presentation to the portfolio committee on labour 04 february 2009 annual report 2007/08

Presentation to the Portfolio Committee on Labour

04 February 2009 Annual Report 2007/08

Presentation to the Portfolio Committee on Labour

04 February 2009 Annual Report 2007/08

Structure of Presentation

Department of Labour

1. Key Issues (Achievements/Challenges)

2. 2007/08 Expenditure Information

3. Auditor-General Report


Vote 16: Labour

Key Issues (achievements/challenges)

Programme 1: Administration

Programme 1: Administration conducts the overall management of the Department and provides support and advisory services.

Communications:

During the 2008 United Nations E-Government survey, the Department of Labour’s website was sited as being “an excellent example of a public agency website that is well tailored to the needs of its stakeholders. The website has a very attractive and simple design that allows users to quickly find what they are looking for. Add to this the posting of online fillings/registrations available and the posting of online vacancies, and you have a full-featured site that is a one-stop shop for labour issues.” Samantha Perry – IT Web Features Editor

The Department’s website grew in popularity with over 5 million hits being registered during the 2007/08 financial year.



Human Resources Management:

In its quest to empower SMS members with the necessary knowledge and skills the Department embarked on a drive to implement the Khaedu training and ensured that all SMS members are granted the opportunity to participate in all Khaedu programmes, as per the SMS Handbook.

Significant improvements were achieved in the area of performance management with mainly all members of the SMS complying with the obligation to complete and submit performance agreements and reviews. Employees at Salary Levels 12 and lower, have always voluntarily and enthusiastically participated and complied with the requirements of our Performance Management Policy.

With regards to Legal Services, 35 contracts were finalised, 86 legal opinions were provided, 85 motion applications were dealt with, 249 debt collections were conducted, 18 legal cases were successfully settled and 60 officials were trained on legal matters.



Financial Management:

Through the provision of regular financial reports and information to the various Management Forums within the Department, the utilisation of financial resources was managed to within 4,4% of the Department’s Vote for the 2007/08 financial year.

The audit process for the Department, the Sheltered Employment Factories and the National Skills Fund was coordinated through the hosting of regular Audit Forums, monitoring and reporting on corrective actions taken to address matters raised by the Office of the Auditor-General.

The phase out of the Imperial Fleet Services contract and the phase in of the PPP Fleet Contract with Phavisworld was successfully managed.



Financial Management (cont.):

Substantial actions were taken to improve the Department’s financial oversight role in respect of Public Entities through the development of a comprehensive quarterly income and expenditure report. This has enabled the early identification of poor performing SETAs.

In this respect, the National Treasury has approached the Department for permission to adopt this reporting format for further refinement and possible utilisation by all Public Entities Nationally.



Information Technology:

Various information technology policies were drafted and implemented. These policies covered areas of information systems security, network and user security, acceptable use of email and internet and disk space allocation.

A risk assessment and risk exposure exercise was completed for the IT environment, enabling the management of risk more efficiently.

The formulation and drafting of a disaster recovery strategy for the Department’s information technology was finalised and approved and is currently in the planning phase for implementation.



Internal Audit:

Through the execution of the annual audit plans, effectiveness audits were performed to provide management with assurance that existing controls were working as intended.

Of the sixty (60) audits scheduled, all were finalised and final reports were issued.

Advice was provided to stakeholders regarding the adequacy of controls.



Security Services:

Improvements to the electronic security system have been implemented, enabling CCTV footage to be retained for a period of one (1) year.

Security arrangements for the National Skills Conference as well as the World Day for Safety and Health at Work, hosted by the Department were successfully arranged and coordinated.

Security capacity at provincial levels was investigated in conjunction with Human Resource Management aimed at ensuring that sufficient capacity can be provided.


Programme 2: Service Delivery

Service Delivery makes sure that the Department of Labour’s policies and programmes are implemented and monitored in an integrated manner.

Employment Services:

Phase 1 of the Employment Services System was rolled out and is accessible to all provincial offices and 125 labour centres across the country. A total of 169 059 job seekers and 15 364 job opportunities were registered on the system.

The envisaged target of 90 000 unemployed people being trained was exceeded as a total of 101 924 were trained.

A total of 75 431 (74%) of trainees who received accredited training were placed in employment opportunities against a target of 63 000 (70%).



Inspection and Enforcement Services:

8 475 Employment Equity designated employers were inspected against a target of 4 000, with 6 881 (81%) complying within 90 days against a target of 75%.

A total of 200 665 workplaces were inspected against a target of 150 000 with 156 924 (78%) complying within 90 days against a target of 70%.

220 191 labour complaints were received, 173 057 were investigated and settled within 90 days, against a target of 70%.

4 106 (74%) of the 5 573 occupational health and safety incidents reported were investigated and finalised against a target of 70%.



Occupational Health and Safety:

The draft framework document for the integration of compensation competencies was finalised.

The draft National Occupational Health and Safety Bill and the National Occupational Health and Safety Policy was developed.


Programme 3: Employment and Skills Development Services / Human Resources Development

Employment and Skills Development Services / Human Resource Development:

Focuses on implementing and monitoring employment creation and skills development via the National Skills Development Strategy (NSDS) and the National Human Resources Development Strategy.

NSF Administration and Transfers: 7 400 learners were registered in various Provincial Strategic Projects.

3 783 learners benefited from R32 million allocated to 400 Co-ops.

101 987 unemployed people were trained, 75 431 (74%) were placed.

19 987 unemployed learners registered in various ABET levels.



SETA Coordination: The scarce and critical skills database was updated and made available during October 2007.

16 320 Skills Development Facilitators / sector specialists were provided with training. This was 9 045 or 124% higher than the set target.

5 565 non-levy paying SMME’s, NGO’s and Co-ops received skills development support.

110 870 workers were assisted to enter scarce and critical skills learnerships, apprenticeships, internships, bursaries and/or skills programmes and 70 526 completed.

56 344 unemployed people were assisted to enter scarce and critical skills learnerships, apprenticeships, internships, bursaries and/or skills programmes and 39 240 completed.



SETA Coordination (Cont):

5 535 (78%) learners in areas of critical skills placed for experience locally and internationally.

2 229 youth trained in new venture creation programmes.

The framework for the Quality Council for Trades and Occupations was completed in September 2007 and was incorporated into the SDA Bill 2008.

23 Sectoral Education and Training Authorities retained accreditation status with the South African Qualifications Authority.



INDLELA:

An approved strategy to refocus INDLELA to cater for apprenticeship moderation, learner assessment and specialised training was developed and incorporated in the SDA Bill 2008.

9 557 trade tests were arranged for candidates.

1 708 candidates were absent or withdrew.

7 928 candidates were tested.

2 903 candidates passed.

Labour Market South Africa:

Programme 4: Labour Policy and Labour Market Programmes

Labour Policy and Labour Market Programmes is responsible for establishing an equitable and sound labour relations environment and promoting South Africa’s interests in international labour matters.

Strengthening Civil Society:The following organisations were allocated funds:•DITSELA;•Strekstroom Advice Centre;•South African Labour Bulletin;•Workers College Natal;•Barkley East Advice Centre;•Nkomazi Community Advice Centre;•Lovavha Labour Advice Centre;•FEDUSA/NACTU Workshop.

Labour Market South Africa:

Collective Bargaining: • 64 collective agreements of bargaining councils

were extended to non-parties covering 884 403 workers.

• 38 Bargaining Councils were visited to determine their representivity and 12 certificates were issued.

• 99 applications for registration of employers’ organisations and trade unions were received with 13 applications being approved.



Employment Equity: 7 companies (26 in total when including subsidiaries) that are listed amongst the JSE Top 100, were identified and subjected to a review by the Director-General in terms of section 43 of the Employment Equity Act.

The following codes were translated: Disability Code (Sesotho, Afrikaans and SiSwati), HIV and AIDS Code (Setswana) and Sexual Harassment (SiSwati, Sesotho, Tshivenda and Afrikaans).

Employment Standards:The earnings threshold in terms of sectoral determinations was reviewed and published in the Government Gazette.

Investigations were embarked upon in the following sectors: Hospitality, Welfare, Unskilled Workers (all sectors) and the Taxi sector.

The 40-hour week and wage differentials were also investigated.



Research Policy and Planning:

The following research reports were completed: •Analysing Wage Formation in the South African Labour Market: The role of Bargaining Councils;•Labour Market South Africa: Measuring regulation and a synthesis of Policy suggestions; •An Empirical analysis of dispute resolution;•Minimum wages, employment and household poverty – Investigating the impact of sectoral determinations;•Adherence to and progress made in respect of the hours of work provisions within the BCEA;•A synthesis analysis of labour regulation studies and Employment and informal economy in South Africa.



Labour Market Information and Statistics:

A number of labour market reports were prepared: Unemployment and Job Opportunity Index 2007, Placement Verification Report, 2007 Annual Labour Market Bulletin and 2007 Annual Industrial Action Report.



International Labour Matters:

ILC reached conclusion on the fishing sector, sustainable enterprise development, budget and programme and development of technical capacity.

Article 19 Report submitted to the ILO in April 2007.

Article 22 Report submitted in September 2007.


Programme 5: Social Insurance

These were presented to the Portfolio Committee on 20 January 2009.

2007/08 Expenditure Information

In the Appropriation Statement for Vote 16: Labour for the 2007/08 financial year, expenditure to the value of R1,949 billion is reflected as having been defrayed against the Adjusted Vote of R2,038 billion. This represents an expenditure level of 95,6% of the Vote.

Expenditure per Main Division of the Vote is recorded as follows:

Main Division Adjusted

Allocation

Expenditure

As at

31March 2008

%

Administration

Service Delivery

ESDS/HRD

LP&LMP

Social Insurance

R 360 008

R 665 753

R 575 039

R 427 408

R 10 001

R 328 384

R 656 753

R 540 119

R 417 467

R 5 898

91%

99%

94%

98%

59%

Total R2 038 209 R1 948 621 96%

R’000


National Skills Fund


Achievements against the NSDS 2005 – 2010 year 3 targets

Promoting and accelerating quality training for all in the workplace:

2 368 new workers benefited from R12,8 million allocated for employment/re-employment training in new initiatives and expansion initiatives.

100 Productivity South Africa future forums established. (Reported on 28 January 2009).

74 turn-around strategies were compiled. (Reported on 28 January 2009).

Promoting employability and sustainable livelihoods through skills development:

101 924 unemployed people were trained, of which, 71 054 (70%) were placed.

5 565 non-levy paying enterprises were supported through skills development.

19 987 unemployed people entered ABET programmes on various levels.



Assisting designated groups, including new entrants to participate in work, integrated learning and work-based programmes to acquire critical skills to enter the labour market and self-employment:

56 344 people entered learning programmes and of these, 39 240 (70%) completed the programme. Of the 56 344, 26 631 entered learnerships, 4 699 were granted bursaries in scarce and critical skills, 4 297 were section 13 apprentices, 5 799 were section 28 apprentices, 1 792 entered internships and 13 126 entered skills programmes.

2 229 learners entered New Venture Creation programmes.

634 out of 3 287 young people who established NVC’s were sustainable after 12 months of completion.



Improving the quality and relevance of provision:

568 out of 1 094 courses on the NSF system are aligned to SAQA unit standards.

Human Sciences Resource Council findings indicate improved participation rates in critical and scarce skills.

Productivity SA 2008 study findings indicate improved productivity due to increased skills development interventions.

UNISA developed assessment tools were used to conduct SETA Board capacity assessments during 2007.

Funding was approved for NSA stakeholder capacity development initiatives, according to their plans.


In the Appropriation Statement for Vote 16: Labour for the 2007/08 financial year, Skills Levies to the value of R6 284 billion were collected and disbursed.

The disbursement of the Levies is recorded as follows:

Details of direct charges against the National Revenue Fund

Adjusted

Allocation

Expenditure

As at

31March 2008

%

Sector Education and Training Authorities (SETA’s)


R5 027 445

R1 256 861

R5 027 445

R1 256 861

100%

100%

Total R6 284 306 R6 284 306 100%

R’000


Sheltered Employment Factories


Sheltered Employment Factories:

A broad direction for a turn-around strategy for the SEF was developed and approved.

Accounting practices were revised and the SEF are now fully GAAP compliant.

In line with SA GAAP, assets were reconciled and a new asset register was compiled.


In the Appropriation Statement for Vote 16: Labour for the 2007/08 financial year, transfers to the value of R45 850 million were made:

The disbursement of the transfers is recorded as follows:

Details of Non-profit Institution Adjusted

Allocation

Expenditure

As at

31March 2008

%

Subsidised Workshops for the Blind

Subsidised Work-centres for the Disabled

R 7 042

R38 808

R 7 042

R38 808

100%

100%

Total R45 850 R45 850 100%

R’000


Auditor-General Reports


Vote 16: Labour

Auditor-General Report – Vote 16: Labour

In the Auditor-General’s report for Vote 16: Labour for the 2007/08 financial year, the Auditor-General expressed a qualified opinion.

The basis for the qualified opinion relates to Capital Assets.

The Auditor-General recognised that the Department had embarked on an extensive process to implement an asset register however, the audit still revealed the following shortcomings in the management and control of assets and the asset register:

• Numerous assets had duplicate barcodes

• A number of assets on the asset register were included at incorrect values

• The asset register was not adequately maintained in accordance with the requirements of National Treasury

• The reconciliation of the prior year balance with the asset register submitted for the period ended 31 March 2008, was still outstanding.


Other matters raised by the Auditor-General include:

Treasury Regulation 3.2.1 – An inadequate risk assessment for 2007/08 was performed and a functional risk committee has not been established.

National Treasury practice note SCM3 of 2004, part 6 –

•Although a detailed implementation plan for SCM has been developed, only acquisition and logistics management has been implemented.

•De-briefing sessions were not held with unsuccessful bidders.

•Demand performance management has not been implemented.

•No needs assessment performed before each acquisition.

•Performance of vendors not monitored.

•Monthly questionnaires not completed and submitted to National Treasury.


Other matters raised by the Auditor-General include: (Cont.)

Department’s own enabling legislation –

The Skills Development Levies Act (SDL Act no. 9 of 1999) – operating procedures are not formally documented and therefore it is not clear which controls were implemented by DoL to administer the SDL Act.

Travel and Subsistence Policy paragraph 6 – In some instances, officials on extended duty did not complete their claim forms within the prescribed period, after returning to the office.


Other matters raised by the Auditor-General include: (Cont.)

Other applicable legislation –

The Guideline for Employees Tax – IRP 10 Volume 41 – The IRP 5 reconciliation for the financial year ending 31 March 2007, was not performed and issued to SARS within the prescribed or extended period.


Matters of governance raised by the Auditor-General include:

Other matters of governance –

In his evaluation, the Auditor-General answered No to the following:

The financial statements submitted for audit were not subject to any material amendments resulting from the audit.

No significant difficulties were experienced during the audit concerning delays or the unavailability of expected information and/or the unavailability of senior management.

The prior year’s external audit recommendations have been substantially implemented.

Auditor-General Report – NSF

In the Auditor-General’s report for the National Skills Fund for the 2007/08 financial year, the Auditor-General expressed a qualified opinion.

The basis for the qualified opinion relates to the following:

Commitments – Sufficient appropriate audit evidence could not be obtained to confirm the existence, valuation and completeness of commitments amounting to R1,544 billion (2007: R745 million). The Fund’s records did not permit the application of alternative audit procedures with regards to commitments because of inadequate systems and lack of proper documentation to support the amount of commitments disclosed.

Advances – The existence, valuation and completeness of the advances amounting to R10,714 million (2007: R2 million) could not be confirmed. Due to the limitations in the accounting system and lack of appropriate documentation, alternative procedures could not be performed.


The following Emphasis of Matter was raised:

The Fund must be listed as a public entity in terms of the Skills Development Act (1999) and is required to prepare its financial statements in line with SA GAAP. National Treasury however issued an exemption from this requirement for the 2007/08 financial year only. Thereafter, the NSF must ensure compliance with the appropriate reporting framework listed for public entities.

Irregular Expenditure – Irregular expenditure to the amount of R237,111 million (2007:R279,119 million) was incurred, as the procurement process was not aligned to the SCM requirements.


Other matters raised by the Auditor-General include:

Non-compliance with applicable legislation –

Section 16A3.1 of the Treasury Regulations – Procurement process was not followed for expenditure incurred under the Social Development Initiative Funding Window.

Sections 6(3) and 6(4) of the Skills Development Levies Act – Interest was charged on amounts overpaid to the NSF. The SDL Act does not provide for the payments of interest on amounts overpaid.


Matters of governance raised by the Auditor-General include:

Other matters of governance –

In his evaluation, the Auditor-General answered No to the following:

The financial statements submitted for audit were not subject to any material amendments resulting from the audit.

No significant difficulties were experienced during the audit concerning delays or the unavailability of expected information and/or the unavailability of senior management.

The prior year’s external audit recommendations have been substantially implemented.

SCOPA resolutions have been substantially implemented.


Sheltered Employment Factories

Auditor-General Report – SEF

In the Auditor-General’s report for Vote 16: Labour for the 2007/08 financial year, the Auditor-General expressed an un-qualified opinion.

The following Emphasis of Matter was raised:

SEF incurred irregular expenditure of R9,5 million during the year under review.

Included in the provision for impairment was an amount of R570,209 that related to cheques fraudulently cashed by unknown parties. The recoverability of these amounts could not be determined. The SEF has reported the matter to the SAPS and the third parties involved.

Department of Labour - progress regarding audit matters: Capital Assets:• All registers updated till the end of November 2008. Currently

updating asset register for December 2008. Stock take completed for the 2008/09 financial year, movements to be updated on asset registers.

PPP Asset Register • The Office of the CIO, in collaboration with the office of the CFO and

Siemens, compiled an action plan on how the Office of the CIO and Siemens will assist the Asset Management Unit (AMU) in updating the IT asset register: – Siemens will provide the financial values of all IT assets procured since

the inception of the PPP. This will enable the AMU to update the asset register.

– Siemens will provide monthly reports of all new IT assets procured, including financial information which will enable the AMU to update the asset register

– The AMU will be informed of all movements of IT assets by the IT engineers.

National Skills Fund - progress regarding audit matters:

Commitments• PWC is currently in the process of confirming commitments against

contracted amounts. It was agreed that the SAP system will be implemented to manage NSF accounts in order to comply with GRAP/GAAP reporting requirements.

• The Project Definition Report of the NSF, SAP-System, Blue Print of Business Requirements and Accrual Accounting Module/s have been compiled and is in process of being signed-off. Thereafter system development can commence.

Advances• Finalisation of the implementation of the SAP system is in process.• Training was provided to NSF Administration and systems staff.• NSF Administration and systems are currently in process to

reconcile advances against claims paid.

Sheltered Employment Factories - progress regarding audit matters:

• Transport issues encountered by the SEF have been resolved and courier services are being utilised in terms of a State contract arranged by National Treasury.

• The respective disclosures in terms of section 55 (2)(b) of the Public Finance Management Act, 1999 (Act 1 of 1999) have been made in the annual financial statements regarding irregular expenditure. No criminal or disciplinary steps were taken, nor were any amounts considered to be recoverable.

Cheques: Fraudulently cashed by unknown parties • A case opened at South African Police Services.

Thank youThank you

presentation to the portfolio committee on labour 04 february 2009 annual report 2007/08

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