Minister of Labour on anticipated labour legislation; CCMA and Productivity SA 2009/10 Annual Reports

Meeting report

Minister of Labour briefing on upcoming labour legislation
Minister of Labour, Mr Membathisi Mdladlana, said that some issues needed to be clarified about the legislative programme. He did not want to be controversial about the Media Tribunal, but it was important to understand that Cabinet processes started at Cabinet Committee level. The Bills were still being discussed in the Cabinet Committees, not in Cabinet itself yet. He hoped that the journalist who stated that the Bills were rejected in Cabinet, would correct the statement. The Bills still had to be tabled in Cabinet. The Cabinet Committee consisted of a group of economic cluster Ministers. The Economic Cabinet Committee was a very active committee and the Labour Market was always a contested terrain. The Economic Cabinet Committee was requested to consult a whole range of departments, and thus far had received quite a number of briefings, from departments like Home Affairs, Public Enterprises, Economic Development, Finance and Public Works. Mr Les Kettledas, Deputy Director General for Labour Market had called them all together. All their comments were being considered. The process was being taken back to the Cabinet Committee after which it would be tabled in Cabinet.

Members would be aware that the ANC won elections in 2009 on the basis of its manifesto which listed five priority areas that had to be attended to by the current government. One of the priorities was the creation of decent work and sustainable livelihoods. In order to achieve that goal, the government had to address certain problems that were obstacles in achieving this. One of these problems was labour broking in the domestic work and farming sectors. South Africa was a member state of the international labour federation, and as such was obliged to comply with labour standards. International Labour Standards on employment agencies initially showed preference for these functions being performed by the state rather than fee-charging agencies in the private sector. The International Labour Organisation’s first ever recommendation, Recommendation 1 of 1919, recommended that countries prohibit the establishment of employment agencies which charged fees and which carried on their business for profit. Where such agencies already existed, it was recommended that they be permitted to operate only under government licence and that all practical measures had to be undertaken to abolish such agencies as soon as was possible.

Labour broking had become a sore point in South Africa. There were those who would like strikes banned or curtailed, but the Constitution extended labour rights to anybody who found themselves within the borders of the Republic of South Africa. Everyone had the right to fair labour practices. Every worker, including domestic and farm workers, had the right to form or join a trade union, to participate in the activities and programs of a trade union, as well as the right to strike.

He raised these issues so that when issues such as outsourcing and labour broking came up, people had to understand that labour broking had not been defined by any South African law since 1994. In the Labour Relations Act (LRA), Section 198 dealt with Temporary Employment Services. Most problems that workers complained about stemmed from this section.

The skills development function was removed from the DoL and relocated to the Department of Higher Education and Training (DHET), but certain sections of skills development, for example private employment agencies, remained with DoL. The DoL faced the dilemma of how it was going to handle the private employment agencies without the backing of the law that had moved to the DHET. The Ministry then decided to draft new legislation for employment services. This law, called the Public Employment Services Act would deal with all matters concerning private and public employment services. This law would allow the ANC, as the party which won the elections and was governing the country, to deal with the issue of creating decent work and sustainable livelihoods, one of the issues it promised the electorate it would address in its election manifesto.

Section 198 of the Labour Relations Act (LRA), the section dealing with Temporary Employment Services would be repealed, to remedy all of the unintended problems it created and the Public Employment Services Act would replace it. This law would still not define labour broking.

Other problems with existing legislations were also discovered. Existing labour legislation defined the employee, but not the employer. This was a result of the evils of the negotiated settlement when the government changed hands. The ANC government was not negotiating now, but governing.

A journalist described the fact that no South African labour law defined or described labour broking to the Minister as a dilemma. He did not see it as a dilemma. The fact that South African labour legislation did not provide for labour broking made it easier to just ban it.

The new legislation would also deal with outsourcing and subcontracting. Within these scenarios, the employer had to be clearly defined, because when there was an accident in the work place, it became very important. A new definition of an employee was also needed for the outsourcing and subcontracting situation. As far as contract work was concerned, there was a new section in the LRA, Section 200(B) which declared temporary work to be permanent unless an employer could provide justification for employment on a fixed term contract.

By clearly defining ‘employer’, the law made sure that employees enjoyed the rights that all workers in South Africa had under the Constitution. The amendments to the LRA would affected the Basic Conditions of Employment Act, the Employment Equity Act and the UIF Act. The amendments would also entrench the principle of equal work for equal pay in line with international labour conventions of which South Africa was a signatory.

It had come to the attention of the Minister that workers who worked at sea, did not enjoy the same rights as workers generally. When these workers had labour disputes, the DoL could not intervene, because work on boats and at sea fell under the jurisdiction of the Department of Transport. The law that governed this situation was currently under discussion at NEDLAC and would in the near future be under discussion in Parliament. The Portfolio Committee on Labour had to watch that law was aligned with the BCEA. The BCEA talked about a 45 hour week, but the ILO norm for fishing industry workers were 70 hours a week. The unions had a problem with this, because due to the rampant exploitatin of workers in South Africa, the gains of the struggle for a 40 hour week that started in 1955 had to be protected.

The UIF Act had to be amended to align it with other employment laws. UIF also had to include learners/apprentices and civil servants. There was still a difficulty with foreign workers, but they also had to be covered by the UIF. In the Western Cape, some farmers deducted UIF from these workers’ salaries, but never paid it into the Fund. There had to be a legal instrument to force employers to pay these monies into the Fund, so that these workers could claim their contributions. Due to the current economic crisis, the benefit period would be extended from 8 to 12 months. There would be a revised application for paternity benefits. There would also be an application for an adjustment to the Income Replacement Rate from 60% to 65% maximum and minimum from 38% to 45%.

It had to be remembered that these were Draft Bills. They were in the process of being discussed, debated and negotiated. The same applied on the issues of Compensation and Health and Safety. They were under discussion in the Cabinet Committees.

They had not been tabled in Cabinet itself, in Parliament or published for public comment. They would go from the Cabinet Committee to Cabinet itself. These would still be draft. It would also be tabled at NEDLAC, as prescribed by the NEDLAC Act. After being discussed at NEDLAC it would be tabled in Parliament for discussion, after which a call for public comment would be published in the Government Gazette. Members of the public would be at liberty to comment.

The Chairperson commented that this briefing had been done to clear up any misconceptions in the minds of Members and so that speculation in the media about at what developmental stage the Bills were at, would come to an end. She expressed her hope that the media would report the truth about where the Bills were in the process. She hoped that the journalist who had published inaccurate information would ask for an apology.

Discussion
The Chairperson noted that Mr George Boinamo (DA) had replaced Mr A Louw (DA) left and he expressed the hope that Mr Boinamo would add value to the Committee and not oppose for the sake of opposing.

Mr G Boinamo (DA) asked whether the Minister could state his reasons for not wanting labour brokers to operate in South Africa. Also, if labour brokers were not defined by any South African law, how did the Minister identify them except by giving them his own definition?

The Minister replied that there had been recommendations from Parliament and the Ministry was given a long list of things to do by Parliament. He believed that Parliament had to be respected. There had been robust debates and walkouts about this issue.

The Minister explained that he had looked up the term ‘labour broker’ in the dictionary. The ILO said that labour was no commodity. A commodity was something that could be sold, which meant that labour brokers sold labour which was equal to slavery. The Constitution gave rights to all workers which outlawed slavery.

Some time ago a group of workers went with the Democratic Alliance to the Minister of Labour and asked to remove these workers from the BCEA. That was a weird suggestion. The Minister of Labour could not say to a worker, ‘because you are poor, let us remove your rights as a worker, which were enshrined in the Constitution’.

The Minister replied that without taking into account the public submissions on labour broking, the ANC had won elections on the basis of its manifesto and it wanted to implement the principles of that manifesto. He said that the DA would probably like to implement its manifesto in the Western Cape that it won. He urged the DA to deal with the problem of labour broking.

Labour broking was not defined in any SA labour law, so he did not have any anxieties about it. The ANC and its alliance partners had discussed and fought for this matter, otherwise there would have been no LRA today. But in practice, workers were still being sold.

Mr E Nyekembe (ANC) explained to the new DA member that the process had started at their strategic planning closed session on 11 and 12 August 2009 where the Minister had presented his legislative programme. This was followed by the public hearings on labour broking. The Portfolio Committee had put together a report on this.

Mr Nyekembe wanted clarity on the fishing industry. While he understood that this matter was being discussed at NEDLAC, and that these discussions fell under the jurisdiction of the Department of Transport (DoT) and not Labour, he wanted to know whether the Department of Labour could not interact with the DoT in order to make sure that the legislation under development aligned with the LRA and the BCEA. The Chairperson of the Portfolio Committee on Labour could also exchange views with Chairperson of the Portfolio Committee on Transport, on the ideal contents and prescripts of the Act in its final form.

The Minister replied that this was a good suggestion that the Chairpersons should confer and exchange notes. Regarding the discussions on working conditions in the fishing industry, there had been serious disagreements. The fishing industry employers did not want the Bill to go to NEDLAC, so there was a struggle to get the fishing industry to agree. Any labour related matter had to go to NEDLAC, because NEDLAC was the parliament of the workers. The law prescribed that labour related matters had to be discussed in the ‘parliament of the workers’ before it was tabled in the Parliament of the Republic. The Ministry wanted to align the law that governed the fishing industry with the BCEA while amendments were being drafted for the BCEA as it was the perfect opportunity to do so. However, if it was going to happen, it had to be discussed at NEDLAC.

Mr I Ollis (DA) asked which Act that the Minister referred to was currently under discussion at NEDLAC. The Shipping Act or BCEA?

Someone indicated that it was the Shipping Act.

Mr Ollis referred to the LRA regarding temporary work. The Minister had put forward the position that all temporary work had to be declared permanent, unless there was an exception. Temporary work existed in all countries. Why not South Africa?
           
The Minster replied that he hoped that Members were not going to engage him on the Bills, because they were drafts. He would not discuss the details of the Bills. The section of the LRA that Mr Ollis referred to was an attempt to address problems with contract work. It declared that temporary work had to be permanent unless an employer could provide justification for employment on a fixed term contract. He advised Members to have a look at the existing law as it stood, in order to understand why the amendment was necessary. There was never any guarantee that a contract would be extended.

He said that MPs had to understand this situation. He used the analogy of Mr Boinamo as a worker who was sent to the Portfolio Committee by his boss, the leader of his political party. He had a 5-year contract and there was no guarantee that it was going to be extended, because it depended on the number of votes the political party won in the next election. He asked if Members wanted workers to work with that kind of job insecurity. There was a whole section in the Constitution that dealt with workers.

The Chairperson said that this was an information sharing session for the benefit of the Members and she hoped that they had a better understanding of the situation with the draft bills mentioned. She thanked the Minister for his briefing.

Commission for Conciliation, Mediation and Arbitration (CCMA) Annual Report 2009/10
Ms Tanya Cohen, Chairperson of the Governing Body of the CCMA, led the delegation. She tendered apologies for Governing Body officials who were unable to attend. They were Mr Beki Mtshalintshali, a representative from organised labour, Mr Elias Monage, a representative from organised business and Mr Afzul Soobedaar, National Senior Commissioner: Mediation as well as Mr Ian Macun.

She gave an overview of the corporate governance and started her presentation by contextualising the role of the governing body and the framework within which it operated. The CCMA was established as a prescript of the LRA. Although a relatively young institution, it grew from nothing into a household name over 14 years. It was established as an independent statutory body and governed by a board known as the governing body  made up of a chairperson, three representatives each from organised labour, organised business and government as well as the executive director. Organised Labour was represented by Mr Beki Ntshalintshali, Ms Mary Malete and Mr Narius Moloto. Organised business was represented by Mr Elias Monage and Mr Dave Carson. The third position was vacant. Government was represented by Mr Thembinkosi Mkalipi, Ms Ntsoaki Mamamshela, and Mr Ian Macun. The Director, Ms Nerine Kahn, completed the Governing Body.

This was a particular intervention in terms of the LRA that was quite unique. This achieved two goals. It was firstly to ensure social partner credibility in the institution and the work it did, and secondly, to maintain the independence of the institution from outside parties. Thus, the Governing Body sat on interview panels to select suitable commissioners. Management was responsible for this task in the case of administrative staff.

In terms of the LRA the governing body was the accounting authority with a number of roles, duties and responsibilities. It was responsible for the appointment of the Director of the CCMA. In addition to ordinary tasks given to a governing body, the CCMA had some specific tasks around the appointment, conditions of service and termination of commissioners.

This Governing Body reported to the executive authority, which was the Minister of Labour. In terms of the LRA the Governing Body was responsible for establishing committees. The committees were: the Audit Committee, the Ad-hoc Nominations and Governance Committee, the Regular Accreditation and Subsidies Sub Committee, the Human Resources (HR) Sub Committee and the Finance and Risk Subcommittee. There was also the Essential Services Committee which fell into a category of its own.

Other than the Nominations and Governance Committees, all committees met quarterly in preparation for the four Governing Body meetings of the year, and in addition there were sometimes additional Governing Body meetings which took place around appointments of commissioners as well as financial and compliance issues.

The Governing Body retained full and effective control over the governance of the CCMA. The Governing Body had established committees that assisted with the fiduciary responsibilities of the CCMA. The CCMA was a schedule 3A institution in terms of the Public Finance Management Act (PFMA). The director implemented and oversaw the Governing Body strategy and managed and directed the activities of the Commission.

The Audit Committee, chaired by Ms Mary Vilakazi, was an independent Committee appointed by the Governing Body. Its functions were to monitor the effectiveness of the internal audit function, the reports of internal and external auditors, and quarterly and annual reports, especially annual financial statements.

The HR Sub-Committee, chaired by Mr Elias Morage, oversaw compliance with HR policies and procedures, employee development, well-being and conduct.

The Finance and Risk Sub-Committee, chaired by Ms Mary Malete, had the duty of reviewing and ensuring that the annual budget of the CCMA was appropriately accounted for. It also had oversight over proper implementation of finance policies and enterprise risk management policy.

The Accreditation and Subsidy Sub-Committee, chaired by Mr Ian Macun, was responsible for the accreditation of bargaining councils and their panellists as well as ratifying the payment of subsidies to councils in terms of the LRA.

The Role of the Governance and Nominations Committee, chaired by Ms Tanya Cohen, Chairperson of the Governing Body, was to advise the Governing Body on all matters relating to governance, strategy and compliance.

The Committee Chairperson asked the chairperson of the Governing Body of the CCMA in future to forward all apologies of Governing Body members who were unable to attend beforehand.

Ms Nerine Kahn, Director of the CCMA delivered the next section of the presentation. It consisted of an overview of The Tsoso Strategy, a strategy that the CCMA adopted from 2007 to 2009. The name was chosen, because it was a strategy that aimed to revive and re-awaken the CCMA.

This strategy that guided the CCMA over the three years, rested on three goals. Firstly, for the CCMA to promote social justice through professional delivery of services, while ensuring compliance with legislation at all times. Secondly, to ensure user friendly, quality services that were delivered with speed, and thirdly, to maintain operational effectiveness while ensuring that services were cost effective.

The Scorecard that followed, measured the CCMA’s progress against these goals. The system used to indicate failure or success was the traffic light system, showing green for achieved, amber for partially achieved and red for not achieved.

The first goal was to promote social justice through the professional delivery of services, while ensuring compliance with legislation at all times. It was divided into two sub-goals:
- to improve the external perception of the services delivered by the CCMA. Over the three years the perception improved by 20% and received a green light.
- to get the CCMA to be recognised as a market leader in the field of continual professional development in the field of labour law. This was achieved and received a green light.

The second goal was to ensure user friendly, quality services that were delivered with speed. For each sub-goal a target was set for 2010. These were:
• To settle 70% of all disputes at the conciliation phase but 59% was achieved. The target was not achieved and it received a red light.
• To have a 21% reduction in CCMA cases referred to the Labour Court from the 2007/08 baseline of 9.4%. The achieved percentage for 2010 was 5.8% and this received a green light.
• To have a 5% reduction in the non-compliance of arbitration awards from the 07/08 baseline of 21%. The cases of non-compliance increased to 28% and this achieved a red light.
• To have by 2010, all administrative rework relating to data integrity errors at 0%. It was 7%, thus not achieved and received a red light.
• To have by 2010 all process rework had to be reduced by 27% from the 07/08 baseline of 11%. In 2010 it stood at 9%, thus not achieved and received a red light.
• To have all conciliations conducted within the statutory time frame of 30 days. This was fully achieved and received a green light.
• To process an arbitration (from date of request to date closed) within 60 days. This was achieved and received a red light.
• To have no late awards by 2010. 1% was achieved and this sub-goal received an amber light.
• To have 70% of all disputes of national interest where offers of assistance were made, to be settled. 55% was achieved which earned this a red light.
• That in 2010, 75% of all offers of assistance in disputes of national interest would be accepted by parties. 84% was achieved, thus this earned a red light.

The third goal was to maintain operational effectiveness while ensuring services were cost effective.
• The target was that staff turnover had to be halved from 8% in 07/08 to 4%. 2.9% was achieved, thus earning this sub-goal a green light.

The next goal was that key skills loss would not exceed 7%. This was achieved, earning this a green light.
• The target was to meet the case management demands with normal resource levels. This meant that the case management administration would be completed with a variance of no more than 5% of planned workload. They achieved 10%, earning this a red light.
• By 2010 a budget model would be in place which would enable funding from government based on unit cost per projected number services. The target was to have funding to be 100% of projected services to be rendered. 96% was achieved. This sub-goal earned an amber light, because it was achieved in part.
• The target was to have the unit cost for delivery of compulsory services stabilised to the degree that there was no more than a 5% variance from budget allocation. This was achieved earning this sub-goal a green light.

In summary, 10 goals were achieved, 2 were achieved in part and 6 were not achieved. Even the goals not achieved were within an achievable range and the CCMA was not displeased with the outcome of The Tsoso Strategy. In some instances there were determining factors that the CCMA had no control over and the economic crisis played a role in the failure to attain some goals.

The next part of the presentation dealt with the operating efficiencies of the CCMA. A table showed success rates in terms of certain facets of the CCMA’s work, over a period of five years, from 2005/06 till 2009/10. Ms Kahn highlighted a few items on the table:
• The Settlement Rate. The CCMA had set as a target, settling 70% or more cases across all process, and achieved 65% which it still saw as an achievement. This was the average figure for January for all commissioners across the country. Settling a case was far more cost effective and also implemented the benefits and the mandates that came for the CCMA in relation to the fact that the parties had an ongoing relationship.
• Late Awards. This measured the success rate of compliance with the statutory requirement to issue arbitration awards within 14 days. It was 9% in 2005/06 and was down to 1% in 2010. The target was 0 %, but the improvement had to be noted. There was a statutory requirement to conduct all conciliations within 30 days. In 2005/06 7% of conciliation fell outside of this 30 day period. In 2010 all conciliations were conducted within 30 days. This was considered a significant achievement.
• Turnaround times. The turnaround time for conciliation came down from 45 days in 2005/06 to 27 days in 2009/10. The turnaround time for arbitration came down from 79 days in 2005/06 to 39 days in 2009/10.The law prescribed 90 days. The CCMA was thus delivering on its mandate which was to deliver a speedy, cost effective labour dispute resolution service, which was in line with its social strategy.

The graph was shown which depicted the growing caseload that the CCMA had to deal with. In 2010 it stood in excess of 150 000 cases and the trend line still pointed in an upward direction.

The extent of service locations in South Africa was noted. There were offices established over the years in Port Elizabeth, East London, Bloemfontein, Johannesburg and Tswane, Durban and Pietermaritzburg, Richards Bay, Polokwane, Witbank, Kimberley, Klerksdorp and Cape Town. In 2009, additional offices were opened in Ekhuruleni, Port Shepstone, Newcastle, Rustenburg and George. This extended the reach of the organisation, making its much needed services available to more people. However, this meant more cases, and thus more work for an organisation operating with already stretched resources.

Mr Ngoako Sekgololo, Chief Financial Officer presented the audit report. He said that the Auditor-General expressed an unqualified opinion on the financial statements and performance information.

However, there were matters of emphasis raised in the report. These were:
• significant uncertainties with regards to a law suit and the final IT3a on Part Time Commissioners submitted for the tax years ending 2007 and 2008.
• early adoption of GRAP 23 (an accounting standard) and the restatement of corresponding figures.
• fruitless and wasteful/irregular expenditure to the value of R11 000 as a result of the late payment of a provident fund. The CCMA Accounting Department already explained to the Portfolio Committee on a previous occasion how this irregular expenditure came about.
• growing concern about the CCMA, technical insolvency as a result of an ever growing caseload. He hoped that the executive authority and the Department could assist the CCMA in finding more resources.
• reporting on a quarterly basis on performance information of the CCMA.
• compliance with laws and regulations on internal audit, risk management and formalised fraud response plan. The CCMA did not have a formalised fraud response plan. It had independently operated whistle blowing facilities. There were two independent lines, one for employees and one for the general public, operated by two independent companies. There was however a need for a formalised fraud response plan. It has now been approved by the board.
• findings on internal control with regard to leadership, financial management and governance.

Another report which was considered by the Auditor-General was its investigation of allegations of irregularities. The investigation had found no fraud or corruption.

The CCMA reported a deficit of R15.240 million. Grant income from the fiscus increased by 36.20% which included a budget adjustment of R65 million during the year under review.

Case disbursements increased by 14.40% as a result of a 9% increase in cases referred to the CCMA. Employee costs increased by 26.08% as a result of implementation of a collective agreement and additional temporary staff to deal with the increase in caseload. Administrative costs increased 13.12%, attributable to increases in audit fees, lease costs of buildings and other admin costs.

Four Year Financial Review
In 2007, the grant income was R234 582. In 2010 it was R369 969.The staff costs and benefits had decreased from 41% to 33 % and case disbursement costs had increased from 32% to 42% of the grant income. This illustrated the financial pressure the CCMA was operating under.

The value added statement showed how the grant from the DoL was utilised. For the 2009/10 year, R123 250 went to salaries, R 4 483 were paid as subsidies to bargaining councils, case disbursements amounted to R 154 252 and R 98 434 was used to expand the operations of the CCMA.

Highlights of the year 2009/10
Ms Kahn said that the web-enabled Case Management System went live at the following entities in the last financial year: All CCMA offices nationally, all public sector bargaining councils, 10 private sector bargaining councils and the roll-out continued. 140 DoL offices used the CCMA’s case viewer to provide case information nationally to members of the public. These offices would get the Case Management System within the next year in order to capture case referrals.

The CCMA was awarded the Gold Award for Public Sector Excellence in the category:  Best Reputation: Legal Sector by the Minister of Public Services. Runners up were the SABS and the SAHRC. President Jacob Zuma had mentioned the CCMA and the role it played in saving jobs in his State of the Nation Address on 3 June 2009. The CCMA managed to save 14 506 jobs during the period January – December 2009.

The Training Layoff Scheme was an alternative to retrenchment that arose out of South Africa’s response to the global economic crisis as agreed between the social partners at NEDLAC. The scheme allowed for companies to temporarily lay off workers facing retrenchment, for three months during which they undergo training provided by their SETA. During this period they had to forgo their salaries, but received a training allowance funded by the National Skills Fund and UIF. The employer continued to pay for a basic social benefit package. The CCMA was the primary implementing partner for the scheme.

In anticipation of widespread industrial action during the 2010 FIFA World Cup Soccer Tournament, CCMA set up 2010 Units at each regional office to ensure labour peace in the run up to and during the event. The process monitored, identified and dealt with instances of labour conflict. It involved both pro-active preventative (stakeholder engagement) and reactive (rapid deployment of commissioners to deal with industrial action) approaches. CCMA would like to think that it played a role in keeping the event relatively peaceful on the labour front, unlike what occurred in other host countries.

There were 17 work stoppages of varying duration during 2007 and 2008 at Mbombela, Green Point, Moses Mabida and Peter Mokaba Stadiums, which placed the delivery of the stadiums in jeopardy. Only two stoppages were protected. In 2009 there was a Civil Engineering dispute that halted construction to the stadiums and related projects for almost 2 weeks.

The TRANSNET dispute happened just before the event, but severely threatened logistical support in terms of goods that were being imported for the event. The ESKOM dispute occurred during the event and threatened the hosting of the semi-final and final matches. Due amongst others to the interventions of the CCMA, these disputes were all resolved in a manner that allowed the event to unfold without any major disruptions.

In conclusion Ms Kahn said that the governing body of the CCMA had taken the experiences and lessons that it learned from the 3-year Tsoso Strategy and put together a 5-year plan for the period 2010-2015, called ‘Phambili’ meaning ‘We are moving forward’, with the aim of delivering an even more effective service.

Discussion
Mr I Ollis (DA) pointed at the vicious cycle of the economic crisis causing more labour disputes, resulting in more cases for the CCMA, creating a need for more resources while it was already insolvent. The need for resources and infrastructure could grow indefinitely according to this model. According to the presentation, it cost the taxpayer +- R5000 to settle 1 case. On an oversight visit to the Johannesburg office of the CCMA, he said, the Portfolio Committee was told that the average payment per case was around R5000. He asked whether it would not be simpler and more cost effective for the state to write the worker a cheque for R5000, which would halve the cost. He wanted to know whether there was not a way in which the employer could withdraw the case and pay the employee the R5000, saving the state the cost.

Ms Cohen replied that the CCMA was a creature of statute and that it had to perform its mandate within what the statute prescribed. If one looked at the role that the CCMA played within the South African economic and labour environment, in many cases it served as an exit gate from being employed. In cases like these, the CCMA made sure that the worker’s rights were protected and that the process and the outcome was fair. This situation could not be reduced to a matter of writing out a cheque. The primary remedy for unfair dismissals was re-instatement, not a cheque. It was very difficult to perform the role that it played in a more cost effective way. The Governing Body spent much time discussing the issue of how to deliver social justice, and the social dialogue and the value of conciliation as part of the process of delivering social justice should not be underestimated.

Ms Kahn argued that the role of the CCMA was to influence social justice. Money was not the important issue although she understood the business argument behind it. It was about the principle that workers had to understand that they had rights, and that they could stand up against an employer who wanted to infringe on their rights, and claim these back.

Mr Ollis also wanted to know why it was necessary for South Africa to have the biggest conflict resolution infrastructure in the world, needing significant resources to keep it running.

Ms Kahn replied that the CCMA was proud to be the largest conflict resolution centre in the world and it attended the International Agencies meeting. The CCMA was often held up as an example. The Portfolio Committee also attended ILO. It meant that citizens in South Africa could exert their rights and stand up to their employers and this could not be quantified in financial terms. That was part of the role the CCMA played.

Mr Ollis asked if workers could access the Training Layoff Scheme without coming through the CCMA and whether the 5 271 people in training and the 184 that had completed training were the only workers ever that benefited from that scheme.

Ms Kahn replied that for the Training Layoff Scheme, the CCMA was the first port of call. The number of people stated in the presentation was the number of people who had gone through the process and were currently in training. There were other areas in SETAs that had training projects which were slightly different. At the end of the financial year, the scheme was at a very early stage. Those were the numbers on 31 March 2010. The scheme was initiated in September 2009. It had gone through an adjustment phase. In the future it would be of value to retrenched workers. Training had been inconsistent, but this was expected in these early stages of the scheme

Mr E Nyekembe (ANC) said that all workers had the right to fair labour practices, but not all workers were members of trade unions. This prompted the ANC led government to put in place an institution like the CCMA in terms of Section 112 of the LRA of 1995, which had the function of protecting the labour rights of vulnerable non-unionised workers. Outside every CCMA office, there were people ambushing and intercepting workers who were on their way to the CCMA to register a complaint. These people took workers to places where they filled in CCMA forms for a fee, while the CCMA offered all its services for free. What was the CCMA doing about this scam?

Ms Kahn thanked Mr Nyekembe for asking the question about the people impersonating CCMA staff, whom he heard her talking about in a radio interview. It was the bane of the CCMA’s life. The CCMA had been set up to service vulnerable workers. Unscrupulous people ambushed workers in front of CCMA offices and pretended to be CCMA workers. They took them to offices and filled in CCMA forms and pretended to render services for a fee that the CCMA rendered for free.

This had been a huge problem in the Western Cape before, but it had been dealt with decisively. It had reared its head in Johannesburg and that was where the scam was being run at the moment. In Johannesburg the CCMA has distributed pamphlets and ran information sessions to enlighten the public. In Ghandi Square in Johannesburg there were big signs stating that the services of the CCMA were free of charge. The CCMA had spoken to the Police Service in Johannesburg. The CCMA was advised to give these people letters, telling them that they were providing an illegal service. The CCMA did this. Thereafter, the CCMA collaborated with the police and the people who ran such a business were arrested in Johannesburg.

Mr Nyekembe addressed the mandate of the CCMA to promote social justice. Social partners called upon the CCMA to come and assist in conflict resolution when there was a dispute. He asked if the CCMA did not think that this had to change so that instead of the CCMA waiting to be invited, it could intervene in a dispute on its own initiative. The CCMA had proved itself to be very effective in resolving disputes and ending strikes. He thought that when strikes affected the country economically, the CCMA had to have the right to intervene in the national interest.

Ms Kahn said that although it was probably not appropriate for her to say it, she agreed with Mr Nyekembe about the need to look at Section 150 of the LRA that prevent the CCMA from intervening in a dispute without being invited. Work in disputes of national interest was high profile and one of the areas where the CCMA received the most publicity, but the CCMA could only step in if parties consented, as the law stood currently. In other countries the law was different. They were in consultation with social partners to try and agree to some intervention.

Mr Nyekembe asked if the Sub-Committee on Human Resources in the CCMA dealt with grievances from workers within the institution.

Ms Cohen said that the HR Sub-Committee dealt with grievances and issues about temporary and permanent but it was broader than what the remuneration committee of a private company dealt with. It did not only deal with remuneration, but also with conditions of service, performance, monitoring and evaluation of performance, disciplinary matters, policy issues around travel and leave. There was a detailed level of oversight. There was also active involvement from Governing Body members, and the sub-committee invited nominations from social partners for additional members with expertise. There was a lot of interest and engagement from the social partners of the CCMA in that committee. However, the Governing Body was aware of its oversight and management role, and did not get involved in management issues.

Mr Nyekembe addressed the issue of the technical insolvency of the CCMA. He wanted to know from the CCMA and the Minister what measures were in place to prevent the insolvency.

Mr M Lekota (COPE) referred to the progressive insolvency creeping in. The volume of work that the CCMA would need to do was not quantifiable at the beginning of the year. The volume of work could stay within the budget for the year, or it could go way beyond projections. Was there a way to restrict this runaway trend of insolvency? He asked how much of the CCMA budget went to variable quantities as opposed to other categories.

Mr Lekota asked what relationship or level of cooperation existed between the CCMA and Chapter 9 institutions which could assist the CCMA to curb the deepening crisis of insolvency. It was part of the operations of the CCMA to market its services to the public, so in a sense, it created its own problems, but it was unavoidable, because that was the brief of the CCMA. If there was a sudden flood of problems in any particular area, could the CCMA apply to Treasury to get emergency funding or were there other back-up plans to respond to disasters within the context of the CCMA.

Ms Cohen replied that there had been a strategy in place for over a year already, to deal with the technical insolvency. The strategy dealt with efficiencies. The provinces were put under huge pressure to meet targets. It dealt with re-adjusting and making savings as any business would do when there were financial concerns. There were a number of critical points where the funding was running out when the Governing Body had to decide whether to slow down the service delivery, deal with cases outside of the 30 day limit, issue awards and arbitrations later. The Governing Body always pushed back and management was equally determined to deliver the service despite the challenges. The question was how to raise the necessary funding for the organisation.

Mr Sekgololo added, about the creeping insolvency, that a simplistic solution would be to say that the fiscus had to put more money into the organisation. This in itself was not a solution. With the help of the Director and some colleagues in the ILO, the CCMA had secured assistance in that it was developing a business and funding model that would cater for times of economic meltdown as well as quiet times. Mr Lekota had raised the issue of variability. The bulk (60%) of the work was already done by part time commissioners and 40% by fulltime commissioners This made the CCMA a lean mean machine when it was quiet, but a robust machine when it needed more manpower. The development of this model was in the early stages. In addressing the issue of escalations, a system was devised that determined that the colleagues in core business, the full time commissioners had to do a fixed number of cases before cases were given to part time commissioners. As a result of this policy, there were some positive results, but the full time commissioners were taking strain. The measure was 4 events per day currently. This worked out to 880 events per full time commissioner per annum.

Mr Nyekembe commented on the slide that showed the increased accessibility of CCMA services to the public, and said that it was a move in the right direction. It made information available to vulnerable workers such as domestic and farm workers in the offices of the DoL. It was a job well done.

Mr G Boinamo (DA) asked what mechanisms the CCMA employed to reduce key skills loss and what was their performance indicator in that area.

Ms Kahn replied that in the Annual Report and in the Scorecard, it showed that the CCMA set a target ensure no skills loss. There was an electronic measurement tool which registered staff who were appointed and those who left and kept an inventory on skills. CCMA also tried to ensure good employment benefits and working conditions for staff in order to keep the turnover low.

Ms Kahn referred to the Labour Court. The CCMA felt hopeful about the way the Labour Court worked currently and hoped to work more cooperatively in the future. CCMA also hoped to have its case management system linked to the IT systems of the Labour Court if it agreed. It would help with tracking CCMA cases that were referred to the Labour Court. CCMA agreed that it had to continue to report to Parliament on its efficiency, but if there was no compliance on awards, and the Labour Court took too long to decide on cases, it could undo the work of the CCMA. The CCMA worked cooperatively with its social partners and NEDLAC to improve.

Mr Boinamo asked to what extent the CCMA was communicating the labour laws to both employers and employees in order to reduce the CCMA case load to create stability in the workplace, because he believed that as much as the worker had rights, the employer had rights too and had to be protected in the same way.

The Chairperson said that the presentation referred to a new internal structure that had just been approved to facilitate whistle blowing within the CCMA. She wanted to know the points of reference and composition of that structure. The points of reference would determine what was acceptable and what was not acceptable.

Mr Sekgololo replied that from 2001/02 the CCMA had set up two hotlines. One hotline for members of the public and another for CCMA staff who wanted to blow the whistle. This hotline was operated by an independent company. What was lacking in these arrangements when it was reviewed by the Auditor-General was the response plan or escalation plan. The person reporting had to be protected. The head of internal audit could elaborate if the Chairperson needed more information.

The Chairperson said that she would not pursue the question about whistle blowers, as the CCMA would be back with the Portfolio Committee in the near future to say what it was going to do with irregularities found within its practices by the forensic investigators. The CCMA was not just any entity. It had a specific mandate and the mandate was to protect vulnerable workers. The CCMA had to lead by example, whistle blowers included. She would address it with the CCMA at a later stage.

Mr Nyekembe said that in the presentation, reference was made to non-compliance with CCMA awards. Only one party can be guilty of non-compliance and that was the employers when arbitration awards favoured employees. Non-compliance watered down the service the CCMA provided. Could that section not be tightened? If the technical loopholes in the law were not identified, the CCMA would be useless. Employers used money as a way to get out of arbitration findings.

Mr Mkalipi said that non-compliance occurred where the employer did not comply with the cost of arbitration. This area was in the process of being amended but he was not at liberty to say what it was. What could be done to reduce the applications for review? The CCMA was a tribunal, not a court of law. There had to be a court of law to somehow certify the cases. What could be done in terms of legislation that would make a company think twice before applying for arbitration?

The Chairperson asked for an explanation of the figures in the Financial Report on page 85 in the Annual Report 2009/10 of the CCMA, where the section dealt with irregular expenditure.
 
Mr Lekgololo said that the CCMA had been with the Portfolio Committee two weeks previously where the CCMA briefed the Portfolio Committee about irregular expenditure. This issue was investigated by the Auditor-General over a number of years. In the accounting department they had to restate the figures. At the top of the page it said: Restated 2009, Restated 2010.The opening balance was stated as R33 million which was not reported in the previous report. This amount spanned over a period of 4 years. The areas of concern were further detailed.

The Chairperson referred to page 85 in the Annual Report, and asked how much the irregular expenditure for 2009/10 was. The Auditor-General reported an amount of R 23 to 26 million. In the CCMA’s previous annual report, it stated R3 million. Exactly how much was it and from where it emanated?

Mr Sekgololo said that for the current year, it was R 25 328 million as stated on page 85. The Auditor-General reported R3 million over the previous three years. The Auditor-General and the CCMA agreed that the issue of contracts had to be looked at, because the irregularities related to policy. The policy was not only applied on the contracts investigated by the Auditor-General, but on all contracts and expenditure incurred by the CCMA for the duration of all those financial years. The accounting department took the figures of the Auditor-General and looked at the findings of the Auditor-General with regards to advertising, with regards to the evaluation committee and they quantified it. That was how they arrived at the figure of R 25 328 for this current year.

Productivity SA (PSA) Annual Report 2009/10
Mr Alwyn Nel, Chairperson of Productivity SA, introduced his delegation and the presentation.

Mr Iggy Satege, Strategic Executive, said that Productivity SA was founded in 1969, 40 years ago. It started by doing projects here and there in the clothing sector. Over the years it had become involved in many diverse industries such as mining, agriculture, government and private institutions.

Currently it had difficulty reaching areas where it did not have offices.

The organisation was structured so that there was a section for creating awareness, another for value chain competitiveness and another for turnaround solutions.

For the financial year 2009/10, the focal areas were job saving, the continuous improvement program, productivity training and awareness, and productivity knowledge. The approach of PSA was customer focused and people centred. It encouraged a productivity mindset that was internalised. PSA aligned to national priorities and achieved delivery through partnerships, networks, and alliances. It also promoted collaboration between management and labour. Cordial and peaceful environments were conducive to higher productivity.

Turnaround Solutions was one of the bigger programs that PSA undertook in 2009/10. It consisted of different phases, but PSA focused on the first phase. This involved implementing turnaround solutions for companies that were in distress. Companies called PSA about the prospect of having to retrench people. PSA immediately activated phase 1 that involved turnaround solutions. Often companies only approached PSA when nothing could be done to save them. In the event that nothing could be done to save the company, the second phase came into play, where PSA assisted the company to manage retrenchments. The third phase was job creation and the Department of Labour (DoL) was very involved in the last two phases. Turnaround solutions was an initiative of the Jobs Summit (1998), funded by the DoL, and managed by PSA. The aim was to save jobs.

Highlights of the program were that 136 Turnaround future forums were established, 18 246 jobs had been impacted upon, 83 turnaround strategies have been developed, 64 Proactive future forums had been established, and 100 early warning systems were implemented. Future Forums were forums where labour and management came together to discuss the future of the company. Without the establishment of a Future Forum at a company, PSA did not become involved with the company. Proactive Future Forums were established in companies that were not quite in trouble yet, but were potentially in trouble. A Proactive Future Forum prepared the management and labour of the company to know what programs to implement and how, when the company ran into problems a few months down the line.

Out of a total of 136 Turnaround Interventions in the 2009/10 financial year, 5 occurred in the North West Province, 3 in the Eastern Cape, 30 in Gauteng, 20 in Limpopo, 11 in Mpumalanga, 8 in the Western Cape, 11 in KwaZulu- Natal, 3 in the Northern Cape, and 45 in the Free State. Most of the companies assisted by PSA were in the metal and steel sector. The clothing and textile sector was also prominent, as well as transport services, wood manufacturing construction, printing, cleaning and catering and many more.

In terms of performance, PSA had set targets for itself:
• Establish 120 future forums in distressed companies. 136 Future Forums had been established, which meant that the target was exceeded. 18 246 jobs have been impacted upon.
• Develop 70 turnaround strategies. 83 Strategies had been developed. Again the target had been exceeded.
• Establish 137 proactive Future Forums in stable companies as well as 100 Early warning Systems. 164 Proactive future forums and 100 early warning systems were established. The target had been exceeded.
• Conduct 12 sector/ industry studies and 13 had been done.

Value Chain Competitiveness was another program PSA implemented in companies to make them internationally competitive. It was a two-year program funded by the Department of Trade and Industry (DTI).

The Work Place Challenge
Firstly companies were nurtured and made to understand the challenges they faced, and what they needed to change if they wanted to be internationally competitive. The Capacity building workshops were important, because it was an appreciation process for these companies. Companies were put together in clusters from 6 to 9 and they ranged from small to big in the same cluster. They learnt from each other and improved. There was an aftercare program through which the companies could access continued support after they had graduated. The Continuous Improvement Programs were implemented in the companies.

Highlights of The Work Place Challenge were that 187 enterprises were nurtured against a target of 64 enterprises. There were 16 capacity building workshops against a target of 6 workshops. There were 19 clusters at the implementation phase against a target of 12.

Research
PSA released an annual publication providing productivity trends in the country. Information covered output employment, capital input, output productivity, capital productivity, multifactor productivity, unit labour and capital costs.

Organisational Productivity Solution
Strategic objectives of the program were to provide productivity training to intermediaries such as educators, SDFs and ETD service providers to leverage our reach to organisations and communities; to conduct direct training to managers, workers and emerging entrepreneurs to foster continuous performance improvements;  and to implement productivity improvement projects in government departments and private organisations for continuous performance improvement.

Against a target of 2000, 2103 emerging entrepreneurs were trained. Against a target of 500, 705 workers were trained on productivity improvement. The Johannesburg City Council was assisted with productivity training.

Positioning/ Branding and Stakeholder Management
The objectives of the Programme were:
• To inspire SA towards greater productivity achievements by raising the urgency and the importance which productivity had to be given in the face of world competitiveness, by highlighting the role of every South African in achieving this, and by creating a universal understanding of productivity.
• To build the legacy of the PSA by giving PSA ownership of productivity related issues, and raising the profile of PSA events (Productivity Month, Research Reports)
• To build appropriate relationships between Productivity SA and stakeholders by initiating, owning and participating in relevant discussion forums, by invitations to lectures, seminars and by partnership and co-sponsorship of productivity or labour related issues.

The outcomes had been:
• An awareness was created of the importance of productivity and competitiveness.
• An association was created between PSA and productivity concepts.
• South Africans embraced the concepts of productivity that led to changed behaviour.
• An entrenched brand awareness that lead to a strong brand equity.
• Forefront of productivity thinking and discourse.
• Assertive and influential.

2009/10 Performance
• A print and electronic campaign was implemented: 72 articles appeared in the print media; 5 magazines were produced as well as the 40^th Anniversary publication and marketing support material.
• 71 Companies would take part in the Productivity Month Awards.
• Partnerships with Provincial Economic Development was important. They provided funding, databases and information as well as facilities. They were also major role players in the awards ceremonies.
• PSA would also build their relationships with the SETAs, because it believed that training that did not lead to an increase in productivity was not viable, so PSA would help the SETAs to make their training for effective.
• PSA was selling competencies, so the issue of talent management was very crucial.

Focal areas
• Talent sourcing and acquisition. In previous years PSA reported a high vacancy rate. Through concerted effort the vacancies would be reduced to two.
• Talent Management was another crucial area. Knowledge management was an area crucial to productivity. From an HR point of view the reasoning would be to keep the critical staff that were delivering. Succession planning had to be in place, meaning that if positions became available, deserving candidates from inside the organisation had to be mentored, coached and groomed.
• Building a performance culture was important, because culture was key to productivity. The organisational culture and values had to be assessed in order to see whether they were conducive to a high level of productivity. If not, it had to change.
•  In 2004 PSA entered into a partnership with the Asian Productivity Organisation in terms of skills transfer. Six PSA employees were trained on the Basic course for Productivity Practitioners and 5 employees on the Advanced Course. Three employees went on a study mission to Japan on Lean Management. The partnership carried the cost.
• Implementation of the Culture Shift Journey impacted on staff morale resulting in improved staff turnover and vacancy rate. There were only 9 resignations as opposed to 22 in the previous year.

Finance and Administration.
PSA received R 75 127 million in 2009, but only R 71 002 million for 2010. It overspent its budget by R 1 187 million.

The highlights for 2009/10 were:
• Job saving as it impacted on more than 18 000 jobs.
• The continuous improvement program exceeded its target by 200%.
• 750 workers underwent Productivity Training.
• The generation of productivity knowledge – productivity statistics and the IMD Report.
• The PSA had an unqualified audit report without any going concern issues.

Discussion
Ms F Khumalo (ANC) asked if the media articles and magazines were enough to popularise PSA. Which other measured were used?

Mr Bongani Coka, Acting PSA CEO, said that PSA had received direct referrals from its partner organisation, CCMA. It had good relationships with labour unions, as it was a tripartite organisation. PSA also ran workshops. It had good relationships with a number of Chambers, for example the Eastern Cape Chamber and the KZN Chamber, which gave it a platform to market itself. During Productivity Month, PSA encouraged a number of companies to embark on productivity program initiatives.

Ms Khumalo wanted a short description of PSA intervention in the agricultural sector.

Mr Coka replied that one particular program came to mind: The Turnaround Solutions for the Social Plan. Due to automation in this sector there was a threat of many job losses in agriculture, but the PSA made an intervention by diversifying the environment with the result that workers could be re-skilled and retained.

Ms Khumalo said that PSA said that it provided skills development. Did those trainees receive any support after being trained?

Mr Coka said that the kind of training that PSA provided was normally training to measure the impact of interventions. A measurement was done before training and a measurement afterwards, which would be compared to see the impact. The candidates for training would normally be people who were in the work environment. PSA made sure that the trainees had the ability to do the measurements correctly. Once it had ascertained this fact, the trainee was given a certificate, which improved his/her marketability.

Mr G Boinamo (DA) noted that there were 23 SETAs and the majority were dysfunctional and had been over several years. People went to the SETAs, underwent training, only to find that they were unemployable. The training that SETAs gave was irrelevant to the job market. What held the PSA back from assisting the SETAs to perform as they should.

Mr Coka replied that the relationship with the SETAs was continuing. They attended the functions of the PSA. At the moment the PSA was communicating with the LGSETA, EnergySETA, and BankSETA and was pursuing the other SETAs.

Mr I Ollis (DA) referred to the table that showed the spread over the country had changed. In the Eastern Cape there were huge car manufacturing plants as well as textile plants. There were only three interventions. Perhaps this had to be adjusted.

Mr Coka said that the spread over the country was a function of partners on the ground in the different geographical locations. PSA struggled especially in areas where it did not have partnerships or geographic presence, which called for stronger stakeholder management. The PSA had the same concerns about the Eastern Cape. There was a high level of poverty, but PSA had limited interventions there. There was however a breakthrough during this financial year, when PSA started working with the Office of the Premier. The Productivity awards were held in the Eastern Cape for the first time and the PSA now had an agreement with the Port Elizabeth Chamber. The spread figures would look different next year, because there were many candidates for SMME training and big companies had also showed interest in the PSA products.

Mr Ollis referred to page 26 where it referred to 2009/10 performance. The PSA had to turn companies away that needed help because it did not have the resources to help them. If South Africa wanted to become a fast growing economy like Brazil, the work of the PSA was needed. The DTI was funding projects. Could PSA not access more funding from the DTI? He regarded this work as valuable. The PSA should approach the DTI for money. Billions were allocated to the DTI to help companies in distress. The PSA had to request more funding at the pre-budget input. He would like to see more companies helped.

Mr Coka said that the PSA would apply to the DTI for funding. Focus currently was on competitiveness, not saving jobs, and they had increased the funding for the Workplace Challenge Program. The PSA would pursue large funders in order to make sure that it could assist companies that needed interventions. The PSA did its pre-budget input in September and had requested for additional funding specifically with regards to saving jobs. It cost an average of R2000 to save a job, while it cost an average of R70 000 to create a job. That was why it made more sense to focus on saving jobs rather than creating new ones.

Mr Ollis asked which department did PSA assist in the City of Johannesburg? He said the call centre of the City of Johannesburg was a disaster and the roads were full of potholes.
 
Mr Coka replied that the project that PSA was contracted to work on by the City of Johannesburg was the Metro Police. There was a lack of productivity as a result of hostile relationships between management and labour. PSA had conducted a study and come up with recommendations.

Mr Nyekembe said that before the SETAs moved from the DoL to the DoHE there was a good relationship between PSA and the SETAs. He asked whether PSA would pursue those relationships so that the SETAs put the productivity concept into their training.

Mr Setege said that the DoL had put the productivity concept into the training that the SETAs provided. However, when the SETAs moved to the DoHE, the productivity function remained behind in the DoL. The role and functions of PSA would be taken up in the Bill that the Minister referred to earlier on, so the issue was being addressed.

Mr Nyekembe knew that PSA responded to calls for help and that whatever advice was given, was not mandatory. He asked whether the PSA did not see the need for an Act to enforce any progressive advice.

Mr Coka said that in the past companies could not be forced to participate in turnaround solutions. The new Companies Act had a section dealing with business rescue which gave the power to a union member or an affected employee to say to the company halt if it wanted to liquidate without going through a turnaround process. Such a person could approach the court to have the company implement a turnaround strategy, before it closed down. PSA as an entity could only intervene on invitation by the company and only if management and labour agreed that there had to be such an intervention. In that regard it remained a challenge.

Mr Nel added that PSA had recently held a revenue generating workshop. The PSA was looking for models to generate revenue and he appreciated the fact that the Portfolio Committee pointed the PSA in the direction of the DTI. The PSA was looking at the IDC which also dealt with companies in distress and other possible funders.

The Chairperson thanked both organisations for their presentations. She advised them to report their achievements and challenges in terms of their strategic plans to be clearer and more concise.

The meeting was adjourned.