South Africa: Minister Thulas Nxesi - Employment and Labour Dept Budget Vote 2021/22

press release

Department of Employment and Labour Budget Vote "Protecting workers, decent work and jobs in the era of Covid19" T.W. Nxesi MP Minister of Employment and Labour

Honourable Chairperson and Members

The Deputy Minister

The Director-General, Senior Management of the Department and its entities

Members of the media

Ladies and gentlemen

Chair, we can all agree that this has been a difficult year. Over 50,000 fellow South Africans have succumbed to Covid19. Thankfully the overwhelming majority of those infected recovered. The pandemic, and lockdowns, resulted in massive disruption to economic activity and livelihoods, which adversely impacted government revenue and budgets.

The Estimates of National Expenditure allocation to the Department of Employment and Labour was reduced by R339 million resulting in a final appropriation of R3.3 billion for 2020/21.

The Department's draft Appropriation Statement for 2020/21 reflects under-spending of 6%. This is a measure of the disruption wrought by the pandemic as programmes and targets were modified as contact services were reduced to curb the spread of the virus. Performance against targets for 2020/21 stands at 51% compared to nearly 90% in the previous year.

Despite difficult conditions, the Department and the majority of entities received an unqualified report from the Auditor-General for 2020/21. There are however challenges around the Compensation Fund which received a disclaimer. We are committed to continued improvement of governance and an organizational review of the two Funds to attain a clean audit. I have met with the Office of the Auditor-General which is providing guidance in addressing problems at the Compensation Fund.

For 2021/22, an appropriation of R3.5 billion was awarded to the Department, representing a reduction of R351 million in the baseline tabled in 2020.

The major reductions made by the Department are: R213 million from Compensation of Employees and R8.5 million on Goods and Services. In addition, budgets across the entities were reduced by R102 million.

So that is the context of the current Budget Vote. But I am not here to lament or blame all problems on the pandemic. Rather, I will focus on the Department's response to the pandemic, and developments around core mandates of employment and decent work.

Response to Covid-19

Occupational Health and Safety (OHS) inspectors helped to craft Covid-19 OHS Directions. To enforce compliance, over 31,000 inspections were conducted for the period 1 April 2020 to 31 March 2021.

The Department appointed an additional 500 OHS inspectors, a welcome addition in the battle against Covid-19 making possible a four-fold increase in the number of inspections planned for 2021/22. The target is to conduct over 96,000 OHS inspections this year.

The Covid-19 Ters benefit started paying out from April 2020. As at 31 March 2021, payments were made to 267,000 employers and to 5.4 million individual employees at a cost of R 58.7 billion - providing support to laid-off workers, their families and communities across the country.

The necessary operational changes at the Fund came with challenges, and we were grateful to the Office of the Auditor-General for their assistance in analyzing systemic weaknesses requiring strengthened controls, and to the SIU for investigating possible fraud and corruption. Disciplinary hearings are being conducted in relation to suspended senior officials on the basis of the preliminary report received from the SIU. These investigations remain on-going.

We were also protected against fraud and corruption by the UIF's 'Follow the Money' strategy to audit all employers that received Covid-19 Ters funding. Up to 31 March 2021, 1,052 employers had been audited and the payments to 1.3 million workers verified. The auditors verified payments of R16 billion and traced R228 million that was fraudulently claimed by employers.

Of the 121 employers that have already been handed to the Hawks via the Presidential Fusion Centre, 16 have appeared in court.

The Compensation Fund, and the licensed mutual assurance companies, have paid for medical treatment and replacement of lost income for 12,500 Covid-related claims over the last 12 months. These bodies have also set aside R1.3 billion, in terms of the COIDA Act to fund vaccines for some 3 million uninsured workers and COID pensioners.

NEDLAC (National Economic, Development and Labour Council) played a critical role in uniting social partners in a common response to the pandemic - shaping the income relief responses, and the health and safety directions for workplaces. The Council's role in promoting social solidarity at this time cannot be over-emphasised.

Employment and Economic Recovery

NEDLAC also continued to facilitate social dialogue around issues of growth and jobs, monitoring implementation of the Presidential Job Summit Commitments, unblocking key structural reforms, now taken up by Operation Vulindlela led by National Treasury and the Presidency.

NEDLAC also facilitated input by the social partners into government's Economic Reconstruction and Recovery Plan (ERRP) announced by the President in October 2020. In the current year, NEDLAC's priorities include: the implementation of the economic recovery plan with a focus on energy security, localisation, improving public transport, the movement of freight and enabling small business development, as well as the roll-out of the vaccination campaign in workplaces.

As part of the reconfiguration of the Department to give effect to the additional employment mandate, the Labour Activation Programmes, funded by the UIF, were refocused to contribute directly to job creation and preservation.

The UIF will strengthen the normal Employer/Employee Relief Scheme (TERS) to give relief to struggling businesses to save jobs. Typically, businesses that have notified the CCMA of their intention to retrench, would then be invited to apply for support from the UIF normal TERS, and where approved referred to Productivity SA to develop sustainable business strategies. From 2020/21, the UIF has invested R104 million to assist distressed businesses.

The CCMA has recorded an unprecedented number of referrals of Section 189A (retrenchment) matters. The processes facilitated by the CCMA in 2020/21 resulted in 42% of notified at-risk jobs being saved: some 58,000 jobs.

UIF LAP targets for 2021/22 include the following: 12,000 youth targeted for training; 41,000 UIF contributors targeted for job retention or re-employment; as well as supporting SMMEs and establishing 30 cooperatives.

Despite the cost of Covid19 Ters benefits in the last year, the UIF has set aside a total budget of R2.4 billion for the LAP programmes, including the following:

Business Turnaround Programme - R70 million;

Normal TERS - R 250 million for new applications; and

TOU (Training of Unemployed) - R1.4 billion for the funding of new projects linked to employment opportunities.

In 2020/21, under the normal TERS programme, Productivity SA supported 25 companies at a cost of R5.6 million directly saving 3,000 jobs. Productivity SA's Business Turnaround and Recovery Programme capacity will be further enhanced in 2021/22 to support 191 companies at a cost of R115 million, saving some 10,000 jobs.

In the light of South Africa's recorded decline in productivity and competitiveness, Productivity SA is strategically positioned to deliver on its mandate of employment growth and productivity, with focused support for formal and informal SMMEs, start-ups and cooperatives. This in turn supports the Economic Reconstruction and Recovery Plan.

Meanwhile, the Compensation Fund has committed 10% of its investment portfolio towards growth and job creation: some R7 billion. This includes an allocation of R1 billion to support employment-creating SMEs over the next four years.

During 2021/22, the Department's Public Employment Services (PES) will continue working with the Presidency to coordinate the Pathway Network Management programme which brings together nationally, work, learning and job opportunities for youth, made easily accessible on a digital platform. This requires the kind of 'joined up government' the President refers to.

Relevant departments and agencies have already signed up to a Memorandum of Agreement. Some 436,000 youths (not in employment, education or training - 'NEETs') have already been supported through the wider network and an additional 170,000 youth NEETs were placed into various work opportunities through the wider pathway management network.

Central to our employment strategy is the need to close the skills gaps. Part of this references the new demands of the 4IR (Fourth industrial Revolution). So there will be a greater emphasis on digital literacy skills, as well as entrepreneurial skills. To this end my Department is collaborating with the Departments of Higher Education, Science and Innovation, and Communication and Digital Technology.

Meanwhile, traditional sectors such as the agriculture and service sectors, which have the potential to absorb many of the unemployed, will be made more attractive through enforcement of decent work principles that our labour laws provide.

PES is also engaging the agriculture sector to recruit locally instead of opting for corporate visas to employ foreign nationals only.

Despite the pandemic, our Labour Centres continue to provide services, within the constraints of Covid health protocols: 245,000 work seekers were provided with employment counselling services, and 37,000 work seekers were placed in employment.

Decent Work

I believe it is critical to reaffirm the mandate of the Department to protect workers and promote decent work. The labour inspectors do this through enforcing compliance with labour market policies and laws. The CCMA works closely with the Department in this respect.

297,000 compliance inspections will be conducted during 2021/22 with a continued commitment to prosecute non-compliant employers.

Despite the pandemic, as at Quarter 3 of financial year 2020/21, 24,500 Basic Conditions of Employment and National Minimum Wage inspections had been conducted, and monies recovered for underpaid employees.

The National Minimum Wage (NMW) was introduced in 2019 to protect the most vulnerable, benefitting some 6 million workers.

The National Minimum Wage Commission and the Department review the quantum of the NMW annually, this year increasing it by 4.5% to R21, 69 per hour, with effect from the 1 March 2021. Where marginal employers cannot pay the new rates, an exemption procedure exists.

I should also flag, that research commissioned by the NMW Commission into the broader impact of NMW legislation indicates that there has been no negative impact on employment.

Meanwhile, to encourage employers to comply with the Employment Equity Act, 3,432 inspections are planned for the current year, up from 1,604 in 2020/21.

During this year, inspections will also take place in the informal sector. The Department currently chairs a national task team to improve working conditions for vulnerable workers, including amending labour laws with a view to simplifying processes, and supporting the transition of informal businesses to formalization.

The new claims management system introduced by the Compensation Fund was fully operationalized in 2020/2021 allowing us to pay benefits to the value of R4, 2 billion, with 90% of these paid within 5 days of approval.

To report on current policy initiatives:

We have introduced the COIDA Amendment Bill which brings major improvements in the benefits paid, as well as:

including domestic workers in the category of employees entitled to occupational injury benefits: and

New provisions for the rehabilitation of injured workers with the aim of assisting their return to the labour market.

The Occupational Health and Safety Amendment Bill and Employment Equity Bill are currently under scrutiny from this House. Recent reversals of transformation measures by major companies' points to the necessity to strengthen the EEA.

Parliament is further requested to engage with ILO Convention 190: - 'Eradication of Violence and Harassment in the Workplace' - for the country to ratify it. My Department has developed a 'Draft Code of Good Practice' which has been published for public comment.

A major initiative underway is the development of a National Employment Policy and Labour Migration Policy which will be finalized this year for public comment.

The promotion of labour market stability and sound labour relations has been central to the mandate of the Department of Labour both to promote decent work and conditions conducive to investment and growth. Examples include:

The Department extended 31 collective agreements to non-parties covering more than 1 million employees, improving their conditions of service.

Four bargaining councils concluded Covid-19 related collective agreements ameliorating the effects of Covid-19 in their sectors as well as ensuring that workers were paid during lockdown.

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 2021/22.

Thank you.

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