Deputy Minister Boitumelo Moloi: Employment and Labour Dept Budget Vote 2020/21

21 Jul 2020

Department of Employment and Labour Budget Vote 31 “Protecting workers and jobs in the era of Covid19” Mini-Plenaries (Virtual),  T.W. Nxesi MP Minister of Employment and Labour delivered by Ms Boitumelo Moloi MP, Deputy Minister of Employment and Labour

  • Honourable Chairperson and Members
  • The Director General, Senior Management of the Department and its entities
  • Members of the media
  • Ladies and gentlemen
     

As we meet, virtually, in the midst of this deadly pandemic, let me assure the Minister as well as all the officials of the Department who are currently in self-isolation that you are in our prayers – some 134 active COVID cases, 705 in quarantine, and tragically 6 officials who have passed on. Let me also take this opportunity to assure those officials and all fellow South Africans that we are with you in solidarity.

Given these exceptional circumstances, I have decided to amalgamate my input, as Deputy Minister, with that of the Minister.

The 2019/20 Budget Vote speech began with the question: what are the implications of the reconfiguration and renaming of the Department of Labour to include the mandate for Employment? Job preservation and creation continues to provide a unifying vision for the Department, reflected in the 2020/21 Budget, and in our response to the pandemic and the accompanying economic challenges.

Let me begin by reporting back on the commitments made in the 2019/20 Budget, and the achievements of the Department for the year:

  • In terms of targets achieved, unaudited figures point to a 100 per cent performance for three programmes of the Department and 50 per cent for the remaining programme.
  • The Department achieved an unqualified audit (although with findings). With the implementation of our ‘Clean Audit Campaign’ to address repeat findings, we are optimistic that this year will see further improvements in outcomes.
  • Whilst the Public Employment Services Branch delivered on its other targets, the commitment to open 10 specialized youth employment centres over two years has been slowed down by lockdown restrictions, with only one physical centre operating in Cape Town. Nonetheless, 63 of our 126 Labour Centres are now equipped with self-service IT stations for use by clients.
  • The Inspection and Enforcement Services Branch has met its targets. We had said that, in conjunction with the Compensation Fund, we would recruit an additional 500 Occupational Health and Safety Inspectors. This process will be largely completed by the end of this month. Vacancies in the existing staff establishment are also being filled, spurred on by the need to increase capacity to enforce new directives to protect workplaces from the spread of the corona virus. Whilst the passage of the Occupational Health and Safety Amendment Bill was stalled by the 2019 elections, the Bill is still very much alive, and has been prioritized for legislation in the current session of Parliament.
  • The Inspectorate has also worked closely with the CCMA (Council for Conciliation, Mediation and Arbitration) to enforce the National Minimum Wage. Some 4,300 non-compliant employers were referred to the CCMA resulting in the recovery of R20 million in short payments to workers. To assist vulnerable workers to report under-payment, the Minister this year launched the Impimpa Hotline. It is estimated that some 6 million, mostly vulnerable and unorganized workers, have benefited from the implementation of this measure. The National Minimum Wage Commission will publish a full report this year on its impact in relation to employment, poverty and inequality. This will, in turn, inform any amendment to the minimum rate for 2021. In the meantime, the minimum wage was increased this year in line with CPI (Cost Price Index).
  • I need to make the point that, even as we strive to increase the capacity of the Labour Inspectorate, we still rely on the assistance of socially responsible employers, organized labour, health and safety committees and individual workers to maximize our impact. In this respect, our capacity is also strengthened by joint inspections with other departments – eg. Agriculture, Home Affairs, SAPS and Transport – as appropriate.
  • The Compensation Fund has prioritized the Rehabilitation and Return to Work programme, underpinned by proposed amendments to the COIDA (Compensation for Occupational Injuries and Diseases Act).
  • In the 2019/20 Budget Vote, we committed to “leverage the resources of the department and its entities (including UIF and CF) to preserve jobs and to invest in job creation.” The Compensation Fund makes provision for 10% of its assets to go towards Social Responsible lnvestments. To date, R2,3 billion has been committed resulting in nearly 10,000 sustained jobs. The Fund has also, jointly with the UIF, committed to invest R1.4 billion in the SME Fund, of which an initial R400 million investment has been made. This is to provide venture capital to support small businesses in creating jobs.
  • The Unemployment Insurance Fund (UIF), as part of the October 2018 Jobs Summit commitments has refocused its Labour Activation Programmes on direct support to distressed companies to preserve jobs via the TERS programme (Temporary Employer/Employee Relief Scheme) and by supporting training that is directly tied to employment. In 2019/20, 33 companies were supported, at a cost of R120 million, directly saving 4,000 jobs. The Fund also preserves and creates employment through its Enterprise Development programme, High Social Impact Fund and Partnership Development Programme which supports start-ups. Of particular note, the Labour Activation Programmes for 2019/20 have:
    •  further extended support to DENEL in the form of fixed interest securities to the tune of R2.3 billion, preserving the jobs of some 2,360 skilled and experienced workers;
    • Invested R350 million in Concor PTY LTD - contributing to preserving 8,000 jobs; whilst
    • Transferred funds of R1.2 billion to the IDC (Industrial Development Corporation) helping to create 6,454 jobs and preserving a further 216 jobs.
  • The CCMA continues to serve a critical role in stabilizing labour relations, advancing employment security and promoting labour market stability. In 2019/20, the Council experienced a 16% increase in case load, largely as a result of the introduction of the National Minimum Wage Act and amendments to the BCEA (Basic Conditions of Employment Act) in January 2019. This has placed great strain on the organization, exacerbated by budget constraints. Over the same period, engagement with parties saved the jobs of 42% of employees facing retrenchment under section 189A referrals. The Council has responded creatively to the current Covid19 constraints by utilizing virtual hearings and going to the clients to hold hearings at employers’ premises.
  • The 2019/20 Employment Equity Annual Report again reflected the slow pace of transformation in the workplace for blacks, women and people with disabilities. It was with this in mind that the Employment Equity Amendment Bill, 2019 was approved by Cabinet in February 2020. The Bill empowers the Minister of Employment and Labour to regulate sector specific Employment Equity numerical targets, and to prescribe criteria for the issuing of an Employment Equity Certificate of Compliance as a prerequisite for accessing state contracts.
  • The Department has developed a Code of Good Practice on the Prevention and Elimination of Violence and Harassment in the workplace, which will go for public comment. This is in line with ILO Convention 190. 
  • The Department also provides subsidies to support ten organisations providing employment to 950 workers with disabilities.
  • We also have our own entities providing employment to 1,150 workers with disabilities – in 13 factories under the Supported Employment Enterprises programme producing high quality furniture and linen – and now PPE products. We have an obligation to support them, as government structures, at all levels, as well as the private sector.
  • You will recall that the Labour Relations Act was amended to deal with violent and unprotected industrial actions. This has contributed to relative labour market stability during 2019/20.
  • Last Friday, Productivity South Africa presented findings indicating that South Africa’s global productivity ranking had fallen from position 56 in 2019 to 59th in 2020. As a country, we need to appreciate that this poor performance is what underpins our fundamental crisis of unemployment, poverty and inequality. We are determined to work through Productivity SA to advocate a culture of productivity and competitiveness.
     

Turning to the budget priorities for 2020/21 and the adjusted allocations: the main appropriation of R3.6 billion has been subject to a R262 million suspension of funds (a reduction of 7.2%).

Priorities for 2020/21 include the following:

  • Public Employment Services, in a joint programme with Higher Education, funded by the EU, will purchase 24 mobile units, to operate across all provinces. This represents a strategic shift from bricks and mortar labour centres and youth centres to a strategy of taking services to the people, reducing the travel costs of work-seekers, and taking into account the new realities of social distancing in the era of Covid19.
  • Given the difficulties faced by many work-seekers, PES registration processes are being streamlined and placed online to make it easier for work-seekers and employers to access services.
  • As part of a larger project to develop a National Employment Policy, Labour Migration Policy development is being fast-tracked both to address immediate challenges, as in the Road Freight sector, as well as to coordinate labour migration policies with our neighbours and the continent.
  • The Inspectorate is focused on enforcing Covid-related Health and Safety directives. During this year it will also prioritize advocacy work to promote compliance with labour legislation in the Domestic sector. There will also be renewed focus on implementing Employment Equity Legislation.
  • The UIF is revamping its Call Centre to better respond to clients’ queries. In the last week, I can report that the call answer rate has improved from 88% to 97%, reflecting an improved average speed to answer calls of 26 seconds. Moreover, a UIF App and USSD (Unstructured Supplementary Service Data) service are being developed to go live in August. The Network Infrastructure has been upgraded and Wi-Fi rolled-out in 123 service delivery points nationwide. The vision is to provide technological online solutions to clients, which also address the need for social distancing. These are the lessons we have learnt from the Covid19 Ters benefits model – which we will now customize and apply to normal UIF benefits.
  • The UIF is also committed to implementing its Section 5D obligations under the UI Act (as amended). It will set aside 10% of its assets to support Labour Activation Programmes in support of jobs and training geared to the needs of the labour market. The UIF has committed R394 million to funding training for 26,000 – 50% to be youth and women. R5.9 million is committed to finance the interventions of the CCMA to preserve jobs. The Fund will provide R104 million to Productivity SA to support some 6,000 SMEs to improve productivity to preserve and create jobs. Specific local LAP projects are too numerous to mention, but include a wide variety of employment-linked training programmes across major sectors. In 2020/21 the Department targets to retain 40,700 UIF contributors in work.
  • I want to flag that, in line with government priorities, the Annual Performance Plan for 2020/21 has added one output for Programme 1 focusing on an internal campaign to change behaviour in relation to gender-based violence.
     

Honourable chair and members: we have to speak about our response to the momentous developments of this year:

  • Falling economic activity (even pre-Covid), declining revenue and the need for budget savings; as well as
  • The impact of the COVID19 pandemic, the declaration of the national disaster and subsequent lockdown to slow down the spread of the virus. These developments required a commensurate response from the Department of Employment and Labour, including:
  • In response to the lockdown, and in line with government’s call for social solidarity, a complete repurposing of the UIF was required to provide income support to temporarily laid-off workers (and their families) on an unprecedented scale. To date some R34 billion in benefits has been distributed through employers in 7.4 million payments to recipients. This was in line with the commitment to provide income support for three months. During the same period, a further R4 billion was disbursed in normal UIF benefits in 677,000 payments to beneficiaries.
  • It gives me great pleasure to announce that, following due diligence and consultation with the UIF actuaries, and in line with the President’s decision to extend the life of the Disaster Management Act until 15th August, we have taken the decision to similarly extend the Covid19 Ters benefit until the 15th of August 2020. The benefit structure and existing criteria remain the same. Applications for April and May will be closed by the end of July 2020, although applications already received for these two months will be processed.
  • The provision of Covid19 Ters benefits also required strict financial controls. I am reassured that it was the UIF itself which detected recent attempted fraudulent activity, and I am encouraged by the speedy response of law enforcement agencies in bringing the culprits to book. This is serious colleagues. Amongst the incomplete claims are thousands of claims on behalf of deceased perosns.
  • The Covid benefit measures also required engagement with business and labour – in NEDLAC - to make possible bulk disbursements of benefits via employers and bargaining councils. I would also commend the work of Nedlac’s Covid Rapid Response Unit, which has provided leadership throughout the pandemic - developing directions and regulations across relevant fields including health and safety, transport and social development, as well as sourcing PPEs and medical equipment.
  • The benefits provided by the UIF were unprecedented. But yes, it was a learning curve, and there were delays as we sought to repurpose the UIF and augment systems. But it was this process which empowered us to provide income support on this scale.
  • The pandemic has also shone a light on gaps in our social security provision, e.g. the current exclusion of non-standard employees and those who fall outside the traditional employer-employee relationship. Going forward, this will be the subject of a policy review to be conducted by social partners in Nedlac into comprehensive social protection reforms.
  • The Compensation Fund is an essential part of our response to the pandemic. In March, we announced our intention to consider any claim from workers who contract the virus while at work. The relief provided by the Compensation Fund comprises:
    • pay-out for temporary disablement while the worker is in quarantine, self-isolation or hospitalized;
    • payment of medical expenses; and
    • where, tragically, the illness results in fatality the Fund will pay-out survivor benefits to the dependents of the worker in the form of a monthly pension and funeral benefit.
  • The Fund is also focused on strengthening its online application system in advance of a possible uptick in claims. Over 1,000 Covid19 claims are currently being processed. In addition during the lockdown:
    • Over 20,000 claims were registered in CompEasy by employers;
    • 146,000 medical invoices were processed;
    • R 921 million was paid to healthcare practitioners for the period 01 April 2020 to 13 July 2020;
    • R15 million was paid in total temporary disablement benefits to beneficiaries; and R276 million was paid to the 24,000 pension beneficiaries of the Fund.
  • For those employers and healthcare practitioners who still experience challenges in accessing the CompEasy system, the Fund is embarking on a national campaign to assist and train stakeholders. Further details will be publicized across media platforms, and feedback from this campaign will be used to improve the ease of using the CompEasy system.
  • As the risk-adjusted alert level moved from 5 to 4 and then 3, the Department had to develop new health and safety directives – working with the social partners in Nedlac - to protect workers and clients in the workplace.
  • As the health crisis morphs into an economic crisis with anticipated large-scale job losses, and as part of economic reconstruction, I would flag the following:
    • The important work undertaken by Nedlac in facilitating engagement of the social partners to prioritize the commitments of the Jobs Summit to refocus on growth and jobs. This supports government’s plans for economic reconstruction and calls for a national debate on the way forward. It cannot be that we combat this present crisis only to return to the previous systemic crisis of unemployment, poverty and inequality.
    • So, front and centre, for the Department must be a coordinated vision of job creation and preservation. Let me indicate how this works in practice. The CCMA has experienced a substantial increase in large-scale retrenchment (section 189A) referrals. The Council engages the parties to mitigate the retrenchments. It is also the entry point for distressed companies to apply for support from the Temporary Employer/Employee Relief Scheme (TERS), and also oversees the convening of the Single Adjudication Committee that involves the CCMA, the Department of Trade, Industry and Competition, Productivity SA and the UIF. The majority of applications are processed in under 21 days. This is the kind of ‘joined up government’, which the President has referred to – requiring alignment and cooperation across government entities.
       

Finally our thanks, as the Ministry, goes to the staff of the Department, and the Commissioners and Executives of entities – led by the DG - for their commitment and hard work in achieving targets and continuing to provide services in difficult conditions.

Honourable Chairperson, I therefore table the budget of the Department of Employment and Labour.

Thank you.