Department of Employment and Labour 2019/20 Annual Report; with Deputy Minister

Meeting report

Department of Employment and Labour Annual Report 2019/20

Mr Thobile Lamati, Director-General, Department of Employment and Labour (DEL), introduced his delegation, which was led by the Deputy Minister, Ms Boitumelo Moloi.

Deputy Minister’s introduction

Ms Moloi said that she was formally communicating the apology of the Minister as he was accompanying President Ramaphosa to a meeting with the President of Malawi. She also offered her deep condolences on the passing of Mr Kimi Makwetu, the former Auditor-General of South Africa.

She said the relaxation of international travel restrictions would bring much needed relief to the hospitality industry in South Africa. The Department remained optimistic that the economic recovery plan would save jobs and restore the economy of South Africa. The outcome of the by-elections was a clear sign of confidence in the plans of the DEL to restore confidence in the ANC to continue serving the people of South Africa, and to prepare for the 2021 local elections.

A lot had been done by the present Portfolio Committee and the Select Committee, as they had the busiest mandate. She thanked all the Members their hard work and contributions to ensure that the DEL was kept accountable.

The focus of the briefing today was the audit report. Her brief observations on the Auditor-General’s (AG’s) report highlighted some crucial matters. These included the ineffective implementation of controls; the lack of effectiveness in mitigating against risks in pursuit of organisational objectives; and the integrity of the information showing financial misstatements, among other things. It was worth noting that the DEL had received an unqualified audit opinion. However, the aforesaid shortfalls must find priority in the decision-making structures of the DEL to improve the speed in which the audit action plan was implemented.

The DEL had also experienced challenges regarding the filling of vacancies at the desired speed. This had impacted on its broader financial expenditure. The Department had agreed to expedite the recruitment processes as the easing of the lockdown restrictions happened.

The Compensation Fund (CF) was in the process of a structural reform at a strategic and organisational re-design level, and consequently had experienced some systemic challenges. The Commissioner had made an assurance that the challenges would be resolved, and they would update the Committee accordingly.

The Unemployment Insurance Fund (UIF) had suffered financial strain during COVID-19, and the resources were almost depleted. However, the DEL had managed to deliver in terms of the commitments made for each tax bracket, despite the challenges brought about by COVID-19. Some challenges were also mentioned in the interim report of the late former Auditor-General.

Members would also be aware of the R104 million funding by the UIF to ProductivitySA as an entity of the DEL responsible for business turnaround solutions programmes. This was a major contribution for social interventions. For many years, ProductivitySA, in collaboration with the Commission for Conciliation, Mediation and Arbitration (CCMA) and the UIF, had managed to save and create jobs. The small, medium and micro enterprise (SMME) sector support from the DEL and other departments could not be overstated. She thanked the DEL for their role in assisting the SMMEs.

DEL’s 2019/20 performance

Mr Lamati said that the presentation document would be shared as the presentation was made.

Ms Nolukholo Sigaba, Acting Chief Operating Officer, DEL, said the presentation would be in three parts:

• The annual performance report for the DEL on its performance information. It would show the performance of the four programmes of the DEL -- the administration, inspection and enforcement, public employment services, and the labour policy and industrial relations programme;
• The annual financial statements of the DEL;
• The Supported Employment Enterprises (SEE) annual report and the annual financial statements.

She said that this was the audited annual performance report of the DEL for the financial year of 2019/2020. The DEL had delayed the tabling of this report because of the rigorous auditing process which had been completed on 9 November by the Auditor- General (AG). This was why the DEL had requested postponements from the Committee, and they appreciate the patience.

She described the overall achievements of the DEL for the period from 1 April 2019 to 31 March 2020, and also depicted its performance in the first quarter, as had already been presented to the Members. Most of strategic objectives had been achieved, except for the following objectives – protecting vulnerable workers and promoting sound labour relations. These two objectives fell under the labour policy and industrial relations programme in the DEL. All the performance targets per programme were met, except for those under the inspectorate and enforcement services (IES) and labour policy and industrial relations branches. The reasons for under-performance would be explained at a later stage.

In the second quarter, all the strategic objectives, save for promoting sound labour relations and monitoring the impact of legislation, had been achieved. All the branches or programmes had also able to achieve good results, except for the labour policy and industrial relations branch.

In the third quarter, the DEL's performance per programme showed that they had achieved on all levels save for the labour policy and industrial relations branch. Overall, the performance in quarter 3 had improved.

In the fourth quarter, there had been a significant increase in the performance of the DEL, despite not being able to achieve the desired results under the strategic objectives of protecting vulnerable workers and monitoring the impact of legislation. The performance per programmes had done well, with the exception of the labour policy and industrial relations branch.

Ms Sigaba compared how the DEL had performed throughout the four quarters, as well as its performance between the present and previous financial years, which showed a noticeable improvement.

The audit report of the annual performance per strategic objective showed the IES performance of the DEL for quarters three and four per province. It was noticeable that Mpumalanga and the Northern Cape had the poorest performance score out of all the provinces. However, there were measures in place to address the poor performance in these provinces. Also, vacancies were being filled in these provinces to ameliorate their poor performance.

She referred to the cases of irregular, fruitless and wasteful and/or unauthorised expenditure detected per financial year, which were reported to the accounting officer of the DEL. The AG had audited the amounts indicated and had approved them. The DEL was not proud of the amount of irregular expenditure, and was implementing measures to address it. The fruitless and wasteful expenditure was mostly because of cars owned by the DEL without insurance, and which had then become damaged. There was no unauthorised expenditure.

The performance of the IES had varied from province to province. Some provinces had not achieved the desired results, but this had been offset by the overachievements of other provinces, allowing the DEL to achieve all the set IES targets. However, all the provinces were encouraged to achieve targets.

All the performance indicators for public employment services (PES) had been achieved. However, it must be noted that the set targets and the achievements were directly influenced by the current economic performance, as the market was not creating jobs. Most targets had been set modestly because the DEL was not in control of influential factors for the performance indicators. However, where targets had been achieved they were then revised. All the provinces had achieved the set targets, and KwaZulu-Natal had been the only province that had failed to satisfy performance indicator for the number of registered work and learning opportunities filed by registered work seekers per year.

The presentation provided information about the labour policy and the industrial relations branch of the DEL. This was the branch that had not done well in the 2019/20 financial year and as a result had brought the overall results of the DEL down. Remedial actions were contained in the presentation.

In conclusion, the overall 2019/20 annual performance was at 79%, with 19 indicators reporting, 15 being achieved, while four were not achieved. The DEL programmes had devised strategies to address both under and over performance, and these would be continuously monitored to ensure an improvement in performance. A number of these improvement strategies had been factored into 2020/21. Monitoring and oversight of performance was prioritised at all levels in the DEL.

Mr Bheki Maduna, Chief Financial Officer (CFO), DEL, said that the Department had received an unqualified report from the AG. However, it was not a clean audit in terms of some compliance issues. The expenditure information showed that there was under-spent money in all four branches of the DEL. The presentation contained a breakdown information of the reasons for unspent money in each branch.

Supported Employment Enterprises (SEE)

Mr Sam Morotoba, Deputy Director General: Public Employment Services, referred to two performance indicators of Supported Employment Enterprises (SEE) during the third quarter, being the number of additional persons with disabilities to be provided with work opportunities in the SEE by the end of March 2022, and the percentage annual increase of sales revenue from goods and services targeted for the same period. He indicated the number of work seekers in different provinces and those that had secured employment. The presentation also provided a racial profile in the factories, which had now changed due to different employment and selection criteria.

Regarding the SEE’s financial information, the Office of the Auditor General had issued a qualified audit opinion for the regularity audit performed for the 2019/20 financial year on following areas: inventories; costs of sales; property plant and equipment; cash flow statement and service in kind. The AG had stated that the value of the aforesaid areas had to be ascertained.

Discussion

Ms C Mkhonto (EFF) said it was good to learn that there had been improvements in the performance of the DEL. She referred to the opening remarks of Deputy Minister Moloi regarding the performance of the DEL and the voters’ trust in it, and commented that the voter turnout was decreasing each time, and they needed to evaluate the reasons for this. The audit outcomes were welcomed, together with the unqualified audit opinion. She said they needed to check the impact that the DEL had on ordinary people. She said the filling of vacancies had been because of poor planning, and this had been used to justify under-performance. Did the DEL not have a database to fill vacancies? Regarding performance over-achievement in some provinces and under-achievement in others, she said the former should not be used to balance out the latter. Each province was a stand-alone and had to be adequately resourced to perform adequately.

Mr N Hinana (DA) said that recent statistics indicated that unemployment in the country stood at over 61%. The DEL had to have a strategy to reduce the high unemployment rate. Regarding the racial groups represented in the factories, how many racial groups were represented in management? He said that foreign nationals should also be included in the statistics of employed people.

Mr S Mdabe (ANC) said they had done an oversight to the UIF, and part of the outcome was that there were discrepancies between the reports and what was seen on the ground. Regarding irregular expenditure and fruitless and wasteful expenditure, there had been no reporting about what was being done to address this and hold those responsible accountable. There was a need to have regular oversight on the non‑performing provinces. They also needed to deal with the technical know-how of the Department’s investigators. He felt there was more work that they needed to do as a Committee.

The Chairperson referred to the presentation about employment services, and asked for a breakdown of workers that could be placed -- for example, their race, gender and so on. In counseling, were those who wanted employment discriminated against if they had criminal records? There was a need to collaborate with the Department of Justice to evaluate the categories of crimes, and then determine how far back the records went against a person, as they could be discriminated against when looking for a job. They should take it upon themselves to remove these blockages that could prevent people from getting jobs.

Lastly, she asked the DEL to indicate the impact of the Treasury’s funding reduction on the Department’s work.

DEL’s responses

Mr Lamati responded on the audit outcomes and the impact that the DEL had on the public, and said that everything that the Department did impacted the public. For example, the inspections may result in workers receiving money that they had been denied by employers. In summary, the DEL addressed ordinary employees' complaints and assisted in resolving them within 14 days. The other impact of the inspectors was to keep people safe at work, and to ensure that they did not lose their jobs, as there was a high cost of training new employees, and they needed to prevent further unemployment. The Department’s work also assisted in placing young people into employment, and they were encouraging the public sector to use these services. The DEL took wasteful expenditure seriously, because it robbed the public of many ‘perks’ that the DEL provided for ordinary people.

He agreed that the over-performance of some provinces could not be used to balance out the provinces that under-performed. That was why they had dealt with the heads of the provinces that under-performed. They were now due to submit plans to enable them to achieve the required target performance. No province should ride on the back of another, so they were taking steps to redress the under-performance where evident, and planning better.

The Department would provide the organogram of the SEE factories as requested. Regarding the strategy to reduce unemployment, part of the plan for economic recovery was to include the DEL in the plans for creating jobs. Secondly, the President had made the DEL part of the employment stimulus programme to assist unemployed people. The DEL was playing a big role in the employment stimulus programme. Therefore, it was increasingly responsible for creating employment, and it was taking this responsibility seriously. That was why they were engaging with the National Economic Development and Labour Council (NEDLAC) about this. They would also confirm if there were foreign nationals in the SEE factories.

Every report submitted to the Committee was the DEL’s level best to indicate what was happening on the ground. On consequence management, it was doing its best to curb corruption and recoup stolen money.

Referring to the people employed in the SEE, he said the Department drew most of the employees in these factories from special schools. These factories were not meant to make huge profits -- they were meant to keep disabled people productive, and at least break even. He agreed that criminal records should not prevent employment, especially where people committed petty crimes, and the DEL would engage other relevant departments on this issue.

Regarding the funds reduced from their budget by the treasury, they had not felt the impact much because COVID-19 had reduced their activities during the current financial year. However, in the next financial year they should be able to see where the shortfalls lay because of the reduced budget, and then they would report on the impact.

The Chairperson asked about the contributory factors for the slow filling of vacancies.

Mr Lamati said this challenge was largely attributable to the fact that once a person left and created a vacancy, there was pressure to fill that position with the most suitable candidates. Secondly, they promoted people internally, and this could make the filling of vacancies cumbersome because of the processes that had to be followed.

Deputy Minister Moloi said that Mr Lamati had dealt with the raised issues comprehensively. She said that the DEL was continually at the disposal of the Committee.

The Chairperson thanked the DEL delegates for the presentation. She said that COVID-19 was here for a while, and that the Committee and the DEL must best serve the country at this time to its best capacity as a united Committee. 

The meeting was adjourned.