TO THE PORTFOLIO COMMITTEE ON LABOUR (original version) PRODUCTIVITY SOUTH AFRICA PRESENTATION FOR THE BRIEFING ON THE QUARTERLY PERFORMANCE (QPR 1 & 2) TO THE PORTFOLIO COMMITTEE ON LABOUR (original version) 15 February 2017 Presented by: Mothunye Mothiba Chief Executive Officer Working together as a team to achieve common goals

PRESENTATION OUTLINE 2016/17 Annual Performance Progress: April – September 2016lans: Progress Overall Performance Per Strategic Objective Performance per Programme Impact Analysis Financial Report April – September 2016 MTSF 2014-19: Progress Strategic Plan Focus and Priority Areas for 2017/18 Key recommendations and areas for discussion

LEGEND Implication: Achieved Performance Indicator is on track or reflects complete implementation. Target achieved  100% + Complete Implication: Not Achieved Performance Indicator behind schedule. Target not achieved  0% - 99% Complete

PERFORMANCE PER STRATEGIC OBJECTIVE Strategic Objectives Annual Performance Indicators Planned Indicators Achieved Not Achieved Overall Performance per quarter Semester performance Q1 Q2 Q1 & Q2 Support initiatives aimed at preventing job losses (TAS) 7 1 4 3 0% 75% 60% Develop relevant productivity competencies (POS) 5 167% 80% 112% Undertake productivity related research (VCC Research & Knowledge Management) 6 83% Facilitate and evaluate productivity improvement and competitiveness in workplaces (VCC WPC) 8 57% 43% 50% Promote a culture of productivity in workplaces (Marketing & Comm) 2 67% 71% 69% Human Resources Management 40% 55% Overall Performance 40 28 33 20 23 11 15 70%

Overall Performance per Quarter (1-3) PERFORMANCE PER STRATEGIC OBJECTIVE: APRIL TO DECEMBER 2016 Strategic Objectives Annual Performance Indicators Planned Indicators Achieved Not Achieved Semester Performance Planned Indicators Overall Performance per Quarter (1-3) YTD Performance Q1 Q2 Q1 & Q2 Q3 Q1, Q2, Q3 Support initiatives aimed at preventing job losses (TAS) 7 1 4 3 60% 9 0% 75% 20% Develop relevant productivity competencies (POS) 5 112% 167% 80% 89% Undertake productivity related research (VCC Research & Knowledge Management) 6 83% 82% Facilitate and evaluate productivity improvement and competitiveness in workplaces (VCC WPC) 8 50% 57% 43% 100% 67% Promote a culture of productivity in workplaces (Marketing & Comm) 2 69% 71% 63% Human Resources Management 55% 40% 133% OVERALL PERFORMANCE 40 28 33 20 23 11 15 70% 34 18 17 64% 68%

REASONS FOR DEVIATIONS/CHALLENGES Funding received from the UIF in July 2016. Work only commenced from the second quarter. Only a portion of the funding was received which equates to 33 companies for the 2016/17 FY. The APP is measured on 200 companies according to the total budget that should have been transferred. Consideration of impact on companies in distress with the funds received should be noted. Semester targets of 70 Entrepreneurs to join Workplace Challenge Programme were not met, only 90% of target could be achieved due to low economic activity in the country. Implementation of the Monitoring and Evaluation tool has been delayed therefore the reports for the 1st and 2nd quarters are still outstanding. The Productivity Statistics Report for 2016/17 has been delayed due to lack of capability – position of the Chief Economist is vacant and cannot be filled due to lack of funding. SMME target was not completely achieved due to the postponement of planned training by Strategic Partners.

REMEDIAL ACTION An agreement reached with the UIF to ensure timely transfer of funds as per the funding agreement and to enhance Governance and Monitoring on the TAS Project Organisation-Wide resources have been mobilised and dedicated towards delivery and achievement of TAS targets – war room established. The established partnerships between Productivity SA and the CCMA, PIC, SEFA and SEDA will assist in the identification and recruitment of companies facing economic distress to join the programme. The new appointment to assist with the Black Industrialist Programme will be accelerated in the 3rd and 4th Quarters of the financial year. System roll-out has been accelerated by including Change Facilitators in the collection of data. To appoint a part-time economist. SMME training to be planned according to signed-off implementation plan.

IMPACT ANALYSIS Working together as a team to achieve common goals

PRODUCTIVITY UNPACKED It is widely accepted that continuous productivity growth in entities is a significant determinant of sustained output growth and as a consequence can lead to employment creation, higher labour compensation, improvements in living standards and alleviation of poverty and inequality. Productivity entails converting resources (inputs) into products and services (outputs) efficiently, effectively and with optimum utilisation of human capital and physical resources for the benefit of business, society, the economy and the environment. Productivity is a mindset that embraces the value of “doing what I do today better than I did yesterday, and even better tomorrow”.

FOR THE STRATEGIC PLAN 2016/17 PRODUCTIVITY SA CONTRIBUTES MAINLY TO OUTCOME 4: MSTF 2014-2019 OUTCOME 4: Decent employment through inclusive growth Programme Improve workers’ education and skills to meet economic needs. This is achieved through conducting productivity training to cooperatives, SMMEs, workers, managers in order to foster continuous productivity improvement in the workplaces thus improving profitability, growth and employment creation. Productivity Organisational Solutions   Reduce workplace conflict and improved collaboration between government, organised business and organised labour through the implementation of the Workplace Challenge Programme. The programme aims at improving productivity and competitiveness of enterprises and sectors through amongst others collaborative relations, implementing processes for continuous improvement, implementing clusters for industrial competitiveness. Workplace Challenge Protect vulnerable workers through the Turnaround Solution Programme that aims at preventing job losses and creating conditions conducive for job retention and creation. Turnaround Solutions

CORE BUSINESS STAGES OF INTERVENTIONS Break even Point (BEP) Stable companies “ICU” Workplace Challenge Decline Turnaround Solutions Emerging companies Productivity Organisational Solutions

PRODUCTIVITY ORGANISATIONAL SOLUTION Province Number of SMME Owners/ Cooperatives Industry Sectors 18-35 Years 36-55 Years 55 years and above TOTAL PER PROVINCE Male Female Gauteng 1821 Manufacturing 207 508 393 590 49 74 Limpopo 416 Manufacturing & Mining 31 161 32 166 5 21 Mpumalanga 47 Forestry 8 13 10 15 1 2 Eastern Cape Kwa-Zulu Natal 109 18 20 57 4 Western Cape 111 41 Northern Cape North West Free State 194 Agriculture 3 46 104 7 165 TOTAL 268 723 532 973 63 112 2671

WORKPLACE CHALLENGE Gauteng 55 Manufacturing and Engineering 4010 Province Number of companies Industry Sectors Number of people employed 18-35 Years 36-55 Years 55 Years and above Male Female Gauteng 55 Manufacturing and Engineering 4010 Not recorded Limpopo 32 Agriculture, Manufacturing , Mining and Forestry 2560 Mpumalanga 11 Forestry 943 Eastern Cape 178 Agriculture, Construction and Forestry 14276 Kwa-Zulu Natal 128 Manufacturing , Forestry and Chemical 10266 Western Cape 113 Manufacturing , Engineering and Agriculture 9063 Northern Cape 3 Agriculture, Food and Beverages 241 North West 92 Agriculture, Clothing and Textile 7378 Free State 7 401 TOTAL 619 49138

TURNAROUND SOLUTIONS GP 5 Manufacturing, Engineering, Furniture, Motor Province Number of companies Industry Sectors Number of people employed 18-35 36-55 55 and above Male Female GP 5 Manufacturing, Engineering, Furniture, Motor 460 Not recorded NW 1 Textile 306 LIM Chemicals 92 WC Furniture, 46 KZN 6 Steel, Textile, Aluminium, Agriculture, Automotive 1012 MP Mining 73 EC Construction 213 NC 2 Construction, Mining 132 TOTAL 18 2334

INTERVENTIONS PER PROVINCE

SUMMATIVE ANALYSIS Employment and income growth: According to the Labour Market Survey, the economy has lost 36 483 jobs over the period 2015/16 and Turnaround Solutions assisted with the saving of 6 976 of these jobs. This equates to 19% of the total, which is insignificant given the levels of retrenchment and unemployment. For the period 2016/2017, Productivity SA received R24,4 million to assist companies facing economic distress against a budget of 97,8 million. Productivity SA should be assisting 200 companies facing distress, this however is a small component of the national economic challenges that South Africa is facing. In addition the Workplace Challenge Programme with a total budget of R8,2 million in the second quarter of the current financial year has assisted companies to retain 42 240 jobs. Added to that figure an additional 150 new jobs have been created as a direct result of the Workplace Challenge intervention. This excludes the impact made through the Productivity SA Entrepreneurship Programme if we consider that 2 349 small businesses were trained on productivity improvement interventions during this semester. Workplace Forums / Dialogue: 21 Future Forums have been established to assist in the normalisation of workplace relations through the Turnaround Solutions Programme. The Organisation has also contributed to peaceful workplace relations by establishing 63 plant level committees through the Workplace Challenge Programme within the same semester.

FINANCIAL REPORT FOR THE PERIOD APRIL TO SEPTEMBER 2016 Working together as a team to achieve common goals

Actual Received Year to Date: Actual Recognised Year to Date: FINANCIAL REPORT – Q2 2016/17 REVENUE STREAMS   Total Budget For 2016/17 Budget Year to Date: Actual Received Year to Date: Actual Recognised Year to Date: Deviation (R) Deviation (%) Forecast to 31 March 2017 Transfers received Money appropriated by Parliament (Doll) 47 944 31 963 23 972 (7 991)^^ -25% 15 981 Grants (UIF) 97 807 48 904 24 452 7 976 (16 476)* -67% 113 336 Grants (DTI) 8 523 6 000 - 0% 2 523 Income earned from services rendered 37 188 17 691 10 839 31 901 Other income 200 100 136 64 191 662 104 657 73 390 48 923 (24 467) -33% 163 805 ^^Transfer for Productivity SA is recognised on monthly basis  not per quarter. R7 991 million will be recognised in November and December(R3 995.5 million per month) Grant for TAS is only recognises to the extent of expenses incurred from the deferred income.

PROGRAMME BUDGET BY ECONOMIC CLASSIFICATIONS FINANCIAL REPORT – Q2 2016/17 PROGRAMME BUDGET BY ECONOMIC CLASSIFICATIONS   Total Budget For 2016/17 Budget Year to Date: Actual Year to Date: Deviation (Actual) Deviation (%) Forecast to 31 March 2017 REVENUE STREAMS Transfers received Money appropriated by Parliament(DoL) 47 944 31 963 23 972 (7 991) -25% 15 981 Grants (UIF) 97 807 48 904 7 976 (40 928) -84% 113 336 Grants (DTI) 8 523 6 000 - 0% 2 523 Income earned from services rendered 37 188 17 691 10 839 (6 852) -39% 31 901 Other income 200 100 136 36 36% 64 Total income 191 662 104 657 48 923 (55 734) -53% 163 805 EXPENSES BY PROGRAMME Administration 47 736 20 711 25 317 (4 606) -22% 19 980 Productivity Organisational Solutions 9 489 4 788 4 633 155 3% 4 856 Value Chain Competitiveness 12 655 5 475 11 907 (6 432) -117% 748 Workplace Challenge 23 975 11 145 4 642 6 503 58% 19 333 Turnaround Solutions 48 174 40 198 83% Total expenses 90 293 54 475 35 818 40% 158 253 Net results 14 364 (5 552) 19 916 139% 5 552

FINANCIAL REPORT – Q2 2016/17 EXPENSES BY CLASSIFICATION PER PROGRAMME   Total Budget For 2016/17 Budget Year to Date: Actual Year to Date: Deviation (Actual) Deviation (%) Forecast to 31 March 2017 ADMINISTRATION Compensation of Employees 24 817 15 408 12 766 2 642 17% 12 051 Goods and Services 22 919 5 303 12 551 (7 248) -137% 7 929 Total expenses 47 736 20 711 25 317 (4 606) -22% 19 980 PRODUCTIVITY ORGANISATIONAL SOLUTIONS 7 706 3 856 3 658 198 5% 4 048 1 783 932 975 (43) -5% 808 9 489 4 788 4 633 155 3% 4 856 VALUE CHAIN COMPETITIVENESS 7 366 3 087 7 004 (3 917) -127% 362 5 289 2 388 4 903 (2 515) -105% 386 12 655 5 475 11 907 (6 432) -117% 748 WORKPLACE CHALLENGE 13 324 6 601 3 255 3 346 51% 10 069 10 651 4 544 1 387 3 157 69% 9 264 23 975 11 145 4 642 6 503 58% 19 333 TURNAROUND SOLUTIONS 6 644 3 322 3 403 (81) -2% 3 241 91 163 44 852 4 573 40 279 90% 110 095 97 807 48 174 7 976 40 198 83% 113 336

EXPENSES BY CLASSIFICATION FINANCIAL REPORT – Q2 2016/17 EXPENSES BY CLASSIFICATION   Total Budget For 2016/17 Budget Year to Date: Actual Year to Date: Deviation (Actual) Deviation (%) Forecast to 31 March 2017 Compensation of Employees 59 857 32 274 30 086 2 188 7% 29 771 Goods and Services 131 805 58 019 24 389 33 630 58% 128 482 191 662 90 293 54 475 35 818 40% 158 253

MTSF 2014-19: PROGRESS REPORT Working together as a team to achieve common goals

PROGRESS REPORT: MTSF (2014-2019) STRATEGIC OBJECTIVES 2014 - 2015 2015 - 2016 2016 – 2017 Semester 1 Annual Target Achieved Q1 & Q2 Planned Support initiatives aimed at preventing job losses (TAS) 12 8 5 3 Develop relevant productivity competencies (POS) 4 2 6 9 Undertake productivity related research (VCC Research & Knowledge Management) 16 Facilitate and evaluate productivity improvement and competitiveness in workplaces (VCC WPC) 11 14 7 Promote a culture of productivity in workplaces (Marketing & Communications) 13 Human Resources Management Total 70 50 41 52 42

TURNAROUND SOLUTIONS 2014 – 2015 2015 – 2016 2016 – 2017 APRIL - SEPTEMBER KEY PERFORMANCE INDICATOR ANNUAL TARGET ACTUAL Workplace Forums (FF) established 65 23 150 39 130 21 Productivity Champions trained 25 19 100 110 6 Number of employment impacted on 5200 1589 7500 6976 6500 2541

PRODUCTIVITY ORGANISATIONAL SOLUTION 2014 – 2015 2015 – 2016 2016 – 2017 APRIL - SEPTEMBER KEY PERFORMANCE INDICATOR ANNUAL TARGET ACTUAL Educators Trained 900 894 950 642 200 273 Emerging entrepreneurs trained 5000 5683 5500 4837 2349 Number of workers trained 800 1286 934 1000 980 Number of managers trained 150 216 160 205 170 144

WORKPLACE CHALLENGE 2014 – 2015 2015 – 2016 2016 – 2017 APRIL - SEPTEMBER KEY PERFORMANCE INDICATOR ANNUAL TARGET ACTUAL Number of new companies that joined WPC 241 201 184 213 63 Capacity building workshops held 47 30 31 80 10 Number of companies implementing WPC 220 370 200 278 247 131 Number of companies in aftercare 275 271 335 332 308 356

STRATEGIC PLAN FOCUS AND PRIORITY AREAS FOR 2017/18

LOCATING PRODUCTIVITY SA AS AN APEX ORGANISATION WITHIN THE NATIONAL DEVELOPMENTAL AGENDA – The Productivity and Competitiveness Movement OUR MANDATE: To promote employment growth and productivity, thus contribute to South Africa’s socio-economic development and economic efficiency. Productivity SA embraces the National Development Plan, Vision 2030, The Medium Term Strategic Framework 2014–2019 and the Industrial Policy Action Plan – as reflected in the following service delivery Key Outcomes: Outcome 4: Decent employment through inclusive growth Outcome 5: A skilled and capable workforce to support an inclusive growth path Outcome 6: An efficient, competitive and responsive economic infrastructure Outcome 12: An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship Section 32 of the Employment Services Act read together with s2(1) (e) and (f), and s7 enjoins Productivity SA to amongst others, develop relevant Productivity and Competitiveness Competencies in workplaces in response to the National Developmental Agenda.

LOCATING PRODUCTIVITY SA AS AN APEX ORGANISATION WITHIN THE NATIONAL DEVELOPMENTAL AGENDA – The Productivity and Competitiveness Movement Productivity SA strategic interventions and programmes focus on: (i) promoting employment, growth and workplace productivity; (ii) promoting a culture of productivity in the workplace; and (iii) improving the employment and re-employment prospects of employees facing retrenchments. The primary focus is on programmes in support of entrepreneurship, creativity and innovation, and the encouragement of the formalization and growth of micro-, small- and medium-sized enterprises. We understand that from an economic perspective, productivity is a wealth-generating process that drives economic growth, and that Productive capacity should reflect the willingness and ability of individuals and organisations to optimise the resources at their disposal in an endeavour to produce goods and services that offer value to the end-user, the customer or the consumer.

PRIORITIES AREAS FOR 2017/18 Refining the Business Model and Strategic Plan to ensure alignment with the National Development Plan - Vision 2030, the Medium Term Strategic Framework 2014 – 2019, and other Government Programmes to improve productivity and competitiveness. Improving the productive and competitive capacity of the national economy and business efficiency through research on socio-economic systems, productivity and economic sectors as well as through the collection and supply of information; Promoting public awareness and dialogue in the workplace to inculcate a culture of productivity and competitiveness in all spheres of the nation’s economic and community life. Strengthen strategic partnerships with the UIF and SOEs to improve the employment and re-employment prospects of employees facing retrenchment or retrenched. Provide support to National Strategic Initiatives and Programmes aimed at achieving sustained levels of inclusive economic growth and decent employment creation, through the following programmes:

EXPECTED ECONOMIC IMPACT Creation of employment Full and gainful employment through productivity improvement initiatives Poverty alleviation Poverty in employment (wage poverty) Reduction of inequality Equitable distribution of the proceeds of productivity gains (wage gap/gain sharing) Improved business and economic efficiency

KEY RECOMMENDATIONS AND AREAS FOR DISCUSSION

RECOMMENDATIONS AND AREAS FOR DISCUSSION Productivity SA’s long term vision is to see productivity being a collective bargaining issue like in all other mature economies such as Germany. Productivity SA should be supported to become a strategic labour market instrument to drive the ILO decent work programme. A well supported Productivity SA should contribute in the attainment of the GDP target of 2,9 as set out in the January 8th statement of the President as well as the NDP objectives.

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