An Executive Summary - Tabled Before Parliament On 20 April 1998
Presented To The Portfolio Committee On Labour By S M Pityana, Director General

The 1997 Annual Report comes at the end of the fourth year of the Minister of Labour's Five-Year programme (1994-1998). Although it covers an extensive amount of work undertaken in pursuit of that programme, some aspects of it are reported in the annual reports of the various statutory bodies like the CCMA, NEDLAC, the two Funds (UIF and Compensation Fund) and others.

This report also covers the first year of the Strategic Plan (1997 - 2000) of the Department of Labour, which was adopted in 1996. It is a candid account of the achievements and shortcomings in that year.

Under the able leadership of Minister Tito Mboweni, the department has successfully entrenched the new vision in labour market policy reform. The labour market policy has been aligned to the national vision of promoting democracy, equality among citizens, respect for human rights, economic growth, productivity and competitiveness and employment. The report further shows that the budgetary allocations in the department had been aligned to ensure that public resources are used in pursuit of broader policy objectives of government.

Although the policy reform programme remains incomplete, the benefits of strategic planning are already evident with 71% of the budget of DOL going to new policy initiatives of the Minister. This is a tremendous shift form the 44% in 1995/96 financial year. In 1998/99 we expect this to grow to about 77%.

There has been an improved monitoring of implementation of programmes in 1997. The report shows that the planning and monitoring processes have helped improve budgeting and expenditure in the department. Underspending has been reduced from 38,27% in 1995/96, 16,17 in 1996/97 to 6,26% in 1997/98.

This report shows major changes to the composition of staff. Tremendous strides have been made to promote affirmative action and bring into the organisation change agents that have played a significant role in transformation. Since the new government came to power in 1994, out of the total of 44 management positions in the category of Director and above, 84% were post-1994 appointees, and only 16% were retained from the old departments of Manpower. These two categories of senior managers are united in their commitment to transformation despite their varied backgrounds.

The department has shown enormous commitment to the rightsizing initiative, while simultaneously ensuring improvement in the efficiency with which it undertakes its functions. The investment in technological infrastructure, staff training and recruitment of high calibre officers are all a combination of measures aimed at improved delivery with a reduced workforce.

Strong control measures have also been introduced with the improvement of the capacity of the Internal Audit Unit. The established of the Internal Audit Committee and an Audit Review Committee to investigate all unauthorised expenditure with a view to advising the Director General on appropriate remedial steps before matters are reported upon by the Auditor General. Through the work of the Internal Audit Unit, the department has been able to crack down on fraud.

South Africa has a very low skill profile in comparison with her key trading partners. The country also has a critically high level of unemployment, particularly amongst school leavers. The majority of the unemployed, both young and old, lacks practical skills with which to enhance their employability or the possibility of self-employment. The restructuring of various enterprises has resulted in retrenchments, which have exacerbated the problem of unemployment. Based on our strategic plan, our achievements for 1997 were as follows:

2.1 Training of Unemployed People
Training unemployed people in order to promote their employment or self-employment has been one of our central programs. In the period November 1996 to October 1997, a total of 66 475 people were trained under the Training of Unemployed Persons Scheme. This number includes 24 352 in the informal sector and 3 642 in entrepreneurship.

In addition, a further 7 843 unemployed people from identified target groups were trained, including prisoners and people associated with the Service Corps (a programme aimed at providing skills to people affected by demilitarisation by the SANDF).

A total of 26 271 people were trained within the context of job creation schemes.

2.2 Assessment of tradespeople
A further total of 4 518 apprentices underwent trade tests at the Central Organisation for Trade Testing at Olifantsfontein. Of these 67% passed and became qualified tradespeople.

In addition a further 3 600 people were assessed. These people had acquired their skill in informal or non-traditional ways and came forward for assessment outside of the traditional apprenticeship route. Of these 54% passed. This will improve their employability. In line with the new South African Qualification Framework (NQF) under a "Recognition of Prior Learning" scheme.

2.3 Counselling and placement services to the unemployed
During 1997, 3 692 053 people voluntarily registered with the Department as unemployed for the purpose of being placed in a job and or to apply for unemployment insurance benefits. Of these 512 388 or 14% made use of the free placement services. Notwithstanding the high rate of unemployment in the country, the Department succeeded in placing 40 372 job-seekers in employment or self-employment in 1997. This is a drop of 4% from the previous year.

A bursary scheme to assist people with disabilities is also managed by the Department. 98 people benefited from bursaries in 1997 - less than in previous years as a result of lack of funds.

292 people with disabilities were placed in employment during 1997. The attitude of employers remains unduly negative to placing disabled people in employment despite subsidy opportunities from the Department of Labour.

The Department provides counselling services to the unemployed people. The total number of clients seen on an individual basis 4 825 in 1997, and 58 288 were seen in groups. This underscores the wisdom of group counselling

3.1 Labour Relations Act
1997 saw an increase in the registration of trade unions, employer organisations and bargaining councils. An indication, perhaps of workers taking advantage of the new organisational rights and the abuse of the system by non bona fide bodies e.g. lawyers and consultants. A total of 417 trade unions registered representing 3,412 million workers. This represents a 13 % increase from 1996 on this basis the unionised workforce represents 64% of workers in non-agricultural employment and 24 % of the economically active population. There were 258 registered employer organisations and 73 registered bargaining councils. Although the LRA of 1995 does not require union and employer federations to register there were 16 and 8 such organisations in 1997.

The department oversees the collective agreements of bargaining councils and facilitates the extension of agreements to non-parties. There were 207 such agreements in 1997. At present 69% of the agreements are extended to non-parties.

The department together with the CCMA is seeking ways of assisting bargaining councils meet the requirements of the new Act and transform themselves into efficient labour market institutions. These institutions remain predominantly white and male. They also have not developed requisite capacity to play their dispute resolution functions as envisaged in terms of the LRA.

The department monitors the activities of the CCMA. The Chief Director Labour Relations is leader of the government delegation and represents the Department of Labour on the Governing Body of the CCMA.

3.2 Employment equity
A draft Bill was published for public comment at the beginning of December 1997. Negotiations on the draft at NEDLAC are almost completed. It is expected that the Bill will be passed by Parliament this year and implemented in 1999. As this law is the first of its kind in South Africa, new institutions will have to be established before promulgation.

To facilitate the development of Codes of Good Practice a research project on the extent of employment equity in today's South African firms is being undertaken as part of a project under the USA/SA Binational Commission.

A project exploring ways in which monitoring of employment equity plans and ensuring compliance with the proposed legislation will be completed by the end of April 1998.

3.3 Minimum Standards
A new Basic Conditions of Employment Act was passed last November. The department is establishing institutional mechanisms to ensure effective implementation. Some sections of the Act, including that on Child Labour were promulgated on 21 March 1998. The rest of the Act will be promulgated between August and October of this year.

There is greater recognition that the success of employment conditions legislation requires more resources and support for inspectors to ensure compliance. A project to radically improve local level service delivery has also been undertaken. A review of our inspectorate in 1997 showed that they require more training, better infrastructure and an improvement in numbers.

The new wage board undertook major investigations in key sectors in 1997. Consequently a new wage determination for the civil engineering sector was published in March 1998. Cleaning and security determinations will be published in May1998. Investigations are also underway in respect of hospitality, commercial and distributive and taxi industry. Work has begun on a possible sectoral determination for children in the performing arts industry.

4.2 Strengthening Civil Society
As part of the Five-Year Programme the department established the Strengthening Civil Society fund for the purpose of strengthening the capacity of labour market institutions. R6 million was disbursed and the following organisations received following allocations:

IMMSA: R891,000

All workers have a right to a healthy and safe work environment. However, too many South African workers are still dying, developing diseases, being injured and maimed by accidents at our workplaces on a daily basis. Based on our strategic plan, which is underpinned by a preventive approach, our focus for 1997 was as follows:
Proactive inspections in high-risk sectors
Promotion of self-regulation
Improving legislation
Increasing OHS awareness in the informal business sector
Marketing and OHS information dissemination

4.1 One of our major operational constraints this year was the severe staff shortage. This hampered our envisaged proactive and preventive work. Some offices had to curtail proactive work and concentrate on reactive accident investigations. 1997 saw a high inspector in OHS, as a result of retirements and better prospects in the private sector. Where 22 new appointments were made 13 resignations were received. This has severely hampered our productivity for 1997 since new inspectors are only fully operational after six months, with productivity time having to be utilised for training. Even with the full complement of inspectors on the establishment, this structure is unlikely to be different, as the number of inspectors would remain too few.

4.2 During date for 1997, 6 102 incidents and 508 fatalities were investigated and finalised by the OHS Inspectors of the Department. During this period, a total of 15 208 requirements were served by the inspectorate during inspections. These requirements were as a result of contraventions of the OHS Regulations administered by the Department. The requirements served resulted in a total of 156 recommendations for prosecution, which is down by 66% on the 1996 figure. This can be ascribed to two primary factors that of junior staff under training and the high inspector vacancy rate of 33%.

4.3 Our major policy focus was aligning OHS with the transformation and restructuring strategy of the Department. To this end we embarked on pilot project with the Compensation Commissioner's office and initiated discussions with the Department of Health aimed at establishing a closer working relationship.

4.4 The Chief Directorate has during this period being finalising a computer program called Integrated Occupational Safety System (1055), for the administration and management of all its offices. The computer program will provide standardised administrative operations and provincial and national inspectorate statistics.

The program main activities have centered around policy issues within the department and in inter-departmental fora. Up until the end of this year the Chief Directorate has been compromised by an inability to find suitable candidates for its key positions, particularly those of the Directors of Research, Policy and Planning and of Labour Market Information and Statistics. These positions have since been filled, so that the program is now in a much better position to implement its work plan.

5.1 Among the major activities of the Chief Directorate have been the following:
The co-ordination of inter-departmental consultations regarding the preparation of government's Employment Strategy in anticipation of the forthcoming President's Jobs Summit.
Capacity building through training of personnel in labour market information and statistics.
Initiation of a number of research programs such as those pertaining to the "Labour Force and Living Conditions Survey"; Case Studies on Labour Migration.
Ongoing consultations with Central Statistical Services regarding rationalisation of the labour market information and statistics.

Development of monitoring mechanisms of the internal and external impact of the Department's policies on the labour market; and inauguration of a Seminar Series.

5.2 In addition the Chief Directorate has continued to represent the Department and to participate on various bilateral and interdepartmental committees, including giving external presentations to various interested parties on labour market policies and issues.

5.3 Finally Chief Directorate has been assigned the responsibility of overseeing, on behalf of the Department, the activities of the National Productivity Institute, which receives a funds form the Department on annual basis.

5.4 The National Productivity Institute
The report of the President's Comprehensive Labour Market Commission submitted to government in June 1996 recommended that the National Productivity Institute be restructured and that its activities be reoriented in accordance with its mandate as a public institution supported by government.

In pursuit of these recommendations the Minister appointed a new oversees the NPI new productivity Advisory Council and Board of Directors.

The new PAC has since met and agreed to appoint a Board of Directors and a Chairperson for a period of a year within which time the NPI would be thoroughly reviewed with respect to its internal organisation and the nature of its activities. Both the PAC and Board have now been reconstituted to be adequately representative of the social partners and major players in the economy in accordance with the new dispensation.

The Department has also had meetings with the management of NPI to discuss procedural matters related to its financial requirements form government and the manner and basis on which funds would transferred to the organisation. It has been agreed that government would not hence forth allocate and transfer moneys to NPI as a matter of course, but would request that NPI follow procedures followed by programs within the department with regard to preparing and motivating its budget and funding from government. Government has insisted on the need to fund activities, rather than to annually issue a blanket cheque to NPI.

In addition, NPI will have to follow procedures prescribed by State Expenditure. As such the financial allocation to NPI has henceforth been subsumed under the budgetary allocation to the Chief Directorate Labour Market Policy, to ensure compliance that appropriate procedures, as required by State Expenditure are followed.

The budget of NPI was reduced the previous year since NPI had accumulated reserves and given the impending restructuring of the PAC and the Board, the Department felt that it needed better motivation of its activities in order to justify the previous level of funding let alone the increased request for funding. In the current year following a presentation to the Department on the nature of is planned activities the funding has been reinstated to the previous level. Since NPI has to be funded form the total allocation of the Department it was not possible to fund the requested higher amount given budgetary constraints and competing demands on the department's funds.

It is the department's expectation that in due course the NPI will emerge as a body that garners broad support and legitimacy from government and all our social partners and that the content and thrust of its activities will reflect this.

6.1 Strategic Planning Unit
Having developed a three year strategic plan for the department in 1996, the Chief Directorate HRM has had to focus on its successful implementation in the first year - 1997.

Three years strategic Plan developed and aligned with National Objectives.
Provincial and Chief directorates business plans aligned with objectives of the Department.
A result oriented management system has been developed on programming, monitoring, evaluation and reporting (PMERS).

Bi-monthly reports submitted to continuously monitor progress on execution of plans.

6.2 Organisation and Work-Study
The Decentralisation process and delegation of powers is in progress to ensure empowerment of provincial offices and labour centres with a view to enhancing efficiency.

Restructuring of Labour Centres in order to ensure
- accessibility of the Labour centres
- Provision of single inspection service.

Agency function to be taken over from magistrates to integrate services of the Department

Client orientation strategy (Batho Pele)
This strategy has been developed to: -
Identify clients and stakeholders of the department.
Identify and address client needs
Ensure effective communication of services provided by the Department.
Ensure the publication of Programs and Provincial Annual work plans with clear performance standards.

Promoting performance Management

Performance Standards have already been set in the following areas:-
Time frames for processing of UI and CC claims /applications
Time frames for processing of Labour relations' complaints
Policy on performance contracts and job agreements finalised

6.3 Training and Development
Training Plans for Senior Managers developed and finalised. 70% of senior management trained on strategic management budgeting financial management and change management.

60 % of middle management have been trained on performance management and client orientation

A program on Adult Basic Education is being piloted at COTT, 98 employees are involved and, depending on the results it will be extended to the rest of the department.
Bursary and Internship policy developed. 400 Bursaries awarded for tertiary education for the period 1996 to 1998.

Orientation and re-orientation of senior managers and staff in progress. 540 employees attended orientation programs.
Senior and middle management received re-orientation in 1997. Orientation Booklets and Manuals developed and distributed.

Diversity Management
A strategy on diversity management was developed to guide the department in dealing with the new situation. Diversity workshops attended by 571 members both at Head office and Provincial offices were held. These focused on enabling staff to deal with a racially and culturally diverse workplace.

6.4 Recruitment and selection Race Representativity
Total number of employees: 5549
Total number of:
Black: 2820 (51%)
Coloured: 478 (0.8%)
Asians: 169 (9%)
Disabled: 45 (0.8 %)
Whites: 2082 (38%)

6.6 Service Benefits
Provides administration services on the following, monitoring leave, housing application ensure processing of retirement payments and severance Packages.

Number of employees retired and approved severance packages is as follows:
Retirement Severance Packages Resignations
1996 11 10 368
1997 10 60 349
1998 04 2 86

7.1 Communication
The Directorate: Communication aims at promoting public awareness of the policies services of the Department as well as to promote the image of the Department and the Ministry. External and internal stakeholders are targeted by utilising various forms of communication, namely information exchange sessions, launches, interventions in the print and electronic media and the production of publications.

7.2 Financial Management
The Directorate: Financial Management actively pursues the alignment of the Department's budget with its strategic objectives and monitors actual expenditure against funds allocated by objective via the computerised Basic Accounting System. The Department is currently operating with no more than two open months at any time that is in line with Treasury Instructions.

7.3 IT and Administration
The Directorate: IT and Administration contributes to the internal capacity and efficiency of the Department by rendering information technology, provisioning and auxiliary services. In the event of computerising the Provincial Offices and Labour Centres a total of 1850 personal computers and 809 network points were installed at the various offices during 1997. An information technology plan (ITP) is currently being developed with a view to identifying IT solutions in support of the Department's objectives. The Department has been selected by the Department of State Expenditure as a pilot site for the Logistical Information System (LOGIS) - a mainframe version of the computerised Provisioning Administration System. Goods and services have been procured in terms of the State Tender Board delegations to the value of R10,7 million during 1997.

The Security division renders an internal security service including physical, information, document, staff, computer and communication security.

7.4 Legal Services
The Directorate Legal Services renders an internal legal service to the Department, including assistance with drafting and amending of departmental legislation, commenting on draft legislation of other departments in so far it affects the Department, legal advice to management regarding the interpretation of legislation and regulations and the perusal of legal documents. During 1997 the directorate was inter alia involved in the drafting of the Skills Development
Bill. Employment Equity Bill and the COIDA Amendment Bill.

7.5 Internal Audit
The Sub-directorate Internal Audit strives to ensure efficiency and effectiveness by rendering an internal audit service to the Department and the two Funds. The head of the internal audit unit reports directly to the Director-General.

The major highlight for the 1998/99 budget is the commitment of greater resources in the skills development programme. This clearly indicates that this programme will begin to establish institutions and structures to implement the new skills development policy. In anticipation of the passage of the law we envisage the establishment of at least 10 SETAS, the National Skills Authority and the National Skills Fund (NSF). The Research and Strategic Planning Unit will be established in the department to provide support to the said structures.

In terms of the department's plans, the increased allocation would also enable it to increase the number of trainees. Particularly those who qualify as target groups to be supported from funds to be disbursed by the NSF. The establishment of the programme will also be revised to take into account the new policy approach.

The other important area of focus will be the transformation of the NPI in line with the recommendation of the Presidential Comprehensive Labour Market Commission. The increased support to the NPI is to enable that institution to pursue agreed programmes. Longer term funding commitments would be determined by the outcome of the transformation programme to be approved by the Minister.

Occupational Health and Safety remains both under funded and the limited resources available there could be used better. The key to this is the need to rationalise the occupational health and safety competencies. During the budgeting process, the budget committee urged such rationalisation. The process is at an advanced stage.

The budget proposals for 1999/2000 should reflect the full re-alignment of the policy programmes and budget. This will be so as it is envisaged that the five-year programme will have been completed.

The 1997 Annual report accounts for the activities undertaken during that period. However, there is better analysis of the impact of the departments activities on the labour market. This will be the focus of the 1998 report. Should this be difficult we might consider producing a special report.