Employment and Labour Budget: Committee Report

Meeting report

Committee Report on Department of Employment and Labour 2021/22 Budget
The Chairperson read through the report. He asked Members to comment on the Observations in the Committee Report.

Observations
Mr M Bagraim (DA) noted that all of the entities besides NEDLAC failed their audit and some entities have had serious problems in their dealings with the public. Therefore, the first observation should be that the Department look at the efficiency and capability of each of the entities.

Dr N Nkabane (ANC) agreed with Mr Bagraim; however, it would seem unfair to evaluate the performance of the entities as there needs to be a consideration of the factors that may have caused a hindrance to their performance. She agrees with Mr Bagraim that the wording needs to be rephrased. It should read that the Covid-19 pandemic has caused interruptions not only to the execution of plans but also the sourcing of resources and their distribution. Covid-19 has stalled economic activities, job creation and livelihoods.

Dr M Cardo (DA) agreed there needs to be a better framing of the observations. The observations on advocacy and outreach campaigns do not set the tone of what the Department wants to say. The Department was reconfigured in 2019 with a focus on job creation and by stating this, better recommendations can be made on how to address the unemployment crisis. It is necessary to reflect and observe on the shortcomings in the Department and its entities. His contribution is two-fold. Firstly, to capture the reasons for unemployment there needs to be an observation. Secondly, make a statement about the dysfunctionality of many of the entities within the Department.

Mr N Nontsele (ANC) said the opening remark would be inappropriate if it does not consider current challenges. He agreed with Dr Nkabane's formulation with recognises these challenges and tackles them in the context of the economy, job creation and livelihoods. He disagreed with Mr Bagraim as Dr Nkabane’s formulation is more appropriate as it covers all critical issues.

The Chairperson agreed with Dr Nkabane. The Committee cannot question the job creation by the Department now in the second year of the pandemic. The Committee is aware that Covid-19 has hit job creation and employment hard. The submission of Dr Nkabane and Dr Cardo is similar. She confirmed that this statement will be added as an introduction to the Committee observations.

Mr Bagraim said that he does not understand how transformation will remain a priority. There are budget cuts, there is no gaining just shrinking. The Commission for Conciliation, Mediation and Arbitration (CCMA) is an example of that shrinkage. The CCMA had to shrink 47% of its staff including its commissioners. Transformation should remain on the agenda but not as a priority as there are greater priorities out there. Service delivery and the lack of capabilities because of funding should be a priority. His submission is that transformation in the Department and its entities remain an issue and should be implemented speedily but not as a priority. He proposed that the word 'unfulfilled' should be added to read as ‘transformation in the Department and its entities remains unfulfilled due to a lack of funding or employment.

Mr Nontsele pleaded with Mr Bagraim to accept the formulation as it is. It does not make sense to say transformation has not been attended to and then say it should not be a priority. The transformation policies put in place by government benefit historically disadvantaged people, designated groups, and addresses gender.

Ms C Mkhonto (EFF) said that the Committee visit to the UIF Centre in Pretoria showed that there was a high vacancy rate in the call centre. This is important as the job is an interactive one with the public. She asked that this be added as an observation for the UIF.

Mr Bagraim supported this.

The Chairperson agreed that it be added as an observation.

Dr Cardo’s observation is that in 2019 job creation was added to the Department's mandate. In numerous budget speeches, job creation was institutionalised into the structure and programmes of DEL. Two years later this has not been achieved. This should be the first observation. Secondly, the Observations do not really say anything. He asked if certain observations are really worth stating such as innovative products. It is not a remarkable enough point to make it an observation. The focus should be on the state of DEL, the functionality of its entities, and its audit outcomes. In this way there can be useful, concrete, and tangible recommendations.

The Chairperson disagreed and saw the new innovative products that the Supported Employment Enterprises (SEE) have developed to improve their financial sustainability as an observation. The SEE has looked at ways to generate funds and that is important. She raised the point that what is important for some might not be for others. If his submission is that an observation is not important, then say what is important. She added that today is not a debate.

Dr Cardo proposed that in the case of Nedlac's budget reduction, it does not get into the core of the problems faced by DEL. It is the role of the Portfolio Committee to exercise oversight, grapple with the challenges and make recommendations. This is to ensure that the Committee exercises oversight to fulfil the recommendations it makes. A point raised in the discussion was Nedlac’s significant spending of its budget on salaries.

Mr Nontsele suggested a new observation should be added that notes that the SEE products currently do not benefit from preferential treatment from the state and this is needed.

Dr Nkabane said that there should be a new formulation of the Compensation Fund observation. The Fund has an action plan aimed at rescuing it from the doldrums, but the Committee has not been consistently updated on the progress that the Fund is making, if any, to turn it around.

Ms Mkhonto pointed out that when the Compensation Fund presented its strategic plan, it did not dispute this fact and promised to improve. There was an opportunity to dispute that it was at fault, but the Fund did not dispute this because it is a true reflection of what has happened.

The Chairperson noted that the Committee had not had a briefing from the Auditor-General on the DEL audit. The Auditor-General apologised and explained that this was due to the magnitude of work caused by Covid-19. A new date will be set for that meeting.

Mr Bagraim noted the observation the Nedlac budget cut will have a negative impact. He contended that Nedlac will not be impacted at all, only a small percentage was taken when compared to the CCMA. The CCMA is worthy of more money to perform for the workers of South Africa. Therefore, he does not agree with this observation. Another observation is that the budget cut 'will have' a negative impact on the CCMA ability to meet its mandate. This should be changed to ‘has had’. CCMA has not met its mandate and will probably not for the next five years.

All Members agreed with Mr Bagraim.

Mr Bagraim said that it serves the Committee no good if it states in the middle of nowhere that Productivity South Africa (PSA) aims to improve. The reality is the productivity in South Africa is the worst in the world and this is worthy of an observation. 

The Chairperson disagreed. It is unfair to say, ‘in the middle of nowhere’. PSA has acknowledged that there are areas where it has improved productivity and has put programmes in place. They took note of workplaces where productivity has been improved. There is still a lot to do to ensure that workers understand the concept of productivity. He did not think this is a true reflection because PSA has put measures in place to improve productivity such as rewards to companies that improved productivity.

Dr Cardo suggested that an observation should be made about potential fraud and corruption. Last year, the UIF was constrained due to the pandemic when it disbursed TERS funds and there was fraud.

Mr Nontsele said there needed to be a reformulation of the observation on the audit outcomes. He had not received any of the audit outcomes as the Chairperson noted.

Recommendations
Mr Bagraim said that DEL and its entities should prioritise enforcement and then report back on a regular basis. There is an issue with reporting back on this and the Committee has to wait for 12 months. He suggested that there are regular reports on internal fraud and consequence management. Another area that DEL can work on is to step up its initiatives to support job creation and SMEs in the disadvantaged groups.

Dr Nkabane pointed out that the statement on initiatives is broad. The Committee needs to suggest how this will be done. She suggested that it stay the same as how it is mentioned later in the report.

Mr Nontsele agreed that there should be a timeframe.

Mr Bagraim suggested that another recommendation should be added to the SEE. The Committee is aware that the employment rate of disabled people is at one percent but the disability population is six percent. The Minister has encouraged government entities to employ at least three percent. The Committee should recommend that the target of the Minister stands but should be reached within one year.

Mr Nontsele suggested that there should be a quarterly report on this. This will enable the Committee to see the progress made. DEL should work with National Treasury speedily so that the SEE is preferred for procurement by the state. The SEE must present within three months a comprehensive market strategy to the Committee which will then be monitored.

Mr Bagraim suggested that the Committee should recommend that the UIF has to improve its administration across the board. The pandemic has caused a mess for the UIF’s administration.

Mr Nontsele agreed. He recommended that the UIF finds measures to attend to the unemployment rate as a result of Covid-19. The measures must set out thoroughly worked out plans with quarterly reports. The pressure in the community is multiplying. Around R2 million people have lost their jobs and the R350 grant has been stopped. The UIF should set up a plan.

Mr Bagraim said it should also be considered how to avoid retrenchments and agreed to add the two recommendations as one.

Dr Cardo suggested that the recommendation that the Nedlac get additional funding is not a worthy of a recommendation. All of the DEL entities are worthy of additional funding. There is no reason for Nedlac to be more worthy of money than the CCMA. Nedlac should show how it enforced agreements with stakeholders. There should be a report from its governance task team that was established in 2017.

Mr Bagraim agreed with Dr Cardo on additional funding. However, the current Nedlac funding should be reduced and should be reallocated to the CCMA or the UIF to sort out their call centre. Nedlac agreements should not only be enforced with stakeholders but with the government as well. There are instances Nedlac comes to an agreement, but the government does not agree.

Mr Nontsele pointed out that Nedlac is a critical institution that bring together social partners. It is a platform for the government to engage more productively with social partners. This is particularly helpful when it comes to the Nedlac constituencies. Nedlac should receive additional funding to meet its statutory obligations.

Ms Mkhonto said the CCMA, Nedlac and the UIF needs additional funding. These funds will have a general impact on workers. She agreed with Mr Bagraim.

The Chairperson pointed out that the UIF does not get funding from DEL. The UIF gets funding from levies paid by employers and their employees. The recommendation about Nedlac should remain as is.

Mr Bagraim said the word 'government' should be added to the enforcement of Nedlac agreements by stakeholders. He suggested government must follow Nedlac agreements as well.

Mr Nontsele asked for clarity about funding.

The Chairperson replied that UIF does not gets its funding from DEL. Therefore, Nedlac recommendation should stay the same.

Mr Nontsele did not agree with Mr Bagraim about adding 'government' to Nedlac agreements enforcement. If one stakeholder is regarded above another, a problem arises. It creates the impression that there are no obligations on the others to ensure that agreements are enforced. The formulation should stay the same as it talks to everyone – including community, labour, business, and government.

The Chairperson agreed to leave the formulation as is.

Dr Nkabane proposed that the Committee needs to look at the DEL institutional arrangements holistically as it is responsible for the needs of society. Vulnerable workers should be able to access the services of the CCMA. There should be a one stop shop to ensure that the CCMA can improve its work. The CCMA should consolidate and be active in all the labour centres. The Department should accommodate the CCMA and making it easy for workers to access them for employment and labour matters. There are labour centres in remote areas, but vulnerable people find it difficult to access these as these are centralised. Decentralisation make it easier for vulnerable workers to get assistance. The digitalisation of the CCMA brings forth more problems as it is not user friendly. People who are not informed about modern technology should be able to access the CCMA with ease.

The Chairperson agreed.

Mr Bagraim asked from where the additional funding for the CCMA will come. DEL does not want to take any money away from any of its entities. He proposed that the recommendation on additional funding be deleted. Secondly, the digitalisation of the CCMA creates a problem. Workers cannot physically go to the CCMA and lodge a complaint. The dispute needs to be lodged online and workers might not have access to data or computers. This Committee should ask the CCMA to open its offices and follow Covid-19 protocols.

Ms Mkhonto asked how vulnerable workers will have access to CCMA services. In South Africa there are multi-purpose centres and traditional authority offices. This is a strategic document and what Dr Nkabane said cannot be added here. It should rather be added at an implementation level.

Mr Nontsele proposed that the Committee state the current reality that government services are operating from home. Staff are not physically in the office and are using their computers at home. Beyond Covid-19, centres will be diminished or minimised. The money that would ordinarily go to these centres will be redirected. There are many labour centres and a worker should not walk away from these centres saying that they were not assisted.

The Chairperson pointed out that these concerns about the CCMA should have been pointed out to DEL in the meeting. The Committee cannot state that the CCMA offices must be opened if DEL was not made aware of this before. In the meeting, the Committee did not challenge DEL to open the CCMA offices.

Members did not make any comments on the Compensation Fund recommendations.

Voting on Committee Report
The Chairperson asked for adoption of the Committee Report.

The Committee adopted the report with the amendments.

Mr Bagraim raised his objection on behalf of the DA.

Ms H Denner (FF+) raised her objection on behalf of the FF+.

Ms Mkhonto raised her objection on behalf of the EFF.

The meeting was adjourned.