EPWP Phase II

Background to EPWP II The first phase of the Expanded Public Works Programme achieved its targeted 1 million work opportunities a year ahead of schedule The second phase of the EPWP will scale up further to contribute significantly to halving unemployment by 2014 Cabinet approved the high level proposals for EPWP II in June 08 and the Business Plan at the Lekgotla in January 2009 R4.1 billion was allocated in the form of an incentive over the MTEF to scale up the EPWP outcomes. Agreement at the PCC for DPW to set targets for provinces and municipalities and for them to report to DPW EPWP II implementation to start on 1 April 2009.

SONA address President JG Zuma – 3 June 2009 As part of Phase 2 of the Expanded Public Works Programme, the Community Work Programme will be fast-tracked. Another important element of our drive to create job opportunities is the Expanded Public Works Programme (EPWP). The initial target of one million jobs has been achieved. The second phase of the programme aims to create about four million job opportunities by Between now and December 2009, we plan to create about job opportunities Given SONA and Economic Crisis: EPWP is a national priority and key component of government crisis response

4 To create 4 million work opportunities for poor and unemployed people in South Africa so as to contribute to halving unemployment by 2014, through the delivery of public and community services. EPWP to enable government to act as an employer of last resort as part of the Anti-Poverty Strategy Goal of EPWP Phase II

Critical Success Factors for EPWP II Make creation of paid work the primary objective of the programme (Employer of last resort) Locate clear political and administrative accountability for EPWP job creation targets across all spheres of government Align EPWP outputs with the core mandates and programmes of implementing public bodies Provide fiscal incentives to accelerate scaling up of EPWP outputs across all spheres of government Mobilise non-state capacity to deliver additional EPWP work opportunities

Key Components of EPWP II 1.Targets and accountability across Government –Each public body to have annual job creation targets –Political and Administrative heads to commit and held accountable for achieving these targets 2.EPWP Incentive Grant a)Incentive grant for public bodies to create EPWP employment through providing R50 for every person-day of work created above a set minimum threshold b)Phased in over the next two years to other sectors, provinces and municipalities 6

Key Components of EPWP II 3.Non-State sector –Mobilise the capacity outside the state (capacity of NGOs, CBOs, non-profit organisations) to create work for EPWP targets group –Work will focus on a wide range of activities as indentified by local communities or the NGO’s and CBO’s –Funding provided on the basis of the wage incentive 4.Technical Support to spheres, sectors and implementing bodies –Implementing bodies requiring capacity can access support through the EPWP Unit and other support programmes like the Technical Assistance Unit from National Treasury 7

1-Targets and Accountability

1-Targets and Accountability across all spheres of Government  Overall Phase II targets will be distributed across all spheres of government and the five year period so that:  Each public body has a clear target for each financial year  It is clear which programmes/ activities of the public body are expected to contribute to the target  The targets are adjusted annually over the MTEF in line with budgets available and the performance of each public body  Targets are calculated by applying an employment factor in FTE per Rand million to grants received by public bodies  Respective political and administrative heads to be held accountable for achieving respective targets  EPWP Unit to manage the setting, monitoring and feedback process for performance in relation to all targets 9

Phase II targets in Full Time Equivalent Jobs broken down per sphere of government LocalProvincialNationalNon-StateTotals 2009/ / / / / Totals

Phase II targets in 100-day work opportunities broken down per sphere of government LocalProvincialNationalNon-StateTotals 2009/ / / / , / Totals

Breakdown of Targets for EPWP phase II for different sectors (work opportunities) YearInfrastructureEnvironmentalSocialNon-stateTotal 09/10300,000150,00080,00020,000550,000 10/11342,000156,00096,00048,000642,000 11/12440,000200,000132,00096,000868,000 12/13572,000275,000187,000176,0001,210,000 13/14720,000375,000255,000300,0001,650,000 Total2,374,0001,156,000750,000640,0004,920,000

Break down of Targets for EPWP phase II for different sectors (Full Time Equivalents) YearInfrastructureEnvironmentalSocialNon-stateTotal 09/10108,69632,60960,8708,696210,870 10/11130,43541,73967,82620,870268,870 11/12170,43559,13090,43541,739361,739 12/13220,00081,304124,34876,522502,174 13/14273,913110,870169,565130,435684,783 Total903,478325,652513,043278,2612,020,435

Phase II targets in Full Time Equivalents broken down per Province E CapeFree State Gau- teng KZNLimMpumN Cape North West W CapeTotals 2009/1012,7328,34921,09124,90813,0708,8805,38422,86713,177117, /1115,1029,72624,22428,87815,36410,3576,34225,30115,083136, /1220,05912,95132,47238,34420,43413,7938,45532,86320,087181, /1326,57217,37144,97851,38627,23918,49011,28844,04627,195243, /1434,40122,89358,80267,64035,58724,35014,77957,98936,312320,692 Totals108,86671,290181,567211,155111,69475,87046,247183,066111,8531,000,070

Phase II targets in 100-day work opportunities broken down per Province E CapeFree State Gau- teng KZNLimMpumN CapeNorth West W CapeTotals 2009/1032,07818,11536,61850,68030,64919,50513,03131,76323,807247, /1136,03420,54443,39857,99934,57822,09414,62936,59227,462281, /1246,79826,97956,02376,37345,14228,99319,08548,22635,560370, /1362,50636,53390,097103,32360,69139,23425,70564,91250,171501, /1481,32648,124118,581135,71379,43951,66033,74484,93966,769659,286 Totals258,741150,296344,717424,089250,499161,487106,193266,432204,7702,060,034

Phase II targets in Full Time Equivalents for Local Municipalities by Province Province 2009/ / / / /2014 Eastern Cape 9,779 11,735 15,334 19,793 24,644 Free State 3,993 4,792 6,261 8,082 10,063 Gauteng 11,028 13,233 17,291 22,320 27,789 KwaZulu-Natal 13,081 15,697 20,511 26,476 32,964 Limpopo 8,046 9,655 12,616 16,285 20,276 Mpumalanga 4,182 5,018 6,557 8,464 10,538 North West 5,240 6,288 8,216 10,606 13,205 Northern Cape 1,259 1,511 1,975 2,549 3,173 Western Cape 3,946 4,735 6,187 7,986 9,944 Total 60,554 72,665 94, , ,596

Phase II targets in 100-day work opportunities for Local Municipalities by Province Province 2009/ / / / /2014 Eastern Cape 28,559 32,557 41,886 54,452 68,541 Free State 11,661 13,294 17,103 22,234 27,987 Gauteng 32,204 36,712 47,232 61,402 77,289 KwaZulu-Natal 38,201 43,549 56,027 72,836 91,681 Limpopo 23,497 26,787 34,462 44,801 56,393 Mpumalanga 12,212 13,922 17,911 23,285 29,309 North West 15,303 17,445 22,444 29,177 36,727 Northern Cape 3,678 4,192 5,394 7,012 8,826 Western Cape 11,523 13,137 16,901 21,971 27,656 Total 176, , , , ,410

Actual performance April 08 - Dec 08 Planned targets to meet SONA Dec 09 Social Sector Environment Infrastructure Non state; CWP Non state: NGO Economic Sector5 474 Totals Acceleration of EPWP to meet SONA December 2009 Work Opportunity Targets

1-Targets and Accountability across all spheres of Government Targets have been set for each Sphere of Government – and for each Sector Implementation Protocols will be signed between the Minister of Public Works and the Premier of each Province committing them to agree, meet and report on targets over the next five years - Ministerial Event with Premiers (TBD) This will take place between now and mid July and will be Managed by the EPWP Partnership Development Directorate Support for EPWP II planning EPWP will assist public bodies to identify gaps between targets and planned projects Public bodies may request technical support from DPW to work in the Province All identified programmes commence reporting on the web based reporting system, supported by the EPWP Monitoring and Evaluation Unit

1-Targets and Accountability across all spheres of Government Detail of the Protocol Purpose of the protocol: –To establish an agreed framework for cooperation and coordination between the Parties to achieve EPWP objectives –To promote the objectives of the EPWP by mainstreaming the use of labour- intensive employment –To confirm the Province/ Municipality’s agreement and commitment to achieving the targeted number of full time equivalent jobs in the Province/ Municipality Specify the institutional structures that will oversee, monitor and report on EPWP progress Obligations and roles of relevant parties –Planning to meet targets –Comply with the rules of the programme in terms of reporting timelines and audit requirements –Monitoring roles

2-EPWP Incentive Grant to Provinces and Municipalities

2- EPWP Incentive Grant EPWP Phase I had a specific stipulation attached to the Municipal Infrastructure Grant and the Infrastructure Grant to Provinces to implement such projects using “labour intensive methods” Follow through on EPWP principles and guidelines uneven EPWP Incentive Grant aims to reinforce and reward public bodies that actually implement labour intensive methods or increase the labour content of infrastructure delivery What is the basis of the Grant? Three key factors built into grant formula: –Aligned to the share of the unemployed in each province –Rural bias built into the allocations –Built in a ‘reality check’ to account for past performance on EPWP specifically R3.2 billion has been allocated to DPW over the MTEF to pay out the incentive to public bodies and this is expected to grow to at least R5 billion by 2014

2- EPWP Incentive Grant - eligibility How was Eligibility determined? In order for provinces and municipalities to be eligible for the incentive grant, must meet 2 sets of criteria: –1. PBs have to report EPWP performance on projects to DPW in a prior financial year –2. Meet minimum job creation targets based on the available infrastructure grant budgets Agreements: Eligible public bodies will enter into agreements with DPW which will specify: –Targets to be met by the public body and the allocation that can be claimed for EPWP work created –Reporting and verification and audit requirements Basis of payment: –While indicative performance targets and incentive amounts are set for each eligible public body, they will only be able to claim the incentive upon proving that work has been created –The EPWP incentive is based on paying all public bodies that create work above a minimum threshold for the EPWP target group an incentive of R50 per day for every day of work created.( Rural Municipalities do not have a minimum threshold).

2- EPWP Incentive Grant Appropriation of funds Eligible public bodies should take into account in the planning processes; the fact that if they meet their job creation targets, they will receive the incentive allocation through a quarterly payment by DPW This payment should be used for any job creation programmes Basis for measuring EPWP performance Number of FTEs per million Rand of the infrastructure grant budget, taking into account the different portfolios of infrastructure and the rate at which each can contribute to job creation Each public body must meet a minimum eligibility threshold before they can start accessing the incentive (zero threshold applies to rural municipalities) The incentive is not paid out for work created below the eligibility threshold, but is paid for all work created above this threshold

EPWP Fiscal incentive allocation over the 2009/10 MTEF 2009/10 R’ /11 R’ /12 R’000 TOTAL R’000 Provinces151,419400,000800,0001,352,419 Municipalities201,748554,0001,108,0001,863,748 Non-State Sector80,500359,621308,740748,861 Provision for Capacity to NDPW 22,03333,14956,000111,182 Administration provision for intermediary for Non-state sector 9,50021,03018,36048,890 TOTAL465,2001,367,8002,291,1004,124,100

2.1. Incentive Grant for Provinces The average Full Time Equivalent for the different infrastructure portfolios (e.g. Roads, Public Works, Education, Health) was considered in calculating the incentive amounts Full incentive amount = (FTE Performance Target – FTE minimum threshold) X R50 per day X 230 days per FTE DORA amount = 75% X Full incentive amount, because only 3 payouts fall into the 2009/10 financial year. Q4’s payment will fall into 2010/11. 4 Provinces, Western Cape, Gauteng, Limpopo and Northern Cape did not meet the FTE minimum threshold and were allocated a nominal incentive amount of R500,000. Total Incentive allocation to Provinces is R151 million for the 2009/10 financial year.

2.2 Fiscal incentive to Municipalities In order to cater for rural municipalities in line with comments from the Select Committee on Finance, the following was resolved: That rural (non-urban municipalities, defined as those not falling into the 9 cities as per the SA Cities Network) will have a zero minimum threshold. This means that rural municipalities will be paid for every FTE Job created from the very first one. Full incentive amount = (FTE Performance Target – FTE minimum threshold) X R50 per day X 230 days per FTE DORA amount = 50% X Full incentive amount, because only 2 payouts fall into the 2009/10 financial year. Q3 and Q4’s payment will fall into 2010/ municipalities will receive the incentive and 6 metros 10 ISRDP nodes will be covered. Total incentive allocation to municipalities is R201.7 million, of which R147.2 million will go to rural municipalities and R54.5 million to Metros.

2.2 Fiscal incentive to Municipalities cont… According to reports, at least an additional 25 Municipalities will become eligible for the 2010/11 financial year. Work being done to ensure more municipalities report so that they become eligible for incentive.

3- Wage Incentive for the Non-state Sector

3- Non-State Sector Wage Incentive Phase II of the EPWP will also see the introduction the wage incentive to non-state bodies like NGO’s, CBO’s and other non-profit organisations whose activities also create work for the EPWP target group R80 million of the wage incentive has been allocated to the non-state sector for 2009/10 and R749m over the MTEF The sector is projected to grow rapidly as many existing non-state programmes have the potential to grow rapidly through the injection of the wage incentive The non-state sector will be managed by DPW with oversight from other key departments, but will be implemented with the assistance of an intermediary

3- Non-State Sector Two sets of programmes will be implemented: Area based programmes: –These will include programmes targeted at a specific area that will generally involve a large range of different activities identified as necessary and beneficial work by the community in consultation with local government. –For 2009/10, this will only involve the expansion of the Community Works Programme pilot programmes. Institutional based programmes: –These will include programmes to be delivered by non-state bodies that have a specific focus area such as health care, child care, community safety, etc. –For 2009/10, a pilot will be initiated by DPW through an intermediary to explore funding projects that will provide a social service and create jobs in the process.

Concluding thoughts Employment creation remains the key priority of government and the EPWP remains the most important vehicle for government to directly create employment for the poor Strong political leadership on the EPWP has proven to be critical in Phase I of the programme and will be equally important in Phase II The introduction of a framework to increase accountability on EPWP performance and a fiscal incentive to reward performance and increase budgets for those that are performing, is expected to provide a huge boost to increasing the scale of the EPWP over the next five years.