Department of Employment and Labour Annual Performance Plan 2022/23; DPME role and mandate wrt monitoring jobs security; with Deputy Minister

Meeting report

Mr Zolani Sakasa, Committee Secretary, reported to the Committee about the Chairperson’s absence due to ill-health, and called for nominations for an acting Chairperson.

Ms S Zuma (ANC) nominated Mr M Nontsele (ANC), and Mr M Wolmarans (ANC) seconded the nomination.

There were no further nominations.

Mr Sakasa declared Mr Nontsele as acting Chairperson of the Committee.

The Chairperson thanked Members, acknowledged the Minister, and welcomed the guests who were in attendance. He gave feedback on the Chairperson’s hospitalisation, and said he had spoken to her telephonically and that she was stable and would be coming back soon. He asked the Deputy Minister to make a brief introduction.

Ms Boitumelo Moloi, Deputy Minister of Employment and Labour (DEL), apologised on behalf of the Minister and indicated that on Wednesdays they had a Cabinet meeting that clashed with Committee meetings. She indicated that all the technical details of the budget review, issues of the DEL sector plan, strategic planning, annual performance review, and supported employment enterprises would be presented in the report by the Department.

 Department of Employment and Labour's strategic plan

Ms Marsha Bronkhorst, Chief Operations Officer (COO), DEL, described the main functions of the Department's four programmes. Public entities which fell under the DEL included the Unemployment Insurance Fund (UIF), the Compensation Fund (CF), the Commission for Conciliation, Mediation and Arbitration (CCMA), the National Economic and Development Labour Council (NEDLAC), Productivity South Africa, and Supported Employment Enterprises (SEE).

The Department had 125 labour centres that were fully capacitated to deal with UIF processing and Compensation Fund operations. There were 30 satellite offices, and the services offered by the Department were mostly UIF claims and the registration of work seekers.

There were 41 Thusong service centres providing a link to government services, with the well-known centre situated in Maponya Mall, Soweto. These areas were serviced by the Department, but the need for service was not high therefore there was no need to open a fully-fledged office.

Strategic Plan and outcome Indicators

Key medium-term strategic framework (MTSF) interventions were required by the DEL to ensure more decent jobs were sustained and created. Sustainable long-term growth was needed to sharply reduce unemployment. This required both broad structural reforms as well as targeted interventions.  The MTSF set a target of reducing unemployment to between 20% to 24% by 2024, with at least two million new jobs created. Job creation remained one of government’s key priorities, but some of the programmes aimed at job creation had been adversely affected by the COVID-19 pandemic, resulting in about 1.4 million people losing their jobs by the end of 2020. Consequently, the unemployment rate had reached a record high of 34.9% in the third quarter of 2021, with 7.6 million people looking for work.

The high unemployment rate among the youth remained a major concern in South Africa, as youth continued to account for the largest proportion of unemployed people. Youth aged 15-24 years and people aged 25-34 years recorded the highest unemployment rates of 66.5% and 43.8% respectively in the third quarter. About 3.4 million (33.5%) out of 10.2 million young people aged 15-24 years were not in employment, education or training (NEET).

In the medium term, particular focus would be given to recovering lost jobs and creating new ones. As a result, the National Economic Development and Labour Council (NEDLAC) had repurposed some of its job commitments to support economic reconstruction and recovery plan (ERRP) initiatives.

Seven government priorities

Ms Bronkhorst listed government's seven priorities, and their impact on the DEL's activities.

Priority 1:  A capable, ethical and developmental state. This was reflected in the administration of the DEL and its entities.

Priority 2:  Economic transformation and job creation. This involved the totality of the Department in terms of inspection and services, public employment service.

Priority 3:  Education, skills and health. This was a core business of the Department, and most importantly Productivity SA.

Priority 4:  Consolidating the social wage through reliable and quality basic services. The DEL's inspection and basic services play a major role.

Priority 5:  Spatial integration, human settlements and local government. The Department's inspection and basic services play a major role.

Priority 6:  Social cohesion and safe communities. This involves work done by labour policy and industrial relations

Priority 7:  A better Africa and world. This also involves work done by labour policy and industrial relations

DEL's strategic planning

The Department's vacancy rate had to be maintained at 8% or less. There was a baseline of 10%, and the Department had difficulty in decreasing the vacancy rate throughout the years.

A new outcome indicator had been added to the strategy -- to improve information security. The five-year target was to have a three-year cyber security.

2022/23 annual performance plan

Ms Bronkhorst outlined the plans for the Department's programmes, including the strategic plan for 2020/25 and the mitigation plan for 2022/23.

Mr Bheki Maduna, Chief Financial Officer (CFO), presented the budget allocation for 2022/23.

(See attached document for details)

DPME on progress in meeting job creation targets

The Department of Planning, Monitoring and Evaluation (DPME) briefed the Committee on its progress in meeting the MTSF 2019-2024 job creations targets during the period from April to December 2021. The presentation covered the economic transformation and job creation of the MTSF, which was a government five-year programme for implementing National Development Plan (NDP) 2030 objectives.

Due to the Impact of Covid-19, the government had had to revise its planning framework to accommodate and provide for the impact of the virus at the socio-economic level. In line with that, it had had to introduce the economic reconstruction and recovery plan as a catalytic response to the impact of the virus in South Africa (SA).

In addition to this, the DPME had also reused the current MTSF to accommodate the new operational environment.

Priority 2’s focus areas sought to achieve:

• Economic growth of 2-3% per annum;

• Unemployment reduced to 20-24%, with two million new jobs created, especially for youth;

• Increased investment, reaching 23% of gross domestic product (GDP) by 2024; and

• Increased participation, ownership and access to resources and opportunities by women, youth and persons with disability.

This could be attained only through coordinated efforts in implementing initiatives that were focused on reigniting the economy and job opportunities.

Government regulation should be fit for purpose - flexible and adaptive to accommodate the current Covid-19 operational environment and a structurally constrained economic trajectory.

Decent jobs sustained and created: Key MSTF interventions

Sustainable long-term growth was needed to sharply reduce unemployment. This required both broad structural reforms as well as targeted interventions.

The MTSF set a target of reducing unemployment to 20% to 24% by 2024, with at least two million new jobs created. Job creation remained one of government’s key priorities, but some of the programmes aimed at job creation were adversely affected by the COVID-19 pandemic, resulting in about 1.4 million people losing their jobs at the end of 2020. Consequently, the unemployment rate had reached a record high of 34.9% in the third quarter of 2021, with 7.6 million people looking for work.

In the medium term, particular focus would be given to recovering lost jobs and creating new ones. As a result, NEDLAC had repurposed some of its job commitments to support  ERRP initiatives.

The following progress had been achieved in meeting job summit commitments between April and December 2021:

• A total of 48 638 work seekers were placed through Public Employment Services (PES), and 14 771 through the Unemployed Insurance Fund (UIF).

 • A total of ten persons with a disability (PWDs) were provided with work opportunities through the Supported Employment Enterprises (SEE).

• The CCMA’s job-saving efforts played an indirect role in job creation/retention. As such, section 189A processes facilitated by the CCMA for the period under review resulted in a total of 13 858 jobs saved.

• A total of 4 891 jobs were created through Operation Phakisa, as reported by the Department of Forestry, Fisheries and Environment (DFFE) at the end of September 2021.

In the area of public employment programmes, a total of 805 502 work opportunities had been reported by the expanded public works programme (EPWP) against an annual cumulative target of 1 009 972 work opportunities. The Department was on track, as it was currently at 80% of the set annual target. Of the 805 502 EPWP work opportunities created, the breakdown of the designated groups had been 71% women, 37% youth, and 1% people with disabilities.

Barriers to job creation

The DPME described the following factors as barriers to job creation:

• Low business confidence was the single most important barrier to investment in SA, hence low employment growth.

• This lack of confidence stemmed from inefficient network infrastructure.

• Supply side constraints included administered prices (electricity, rail, port tariffs) due to high costs.

• Weak execution of government plans, such as delays in the auctioning of high demand spectrum, which resulted in allocative and productive inefficiencies.

• Policy uncertainty and inconsistency, particularly in the mining sector.

• More recently, the slow pace of Covid vaccinations.

Poor delivery of basic services and crumbling infrastructure at local level.

The Department referred to examples of poor delivery of basic services and crumbling infrastructure at the local level. These included:

• The water crisis in Lekwa Municipality in Mpumalanga, was affecting poultry farming and increasing production costs.

• Poor administration and crumbling infrastructure had led to a cheese factory closure in Lichtenburg in the North West province.

• Sub-optimal use of public procurement as an industrial policy lever, reducing the state’s buying power. 

• Illicit trade/customs fraud issues such as under-invoicing, misdeclaration and customs duty circumvention. 

• Skills constraints locking out young people, particularly in technology and innovation.

The Competition Commission report on “Concentration and Participation” in the economy highlighted the excessive levels of market concentration in practically all sectors of the economy. In the current environment, agriculture and retail industries are the worst affected, to the detriment of small, medium and micro enterprises (SMMEs).

Portfolio Committee recommendations

The process of finalising the Employment Equity Amendment Bill and the Public Procurement Bill must be expedited in order optimise participation of vulnerable groups in the mainstream economy. The DEL’s mandate extension to include ‘employment’ would assist in improving the coordination of all government’s efforts to create jobs and reduce unemployment. This work must be expedited.

Implementation of structural economic reforms was critical for new investment and employment generation, and this must be the apex focus of the economic cluster for the remainder of the sixth administration. This would enable the realisation of industrial master plan objectives.

Resource mobilisation would require the government to provide funding in support of implementation of industrial policy, such as business incentives. Industrial financing support should be at competitive rates, especially for SMMEs. The Presidential employment stimulus must be sustained in the medium term to support job creation and livelihoods while consolidating economic recovery. The implementation of Operation Phakisa initiatives in the relevant sectors must be reinvigorated and regular reports provided. There must be support for the completion of digital hubs that were lagging behind, and an increased number of hubs established to promote innovation and entrepreneurship.

(See presentation for further details)

Discussion
Mr Thobile Lamati, Director-General, DEL, confirmed that the Department had the capacity to do all the inspections. He said the APP presented to the Committee was based on the current resources that the Department had, so it should be able to meet its targets. These were the targets that the provinces had set for themselves, given the resources they had.

The reality was that the country was going to have to live with Covid-19, and there would be different variants of this virus. Therefore, the Department had taken a decision to accept that Covid-19 existed. They had noted that the government had made a call to everyone to make vaccines available. The Department had also noted the approach which government was currently taking, compared to when vaccines were not accessible.

The Department had issued a code that had been developed in terms of the hazardous biological agents' regulations. This code guided employers on how to deal with Covid-19, especially now that they were looking at withdrawing the Disaster Management Act. The other thing was that the Department had just published the hazardous biological agent regulations which for the first time classified Covid-19 as a biological agent. This would therefore compel employers to a certain extent to mitigate the risk of exposure, and those already infected may need to take necessary steps to reduce the exposure. If they issued the code of practice to employers, it also suggested that they must implement the same as a Department. There had been a push to do away with the Disaster Management Act and to relax the other protocols requiring compliance. As the Department was an employer, it was compelled by law to make sure it took care of its employees. They must not be exposed to all sorts of risks that could lead to injury or result in contracting occupational diseases. He believed that they had taken the steps to mitigate the effect of any Covid wave that would come while trying to normalise the situation in the Department and in the country.

DPME's response

Ms Mmakgomo Tshatsinde, Deputy Director-General: Sector Monitoring (DPME), extended the Department’s apology on behalf of their members who were absent, and said it was her role to lead the delegation.

Ms Palesa Shipalana, CFO, DPME, said it was very important that they have a line of sight in terms of where the country was going and also what they needed to achieve. They were in the mid-term of this administration, and their performance in this area, which was very important for employment and labour, was quite alarming. They had only ten years left to achieve the objectives of the long-term National Development Plan (NDP). The decisions would give impetus to this long-term plan. The Department was very important and critical as a driver and a coordinator in this area, unlike other departments, which were only contributors to what needed to be done. This was the reason why it was important that departments work together and help one another to reach their objectives.

There was a realisation that one needed to align every year to identify what the key areas were which were going to provide a lever to guide government’s performance. During the time of budget prioritisation, the Department knew that there were budget challenges and that government funds were limited. A prioritisation process was going on. During that process, National Treasury and all the departments came together and considered the key priorities for this time of stabilisation and recovery in terms of the ERRP. This was where the national annual strategic plan came in -- it had identified the ten priorities to which all the departments had to align. If need be, the monitoring and planning team could address the Committee regarding this.

During the Department's round of bi-annual reporting to the Cabinet in January, President Ramaphosa specifically indicated that he wanted the Department to look at the binding constraints. The binding constraints were the systematic issues in government as a whole that were hindering progress, and it looked like they were regressing. This had happened way before the effects of Covid-19 -- in general, things were deteriorating slowly, including employment.

The priority of each department should be to identify the challenges in areas covering the whole government sector, and not just those of the departments. This was the reason why a priority of each department was to come up with systematic challenges in areas covering the whole government sector, propose remedial action based on the evidence they had, and provide information obtained through research and evaluation.

Government was focusing on the key issues that would be the driver of performance going forward. In the Department, the linkage was that it was the driver or contributor to Priority 2, and it was working together with everyone to pull the country towards the trajectory which was needed.

Ms Shipalana said that they met with the departments officially at the end of each quarter and engaged on two things -- programmes that were lagging behind so that blockages could be identified. They received quarterly reports from the departments which were assessed, and then later engaged them formally in a long session where they dealt with performance challenges and identified solutions together.

The DPME monitoring framework required the departments to submit MTSF performance reports twice a year. Those reports were followed by the monitoring Department conducting their own fieldwork or site visits to key priority programmes identified in each department. Both reports would be combined to prepare the MTSF report for the Cabinet during the "Programme of Action" week.

During the past three months, the DPME had engaged the departments because they were facilitating visits in preparation for the submission of the MTSF bi-annual report at the end of April. This year, it was preparing to conduct a mid-term review of government reviews against the MTSF, because they had come to the mid-point of the MTSF and the current administrative electoral time frames.

She indicated that this year there would be additional engagements to deal with the mid-term reviews and the performance of departments against their MTSF targets.

Ms N Mkhonto (EFF) said she was uncertain if her question would be aligned with the agenda of the day, but there had been an outcry in SA over the Public Service Wage Bill. When jobs had to be created, social partners had to come into the picture -- for example, SMMEs and so on. However, from the government's perspective, how would the issue of the public service wage bill be balanced with the creation of jobs? SA had one of the highest public service wage bills amongst the countries evaluated. There was a high vacancy rate of critical skills that were needed in the public, such as educators, doctors, nurses and so forth. The presenters had come up with this diverse range of programmes that were meant to create jobs. The question was, how would this be balanced?

DPME's response

Ms Tshatsinde said the Department understood the outcry over the public service wage bill and need for the creation of jobs. The government was creating jobs and needed to be mobilising the rest of the country. However, one of the major challenges they were experiencing was the wage bill and the capacity of the state. The President had also spoken about this recently.

The capacity of the country was the issue giving the Department challenges across all spheres of government. Government needed capable people who could do the work. Looking back at previous government previous projects involving tenders, contracts etc, a lot of money had been wasted. The strategy now was to create the capacity to be able to do work. They were moving in the direction of in-sourcing rather than outsourcing all the work done in government. This was exactly what was being done in priority one -- dealing with capable capacity and a capable state in areas of competency.

The Department was not yet certain on how to move forward, but there were a number of initiatives on how to capacitate the state to do what needed to be done. These were also so that jobs could be created, not only by government, but everybody responsible in the country. Their concentration was mostly focused inwardly, looking only at the government. However, it was also necessary to look outwardly at the whole country and mobilise everyone to create the jobs required. Government on its own would not be able to create jobs or the kind of skills required by the country.

Closing remarks

Ms Tshatsinde indicated that she had taken the liberty of providing additional information because the DPME hardly found an opportunity to do so. The Department had made a contribution by providing the whole priority report on the website. All the materials had been attached and could be found on the its website. The whole analysis of this sector's priorities had been posted for everyone to access.

The Chairperson said the Committee would make use of this report to pursue its oversight responsibilities, including its interface with the Department. This included areas where there were gaps, to make sure that they were not lagging.

Deputy Minister Moloi took the opportunity to thank the presenters, saying it was necessary to get closer to the DPME. Their presentation was key and important in relation to the work that they did. However, it would be more beneficial if their briefings were done on a quarterly basis to check if the set targets were achieved. She would engage them further in order to get closer to them. The Committee could see that there had been improvements in the Department’s strategic plan compared to previous years. The presentation had been necessary for the Committee to continue to monitor whether the Department would stick to the targets they had set for themselves. The Department would come back from time to time and give feedback on the work that they did with departments. They would be working together with the Portfolio Committee on its oversight work

Lastly, she sent a message of speedy recovery to the Chairperson.

The meeting was adjourned