policy and Industrial Relations.

Table 1: Summary of the Departmental Spending for the 2020 Medium Term Expenditure Framework

Source: Estimates of National Expenditure, National Treasury

It should be noted that in response to the COVID-19 pandemic, allocated resources as well as programme priorities will be reprioritised by the Department. It is anticipated that the Minister of Finance when tabling the special adjustment budget the changes will be reflected in the Special Adjustment Budget.

 

In terms of Inspection and Enforcement Services the Department submitted that in 2020/21 financial it will conduct 221 556 inspections in respect of various labour laws in all provinces. In 2020/21 financial year, the Department is expected to conduct 24 408 inspections in the Eastern Cape Province, 18 732 in Free State, 47 520 in Gauteng, 44 436 in KwaZulu Natal, 20 892 in Limpopo, 16 812 in Mpumalanga, 9 660 in Northern Cape, 14 976 in North West, and 23 832 in the Western Cape. Further, the Department is expected to conduct education and advocacy awareness initiatives to increase awareness of employment law.

 

The Department through the 2018 national macro reorganisation of government in recognition of the need to respond to increasing levels of unemployment, inequality and poverty in South Africa was given an additional responsibility to drive employment creation initiative across the government. Young people are reported to be the most affected group. According to the official definition, unemployment in South Africa has reached 29 per cent, and according to the expanded definition, is sitting at 38.5 per cent. With the COVID-19 outbreak, mainstream media reports have indicated that South Africa unemployment rate could reach 50 per cent.

 

More than half of unemployed youth find it difficult to access opportunities in the labour market because of their low levels of education and skills, lack of experience, and other social and economic factors.  In response to some of these challenges, the 2018 presidential jobs summit delivered a framework agreement consisting of high‐impact actions aimed at driving job creation, job retention and economic growth.

 

Over the medium term the Department reported that it will develop an employment policyin line with International Labour Organisation guidelines, to coordinate all employment initiatives. In addition, an employment schemes framework will be developed to facilitate the provision of short‐term employment in response to the oversupply of labour and the lack of available opportunities for adequate employment. The employment schemes frameworkaims to provide short‐term employment, especially for young people, to stimulate the economy through multiple strategies that will allow participants to generate their own income.

 

The number of work seekers registered on the Employment Service s of South Africa database is set to increase from 700 000 in 2019/20 to 800 000 per year from 2021/22 due to a planned increase in advocacy campaigns and the number of employment counsellors employed. Employment counselling will be provided to an estimated 690 000 registered work seekers over the medium term at a projected cost of R45 million in the Work Seeker Services sub-programme.

 

The Department submitted that it will registered 90 000work-seekers on Employment Services in the Eastern Cape Province, 52 500 in Free State, 195 000 in Gauteng, 127 500 in KwaZulu Natal, 52 500 in Limpopo, 60 000 in Mpumalanga, 30 000 in the Northern Cape, 45 000 in North West, and 97 500 in the Western Cape.

 

In job seekers platformwork seekers will be profiled so that those who require less intervention and job preparation can be fast‐tracked to job opportunities, thereby availing career counsellors to focus on work seekers who require more assistance and enhancing their prospects of securing employment. In 2020/21 financial year, the Department reported that it will register 27 938 work-seekers to be provided with employment counselling, 19 206 in Free State, 45 396 in Gauteng,27 938 in KwaZulu Natal, 22 698 in Limpopo, 26 190 in Mpumalanga, 12 222 in the Northern Cape,17 460 in North West, and 20 952 in the Western Cape.

 

The Department reported that the placement process of the job seekers will be streamline and integrated with the systems of the Unemployment Insurance Fund and the Compensation Fund, as well as the national learner’s record database. Further the department will also play a more active role in facilitating job creation by establishing partnerships with stakeholders such as the Department of Higher Education and Training, the Department of Public Works and Infrastructure, the National Youth Development Agency, municipalities and the private sector.

 

Productivity South Africa is expected to play a critical role in the implementation of the training lay off scheme, business recovery and turnaround solutions, and job‐saving programmes. As a result of these efforts, the number of registered employment opportunities filled by registered work seekers is expected to increase from 90 000 in 2019/20 to 105 000 in 2022/23 at an estimated cost of R140.4 million over the medium term in the Work Seeker Services sub-programme.In the Eastern Cape 13 000 work seekers would be placed for employment opportunities, 7 500 in Free State, 18 200 in Gauteng, 15 000 in KwaZulu Natal, 10 000 in Limpopo, 8 000 in Mpumalanga, 5 800 in the Northern Cape, 6 500 in North West, and 11 000 in the Western Cape.

 

In terms of the Labour Market Policy & Industrial Relations the Department submitted that it will table the to Parliament the amendments to the Employment Equity Act by the end of the 2020/21 financial year. Over the medium term the Department reported that it will continue to to facilitate the establishment of an equitable and sound labour relations environment and promote South Africa’s interests in international labour matters through research, analysing and evaluating labour policy, providing statistical data on the labour market, and supporting institutions that promote social dialogue.

 

The Department further committed to review of the National Minimum Wage by the end of the financial year. The National Minimum Wage Commission and secretariat established in 2019 will be responsible for reviewing, adjusting and monitoring the social and economic impact of the national minimum wage, which is set at R20 per hour.

 

In addition,Department will ensure that collective agreements are assessed and verified within 180 working days of receipt by the end of the 2020/21 financial year. As already stated in this report the CCMA will be key government structure that will assist to ensure there is better industrial relations taking into account the expected retrenchment notices as result of the impact of the COVID-19 pandemic.

 

In terms of its contribution to realise to the government priority 1: priority 1 to developing a Capable, Ethical and Developmental State, the Department indicated that it will ensure that 80 per cent of vacant funded posts are filled within 4 months of becoming vacant. Over the medium term the Department has planned to continue tackle cases of irregular, fruitless and wasteful and/or unauthorised expenditure. Further, the Department has planned to enhance its ICT capability to improve services to the clients, and also to strengthen governance structures.

 

5.  Issues Arising from Engagement

1. The Committee noted the impact of COVID-19 to the domestic and global economies, and the resultant effect to the South Africa economic growth, fiscal health of the country.
2. Further the Committee noted that the strategic plan and spending plans of the Department would need to be revised to accommodate the policy response to the COVID-19 pandemic.
3. The Committee agreed with the Department that SEEs need to be supported. Further, the Department should use internal functional policy programmes to gear up the performance of the SEE. Inter-intra departmental strategic support should be used to optimise the functioning of the SEE. The organisational health and capability including financial sustainability of the of the SEE should be prioritised. Partnership with the government development agencies should be formalised and cemented.
4. The Committee noted the concerns raised in relation to the procurement of Personal Protective Equipment (PPE). Further, the Committee encouraged a streamlined procurement process that would enable SEEs, SMMEs (including those, which owned by young people, person with disabilities, and women) to supply PPEs. Local economic enterprises should also benefit including social enterprises.
5. The Committee noted that the Public Employment Services will be facing an increase of the number of jobseekers, and it will need reallocate many of the job seekers across occupations, sectors and regions. This requires providing them with good labour market information and support for skills development. The Committee recognised that additional resources would be needed to support the increasing number of the people who will be unemployed.
6. Services of the Labour Activation Programme would be in high demand. Reserve funds of the CF and UIF would be in high demand. That pose future risks on the availability of the funds as significant withdrawals could be warranted as many companies face solvency and putting jobs at risk.
7. The Department stressed the commitment of government to ensure that many companies need to be served, and jobs be protected. Collaborative effort will be undertaken to save as many companies and protecting current jobs, and shifting the workforce to new industries and sectors.
8. The Department further submitted that it will develop the Employment Policy to create labour market stability, and creation of decent employment in order to support an inclusive economy. The initiative will be done taking into consideration international law and treaties that support open and dynamic labour market.
9. The Department submitted that over the medium term it will continue to prioritise gender equity considerations in the workplace including tackling sexual harassment of women. The gender based violence regulations in the workplace would also be aligned to international conventions. 
10. Municipal environmental inspectors are in the process of exploring collaboration with a whole host of other inspection bodies that license to operate and will go a long way in augmenting numbers the Department have.
11. The Sheltered Employment Enterprises (SEE) expectation that it should generate an income instead of being funded by the Department will decreasedemand on fiscal allocation and focus on improving manufacturing towards self-reliance and funding. There is an intention to expand for example in areas like Mpumalanga. As long as guaranteed work is achieved andthen the factories will be able to generate their own income and reduce their reliance on government funding.
12. The Department submitted that it is planning to recruit additional specialist inspectors in an attempt to increase occupational health and safety inspection. It was indicated by the Department that it is competing with private sector including the Department of Mineral Resourcesin attracting inspection talent. The private sector has an edge in terms of recruitment as it offers better remunerative package. Over the medium term, the Department indicated that it will pay particular attention on recruiting the best talent in the inspection services. Additional resources would be required.
13. The Committee commended the strategic plan of the CCMA, and noted the essential role of the CCMA, particular in the current socioeconomic situation. Further, the Committee recognised that the CCMA would need additional resources to address industrial relations disputes that would be worsened by the COVID-19 pandemic in labour market. 
14. Further, the Committee noted that CF need to pay particular attention to ensure that it improve the organisational health, and enhance ICT infrastructure services in order to improve service delivery. Further, CF should prioritise spending in Compensation of Employees to fill critical vacant posts.
15. The Committee noted the strategic focus of NEDLAC including the work that has been done to respond to COVID-19. On top of the internal reprioritisation process, additional resources would be needed by NEDLAC. The current services would be shifting to migrating into digital services. That would need much support to be provided to the stakeholders in order they are able to effective participate in NEDLAC’s legislative and policy processes.
16. The Committee also noted the review process that NEDLAC has undertaken to improve its strategic focus and functional operational requirements to meet the new socio-economic developments.
17. The Committee, further noted the pivotal role played by NEDLAC in assisting government to manage COVID-19 interventions, particular to efforts in forging collaborative initiatives amongst social partners. Partnerships with Business SA including organised labour was noted by the Committee.
18. The Committee recognised that role played by Productivity South Africa in the overall functioning of the industries, and by extension to the economy. It was noted by the Committee that South Africa in terms of ratings in competitiveness is ranking lower than G20 member countries including BRICS member countries. Productivity South Africahas also identified this a challenge that needs to be tackled. Over the medium term the entity has planned to enter into partnerships with other government departments such as the Department of Trade, Industry and Competition, Small Business Development, Innovation and Technology institutions, including the private sector and post-secondary institutions implement initiative that would boost productivity of the companies, and build workforce skills development.
19. Over the medium term Productivity South Africaindicated it will also pay particular attention on the organisation’s financial sustainability. This is the issue that the Committee recognised as some of the challenges that pose organisational risk that would affect the functioning of the entity. 
20. Further, the Committee noted that the services of Productivity South Africa would be needed by many companies as a result of the COVID-19. The entity would need to redirect the resources to meet the needs of companies that would be facing operational distress. Further, the role of industry associations would be critical, thus Productivity South Africa should enhance the relationship with industry players.

 

6. Recommendations

 

Following engagement with the Department and entities, the Select Committee proposed the following recommendations to the Minister of Employment and Labour:

1. Taking into account the demands that would require policy responses as a result of the COVID-19 pandemic, particular with occupational health and safety requirements. National Treasury taking into cognisance available resources should consider to allocate additional resources to the Department to meet commitments necessitated by the COVID-19 pandemic.  
2. The Committee recognised that the organisational health and capacity including financial sustainability of the SEEs should be prioritised. The Department working closely with National Treasury should work on a mechanism that would ensure that business operations of the SEEs are adequately funded.  Further, over the medium term both National Treasury and the Department should explore alternative funding and financing sources to support growth and expansion of the SEEs.
3. COVID-19 would disrupt the economy, and would have negative impact to the labour market. Over the medium term, the Department should engage National Treasury to allocate additional resources to the CCMA in order it can meet policy commitments in response to the COVID-19.
4. Over the 2020 medium term Productivity South Africa should develop a business model that would ensure that it becomes financial sustainable.
5. Further, the Committee recommends the Department to finalise the development of the Employment Policy by the end of the 2020/21 financial year.

 

 

Report to be considered.