ATC200618: Report of the Portfolio Committee on Employment and Labour on the Fourth Quarterly Report Regarding the Performance of the Department of Employment and Labour and its Entities in Meeting Strategic Objectives for 2018/19, Dated 10 June 2020

Employment and Labour

Report of the Portfolio Committee on EMPLOYMENT AND Labour on the FOURTH Quarterly Report regarding the Performance of the Department of EMPLOYMENT AND Labour and its entities in meeting Strategic Objectives for 2018/19, dateD 10 June 2020

 

The Portfolio Committee on Employment and Labour, having considered the Fourth Quarterly Report on the performance of the Department of Employment and Labour (DEL) and its entities in meeting strategic objectives for 2018/19, reports as follows:

 

1. Introduction

 

The Portfolio Committee on Employment and Labour considered the Fourth Quarterly Report on the performance of the Department of Employment and Labour and its entities in meeting strategic objectives for 2018/19 as presented in the meeting held on 27 and 28 August 2019.

 

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

 

1. Performance per Strategic Objective

 

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

Table 1: DEL Performance per Strategic Objective in Q4

STRATEGIC OBJECTIVES	Planned Indicators	Indicators with Q4 Targets	Achieved	Overall Achievement
Strengthen occupational safety protection	This strategic objective is covered in terms of indicators that are applicable to protecting vulnerable workers
Promote equity in the labour market	1	1	1	100%
Protecting vulnerable workers	5	4	2	50%
Strengthening multilateral and bilateral relations	1	0	-	-
Contribute to employment creation	4	4	4	100%
Promoting sound labour relations	3	3	1	33%
Monitoring the impact of legislation	2	2	2	100%
Strengthening the institutional capacity of the Department	4	4	3	75%
OVERALL PERFORMANCE	20	18	13	72%

Source: Presentation to the Portfolio Committee on Employment and Labour dated 27 August 2019

 

The overall performance of the Department went down from 82% in Q3 to 72% in Q4 of 2018/19 financial year. The Department’s performance on “Protecting vulnerable workers went down from 100% in Q3 to 50% in Q4. On “Strengthening the institutional capacity of the department” it deteriorated from 100% in Q3 to 75% in Q4. The Department’s performance on “Promoting sound labour relations” was remained at 33% in both Q3 and Q4. The Department improved on “Monitoring the impact of legislation” strategic objective from 0% in Q3 to 100%in Q4. The Department reported an overall achievement of 100% in “Promote equity in the labour market” strategic objective.

 

1. Performance per Programme

 

The overall performance per programme was reported as follows:

 

Table 2 DEL Performance per Programme in Q4

BRANCH	Annual Planned Indicators	Indicators with Q4 Targets	Achieved	Overall Achievement %
Administration	4	4	3	75%
Inspections and Enforcement Services	4	4	3	50%
Public Employment Services	4	4	4	100%
Labour Policy and Industrial Relations	8	8	6	66%
OVERALL PERFORMANCE	20	20	16	72%

Source: Presentation to the Portfolio Committee on Employment and Labour dated 27 August 2019

 

The Public Employment Services programme remained at 100% in both Q3 and Q4 of 2018/19 financial year. Administration programme and Inspections and Enforcement Services programme went down from 100% in Q3 to 75% and 50% in Q4 respectively. Labour Policy and Industrial Relations programme improved from 40% in Q3 to 66% in Q4 of 2018/19 financial year.

 

1. Programme performance in Q4 of 2018/19

 

4.1.       Administration

The purpose of the Administration programme is to provide strategic leadership, management and support services to the Department.

 

The Administration programme comprise the following sub-programmes: Ministry; Office of the Director-General; Office of the Chief Operations Officer; Corporate Services; and Office of the Chief Financial Officer. Corporate Services includes: Human Resource Management, Internal Audit, Risk management, Security Services, Communication, Legal Services and Office of the Chief Information Officer.

 

The Department incurred fruitless and wasteful expenditure amounting to R2.9 million (R2 896 605.76) in the fourth quarter of 2018/19. This is an increase of R2.5 million (R2 470 793.19) from R425 812.57 reported in Q3 of the year under review.

 

A total of R1.5 million (R1 502 954.17) of irregular expenditure was detected and reported during the reporting period. This is an increase of R832 573.44 from R670 380.73 reported in the third quarter of 2018/19.

 

There was no unauthorized expenditure detected and reported during the reporting period.

 

4.2.       Inspection and Enforcement Services (IES)

The purpose of the IES programme is to realise decent work by regulating non-employment conditions through inspections and enforcement, to achieve compliance with all labour market policies.

 

The programme consists of the following sub-programmes: Management and Support Services; Occupational Health and Safety; Registration: IES; Compliance, Monitoring and Enforcement Services; Training of Staff: IES; and Statutory and Advocacy Services.

 

The programme conducted 61 642 inspections in Q4 of 2018/19 against a target of 65 620, translating to an overall performance of 94%. Of those inspected 49 615 were found to be compliant and 12 027 were non-compliant and as a result were issued with enforcement notices. The highest number of inspections conducted were in KZN, which conducted 13 112 inspections. It was followed by Gauteng, which conducted 12 630 inspections.

 

A total of 680 Director-General Reviews were conducted against a target of 700, which constitutes 97.1% performance. Of all the reviews conducted 273 complied and 407 did not comply. Of the 407 that did not comply 339 were issued with Director-General recommendation with which to comply within 60 days. Eastern Cape had the highest number of compliant employers, which was 83 employers. Gauteng had the highest number of non-compliant employers, which was 111 employers. The following sectors were reviewed: Agriculture; Manufacturing; Construction; Retail, Motor Trade; Wholesale Trade, Commercial Trade; Catering, Accommodation; Finance and Business; and Community, Special and Personal Services.

 

In order to address identified areas of non-compliance, the programme is to monitor due dates for employers to comply with DG recommendations; serve confirmatory letters to employers who fail to comply within timeframe and employers who fail to comply with sections invoking direct referral for prosecution; and conduct quarterly workshops to capacitate newly converted EE inspectors.

 

The programme conducted 384 employment equity inspections against a target of 388, which constitutes 99% performance. Of those inspected, 271 were compliant and 113 were non-compliant and those found to be non-compliant were issued with notices to comply within 14 days. Gauteng conducted the highest number of EE inspections, which was 123 inspections against a target of 83. Of those inspections conducted in Gauteng, 91; were compliant and 32 were non-compliant. To address areas of non-compliance nationally, the programme will conduct advocacy sessions with employers and their EE Forums; serve confirmatory letters to employers who fail to comply within timeframe; and invoke direct referral for prosecution for those employers who were found to be operating without an EE Plan.

 

IES inspected 48 038 workplaces for BCEA compliance against a target of 52 638, translating into 91% performance. Of those inspected 87% were compliant and 13% were found to be non-compliant and issued with enforcement notices to comply within 14 days. Major BCEA non-compliance was found in the following sectors: Wholesale and Retail; Domestic; Hospitality; Farm Worker sector; and Private Security sectors. Areas of non-compliance included: underpayment of wages; non-issuing of pay slips; illegal deductions; non-issuing of particulars of employment; and non-signing of attendance to prove working hours including overtime. IES is to conduct project based inspections to determine areas of non-compliance in sectors; establish sector specific forums to engage stakeholders; create awareness through radio talk shows and advocacy; and reintroduce and strengthen structured advocacy sessions Under BCEA and deepen the employers and workers’ understanding of BCEA and National Minimum Wage Act including Sectoral Determinations.

 

A total of 6 887 OHS inspections were conducted against a target of 6 857, resulting in a positive variance of 30. Of the total number of inspections done, 4 275 were compliant, translating to 63.5% compliance level. A total of 2 512 or 36.5% of those employers inspected were non-compliant and were issued with enforcement notices to comply within the defined period or to take such action as the law allows.

 

Of the 272 incidents that were reported, 210 or 77%% were investigated and finalized within 90 days. The challenges with investigations of these incidents include inaccessibility of injured persons and witnesses when incidents are investigated; protracted periods by National Prosecution Authority in prosecution decisions; new inspectors’ limited competency in investigating and recommending prosecution; incidents reported to labour centres not forwarded to provincial offices within specified timeframes; and poor quality incidents reports by OHS inspectors.

 

A total of 533 applications for registration of entities were received and 527 or 99% were processed and finalized within 60 days against a target of 80% entities processed within 60 days. Head Office and the Western Cape province processed most applications within 60 days, followed by Gauteng and KZN.

 

A total of 5 485 procedural (UIF) audits were conducted against a target of 4 644, equating to 118% performance. Of those employers audited, 3 099 or 56.5% were compliant and 2 386 or 43.5% were non-compliant and those found to be non-compliant were issued with enforcement notices to comply within 14 days.

 

A total of 371 or 107.7% payroll audits were conducted against a target of 346. A total of 156 or 42% audited employers were compliant and 215 or 58% were non-compliant and issued with notices. Areas of non-compliance were: declarations in terms of section 56 of the UIA; failure to register with the Fund; and non-payment of contributions. The most non-compliant sectors were: wholesale and retail; community; hospitality; and farm work sectors. To address non-compliance, IES will reintroduce and strengthen structured advocacy sessions under UI legislation and deepen the employers and workers understanding of UI legislation; strengthen relationship with SARS to achieve improved compliance; and launch a series of advocacy campaigns to sensitise non-compliant employers about the legislation and the consequences of non-compliance as per section 56(3).

 

The Employment Audit Services (EAS) recovered a total of R291 202.66 through penalties imposed to non-compliant employers. The major share of monies recovered was in the Eastern Cape (R166 964.78); and North West (R100 818.88).

 

1. Public Employment Services (PES)

 

The purpose of this programme is to provide assistance to companies and workers to adjust to changing labour market conditions and to regulate private employment agencies. It consists of the following sub-programmes: Management and Support Services; Employer Services; Work-Seeker Services; and Designated Groups Special Services. The programme has oversight over the following entities: Supported Employment Enterprises; Productivity South Africa; Unemployment Insurance Fund; and Compensation Fund.

 

1. PES performance per strategic objective

 

PES reported performance per strategic objective as follows:

 

 

Table 3: Work-seekers registered per Province Q4

Province	Q4 Target	Actual
EC	21 000	27 373
FS	12 250	17 825
GP	45 000	53 652
KZN	31 500	33 530
LP	12 250	18 163
MP	14 000	17004
NC	5 250	8 251
NW	10 500	14 462
WC	22 250	27 669
Online	0	15 952
TOTAL	174 000	233 881

Source: Presentation to PC: Employment and Labour dated 27 August 2019

 

Table 3 reflects that the PES programme registered 233 881 work-seekers on ESSA against a target of 174 000, translating to 134% achievement. Gauteng province registered the highest number of work-seekers at 53 652, followed by KZN at 33 530 and Western Cape at 27 669. Of the work-seekers registered, 146 465 or 63% are young people aged 16 - 35 years and 87 413 or 37% are adults aged 36 years and above. Of the work-seekers registered, 1 367 or 0.6% are people with different forms of disabilities, including 737 with blindness, 228 with physical disabilities and 184 with chronic conditions. In terms of Employment Equity, 200 431 or 86% of work-seekers registered are Africans; 23 853 or 10% Coloureds; 6 424 or 3% Whites and only 2 737 or 1% are Indians. The remaining 436 were not specified by equity group.

 

Only 39 191 or 29% of registered work and learning opportunities were classified by economic sectors, while 103 613 were not. Agriculture; Construction; and Safety and Security registered 10 927; 8 160; and 5 588 respectively. Of the 142 804 opportunities registered, 81 947 or 57% are formal jobs.

 

Table 4: Work-seekers provided with employment counselling by Province

Province	Target	Actual
EC	27 080	34 438
FS	16 670	20 403
GP	39 580	48 983
KZN	22 920	31 745
LP	20 830	21 845
MP	22 920	21 592
NC	14 580	13 885
NW	18 750	18 070
WC	16 670	18 517
Online	0	7 197
Total	200 000	240 675

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

PES programme provided 240 675 work-seekers with employment counselling against a target of 200 000, translating to 120% achievement. Gauteng; Eastern Cape; and KZN provided 48 983; 34 438; and 31 745 employment counselling respectively.

 

A total of 49 968 work and learning opportunities were filled by registered work-seekers, of which 30 156 or 60% were formal jobs, 13 906 or 28% were projects, 3 695 or 7% were learnerships and 680 or 1% were internships. A total of 34 829 or 70% work-seekers placed were young people between the ages 16 – 35 years. The remaining 15 107 were work-seekers aged 36 years and above.

 

Only 12 056 or 24% opportunities filled were classified by economic sector and 37 912 or 76% were not. Most of the placements came from Agriculture (3 364); followed by Construction (2 920); Safety and Security (2 017); and Banking (1 423). Challenges with placement include skills mismatch and that number of work-seekers registered lack required experience. Proposed interventions include: profiling of work-seekers on ESSA database, establishment of employment schemes for the low skills work-seekers and provisioning of funding from UIF and CF for the implementation of employment schemes.

 

4.4.       Labour Policy and Industrial Relations (LP & IR)

 

The purpose of this programme is to facilitate the establishment of an equitable and sound labour relations environment and the promotion of South Africa’s interests in international labour matters through research, analysis and evaluating labour policy, and providing statistical data on the labour market, including providing support to institutions that promote social dialogue. The programme consists of the following sub-programmes and entities: Management and Support Services; Strengthen Civil Society; Collective Bargaining; Employment Equity; Employment Standards; Commission for Conciliation, Mediation and Arbitration (CCMA); Research, Policy and Planning; Labour market Information and Statistics; International Labour Matters; and National Economic Development and Labour Council (NEDLAC).

 

LP & IR programme received 33 applications for registration from labour organisations in Q4. This was a decrease by 5 applications from the 38 received in Q3. Of those applications received 29 were refused within 90 days of receipt. The number of applications refused decreased by 3 from 32 refused in Q3 of 2018/19. Only 4 applications were approved within 90 days in Q4, which is a decrease by 2 from the 6 applications approved within 90 days in Q3. One trade union was deregistered in Q4 of 2018/19.

 

The number of trade union applications increased from 10 016 in Q3 to 19 465 in Q4 of 2018/19. The Industrial sector and the Estate sector reflected the highest number of members at 4 000 each. Trade union members impacted by refusal per sector increased from 9 401 in Q3 to 15 503 in Q4 of 2018/19. The highest number of members impacted by refusal were from the Estate sector.

 

5.         Financial Report

 

5.1.       Expenditure information per programme in Q4

 

Table 5: DEL Expenditure Information per programme in Q4

BRANCH	FINAL APPROPRIATION	EXPENDITURE AS AT 31/03/2019	AVAILABLE BUDGET	EXP AS T 31/03/2019
	R’000	R’000	R’000	%
Administration	881 531	804 917	76 614	91%
Inspection and Enforcement Services	592 223	549 211	43 012	93%
Public Employment Services	605 674	542 817	62 857	90%
Labour Policy and Industrial Relations	1 203 442	1 189 746	13 696	99%
Total	3 282 870	3 086 691	196 179	94%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

The final appropriation of the DEL amounted to R3.3 billion in 2018/19 financial year. By the end of Q4, R3.1 billion or 94% was spent. The available budget as at 31 March 2019 was R196.2 million. The Department underspent by 6% at the end of Q4 of 2018/19.

 

The Administration programme spent R804.9 million or 91% of the allocated R881.5 million by the end of Q4 of 2018/19 financial year. This programme had an available budget of R76.6 million by the end of Q4. This programme underspent by 9% at the end of Q4.

 

The IES programme spent R549.2 million or 93% of the allocated R592.2 million by the end of the Q4 of 2018/19 financial year. The available budget as at 31 March 2019 was R43 million. IES programme underspent by 7% at the end of Q4 of 2018/19.

 

The PES programme spent R542.8 million or 90% of the allocated R605.7 million by the end of Q4 of 2018/19 financial year. The available budget as at 31 March 2019 was R62.9 million. The under expenditure of this programme was 10% as at 31 March 2019.

 

LP & IR programme spent R1.18 billion or 99% of the allocated R1.2 billion by the end of Q4 of 2018/19 financial year. The available budget as at the end of the Q4 was R13.7 million. The portion of the budget spent by this programme is in line with the expenditure pattern recommended by the National Treasury.

 

Table 6: Expenditure Information by Economic Classification in Q4

ECONOMIC CLASSIFICATION	FINAL APPROPRIATION	EXPENDITURE AS AT 31/03/2019	AVAILABLE BUDGET	% EXPENDITURE AS AT 31/03/2018
	R’000	R’000	R’000	%
Current Payments	1 856 686	1 700 606	156 080	92%
Compensation of Employees	1 271 652	1 149 680	121 972	90%
Goods and Services	585 034	550 926	34 108	94%
Transfers and Subsidies	1 3315 142	1 296 766	18 376	99%
Payments for Capital Assets	109 633	87 910	21 723	80%
Payment for Financial Assets	1 409	1 409	0	*
Total	3 282 870	3 086 691	196 179	94%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

In terms of Economic Classification, the larger portion of the budget went to Current Payments (R1.9 billion) and followed by Transfers and Subsidies (R1.3 billion). Compensation of Employees comprised the R1. 3 billion or 69% of the Current Payments budget. At the end of Q4 Current Payments spent R1.7 billion or 92% of the allocated R1.8 billion. The available budget for current payments as at 31 March 2019 was R156.1 million. Compensation of Employees spent R1.1 billion or 90% of the allocated R1.3 billion for the year 2018/19 financial year. The available budget for Compensation of Employees as at 31 March 2019 was R121.9 million.

 

Goods and Services spent R550.9 million or 94% of the allocated R585 million by the end of Q4 of 2018/19 financial year. The available budget for Goods and Services was R34.1 million as at 31 March 2019.

 

A total of R1.29 billion or 99% of the R1.3 billion allocated for Transfers and Subsidies was spent by the end of Q4. The available budget for Transfers and Subsidies was R18.4 million as at 31 March 2019. The largest amount, which is R963 million was transferred from Labour Policy and Industrial Relations programme to the CCMA and was all spent (100%) as at 31 March 2019. NEDLAC received R45.98 million from the same programme and all was spent (100%) by 31 March 2019. Productivity South Africa received a transfer of R78.4 million from the Public Employment Services programme and had spent all its budget transfer (100%) by the end of Q4.

 

6.         Supported Employment Enterprises (SEE)

 

The entity was established in 1943 through a Cabinet Memorandum as Service Product for the sole purpose of creating employment for ex-service man and women who could not secure employment in the labour market due to barriers that prevented their participation. The factories moved from various departments and eventually to the then Department of Manpower as the Sheltered Employment Factories.

 

The entity was formally established under the Employment Services Act, No. 04 of 2014 and continue to be audited as a trading entity.

 

There are currently 13 factories located in 8 of the 9 provinces in South Africa, with Mpumalanga currently being the only province without a factory. A process is underway to launch the Mpumalanga factory before the end of the current financial year.

 

The SEE provides employment to a total of 159 DEL staff seconded to support operations and a number of persons with disabilities employed under the Basic Conditions of Employment Act.

 

SEE is managed under the Department of Employment and Labour and report through the Branch: Public Employment Services.

 

Until 1999 the entity enjoyed “Preferential Procurement Status” that meant all government departments procured their office and school furniture as well as hospital linen and uniforms from SEE. The entity continues to receive grant funding to subsidize operations and is allowed to charge 50% upfront payment. SEE is allowed to invest proceeds from its sales in the following:

• Employing additional people.
• Expansion of manufacturing capacity of the entity. Large scale investment was made in the new Limpopo, Seshego factory and replacement of some of the old machinery in existing factories across the country.
• The sales proceeds generated during 2019/20 financial year will fund the establishment of a new factory in Mpumalanga and employment of additional people.

 

6.1.       Performance per Strategic Objective

 

SEE reported on its performance as follows:

 

Table 7: Performance per Strategic Objective of SEE in Q4 of 2018/19

STRATEGIC OBJECTIVE	Annual Planned Indicators	Indicators with targets reporting in Q4	Achieved	Overall Achievement %
Provide work opportunities for PWD	2	2	2	100%
Overall Performance	2	2	2	100%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

The performance of SEE increased from 50% in the Q3 to 100% in the Q4 of 2018/19. SEE met its target of employing 100 people with disabilities by end of Q4 of 2018/19. The entity plans to secure more business in order to sustain and increase employment levels. It also intends to continuously improve its manufacturing processes and customer care.

 

6.2.       Head count per factory

 

Table 8: Number of People with disabilities (PWD) employed per factory

Factory	DBN	PMB	EL	PE	Ndabeni	Epping	Kimberly	Bloem	Potchestroom	Silverton	Rand JHB	SpringF (JHB)
PWD 31/03/2018	92	59	45	59	162	98	59	52	31	100	82	90
PWD provided with work opportunities 2018/19	0	6	25	18	10	0	1	1	4	11	24	0
PWD 31/03/2019	92	65	70	77	172	98	60	53	35	111	106	90

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

Table 8 reflects the number of people with disabilities employed per factory. Durban factory did not employ PWD in 2018/19 financial year due to damage to the factory as a result of storms in the province two years ago.

 

The sales revenue of the entity from goods and services increased by 16.59% against a target of 10% by the end of Q4 of 2018/19. The actual revenue was R72 million against a target of R61.8 million by the end of Q4 of 2018/19 financial year.

 

6.3.       Challenges facing SEE

 

Some of the challenges confronting SEE are:

• Lack of support from government departments. Department of Basic Education and the Department of Health are some of the few government departments that support the entity.
• The entity is expected to compete for tenders like other private organisations without the requisite expertise.

 

6.4.       Audit Outcome

 

The entity reported that it received a qualified audit opinion in 2018/19 financial year. The reason for a negative opinion was reported to be non-alignment of Strategic Plan and the Annual Performance Plan. Financially there was disagreement between SEE and Auditor General personnel on the method used to calculate costs of raw material. SEE has requested assistance from AGSA so as to comply within two months.

 

1. Q4 PERFORMANCE OF ENTITIES OF THE DEPARTMENT OF LABOUR (2018/19)

 

The entities that report to the Department of Labour are:

 

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

 

7.1.       The Compensation Fund (CF)

 

Constitutional Mandate

The mandate of the CF is derived from section 27(1)(c) of the Constitution. In terms of this section, “Everyone has the right to have access to social security, including, if they are unable to support themselves and their dependents; and appropriate social assistance.” The CF is mandated to provide social security to all injured and diseased employees.

 

Legislative Mandate

The CF is a Schedule 3A Public Entity of DEL. The CF administers the Occupational Injuries and Diseases Act (COIDA). The main objective of the Act is to provide compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees, or for death resulting from injuries or diseases.

 

7.1.1.    CF Performance per Strategic Objective in Q4 of 2018/19

 

CF reported on its strategic objectives as follows:

 

Table 9: Q4 Performance per Strategic Objective

STRATEGIC OBJECTIVE	Annual Planned Indicators	Indicators with targets reporting in Q3	Achieved	Overall achievement %
Provide an effective and efficient client oriented support services	3	3	1	33%
Provide faster, reliable and accessible COID services by 2020	6	6	5	83%
Overall Performance	9	9	6	67%

Source: Presentation to the PC: Employment and Labour dated 21 August 2019

 

Table 9 above reflects that CF achieved an overall performance of 67% in Q4 of 2018/19 financial year. This is a decrease from the overall achievement of 86% in Q3 of 2018/19. On the strategic objective “Provide an effective and efficient client oriented support services”, the entity had three targets reporting in Q4 and only one was achieved. This translates to an overall performance of 33%, which is a decrease from the 100% achieved in Q3 on the same strategic objective.

 

On the objective “Provide faster, reliable and accessible COID services by 2020” CF had six targets reporting in Q4 and achieved 5 translating to an achievement of 83%, which is consistent with Q3 achievement.

 

7.1.2.    CF Performance per Programme in Q4 of 2018/19

 

CF reported its performance per programme as follows:

 

Table 10: CF Performance per Programme in Q4

PROGRAMME	Annual Planned Indicators	Indicators with targets reporting in Q4	Achieved	Overall Achievement %
Administration	3	3	1	33%
Compensation for Occupational Injuries and Diseases Services Operations	3	3	2	67%
Medical Services	2	2	2	100%
Orthotic Rehabilitation	1	1	1	100%
Overall Performance	9	9	6	67%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

Table 10 above reflects performance per programme in Q4 of 2018/19. The overall achievement was 67%, with Administration and Compensation for Occupational Injuries and Diseases Services Operations (COID Services Operations) achieving 33% and 67% respectively. Medical Services and Orthotic Rehabilitation programmes achieved 100% each.

 

Administration programme had three targets reporting in Q4 and achieved only one, translating into an overall achievement of 33%. The Fund managed to increase its risk management maturity level to 3.5 by 31 March 2019 against a target of four, resulting to a variance of 0.5. The Fund requested an independent assessment of the risk management maturity from Internal Audit. It will device an improvement plan based on the outcome of the audit. Administration programme did not achieve its target of increasing investment return by 6.7% by the end of Q4 of 2018/19 financial year. It only managed to achieve 5.1% due to weak economic growth environment, which contributed to poor market performance.

 

Compensation for Occupational Injuries and Diseases Services Operations programme had three targets reporting in Q4 and achieved two translating to 67% achievement. COID Services and Operations programme assessed 55% of active registered employers by 31 March 2019 against a target of 75% resulting to a variance of 20%. The reasons for non-achievement include employers’ non-submission of Return on Earnings (RoE’s); definition of active registered employers not fully implemented due to current APP limitations; and employer follow-up and enforcement through IES not effective.

 

Table 11: Compensation claims adjudicated in Q4

Province	Total claims registered	Total claims adjudicated	% of total claims adjudicated	Claims adjudicated within 40 working days	% of total claims adjudicated within 40 working days
EC	10153	9916	98%	9193	91%
FS	3399	3308	97%	3221	95%
GP	41383	40418	98%	37837	91%
KZN	18203	17035	94%	16635	91%
LP	23584	23274	99%	22707	96%
MP	5836	5781	99%	570898	98%
NW	6389	6221	97%	6121	96%
NC	1839	1806	98%	1745	95%
WC	45437	45036	99%	43497	96%
Total	156223	152795	98%	146664	94%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

CF adjudicated 146 664 or 94% of 156 223 registered compensation claims within 40 working days against a target of 90%. All the provinces exceeded the target of 90% with Mpumalanga adjudicating 98% of registered compensation claims within 40 working days.

 

Table 12: Medical invoices finalized in Q4

Province	Total received	Total finalised	% of total finalised	Finalised within 60 working days	% of total finalized within 60 working days
EC	50992	50823	100%	48860	96%
FS	37131	36975	100%	35010	94%
GP	566428	564491	100%	522004	92%
KZN	51641	51485	100%	46104	89%
LP	77231	76692	99%	73763	96%
MP	30093	30002	100%	28354	94%
NW	35896	35617	99%	34678	97%
NC	12002	11977	100%	11188	93%
WC	71538	71176	99%	65941	92%
Autopay	1790	1790	100%	1479	83%
Total	934742	931028	100%	867381	93%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

The entity finalized 93% of medical invoices within 60 working days of receipt against a target of 85%. All the provinces exceeded the target of 85% with North West finalizing 97% of medical invoices. All provinces exceeded the 85% target of medical invoices finalized within 60 working days.

 

Table 13: Compliant requests for assistive devices responded to in Q4

Province	Received	Achieved	Percentage
EC	29	18	62%
FS	81	81	100%
GP	356	324	91%
KZN	219	208	95%
LP	153	134	88%
MP	130	124	95%
NC	21	18	86%
NW	79	67	85%
WC	91	82	90%
Total	1159	1057	91%

Source: Presentation to the PC: Employment and Labour dated 27 august 2019

 

CF responded to 91% of compliant requests for assistive devices within 15 working days against a target of 85%. The highest performing province was the Free State which responded to all compliant requests for assistive devices within 15 working days. The Eastern Cape was the only province that under achieved by responding to 62% of compliant requests for assistive devices within 15 working days.

 

Table 14: Pre-authorisation responded to within 10 working days in Q4

Province	Received	Achieved	Percentage
EC	184	162	88%
FS	116	114	98%
GP	563	503	89%
KZN	225	212	94%
LP	143	140	98%
MP	133	124	93%
NC	31	30	97%
NW	6	6	100%
WC	237	229	97%
Total	1638	1520	93%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

The Fund responded to 93% of pre-authorisation within 10 working days on previously finalized cases against a target of 85%. All the provinces exceeded the target of 85% with North West responding to all pre-authorisation within 10 working days. However, North West received only six pre-authorisations requests.

 

7.1.3.    CF Financial Performance in Q4 of 2018/19

 

CF reported financial performance as follows:

 

Table 15: CF Expenditure per Programme in Q4 of 2018/19

BRANCH	ADJUSTED BUDGET	EXPENDITURE AS AT 31/12/2018	AVAILABLE BUDGET	EXP AS AT 31/12/2018
	R’000	R’000	R’000	%
Administration	2 357 627	3 869 336	(1 511 709)	164%
COID Services	1 364 860	2 271 573	(906 714)	166%
Medical Services	2 772 988	4 856 527	(2 083 539)	175%
Orthotic and Medical Rehabilitation	42 450	26 653	15 797	63%
Total	6 537 925	11 024 089	(4 486 164)	169%

Source: Presentation to the PC: Employment and Labour dated 27 August 2018/19

 

The adjusted budget for CF amounted to R6.5 billion and R11 billion or 169% was spent by the end of Q4 of 2018/19 financial year. The budget allocation was exceeded by R4.5 billion or 69% at the end of Q4. Medical Services had a budget of R2.8 billion but it spent R4.9 billion exceeding the allocated budget by R2 billion or 75%. The Administration programme spent R3.3 billion against the allocated budget of R2.4 billion resulting to an over-expenditure of R1.5 billion or 64% The only programme that did not overspend was the Orthotic and Medical Rehabilitation programme. It spent R26.7 million against a budget of R42.5 million, translating to 63% expenditure or underspending of R15.8 million.

 

1. The Unemployment Insurance Fund

 

Constitutional Mandate

The mandate of the UIF is derived from section 27(1)(c) of the Constitution. The UIF provides social security to its contributors in line with section 27(1)(c) which states that “everyone has the right to social security”.

 

Legislative Mandate

The mandate of UIF is stated in the Unemployment Insurance Act (Act 63 of 2001) as amended. The UIF was established in terms of section 4(1) of the UIA. The Act empowers the UIF to register all employers and employees in South Africa and pay those who qualify for unemployment insurance benefits.

 

The Unemployment Contributions Act (Act 4 of 2002) empowers the SARS Commissioner and the UI Commissioner to collect monthly contributions from both employers and employees. Section 9 of the UCA empowers the UI Commissioner to collect contributions from all those employers who are not required to register as employers in terms of the fourth schedule of the Income Tax Act (Act 58 of 1962) and who are not liable for the payment of the skills development levy in terms of the Skills Development Act (Act 9 of 1999). These contributions are used to pay benefits and other expenditure reasonably incurred relating to the application of the Act.

 

Policy Mandate

The UIF is expected to make a contribution to the following service delivery outcomes:

• Creation of decent employment through inclusive economic growth;
• An efficient, effective and development-oriented public service and an empowered and inclusive citizenship; and
• An inclusive and responsive social security system.

 

1. UIF Performance per Strategic Objective in Q4 of 2018/19

 

UIF reported on its performance per strategic objective as follows:

 

Table 16: UIF Performance per Strategic Objective in Q4

STRATEGIC OBJECTIVE	Planned Indicators	Achieved	Overall Achievement %
Ensure financial sustainability	3	3	100%
Strengthen institutional capacity of the Fund	1	0	0
Provide easy to use services through multiple access points	2	0	0
Improve service delivery	6	5	83%
Collaborate with stakeholders to improve compliance with UIF acts	2	1	50%
Enhance employability of UIF beneficiaries, enable entrepreneurship and preserve jobs	2	1	50%
OVERALL PERFORMANCE	16	10	63%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

The overall performance of the UIF went down from 69% in Q3 to 63% in Q4 of 2018/19 financial year. The sole contributor to the decrease in performance was the strategic objective, “Collaborate with stakeholders to improve compliance with UIF Acts”, which went down from 100% achievement in Q3 to 50% in Q4. Overall performance on other strategic objectives remained the same for Q3 and Q4. On the strategic objective, “Ensure financial sustainability”, the entity achieved an overall performance of 100% in both Q3 and Q4. On “Improve service delivery” strategic objective, UIF achieved an overall performance of 83% in Q3 and Q4. The Fund’s performance on strategic objectives, “Strengthen institutional capacity of the Fund” and “Provide easy to use services through multiple access points” was 0% for both Q3 and Q4.

 

1. UIF Performance per Programme in Q4 of 2018/19

 

UIF reported on its performance per programme as follows:

 

Table 17:UIF Performance per programme in Q4

PROGRAMME	Planned Targets	Achieved	Overall Achievement %
Administration	6	3	50%
Business Operations	8	6	75%
Labour Activation Programmes	2	1	50%
Overall Performance	16	10	63%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

The Administration programme had six planned targets and managed to achieve three, translating to an overall achievement of 50%. The Business Operations programme achieved six targets against the planned eight targets, equating to 75% overall achievement. UIF achieved one target against two planned targets on Labour Activation Programmes, translating to an overall achievement of 50%

 

The targets that were not achieved include:

• Percentage of vacancy rate reduced. The process to appoint 32 Call Centre agents will be finalized in Q1 of 2019/20.
• Number of provincial sites upgraded with free Wi-Fi. Service provider has been appointed and equipment was delivered on 19 March 2019. Implementation to commence in Q1 of 2019/20.
• Integrated Claims Management System (ICMS) implemented. The target has been revised and rolled over to the 2019/20 APP.
• Number of newly registered employers per year. Performance on this target was impacted by the system downtime owing to data centre move. The system was stabilized after the data centre move and introduced online registration.
• Percentage of applications with complete information issued with compliance certificates or tender letter within 10 working days. The action plan was implemented and improved month-to-month performance but did not yield expected results for cumulative target. The strategies that were put in place to ensure month-to-month performance will be maintained.
• Number of UIF beneficiaries provided with learning and/or workplace experience opportunities. Request for proposal one has been finalized. The target has been revised in the 2019/20financial year.

 

1. Annual Performance Comparison

 

Table 18: UIF annual performance comparison 2017/18 and 2018/19

Province	2017/18	2018/19	2017/18	2018/19	2017/18	2018/19	2017/18	2018/19	2017/18	2018/19
	Ordinary		In-Service		Deceased		Payments		Registrations
EC	76%	93%	75%	93%	78%	93%	99%	97%	98%	98%
FS	80%	95%	66%	94%	70%	98%	98%	100%	94%	97%
GP	89%	96%	78%	96%	69%	88%	100%	100%	98%	98%
HO	84%	89%	61%	75%			95%	99%	99%	99%
KZN	85%	94%	68%	91%	84%	94%	97%	98%	96%	98%
LP	70%	89%	56%	90%	71%	88%	100%	100%	96%	100%
MP	80%	88%	50%	86%	75%	90%	97%	93%	96%	95%
NW	79%	94%	72%	95%	58%	92%	99%	99%	94%	98%
NC	94%	95%	90%	97%	93%	95%	96%	96%	96%	96%
WC	84%	94%	73%	92%	79%	91%	99%	100%	92%	99%
Total	83%	94%	71%	92%	75%	92%	99%	99%	98%	99%

Source: Presentation to PC: Employment and Labour dated 27 August 2019

 

UIF processed 94% of unemployment benefits within 15 days against a target of 90% in 2018/19 financial year. This is an improvement of 11% from the 83% achieved in 2017/18. It processed 92% of in-service benefits within 10days against a target of 90%. This reflects an improvement of 21 against the 71% processed in 2017/18. The Fund processed 92% of deceased benefits within 20 days against the target of 90%. This reflects an improvement of 17% from the 75 % achieved in 2017/18. The entity registered 99% of UIF claims within two working days in 2018/19. This was an improvement in performance from the 98% registered in 2017/18. The Fund also paid 99% of UIF benefits in 2018/19, which was the same as in 2017/18.

 

1. UIF Expenditure per Programme in Q4 of 2018/19

 

The Fund reported on its expenditure per programme as follows:

 

Table 19: UIF expenditure per programme in Q4

PROGRAMME	Budget	Actual as at 31/03/2019	Variance	Expenditure as at 31/03/2019
	R’000	R’000	R’000	%
Administration	2 374 694	2 088 928	285 766	88%
Business Operation	11 430 629	12 475 841	-1 045 214	109%
LAP	950 386	121 507	828 879	13%
TOTAL	14 755 709	14 686 276	69 433	99.5%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

The UIF spent R14.7 billion or 99.5% of the allocated R14.8 billion as at 31 March 2019. The highest budget allocation was for Business Operations, which was R11.4 billion and the entity over-spent in excess of R1billion or 9%. The actual expenditure as at 31 March 2019 was R12.5 billion. The Administration programme spent R2 billion or 88% of the allocated R2.3 billion, resulting to a variance of R285.8 million. The Labour Activation Programme (LAP) spent R121.5 million or 13% of the allocated R950.4 million resulting to a variance of R828.9 million.

 

1. UIF Expenditure per Economic Classification in Q4 of 2018/19

 

UIF reported on its expenditure by Economic Classification as follows:

Table 20: UIF expenditure by economic Classification in Q4

ECONOMIC CLASSIFICATION	Budget	Actual as at 31/03/2019	Variance	Expenditure as at 31/03/2019
	R’000	R’000	R’000	%
Compensation of Employees	1 526 440	1 338 030	188 410	88%
Goods and Services	1 835 131	2 182 338	-347 257	119%
CAPEX	713 904	53 212	660 743	7%
Transfers	10 680 233	11 112 696	-432 463	104%
TOTAL	14 755 709	14 686 276	69 433	99.5%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

The larger share of the budget went to Transfers at R10.7 billion. The entity over-spent the allocation to the excess of R432.5 million or 4%. The actual expenditure on Transfers was R11.1 billion as at 31 March 2019. The entity spent R2.2 billion or 119% against the allocation of R1.8 billion, resulting to a variance of R347.3 million. A total of R1.3 billion or 88% was spent on Compensation of Employees against an allocation of R1.5 billion, resulting to a variance of R188.4 million. The Fund spent R53.2 million or 7% of the R713.9 million allocated for Capital Expenditure resulting to a variance of R660.7 million.

 

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

 

Constitutional Mandate

CCMA aims to promote social justice and economic development in the world of work, and to be the best dispute management and dispute resolution organization. The entity derives its mandate from section 23 of the Constitution that deals with labour relations.

 

Legislative Mandate

CCMA legislative mandate is drawn from the purpose of the Labour Relations Act (LRA), which is to advance economic development, social justice, labour peace and the democratization of the workplace. Section 115(1) of the LRA identifies the mandatory functions of the CCMA as follows:

• Conciliate workplace disputes.
• Arbitrate certain categories of disputes that remain unresolved after conciliation.
• Establish picketing rules in respect of protected strikes and lock-outs.
• Facilitate the establishment of workplace forums and statutory councils.
• Compile and publish information and statistics.
• Consider accreditation and subsidy of Bargaining Councils and Private Agencies.
• Administer the Essential Services Committee (ESC), including the Director of the CCMA functioning as the Accounting Officer for the ESC.

 

7.3.1.    CCMA Performance per Strategic Objective in Q4 of 2018/19

 

CCMA reported its performance per strategic objectives as follows:

Table 21: CCMA Performance per Strategic Objective in Q4

STRATEGIC OBJECTIVE	Annual Planned Targets	Planned Targets reporting in Q4	Achieved	Overall Achievement
Enhancing the Labour Market to advance stability and growth	5	5	5	100%
Advance good practices at work and transforming workplace relations	5	5	5	100%
Building knowledge and skills	1	1	1	100%
Optimising the organisation	8	8	7	95%
Overall Performance	19	19	18	95%

Source: Presentation to the PC: Employment and Labour dated 27 August 2019

 

Table 21 reflects the overall achievement of the CCMA at 95% by the end of Q4 of 2018/19, which is an improvement from the 63% achieved in Q3 of 2018/19. It is also an improvement in performance when compared to the 87% achieved in Q4 of 2017/18. The entity improved from 50% to 100% in the strategic objective, “Enhancing the labour market to advance stability and growth”. CCMA improved from 50% to 95% in the strategic objective, “Optimising the organization”.

 

CCMA heard 136 857 or 88% of the 155 351 registered cases’ first event within 30 days against a target of 90%. The reason for non-achievement of the target was reported to be the limited capacity of the Case Management System to extract and populate the number of conciliations sat down to be heard at first event within 30 days. To avoid the repeat of this non-achievement, CCMA reported that it has amended the technical indicator to reflect “all” cases activated for conciliation at first event within 30 days of the date of receipt of the referral.

 

7.3.2.    CCMA Dashboard in Q4 of 2018/19

 

The entity reported on its progress during the period under review as follows:

• A total of 51 000 cases were referred to the CCMA in Q4 of 2018/19 financial year, compared to 45 180 cases in Q3 of the same year.
• On average it took CCMA 24 days to conciliate disputes compared to the legislated target of 30 days. It took CCMA 23 days on average to conciliate disputes in Q3 of 2018/19.
• On average it took the entity 68 days to arbitrate disputes against a target of 60 days in Q4 of 2018/19. The target of 60 days was achieved in Q3 of 2018/19.
• The entity settled 29 or 83% of the 35 public interest matters (section 150) during the period under review.
• The CCMA settlement rate remained unchanged at 74% in the period under review.
• The entity conducted 376 outreach services during the period under review.
  • A total of 19 082 people were capacitated to better understand the law and their rights through the outreach activities conducted.
• Of the 38 588 jobs at stake, 15 787 or 41% were saved compared to employees facing retrenchments (cases referred to the CCMA).
• CCMA hosted the 2nd Annual Labour Conference on 14 – 15 March 2019 in Ekurhuleni. The theme of the conference was the implications and application of the Employment Law Amendments and the National Minimum Wage.
• The entity received 114 complaints in Q4 of 2018/19 compared to 98 complaints received in Q4 of 2017/18 financial year, which were investigated and reported on.

 

7.3.3.    CCMA Financial Performance in Q4 of 2018/19

 

Table 22: CCMA Expenditure per Programme in Q4 of 2018/19

PROGRAMME	Budget	Actual Spending	Variance	Expenditure As at 31 December 2018
	R’000	R’000	R’000	%
Administration	554 987	512 286	42 701	92%
Institution Development	29 733	28 363	1 369	95%
Corporate Governance	7 300	5 316	1 984	73%
Social Services	453 540	429 800	23 740	95%
Total	1 045 560	975 765	69 795	93%

Source: Adapted from the Presentation to the PC: Employment and Labour dated 28 August 2019

 

The CCMA spent R975.8 million or 93% of the allocated R1 billion as at 31 March 2019, resulting to under-expenditure of R69.8 million or 7% of the budget allocation. The Administration programme received the highest allocation and spent R512.3 or 92% of the allocated R554.9 million, resulting to an under-expenditure of R42.7 million or 8% of the allocated amount. The entity reported that the variance resulted from implementation of cost cutting measures.

 

Expenditure for Social Services programme amounted to R429.8 million or 95% of the R453.5 million budget, resulting to a variance of R23.7 million or 5% of the budget. The variance resulted from unfilled vacancies, planned foreign travel, software and computer maintenance as well as the court litigations costs and the procurement of once off JAVS recording system that was awarded but the expenditure did not incur as anticipated.

 

Institution Development programme was allocated a budget of R29.7 million and spent R28.4 million or 95%, resulting in R1.4 million or 5% as unspent budget. CCMA reported that the variance resulted from unfilled vacancies as well as dispute management activities that are demand based.

 

Corporate Governance spent R5.3 million or 73% of R7.3 million budget allocation, resulting to a variance of R1.9 or 27% of the allocation. The variance was reported to have resulted from training course fees and material development costs that were planned to conduct the training interventions.

 

Table 23: CCMA Expenditure by Economic Classification in Q4 of 2018/19

ECONOMIC CLASSIFICATION	Budget	Actual Spending	Variance	Expenditure as.at Q4
	R’000	R’000	R’000	%
Compensation of Employees	538 678	522 178	16 500	97%
Goods and Services	469 793	438 128	31 665	93%
Transfer Payments	6 178	5 610	568	91%
Total Operational Expenditure	1 014 649	965 916	48 733	95%
Capital Expenditure	30 911	9 849	21 062	32%
Total Expenditure	1 045 560	975 765	69 795	93%

Source: Adapted from the Presentation to the PC: Employment and Labour dated 28 August 2019

 

The total operational expenditure of CCMA amounted to R965.9 million or 95% of the allocated R1 billion. The entity underspent by R48.7 million on operational expenditure at the of Q4 of 2018/19 financial year. The largest portion of the allocation of R538.7 million went to Compensation of employees, of which R522.2 million or 97% was spent as at 31 March 2019. The variance of R16.5 million was reported to be in line with the projected budget and was related to unfilled vacancies.

 

Goods and Services received the second largest allocation of R469.8 million and R438.1 or 93% was spent by the end of Q4 of 2018/19. The variance of R31.7 million was reported to have resulted from training, software, consulting fees and legal fees that are on demand basis as well as the communication expenses due to the implementation of cost containment measures.

 

CCMA spent R5.6 million or 91% of the allocated R6.2 million on Transfer Payments by the end of Q4 of 2018/19. The variance of R568 000 was reported to have resulted from lower inflow of Bargaining Council claims submitted that relates to awards rendered and settlement agreements.

 

The entity spent R9.8 million or 32% of the R30.9 million allocated for Capital Expenditure. The variance of R21 million was reported to have resulted from once off procurement of JAVS case recording system. The contract was awarded; however, the services are not yet expensed as anticipated.

 

7.4. National Economic Development and Labour Council (NEDLAC)

 

NEDLAC was established through the NEDLAC Act no 35 of 1994. It operates under the terms of the NEDLAC Constitution. NEDLAC mandate is derived from the following: NEDLAC Act; Labour Relations Act, NEDLAC Constitution; and NEDLAC protocols.

 

NEDLAC objectives in terms of the NEDLAC Act are as follows:

• 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 they are introduced in Parliament;
• Consider all significant changes to social and economic policy before it is implemented or introduced in Parliament; and
• Encourage and promote the formulation of coordinated policy on social and economic matters.

 

7.4.1.    NEDLAC Performance per programme

 

NEDLAC reported its performance per programme as follows:

 

Table 24: NEDLAC Performance per programme in Q4

PROGRAMME	Total No. of Quarterly Planned Indicators	Achieved	Not Achieved	Overall Achievement %
Administration	7	6	1	86%
Core-Operations	18	17	1	94%
Constituency Capacity Building	6	6	0	100%
Overall Performance	31	29	2	94%

Source: Presentation to the PC: Employment and Labour dated 28 August 2019

 

Table 24 reflects an overall achievement of 94% by NEDLAC as at 31 March 2019. Constituency Capacity Building programme achieved all six indicators reporting in Q4, translating to an achievement of 100%. Core-Operations programme had 18 targets reporting in Q4 of 2018/19 financial year and achieved 17, translating to performance of 94%. The Administration programme achieved six of the seven targets reporting in Q4, translating to an achievement of 86%.

 

1. Challenges experienced and remedial action

 

Some of the targets in the Annual Performance Plan were not achieved and the reasons provided were as follows:

• Quarterly staff performance appraisals for finance staff were not conducted within two months following the end of each quarter. The appraisals were not concluded due to suspension of the line manager. Appraisals would be conducted in the next quarter by the new line manager.
• The Labour Market Research report could not be concluded in time due to delays encountered during the consultation processes by the Chamber.

 

1. NEDLAC Financial Performance in Q4 of 2018/19

 

1. NEDLAC budgeted income for 2018/19

 

Table 25: Budgeted Income for 2018/19 Financial Year

Description of Income	Amount
Grant from Department of Employment and Labour	R33 825 000
Interest Received	R452 000
Sundry Income	R95 000
Total Income	R34 372 000

Source: Presentation to the PC: Employment and Labour dated 28 August 2019

 

The total income of NEDLAC in 2018/19 financial year amounted to R34.4 million, excluding the R12 million allocation for the Job Summit. The largest portion of revenue was the R33.8 million grant from the Department of Employment and Labour.

 

1. NEDLAC expenditure per economic classification in Q3

 

Table 26: NEDLAC expenditure per economic classification in Q4

ECONOMIC CLASSIFICATION	Actual	Budget	Variance
	R’000	R’000	R’000
Compensation of Employees	21 235
Goods and Services	25 665
TOTAL	46 900	41 456	(5 444)

Source: Presentation to the PC: Employment and Labour dated 21 August 2019

 

NEDLAC spent R21.2 million on Compensation of Employees by the end of Q4 of 2018/19. It spent R25.7 million on Goods and Services, resulting in total expenditure of R46.9 million against a budget of R41.5 million, translating to an over-expenditure of R5.4 million.

 

1. Productivity South Africa

 

Productivity SA is established in terms of section 31 of the Employment Services Act, No. 4 of 2014, with the mandate to fulfill an economic or social responsibility of government. Its mandate is to promote employment growth and productivity thereby contributing to South Africa’s socio-economic development and competitiveness.

 

Productivity SA has three regional offices in Johannesburg/ Midrand, which is the head office and also servicing Gauteng, North West and Limpopo; eThekwini/ Durban servicing KZN, Eastern Cape and Mpumalanga; and Cape Town servicing Western Cape, Northern Cape and Free State.

 

7.5.1.    Productivity SA Performance per Strategic Objective in Q3

 

Productivity SA reported its performance per strategic objective as follows:

Table 27: Productivity SA Performance per Strategic Objective in Q4

STRATEGIC OBJECTIVE	Annual Planned Indicators	Indicators with Targets Reporting in Q4	Achieved	Overall Achievement %
Strengthen the institutional capacity of Productivity SA to deliver on its mandate and be financially sustainable	4	4	3	75%
Provide support to programmes aimed at sustainable employment and income growth	2	2	1	50%
Provide support to companies facing economic distress to retain jobs	3	3	0	0%
Contribute to employment and income growth through research, information generation and dissemination	2	2	0	0%
Promote social dialogue and a culture of productivity and competitiveness in the workplace and community life	2	1	0	0%
Overall Performance	13	12	4	33%

Source: Presentation to the PC: Employment and Labour dated 28 August 2019

 

The overall performance of Productivity SA went down from 50% in Q3 to 33% in Q4 of 2018/19 financial year. On the strategic objective, “Strengthen the institutional capacity of Productivity SA to deliver on its mandate and be financially sustainable” the entity’s performance went down from 100% in Q3 to 75% in Q4. On the strategic objective, “Provide support to programmes aimed at sustainable employment and income growth” Productivity SA remained at 50% performance in Q4 as it was in Q3 of 2018/19. The entity’s overall achievement was 0% in the following strategic objectives:

• Provide support to companies facing economic distress to retain jobs.
• Contribute to employment and income growth through research, information generation and dissemination.
• Promote social dialogue and a culture of productivity and competitiveness in the workplace and community life.

 

1. Productivity SA Performance per Programme in Q4 of 2018/19

 

Productivity SA reported on its performance per programme as follows:

 

Table 28: Productivity SA Performance per Programme inQ4

PROGRAMME	Annual Planned Indicators	Indicators with Targets Reporting in Q4	Achieved	Overall Achievement %
Corporate Services	2	2	2	100%
Human Resource Management	1	1	-	0%
Marketing and Communication	1	-	-	-
Productivity Organisational Solutions	2	2	1	50%
Value Chain Competitiveness	4	4	1	25%
Turnaround Solutions	3	3	0	0%
Overall Performance	13	12	4	33%

Source: Presentation to the PC: Employment and Labour dated 28 August 2019

 

Table 28 reflects that Productivity SA achieved all its planned indicators in the Corporate Services programme. The performance on Human Resource Management programme remained at 0% in Q4 as it was in Q3 of 2018/19. Productivity Organisational Solutions’ programme performance remained at 50% in both Q4 and Q3 of 2018/19 financial year. Performance on Value Chain Competitiveness programme went down from 100% in Q3 to 25% in Q4 of 2018/19. Performance on Turnaround Solutions remained at 0% in both Q3 and Q4 of 2018/19.

 

1. Productivity SA Financial Performance in Q4 of 2018/19

 

Productivity SA reported its financial performance as follows:

 

Table 29: Productivity SA Revenue and Expenditure per Programme in Q4

FINANCIAL PERFORMANCE	Quarter 4
	Actual R’000	Budget R’000	Variance R’000
Revenue	87 983	144 883	(56 900)
Non-exchange revenue	77 506	123 168	(45 662)
Administration	66 776	53 261	13 515
Turnaround Solutions	1 099	60 326	(59 227)
Workplace Challenge	9 631	9 581	50
Exchange Revenue	10 477	21 715	(11 238)
Expenditure/ Programme	87 766	144 883	57 117
Administration	53 912	50 767	(3 145)
Productivity Organisational Solutions	11 193	11 482	289
Value Chain Competitiveness	8 683	9 449	766
Workplace Challenge	12 879	12 859	(20)
Turnaround Solutions	1 099	60 326	59 227
Surplus/ (Deficit)	217	-	217

Source: Presentation to the PC: Employment and Labour dated 28August 2019

 

Productivity SA budgeted for R144.9 million in 2018/19 financial year but received a budget of R87.9 million, resulting in a budget deficit of R56.9 million. The entity budgeted for non-exchange revenue amounting to R123.2 million but received R77.5 million, resulting to a budget deficit of R45 7 million. The larger share of non-ex change revenue was Administration programme which received R66.8 million against the budgeted R53.3, resulting to a surplus of R13.5 million. Turnaround Solutions programme budgeted for R60.3 million but received only R1.1 million resulting to a budget deficit of R59.2 million. Exchange revenue amounted to R10.5 million against budgeted R21.7 million resulting to a budget deficit of R11.2 million.

 

The expenditure on Administration programme constituted the largest amount at R53.9 million or 61% of the overall expenditure against the budget of R50.8 million resulting to over-expenditure by R3.1 million in Q4 of 2018/19 financial year.

 

Productivity SA spent R87.8 million against the budget of R144.9 million, resulting to under-expenditure of R57.1 million. The larger portion of expenditure went to Administration programme, which amounted to R53.9 million against a budget of R50.8 million resulting to over-expenditure of R3.1. million. Productivity Organisational Solutions programme spent R11.2 million against an allocation of R11.5 million resulting to an under-expenditure of R289 000. Value Chain Competitiveness programme spent R8.7 million in Q4 of 2018/19 financial year against the budget allocation of R9.4 million resulting to an under-expenditure of R766 000. Workplace Challenge programme spent R12.87 million against the budget of R12.85 resulting to an over-expenditure of R20 000. Turnaround Solutions programme spent the whole R1.1 million that was allocated against the budgeted R60.3 million in Q4 of 2018/19 financial year. Productivity SA was left with a budget surplus of R217 000 at the end of Q4 of 2018/19 financial year.

 

Table 30 below reflects revenue and expenditure by economic classification as at 31 March 2019.

 

Table 30: Productivity SA Revenue and Expenditure by Economic Classification in Q4

FINANCIAL PERFORMANCE	Quarter 4
	Actual R’000	Budget R’000	Variance R’000
Revenue	87 983	144 883	(56 900)
Non-exchange revenue	77 506	123 168	(45 662)
Department of Labour	66 776	53 261	13 515
Unemployment Insurance Fund	1 099	60 326	(59 227)
Department of Trade and Industry	9 631	9 581	50
Exchange Revenue	10 477	21 715	(11 238)
Expenditure/ Programme	87 766	144 883	57 117
Compensation of Employees	64 595	64 520	(75)
Goods and Services	23 171	80 363	57 192
Surplus/ (Deficit)	217	-	217

Source: Presentation to the PC: Employment and Labour dated 28August 2019

 

Table 30 above classify non-exchange revenue according to source. Productivity SA received R66.8 million from the Department of Labour against R53.3 million that was budgeted for, resulting to a positive variance of R13.5 million. The Department of Trade and Industry allocated R9.63 million to the entity against the budgeted R9.58 million resulting to a budget surplus of R50 000. The financial problems of Productivity SA arose from the allocation of R1.1 million by the UIF that is far less than the budgeted R60.3 million, resulting to a shortfall of R59.2 million.

 

Productivity SA spent R64.6 or 74% of expenditure per economic classification on Compensation of employees against a budget of R64.5 million, resulting to an over-expenditure of R75 000. It spent R23.2 million or 26% of expenditure by economic classification budget on Goods and Services against the budget of R80.4 million, resulting to under-expenditure of R57.2 million or 71%

 

1. Committee Observations

 

The Committee made the following observations:

8.1.       SEE lacks support from government departments. The entity is expected to compete for tenders like other private organisations without the requisite expertise.

8.2.       CCMA did not report non-financial performance per programme in its presentation to the Committee.

8.3.       NEDLAC did not report non-financial performance per strategic objective as well as expenditure per programme in its presentation to the Committee.

8.4.       Productivity SA received R1.1 million from UIF against the planned budget of R60.3 million, resulting to a shortfall of R59.2 million. The entity underspent its Goods and Services budget by R57.2 million or 71%.

 

9.         Committee Recommendations

 

The Committee recommends that the Minister ensures that:

9.1.       Supported Employment Enterprises receive the necessary support from government departments through negotiations with National Treasury to accord the entity the preferential procurement status.

9.2.       All entities of the Department use a uniform format of reporting financial and non-financial performance.

9.3.       The funding model of Productivity SA is timeously expedited to ensure that the entity fulfill its crucial mandate, which include assisting companies in distress to save jobs.

 

Report to be considered.