The Committee held a briefing on the ‘Draft Report of the Portfolio Committee on Labour’s 1st and 2nd Quarterly Reports regarding the performance of the Department of Labour and its entities’. The Report reflected that the Department of Labour’s overall achievement had increased to 80% in the first quarter of the 2018/19 financial year. Out of the 40 National Economic Development and Labour Council annual targets, 22 were set for the first quarter of which only 17 out of the 22 targets were achieved in the first quarter. Out of the 31 annual targets for the second quarter, only 25 of the targets were achieved. On average the CCMA took 24 days to deal with conciliation cases as compared to the legislated target of 30 days.
The Compensation Fund achieved six out of seven of its planned targets for the second quarter and spent R2.1 billion at the end of the second quarter of the R6.5 billion annual budget for the 2018/19 financial year. The Committee heard that the UIF improved on its collaborations with stakeholders to improve compliance with the UIF Act. The UIF budget for 2018/19 amounted to R8.8 billion, of which R6.6 billion was spent by the end of the second quarter. The DA noted that the 2018/19 financial year was the worst period of unemployment yet the Committee had not even mentioned this in the Draft Report. Members were urged to make very specific ‘Observations’ and ‘Recommendations’ in problematic areas such as this and the UIF’s online system being constantly offline and where the Department had failed in relation to the auditing requirements. The Chairperson cautioned Members about being aware that ‘Observations’ and “Recommendations’ could only be made regarding planned targets and financial budgets that were reported by the Department to the Committee.
The Committee noted that NEDLAC had received a qualified audit opinion in respect of undisclosed irregular expenditure amounting to R391 809 on the financial statements. The Committee was concerned about the Department of Labour’s irregular expenditures and asked what recommendations regarding this were going to be given to the Department. The DA felt that the Committee should note the fraud and the high unemployment rate in the Draft Report. The ANC however believed that that responsibility should be taken up by the 6th Parliament. Certain recommendations and observations were amended and removed from the Draft Report to facilitate the work of this Committee in the 6th Parliament. The DA objected to the Adoption of the Draft Report.
The Draft Minutes of the 6 March 2019 were adopted.
The Committee held a briefing of its Legacy Report. Only two changes were made. These were to the number of meetings held up and until 2018/19 which was 41, and an addition meeting on the National Minimum Wage Amendment Bill which was held on the 19 March 2019. The Legacy Report was adopted.
It was noted that the finalisation date for the National Minimum Wage Amendment Bill may change if the Committee does not finalise the Bill on the specified date.
The Chairperson opened the meeting and thanked the Committee Members for their availability. He reminded the Committee of the special meeting that will be taking place on Tuesday, 19 March 2019, where the Committee will be discussing the National Minimum Wage Amendment Bill.
Mr Zolani Sakasa, Committee Secretary, Parliament said that the meeting is in receipt of apologies from Ms L Mjobo (ANC), Ms A Muthambi (ANC), Mr D America (DA) and Mr P Moteka (EFF).
The Draft Minutes of 6 March 2019
Mr M Bagraim (DA) moved for the adoption of the Draft Minutes.
Ms T Tongwane (ANC) seconded the adoption of the Draft Minutes.
The Draft Minutes 6 March 2019 were adopted.
Briefing on the Draft Report of the Portfolio Committee on Labour on the 1st and 2nd Quarterly Reports regarding the performance of the Department of Labour and its entities
Ms Sibongiseni Ngcobo, Content Advisor, said that the Department’s overall achievement objective increased from 53% in the first quarter of 2017/18 to 80% in the first quarter of 2018/19. The major contributors to this increase were the promotion of equity in the labour market; strengthening of multilateral and liberal relations and the promotion of sound labour relations at 100%; which was actually 100% and 67%, respectively. The overall achievement in the second quarter increased from 56% in Q2 of 2017/18 to 80% in Q2 2018/19. The achievement in strengthening multilateral and bilateral relation’s strategic objective declined from 100% in Q2 for 2018/18 to 0% in Q2 of 2018/19. The Department’s Administration programme improved from 50%in Q1 of 2017/18 to 75% in Q1 of 2018/19. The Inspection and Enforcement Services programme performance improved from 25% in Q1 of 2017/18 to 75% in Q1 of 2018/19.
Public Employment Services Programme
The programme achieved all its targets for both Q1 and 2 of 2018/19. In Q1 of 2018/19 the programme registered 212 287 work-seekers on the Employment Services of South Africa (ESSA) against a target of 151 000. In Q1, 34 903 employment opportunities were registered on ESSA against the target of 18 700. In Q2, 71 285 employment opportunities were registered on ESSA against the target of 42 500. The Department’s expenditure information per programme in Q1 reflects that the final appropriation of the Department amounted to R3.3 billion in 2018/19. The actual expenditure at the end of Q1 was R683.3 million. Thus, the Department spent 20.8% of its allocated budget by the end of Q1. The Labour Policy and Industrial Relations programme received the largest share of the Department’s budget at R1.2 billion. This programme spent R296.9 million or 24.7% of its final appropriation at the end of Q1. The expenditure information by economic classification in Q1 showed that a larger portion of the budget went to Compensation of Employees at R1.3 billion. Of that, appropriation of R260.4 million was spent by the end of Q1 of 2018/19, translating to 20.1% of the expenditure. The total allocation less transfers amounted to R1.99 billion in 2018/19. A total of R352.3 million was spent by the end of Q1, translating to 17.7%.
The programme spent R570.5 million of its budget in Q2. The Administration programme spent the least at R335.8 million of its budget. The Public Employment Services and the Inspection and Enforcement Services programme spent R250.36 million and R244.9 million of their budgets, respectively. The total available budget at the end of Q2 was R1.9 billion.
Ms L Theko (ANC) enquired about why the total expenditure per programme and the total expenditure by economic classification was the same percentage.
Mr Ngcobo replied saying that Table 6 showed the amount spent per programme, and Table 7 reflects the amount by economic classification under each programme. Table 7 is a breakdown of the amount spent in each programme, thus the total percentage will be reflected as being the same.
National Economic Development and Labour Council (NEDLAC)
Of the 40 NEDLAC annual targets, 22 reported in Q1 of 2018/19. Of the 22 targets reporting in Q1, 17 were achieved which translated into an overall performance of 77%. The Administration programme achieved all of its targets in Q1 of 2018/19.Core-operations and the Constituency Capacity Building programme achieved 78% and 50%, respectively. He said that NEDLAC received a qualified audit opinion in respect of undisclosed irregular expenditure amounting to R391 809 on the financial statements. As a remedial action, NEDLAC reported that it is in the process of improving compliance with the relevant statutory requirements and effective and timeous implementation of audit action plans. NEDLAC also had a challenged of unfunded mandates such as the Presidential Jobs Summit and Financial Sector Summit activities. The entity has submitted additional funding requests to the departments and the National Treasury to remedy the situation.
Commission for Coalition Mediation and Arbitration (CCMA)
The entity had 1 target reporting in Q1 under the strategic objective ‘Advancing good practices at work and transforming workplace relations’. This target was not achieved resulting in a 0% achievement on this strategic objective in Q1. The CCMA reported that the Q1 target will be achieved in Q2 of 2018/19. The entity also reported that 48 664 cases were referred during Q2 of 2018/19, compared to 47 311 cases in Q2 of 2017/18. A total of 22 250 cases have been referred from the beginning of 2019, of which 1670 were National Minimum Wage referrals. The overall expenditure of the entity was R475.8 million of the R521.6 million budget, resulting in the variance of R45.8 million. The variance was reported to be a result of implementation of cost containment measures on travel and subsistence.
The entity received 6 out of 7 planned targets reporting in Q2, translating into an overall achievement of 86%. All the targets for each programme were achieved, except Compensation for Occupational Injuries and Disease Operations. The Compensation Fund approved an annual risk-based audit plan against a Q1 target of 15%. In Q2 the entity implemented 60% of the approved annual risk-based audit plan against a target of 45%. All approved benefits were paid in Q1 and Q2 within 5 working days against a target of 98%. The Fund adjudicated 92% and 95% of the claims in Q1 and Q2 within 40 working days of receipt against the target of 90% for both quarters.
Unemployment Insurance Fund (UIF)
The UIF performance was 63% in both Q1 and Q2 of 2018/19, which is an improvement from the 58% achieved in Q2 of 2017/18. On the Ensuring Financial sustainability strategic objective, the entity achieved 100% in Q1 and Q2 of 2018/19, as well as in Q2 of 2017/18. The UIF’s budget for 2018/19 amounted to R8.8 billion, of which 75% was spent by the end of Q2 resulting in a variance of R2.2 million. The larger share of the budget went to Business Operations at R7.2 billion. The 15% underspending was attributed to benefits payments, compensation of employees and the South African Revenue Service (SARS) Commission. However, lesser claims were achieved than initially projected. In terms of economic classification, the larger share of the budget went to Transfers at R6.9 billion. Good and Services received the second largest allocation at R999.5 million.
The Chairperson commented on Table 29 enquiring why there were only two planned targets under ‘Corporate Services’. He said this indicates that there are no further planned activities for Q3 and Q4. He was concerned about the planned targets because ‘Corporate Services’ should be an on-going activity.
Mr Ngcobo replied that Table 29 reflects the planned targets as received from Productivity South Africa (PSA). He said that he will enquire with the PSA to get clarity on the planned targets for Corporate Services.
Mr Bagraim said he is satisfied with the financial figures in the Draft Report; however he would like to comment on the Committee’s ‘Observations and Recommendations’. He said that he would like to add more observations and recommendations.
Ms L Theko (ANC) asked what recommendation is the Committee going to give the Department concerning its irregular expenditure. She said that she agrees with all the Draft Reports’ Observations.
The Chairperson asked that the Committee firstly agrees that its ‘Observations’ are correct before changing the ‘Recommendation’s.
Mr Bagraim said the 2018/19 financial year is the worst period of unemployment, yet the Committee has not noted that in the Draft Report. The Auditor-General indicated that the Department is failing to meet its audit requirements; there are numerous external investigations taking place, none of which have yet been met with prosecution; in terms of productivity, the PSA has the second lowest rate; the CCMS is under-financed and the UIF has had technical challenges for the last eight months. The public has for numerous months complained that the UIF’s online system is constantly offline. He said that the Committee needs to make specific ‘Observations’ and ‘Recommendations’ relating to the above serious matters.
The Chairperson said he agrees with Mr Bagraim’s comments, however the Draft Report can only contain ‘Observations’ and ‘Recommendations’ relating to information regarding planned targets and the financial budgets that were reported by the Department to the Committee.
Ms S van Schalkwyk (ANC) said it is not the Department’s responsibility to create jobs; however the Department should ensure that the environment is conducive to job creation. She agreed that the Committee should make observations and recommendations regarding the countless challenges regarding fraud..
The Chairperson said the different types of fraud cases being investigated in the Department should also be included in the Draft Report.
Mr Bagraim suggested that the Committee should at least note that they observed the challenges of the Department. He said he understood that the Committee cannot directly get involved with the fraud investigations, but the Committee should at least make a comment on those challenges. On page 2 of the Draft Report the Department has listed that one of their strategic objectives is to “contribute to employment creation”. The Committee does not have to be specific with its observations; however it has to note that it has noted the fraud and irregular expenditures of the Department. He said the ‘Observation’ can be overarching all the challenges of the Department.
Ms Theko suggested that the Draft Report also include observations on two of the Department’s strategic objectives, namely; the “protecting of vulnerable workers’ and the “promote sound labour relations”. She said that these two strategic objectives addressed the unemployment challenges which Mr Bagraim is referring to.
The Chairperson said the Department should explain what they meant by “contribution to employment creation”. He said this statement contradicts what the Department’s mandate is, because the Department is not responsible for creating jobs.
Ms van Schalkwyk suggested that the Committee also notes as an ‘Observation’ of the health and safety issues in the government buildings.
Ms Theko said the Auditor-General has submitted to the Committee a list of recommendations on how the Department should go about remedying their non-compliance to the audit requirements.
Mr Ngcobo said the Department has previously stated that the irregular expenditures are mainly due to matters relating to employees who do not attend events that they have already been paid for. The Department said there is no law that governs how the monies can be retrieved from those employees.
Ms van Shcalkwyk said the recommendation regarding the remedial action for the Department relating to ‘compliance to audit requirements’ should be inserted into the Draft Report.
Ms Theko said the Committee should recommend that the Minister should take steps to prevent any other irregular expenditure as a ‘Recommendation’.
The Chairperson added another ‘Recommendation’ that steps should be taken against individuals involved in fraudulent activities.
Ms van Schalkwyk said that she does not agree with Ms Theko’s recommendation regarding the Department’s strategic objectives. Instead, she suggested that there must be an ‘Observation’ speaking to the compliance of the Employment Equity Act. She suggested that the Committee should move to the ‘Recommendations’ and allow the 6th Parliament to make the ‘Recommendations’.
Ms Tongwane agreed with Ms van Schalkwyk. She said the 5th Parliament term is almost ending, and the recommendations’ should be the responsibility of the 6th Parliament.
The Chairperson asked if the Committee agrees that ‘Observation’ 7.2 is being dealt with in ‘Recommendation’ 8.3, and ‘Observation’ 8.2 and 8.3 must be combined into one sentence.
Ms Theko corrected the Chairperson saying ‘Recommendation’ 8.2 must be removed because ‘Recommendation’ 8.3 already deals with the filling of vacant posts.
Ms van Schalkwyk recommended that ‘Recommendation 8.3 can be amended as “The Portfolio Committee and all government departments, and its entities, are encouraged to use the ESSA database to source candidates for entry level posts.”
The Chairperson commented that the issues relating to health and safety compliance of government buildings is dealt with in ‘Recommendation’ 8.4.
Mr Ngcobo said the Employment Equity Act does not prescribe any amount for fines for contraventions.
Ms van Schalkwyk moved for the adoption of the Draft Report.
Ms Tongwane seconded the adoption of the Draft Report.
Mr Bagraim objected to the adoption of the Draft Report.
Briefing of the Legacy Report of the Portfolio Committee on Labour
Mr Sakasa said that there were only two changes to the Legacy Report. The number of meetings held until 2018/19 was 41, and there is an additional meeting on the National Minimum Wage Amendment Bill, which will be held on the 19 March 2019.
Ms Tongwane moved for the adoption of the Legacy Report.
Mr Bagraim seconded the adoption of the Legacy Report.
The Chairperson commented that the finalisation date for the National Minimum Wage Amendment Bill may change if the Committee does not finalise the Amendment Bill on the specified date.
The meeting was adjourned.
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