Department of Labour Budget Vote Speech 2013/14 by Honourable Minister Mildred Oliphant

22 May 2013

Theme: 'Working towards a peaceful environment in labour relations and collective bargaining.'

House chair
Colleagues and compatriots
Fellow South Africans.

Firstly house chair allow me to join millions of our compatriots in paying tribute to one of our best broadcasters Vuyo Mbuli who passed on last weekend. May his soul rest in peace.

Let me remind this house about the clarion call made by the real Congress of the People that met in 1955: Peace and friendship amongst all our people shall be secured by upholding the equal rights, opportunities and status of all South Africa shall strive to maintain world peace and the settlement of all disputes by negotiation - not war.

This budget vote takes place at a time when South Africa enters the critical moment of the collective bargaining season. It is also true that we have experienced greater turbulence in industrial relations in our young nation.

These challenges in the area of labour relations and collective bargaining in the year under review have also provided vital insight and lessons going forward and will be noted in history as necessary painful steps in building our young nation.

Precisely because mining has been and remains a key pillar of our economy, its troubles echo all over the country and affect many industries in its wake. So it was that when ructions occurred recently in the mining sector - especially in the platinum belt, it left in its wake not only dead or maimed compatriots, but a changed collective bargaining framework and a considerable dent in the economy - the effects of which will be felt well into the future.

Added to this, the strikes in the road freight sector and the protest action by farmworkers in the Western Cape reminded us of just how important the responsible exercise of labour relations to the country and to the economy is.

We do want to appeal to citizens not to despair and throw hands in the air on the basis of the challenges we are facing. After all, the very foundation of this nation is based on significantly worse challenges that we overcame. We rise with the morning sun time and time again and rededicate ourselves to the ideal of a better life for all. We do so as part of the human effort and endeavour to create a society on the basis of equality, fairness and justice.

Our country is steeped in the art of negotiation and dispute resolution and for this reason, the Department of Labour in concert with other affected departments, has engaged organised labour and organised business in concluding a peace and stability framework for the mining sector. Talks are also continuing about the character of a new centralised bargaining arrangement in the platinum sector.

In the light of the challenges in the collective bargaining front, and attendant developments, the department will host a labour relations indaba, an event that will see stakeholders and role-players engaged in a conversation on the future of collective bargaining and social dialogue. We want to generate greater interests and concerns of social partners in respect of labour relations conflict, and identify measures to strengthen labour relations and dialogue in order to achieve labour market stability and peace. To achieve this, DoL is working closely with NEDLAC and the Commission for Conciliation Mediation and Arbitration (CCMA). Out of the pain of Marikana and other hotspots, a nation united in the view of how it wants to deal with challenges of industrial relations will rise.

As part of the learning's from our troubled year, we have also tabled for discussion the Bureau for Food and Agricultural Policy report that guided us in the setting of the sectoral determination for farmworkers earlier this year at Nedlac. This is to help us see how some of its recommendations can be incorporated into other policy considerations going forward.

The Minister will be engaging the leadership of the Labour movement to discuss the adversarial nature of our Industrial relations and to explore various ways to arrest the potential threat to our system of collective bargaining. The department will also explore areas that present partnership possibilities such as capacity building and communication. For the collective bargaining institutions to work we need strong and sophisticated union organisations and strong employer bodies. The bulk of the troubles in the collective bargaining processes mirror the state of organisation in the parties that are involved.

As you may well be aware, the department has always deployed either my office or the institutions under my watch to assist parties in disputes and so far, this has worked well. But this defeats the purpose as collective bargaining institutions were created in order to free government from becoming involved in work place issues. You will agree with me that to expect the Minister to become involved in every dispute carry the risk of undermining the very institutions that were set up to do this work and besides, it is not sustainable nor feasible.

House chair,

It is worth repeating that the Department of Labour is alive to its mandate of ensuring that there is decent work pursued under conditions of freedom, equity, security and human dignity - the ideals that drove our people to create a blueprint called the Freedom Charter.

Our mandate directs us: "To regulate the labour market through policies and programmes developed in consultation with social partners, which are aimed at: improved economic efficiency and productivity; employment creation; sound labour relations; eliminating inequality and discrimination in the workplace; alleviating poverty in employment; enhancing occupational health and safety awareness and compliance in the workplace; as well as nurturing the culture of acceptance that worker rights are human rights."

As members are well aware, there are bills before Parliament in which we seek to address all of the above. I would like to urge the members to ensure that these bills are passed into law as speedily as possible so that workers can benefit from an improved legislative platform and protections in line with International Labour Organisation standards. The amendments will see an enhanced regime of legal and social protection to deal with current realities in our labour market.

This is in keeping with the promises made in the African National Congress election manifesto in 2009 which promised that: "In order to avoid exploitation of workers and ensure decent work for all workers as well as to protect the employment relationship, (we will) introduce laws to regulate contract work, subcontracting and out- sourcing, address the problem of labour broking and prohibit certain abusive practices.

Provisions will be introduced to facilitate unionisation of workers and conclusion of sectoral collective agreements to cover vulnerable workers in these different legal relationships and ensure the right to permanent employment for affected workers."

These commitments have the genesis in the Freedom Charter which committed the state to ensure that:

• All who work shall be free to form trade unions, to elect their officers and to make wage agreements with their employers;
• The state shall recognise the right and duty of all to work, and to draw full unemployment benefits;
• Men and women of all races shall receive equal pay for equal work;
• There shall be a forty-hour working week, a national minimum wage, paid annual leave, and sick leave for all workers, and maternity leave on full pay for all working mothers;
• Miners, domestic workers, farm workers and civil servants shall have the same rights as all others who work;
• Child labour, compound labour, the tot system and contract labour shall be abolished.

Allow me house chair to acknowledge in our presence one of the stalwarts that took part in that historic gathering in Kliptown in 1955 - Leon Levy who continues in the effort of attaining a peaceful environment in labour relations as a senior CCMA commissioner. Mr Levy, who in the 1950s and 60s served as President of the South African Congress of Trade Unions (SACTU), the first non-racial trade union federation in South Africa which advocated for unionisation of workers across the colour bar under the theme "Organise or starve" as well as promotion of One Union One Industry principle.

Let me also pay tribute to another stalwart - in her absence - who was also present at the real Congress of the People in Kliptown. Umama Emma Mashinini who was one of the founding members of the Garment Workers Union and later went on to be elected General Secretary of the Commercial Catering and Allied Workers Union of South Africa.

Here in the hallowed corridors is Honourable Eric Mtshali, popularly known as "Stalin" who also served with great integrity especially with SACTU and continues to inspire and lead. It is stalwarts such as these that showed extraordinary courage and determination, thus contributing to the improvement of working conditions and the formation of strong trade unions for South Africa's workers.

House chair,

The democratic state post 1994 sought to translate these wishes of thousands that gathered in Kliptown into a reality.

Bringing change to a system so pervasive and systemic like the state-sanctioned discrimination is not an event but a process. We continue therefore to fine-tune the process and evolving our jurisprudence to keep up with changing conditions. We reported to this chamber last year that we had instituted wide-ranging legislative reforms. These reforms include the very effort of curbing the abusive practices visited on workers everyday by the system of labour broking. The fact that both business and labour are up in arms with regard to some of the proposed changes, tells us that we are doing something right.

We promised to continue protecting vulnerable workers as enjoined in the Freedom Charter where it says miners, domestic workers, farmworkers and civil servants shall have the same rights as all others who work.

One of the most effective tools the department employs in protecting the vulnerable sectors of our society are sectoral determinations which regulate the minimum wage that workers can earn in a given industry. Let me repeat. Sectoral determinations regulate the bare minimum wage. To this end, in the past financial year, the department has amended and reviewed the determinations in the Hospitality, Contract cleaning, Civil engineering, Private security; Taxi, Wholesale and Retail and Farm workers sectors.

We are proposing the following changes to the Unemployment Insurance Act.

• Increased benefits to beneficiaries
• Benefits period from eight months to 12 months, which means workers will be paid over a longer period without additional contributions.
• The inclusion of domestic workers on maternity benefits
• In addition a woman who goes on maternity leave will be paid at an income replacement rate from 38% to 66%.
• Workers will be given adequate time to claim UIF up from six months to 18 months for death benefits and 12 months for other benefits.

This is an attestation ladies and gentlemen to a prudent and correct management of the funds by the Unemployment Insurance Fund which has made it possible for the state of affairs where we add to the benefits possible.

After all, bringing those in need under the protective blanket is a function and purpose of developing our young state, as Amartya Sen, in his seminal book Development as Freedom asserts: "Protective security is needed to provide a social safety net for preventing the affected population from being reduced to abject misery, and in some cases, even starvation and death. The domain of protective security includes fixed institutional arrangements such as unemployment benefits and statutory income supplements to the indigent as well as ad hoc arrangements such as famine relief or emergency public employment to generate income for destitutes."

The proposed changes to the Compensation for Occupational Injuries and Diseases Act will see domestic workers and farmworkers covered by these protective measures. We continue fighting the scourge of child labour, compound labour, the tot system and contract labour as stated in the Charter.

In June, we will be hosting the Child Labour day in Mpumalanga after successfully doing so in Limpopo last year. We are well aware that children are made to do work not suitable for their age especially in the agricultural sector.

Alongside our sister departments, we realise the shortage of skills in our economy and are working to make a difference in this field. To this end, we have partnered with the South African Maritime Safety Association to enable them to tap into our system for the cadets they want to put through the paces of training. We have also agreed to work with the Department for Higher Education and Training to have these cadets placed at FET colleges. As you will hear later, we have also partnered with SETAs to provide training for youth and unemployed people.

I would also like to take this opportunity in congratulating the 2013 class of The Workers College Natal who were awarded diplomas by the University of KwaZulu-Natal in fields like labour studies and labour economics. This college which is partly funded by the Department of Labour provides capacity building for union officials of the three federations' affiliates to obtain a national academic qualification.

It may very well be that we would be approaching the fiscus in the next medium term budgetary framework to explore whether this noble concept could not be replicated to other provinces as well.

But we also continue lending weight to other efforts to build capacity through our support of Ditsela which is involved in building capacity by training union officials the funding which has been in place since 1996. For the next three years, R30.4-million has been allocated for this purpose.

Colleagues and compatriots,

As you well know, the Department of Labour is comprised of critical branches and allow me to give an update on the different entities.

Unemployment Insurance Fund

The Unemployment Insurance Fund (UIF) continues to play a pivotal role in the area of job creation, ably guided by its board. During the 2012/13 financial year, the UIF and Industrial Development Corporation (IDC) continued their collaboration through the issuance of an additional bond of R2 billion which has increased the total bond to R4 billion. The IDC utilises these funds to lend out to businesses that aim to create or save jobs. Through this partnership, 21 234 new jobs were created and 20 161 saved for the period up to 31 March 2013.

For the 2013/14 financial year, this investment has increased from 5% to 10% of the total investment portfolio. That means well over R8 billion will be made available for investment in manufacturing, mining beneficiation, agriculture and tourism. We have allocated R3.2 billion to the Public Investment Corporation (PIC) to plough into job creation projects, over and above the amount allocated to IDC. We are establishing an Advisory Committee at UIF to ensure that the money invested by the PIC on our behalf creates and lead to job retention.

In addition, the UIF will continue funding Productivity South Africa's Turnaround Solutions - a three year R39-million a year agreement to assist companies in distress to save jobs and keep people in employment.

The department will also continue re-skilling beneficiaries who lost their jobs for re-integration into the labour market through its "Training of the Unemployed" initiative in collaboration with various government training institutions. An amount of R210 million has been set aside for the current financial year and R1 billion over the three year rolling period. In the 2012/13 financial year, three training initiatives were rolled out involving: 1000 UIF beneficiaries and unemployed youth on various ICT related programmes in collaboration with the MICT SETA, 1000 on mining related artisan programmes in collaboration with the Mining Qualification Authority and 1 500 in various artisan trades in collaboration with the MERSETA.

The UIF has maintained its commitment of R1,2 billion made towards the funding of the Training Layoff Scheme. A total of R105 million has been budgeted for the 2013/14 financial year and R400 million over the three year rolling period.

In all this, the UIF has remained true to its core mandate of collecting contributions from employers and paying benefits to employees who qualify. During the 2012/13 financial year, the collection of revenue increased by 9,8% from R12,3 billion to R13,5 billion against the payment of benefits of R6 billion to 500 000 persons. The projected revenue to be collected is R13,9 billion.

The UIF continues to look for ways to improve accessibility for its services. During the last two years, the UIF has been enhancing the uFiling system to include an online claims portal. The system is being piloted among the few accredited employers with a plan to fully launch it during this financial year. The uFiling system will also continue to provide employers with a platform to register employees and pay contributions online. By the end of March 2013, 42 287 employers utilised the uFiling system.

Inspection and enforcement services

House chair,

In the last financial year, we lost one of our members; the DDG responsible for IES Siyanda Zondeki Nxawe. May her soul rest in peace.

In terms of the work of this branch, during the past year, the department adopted a more targeted approach to inspection and enforcement. It did so by adopting a targeted approach to deal with the most problematic sectors as well as the high risk sectors where levels of non- compliance and injuries on duty are more pronounced as evidenced by our claims history at the Compensation fund.

In the 2012/13 financial year we have conducted 141,744 inspections in these sectors alone. Of these, 112, 672 were in what we term the problematic sectors and 28, 803 in high risk sectors. Over the same period we have seen compliance levels in the problematic sector stabilising at around 64% whilst for the high risk sector we have seen a decline in compliance levels to around 54 percent. The focus on these sectors will continue going forward.

Given this level of compliance, it is necessary for me to remind our social partners that they share a responsibility for ensuring that employers and employees comply with the labour laws of this country. We have jointly formulated our legal framework through social dialogue and we need to work together to ensure an improved level of compliance in our labour market.

Labour inspection services play a key role in ensuring enhanced productivity, respect for national laws and protection of worker's rights. Labour inspection services promote compliance with labour law and aims to enhance the smooth functioning of the labour market. In other words, labour inspection services are an indispensable institution of social policy and sound labour market governance.

Our Roving Inspection Team as well as our Employment Equity team has seen some measure of success during the last financial year. We have requested these teams to follow up on a number of inspections that they have conducted and specifically for the Roving Team we have seen at least 14 cases referred to the justice system for non-compliance with the Occupational Health and Safety Act.

The Employment Equity Team for the year under review has completed 269 DG Reviews in terms of the Employment Equity Act. The overwhelming majority of companies reviewed - 254 to be exact were found to be non-compliant. We will vigorously pursue compliance going forward.

The department is committed to continuing with its efforts to strengthen the inspectorate. To this end we have devised a number of initiatives over the last financial year that would inform our approach going forward.

At a policy level, we have completed the work in preparation for our ratification of the International Labour Organisation Convention (Convention 81) on labour inspection. It is our aim to register South Africa's ratification of Convention 81 at the ILO during the course of this year.

We will also seek to amend the Occupational Health and Safety Act to ensure that it not only responds to the needs of a changing economy but also to strengthen powers of our Occupational Health and Safety inspectors.

We are indeed beginning to bite and a number of employers have in this financial year felt the strength of our teeth. As promised in the new financial year, we are going to intensify our efforts to ensure that those who don't comply with our labour market policies do not sit easy.

Public employment services

In June 2012, the department officially launched the Jobs Fairs and Summits that were conducted in all nine provinces. These fairs were intended to provide an opportunity for work-seekers to meet prospective employers, in both private and public sectors, and other organisations that can assist with placement in different forms of employment or in learning opportunities.

The immediate effect of the Jobs Fairs was as follows:

• 23 726 work seekers were registered in an electronic database;
• 14 253 work seekers received employment counselling to assist them in career choices;
• 8 051 job opportunities were registered by employers accompanied by pledges of real and immediate job opportunities from employers.

The Jobs Fairs were an important start in the process of raising awareness of the public employment service. It is clear that the department will need partnerships with employers and employer organisations if we are to increase the placement rate and a proper meaningful service to the many job seekers in the labour market.

Honourable chairperson,

It is a pleasure to welcome to the House today a number of employers who participated in our Job Fairs and who have made use of the department's employment service. With them are young, first time entrants to the labour market who have been placed in jobs through our service.

During the last financial year, our employment services managed to register 600 259 work seekers. These are persons who register with the Labour Centres of the department throughout the country. Many of the work seekers that we register, however, come to our offices to claim Unemployment Insurance benefits. The service managed to provide career counselling to 264,068 work seekers, while 16,171 were placed in job opportunities.

Last year, I reported that the Sheltered Employment Factories that fall under the department and that employ more than 1 000 persons with disabilities had started a turnaround strategy. I can now report that the Business Case for the factories has been finalised, as well as an options analysis and implementation plan.

Compensation Fund

The Compensation Fund is responsible for managing the COID Act which deals with compensation for injuries and diseases contracted in the work environment. The Fund has experienced challenges in the last financial. The challenges experienced have been brought to the attention of the Portfolio Committee In our last budget we also made a commitment on the implementation of a turnaround. This has been partly implemented.

We indicated last year that the Fund will launch an online submission of Return of Earnings System. This system was launched in May 2012. To date, close to 200 000 employers switched from manual to an online submission system and the fund was able to collect over R7.3 billion in revenue as a result thereof.

In the period under review, the Compensation Fund paid out over R775 million Rand in pensions to over 295 000 pensioners. We also indicated last year that special attention will be given to improving claims management system. I am glad to say that there have been some improvements on this front, but more still needs to be done. We have managed to process 934 000 invoices in Medical Payments amounting to R1.5 billion Rand, a remarkable improvement indeed.

I have directed the Commissioner and the Director General to initiate a process of piloting the Rand Mutual Assurance (RMA) claim system as a matter of urgency and provide me with regular feedback. We will also be amending the Compensation Fund Act to introduce an enabling provision for Rehabilitation and Early return to work for the injured and diseased workers. The Draft Amendment Bill has been signed-off by the Board and it is going through the internal legal processes.

The Fund has funded a total of 21 Social Civil Society job creation projects and the discussions with the PIC to allocate R3.5 billion investible income for job creation and infrastructure development projects.

Labour Relations

In the area of labour relations, the past year has raised a number of challenges. The department will continue to work with our social partners to stabilise areas where there is conflict in labour relations.

I also want to acknowledge the important work that is being carried out by the CCMA in mediating and conciliating disputes and providing other support, including to platinum mining companies. It is crucial that employers and trade unions do whatever they can to stabilise incidents of unrest wherever they occur.

Regarding our obligations to the International Labour Organisation (ILO), South Africa has been in the forefront of ratifying the different conventions. Recently Parliament ratified the following:

Maritime Labour Convention of 2006: To provide for a modern system of improved conditions of decent work in the maritime sector together with an enforcement regime.

Convention concerning Work in the Fishing Sector of 2007 (No. 188) - To ensure that employees on fishing vessels will have decent conditions of work, including food and accommodation, occupational safety and health, medical care and social security.

Labour Inspection Convention of 1947 (No. 81): To provide useful guidance for designing and monitoring an improved labour inspection system, and

Domestic Worker Convention of 2011 (No. 189): To enhance the protection of domestic work worldwide. In any event, nearly all issues in this convention are already entrenched in the Sectoral Determination for Domestic Workers. There are, however, a few issues that still need to be addressed, such as coverage for domestic workers under the Compensation for Occupational Injuries and Diseases Act (COIDA).

The HIV and AIDS Code and Technical Assistance Guidelines have been reviewed and aligned with the ILO's Recommendation 200 concerning HIV and AIDS and the world of work has also been adopted.

The department also hosted a successful Employment Equity Indaba which sought to place back in the public discourse the issue of workplace transformation. This is especially more urgent now to begin to take stock of the impact of the changes that the democratic government has made.

The Commission for Employment Equity's latest report shows that there is still a long way to go. Employment Equity is not a compliance issue. It is not about ticking boxes. It is a moral and human rights imperative; it is a pre-condition for the achievement of sustainable development, economic growth and equality in the country, which should be supported by decent work initiatives. Pro-active measures are required by organisations to develop and harness an inclusive and diverse workforce that is free from unfair discrimination and is reasonably demographically representative.

Earlier in the year we reviewed the sectoral determination of farmworkers. A number of farmers indicated that they could not meet the determination at R105 a day. We made it clear that subject to certain conditions, it was possible for temporary exemptions to be granted.

Let me now turn to the priorities of the Department of Labour for the remainder of the current year.

Department of Labour strategic priorities, 2013/14

For the 2013/14 financial year, an appropriation of R2, 415 billion has been awarded to the department. This appropriation is duly reflected in the Estimates of National Expenditure (ENE) 2013. The increase of R276 million when compared to the 2012/13 adjusted appropriation can mainly be attributed to the following:

• R23,2 million in respect salary adjustments;
• R50 million in respect of the Sheltered Employment Factories for implementation of the business case;
• R85 million in respect of the CCMA's roll-out of the web-based case management system.

The spending focus over the medium term will continue to be on protecting vulnerable workers, reintegrating work seekers into the labour market and ensuring decent work.

While we need to strengthen the role of all labour market institutions, it should be noted that in times of high unemployment, the workload for the Department of Labour also increases as there are growing pressures in the labour market. Unfortunately, our budget allocations have not provided much room for expanding services and extending direct support to job seekers, in particular.

In this financial year, the department has an opportunity to:

• Manage for the first time in 10 years its own IT services.
• Improve in to the functioning of the Compensation Fund will be effected. In particular, the claims backlog will be substantially reduced and the turnaround times on claims and employer services improved.

In relation to our legislative and policy environment, we will be focussing on:

• Amendment of the Unemployment Insurance Act.
• Amendment of the Compensation for Occupational Injuries and Diseases Act
• Amendment of the Occupational Health and Safety Act
• Amendments to other labour legislation including the promulgation Employment Services Bill that are currently before Parliament.
• This financial year, we are going to up skill 1000 domestic workers as well as train farmworkers in terms of the BCEA, LRA and sectoral determinations.
• The current year should be one in which the Department can focus on promulgation and implementation to improve worker protection and employment security.

Our first priority in the coming year should, however, be to work together to achieve a peaceful environment in labour relations and collective bargaining. This is not a task for government alone. It is one that requires all employers, employees and their organisations to renew our common loyalty to our country and our commitment to its future. As people who live and work in South Africa, we need to take our destiny into our own hands and to find long-term solutions to the challenges that face the future of labour relations and collective bargaining.

We call upon members of this house to join the human effort which seek to stabilise the development of our nation and the creation of a society wherein there shall be work and security for all. As our forebears said, "we will continue to fight for these freedoms side by side, throughout our lives, until we have achieved a better life of South Africans".

Allow me then members to thank the chairperson and members of the portfolio committee for their work, in keeping us on our toes. We also thank our social partners, organised labour and business for their support. Lastly but most importantly, I want to thank all department officials led by the Director General for their support. I would particularly like to thank the staff in the Ministry whom I sometimes give a hard time.

I would like to finally commend the budget of the Department of Labour to the honourable members of this house.

I thank you.

Issued by the Department of Labour, May 22 2013

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