DEL 2020/21 APP; PES & SEE response to COVID-19; with Minister & Deputy Minister

Meeting report

Chairperson Rayi opened the meeting.

The Committee Secretaries registered attendance, noting no apologies.  

Chairperson Rayi proposed a roll-call procedure for virtual questions and a 3-minute time limit. Any questions above this limit should be written. He asked for members’ agreement.

Mr M Nontsele (ANC) proposed that videos should only be switched on when one was speaking to limit interference.

Chairperson Dunjwa welcomed Ms E Ntlangwini’s (EFF) to the Committee, and proposed a different approach, allowing 2 instead of 3 minutes to Members.

Chairperson Rayi welcomed the Minister, and ceded to him.

Remarks by the Minister of Employment and Labour

Mr Thulas Nxesi, thanked the Chairperson. The Department of Employment and Labour (DEL) would give detailed presentations and he would provide an overview. He would not deal with the UIF but gave an update that it had disbursed R9 billion in TERS benefits to bargaining councils and employers. The Compensation Fund was also strengthening capacity. He highlighted the importance of Inspection and Enforcement Services in combating the pandemic. Their role was likely to focus on breaches of health and safety regulations in the workplace as the country moved into Level 4.

The DEL, in terms of the Disaster Management and Occupational Health and Safety (OHS) Acts, had given very detailed plans for the re-opening of places of work, especially in terms of reconfiguration, provision of PPE and sanitiser and other issues. These regulations had been made in consultation with social partners at NEDLAC.

On Social Employment Enterprises (SEE), these were now focused on PPE provision.

DEL needed to continue to look at long-term issues despite the immediate crisis. He was struck by the Department’s relevance to the crisis, in terms of its Constitutional mandate, especially in terms of Sections 24 and 27. The UIF and Compensation Fund were particularly important in this regard. COVID-19 had shown gaps in the net, especially for nonstandard workers, informal workers and those without social grant access.

IES plans were built on decisions from 2012 to grow professionalisation of the Inspectorate. Additional recruitment and training would increase capacity from 170 to 670 inspectors. DEL was looking at using other inspecting bodies to grow capacities.

He noted the role of labour legislation in allowing protection of vulnerable workers and the unemployed, and the development of national employment bodies.

The DEL was planning for the “new normal” – nothing would ever be the same again. Covid-19 would radically affect planning processes, which were based on pre-Covid data projections. Reduction in productive activity and increasing unemployment would give new priorities and intensify pre-existing issues.

As the Committee scrutinised DEL’s plans, it was important to ask questions on the impact of the crisis on planning. The Minister proposed to use the opportunity to make better policy and imagine a better world, where South Africa defeated poverty, corruption, unemployment and inequality.

Briefing on DEL’s Annual Performance Plan
Mr Thobile Lamati, Director-General, DEL, made the presentation.

Priority 1: Capable, Ethical and Developmental State.

This would be contributed through the administrative component of DEL. The outcome was functional, efficient and integrated government, focused on reducing vacancies in the DEL and the improvement of ICT services, given DEL is a transactional department.

Priority 2: Economic transformation and job creation

Mr Lamati recalled the Job Summit and the agreement to create 275 000 jobs, not including downstream jobs. DEL was monitoring the creation of jobs through this agreement and the Presidential Youth Employment Interventions. Government targeted 1 million youth jobs created by 2024. DEL’s programmes would contribute 256 000 through PES, SEE, and the UIF and Compensation Fund. DEL was aiming for a new employment policy by 2024, spearheaded by PES. The Department was well on its way to developing this policy. Investing for accelerated growth comprised the transformation of labour market and economy through employment equity legislation. Increased economic participation would be enforced through National Minimum Wage (NMW) and Basic Conditions of Employment Act compliance. IES targeted inspection of 838 000 workplaces by 2024 in this regard.

Priority 3: Education, Skills and Health

A safe and healthy work environment would be achieved by enforcing compliance with the OHS Act through IES inspections. IES planned to conduct 421 000 inspections over the next 5 years.

Priority 4: Consolidating the Social Wage

Comprehensive social security coverage would be targeted by enforcing compliance with the Unemployment Insurance Act, Unemployment Insurance Contribution Act and the Compensation for Occupational Injuries and Diseases Act through Employer Audits. DEL planned to improve coverage with 131 850 employers in the next 5 years.

Priority 6: Social Cohesion and Safer Communities

Equal opportunities, inclusion and redress would be driven by amendment of the Employment Equity Act by Labour Policy & Industrial Relations and targeting a 2% annual increase in representation of Africans in senior and middle management levels from 23% and 40% respectively to 50%. DEL was targeting an increase of the number of persons with disabilities employed, targeting this to make up 2.5% of employed adults by 2024. DEL was also developing an income differential data collection tool.

Priority 7: A better Africa and a better world

DEL committed itself to fulfilling South Africa’s obligation to SADC and the AU, as well as full payment of South Africa’s contributions to international organisations on time.

Four Programmes were funded in the APP:

Programme 1: Administration

Administration was allocated R1.01 billion to fill DEL’s funded vacancies, improve ICT performance and ensure ethics structures had capacity. DEL committed to resolve 90% of reported incidents of government corruption and the submission of AFS and IFS on time. DEL proposed the elimination of irregular or unauthorised expenditure, targeting a 25% reduction in irregular expenditure and complete elimination of unauthorised expenditure.  

Programme 2: Inspection and Enforcement Services

IES was allocated R670 million, targeting 220 000 employers inspected for the year, and 90% serving of notices to non-compliant employers.

Programme 3: Public Employment Services

PES was allocated R643 million. PES was seeking to register 750 000 work-seekers and 95 000 employment opportunities, provide 220 000 work-seekers with employment counselling and fill 47 500 opportunities per year. It would also aim to conclude 30 partnership agreements and develop the first draft of the new Employment Policy.

Programme 4: Labour Policy and Industrial Relations

LP&IR was allocated R1.3 billion. It was charged with amending the EE, publication of the EE report and the development of codes of good practice to eliminate harassment and violence in the workplace. LP&IR was also developing the income differential data collection tool, reviewing the National Minimum Wage level, assessing collective agreements, approving labour organisation applications, and publishing progress reports on cooperation and labour market reports.

DEL was allocated just over R3.6 billion for 2020/21. Just over R2 billion was devoted to current payments, of which R1.5 billion was for compensating employees, R1.4billion went to transfers and subsidies, and R68 million for payments.

(See presentation)

PES and SEE response to COVID-19

Mr Lamati said that PES and SEE operations had been re-organised to comply with Covid 19 regulations. Management participated in the DEL COVID 19 Action Plan development process and Risk assessment was conducted to protect staff as far as possible. COVID Action Plans to prepare for the re-opening of factories were developed in accordance with the COVID 19 Regulations. SEE has also explored other measures that will include light single phase machinery being provided to those above 60 and on chronic medication to work from home.

There are currently 4.6 million registered work seekers on the ESSA system. Statistics South Africa (Stats SA) quarterly labour force surveys estimates that there are 10 million people unemployed. The ESSA system reports on those that have registered on the DEL system. Given the structured platform that ESSA is based on, it can easily accommodate the remainder of the registrations as they come forward, or if they are contained in other databases, they can be imported into ESSA creating a national register for Government.

DEL did approach Treasury, the Department of Social Development and SASSA, on the possible use of the database to pay the benefits and to ensure a speedy government response. SASSA and DSD are still to make a decision on this matter.

Labour activation and employment schemes were particularly important in light of the crisis.

Regarding managing Labour Migration during Level 4, a draft policy had been developed with the ILO’s assistance, and the process was underway to ensure alignment with the Department of Home Affairs’ directives.

Given the high number of workers applying for normal unemployment benefits, PES will automatically enrol them, based on the UIF application.

PES is in discussion with SAQA to electronically load qualification data-agreement reached already-this will enable speedy registration with the need to complete manual forms.

In terms of SEE, the only province without a factory was Mpumalanga, where plans underway to build one. SEE factories had been kept busy, the Western Cape Department of Health commissioned a R9 million project to produce PPE and hospital supplies.

Challenges included:

Decentralisation of procurement of COVID 19 PPEs to Provincial and Municipality levels by National Treasury is making it very difficult for the NDOH to coordinate and ensure that SMMEs, COOPs and Social Enterprises like SEE benefit from current massive contracts.
Insufficient support from Provincial Departments of Health, despite National Contract with NDOH being in place and prices of Social Enterprises being approved by Treasury
Inflation of raw material prices by suppliers when dealing with Social Enterprises like SEE, COOPs and SMMEs

(See presentation)

Discussion
Ms S Boshoff (DA, Mpumalanga) registered her concern that the SEE subprogramme was the only one to see a decrease in funding. This programme was there to support the country’s disabled people – it looked as if the government was not taking them seriously. Was there anything the DEL could do to make sure the SEE programme increased its budget, especially in light of its work on PPE? Why was South Africa lagging behind other African countries in competitive status?

Ms Boshoff was concerned about underspending across all programmes – how was this being monitored and what was being done to address it? Could this underspending be used in SEE or IES? What measures were in place to address industrial action due to retrenchments and business closures? Regarding the loss of inspectors to private sector and the Department of Mineral Resources and Energy (DMRE) – what strategies were in place to retain inspectors, and what was the plan if DEL’s salaries were insufficient? She requested a statement on the IES staff complement.

Ms S Zuma (ANC) asked what measures IES had taken to ensure offices had been sanitised before employees went back to work.

Mr M Cardo (DA) enquired whether DEL had reconsidered its APP and Strategic Plan in light of the Covid-19 pandemic, which would render job creation targets null and void. Covid-19 would change the labour market – what did this mean for DEL? He requested the DG provide clarification on the Employment Equity Act amendments referred to, asking whether these gave the Minister the power to set sectoral targets? Was it the time to set sectoral targets when DEL didn’t know what sectors would still be standing after the crisis? He noted the comments of the Minister of Finance on foreign nationals in catering industries, asking whether DEL was creating a policy on such matters.

Mr M Dangor (ANC, Gauteng) noted that what the Committee was dealing with was what was passed by Parliament. Any adjustments had to be passed as an adjustment bill.

Ms H Denner (FF+) asked when the NMW Commission report on the effect of the National Minimum Wage would be available.

Ms Ntlangwini thanked the chair for the welcome to the Committee. She enquired as to what the ratio per IES inspector to inspections was. She noted the figure of 4.6 million workseekers in the ESSA system – when was this figure compiled? How many non-profit institutions were funded by DEL?

Mr K Mmoiemang (ANC, Northern Cape) wished to verify with the Minister as to whether the new Employment Policy was linked to the new mandate and reconfiguration of the Department. Would Covid-19 re-engineer the PES job creation target? He commended the good work and leadership of the Minister in terms of mitigating the economic impact of lockdown on vulnerable workers.

Ms N Hermans (ANC) recalled the shortage of inspectors in the Northern Cape. Covid-19 might lead to programme changes – what would happen to such issues? She enquired as to the possibility of linking district inspectors and IES programmes.

Mr M Bagraim (DA) asked, with the shrinking of the workforce, whether the government should not scrap BEE regulations, as no one was expanding the workforce at all. He proposed looking at some of employment regulations acting as a handbrake to job creation.

Dr N Nkabane (ANC) commended DEL for the good work done. She wanted to know whether the development of a code of good practice would create a new code, or simply amend the existing code.

Mr M Hendricks (Al Jama-ah) raised the issue of SEE factories, noting they were well geared to produce PPE. He wondered whether their expertise was being used.

Mr Nontsele stressed issues relating to closure of companies or factories by lower levels of government leaving gaps for legal issues, requesting guidance in this matter. In terms of PES partnerships, what was the total current number? Regarding information-sharing with SASSA – would new entries to the database come from the Department of Social Development, or would DSD rely on DEL for the database to be updated? He proposed making a representation to Treasury on the provincial and municipal procurement directive.

Chairperson Dunjwa ceded to the Minister and DG.

DG Lamati noted the decrease in SEE funding, indicating that every year DEL submitted inputs based on its needs to Treasury. When it came to SEE, DEL also submitted these inputs. There was an expectation that these factories would generate revenue from their products, so decreased funding reflected a push to focus on improvements in revenue generation. If Members would like to intervene in the appropriation, DEL would welcome this, as it wished to establish a factory in Mpumalanga. If going forward factories did well to get projects from departments, reduced funding would not be an issue.

Regarding underspending, DEL could not take money from one programme to another in government, unless Treasury allowed it. Usually underspending in compensation was due to the fact that filling of vacancies was a moving target.

On possible industrial action, the CCMA dealt with all issues relating to disputes, and was standing ready to provide a service if needed. DEL hoped not to have too many retrenchments, but this seemed inevitable.

On the loss of inspectors to DMRE and the private sector, DEL did have a policy aimed at retaining inspectors, but it could not compete with private sector compensation. DEL tried to give inpsectors a working environment that supported their growth and professional development. Not only money could retain people. DEL’s experience was that a number of inspectors actually wished to return after leaving

IES’ staff complement was 170 inspectors. DEL expressed its wish to increase the number by 500 to 670 by the end of the financial year. This was not enough, but would go a long way to assisting IES in having an impact and ensuring the workplace complied with Level Four restrictions. Return to work required a proper risk assessment, and controls put in place to protect workers.

He noted the difficulty to respond to Mr Cardo’s question, agreeing with Mr Dangor that DEL could only look at what it had in the MTSF approved by Parliament.

EE amendments: was it the time to set sectoral targets? DEL was referring to amendments submitted to Parliament. Mr Lamati did not think that the issue of transformation of the labour market should be put aside despite the current situation. As the economy was phased in DEL tried to boost productivity, it had to drive the transformation agenda, so it did not have to start again from scratch. His view was that the transformation agenda was still very important.

On an employment and labour migration policy to address the issue of foreign nationals, there is a process that had already been followed. If foreign nationals work locally legally, this had been done in accordance with this process. DEL was focusing on the issue of foreign nationals in the country illegally and employed illegally, and thus submitted to a harsh environment. He noted that even those here illegally had to be accorded their human rights.

The National Minimum Wage Report would be issued by June 2020.

The Ratio of inspections per inspector depended – not all companies were of the same size or complexity.

DEL was not responsible for the R350 special grant disbursement, DSD was. DEL made its database of unemployed workseekers available to DSD. It continued to register workseekers.

DEL supported a number of non-profit organisations determined by the money DEL had.

The new Employment Policy was linked to DEL’s new mandate, as Skills Development was transferred to DHET, one component was left with DEL – Public Employment Services. Employment policy was to be developed by the Employment Services branch. This would impact on whether DEL could increase its targets or not. If the Minister was given the legal right to set sectoral targets, what would happen was that, in areas for instance where there was a preference for foreign nationals, the Minister could make a determination on a percentage of foreign nationals allowed in a sector.

The Northern Cape’s reason for an inspection downturn was a lack of PPE. DEL insisted that inspectors had to have PPE. It was increasing the number of inspectors in the Northern Cape.

On municipal environmental inspectors, DEL was exploring collaboration with a host of inspection bodies that it licensed to operate. This could augment IES’s capacity.

Should the Department scrap BEE codes? The DG had already touched on the continued importance of transformation. Experience had taught DEL that self-regulation did not work in transformation. He thought legislation was still relevant to ensure transformation.

The responsibility of Parliament was to make laws. DEL just implemented. If members were of the view it had to amend legislation, DEL would await instruction.

The current code of good practice only addressed sexual harassment, so did not go far enough. It did not include GBV issues either. This would be a new code taking into account everything contained in Convention 190. It would take from the existing code.

He noted SEE was geared up to the manufacturing of PPE. SEE had been supporting SANDF. DEL was wearing masks made by these factories. DEL was appealing to members to assist in putting these skilled people to good use.

DEL would like to set all its targets at 100%. But 90% allowed the Department to account for dependencies and externalities. There were instances where DEL was not in control of the outcome. Targets were based on resources the Department had.

DSD had its own database and system to assess grant eligibility. DEL had just offered its help. SASSA decided to take a different route as was their right.

DEL supported the Committee’s view that the SEE had to be supported.

On the issue of the employment of African and Coloured people at DEL – there was an Employment Equity plan.

275 000 jobs were to be created as per the job summit – across all sectors and different salary scales. Some of these jobs would be permanent, some temporary.

Minister Nxesi replied to Mr Cardo’s comment, noting that what the DEL was presenting was prepared prior to the pandemic. The Department could not act as if Covid-19 had not affected its programmes. However, it was bound to follow the parliamentary procedure and present the plans it had. DEL assumed that Treasury would have to present a revised budget, and then it would review its own programmes. DEL should not expect a lot of money. There would be cuts across programmes of government. Departments would have to do more with less. The existing budget was heavy on cuts already. The UIF would be under serious strain, and heavy dependence would be placed on the state while it is already under stress. Many international commentators were noting that the state would have to move into the centre during the crisis. To deal with mass unemployment, one strategy would be the formalisation of public employment programmes. These had to be labour intensive. The country might have to ramp up on its own infrastructure, hard and soft. Roads, water, dams – the country was still behind on many infrastructural targets. Investment here would enable South Africa to create jobs. The pandemic had forced DEL to use technology. South Africa had to look into massive skills development in line with the Fourth Industrial Revolution. Employment policy and migration processes had started when Minister Nxesi arrived at DEL. It had to be finalised. In many industries, employers had preferred foreign nationals over South Africans for whatever reasons. In some sectors it had to do with skills, in some it was for cheap labour that could be easily exploited. DEL could not sit with millions of unemployed South Africans and have many foreign nationals employed. He noted the need to create quotas and push them hard. He wanted to simplify and coordinate this policy. Minister Nxesi did not want the process to be xenophobic or violent, but he had to protect the national interest. It would be a balancing act.

Chairperson Dunjwa thanked the Minister and DEL. She requested DEL respond to all written questions and all responses be forwarded to the Committee Secretariat. She requested DEL to circulate the directives on OHS issued by the Minister. She proposed minutes be dealt with in the following meeting as some members had not received draft minutes.

The meeting was adjourned.