NEDLAC and Compensation Fund Q2 2021/22 Performance; with Deputy Minister

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Employment and Labour

01 June 2022
Chairperson: Ms M Dunjwa (ANC)
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Meeting Summary

The National Economic Development and Labour Council and Compensation Fund briefed the Committee on their 2021/22 second quarter performance in a virtual meeting.

The National Economic Development and Labour Council completed restructuring on 1 August. A labour and development unit and an economic unit had been set up, and a new corporate services unit was established. It had achieved eight out of ten applicable targets in the second quarter. The two targets not achieved were training, which the restructuring had disrupted, and constituency capacity building, as the community constituency had requested a capacity-building intervention too late in the quarter.

Members of the Committee asked about the critical skills list, proposed labour law reforms, plans to improve public transport and shield vulnerable sectors from the effects of fuel price increases, the Council’s new governance structure, and COVID-19 vaccine production, uptake and mandates.

The Compensation Fund had achieved six out of eight applicable performance targets in the second quarter. The two targets not achieved were reducing the vacancy rate and increasing the percentage of claims adjudicated within 30 days to 85%. In the first case, the Fund had found it difficult to compete with private and overseas competitors, and it was requesting additional resources to help it attract staff. In the second case, a large number of claims had not included all the necessary information, and the Fund was instructing regional offices to engage with employers to obtain the missing information.

Members of the Committee noted that numerous complaints about the processing of claims by the Fund were still being received and questioned why it had set such a low target for eliminating irregular, fruitless and wasteful expenditure.

Meeting report

National Economic Development and Labour Council Q2 performance
Ms Lisa Seftel, Executive Director, National Economic Development and Labour Council (NEDLAC), observed that the unrest in July 2021 had occurred during the reporting period under discussion. The Council had also completed restructuring on 1 August -- a labour and development unit and an economic unit had been set up, and a new corporate services unit had been established.

NEDLAC had achieved eight out of ten applicable targets in the second quarter. The two targets not achieved related to training, which the restructuring had disrupted, and constituency capacity building, as the community constituency had requested a capacity-building intervention too late in the quarter.

She summarised NEDLAC’s key areas of focus: dialogue sessions, processes, emerging issues and economic recovery, and discussed progress made by its governance task team, which was looking at its mandate and constituency capacity building. She gave an overview of the Council’s finances, drawing attention to improved spending on goods and services and the absence of irregular, fruitless or wasteful expenditure.

See presentation for further details

Discussion
Mr M Bagraim (DA) questioned whether the critical skills list was adequate, and suggested that it might also be worth looking at getting a person with a critical skill, as it sometimes took months or even years.

Dr M Cardo (DA) was also interested in the critical skills list. What was the division of responsibility between the Department of Home Affairs (DHA), the Department of Employment and Labour (DEL) and the Department of Higher Education and Training (DHET) in the compilation of the list, and what was NEDLAC’s role? There was a long-standing view that the list did not accurately identify the real critical skills.

Ms Seftel recalled that the development of the list had been a joint effort of the DHET, DHA and DEL. It was initially presented to NEDLAC in a dialogue session, and there had also been a period of public comments. NEDLAC’s role had been to go through and confirm the entries in the list. The social partners had not yet taken the next step up.

The Chairperson suggested that, if possible, NEDLAC should undertake a study of the skills that had left the country, going back as far as 1994.

Mr Bagraim asked for more detail on the labour law reforms being considered.

Dr Cardo asked what the scope, mandate, timeframes, and labour law task team membership were. Were there any small business representatives on the team, and was the automatic extension of collective bargaining council agreements to small businesses up for review?

Ms Seftel replied that organised labour had tabled proposed changes to the Labour Relations Act (LRA), the Basic Conditions of Employment Act (BCEA), the National Minimum Wage Act (NMWA) and the Occupational Health and Safety Act (OHSA) in early 2021. Later in 2021, organised business commented on these proposals and made their own proposals. A task team was set up to look at these proposals, and proposals tabled by government in February 2022. Small business was represented through Business Unity South Africa (BUSA). Changes to the LRA would be prioritised, and the extension of bargaining council agreements to small business was on the agenda. The first phase of the process would be completed by the end of the year.

Mr Bagraim asked whether NEDLAC had developed any theory to explain why the COVID-19 Temporary Employee Relief Scheme (TERS) had been such a disaster.

Ms Seftel could not comment on why it had been a disaster, but could report that a sub-committee of the NEDLAC rapid response task team on COVID-19 had met every second week, meeting with employers to try and address problems with the TERS.

Mr Bagraim reported that the Congress of South African Trade Unions (COSATU) had put out a statement the day before saying that public transport was an absolute disaster, and suggested that this might also be worth looking at.

Ms Seftel replied that there had been no deliberations on public transport in the quarter under review, but during previous and subsequent quarters, a proposal by the Department of Transport for a public transport subsidy had been discussed. Vandalism and modernisation had also been discussed with the Passenger Rail Agency of South Africa (PRASA).

Ms C Mkhonto (EFF) asked how NEDLAC was planning to support workers and small, medium and micro enterprises (SMMEs) to navigate steeply rising fuel costs.

Ms Seftel replied that it was for one of the social partners to raise issues to be placed on NEDLAC’s agenda. It was possible that it would be raised in light of the sharp petrol price increase the day before.

Ms Boitumelo Moloi, Deputy Minister of Employment and Labour, noted that the suspension of the general fuel levy had been extended until the start of August, and that some strategic oil reserves would be released.

Mr Bagraim asked about the new governance model that NEDLAC was looking at. He presumed that the South African Federation of Trade Unions (SAFTU) was now a member. Had NEDLAC looked at how it might represent the unemployed?

Dr Cardo called for the recommendations of the governance task team to be presented to the Committee, with timeframes for their implementation.

Ms Seftel replied that approved recommendations from the NEDLAC executive council could be shared when it presented its third quarter results. It was targeting October 2022 to complete its revised constitution and protocols, but amendments to legislation would take longer. It was currently implementing the recommendations, so SAFTU was not yet a member, and deliberations on the representation of unemployed people were ongoing.

Mr Bagraim asked whether NEDLAC had looked at which other ministries, besides Employment and Labour, might be interested in making an input.

Ms Seftel replied that the Minister of Finance and the Minister of Trade, Industry and Competition were already represented on the Executive Council. It would look into enhancing the representation of other interested ministries.

Mr Bagraim congratulated NEDLAC on eliminating irregular, fruitless and wasteful expenditure.

Ms Seftel appreciated the comment.

Ms Mkhonto noted that the country had not been able to find buyers for the COVID-19 vaccines it was producing. When had the decision to produce the vaccines been made, and what was the target market at the time?

Mr S Ngcobo (IFP) asked what observations NEDLAC had made about the uptake of COVID-19 vaccination, particularly the third shot. His impression was that there was a general reluctance. What was NEDLAC’s position on mandatory vaccination?

Ms Seftel recalled that when the vaccine rollout started, the aim had been to get as many vaccines as possible into the country. Among NEDLAC's social partners, the focus had been on vaccine distribution, and it was a source of disappointment that the rollout had not reached as many people as it might have. The social partners had also worried about the uptake of the booster shot, and they had been convinced, when the Omicron variant had begun to spread in late 2021, that vaccine mandates would protect the economy from another massive shutdown. When it became clear that the Omicron variant was less serious, the strong push for vaccine mandates had eased off. The DEL had developed a code of good practice that did not make vaccines mandatory, but did indicate that a health risk assessment of a workplace could potentially make a vaccine mandate applicable.

Ms Mkhonto reported that Pick n Pay franchises in Kwazulu-Natal (KZN) were complaining that they had not been able to access insurance payouts due to them after the July unrest. They were claiming that Pick n Pay was withholding the payouts. Was NEDLAC aware of this, and what would their intervention strategy be?

Mr Ncgobo welcomed the improved spending on goods and services, but wanted to know how it had been achieved.

Mr Farhaan Shamsoodien, Chief Financial Officer, NEDLAC, explained that the main reason for the increase was that the third wave of COVID-19 had been lifting at the time, leading to an increase in procurement. A similar trend was seen throughout the financial year.

Compensation Fund (CF) Q2 performance
Mr Vuyo Mafata, Commissioner, CF, reported that the Fund had achieved six out of eight applicable performance targets in the second quarter. The two targets not achieved related to reducing the vacancy rate, and increasing the percentage of claims adjudicated within 30 days to 85%. In the first case, the Fund had found it difficult to compete with private and overseas competitors, and it was requesting additional resources to help it attract staff. In the second case, a large number of claims had not included all the necessary information, and the Fund was instructing regional offices to engage with employers to obtain the missing information.

He discussed the Fund’s operational performance per province, financial performance and financial position, drawing attention to an increase in revenue from R10.3bn to R11.8bn, and an expected surplus of R2.4bn.

Discussion
Mr Bagraim observed that the Fund had reported the performance of its administration programme at 67%, but noted that dozens of complaints from the public were still being received. Was the administrative programme performance improving or getting worse?

Mr Mafata replied that the administration performance had improved. Most of the complaints were from people who were not satisfied with the outcome or progress of a claim. Overall, the number of complaints was declining. The Fund was also trying to make it easier for employers to register claims directly online, which would ease the administrative burden of its staff.

Mr Bagraim questioned the low annual target of 50% to eliminate fruitless, wasteful and irregular expenditure, suggesting it should actually be 100%. Did the Fund expect to meet its target?

Mr Mafata replied that the target was relative to the baseline at the start of the reporting period. He recalled a large amount of fruitless and wasteful expenditure on the books, which was why a realistic target of 50% had been set. He noted that new cases of fruitless and wasteful expenditure had significantly declined, while some expenditure, such as costs related to litigation by unsatisfied claimants, was classified as fruitless and wasteful, even though it was unavoidable.

Deputy Minister's closing remarks
Deputy Minister Moloi thanked the officials for the detailed information they had shared. She was satisfied with the performance of NEDLAC and the CF, and said that credit should be given where it was due. She thanked the Committee for its positive engagement in the meeting and invited it to do oversight of the Department’s entities. She appreciated the Committee’s positive report on its oversight of the Department’s centres in the Eastern Cape.

The meeting was adjourned.

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