Labour Activation Programme (LAP)
The Department of Employment and Labour (DEL) has been inundated with enquiries over the past few days about the functioning of its Labour Activation Programme (LAP), which is funded by the Unemployment Insurance Fund (UIF). This coincidentally comes after Minister Nxesi impressed on the need for DEL and UIF Board to evaluate the impact of our interventions and discussed how we revamp the program to contribute impactfully to the challenges facing our country, in particular unemployment, poverty alleviation, and inequality. To clarify a number of issues that have been raised by several media houses, we have deemed it appropriate to respond through a broad media statement that will provide context and additional information about the programme.
What is the LAP and its role & place?
The DEL therefore wishes to clarify the role of the LAP, what it does, and how it fits into the alleviation of unemployment in South Africa. Firstly , one needs to understand the context of the work of the UIF, which is to collect 2% contributions ( 1% from the employer and the other 1% from the employee ), which then qualifies employees to receive unemployment benefits should they lose their income. Other benefits include the following:
- Reduced work time,
- Maternity,
- Illness,
- Dependents,
- Adoption, and
- Parental benefits.
All these have a qualifying condition that has to be met by UIF contributors to enable them to successfully apply at any of the Labour Centres (LCs) across the Country. The LAP was created in tandem with the new mandate of DEL to stimulate job creation, enhance employability of the unemployed, preserve existing jobs and to improve operational efficiencies of companies in distress.
However, due to the rise in unemployment in South Africa, created by inequality, a constrained economy, COVID-19, etc. resulting in high levels of vulnerable families and communities, the UIF, through Section 48 (1) of the Unemployment Insurance Act, [UI Act] (Act No. 63 of 2002) , which empowers the UIF Boards to advise the Minister of Employment and Labour on implementing policies and programmes that will assist the country to minimise this burden of unemployment and create opportunities for job creation, skills retention through schemes that will alleviate the effects of unemployment. The creation of the LAP was introduced with the main objective and goals to:
- Creating opportunities for employment
- Skilling and re-skilling of unemployed clients
- Combating long-term unemployment
- Alleviating Poverty and a Reduction of Unemployment
The UIF collaborates closely with organizations, educating and enticing participation in the training of the unemployed. Providing turnaround solutions through Productivity South Africa, enterprise development, and partnerships with government agencies, development banks, and the private sector, are some of the key areas the UIF has been engaging various companies to help businesses in distress and ensure that companies that meet the eligible requirements apply to be part of these programs. LAP offers a range of training choices, which vary based on the type of business, the status of employees whose jobs are in jeopardy, and the employer's future financial prospects.
Through the existing and new partnerships, the UIF delivers the LAP programme. All willing private sector and non-governmental organisation are eligible to partner with UIF on the LAP programme. Applying to any of these opportunities is therefore open to eligible companies.
Table 1: LAP Plumbing Project in North West
Recently, 200 job seekers from the Mafikeng in the North West Province, were accepted into the 12 month Plumbing Learnership Program, which is a product of the Labour Ativation Program (LAP). This program will run over a period of a year and participants will do theoretical and practical work which upon completion, will receive, NQF level certificates from Accredited Service Providers. This will then enable them for future job opportunities. Plans are afoot to syndicate this project with other existing work placement opportunities within the LAP and other government programmes.
LAP also manages the Temporary Employer & Employee Relief Scheme (TERS) as a sub-programme. The sub-programme’s aim is to enable the retention of workers in companies that are facing financial distress. LAP provides support through its TERS for up to a maximum period of 12 months. Companies that qualify to receive such assistance are funded for 75% of their employee basic salaries, up to a maximum amount of R17 119,44 per month. This solution seeks to minimise employer costs for a period, to allow companies to focus on ameliorating deficiencies.
Within the LAP directorate, there is an Employability Enhancement sub-programme that aims to enhance employability of the unemployed by offering training courses in skills that are relevant and needed in industries, sectors as well as society to increase prospects of being integrated or re-integrated into the labour market as well as to enable entrepreneurship.
Lastly , the Business Turnaround and Recovery sub-directorate implements its work through Productivity South Africa (Productivity SA) to enhance the productive capacity and operational efficiency of enterprises throughout their business lifecycle, in order to preserve jobs and minimise retrenchment of workers.
The Mandate Changes – “from Labour to Employment and Labour”
The 6 th Administration through the National Macro-Organisation of Government (NMOG) process expanded the mandate of the Department to include Employment . Initiatives like the LAP are some of the programmes that responds to the broadened mandate. In line with the renaming, the focus on employment and the role to be played by the UIF in the employment agenda, the Departmental budget was enhanced to take into account the new areas of work the new mandate imposed.
Cabinet followed-up the expansion of mandate by establishing an Inter-Ministerial Committee (IMC) on Job Creation and Public Employment Programmes. Cabinet also directed the DEL to develop a Public Employment Policy for the whole of government to aid in driving and enhancing existing initiatives within the public sector, as well as harnessing the collaboration with the private sector. Through the IMC, each government department involved is expected to play their part towards employment creation, while the department of Employment and Labour co-ordinates the activities of the IMC and also bring his own contribution.
Some notable observations by the Ministry and its oversight role
The Ministry and department having duly received a number of enquiries, the department engaged the Ministry to reflect on the contents of the enquiries and provide oversight and guidance on the above. The following observations are noted:
…after having gone through the respective inquiries from the media, in particular amongst others Sunday World, we wondered where the distortion of our work comes from and as to when is going to be the next load of dirt that is dug and unduly thrown against the Minister.
The Minister reject the absurd accusations with contempt and clear statements intended to defame and denigrate him. We hope that this misleading informers are not fighting back against the anti-fraud champion, the fight against corruption and good governance. The Minister does not issue administrative and operational instructions to officials, Minister works through the Director General and respect public officials as professionals and experts in their fields. The Minister focuses at issues of legislative mandate, policy, giving strategic direction and oversight.
Generally, the Minister encourages fellow South Africans that anyone of them who has witnessed malfeasance should quickly approach the country's law enforcement agencies, and/or some relevant institutions that are constitutionally enshrined and report what they have seen…
Guided by the above observations, the DEL engaged with the UIF to ensure that processes are above board. A UIF Board meeting was convened to solicit the advice and counsel of the Board on the government’s stated intention of expanding and upscaling the LAP programme. The intent is to create 2 million work opportunities in the immediate future. The government is seized with considerations on how to identify the additional funds required to achieve this objective. The government also intends to pool the various available pockets of budgets available across departments and entities as well as leveraging its own budget with the private sector resources. To that extent, government is currently engaging organised business to leverage on collaboration that would contribute to cyclical and sustainable job creation initiatives.
The UIF has provided an assurance briefing to the Ministry and the Department about their processes and the work that they are doing. At this point the Department has no reason to doubt the work done by the UIF and its committees or suspect any nefarious dealings within.
DEL is determined to revamp and re-double it’s efforts to make impact in addressing the challenges faced by the department as well as ensuring that we achieve our mandate guided by clean governance and fight corruption. We have noted questions related to conflict of interest, fraud and corruption. We wish to assure that DEL has control measures in place and policies to deal with matter associated & relative hereto. Whenever this is detected we are committed to act without hesitation. This position is attested to and evinced by our Audit Outcomes from the Office of the Auditor General South Africa (AGSA) which opinionated on the outcome of an Unqualified Opinion. Similarly, the Minister’s unhesitant actions to halt, investigate and referral for review of the DEL/UIF/Thuja contract, bears testimony to this commitment.
Frequently Asked Questions (FAQs)
There has been various and varied frequently asked questions. H erewith our responses to the FAQs:
How much is the LAP annual budget? Does the Department have any intentions of increasing the budget? Should the budget increase, will the department have sufficient capacity to spend the additional budget?
The Department having assumed an additional mandate of employment realised a budget increase to cater for additional area of work. This increase also inadvertently increased the LAP budget. The current LAP budget for 2023/24 is R2.8 billion. Historically the LAP budget has been varying between R706 million and R951 million before the Department was renamed to Employment and Labour by the President.
Given the challenge of unemployment and the limited funds available, this has necessitated an intentional focus on employment creation and hence the requirement for additional budget and a drive towards reduction of unemployment. To this end the Minister of Employment and Labour has been in engagement with his Inter-Ministerial Committee (IMC) on Job Creation and Public Employment Programmes counterparts on employment to discuss the pooling of resources to ensure that the crisis of unemployment is addressed. DEL like other departments is also expected to identify areas of the budget that can be contributed to the bigger pool for job creation and public employment programmes. Accordingly, DEL and its Funds (UIF & Compensation Fund) & its entities are required to also contribute. The two funds are currently having significant reserves that may be freed to contribute to this objective. These objectives have been set pre-COVID in the Medium-Term Strategic Framework (MTSF) and in the Economic Recovery and Reconstruction Programme (ERRP) as in line with the National Development Plan (NDP).
The Minister has entered into a performance agreement between him and the President. A revised target of creating 2 million work opportunities in the immediate future through the expanded LAP project. The revised target was included in the revised Annual Performance Plan of the Department, which has recently been tabled and presented before the Parliamentary Portfolio Committee on Employment and Labour. This revised target has been communicated to the Board of UIF and its management. Exploratory work to identify the resources for the implementation of the project is being undertaken. An Actuarial study and exercise has been undertaken to identify the excess reserves within the UIF. With the Actuarial report ready, the next step will be an approach to the National Treasury to seek approval in terms of the tenets of the Public Finance Management Act [PFMA] as amended (Act No. 1 of 1999). The available amount from the reserves will be informed by the actuarial report and the National Treasury’s considerations and approval. The Compensation Fund (CF) is currently undertaking a similar process.
The Department is very much aware that the enhanced project would be massively big and would require additional resources, stringent controls and focussed risk management, and hence the Director-General and the Minister has sought approval from Cabinet to bring in additional capacity to ensure that the project takes off and is managed tightly. In preparation for this, the Department commissioned a work study on the Architecture Review of the UIF and CF by PwC, whose report has recommended the capacity needs and interventions to strengthen the funds. The recommendations of PwC has since been considered and accepted for implementation.
What is the number of the projects currently within LAP and what is the estimated total value of the project?
There are currently 25 approved projects committing jobs and enterprise development opportunities to approximately 69 000 unemployed beneficiaries. The LAP budget committed to approved projects is R2.2 billion ( of the available R2.8 billion ) inclusive of projects coming from prior financial years (the exact budget is R 2,157,283,653.08 over the next three years).
There are no projects that have been approved beyond the available budget. The last approvals were in Quarter 1 of the financial year 2023/24 and they amounted to R 2,157,283,653.08 as indicated above. There are no projects approved in Quarter 2. It can therefore be deduced that the Projects implemented in the 2023/24 financial year are less than the allocated budget of R2.8 billion.
It should however be noted that this amount does not include the R5 billion contract of DEL/UIF/Thuja that is currently being reviewed.
Does LAP create permanent jobs?
LAP is intended to create both short-term and long-term jobs. LAP is interventionist in nature in that it seeks to assist companies in distress and to stimulate the creation of job opportunities. It follows that the majority of jobs created under the programme are short-term and sometimes cyclical in nature. Employers participating in the LAP are expected to employ beneficiaries of projects for at least an equivalent period of the duration of the project. New interventions with the private sector through utilisation of instruments as a wage subsidy will ensure a significant increase in the creation of long-term jobs.
How is the UIF Labour Activation Programme National Adjudication Committee (LNAC) constituted? Can it have members who are not employees of government?
The LNAC is appointed by the Director General of DEL. The role of the committee is to recommend labour activation projects to the relevant decision makers in the department for approval or decline. The approval process is governed by clear and defined delegations of authority within the department.
Its function is to aid in the adjudication of worthy projects to be considered for funding. LNAC is made up of both employees of the DEL and its Funds as well as external members who may or may not be civil servants. The National Treasury Guideline on constituting advisory committees provides for the appointment of both employees of government and non-employees as well as setting the remuneration tariffs for such non-employees of government. The committee is selected from a variety of relevant stakeholders including other government departments and external parties that can add value to the process to ensure that the process is fair, transparent and open. Chairperson of the LNAC is appointed in line with the applicable terms of reference.
How does LNAC operate and who reviews its work? Are the processes effective in identification and prevention of irregularities?
The adjudication committee does not approve projects. The approval process is governed by clear and defined delegations of authority within the department. In this way the LNAC is not a final arbiter. The system is designed to ensure effective segregation of duties, accountability and strengthening internal controls.
In the recent assessment of all newly approved project in Quarter 1 of the financial year 2023/24, it was found that none of these projects recommended by the adjudication committee and approved were all subjected to a due diligence process, which is an integral part of the process. Through a rigorous process and assessment thereof, it has been found that these LAP projects are effective. DEL and UIF are however committed to continuous improvement of our control environment and to monitoring the programme performance of the LAP projects.
LNAC operates on the basis of the approved Terms of Reference including the Standard Operating Procedures (SOPs). The senior management regularly reviews the work of LNAC and its processes to ensure that they remain aligned to the policies and relevant prescripts. The reviews have found that LNAC operates within the strictures of the established SOPs. Should the need arise, the SOPs may be amended by the competent authority or delegated authority following due process. The UI Act provides for the governance frameworks and procedures regulating the UIF and its operations.
Concluding remarks
Having reviewed all of the key projects and the unemployment crisis and inadequate service delivery outcomes through our service channels, DEL is increasing its capacity in project and programme management as well as in the ICT environment to be more responsive, efficient and effective in the management of key projects as well as business processes including the LAP project. The UIF architecture is being reviewed with the purpose of ensuring better outcomes in administering the LAP and its projects. We are confident that the interventions will be effective in ensuring a much more robust institution that delivers on the key tenets of its mandate. We remain committed to good governance and service delivery.
Mr. Teboho Thejane
Departmental Spokesperson
Cell: 082 697 0694
