Report of the Ad Hoc Committee on Labour on Budget Vote 17 * Labour, dated 22 June 2004: " The Ad Hoc Committee on Labour, having considered Budget Vote 17 - Labour, reports as follows:

A. Terms of reference The Committee resolved to conduct budget hearings on 31 May and 1 June 2004. The objectives of the hearings were to: • Establish how allocated funds are spent or transfers to statutory bodies were to be spent. • Monitor the achievement of targets, and whether funds allocated meet those targets. • Establish whether the budget meets the Growth and Development Summit commitments. • Monitor progress made and establish problems encountered. • Fulfil its mandate of overseeing the Department of Labour (the Department) and statutory bodies that fall within its portfolio. • Determine whether policy developments take place in accordance with the key objectives and aims as stated in the 15-point plan of the Department. • Monitor compliance with the Public Finance Management Act (PFMA). The Committee agreed that a report would be compiled and tabled in Parliament after all the information had been collated and analysed.

B. Introduction On 31 May and 1 June 2004 the Committee met with representatives of the Department, led by the Acting Director-General, Dr V Mkosana. The Committee also met with the following stakeholders from statutory bodies such as: • Nedlac (Business, Labour and Community Constituencies) • Umsobomvu Youth Fund • National Skills Fund • Unemployment Insurance Fund • Compensation Fund • National Productivity Institute • Commission for Conciliation, Mediation & Arbitration The Chairperson clarified that the purpose of the hearings was to ascertain how the Department was to spend money allocated to it by Parliament, and how transfers to statutory bodies were to be spent. He indicated that the Committee had identified three areas on which the Department had to express itself, namely job creation, skills development and poverty reduction. The Department’ s presentation was based on its mission, programme of action, strategic plan for 2004/09 and the integrated work plan for 2004/05. The Department Tuesday, indicated that its mission statement committed it to reduce unemployment, poverty and inequality in the workplace. These objectives would be achieved through a set of policies and programmes that would be developed through a process of consultation with social partners. The five-year (2004/09) strategic plan document had been finalised and would be presented to the Committee in due course. The integrated work plan for 2004/05 of the strategic plan has been developed, and covers the following areas: • Employment creation; • The enhancement of skills development; • The promotion of equity in the labour market; • The protection of vulnerable workers; • Strengthening multi-lateral and bi-lateral relations in which it had an interest; • Strengthening social protection; • Promoting sound labour relations; • Strengthening capacity of labour market institutions; • Monitoring the impact of legislation on broad government policies; • Strengthening the Department’ s institutional capacity.

C. Expenditure Trends In terms of the Medium-Term Expenditure Framework (MTEF) allocations, the main appropriation for 2003/04 was R 1 291 089 000, which was later adjusted to R 1 054 138 000 due to the Department having a roll over. The allocation for the current financial year was R 1 191 733 000. This represented 0,32% of the government’ s total budget. In nominal terms this represented a 7,7% decrease on the Department’ s budget. Taking the inflation factor into consideration, the Department’ s budget had decreased by 12,42%. The Department noted the request of the Committee for a more detailed report on quantifiable measurements on the budget. It undertook to supply this information to the Committee. The role of the Department in the Extended Public Works Programme (EPWP) The Department indicated that it plays an important role in the Extended Public Works Programmes and that it would monitor the achievements and targets of the Growth and Development Summit on an ongoing basis. A Memorandum of Agreement has been reached with the key strategic departments on the training of participants in the EPWP. The Department indicated that R 200 million has been allocated through its social development window for its role in the EPWP. The mission of the Department spoke to the issue of employment creation. The Committee wanted to know how the Department translated those objectives into quantifiable outcomes, and whether the policies in place hindered or assisted job creation. The Committee expressed a need to be provided with information on the role of lead agencies. According to the Department, 21 employment skills development lead agencies had been launched. These have been instructed to find workplaces for 11 000 learners in the pilot phase. An agreement has been reached with the Department of Education that adult basic education and training be integrated into the EPWP. The Committee expressed its concern about the plight skilled workers who were retrenched from mines. The role of local government, as a de facto employer, is seen as crucial in the rolling out of the EPWP. The Local Government Sector Education and Training Authority has facilitated the training of local government officers to enable them to manage labour intensive programmes.

D. Departmental programmes (1) Administration This programme is responsible for the overall management of the Department and provides support and advisory services. The adjusted appropriation for 2003/04 was R 238 556 million. The estimated expenditure for 2004/05 is R 251 886 million. This represents a 5,6% increase on this years’ budget for this programme. The Committee wanted to know what impact assessment the Department had done on casualisation and outsourcing. In relation to the latter, a preliminary study on casualisation and the changing nature of work had been commissioned. A strategy will be developed on the basis of that study. The Committee was informed that institutional restructuring was being finalised, and that priority posts had been filled. In addition, the absorption of staff was done in line with the Public Service Restructuring and Transformation Initiative. The Committee wanted to know whether the Departments was making progress in relation to sheltered employment and the Compensation Fund, and the restructuring of sheltered factories and COIDA. The Department indicated that the issue of sheltered employment had a long history. It was based on past laws and was intended to care for people with special needs. The Department acknowledged that the issue had not been addressed with the urgency it deserved, and committed itself to address the restructuring issue in the coming year. (2) Service Delivery The above programme is responsible for the implementation of the Department’ s policies and legislation. The shift towards service delivery and implementation is reflected in the allocation to this programme. The estimated expenditure for 2004/05 is R 477 439 million. This represents an increase of almost 18% compared to the R 404 907 million adjusted appropriation for 2004 The Committee noted that during the 2003/04 financial year, a tremendous improvement on inspections was achieved. Almost 171 000 inspections were conducted in terms of the inspection and enforcement strategy. The inspector visibility also contributed to raising awareness among employers about occupational health and safety matters. The Committee sought clarity on progress regarding the integration of competencies pertaining to occupational health and safety and the Compensation Fund. It was informed that a draft policy has been developed, and would be refined and tabled at Nedlac during the course of the current financial year. With regard to the integration of inspections, provincial labour centres have been restructured and capacitated to provide integrated services to clients. More resources have been deployed to ensure the enforcement of health and safety standards. (3) Employment and Skills Development Services One of the Department’ s key objectives was to contribute to employment creation and enhance skills development. This programme had received an amount of R 125 530 million during 2003/04. The estimated expenditure for 2004/05 was R 140 976 million. The Work Plan for 2004/05 included the launch and implementation of the 2005/09 National Skills Development Strategy. The achievements of the current strategy will inform the 2005/09 strategy. More attention would be focused on the implementation of the Skills Development Amendment Act. The Department will ensure that the target is met for 70 000 unemployed learners to be registered by May 2004. A target has been set for a minimum of 80 000 learners to enter learnerships by March 2005. The Department indicated that Setas have projects that are funded by the National Skills Fund. The latter will work towards improving its impact through contributing to the training dimension of the EPWPs. The use of skills development funds will be monitored closely. The Committee sought clarity on whether the Department had provided for the advancement of community development workers. These workers are also capacitated through Seta learnerships. (4) Labour Policy and Labour Market Programmes This progamme received the second largest share of the Department’ s budget. It is based on the integration of labour policy, labour relations, auxiliary and associated services and sheltered employment factories. The estimated expenditure for 2004/05 is R 299 892 million. This represents an increase of almost 12.9% compared to the R 265 506 million appropriated in 2003/04. In relation to the protection of vulnerable workers, the Department would ensure the identification and protection of vulnerable workers through sectoral determinations. The national targeted advocacy and blitz inspections will be conducted in areas such as domestic and agricultural environments, and employment equity. The child labour action programme will be finalised and implemented. The restructuring of sheltered employment will also be finalised. (5) Social Insurance The estimated expenditure for the current financial year is R 21 540 million. This represents an increase of 9,7% compared to the adjusted appropriation of R 19 639 million for 2003/04. The Committee was informed that the introduction of the turnaround strategy has enabled the Unemployment Insurance Fund (UIF) to raise a projected surplus. The latter is held with the Public Investment Commissioner. By 31 May 2003, the UIF managed to reach a financially sound deficit of R 188 million. This resulted into the withdrawal of the earmarked allocation for 2004/05. The Department also reported that more than 579 000 employers of domestic workers were currently registered with the UIF. Key priorities for 2004/5 included the finalisation and improvement of an employee database and the improvement of support to database users. The Committee was concerned that the UIF was punitive toward contributors. The Committee noted the 28-day turnaround period and wanted to know whether the period included the finalisation of the claim. The Department informed the Committee that some deficiencies within the law had been realised. One the problems was the manner in which legislation is administered. The Committee was assured that these problems would be addressed in the second phase of the transformation of the UIF.

E. PRESENTATIONS MADE BY THE STATUTORY BODIES: (1) National Economic Development and Labour Council (Nedlac) This entity is governed in terms of the Nedlac Act of 1994. It is aimed at building consensus by tripartite participation in decision making on labour and socio- economic matters. Nedlac considers all proposed legislation and significant changes to social and economic policy. In terms of its budget, Nedlac receives funds by way of transfers from the departmental budget. The amount transferred for the current financial year is R 9 million. This reflects a 15,4% increase compared to the R 7,8 million transferred in 2003/04. Because Nedlac has a primary responsibility to monitor progress and the implementation of the GDS agreements, an additional allocation of R 4,5 million over the MTEF period has been granted. The key focus areas for 2004/05 were listed as follows: • Implementation of the GDS agreements; • Monitoring implementation of policies developed at Nedlac; • Performance management; • Quality of agreements; • Pareto principle. The most significant achievement for Nedlac in the 2003/04 was the successful convening of the GDS. The Committee noted that all four Nedlac constituencies were committed to the GDS agreements. In terms of local implementation, resources are to be mobilised towards the reinforcement of Integrated Development Plans (IDPs). Nedlac is aiming at replicating social dialogue at both provincial and local levels. A progress report on the review of the GDS will be tabled on 7 June 2004, and will be made available for public focus after ratification by the Executive Committee. The Committee was informed that the following legislation is before Nedlac: • Superior Courts Bill; • National Ports Authority Bill; • Insolvency Act; • Medicines and Price Registration; • Co-operatives Bill; • Financial Services Charter. The following were listed as special projects for the current year: • Ten* year Nedlac celebrations; • Buy Local Campaign-Proudly South African; • Developing working partnerships; • Sector Summits; • Review of Nedlac’ s impact in society. Challenges facing Nedlac were noted as follows: • Membership is far behind leadership. • Long lead times to obtain mandates. • Capacity to deal with complex and often foreign issues. • Implementation and impact measurements. The Committee further received inputs from the business, labour, and community constituencies. Documents submitted in respect of those presentations form part of the Committee’ s records. The Committee noted that, after having been briefed by Nedlac and its constituencies, Nedlac was moving far ahead of its constituencies. It was suggested that Nedlac must ensure that it keeps its constituencies on board. (2) Umsobomvu Youth Fund This organisation was mandated to facilitate and promote the creation of jobs and skills development among young South Africans. The allocation for the current financial year is R 497 million. This represents an increase of 56,7% from the previous allocation. Some of the major achievements of Umsobomvu during the previous financial year included drawing private sector involvement, providing funding to small entrepreneurs, and establishing public-private partnership funds with business partners and First Rand. First Rand aims to invest an additional R 160 million in this initiative because of the Financial Services Charter. Almost 2 900 youth were assisted through entrepreneurship programmes. More than 385 young business people got access to finance through the implementation of the entrepreneurship finance programme. Plans for 2004/05 were listed as follows: a. Launch of the youth card By purchasing the card, young people become eligible for discounts on goods and services, while Umsobomvu receives their personal information, which will be used to provide the youth with information to promote their skills. b. Roll out of the National Youth Service Programme This is an initiative of the Presidency, managed by the Project Partnership Team. Various government departments act as resource agents. Umsobomvu will support this programme by running capacity-building exercises for the institutions managed by the programme, providing funding for the youth development components and by establishing the National Youth Service Unit. Umsobomvu is the key player in ensuring that between 7 000 and 10 000 young people are trained in 2004. An amount of R 31 million has been committed to train young people. Funds will be channeled for training on primary health care, community-based care, etc. With respect to skills development, youth will be trained to develop their communities. c. Roll out of the Entrepreneurship Education Programme Plans for this programme include its review and the finalisation of the employment equity strategy, the launch of pilot programmes for in-school and out-of-school youth, rollout of the Business Development Voucher Programme to the four remaining provinces (Free State, Mpumalanga, Northern Cape and North West), provision of business support to 6 000 young entrepreneurs, and the creation and sustaining of about 9 000 direct jobs. School-to-work programme This is a strategic intervention aimed at improving the employability of youth in high growth sectors through the development of high-level technical skills training and work experience. Its target is unemployed matriculants and graduates from historically disadvantaged institutions. The programme provides scarce skills to young people in areas such as accounting, agriculture, information technology, engineering, etc. The aim is to enable young people to move to some accredited programmes. Discussions with the Department are ongoing to look at consolidating the integration of life skills and entrepreneurship education, and enterprise funding and business development services for self-employment exit opportunities. In line with its mandate, Umsobomvu has identified the Department of Education (DoE) as a strategic partner to deliver skills development intervention to unemployed youth. However, agreements have been reached with the DoE to provide training on scarce skills through the public further education and training colleges. An amount of R 25 million direct investment will be extended to training programmes over the next two years. Umsobomvu and the DoE are currently finalising the operational plan, which will guide the implementation of identified interventions. e. Information Programme The focus is towards moving information content to where young people are, as well as ensuring integration with partners who share a common purpose. However, 12 youth advice centres have entered into agreements with the Government Communication and Information Service (GCIS) to roll out the information through the multi-purpose centres. By 2004 all graduates will be captured on the database and linked with opportunities. Challenges were noted as follows: • The risk of being perceived as a panacea; • Improving access, especially for rural areas; • A dependency on partners; • Youth development agenda not mainstreamed; • A diminishing resource base; • Formalising partnerships with public and private sector institutions; • Inadequate funding for youth development programmes. The Committee noted the successes and challenges faced by Umsobomvu, and agreed that it should make available the database of assisted persons, including their geographical location. The Committee also identified the need to assess the quality of training provided to the youth, and commended Umsobomvu on the good work made in relation to agricultural projects. A suggestion was made for parliamentary constituency offices (PCOs) to be used as points of referral. The Committee expressed the view that co-ordination and liaison with other institutions should be enhanced, and requested information and relevant contact people in Umsobomvu and its projects. The Committee raised some concerns around: • The accessibility and criteria for funding; • The location of the 12 youth advisory centers; • Accessibility to rural areas; • Highly trained youth as against their placement; • The role of Umsobomvu in assisting disabled youth. According to Umsobomvu, funding applications for SMMEs are often turned down by banks as a result of no collateral and the lack of experience in running a business. However, Umsobomvu emphasised that it would not be possible for it to fund each and every applicant. Partnerships with the private sector were needed in this regard. The Committee also wanted to know the location of the youth advice centres. The Department noted Soweto, West Rand, Bushbuckridge, Kimberley, Athlone, Limpopo, Polokwane, Empangeni and Port Shepstone. Umsobomvu indicated that it was looking at linking some programmes with the IDPs and local economic development plans. In relation to youth with special needs, it mentioned that programmes with the POSTSETA engage such people. However, more still need to be done to address the plight of young people with special needs. With regard to accessing information through public representatives, the Committee was informed that Umsobomvu was in a process of appointing a parliamentary officer to act as a link between members and Umsobomvu. The Committee sought clarity on whether there was an overlap in the programmes of Umsobomvu and the National Skills Fund (NSF). Umsobomvu indicated that it was involved in discussions with the NSF about a strategy that could enable both bodies to contribute towards assisting the youth. It also cautioned against ending up with more skilled yet still unemployed youth. On the issue of addressing identified challenges, Umsobomvu indicated that a strategy was in place to address the identified challenges. (3) National Productivity Institute (NPI) The NPI is a Section 21 company, which is tasked with improving productive capacity in all spheres of the nation’ s economic and community life. It is aimed at supporting government* led strategic initiatives that affect job creation and retention, productivity and competitiveness. In relation to the NPI budget, 50% comes from government transfers and the other half from donor funding. Government funding for 2003/04 was R 21,8 million. This amount increased by 6,2% over the MTEF period. An amount of R 11 million was transferred by the Department of Trade and Industry to assist with the workplace challenge programme. Sixty-two companies across 11 sectors have embarked on productivity improvement through collaboration at the workplace. The future forum’ s turnaround strategy has impacted on approximately 7 540 jobs. The SMME and community productive capacity development programme reached 272 SMME service providers. The programme enhanced the productivity awareness of 99 entrepreneurs with disabilities. The major challenge facing the NPI is inadequate funding to improve on service delivery. An estimated R 44 million is needed over the next three years. The Committee raised a concern that the organisation was not well known. Clarity was sought on whether there was a strategy to market the organisation. The Committee wanted to know whether the NPI hired certain people in relation to project management, and requested to be provided with the names of such people. The Committee was informed that project management is a competency within the organisation. Most staff members in the institution were trained in project management. The NPI agreed that marketing the organization remained a challenge. One of the ways to create awareness was to use the SABC. The NPI is looking at using other mediums as well. (4) Compensation Fund The Fund provides compensation for disablement resulting from occupational injuries, disease or death. It is financed by levies from employers. The Committee was informed that the functioning of the Fund has improved significantly. The Fund is financially sound. The Department is in the process of restructuring and decentralising the functions of the Fund to make it more accessible by the people. The Committee was concerned at the bureaucracy, which impacted negatively on payments by the Fund. The Department, however, indicated that a strategy aimed at addressing the problem was being developed. Most importantly, it was looking at a prevention strategy that would reduce the claim. The challenge was to develop human resources, and information and communication technology to handle compensation queries. Part of the restructuring of the Fund would include decentralising the function to the provincial labour centres. The Committee suggested that bureaucratic technicalities in relation to the Fund should be made friendly to people who are not equipped to deal with such technicalities. In addition, a mechanism should be devised to improve communication between the Department and rural communities. The Committee was concerned at the inadequacy of compensation to the injured. According to the Department, the matter was receiving the Fund’ s attention. (5) Commission for Conciliation Mediation and Arbitration (CCMA) The Committee was briefed about the CCMA’ s performance during the previous financial year. Key priorities over the current financial year were to: • To provide expedited, integrated, simple and high quality dispute resolution and prevention services; • Improve management services; • Enhance operational efficiency. The government transfer for 2004/05 was R 172,6 million. This represented an increase of R 7,2 million on the R 155,5 million for 2003/04. The strategic focus over the MTEF period was to: • Improve the basic CCMA dispute resolution services; • Establish specialist services with distinct competencies; • Develop appropriate regulatory systems; • Strengthen research capabilities; • Improve support services. The Committee was provided with information on the 2003/04 statistics in terms of the caseload by issue, sector and province. The Committee sought clarity on whether the 14-day period for dispute resolution referred to the processes of mediation and arbitration. It was informed that, the 14-day period related to arbitration awards, and that the CCMA had implemented it successfully. The Committee noted that farm workers were most affected by unfair labour practices. Clarity was sought on whether there is a mechanism in place to deal with that problem. The CCMA agreed that there was a need for workers to link up with the Department to ensure that they knew their rights. It was also noted that there were numerous people in the South Coast area, who wanted to lodge labour cases. It was suggested that the Department consider setting up a satellite office in that area. A concern was raised about the waiting period and delays in processing cases. Specific reference was also made to delays experienced in processing cases in labour courts. It was suggested that the CCMA look at where the bulk of cases lay and identify the complexity of cases. The CCMA should also look into the possibility of examining the jurisdiction of cases referred. In relation to the CCMA being punitive towards non-unionised workers, the Committee was informed that legal representation at the CCMA is prohibited. Members of Parliament can play a critical role in ensuring that complaints are processed. The involvement of the parliamentary constituency offices has been identified in provinces such as Gauteng. With regard to delays in processing cases, a complaint system has been set up. Almost 82% of conciliation was completed in one year. The CCMA emphasised the need to be aware of the nature of cases and the area of competence. The Committee noted that most referrals were from the retail sector. The CCMA mentioned that an agreement has been reached with Business Unity of South Africa (BUSA) to meet on a quarterly basis to look at the matter. The CCMA also alluded to the fact that some delays were due to the lack of a physical address of people living in informal settlements. However, a system of logging a person’ s cell phone number in a computer has been devised. People are notified about the date of the case via an SMS. On the issue of the jurisdiction of cases, the Committee was informed that staff at the front desk are capacitated to advise the public on whether the case falls within the jurisdiction of the CCMA or not. The Committee commended the enormous amount of progress made, but noted that little was mentioned on problems faced. The Committee suggested that there was a need to find a way in which it could assist.

F. GENERAL RECOMMENDATIONS (1) Parliamentary constituency offices should be used as a resource to market the organisations. (2) Interaction should not only be based on the request by the Committee. Organisations should also initiate interaction. (3) Members should be invited to activities or events that occur at all levels, i.e national, provincial and local. (4) Members should be furnished with the contact details of ach organisation. Conversely, organisations should be provided with the contact details of Committee members, including their constituencies. (5) Nedlac must ensure that its constituencies are moving alongside it.

G. CONCLUSION The Committee commended the Committee Secretary for the manner in which the Report had been compiled."