Compensation Fund, Unemployment Insurance Fund, Supported Employment Enterprises: Quarter 1 and 2 financial and performance briefings

Meeting report

The Department of Labour (DOL) briefed the Committee on the first and second quarter performance for the Compensation Fund, Unemployment Insurance Fund and Supported Employment Enterprises. Detailed figures and descriptors were provided, target by target. For the Compensation Fund, it was noted that in quarter 1, 58% (20 183) of the registered claims were adjudicated by the end of the quarter, and in quarter 2, 84% of claims had been adjudicated. Many of the benefits were paid within five days. A Compensation Benefits adjustments for 2017/18 had been finalised and recommended by the Board to the Minister. Consultations with medical stakeholders were still continuing on the annual review and approval of tariffs. An electronic case management system would ensure improvement in management of litigation claims. Overall, in quarter 1, performance against targets was 46% and in quarter 2 it was 50%, although Programme 1 achieved nothing. Members asked about tracing, the need to have consistent information across the backlog and lists of claimants to be published asking them to come forward, and wondered if the DOL could assist in tracing. Less expensive alternatives should be found. Members asked about the 70 000 backlogs in the Legacy Fund and why these had not been mentioned specifically, asked what efforts had been made to retrieve payment and stressed that this was a very serious issue. It had arise through a system where provinces were merely forwarding claims but decentralisation was expected to help. Members asked why the Fund was outsourcing some work. They took issue with the description of some targets as “partially” achieved, wanted more details on the restructuring of the Fund and heard that it was hoped that implementation on this would begin in April 2017.

The Unemployment Fund had overall performance against targets of 58% in quarter 1 and 75% in quarter 2. It primarily aimed, through Labour Activation programmes, to fund poverty alleviation schemes. It had not achieved its annual target for funds to be transferred for turnaround solutions being implemented by PAS, having achieved only 25% against a target of 80%.

The Supported Employment Enterprises’ main indicator was percentage increase of gross profit, which should rise to 41%, and sales gross profit margin of 39%. However, the targets were not achieved, with the Enterprises in fact experiencing a 183% gross loss. Members asked whether it was not preferable for government to rather support other existing institutions for the disabled in supporting employment for disabled people and commented that government itself was not good at creating employment although it had a better track record in facilitating it worldwide through existing employment opportunities. They commented that the mandate of the entity should be reviewed, but the Chief Executive Officer said that the entity would have to become a defined legal entity to do trade, and meet the expectations of stakeholders wanting to contract with it. It was being held back by DOL processes which slowed down decisions and made its operations unsustainable.

Members noted that 22 to 31 March would be devoted to oversight of clothing and textile industries. Up till now, Members had focused on workplaces and employers rather than specific DOL projects and thought that the focus should shift, with spot and unannounced visits to some of the flagship projects.

Minutes
First and Second Quarter (Q1 and Q2) performance of Department of Labour (DOL) entities
The Compensation Fund
Mr Vuyo Mafata, Commissioner, Compensation Fund, presented the performance against strategic objectives for Q1 and Q2 of the 2015/16 financial year. The presentation (see attached document for all details) set out the objectives, measurements and statistics.

Overall performance in Q1was at 46%, with individual programme performance ranging from 33% in Programme 2 (Operations) to 60% in programme 3 and 46% achievement overall. Specific performance indicators included:
- 100% of approved benefits paid within 5 days
- 58% (20 183) of registered claims adjudicated by the end of the Quarter
- 96% (4 491) of received compensation benefits finalised, 78% of medical invoices finalised
- All registered compensation claims were adjudicated within 60 working days.

Overall performance in Q2 was at 50%. Programme performance averaged 50%, although Programme 1 had a 0% achievement. Specific indicators included;
-
100% of the R 2.1 trillion approved benefits were paid within 5 days
- Compensation Benefits adjustments for 2017/18 had been finalised and recommended by the Compensation Fund (CF) Board to the Minister
- Consultations with medical stakeholders were ongoing around the annual review and approval of medical tariffs
- Chronic medication distributor had been appointed (Pharmacy Direct)
- The project schedule was agreed for an Electronic case management system
- 84% (66 184) registered claims were adjudicated by the end of Q2.
- 95% (6 618) of benefits were finalised, and 85% of invoices were finalised
- 92% of registered claims were adjudicated within 60 working days.

Targets were not achieved in Q2. CF risk management maturity was to be improved annually up to differing levels, by 31 March 2017, and the first target was to review one strategic risk register by 30 September 2016. This had not happened and it had not even started. He explained that Q1 targets had to be carried over to Q 2, which meant that the Strategic Risk assessment then had to be moved to Q3. The Committee was told that the appointment of the Service Provider would bring capacity of the Risk Management Directorate and the Register should be compiled by the end of Quarter 3.

Another target not met related to a review of six operational risk registers by 30 September 2016. Five risk assessments were conducted. The register outstanding will be added to the Q3 and 4 plans, and will again involve assistance from the service providers.

The review of the Risk Appetite and Tolerance Framework by 30 September 2016 did not take place, for the same reasons around overlaps. It was re-scheduled now for Q4. Policy and strategy documents had been attended to.

In Q2 it was intended that 45% of cumulative projects as listed on the risk audit plan must be executed by end September. 32% of projects were executed to date – some from each of the 2015 and 2016 financial years. The delays were occasioned by outstanding sign-offs, but this would be escalated. Furthermore, a review would be done of the planned hours and the project plan must be revised to take into account the planned leave and training.

Another non-achievement related to the percentage of active registered employers assessed annually by 31 March 2017, where only 62% was achieved instead of 75% of the annual target. This delay was due to non submissions in return of earnings forms by some employers. The outstanding matters would be assessed by Q3

The CF was also supposed to clear the 141 findings arising from the Auditor-General’s reports, by 31 March 2017, in respect of the 2015/16 audit report. 19 of those should have been cleared by end September but actual performance was zero. The CF explained that it had decided, rather than spending time clearing the errors, to rather focus on what would have to be done to prevent a future recurrence. An action plan was developed and was now being monitored weekly.

The CF fell slightly short of its targets on vacancies, having had a vacancy rate of 11% instead of 10% in September. It was reviewing all job profiles for posts before advertising, following the skills audit, with a longer-term action plan in place to fill posts. Reports were being made every two weeks to Exco.

As mentioned, the CF was working on moving to electronic case management systems; it was supposed to source a new system by 30 September but that intention had now changed and it would be using its existing SAP CRM system, which was due to be delivered and upgrade on 3 April 2017.

There were some incomplete claims by end September, with 84% of registered claims being adjudicated instead of the target of 85%. The CF would be following up on outstanding information by contacting both employer and employee.

Analysis of Q2 injuries
Mr Mafata said that an analysis of injuries was being done in the workplace. The CF took a decision to focus on twenty industries with high numbers of injuries reported (see attached presentation for breakdown). A further breakdown was presented of injury rates by gender.

The next reports looked at the progress on claims processing in respect of medical, compensation and pension claims, with a comparison to the figures over the previous four years. The benefits paid were also set out in similar way.

Discussion
Mr M Bagraim (DA) appreciated the frank presentations. He also reiterated the Commissioner’s continued engagement on the two or three complaints he sends to the Commissioner’s Office each week. However, the number of complaints coming in from the public each week was not dropping.

He noted that the 70 000 complaints backlog reported at the end of 2016 had not been addressed, and he also asked whether the Department is assessing the historical plans.

Mr Bagraim asked how the Department intends to ameliorate the issue of missing documentation for claims.

Mr Bagraim wondered whether the report that the least number of injuries happened in farming industry was correct; farmers were working outside, with various tools and equipment. He thought that perhaps farmers were not permitting their employees to submit any claims because this was thought to reflect badly on the company. For this reason, he suggested that more inspectors and more funding were perhaps required. Employees who were reporting that their employers had not completed the necessary compensation forms were leaving themselves open and exposed.

Ms D van Schalkwyk (DA) commented that the overall performance of 46% for the two quarters under review was of concern. She added that the CF had not produced the financial performance for the two quarters, and it would be important to check this against the overall performance figures of 46%. She was pleased to see the full payment of approved claims within five days, in line with targets.

Ms van Schalkwyk was concerned about slow progress in addressing the findings of the AG; there had been only partial attention to this, and she wanted to know what steps had been taken to ensure that everything would be addressed by Q4 to prevent a repeat of the audit outcomes.

She also asked if the internal audit has been conducted and whether it did address the audit findings of the previous financial year.

Ms van Schalkwyk was concerned at 0% performance for Programme 1 in Quarter 2, asked what would be done to address that, and when the case management system would be finalised and implemented; reports that it was “in progress” without any results were not helpful. She asked what the current vacancy figure was, noting that a number of people had been employed.

Mr T Rawula (EFF) said that the failure to achieve targets was a serious concern. He asked about provincial operations, which was only vaguely addressed, and pointed out that no demographics were specified..

Mr Rawula wanted to focus on areas where there had not been achievements. He asked how the CF would handle consultants for risk management in the future. Entities were generally discouraged from relying on consultants, and this was even worse if they were blamed for lack of performance, so it was necessary to try to build internal capacity.

Mr Rawula said the Commissioner indicated that by the end of the Quarter the Department achieved 58% for adjudication, but the period of time was not provided. He asked for clarity on the days for adjudication.

He then commented that nothing was said about the Legacy Fund which refers to the 70 000 backlog of payments, and he asked whether the figures given included the backlog. The last CF presentation reported that this backlog was due to lack of information provided by the Compensation Fund. He asked whether the CF has made efforts to retrieve the information.

Mr Rawula noted that mining was not represented in the list of top 20 injury-related industries, and wondered if it should have been. He also said that there was a discrepancy regarding the low injury rate in the farming sector. The Committee had been informed that there had been a claim that a farm worker was killed when mistaken for a wild animal in the bush.

Mr B Mkongi (ANC) asked if the CF has any document which speaks to the reasons for injuries. He said that he was especially interested in the reasons for high injury in the food and retail industry.

Mr Mkongi said that in the previous week, other entities in the Department of Labour had told the Committee of the actual reasons behind their non-achievement and he asked that the CF do the same. It seemed from the reports that there was dramatic increase in the turnover of funds because of the employment of new staff. He asked where the new staff have been deployed to, and asked that the claims of insufficient capacity must be explained against the statement that there seemed to be an increase. He asked at what level capacity was required.

Mr D America (DA) referred to the turnaround strategy and the restructuring of the functional and organisational structure of the CF, and asked if all was on track for implementation from 1 April 2017

Ms van Schalkwyk noted the challenges regarding the audit findings, and asked the Department to confirm the vacancy rate.

Mr Mafata said that the challenges in dealing with the reported backlogs are related to information required from clients, as most of the claims date back to the early 2000s and some even date back to the 1990s. He said that the CF has been able to deal with 34 000 claims in the two quarters under review. Several projects have been implemented to address backlogs, including publication of requests to people to come forward, in national and community newspapers and on radio stations . However, the response was not as good as hoped. In addition a tender had been finalised to employ a tracing services company; the CF often knew of details, but did not know if the claimant was alive, nor his or her banking details.

Mr Mafata said that the CF has changed systems and that in the past eight years or so the CF has used three claim systems, with information sitting in the different systems. It is now s attempting to integrate the data in the systems, because any backlogs in the systems reflect that the claims have not been finalised, which is incorrect. This will avoid the payment of duplicate claims.

The Chairperson asked what details the Department has for claimants which results in the CF being unable to reach or locate the claimants, and why it was unable to reach the public.

Mr Mafata said that a claim with the Compensation Fund is triggered by medical reports. Sometimes those were missing. Sometimes banking details may be missing, or the doctors’ claims have been submitted but the employer’s notice of incident does not exist. The CF and Department do hold claimant information, employer information and address at the time, however there is also an issue of labour migration. The tracing agency should now be able to address that problem and re-establish contact where it might have been lost.

The Chairperson said that the CF had only responded partially. Information which is most critical to the claim is the medical records, as the addresses often do not match and claimants will be difficult to locate. She asked how much had been budgeted for the tracing company and whether the use of consultants will not create more problems. Because claims come from different provinces, she suggested that the offices in each province should communicate what the problem is relating the claims in the province. She was unsure why a tracing company should be required and wanted the CF to explain what a tracing agency could do that the CF could not, and what exactly it was expecting.

Mr Mkongi agreed that this was a very important question and asked that a written answer be supplied if the Department could not answer now. More discussion was needed on the pros and cons of using an outside company instead of internal staff. The money is meant to be given to the claimants as compensation and therefore it is a priority issue.

The Chairperson asked what it is that the CF could not do that requires the services of consultants.

Mr Mafata referred to the legacy backlog which comprises the claims that were lost with the Compensation Fund a long time ago. He said that the role of the provinces in the past, was merely that of being a “post office’. Claimants would submit claims to Compensation House in Pretoria, therefore there are no records of the claims submitted in the different provinces as they were not a part of the process. The functions have been decentralised so that provinces play a role in the process and it is easier to trace and locate a claimant.

Mr Mafata said that the Department promised to run advertisements and approach the radio stations, however it was unable to solicit a better response from the claimants. 34 000 claims have been sorted out. 36 000 claims have not been processed because the claimants cannot be located. The staff employed by the Department have a specific function to perform and are not in the position to go out and look for the claimants, which the Department is finding very difficult to do.

Mr Mafata said that the Department has decided to use the services of a tracing company. Tracing is not a function performed by the Department, it may appear to be an outsourcing of the functions of the Department of Labour, however the Department does not view it that way as once staff is trained the processing and adjudicating of claims will commence. The money which will be paid to the company will not be taken from the money allocated to these claims.

The Chairperson said that verification has to be conducted before payment is made. She asked whose responsibility it is to find the details,

Mr Mafata said that the responsibility to report the incident rests with the employer. If the employer cannot provide the details because the person is no longer residing in the area or at the same place of employment, it is difficult for the Department to locate the claimants as it relies heavily on the information reported by employers.

The Chairperson asked why pay more money to a company to trace the claimants. She said that it is not that the Department does not want to pay, as it has appealed to the public to come forward with regard to compensation claims. The Chairperson said that the people comprising the backlog should be clear, and able to compare with the lists of claimants provided to the Members for their constituencies which can be published. The Chairperson said that it is uncertain whether the company will be able to trace the claimants as the Department has faced challenges regarding this. She said that while it is not the Department’s mandate to trace claimants, the Department works with various entities. She asked if it is the responsibility of another Department to locate the details. To save the State’s money, a less expensive alternative needs to be identified.

Mr Mafata said that retrieving the details is the responsibility of the CF. He said that however, responsibility to report a claim to the Compensation Fund rests with employer of the claimant.

Mr Rawula said that the role of the provincial offices has not been addressed. He added that the Commissioner indicated that information such as medical reports are an issue. As long as individuals remain claimants, the information of companies is available however claimants are rated by their relationship with the company and employer and the role of the companies in assisting the CF is unclear.

Mr Rawula said that it is a compliance issue. The CF represents claimants yet cannot trace them and he suggested that if the CF were to report that companies are not cooperating, a compliance order will be issued. Mr Rawula said that there is no indication that the claimants were traced through the companies. He agreed that it there was no such proof, then use of the consultants was wasteful.
Mr Bagraim congratulated the Department for the 34 000 cases which were located. He noted that his question would refer to those who phoned regularly to complain that although their claim was submitted they had received no follow up. Members were aware of files and paperwork lost, which meant that the CF faced a massive task of recreating files. He recommended that the CF broadcast appeals on SAfm.

The Chairperson, with Ms van Schalkwyk adding her support, added that appeals through radio stations should be made in different languages to make it more accessible to the public. The Committee will support the CF and Department of Labour in creating temporary employment for unemployed students for the tracing in the provinces.

Mr Mkongi thought it possible that some of the claimants are deceased, and suggested liaison with the Department of Home Affairs. t

Mr Mafata said that the Compensation Fund has partnered with the IES branch in the Department of Labour, and would contribute to expanding capacity there with Occupational Health and Safety to try to prevent more workplace injuries and disease. Focus programmes have been initiated for employers and employees and vulnerable workers in order to advocate rights in cases where employers are not reporting incidences of injury.

Mr Mafata agreed the 50% overall performance for Q1 raised concerns, but pointed out the positive of improvements in the processing of claims at 80%. What appears to be dragging the CF down are the indicators for administration and support services. Progress is being made, although it is not reaching the target set for this quarter.

Mr Mafata said that the Department will provide the financial aspects in the next quarterly report. He noted that issues relating to the AG findings and financial misstatements are a “work in progress”.

Mr Mafata said that it was important to deal with the root causes. Revenue management has been the source of disclaimers for the fund for a number of years. By January, ten out of the 15 findings had by then been dealt with. He was mindful that addressing the root causes will take longer than singly addressing the findings.

The Chairperson indicated that the Department of Labour had sat down with the AG and reached an understanding on some points, yet the final report seemed to reflect something very different. Progress was needed.

Mr Mafata agreed that there had been meetings with the AG and the matters would not recur. He said that when audit findings are addressed, they are referred to internal audit for verification and then to the AG for external assurance.

The case management system handles in-house tribunal hearings for cases in external courts, and it was hoped to complete this by end Q1 in the new financial year. The Compensation Fund initially wanted to use the current system used by the Commission for Conciliation, Mediation and Arbitration (CCMA) but found that it was not suitable because of the different kinds of work. The CF would use SAP and customise the system for the cases. The system should be finalised and ready for use by July 2017.

Mr Mafata said that the vacancy rate has required ongoing work and one of the biggest challenges for the Department has been the ability to attract medical expertise. Now, medical doctors were appointed, and disability managers and case managers were being appointed. The remuneration packages across different departments were competitive and many staff had been poached, but employees would be starting. There would be vacancies in the provinces in which the Department decentralised the medical service practitioners and administrative staff. Provincial offices must adjudicate and process claims, although Head Office provided coordination and support., and also played a role although in theory it was the provincial offices who had responsibility for adjudication and processing of claims. The provincial breakdown of finalised claims was not included; it would be set out in the next presentation.

He clarified that restructuring aims to address the issue of capacity in areas with a high reliance on consultants. Insufficient capacity was provided in the current structure on risk management and support for the investigation of fraudulent claims. In the revised structure, a stand-alone fraud investigations unit will deal with the issue relating to medical records and medical service providers. Capacity will increase once the structure is approved and implemented. The business will be segmented into three focused areas which will result in added capacity to eliminate the reliance on consultants. Currently, consultants are only used in the area of risk management.

Mr Mafata said that injuries in the mining sector were represented in the presentation under subclass 4 (mining houses), which listed 4 138 reported claims in the first two quarters. The Minister issues licenses for compensation in the mining sector. Rand Mutual Insurance is responsible for the Compensation Fund in the mining and ore and steel sector. Uncontrolled mines can register directly with the Compensation Fund. The CF did not have a breakdown of the reasons for injuries, although this information would have been included in the accident reports filled by employers. As part of the Department’s relationship with IES, the Department will provide information to the CF on the claims to determine the nature of inspections and advocacy work required.

Mr Mafata said that the target to adjudicate 85% claims cannot be achieved unless the Department achieves 85% or more based on the Department’s legend.

The Chairperson asked what were the said short-term targets for each Quarter, and added that she was not sure how the CF could achieve 100% by the end of the year if the current progress for some of the targets is 0%.

Ms van Schalkwyk requested clarification on the targets which had not been met. She wondered if the CF and Department were simply intending to roll over targets to the next quarter, and she wondered if the Compensation Fund will only take into consideration these overall targets at the end of the financial year.

Mr Mafata said that the targets are quarterly, but accumulative. If a target is not achieved in Quarter 1, the Department will continue to work on it in Quarter 2, and the same applied to the claims in respect of the targets that were rolled over. Addressing the individual outcomes at the end of the year as a number creates issues for the AG because there will then be an annual report and Quarter 4 report which do not reconcile.

The Chairperson asked what was overlooked when setting the targets, and what the challenges had been that meant the targets have not been achieved.

Mr Mafata said that when the CF reports to the AG, it does not reflect the “partially achieved” for the purposes of tracking progress for each indicator. Each branch is required to have a breakdown of achieved or not achieved, to project whether the branch will be able to “catch-up” by the end of the financial year. Partially achieved targets are linked with the expenditure, because money and resources have been spent to achieve against the target. The next report to the Committee will reflect the partially achieved targets and how much was spent on achieving each target.

The Chairperson said that “partially achieved” targets posed a problem when the Committee was not sure of the numbers. The Committee wanted to know what “partial achievement” meant, and why they were only partially achieved.

Mr Mafata said that the Minister approved the restructuring of the Compensation Fund. Mr Mafata said that the necessary consultations were taking place with the Department of Public Service and Administration. The consultations were completed at the end of January and inputs were made regarding the alignment with government. The revised structure, as consulted on with the DPSA, is being resubmitted to the Minister of Public Service and Administration. The Department is hopeful to receive feedback before the end of March 2017 to begin implementation in April 2017.

Mr Mafata said that focus has been on the core business of the CF in terms of revenue and claims processed in preparation for the functional recruiting. The medical claims unit had been separated from the compensation claims unit,to ensure that there is specialised focus and greater monitoring. This has contributed to the increased rate at which claims have been processed and paid.

Ms van Schalkwyk requested proper assurance that proper consultation has been conducted with the employees and their representatives, thus taking the relevant stakeholders into consideration.

Mr Mafata said the Compensation Fund is conducting the necessary consultations, and further consultations will be conducted with organised labour after receiving the Minister’s approval on the revised operational structure.

Mr I Ollis (DA) arrived at this point, apologising for his tardiness. He asked what the progress was on claims processing ,and why there was a decrease from 205/16 to 2016/17.

Mr Mafata said that the figure relates to payment for permanent or temporary disability. The figure in 2015/16 is completely independent of the number of claims and the amount assigned to groups of disability claimants. The figure is dependent on the number of claims and is not linked to the previous financial year.

The Chairperson thanked the Compensation Fund for the presentation, and stressed again that the process should be speeded up. She noted that the presentations to the Committee should reflect progress and greater clarity.

Unemployment Insurance Fund (UIF) Performance Report:
The representative from the Department of Labour noted that the constitutional mandate of the DOL to do with unemployment insurance funding was important. In section 27 an obligation was cast provide adequate social security nets to protect vulnerable workers.

He outlined the policy mandate of the UIF, which was the creation of decent employment, while also being able to have security nets to protect vulnerable workers. In the medium term, the UIF would contribute to the Department in the following financial ways:
-Outcome 4: Decent employment through an inclusive economic growth
- Outcome 12: An efficient, effective and development oriented public service and an empowered and inclusive citizenship and
- Outcome 13: An inclusive and responsive social protection system

The Fund would also be contributing to some strategic objectives of the Department of Labour – namely
-Contribute to decent employment creation (DOL strategic objective 1, Outcome 4)
Strengthening social protection (DOL strategic objective 5, Outcome 13)
Strengthening institutional capacity of the Department ; (DOL strategic objective 8, Outcome 12).
Later in the presentation these outcomes were set out and further expanded upon.

The Unemployment Insurance Fund’s strategic objectives included:

improve financial management (DOL strategic objective 8, Outcome 12)
- improve service delivery (DOL strategic objective 5, Outcome 13)
- improve compliance (DOL strategic objective 3 & 5, Outcome 13); and
- Fund poverty alleviation scheme (DOL strategic objective 1, Outcome 4)

Finally, it was working to its own strategic objectives of contributing to employment (SO1 and outcome 4), strengthening social protection(also under objective 1)and strengthening institution capacity. That wording had been carried over into the reports.

Unemployment Fund (UIF) briefing
The objectives of the Unemployment Fund included work done on:
-Outcome 12: Improve financial management
-Outcome 13: improve service delivery
-Outcome 13: improve compliance
-Outcome 4: Fund poverty alleviation scheme

Some of the contributions by the Fund were then outlined. The increase in contributions collected by Mr Bailey at least cam up with a rate equal to the prevailing Consumer Price Index.
Increases in the rate of processing claims were achieved in order to pay within the targeted service and turnaround times. It would contribute in the various schemes designed to alleviate the harmful effects of unemployment ,which includes investing mandated funds in Social Responsibility Investments . Finally it would maintain effective systems of internal control as required by the Public Finance Management Act

The delegate proceeded to outline the strategic objectives and attainment against them, for Q1 and 2 (see attached presentation for full details). In summary, financial management was 66% in Q1 and 100% in Q2. Service delivery over the two quarters was at 50%. Overall achievement for UIF was 75%. Fund poverty alleviation achieved 33% in Q1 and 67% in Q2.

The delegate then set out the key performance indicators and reasons for variance under each of the separate programmes. For Programme 1: Administration, the return on investment was achieved and exceeded with a 4.82% return on investments by 30 September 2016. The strategies had been revised for the next quarter because of the economic rebalance still going on. Administrative expenditure was kept at 10% of revenue. Social investment committed was targeted for 80% by the end of the year and was on target, with new deals in the process.

Under programme 2 the key aim was to improve service delivery, which was judged by percentage of valid claims with complete information approved or rejected. The annual target was 90% of valid claims, and a five week decision period. The provincial breakdown was given. In Gauteng, Limpopo, Free State, Eastern Cape the target was not achieved, with percentages in the 80s . It was achieved in North West with 95%, Mpumalanga with 92%, Kwazulu Natal with 94%, Western Cape at 93% and Northern Cape at 96%. Taken overall the UIF was under target on this indicator. In October and November performance had risen to 90%. The reasons were ascribed to slow network performance, limited bandwidth regular system downtime and lower compliance levels. It would be corrected since the Data Centre tender process has started and standard forms and directives were being developed, along with a major drive to encourage compliance. A Service Delivery Improvement Plan (SDIP) team was visiting the provinces. Recommendations from those performances doing well would be shared with others.

The second indicator related to u-filing claims submitted, and this was achieved. Communication campaigns had been key to the process.

The third indicator was boosting the registration of employers, and this target was achieved, with 31 755 new employers were registered. Again sound communications was the deciding factor.

The fourth key performance indicator was the percentage increase in revenue. Although the achievement was below the annual target of 7.5% by March 2017 it was well on track, with a 6.42% increase in contributions of revenue up to September compared to the previous year.

In relation to compliance to the UIF Act, the target was achieved, as 13.15% of the current balance (R209million) was collected. Debt collection had improved, and SMS messages were used by the provinces to follow up on debt.

The number of employers using u-filing was not achieved because it was not user-friendly. However it was being modernised.

Programme 3 aims to fund poverty alleviation schemes, and its KPIs were percentage of budgeted funds transferred for turnaround solutions to the Labour Activation programme. It was not achieved because the accounting by Productivity SA for funding transferred in previous financial years was not satisfactory and had a knock-on effect. There was an investigation under way into possible mismanagement of funding.

The next strategic objective was the turnaround time to approve or reject Training Lay-Off Scheme applications received from the Sector Education and Training Authority (SETA). This was achieved and one scheme approved. The target to transfer funding back to the SETA after approving the scheme was also met.

The presenter presented an analysis of claims processed between April 2015 and September 2016. The top five sectors were:
Personal Services (Restaurants, laundries and beauty shops) – 252 678 (22%)
Trade (Plumbers, electricians, welders) – 251 721 (22%)
Building – 100 060 (9%)
Agriculture – 92 600 (8%)
Air – 66 329 (6%)

The age groups were also summarised. The highest was in the 26-35 group at 39%.

The benefits claims reasons were then also summarised, with the highest being expired contracts at 37%, and dismissal at 19%. Retrenchments were at 16%. The top ten industry sectors by age, gender, and the claims breakdowns were given (see presentation). There was also a breakdown by province, with the most claims coming from Gauteng, followed by KZN. It was said that the top ten industries which constitute more than 60% of the claims would require further investigation on the levels of compliances. Compliance and inspections strategies should be informed by areas of high claims. In addition, interventions would be assessed on increased according to where increased take-up was needed.

The Labour Activation Programme (LAP) Pipeline Project was then summarised. For the UIF-MERSETA Artisan Development Project 2. UIF had targeted 1 000 learners and currently 157 were receiving training. It was busy with the recruitment of learners . There were MoUs with 29 learners for experiential training.

The AGRISETA project specialises in farming together and mixed short skill training, and agriculture learnerships. The Department targeted 2 000 learners for farming and short skills training, and 700 for agriculture learnerships. No UIF beneficiaries had started training although there was a R15.9 million commitment. It was busy with recruitment of learners and training should start in February 2017.

The third project was .TETA Project 1 (Putco). The Department targeted 642 learners and had that number already in training, with a commitment over four years.

The TETA Project 2, specialising in spraying, painting and motor mechanics, and new venture creation/Business Skill Training, was targeting 3 600 learners and 300 learners respectively. This was also due to run to October 2019 and the MOUs were being finalised.

The Technical and Vocational Education Training College project targeted 1 162 learners. UIF beneficiaries are currently being trained in building and civil construction. Each TVET caters for 50 learners, four months in class doing theory and eight months doing workplace exposure in the Municipality Infrastructure project.

The sixth project was “NWU” and 100 of the 150 targeted were in training.

Partnership schemes not yet implemented included the UIF-Moses Kotane Institution training, which was a Maritime Enterprise Development training on boat building, skippers license, maritime imports and exports management and maritime technicians. The programme is funded on a 50/50 basis. The Fund will engage with Department of Public Works by February 2017. The next project was with the Department of Energy, on Solar Geyser Installation. UIF has committed R36 750 000.00 and the Department of Energy has committed R60 000 000. The initial target was 54 municipalities, now raised to 77, all of whom had signed service level agreements, and engagement would by ongoing up to February 2017.

The partnership with the Department of Works (DPW) is on construction skills. It is 100 % funded by UIF, with DPW to provide workplace experience. The partnership with the Department of Human Settlements also focused on construction skills, and again is fully funded by UIF, with the Department providing workplace experience. The SAMSA partnership on maritime skills is also fully funded by UIF.

Other partnerships (see attached presentation for full details) included those with:
- Eastern Cape Socio Economic Consultative Council: for new venture creation, 80% funded by UIF
- Coega Apprenticeship training: focuses on apprentices, drivers and FET placement stipends: 75% funded by UIF

Other schemes were in the pipeline, but were still waiting for MoUs to be signed. These included
- In line with the Minister of Labour budget speech, projects through Expanded Public Works programmes in the provinces, including clearing of alien trees, skippers licences, grass cutting
- formation of cooperatives
- Partnership with Department of Small Business Development
- Interdepartmental partnerships for employment and business opportunities to help with alleviating drought

Supported Employment Enterprises (SEE) 2016/17 Annual Performance Plan progress
Mr Silumko Nondwangu, Chief Executive Officer, Supported Employment Enterprises, noted that the SEE was set up to operate a national network of factories and factory outlets that contributes to the economic empowerment of people with disabilities. It provided employment and training opportunities to the disabled and would support their transition to mainstream employment. It was governed by the Employment Services Act. Disabled persons included those with permanent disablement as defined in the Compensation for Occupational Injuries and Diseases Act, 1993

Describing the progress on the 2016/17 Annual Performance Plans he said that in Q1 and Q2 it had achieved r63% and 75% against performance targets, which was a significant improvement on the 20% shown in the previous year.

He took the Committee through the performance information, describing the key outputs, the key indicators to support that output and the deliverables (see attached presentation for full details).

In relation to increasing sales of goods and services, consultations were finalised with factory managers and production norms and standards were developed. The aim was to increase the gross profit margin to 41% and achieve a sales gross profit margin of 38%. The target was not achieved. Instead, SEE experienced a 183% gross loss. The budget was R0 and there was no expenditure.

He explained that there was, nationally, no Saligna wood available to produce the school furniture order for the Eastern Cape Department of Education. There had been a change in the accounting treatment and all factory expenditure was now regarded as cost of sales, which was why the figures reflected as they did. To try to address this, a second urgent tender for suppliers of Saligna has been issued. There is a possibility of securing it from SADC countries. The tender includes the supply of the component as well as raw timber.

SEE's main aim for effective and efficient financial management was to reduce the percentage and number of audit findings by 30% per annum or 5% per quarter. Audit findings were now reduced by 44% and an audit action plan had been followed. The strategic risk management targets were also achieved. The third aim related to all procurement being made in line with the approved supply chain management policies. The policy was developed in June 2016.

SEE aimed to strengthen institutional capacity, and this would be done by developing the staff in line with workplace skills programmes, but this was not achieved. Although skills audit forms were completed, they had to be incorporated into the Workplace Skills Plan. Some workshops had been conducted. The plans had to be reviewed as they had not included the factory workers. Training providers were being appointed now. The target to develop 20% of those identified with disabilities had not been achieved, but this was being done now by trying to identify the training needs.

He reiterated that the fact that the existing Work Skills Plan did not include factory works, and thus and had to be reviewed, was a major constraint. Training service providers were expedited.

In Q2, he described the quarterly monitoring report, saying that the target for getting approval of production norms and standards was achieved. Production Norms and Standards were approved by the CEO on 30 March 2016. However, the gross profit margin did not increase by 41% as planned. Low sales revenue had resulted from the non-availability of the wood to produce the school furniture. However it was noted that work should have commenced in December.

Eight advocacy campaigns should be conducted each year, and two were completed in the relevant quarter; the Manufacturing Indaba in Durban on 16 August 2016, and as the Women in Small Business Dialogue and Emporium on 26 August 2016.

Repeating the earlier information relating to audit findings being reduced, he noted that 18% of Audit findings were addressed in this quarter. The strategic risks monitoring target was also achieved and risk management, fraud and corruption workshops were held in July 2016 with various factory management levels (instructors to factory managers and production managers).

In relation to procurement the SEE had achieved 95% compliance with procurement plans and was aiming for 100%. Strengthening capacity was being addressed through developing staff in line with Work Skills plans, but the target of training was not achieved. Training requests have been sent to the Department of Labour, but there was some difficulty in linking the training codes between SEE and Department of Labour financial systems. There was a meeting planned to try to resolve this issue.

In relation to targets to develop 20% of those with disability skills, 212 people were identified for training and this constitutes 35% of the factory workers.

Discussion
Mr Bagraim noted his appreciation for the overview. He asked whether it is not more functional, and probably more effective, for government to look at the various institutions such as the APD and Epilepsy South Africa or Deaf South Africa or Blind South Africa to support employment for disabled people. He said that government is never good at creating employment although it is good at facilitating it worldwide through existing employment opportunities.

Mr Rawula asked if the CEO would advise that the mandate of the entities should be reviewed.

Mr Nondwangu said that the nature of the challenges meant that there was some urgency to making sure that the SEE did become a definable legal entity with the relevant delegations, to be able to do business. The entity is responsible for trading, unlike other government departments. He said that the SEE must be able to quote for products and deliver them to customers within the expected period. It was currently regulated by the Department of Labour, but SEE is failing to meet major contracts as a result of the various processes in the Department of Labour This was something that had to be resolved urgently.

He noted that entities catering for those with disabilities remained segregated although he could not explain why this happened. Some fell under the Department of Social Development and other government departments, and he could not make recommendations as to what should be done, although he did say that improved coordination between them should ensure that the objective of providing gainful employment to the disabled would be recognised.

The Chairperson noted that perhaps the Committee should revisit some of the recommendations for the SEE that had been made earlier.

Other Committee business: Consideration of the Parliamentary Programme
The Chairperson said that the minutes adoption would stand over until the person who had chaired was present.

Members discussed applying for another two slots in the programme, and decided that 3 March would be used to finalise matters, and the draft report on the national minimum wage should be moved, to allow the Committee to make a better comparison between NEDLAC and minimum wage briefings.

The Committee will not meet on 8 March and 15 March 2017. From 22 to 24 March, the Committee would be conducting oversight on the clothing and textile industry in Western Cape and KwaZulu Natal. There was again a suggestion from Ms van Schalkwyk, agreed to by other Members to focus on Department of Labour projects rather than visiting the same sectors as were visited previously.

Members discussed the possibility that flagship programmes should be identified by the Committee Section, and unannounced visits should be paid.

Mr Mkongi recommended that the youth programmes are verified for authenticity,

Members adopted the amended programme.

The meeting was adjourned.