Budget Vote by the Minister of Employment and Labour, TW Nxesi
National Assembly
Department of Employment and Labour
Budget Vote
“Facilitating jobs, social protection and decent work"
Protocol
- Honourable Chair/Speaker and members of this House
- Cabinet ministers and deputy ministers present, particularly the Deputy Minister of Employment and Labour
- The honourable Chair and members of the Portfolio Committee
- The Director-General and senior management of the Department and its entities
- Invited guests
- Ladies and gentlemen
I want to begin by flagging a South African achievement: the successful 5th Global Conference for the Elimination of Child Labour – held in Durban last week – a success in the face of adversity. It is only weeks after the devastating floods in KZN. We deliberated hard on whether we should even continue with the event.
But no, we concluded that what the province needed now was to restore its economy – and bringing 3,000 conference guests to the province would contribute to the tourism and hospitality sector - with thousands more viewing on the virtual platform and able to see what South Africa can offer.
And of course, it was important that we continued to provide this important platform to bring together social partners and civil society from all over the world to engage and share information and best practice – for the purpose of eliminating child labour by 2025 in line with the sustainable goals set by the United Nations.
So our thanks to the team at the Department of Employment and Labour, the officials of the International Labour Organisation (ILO), and the support from across government: from the Presidency to national departments, to the Premier of the province, to the municipality and all participating stakeholders. This is another reminder that when we practice 'joined up government' - good things happen.
To the Budget Vote: strategically, the Department seeks to:
- leverage its existing programmes to intensify its employment mandate,
- whilst continuing to play a regulatory role in the labour market to promote safe and decent work, and
- provide social protection to workers.
This approach underpins our efforts to reconfigure the Department to strengthen the employment mandate. These tasks are made all the more difficult by the unprecedented levels of unemployment – currently standing at 35.3%.
The factors behind this are well-known:
- The economy was already sluggish before the pandemic – reflecting structural weaknesses.
- The lockdowns to curb the spread of Covid-19 came at a heavy price – a 7% fall in economic activity and the shedding of up to 2 million jobs.
- And as economic activity started to recover last year we were hit by the July riots further destroying jobs and livelihoods.
- And again, most recently, KZN faced devastating floods which destroyed lives, infrastructure and jobs.
- International trends have generally not assisted, with the exception of the rise in commodity prices.
Under the current circumstances of high unemployment, the state has to intervene, hence the number of interventions that we have made including the Presidential Employment Stimulus that has already benefitted some 800,000 South Africans and the youth in particular.
In recent years, the Department has received a favourable unqualified report from the Office of the Auditor-General South Africa. In respect of the 2021/22 audit that is currently underway, it is envisaged that once again, an unqualified audit opinion will be received. The same applies for the CCMA and Productivity SA. We also anticipate improved findings for the two Funds.
Plans are being implemented to fundamentally review the organisational architecture, systems and processes of the Funds. This will not happen overnight – and there are no short-cuts.
Forensic auditors have been engaged to address the widespread fraud and corruption which occurred in the Funds. The benefits, in the case of the UIF Covid-19 Ters programme, are already being felt with the return of nearly R1 billion in irregular and illegal payments.
Audit Action Plans were implemented to address the areas identified by the Office of the Auditor-General. The UIF has already moved from a disclaimer to a qualified audit – a small gain achieved in the face of massively increased claims for unemployment and relief benefits.
We can agree that the key to improved performance is strengthening good governance, and fighting fraud and corruption.
Let us remind ourselves that the pandemic is still with us and we are now into a fifth wave. In 2020 we announced the addition of 500 Occupational Health and Safety (OHS) inspectors and their work is yielding results. In 2019/20 there were 28,000 OHS inspections. In 2021/22, this jumped to 62,000 inspections conducted by Quarter 3. Like the Department's 126 Labour Centres, the OHS inspectors have a national footprint across every province.
Last year there were 36,000 compliant and 26,000 non-compliant employers. The most common forms of non-compliance relate to: General Safety Regulations, COVID 19 directions, Hazardous Chemical substances, Environmental Regulations for Workplaces, Electrical Installation Regulations and Facilities Regulations.
To deal with these challenges the Branch has established a national roving team and developed national mega blitz inspection plans to cover backlogs and priority areas.
In an effort to ramp up our inspections, the inspectors will visit 839,000 workplaces over the next five years.
Enhancing social security for workers is one of our priorities. The Compensation Fund implemented the new claims management system and results include an improvement in the adjudication of claims. As at 31 December 2021, a total of over 90,000 claims were received, of which 79% were adjudicated within 30 working days of receipt.
Now I want to strongly flag this: when the Compensation Fund seeks to strengthen an efficient on-line system to manage verified claims, that brings the Fund into conflict with vested interests – the third party middlemen – an industry that grew up exactly because of the past inefficiencies of the Fund. If the Fund successfully reforms itself, the reason for their existence falls away. [Perhaps, that is why their supporters in Parliament are so vocal?]
The Fund continues to ensure that Medical Service Providers are paid. Of the 533,000 claims received as at 31 December 2021, 87% were finalised within 40 working days of receipt. Some 8,000 requests for pre-authorisation of Specialised Medical Interventions were received during this period and 97% were finalised within 10 working days of receipt.
The Fund paid a total of R 3.3 billion towards benefits, of which 93% was paid within five working days.
I believe that members of the Portfolio Committee witnessed the smooth processing of claims – for both Funds – on their oversight visit to the Eastern Cape. [Unfortunately, the DA were poorly represented on the visit.]
When the Commissioner tries to stamp out bad practices and he demands accurate and verified documents before paying out claims, I believe he deserves your support.
The Compensation Fund continues with the Rehabilitation Programme which includes provision of assistive devices. Persons with Disabilities are enrolled in Vocational Rehabilitation Programmes through Post-School Education and Training institutions, and fully funded.
Return to Work programmes ensure that those who are injured in the workplace are reintegrated into the labour market.
The Unemployment Insurance Fund (UIF) played a significant role during the lockdown period. In a drive to cushion workers and businesses, over R64 billion has been spent by the UIF towards COVID-19 TERS benefits - helping sustain economic activity across every province and community.
In response to the July riots, TERS funded another programme: Workers Affected by Unrest (WABU). To date, over 4,000 employees were paid the relief at an expenditure of about R14 million. More WABU payments will be made upon completion of the due diligence process.
In response to the jobs crisis, the UIF has created and saved jobs through investment with the Industrial Development Corporation to the tune of R5 billion over five years.
The IDC through the UIF Fund has currently approved 41 qualifying transactions totalling R2.3 billion, of which R130 million was for companies in distress and relating to job preservation. These transactions support SMEs, black industrialists, women-owned companies and start-ups.
Through the UIF Labour Activation Programme (LAP), the Department contributes to training of the unemployed as part of government initiatives to stimulate the creation of jobs in the labour market:
- For the 2022/2023 financial year, the UIF's LAP has set aside a budget of R3.1 billion to fund the Training of the Unemployed, normal TERS, and Business Turnaround and Reengineering. LAP programmes facilitate the training of recruits, and the creation and sustaining of jobs.
- Through the Training of the Unemployed programme, the Fund implements projects, with implementing partners, with employment guarantees at the end of the term of the project. To this end, the KwaZulu-Natal Department of Education, for instance, has already absorbed over 14,000 participants from one of the projects funded through the Labour Activation Programme.
- The Temporary Employer/Employee Relief Scheme provides support to distressed companies that seek to retain their employees. Under the scheme, the UIF funds 75% of an employee's basic salary up to a maximum amount of R17,119 per month, for a maximum period of twelve months.
- The Business Turnaround and Recovery Programme is funded by the Unemployment Insurance Fund to provide support to enterprises facing economic distress and initiatives aimed at preventing job losses.
Of importance is that the Labour Activation Programme has taken a strategic direction that training of the unemployed should be demand-led and lead to employment at the end of the training period. So, the employers and partners who participate in the programme commit to ensuring that the learners will be absorbed.
In the Medium Term Expenditure Framework (MTEF) period, the LAP has planned for 75,000 participants in programmes that enhance their employability.
The UIF will continue to pursue the government's drive to pay suppliers within 30 calendar days. As at the end of Quarter 3 of 2021/2022, the Fund has paid 98% of its received invoices within 30 calendar days. The Fund will seek to achieve 100% in the 2022-2023 financial year.
To look at policy and legislation:
to promote equity and equality in the workplace, Parliament, on 29 November 2021, ratified the International Labour Organisation (ILO) Convention 190 concerning the elimination of violence and harassment in the workplace.
In order to fulfil the international obligations that emanate from this, the Department developed – in consultation with social partners - a Code of Good Practice on the Prevention and Elimination of Harassment in the workplace, released 18 March 2022. These Guidelines provide a comprehensive set of practical proposals – including step-by-step guidance on adoption of Convention 190, and the necessary supporting processes and structures to ensure enforcement.
Over the last year, the Department has extended 26 collective agreements to non-parties. This is critical in fighting persistent poverty and inequality experienced by so many of our working people; and for achieving the principles of decent work in our labour market.
The National Minimum Wage Act was assented to in November 2018, setting a historic precedent in the protection of low-earning (vulnerable) workers in South Africa and provided a platform for reducing inequality and the huge disparities in income in the labour market.
The 6.9% adjustment of the National Minimum Wage increased rates from R21.69 to R23.19 per hour effective from March 1, 2022 – applicable to all sectors including the farming and domestic work sectors.
- This increase will benefit about 892,000 domestic workers who are overwhelmingly women, and 800,000 farmworkers.
- Contrary to the opposition's belief that the introduction of the minimum wage would have a negative impact on employment levels, the research findings indicate that there is no major negative impact on employment as a result of the National Minimum Wage.
The Department's Public Employment Services (PES) branch which drives the implementation of the labour market policies, including the provision of free career counselling, job placing, retraining and up-skilling - strives to create an enabling environment for employment.
At an operational level the Department of Employment and Labour continues to provide support to many desperate work seekers. For the period April 2021 to 28 February 2022:
- 839,000 work seekers were enrolled by the Department on its Employment Services of South Africa (ESSA) system,
- 257,000 work seekers were provided with employment counselling services by the Department's employment counsellors,
- 124,000 job opportunities were canvassed with employers, and
- 59,000 unemployed work seekers were placed in employment opportunities.
It is important that this service is utilised across the economy and across the public sector.
The Department also actively participates in the digital Pathway Network Management system, which as at January 2022, offered 674,000 job opportunities. Over the two phases of the Presidential Youth Employment Stimulus, 596,000 appointments of school assistants have been made, making this the single largest youth employment programme in the country, supporting the aims of the Presidential Youth Employment Intervention.
The Department will also extend training projects aimed at creating jobs, particularly for the youth, in the fibre optics, food handling and mixed farming sectors. The projects are undertaken through the UIF LAP programme. We will also establish 10 specialized Youth Centres over the coming two years – in addition to our 126 Labour Centres. Part-time centres, mobile centres and the Departmental buses – expand the physical reach of employment services to more remote areas.
During 2021/2022, a total of 991 workers with disabilities and 48 administrative staff were subsidized. A total of R20.9 million was paid to these workers as at the end of Quarter 4 of 2022 to support this employment programme.
The Commission for Conciliation Mediation and Arbitration – the CCMA's - section 189A processes for the period 01st April 2021 to 31st December 2021 resulted in 44% of jobs being saved - 14,000 jobs of those employees threatened with retrenchment.
The Employment Equity Amendment Bill has now been passed by Parliament and is intended to expedite the pace of transformation in the labour market and ensure that those non-compliant organisations that resist transformation do not continue to financially benefit from state contracts or doing business with any organ of state.
Parliament has also finalised the Compensation for Occupational Injuries and Diseases (COID) Amendment Bill. The other pieces of legislation for legislators' consideration include the Occupational Health and Safety (OHS) Amendment Bill and the Employment Services Amendment Bill.
The draft National Labour Migration Policy (NLMP) has been released for comment. In addition, the department is conducting a national roadshow to engage stakeholders in workshops. The policy seeks to balance:
- The constitutional rights of all to labour protections;
- The expectations of South Africans to access work;
- Our international obligations and treaties; and
- The needs of the economy for scarce skills.
The Department has also led the process of developing the South African National Employment Policy, in collaboration with the International Labour Organization and leading local experts. Following a rigorous situational analysis, the first draft of the policy has been completed for consultation with social partners.
Finally, let me thank the Deputy Minister, 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 very difficult conditions.
Honourable Chairperson, I hereby table the budget of the Department of Employment and Labour for 2022/23 – an amount just short of R6 billion.
Thank you.
