Department of Employment and Labour (DEL) response to the State of the Nation Address and the Budget Speech; with Deputy Minister

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Employment and Labour

09 March 2022
Chairperson: Ms L Dunjwa (ANC)
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Meeting Summary

President Cyril Ramaphosa: 2022 State of the Nation Address (SONA)

2022 Budget Speech & Key Documents

In a virtual meeting, the Committee was briefed by the Department of Employment and Labour on its response to the President's 2022 State of the Nation Address (SONA) and Budget Speech. The Department had developed a plan of action to address nine key priorities identified by the President, and outlined which of these key priorities were being pursued under each of its four programmes. The Department also shared information on its budget allocations up to 2024/25, drawing particular attention to the slight increase in the budget of the Commission for Conciliation, Mediation and Arbitration (CCMA).

The Deputy Minister of Employment and Labour congratulated the Department on identifying key priorities arising from the SONA. She confirmed that the presentations on the Annual Performance Plan would reveal greater detail on how targets would be pursued. She urged the Committee to support the Supportive Employment Enterprises(SEE) target of 30 government customer agreements.

Members of the Committee welcomed the presentation as a step in the right direction. The Committee believed that it showed promise although as always the devil was in the detail. Members were particularly happy to see that the CCMA had received a budget increase. Members questioned the level of seniority at which disabled people were employed by Supportive Employment Enterprises, the Department’s views on a basic income grant, progress on restructuring projects within the Department. Attention was brought to questionable labour practices by employers during the pandemic as well as labour inspectors who avoided interviewing workers.

Meeting report

Presentation by the Department of Labour on its response to the State of the Nation Address and the Budget Speech

Ms Marsha Bronkhorst, Chief Operating Officer, Department of Employment and Labour (DEL), said that the Department had developed a plan of action to address nine key priorities identified by the President in his State of the Nation Address (SONA):

Addressing deep poverty, unemployment and inequality
Economic growth and job creation
Combating hunger
Building a capable, ethical and developmental state
Skills development
Combating fraud and corruption
Overcoming COVID-19 and the general health of South Africans
Infrastructure development for economic growth
Expand public and social employment

She discussed which of these key priorities were being pursued under each of the Department’s four programmes:

Administration
Inspection and Enforcement Services
Public Employment Services
Labour Policy and Industrial Relations

Mr Bheki Maduna, Chief Financial Officer, DEL, presented the budget allocation for each programme for the years 2022/23, 2023/24 and 2024/25. He gave a breakdown of the budget by economic classification, as well as current payments and transfers and subsidies, over the same period. He drew attention to an error on slide 43: in the last row, the figure 50 481 should have read 2 191 519, and 4 295 616 should have read 9 436 654.

Mr Thobile Lamati, Director-General, DEL, reported that work had begun on developing a social compact, as raised in the SONA, and it was hoped that bilateral discussions between government and the various social partners would begin soon.

He admitted that the Department’s work might sometimes appear inward-looking, but assured the Committee that it was well aware that, as an infrastructure-led plan, the President’s Economic Reconstruction and Recovery Plan would depend on the private sector. Without the private sector on board, an infrastructure programme could not be delivered hence government was ensuring that jobs were created.

Both presentations reflected on the Pathway Management Network. He detailed that the network was part of the Department’s efforts to further employment. It was a “network of networks” that sought to stimulate, identify and aggregate jobs and work experiences in the social, formal and informal sectors. Localisation was factored into the efforts to create jobs as well as systems change.

The aim was to connect youth to different platforms within the network and integrate access to these networks. This programme was at the centre of the Presidential Youth Employment Interventions, which comprised an ecosystem manager and an innovation fund. The Government Technical Advisory Centre (GTAC) and the Jobs Fund have been allocated these roles with the Department playing a monitoring role as it had to account for the R304 million allocated. Thus the Department was working with the private sector but there was a focus on public employment programmes that government was administering.

He added that there was a slight increase in the CCMA’s budget.

Discussion

Mr M Bagraim (DA) thanked the Department for the presentation, which left him feeling unusually upbeat. It suggested that the Department was looking toward its extended mandate, which was good news. He asked if he could send the Director-General written questions related to the timing and dates of the various initiatives presented.

The outlook was promising but the devil was in the detail. He was excited to see that the Department was going to be working with the private sector, recalling that in the SONA the President had said that 80% of the jobs in the country were created by the private sector. He was also happy to see the slight increase in the budget of the Council for Conciliation, Mediation and Arbitration (CCMA), although he thought it could be greater still, and he hoped its offices would soon be opened to the public.

Mr N Hinana (DA) agreed that timelines and dates of deliverables and priorities were required to measure the Department's success. For example, in the case of targets set to be completed within 100 days, when did the counting start? He noted the achievements and targets of Supported Employment Enterprises (SEE) in employing disabled people but wanted to know at what levels they were and would be employed. It was not enough if employment was only in entry-level positions. There was no reason why someone with a physical disability could not take on a management position. He noted that no mention had been made of a basic income grant (BIG) as a tool for fighting poverty. He had wanted to know how far discussions with social partners had gone on this matter.

Ms C Mkhonto (EFF) wondered whether any of the targets presented were realistically achievable, given the country's low productivity levels. She asked whether it was possible for the Department to place a non-performing entity under administration, similar to how a non-performing province could be placed under administration in accordance with section 100 of the Constitution.


She reported complaints that there were labour inspectors who only held meetings with employers and called for a mediation approach in which inspectors met with employers, managers and workers. This would give them a more accurate picture of the workplace.

She also said there were employers who had left their workers in limbo during the pandemic, stopping their salaries without explanation but not retrenching them, or paying them a reduced salary even while receiving funds through the Temporary Employer/Employee Relief Scheme (TERS). There was even an entity funded by the Department of Sport, Arts and Culture (DSAC) that had stopped paying workers without explanation. She agreed with Mr Bagraim that the budget increase for the CCMA was a small step in the right direction.

Mr S Mdabe (ANC) welcomed the presentation but asked why there was no mention of the National Minimum Wage Act in the list of legislation that labour inspectors had to comply with. He asked when the restructuring and repurposing of the Public Employment Services (PES) branch was expected to be complete so that it could perform the task of coordinating and facilitating job creation, in the public but also the private sectors. The silence of the PES branch was too loud, especially when it came to the Department’s expanded mandate.

Responses

Mr Lamati appreciated the rare compliment of the Department from Mr Bagraim. He confirmed that the Department was working very closely with the private sector and would welcome written questions on timeframes. He noted that the commitments mentioned in the presentation were all included in the Annual Performance Plan (APP) or referred to in the Medium-Term Strategic Framework (MTSF). Urgent targets were already in the process of being implemented.

The 100-day window had started the day after the President's Address. Discussions on a BIG were ongoing. Government had no objection to it in principle but the costs and sustainability still had to be studied. Bilateral discussions with social partners, facilitated by the National Economic Development and Labour Council (NEDLAC), would start very soon.

He acknowledged the problems posed by the country’s low productivity level and admitted that not much would be achieved if it was not addressed, which was why productivity should be an element of the social compact between government, business and labour.

It was not feasible for the Department to place its entities under administration. However, other provisions could be used with a similar effect in some cases, such as the Compensation Fund (CF) and the Unemployment Insurance Fund (UIF), all of whose staff were employed by the Department itself, while in both these cases the Commissioner was designated by the Minister, not appointed, and this designation could be revoked. Other entities had boards of directors that could be dismissed by the Minister.

Labour inspectors were trained to interview workers as well as employers when they did inspections, and he invited anyone to contact him directly if a labour inspector was breaking this protocol. He also invited Ms Mkhonto to provide specific examples of workplaces where workers had been left in limbo or mistreated during the pandemic so that the Department could follow up and offer advice to the workers.

The reason for the omission of the National Minimum Wage Act in the presentation was that it was a ‘subset’ of the Basic Conditions of Employment Act. He noted that the Department was restructuring itself across the board, not just in the PES branch, to meet the new challenges of the labour market. The PES branch was part of this. He added that the National Labour Migration Policy (NLMP) and the new National Employment Policy would see the PES branch taking over some responsibilities from the Department of Home Affairs.

He undertook to brief the Committee on the Department’s restructuring when the time was right, but he was not yet able to give precise dates.

Ms Lisa Seftel, Executive Director, NEDLAC, noted that in his Address the President had asked for a new and comprehensive social compact within 100 days. The most significant input into this process would be the bilateral discussions led by government with the different social partners, which would be complemented by NEDLAC's other work, and she promised that there would be something on the table within the 100-day window.

Mr Mothunye Mothiba, Chief Executive Officer (CEO), Productivity SA (PSA), said that the country’s low productivity and competitiveness were at the root of the problems. PSA had made government aware of this and it was working together with the Department of Trade, Industry and Competition (DTIC) and the Department of Small Business Development (DSBD), as well as business, to identify what should be done to improve the competitiveness of local enterprises.

Mr Sibusiso Phakathi, CEO, SEE, said that SEE employed only disabled people in all its factory operations across the country. It had also defied unemployment trends in 2021 by employing more people, and with support from the relevant Departments, particularly in the form of commitments to buy its products, it was on track to meet its target of 400 additional jobs. He did not have information on hand about the level of employment of disabled people.

Ms Aggy Moiloa, Deputy Director-General (DDG): Inspector and Enforcement Service, DEL, confirmed that labour inspectors that did not engage with workers were violating standard operating procedures, which clearly required that they interview not only employees but also health and safety officers. Where workers were unionised, shop stewards had to be part of the process from beginning to end. She drew attention to the relevant sections (65 to 75) of the Basic Conditions of Employment Act that provided for the implementation of the National Minimum Wage Act.

Mr Sam Morotoba, DDG: Public Employment Services, DEL, noted that the entry-level wages at SEE factories were R5500, which was above the means test of the Department of Social Development. An amendment to the Employment Services Act was being proposed that would make SEE a trading entity, which would mean that departments could be compelled to procure from it.

The Department was aiming to subsidise the salaries of 1120 people with disabilities. Work was ongoing to clear the database of people who were no longer eligible to receive the R350 social grant or could be provided with work through the Extended Public Works Programme (EPWP).

He drew attention to the Department’s website, where the NLMP could be viewed, and reported that the National Employment Policy was currently undergoing a socio-economic impact analysis. It would be published once it had been approved by Cabinet. These policies, along with the additional short-term funding for the PES branch from R600m to R900m, would strengthen the Department’s ability to coordinate employment matters.

Deputy Minister’s remarks

Deputy Minister of Employment and Labour, Ms Boitumelo Moloi, congratulated the Department on identifying key priorities arising from the SONA. She confirmed that the presentations on the APP would reveal greater detail on how targets would be pursued. It was important that a more integrated approach to bringing services to the people be done through the District Development Model.

She expected that, in response to challenges, it would become standard practice for all audit action plans to be subjected to an internal audit, and the establishment of an ethics unit in the office of the Director-General was a step in the right direction that was long overdue. The Department was also monitoring vaccination levels among its staff, and the review of the labour regulations to allow small businesses to hire more workers was a matter that Members would be excited to hear about.

NEDLAC’s Social Compact Programme also had great potential. The SEE target of 30 government customer agreements needed everyone’s support. The Department would work hard to achieve this objective. PSA had funding challenges but government had to strive to meet objectives despite budget constraints.

Closing

The Chairperson said that the meeting had shown that, working together, the country would be able to move forward. She encouraged Members to make use of the Department’s Parliamentary Liaison Officer to report specific labour inspectors and workplaces where they saw problematic practices. There was no need to wait for Committee meetings to bring up such matters.

She acknowledged Mr Bagraim for giving credit to the Department where it was due but noted that the Department should not take the Committee's support for granted. In particular, she said she would follow up with the Auditor-General on the audit of the UIF.

The meeting was adjourned.
 

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