Extended Public Works Programme & job creation Minister & Department briefing & election of Chairperson

Public Works and Infrastructure

14 September 2009
Chairperson: Mr G Olifant (ANC)
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Meeting Summary

Mr Godfrey Olifant was unanimously elected as Chairperson.

The Minister of Public Works, Hon Geoff Doidge, addressed the Committee on the Expanded Public Works Programme (EPWP) second phase. The target of creating 500 000 additional jobs by the end of 2009 must be achieved. There had already been good progress, with one million jobs having been created in the first phase, with a total of 4.5 million additional jobs by 2014. The Department of Public Works continued with another briefing noting that only 25% of the available labour force was employed, with 40% of South Africans living below the poverty line or with their income not sufficient to pull their families out of poverty. Even those jobs secured must be upscaled and the labour market formalised. The EPWP was regarded as an emergency measure, as it did not achieve formal jobs, as measured by the International Labour Organization (ILO), but it did provide opportunities for training. It must also be remembered that “decent work” as opposed to mere employment, was the goal. Government had decided to call upon non-governmental institutions to assist in offering work and administering resources. The Department said that the EPWP was targeting the poor and the vulnerable, as their earnings, together with social protection, should allow them to achieve a sustainable and acceptable standard of living. The EPWP was concentrating on creating work opportunities through labour-intensive public funded projects, either in infrastructure projects, environmental protection projects or the social service sector. The Department of Public Works was coordinator, and other departments and entities would budget for this, although they could access funding and incentives, under strict rules that were set out. The key characteristics of EPWP Projects, and the allocations for the next three years, were described. Training and enterprise development would be implemented in sector specific programmes to enhance service delivery, beneficiary well-being and skills development.  So far, 83 000 work opportunities had been reported, although this was likely to be under-reporting, and 90 data capturers had been employed to assist provincial and municipal entities to get the correct figures and put them into an acceptable report.

Members asked how much of the Eskom development expenditure would translate into jobs. Members noted complaints from their constituents that they were not promoted, nor full use made of skills acquired under these programmes, and there was a perception that jobs were linked to political connections. Members also asked about signature of the contracts, when the Department would attend to building of infrastructure for all departments, as this was its core mandate, and the proliferation of consultants. It was noted that the last issue was being discussed at National Economic Development and Labour Council.

Meeting report

Election of Chairperson
Mr Godfrey Olifant (ANC) was unanimously elected as Chairperson.

Mr Oliphant remarked that he felt that 09:00 was too early to begin meetings. A larger venue would also have to be found for the large number of Committee Members and interested parties.

Minister of Public Works Briefing: Expanded Public Works Programme (EPWP)
Hon Geoff Doidge, Minister of Public Works, emphasised that the Members of the Committee should be very zealous in carrying out the Parliamentary obligation of oversight over the Department and the programmes it embarked upon, especially given the target of creation of 500 000 additional jobs by the end of 2009. Progress was already being made to achieving this end. All the provinces had been visited and seminars held. One million jobs were created in the first phase of the Expanded Public Works (EPWP) programme and the Department was on track for 4.5 million additional jobs by 2014. However, it must achieve 500 000 jobs by end of December 2009. He further emphasised that the Department of Public Works (DPW or the Department) was a co-ordinating department. It was not a line department but was working in association with the provincial governments and the municipalities, all of whom had the responsibility to ensure the achievement of the targets. He urged the members to analyse the budgets of the departments in order to ascertain which departments, provincial governments and municipalities were achieving the targets, and which were falling behind.

Mr Doidge added that in addition to the sums of money appropriated to the budgets, a further sum of R4.1 billion had been set aside as an incentive for achievement. Thus far KwaZulu Natal (KZN) had been paid R19 million for exceeding its target. He urged that any departments or entities not achieving their targets should be held accountable.

Department’s briefing
Mr Stanley Henderson, Chief Director: EPWP Monitoring and Evaluation, Department of Public Works, noted at the outset that South Africa had a severe unemployment and poverty challenge. He stated that approximately 25% of the available labour force was unemployed, that approximately 40% of the population lived below the poverty line, but even amongst those employed there was “working poverty”, meaning that they earned low pay in relation to their cost of living, so that despite being employed this did not pull the family out of poverty. He added that Government had adopted targets to halve unemployment and poverty between 2004 and 2014, but this should be viewed as an interim target only, as the aim was to improve upon these figures. Jobs should also be upscaled and the labour market should be formalised.

Mr Henderson noted that formal employment, relative to the growth in Gross Domestic Product (GDP), began growing from 1997. The unemployment rate fell from 28% in 2004 to 23% in 2008. However, the formal economy needed to generate a set number of new jobs annually if unemployment was to be halved. Although a number of jobs had been created under the EPWP, it must be recognised that this was an emergency measure, as it did not achieve formal jobs as measured by the International Labour Organization (ILO). Between 2008 and 2009, the global recession had impacted strongly on job creation, and the rationing of electricity and rising interest rates had also reduced unemployment growth considerably, so that the employment figures had not changed in this year.

Mr Henderson reminded Members that “decent work” was different from “job opportunities” as the latter may not provide decent work. In order to achieve more, the Department had decided to call upon non government organisations (NGOs), the community business Organisations (CBOs), and not-for-profit organisations (NFPs) to assist. The employment that they were offering was included in the definition of “Decent Work”’. The aim was to create the equivalent of 4.5 million work opportunities in five years. This would include two million Full Time Equivalent jobs (FTEs) for the poor and unemployed people in South Africa, which would contribute to halving the unemployment by 2014 through delivering public and community services. Within five years this scale would move from 210 000 to 610 000 FTEs, which was regarded as the equivalent of 4.5 million 100-day work opportunities in the five year period.

Mr Henderson quoted from the Framework for South Africa’s response to the International Economic Crisis (the Framework), saying that the EPWP was seen as an important part of Government’s ability and capacity to provide employment to those who were not absorbed into the labour market. The target groups were the poor and vulnerable. The EPWP had a high probability of earning sufficient income, whether through one job, or multiple economic opportunities. The economy increasingly generated employment with a bias toward the creation of decent work opportunities and sustainable livelihoods. The Department of Labour was currently amending a Ministerial determination on employment conditions, setting a minimum of between R50 and R100. The majority of people finding work could achieve a sustainable and acceptable standard of living through the combination of their work earnings, private entitlements and social protection. Human Rights issues were important, and people must have freedom to express their concerns, organise, and participate in the decisions that affect their lives.

Mr Henderson moved on to set out the specifics of the EPWP Phase 2. The Infrastructure sector aimed to create work opportunities through the use of labour-intensive methods during the construction and maintenance of public-funded projects. The Environment and Culture sector aimed to create work opportunities in public-funded environmental programmes. This sector also had significant potential to keep expanding its existing programmes and create new programmes providing environment-related services. The Social sector aimed to create work opportunities through the provision of social services. This sector was estimated to have the largest potential for expansion over the next five years, including child minding and early or remedial education, with a one-on-one interaction. The Non-State sector aimed to create work opportunities through NGOs, CBOs and NFP organisations, who would offer advice on priorities and administer resources in the running of the programmes, as envisaged in the Framework.  

Mr Henderson reiterated that DPW did not “hold the purse strings”, but these were handled by the line departments, according to the budgets they had drawn. The DPW was the coordinator, and would ensure an equitable share where needed. Additional funds could be accessed through the non-State services (NSS). There was money set aside for incentives, which would be paid only to those performing well. Those either not delivering services, or those who, although delivering, failed to report on time, would not receive incentive funding. The R4.1 billion allocated would be broken down in accordance with the Division of Revenue Act (DORA)

The key characteristics of EPWP Projects were described. They tended to be highly labour intensive, and a large percentage of the overall project costs was paid out in wages to the target group. They employed large numbers of the target group, paid wages of between R50 and R100 per day, and employed the group under the special Public Works Programme conditions of work, not the Labour Relations Act. They were aimed at 555 women, 405 youth and 2% disabled.

Funding of EPWP came via the normal budgets of the national departments, provinces and municipalities, but two additional incentive performance-based conditional grants, plus an allocation for non-State sector participant employer organisations, were created. EPWP had been allocated R4.1 billion in the current Medium Term Expenditure Framework (MTEF). The figures for the incentive grants for provinces, municipalities and the non-State sector were broken down (see attached presentation).

Mr Henderson stressed that the programme was expected to create 500 000 work opportunities between March and December 2009. All public bodies from all spheres of government, and the non-State sector were required to deliberately optimise creation of work opportunities for unemployed and poor people, through delivery of public and community services. Public bodies should create work opportunities in terms of their normal mandates and budgets. Training and enterprise development would be implemented in sector-specific programmes to enhance service delivery, beneficiary well-being and skills development.

Mr Henderson noted that between April and June 2009, more than 83 000 work opportunities had been reported. However, this figure was very conservative and reflected poor or under-reporting, and did not always reflect all projects in all spheres of government. KwaZulu Natal had, mostly through good reporting, already accessed R18 million.

Although the municipalities had a different financial year end, only three had shown capacity to report on time. Both Provincial and Municipal entities needed to be reminded that the projects were intended to be labour-intensive. Ninety data capturers had been employed to get the information, as a result of the poor reporting, and present it in an acceptable report format.

Minister Doidge interjected to say that the reporting
deficiency had been highlighted to the provincial and Municipal entities and also to South African Local Government Association (SALGA).

Discussion
Mr H Magama (ANC) enquired as to how much of the Eskom development expenditure was to be devoted to the creation of jobs, especially the lowly and non-skilled sector. He added that in his constituency, people complained that they achieved skills but still remained on the lowest rung of the employment ladder, and were not being challenged to use the skills acquired.

Minister Doidge was unable to provide the exact numbers of low or unskilled workers who would benefit from the Eskom development, but noted that that every para-statal, provincial government and municipality had been asked to ensure that their efforts were geared to job creation. However, the Department could not insist upon this. Some projects were already successfully creating jobs and heightening environmental awareness. A change of mindset would be required. Hon Ebrahim Patel, Minister of Economic Development, was ensuring that all these points were presented at National Economic Development and Labour Council (NEDLAC) to ensure that everybody was aiming at the same targets and using international best practice.

Mr B Radebe (ANC), while expressing appreciation for the presentation, expressed concern about high levels of non-skilling at a time of huge unemployment. He was also concerned to hear of the intention to supply municipalities with funding, given that only three had managed to produce unqualified audits.

Mr J Masango (DA) asked what the agreements with the Municipalities meant in reality, and whether the data capturers would be able to rectify the problems. He also expressed concern about allegations that unless people had good political connections, they would be unlikely to secure employment through these schemes, particularly in the rural areas.

Minister Doidge noted that in response to the queries about lack of skills at municipal level, the Department had 150 engineers who were on call for use by the Municipalities. The 90 data capturers would also assist where required. The Department could not insist that they be used. However, he stressed that any entity not reporting properly would not receive any incentive payments, and no exceptions would be made to the strict rule.

Ms D Ngcengwane (ANC) expressed concern about fronting and asked upon what basis the targets for the vulnerable had been arrived at.

Mr Henderson stated that those employed in EPWPs were employed under the DPW’s own standards, not the Basic Conditions of Employment, since these were regarded as work opportunities, not jobs. He conceded that fronting was a problem but stated that no payment was made without proof of identity. If the payments were properly made, there was no chance of error. The EPWP was a springboard for entry into the job market, and for creating infrastructure, and all projects would be much more effective if DPW was included from the planning stage rather than being presented with an opportunity after the fact.

The Chairperson invited Members to make suggestions to the Department as well as ask questions.

Mr N Nomathamba (ANC) asked when the DPW was going to reclaim its mandate in the building of infrastructure, since this was a core mandate of DPW, and take it away from departments such as health and education. DPW, unlike other departments, had the personnel with the skill and training to do so.

Ms M Madlala (ANC) expressed concern about proliferating use of consultants, even to the extent where consultants were employed to manage other consultants, at vastly inflated costs, and without transferring their skills to the Department’s employees.

Mr L Gaehler (UDM) also expressed concern about the use of consultants and non-transferral of skills. He suggested that the OR Tambo Municipality’s practices should be followed.

Mr Radebe said that everyone had good intentions, but there was very little delivery of services; any jobs created tended to be in areas of unskilled labour. He also said there was too much reliance on machinery and not enough upon human effort.

The Chairperson said that he felt this was a work in progress and that it was being raised and addressed at NEDLAC.

Mr Henderson reminded Members that all money was disbursed in terms of DORA and according to strict rules.

The Chairperson agreed that this was an important point. He suggested that the Committee should engage with the Auditor-General (AG) to overcome many of the annually-recurring qualifications and matters raised by the AG.

Mr Radebe stressed that it was public money and must be disbursed in accordance with the Public Finance Management Act.

Mr Henderson added that the DPW had identified a core of 36 queries raised by the AG every year, and this core was being addressed.

The meeting was adjourned.

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