The Standing Committee on Public Accounts (Scopa) has expressed grave concern at the ballooning wage bill likely to be faced by the Department of Labour should it absorb staff belonging to its former information communication technology (ICT) service provider, a meeting heard in Cape Town on Tuesday.
The committee was responding to a briefing by the department on the ICT transition update.
Nkosinathi Nhleko, Director-General, and Virkash Sirkisson, Acting Chief Information Officer, addressed Scopa and members of the Portfolio Committee on labour about the history behind the Public Private Partnership (PPP) contract with Siemens Business Services as well as current challenges relating to its termination. Siemens has since been bought over by EOH.
It emerged that the current wage bill in respect of all staff connected to the DoL contract equates to R12.4 million per month. This calculates to an annual wage bill of R148.8 million. As reported in the DoL Annual Report for 2012/13 the total value of the IT-PPP contract over the ten (10) year period was R2,02 billion.
In his presentation, Nhleko alluded to the significant wage bill aligned to the take-over of existing EOH employees. Some of the challenges include that some of the EOH employees are on salaries higher than government salary structures. Some EOH staff members are currently on salaries which can be compared to those of Premiers and Chief Directors.
In addition to the financial restrictions presented, one of them includes Section 197 of the Labour Relations Act, which compels DoL to takeover EOH resources. EOH resources include: the partner who is providing termination support and resources as well as people from the company who provide service.
Currently, there is a three-phase approach to the take-over. Phase one: take-over of the management layer, phase two: takeover of critical staff, phase three, balance of staff. This is however the most complex and time consuming option which has the potential to become protracted. Section 197 deals with the transfer of a business or a service.
Nhleko further outlined the top five priority risk areas as being: Disruption of service delivery due to discontinuation of IT services; litigation arising from EOH employees due to failure to finalise S197; budget constraints; political risk and reputational risk for the department.
“We are negotiating with EOH on the possible takeover of those employees involved in the daily provision of ICT services to DoL. The worst case scenario is that DoL might have to take-over all the resources of EOH on the PPP contract,” he said.
The process is expected to be concluded by November this year.
Enquiries:
Page Boikanyo, Departmental Spokesperson
Cell: 082 809 3195
