Democratic Alliance (Cape Town)

South Africa: Labour Department Should Place Compensation Fund Under Administration

press release

The Compensation Fund is in a state of chaos and needs to be placed under administration by the Department of Labour. I will write to the Labour Minister, Mildred Oliphant, and the Director-General of the Labour Department, Nkosinathi Nhlekoto, to request a joint meeting to discuss this option as a possible solution.

This week the Portfolio Committee on Labour received a comprehensive briefing on the state of the Compensation Fund by Mr Nhlekoto. The bottom line is that the Compensation Fund is no longer able to function properly. It has received four qualified audits in a row, and Mr Nhlekoto reported that it is likely to receive another one for 2012/2013.

The result is that the fund has failed to pay more than 120 000 medical invoices, even as it sits on a R14 billion surplus. Medical practitioners are threatening to go to the Public Protector over this.

The Labour Department has already launched a forensic investigation into the Fund's failure to pay medical practitioners. But given the Labour Department's own inefficiencies, we are not convinced that the solution to the Compensation Fund's woes will come from within the department.

According to Mr Nhlekoto, the primary reason for the payment backlog relates to the Compensation Fund's inability to effectively implement a computerised payment system. The situation is currently so problematic that the Fund cannot reconcile its revenue and debtors. But the Labour Department itself has experienced similar problems with computerisation and financial administration.

I will therefore request that a Treasury task team be set up to administer a clean-up of the Compensation Fund. This Fund simply has to work: Sick and injured workers deserve to be covered as the law requires, service providers have to be paid on time and the money needs to be accounted for. Treasury has experience in cleaning up other government departments in Limpopo.

A similar intervention at the Compensation Fund is now necessary.

We have to act now to safeguard continued effectiveness of the Fund; and to protect workers' basic rights to compensation when injured at work.

Sejamothopo Motau, Shadow Minister of Labour

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