Nedlac & Productivity SA 2020/21 Annual Performance Plans; with Minister

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Employment and Labour

14 May 2020
Chairperson: Ms M Dunjwa (ANC) and Mr M Rayi (ANC, Eastern Cape)
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Meeting Summary

Video: JM: PC on Employment and Labour and SC on DTI, Economic Development, Tourism, Labour, 14 May 2020

Annual Performance Plan (APP) of Government Departments & Entities 20/2021

In a virtual meeting, the Joint Committee was briefed by NEDLAC and Productivity South Africa (PSA) on their Strategic and Annual Performance Plans. Members heard that for the 2018/2019 financial year, NEDLAC received an unqualified audit opinion and contributed to the achievement of decent work and economic growth targets as set out in the National Development Plan and the New Growth Path, and had contributed to the reduction of income inequality as measured by the Gini coefficient.

Members noted that NEDLAC had been experiencing challenges related to its legitimacy and that its relevance had been questioned. In this regard the Committees heard that government had set up a task team to review NEDLAC’s relevance and asked whether any report had been produced and what recommendations had been made. Some Members proposed that the regulations should be eased so that businesses could hire more employers and then asked whether NEDLAC had any representatives that represented the unemployed.

Members asked what role NEDLAC had played in establishing health and safety codes in the work place during the COVID-19 pandemic and what NEDLAC had done to prepare the workplace for the 4th Industrial Revolution. NEDLAC informed Members that it already had community constituency and that this group represented the unemployed, also other groups were welcome to apply for membership. With regard to NEDLAC and the 4th Industrial Revolution, Members heard that when the COVID-19 pandemic started to spread in South Africa, there had been a lot of resistance within NEDLAC to shift work online. This has all changed however since the lockdown as more and more NEDLAC colleagues embraced the online platforms. The Committees were pleased to hear that NEDLAC had also been instrumental in proposing that Personal Protective Equipment (PPEs) and ventilators should be procured and produced locally to stimulate the economy and create jobs.

The Committees were briefed by Productivity South Africa. It emphasised the need for an integrated economic policy framework where the country could prioritise a framework that encouraged the absorption of low skilled workers into the workforce. Members commended the PSA for thinking outside of the box and looking holistically at issues of economic growth and job creation.

 Members noted that the PSA had not yet met one audit finding. This begged the question when this outstanding audit finding would be attended to. Members asked what action plans are in place to cater for rural and township economies; whether the PSA had the human resource capacity to adequately assist SMMEs; what progress was made on the proposals by the PSA and the Committee to address the funding issues and why the PSA had benchmarked itself against Nordic countries.

Members heard that the PSA was of the view that South Africa should promote labour intensive industries to see how this translated into jobs, and that it had made progress regarding funding as the budget for the current financial year had been increased by R104 million and this money will be used to support enterprises that are going through economic distress. Members were informed that the reason why the PSA chose to benchmark against Nordic countries had been as a result of their high rankings in the global competitive index.

The Minister expressed his confidence that both the entities were well placed to deal with the consequences of the pandemic, especially with support to small businesses. He added that some sectors would be hit harder than others but the various agencies of the Employment and Labour Department were committed to assisting businesses to find suitable solutions.

Meeting report

Opening remarks from the Minister of Employment and Labour, Mr Thulas Nxesi

The Minister said that this Department, like the whole of government, had been saddled with pre-COVID-19 actions plans.  So like others, the Department now had to plan for the new normal as the country gradually emerged from the lockdown. This was against a backdrop of departments that grappled with the implementation of Level 4 lockdown regulations whilst also planning to move to Level 3.

The Minister noted that these trying times called for decisive leadership and that this was important for compliance and accountability. Most of government’s plans will change as new adjusted budgets are being ushered in to deal with the effects of the COVID-19 pandemic. This process would be led by government and Parliament and will be characterised by a lot of engagements between the relevant role-players.

He added that throughout this crisis and its aftermath, NEDLAC would continue to provide the “social glue” that held the process together. President Ramaphosa had espoused the need for “social compact” as represented by NEDLAC.

NEDLAC brought together a multitude of different role-players such as business, labour and government to name but a few to look and refine those lockdown regulations that pertained to labour and employment issues. Many of these role-players agreed that South Africa will see a spike in retrenchments and disputes in the coming months.

To manage the fall out of these retrenchments, the Minister had signed a directive that empowered the various bargaining councils, the CCMA and NEDLAC to attend to the fall out unhindered.

The Minister also anticipated that the senior managers of the CCMA and NEDLAC would see to it that employers adhered to regulations on deep cleaning and work adjustments. The Minister emphasised that both public and private sector entities had to comply with these regulations. He added further that NEDLAC stood ready to mitigate the socio-economic fall out of the pandemic and that the latter had ample experience as proved by the work done on the Presidential Jobs Summits.

On Productivity South Africa (PSA), the Minister expressed his confidence that the entity was well placed to deal with the consequences of the pandemic, especially with support to small businesses. Some sectors will be hard hit with others not coming back at all. The various agencies of the Employment and Labour Department will try and assist these businesses to find suitable solutions.

The Minister stated that even as South Africa was wrestling with the pandemic, the lockdown and the economic consequences, the important questions still had to be asked. As the country was charting its economic recovery the triple threat of unemployment, inequality and poverty had to be confronted.

The Minister was of the opinion that all stakeholders had to be engaged as underpinned by South Africa’s successful response to the COVID-19 pandemic as led by Cabinet and Parliament.

Briefing on NEDLAC’s Strategic Plan and 2020/20/21 Annual Performance Plan

Ms Lisa Seftel, Executive Director: NEDLAC, briefed the Committee on NEDLAC’s Strategic Plan and 2020/2021 Annual Performance Plan.

Ms Seftel reported that NEDLAC contributed to the achievement of decent work and economic growth targets, as set out in the National Development Plan and the New Growth Path, and contributed to the reduction of income inequality as measured by the Gini coefficient. NEDLAC also strove for improved governance, leadership and secretariat performance as measured by a reduced number of audit findings and increased levels of stakeholder satisfaction.

For the 2018/2019 financial year, NEDLAC received an unqualified audit opinion. One of the key risks that NEDLAC faced was that the budget that the entity received was not aligned with NEDLAC’s performance targets. To mitigate this, NEDLAC had looked at various options one of which was budget adjustment. NEDLAC will also engage chambers and various unit heads to ensure that budget spending was in line with set work plans.

Another risk that had been identified was the unavailability of constituency representatives to attend meetings. To mitigate this, NEDLAC had absolved to escalate or engage the Overall Conveners for intervention.

NEDLAC also expressed concern that constituencies did not complete engagements within the timeframes set in the NEDLAC Protocol. This situation has now been exacerbated by the OVID-19 pandemic. The sharp focus on the economic consequences of the COVID-19 pandemic has impeded government’s ability to address long term transformational issues.

Since the outbreak of the pandemic in South Africa, NEDLAC shifted away from physical meetings to online meetings that required a shift of resources from airfares and catering to quality online resources and data for constituencies. Social partners of NEDLAC had also requested that NEDLAC should play an enhanced role in communicating its decisions/work to internal and external stakeholders via newsletters, an upgraded website and social media.

Since 17 March 2020, a COVID-19 NEDLAC Rapid Response Team had met regularly to focus on amongst other things the avoidance of dismissals, to protect livelihoods, mitigate the distress of workers and companies as well as health and safety protocols.

Health and safety in the workplace, a revision of the Job Summit Agreements and a comprehensive and aligned approach to relief for workers and small businesses were issues that emerged as new agenda items for NEDLAC as a result of the COVID-19 pandemic.

Discussion

Dr M Cardo (DA) stated that NEDLAC had been experiencing challenges related to its legitimacy. During a particular summit last year, Business Unity South Africa (BUSA) questioned NEDLAC’s relevance. Consequently, government had set up a task team to review NEDLAC’s relevance. He wanted to ascertain whether any report had been produced and what recommendations had been made.

He recalled that one of the criticisms levelled against NEDLAC had been around inclusivity and representation.

Mr M Bagraim (DA) thanked NEDLAC for the presentation. He stated that much of what had been in the NEDLAC presentation covered the period pre-COVID-19 when South Africa already suffered from a very high unemployment rate. He proposed that the regulations be eased so that businesses could hire more employers. In essence, Mr Bagraim called for the relaxation of employment laws in South Africa. He also wanted to know whether NEDLAC had any representatives that represented the unemployed.

Ms S Boshoff (DA, Mpumalanga) asked what role NEDLAC had played in establishing health and safety codes in the work place during the COVID-19 pandemic.
 

The Chairperson noted that the outbreak of COVID-19 had compelled businesses and institutions to institute new and innovative ways of conducting business/work. This included Parliament. She wanted to ascertain what NEDLAC had done to prepare the workplace for the 4th Industrial Revolution.

Responses by NEDLAC

Ms Seftel noted that BUSA never called for NEDLAC to be scrapped, but rather that the mandate had to be reviewed and to make the body more responsive to prevailing needs. She confirmed that a task team was appointed to look into NEDLAC.

There has not been a report or recommendations as of yet. The priority for NEDLAC has been to respond to COVID 19.

On inclusivity, she stated that the government task team was looking at amending the protocol on inclusivity and that NEDLAC did not set the content agenda. The agenda was set by the social partners.

She added that NEDLAC already had community constituency and that this group represented the unemployed. Other groups are welcome to apply for membership.

On the question about the 4th Industrial Revolution, she informed Members that when the COVID-19 pandemic started to spread in South Africa, there had been a lot of resistance within NEDLAC to shift work online. This has all changed however since the lockdown as more and more NEDLAC colleagues embraced the online platforms.

On workplace safety, she added that when the lockdown was instituted there was an understanding that the health and safety of essential workers and health care workers had to be looked at. NEDLAC’s rapid response team had been insistent that these workers had to be protected. NEDLAC also wanted to ensure that there were enough PPEs to protect hospital workers.

NEDLAC also played a key role in advising government on the minimum standards that had to be met before businesses could be opened when government announced the beginning of Level 4.

NEDLAC also proposed that each workplace had to have a compliance officer for COVID-19. This representative was seen as the vocal point on all COVID-19 related matters.

NEDLAC had also been instrumental in proposing that personal protective equipment (PPEs) and ventilators should be procured and produced locally to stimulate the economy and create jobs.

Briefing by Productivity South Africa (PSA)

Mr Mothunye Mothiba, CEO: PSA, briefed the Committee on the PSA’s Strategic Plan and 2020/2021 Annual Performance Plan.

He informed Members that the core functions of the PSA were to protect jobs, support the informal sector and inclusive growth interventions.

Members were told that the South African economy compared to that of industrialised nations with over 700 000 small to medium sized enterprises. South Africa also had a thriving informal economy, of which 34% were black owned.

The PSA had adopted a “Change Agenda” over the 2020-2024 medium term strategic framework. This Agenda was underpinned by four strategic pillars such as an integrated training and skills development ecosystem that created a workforce of the future. The PSA had an integrated enterprise ecosystem that improved the competitiveness and sustainability of enterprises. There was an integrated research and innovation system that ensured the provision of productivity and competitiveness related value added information and statistics that informed evidence-based planning as well as monitoring and evaluation. The final pillar was to promote a stronger culture of productivity and accountability through a national productivity movement.

In the medium term, Productivity South Africa will contribute mainly to the following two priorities of the sixth medium term strategic framework priorities such as economic transformation and job creation coupled with a capable, ethical and developmental state. The target areas over the medium term included manufacturing, the agricultural value chain, the mining value chain, green and energy saving industries as well as the electro-technical sector.

Discussion

Dr Cardo stated that PSA’s change agenda sounded promising and contained good proposals. He wanted to ascertain to what extent the change agenda had been influenced by National Treasury. He particularly pointed to what he labelled “onerous labour agreements and collective bargaining”.

According to Dr Cardo, there seemed to be a misplaced notion that the new economy that is being touted would rise from the ashes like a phoenix after the COVID-19 pandemic had abated. He stated that there was a need for an integrated economic policy framework. South Africa had to prioritise a policy framework that encouraged the absorption of low skilled workers into the workforce. He thus wanted to ascertain whether the change agenda took this into account.

Ms N Nkabane (ANC) commended the PSA for thinking outside of the box. She stated that when she looked at Slide 16 on the presentation that dealt with the change agenda over the medium term strategic framework, it reminded her of the expanded mandate of the Department.

There seemed to have been an attempt to look holistically at issues of economic growth, job creation and Slide 29 mentioned that the PSA had not yet met one audit finding. She wanted to ascertain when this outstanding audit finding would be attended to.

Mr S Mdabe (ANC) stated that Slide 10 of the presentation spoke about a five year strategic plan to support the informal sector. What he missed in the presentation was a particular reference to the holistic development of township and rural economies. He asked what action plans are in place to cater for rural and township economies and whether the PSA had the capacity to implement the APP.

He also referred to slide 14 of the presentation. This particular slide spoke of the 1, 5 million SMMEs in the informal economy and that 34% were black owned, yet there was only a budget of R230 million to support these SMMEs. He wanted to know whether the PSA had the human resource capacity to adequately assist these SMMEs. He also proposed that the PSA liaised with the Department of Small Business Development to avoid duplication.

Mr M Nontsele (ANC) recalled that slide 12 of the presentation detailed a myriad of challenges that the PSA faced on how to help the economy to become more productive and competitive. He viewed this as a huge task that had to be undertaken. He lamented the budget allocation towards this purpose.

He also added that the PSA had been operating on a deficit in the absence of a sustainable funding model. He wanted to know what progress have been made on the proposals by the PSA and the Committee to address the funding issues.

Chairperson Dunjwa wanted to know why the PSA had benchmarked itself against the Nordic Countries. In her view, the Nordic countries were far more advanced than South Africa.

Responses by Productivity South Africa

Mr Mothiba replied that the PSA had looked at the National Treasury’s paper on the changed agenda. The PSA was thus of the view that South Africa should promote labour intensive industries to see how this translated into jobs.

He added that when the PSA looked at the four pillars a lot of research had been conducted. The PSA sourced information from the Institute of Development Management as well as the World Economic Forum. The PSA had also looked at the work conducted by the International Labour Organisation (ILO) on the future of work. The reality, he stated was that a lot of work had to be done to support enterprises.

The PSA regarded skills development as paramount in the quest for increased productivity and thus the PSA had to ensure that the country had capacity in the field of productivity champions and productivity practitioners.

Mr Mothiba defended the role of the PSA and noted that the PSA’s role was clearly crafted and that the PSA was looking at streamlining collaboration. The PSA had been clear that the entity did not wish to impede the mandate of the Small Enterprise Development Agency (SEDA).

He added that when the PSA got involved in the respective provinces, it did not act in isolation. The PSA always sought to work with the relevant provincial department of economic development. The interventions by the PSA are responsive to provincial needs. The PSA administered a workplace challenge programme that was funded by the Department of Trade and Industry (Dti). This programme had been developed in consultation with the Dti.

On the PSA’s resources, Mr Mothiba stated that the PSA’s resources were limited and that the entity would not be able to cover certain programs during the medium term.

During this financial year, the PSA identified 3000 small black owned enterprises that had a multiplying effect for assistance.

The PSA had made progress regarding funding. The PSA should be funded in terms of Section 12 of the Employment Services Act.

The budget for the current financial year had been increased by R104 million. This money will be used to support enterprises that are going through economic distress. The PSA believed that with this financial outlay the entity would be able to implement what had been reflected in the APP.

He also explained that the reason why the PSA chose to benchmark against Nordic countries had been as a result of their high rankings in the global competitive index.

The PSA assessed and looked at particular features such as social security and workers’ rights and the emphasis on decent work.

The PSA felt that it was important to benchmark against these countries. The PSA had also looked at certain Asian countries as well as the BRICS Nations. All these economies had an index value of over 70.

The meeting was adjourned

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