Department of Employment 2019/20 Quarter 3 & 4 performance; with Deputy Minister

Meeting report

Department of Employment and Labour Quarter 3 and 4: Performance Report

Mr Thobile Lamati, Director-General, DoL, made the presentation.

The DG said the Department showed a steady improvement in its performance, quarter on quarter. In quarter one, the performance was at 82% compared to 89% in quarter four.

Three of the programmes (Administration, Inspection and Enforcement Services (IES), and Public Employment Services (PES)) achieved 100% of its performance targets. The performance of programme four fluctuated between 60% and 75%.

On programme one, which is administration, the Department had an average vacancy rate of 6.4% in quarter three, and 12.75% in quarter four. The increase in the vacancy rate from quarter three to quarter four is due to the creation of 500 new Occupational Health and Safety (OHS) inspector posts approved during quarter four.

Irregular expenditure amounted to R460 559. Fruitless and wasteful expenditure amounts to R251 098. The majority of this is the result of damages incurred in vehicle accidents and no-shows at booked accommodation. The amount of R718 343 was recovered in debts owed to the state.

In quarter four, the Department became aware of fraud which potentially amounts to R2.5 million. This originates from payment of fraudulent invoices for Employment Health and Wellness Programme (EHWP) services, which were not delivered. A forensic auditor was appointed, and an interim report completed. A criminal case will be opened once the final report is received. Where indicated, consequential management will follow. There were 372 misconduct cases opened during the quarter under review:

• 161 of these cases were for the non-disclosure of financial interests
• 60 for damage to state vehicles
• 40 for dereliction of duties

Programme two is Inspection and Enforcement Services. By quarter four, 227 990 inspections were carried out by the Inspectorate. 3 785 of these were Employment Equity Act (EEA) inspections. EEA provisions mostly contravened:

• 24 appointment letters not signed by the Chief Executive Officer. Employment Equity Managers are not appointed with the required resources and budget.
• Section 16 and 17 attendance registers do not indicate the designated groups represented by the Committee Members.
• Section 19 analysis conducted post the development of the EE Plan. Barriers, not a true reflection of what is happening in the company
• Strategies were not analysed and commented on in the Analysis.
• Section 20 EE plans do not show reasonable progress towards transformation in line with goals and numerical targets set by employers. 

166 388 of the inspections were Basic Conditions of Employment Act (BCEA) /National Minimum Wage (NMW) inspections. The four sectors with the highest non-compliance with BCEA are:

• Wholesale and Retail
• Community
• Manufacturing
• Hospitality

1 673 employers were referred for prosecution because of non-compliance to the NMW, and R145 161 507 was recovered in underpaid NMW wages and paid over to workers.

Programme three is Public Employment Services. Here, 456 162 work seekers were registered by PES during the two quarters under review. Of the registered work seekers, 466 315 were prepared for the world of work through employment counselling. 24% (108 521) were placed in employment/learning opportunities of which 76 575 (71%) were youth. The breakdown is:

• 49% in informal jobs
• 28% in projects 
• 16% in UIF LAP (Unemployment Insurance Fund Labour Activation Programme)
• 7% in learnerships

Programme five is Labour Policy and Industrial Relations. This is the only programme which did not achieve against all its targets. The performance for quarter three was 60%, and for quarter four it was 75%.

The research unit experienced challenges. There was also a delay in research done for the NMW, which had to be announced in January 2020. This was caused by the delayed publication of the Quarterly Labour Force Survey (QLFS), which forms the basis of the NMW determination.

Supported Employment Enterprises (SEE) did not achieve its target of employing more People with Disabilities (PWD) at the factories. This is because SEE did not receive sufficient new contracts which warrant employing additional staff. The entity continues to struggle financially as government departments continue failing to place orders with it.

The total number of Key Performance Indicators (KPI) for the Department of Employment and Labour (DEL) for the financial year was 19. That is:

• There were 16 planned targets for quarter three. Of these, 14 were achieved (88%), and two were not achieved (12%).
• There were 19 planned targets for quarter four. Of these, 17 were achieved (89%), and two were not achieved (11%).
• Both quarters have again seen a slight improvement of 1% in the overall level of performance, compared to the previous quarter.
• The Department continues to make improvements in its performance for the 19/20 financial year

Discussion

Mr M Bagraim (DA) said the Committee is hearing a lot of fantastic stuff from the DG, but the reality is a lot of people in the public are not happy with the performance of the Department, but are very unhappy. The Department should reassess its targets, and instead of giving itself100% it should push to do better. The Department must push its officials to do better.

The DG replied that on an annual basis the Department presents its Strategic Plan and Annual Performance Plan, and highlights what it will be doing in the year. At one meeting where he made a presentation, the Department had several indicators it did not achieve. At that time, Mr Bagrain asked what is the point of making targets when it is not achieved. Now that the Department is achieving targets, it seems to still be a problem. Whenever the Department sets a target and cannot achieve it, the Department improves it. As the Department, it constantly does this. The Department tries to set out targets based on the resources it has. It is not going to help the Department to say it is going to do all this, when the Department is ill resourced to do it. There is a need to push more, and this is what the Department is striving for.

Dr M Cardo (DA) referred to the mention of challenges related to the nation’s minimum wage. The presentation noted it is caused by the delay of the Quarterly Labour Force Survey. He said the release of the Quarterly Labour Force Survey has been delayed for a second time. He wanted the DG to explain what is going on.

He also asked what the status is of the National Minimum Wage Report, and asked if the Department engages with Stats SA on the Quarterly Labour surveys. He wanted to know why it is constantly delayed, and what actions must be taken to create jobs, in light of the Covid19 impact.

Dr Cardo asked how many employees are suspected of being involved in the fraud, and what consequence management will follow the investigation.

Of 57 000 inspectors, less than 2% of the inspectors are in line with employment equity. There is a draft Employment Equity Bill which was introduced to Parliament, and it imposes harsher penalties for legislative non-compliance. He asked how this legislation impacts on the employment services division.

In reply, the DG said the National Minimum Wage Commission was initially supposed to produce a report in June of this year. It requested the deadline be moved to July. The delay is because of the publication of the Quarterly Labour Survey. It requested to present it in September because of Covid19.

The DG said the Department engages with Stats SA on a regular basis. The Department produces administrative data and shares it with Stats SA. Replying to the question on fraud, the DG said it does not know the exact number, but the Department has a unit called Employee Health and Wellness, which has about less than 20 people in it. He said the Department would want to look at every unit and see the role it plays, and see if there is internal control. The Department will get this when the final report on the matter is out.

He said there are service providers involved in the fraud. Once the Department finalises this, it will move to blacklist those companies and report the matter to the law enforcement agency.

Speaking on the UIF matter, the DG said the Auditor-General (AG) is going to give a press briefing. The Department will also have one afterwards to inform the public about what it will do to make sure the root findings of the AG report are addressed.

The DG said the Department has 57 000 payroll inspectors. The compliance legislation will make life easier for the Department. Companies will know what is required of it, and it will make work easy for the Department.

Ms N Hermans (ANC) said she appreciates inspections being done in different sector, and asked about the transport sector. She said one did not know the Department inspects some of these sectors. For example, inspections are done in the taxi industry to check if the minimum wage is observed.

She asked about the vacancy rate of these inspectors, and how best this can be improved.

Ms Hermans also asked about the R2.5 million fraud case, and if the officials and service providers are implicated.

On subsidies and transfers, the Department is spending more money. She asked if these employees are not part of the Government Pension Fund.

The DG said the Department included an Impact Analysis Report in the presentation, and it has a breakdown on the national minimum wage per sector inspected. The transport sector is there, and the analysis includes indications done in the sector. The bulk of the transport sector falls under bargaining councils. What is reflected in the presentation is a portion, and does not cover all.

Transport has a regulator, which regulates the rail sector. The Department only regulates issues connected to wage disputes. The sector has a health regulating board. The Department gets several complaints and does analysis on these complaints. This forms part of its inspections in the next financial year. The Department targets sectors because of its role.

On fraud, the DG said yes officials from the Department and service providers are part of the alleged fraud. The Department wants to get to the bottom of the matter.

Replying on subsidies, the DG said yes, those persons are part of the pension fund, but when they leave the Department some will have leave days which are due. The Department has to pay them, and that is why we it has this cost.

Mr S Mdabe (ANC) said there are 372 misconduct cases. He asked if the unions are supportive or engaging in these cases. He wanted to know what the union’s position is, and what the relationship between the union and the Department is in general.

The DG said the union is always supportive, but its nature is to defend its members at all costs. The Department has a good relationship with it, and if there is a new policy, the Department engages with the union.

The Department and the union differs on how it makes decisions, but there is not bad blood.

The Chairperson said the Committee needs information to support the Department. She called upon the Department to give the Committee a list of factories in provinces, and its focus areas, so when the Committee conducts oversight, it will be very much aware.

Deputy Minister Moloi thanked the Committee for the opportunity to account. The Department is at the Committee’s service. She thanked Members for always keeping the Department on its toes. The Department tries its best and improvement is seen.

Adoption of Committee Minutes

The Committee considered and adopted three Committee meeting minutes.

The Chairperson adjourned the meeting.