PRESENTATION BY THE DEPARTMENT OF LABOUR TO THE SELECT COMMITTEE ON LABOUR AND PUBLIC ENTERPRISES 31 OCTOBER 2012 Annual Report 2011/12 1

TABLE OF CONTENTS 2 1.MANDATE 2.MEDIUM TERM STRATEGIC FRAMEWORK (MTSF) AND SERVICE DELIVERY OUTCOMES ALIGNED TO THE DOL STRATEGIC OBJECTIVES 3.KEY ASPECTS OF THE DOL STRATEGIC PLAN 2011/12, TARGETS AND PERFORMANCE 4. BUDGET ALLOCATIONS AND UTILISATION INCLUDING AUDIT FINDINGS 5. SHELTERED EMPLOYMENT FACTORIES 6. MANAGEMENT ACTION TO RESPOND TO AUDIT MATTERS 7. HUMAN RESOURCES

3 1. Mandate Vision The Department of Labour will strive for a labour market which is conducive to investment, economic growth, employment creation and Decent Work. Mission Regulate the South African labour market for a sustainable economy through: Appropriate legislation and regulations Inspection, compliance monitoring and enforcement Protection of human rights Provision of Employment Services Promoting equity Social and income protection Social dialogue.

2. MTSF and Service Delivery Outcome aligned to the Department of Labour’s strategic objectives 4 In this report, the Department reflects on its contribution to year three of the Medium-Term Strategic Framework (MTSF) with a focus on the following Government service delivery outcomes: Outcome 4: Decent employment through inclusive economic growth, and two other outcomes; Outcome 11. Create a better South Africa and contribute to a better and safer Africa and World; and Outcome 12: An efficient, effective and development orientated public service and an empowered and inclusive citizenship.

2. MTSF and Service Delivery Outcome aligned to the Department of Labour’s strategic objectives - continues 5 SERVICE DELIVERY OUTCOMES AND OUTPUTS DoL STRATEGIC OBJECTIVES 4: Decent employment through inclusive economic growth Outputs: 4.1 Making our growth more labour absorbing 4.2. Reducing youth unemployment 4.3. Raising our international competitiveness 4.4. Analysing the cost structure of the South African economy 4.5. Reviewing support for small business 4.6. Expanding our Public Works Programme 1: Contribution to employment creation 2: Promote equity in the labour market 3: Protecting vulnerable workers 5: Strengthening social protection 6: Promoting sound labour relations 7: Monitoring the impact of legislation 11: Creating a better South Africa and contributing to a better and safer Africa in a better world. 4: Strengthening multilateral and bilateral relations 12: An efficient, effective and development orientated public service and an empowered and inclusive citizenship Output: 12.1 Service delivery quality and access 8: Strengthening the institutional capacity of the Department

2. MTSF and Service Delivery Outcome aligned to the Department of Labour’s strategic objectives - continues 6 To achieve these objectives, the Department, in the 2011/12 financial year focused on the following strategic programmes Labour law amendments. Rebuilding the Public Employment Services. Implementation of Decent Work Country Programme. Strengthening of Department of Labour inspectorate. Reduce inequality and discrimination in the labour market through effective compliance monitoring and enforcement of the Employment Equity Act. Improved access to income protection services (CF and UIF) including reintegration of workers into the labour market.

Branches/Programmes within the Department of Labour Programme 1: Administration (ADMIN) Programme 2: Inspections and Enforcement Services (IES) Programme 3: Public Employment Services (PES) Programme 4: Labour Policy and Industrial Relations (LP and IR) 7

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance 8 OUTCOME 12: AN EFFICIENT, EFFECTIVE, AND DEVELOPMENT ORIENTED PUBLIC SERVICE AND AN EMPOWERED AND INCLUSIVE CITIZENSHIP Strategic Objective 8: Strengthening the institutional capacity of the Department KEY PERFORMANCE INDICATORS ANNUAL TARGETS PROGRESS 1. % of customer complaints attended to within 14 days of Receipt 90% within 14 days 98% (5 434 out of 5 517) were resolved within timeline 2. Percentage of women, youth and people with disability (PwD) employed in line with the EE Plan 34% women employed in Senior Management Service (SMS), 43% youth and 3% people with disability (PwD) employed in the Department 38.5% (32 out of 83 employees at Senior Management Service level) women are employed in Senior Management Service (SMS) as at 31 March % (2 830 out of filled posts) youth employed in the Department as at 31 March % (184 out of filled posts) of the employees in the Department are people with disabilities as at 31 March Percentage of vacancy rate reduced with a specified period of time Vacancy rate reduced to below 8% by 31 March 2012 The vacancy rate in the Department has been reduced to 7.28% (554 out of posts) as on 31 March 2012.

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 9 OUTCOME 12: AN EFFICIENT, EFFECTIVE, AND DEVELOPMENT ORIENTED PUBLIC SERVICE AND AN EMPOWERED AND INCLUSIVE CITIZENSHIP Strategic Objective 8: Strengthening the institutional capacity of the Department KEY PERFORMANCE INDICATORS ANNUAL TARGETS PROGRESS 4. % of misconduct cases finalised within a prescribed period of time 70% of misconduct cases finalised in line with applicable prescripts by 31 March % (216 out of 271 cases) of misconduct cases were finalised in line with the applicable prescripts as on 31 March Exit and services transfer plan developed and implemented Implementation of Exit and Services Plan The Exit and Services Transfer Plan was developed and approved.

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 10 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 2: Promote Equity in the Labour Market KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Inspect JSE listed companies and ordinary designated employers to achieve 80% compliance with EE legislation workplaces inspected JSE (60 ) Designated (140) Procedural (9 800) A total of workplaces were inspected; 65 JSE listed companies inspected 218 Designated employers inspected companies were inspected procedurally Refer to page 39 of the Annual Report for Provincial breakdown.

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 11 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 3: Protecting vulnerable workers KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Inspect workplaces to achieve 80% compliance rate inspections with 80% compliance rate routine inspections were conducted and 74% ( ) compliance achieved The Limpopo figure of (target) was omitted in the Annual Report.

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 12 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 3: Protecting vulnerable workers KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 2. Conduct blitz inspections in targeted sectors Conduct blitz inspections in the targeted sectors blitz inspections conducted Refer to page 40 and 41 of the Annual Report for Provincial and Sector breakdown

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 13 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 3: Protecting vulnerable workers KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 3. Settle at least 70% of received labour related complaints within 14 days at Registration Services Settle 70% of received complaints within 14 days labour related complaints were received and (74%) settled within 14 days

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 14 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 5: Strengthening Social Protection KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Reduce incidents in the following high risk sectors by conducting audits, do blitzes and hold 1 seminar per year: - Iron and Steel, - Construction, - Chemical and - Agriculture/forestry) Establish a baseline by conducing at least: 20 audits per sector Blitz per sector 1 seminar per year 722 inspections conducted in the Iron and Steel Sector, 1003 Inspections conducted in the Construction Sector, 144 inspections conducted in the Chemical Sector and 1338 inspections conducted in Agriculture and Forestry Sector Refer to pages 43 and 44 of the Annual Report 2. Conduct inspections in the identified industries exposing workers to silica dust 200 workplaces inspected in order to reduce exposure by at least 2% 213 workplaces were inspected The inspections conducted were the first. Follow-up inspections will continue to determine the level of reduction to exposure. Prov.TargetActualDeviance GP NATIONA L

3. Key Aspects of the Department of Labour’s Strategic Plan 2011/12 - Targets and Performance 15 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribution to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Number of registered job-seekers on the Employment Services for South Africa system per year reporting job-seekers registered on the System Work-seekers registered : Prov.TargetActualDeviance EC FS GP KZN LP MP NC NW WC NATIONAL

3. Key Aspects of the Department of Labour’s Strategic Plan 2011/12 - Targets and Performance 16 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribution to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 2. Number of job-seekers Registered on the system assessed and profiled 50% job- seekers registering on the system are assessed and profiled within 60 days of Registration (40%) of the job seekers registered on the system were assessed and profiled Prov.TargetActualDeviance EC FS GP KZN LP MP NC NW WC NATIONAL

3. Key Aspects of the Department of Labour’s Strategic Plan 2011/12 - Targets and Performance 17 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribution to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 3. Number of job- seekers placed/referred to opportunities job- seekers placed/referr ed to opportunities referred/placed into opportunities NB: Other work-seekers were provided with counselling & employment enhancement and other DoL services

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 18 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribution to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 4. Number of employers registering vacancies on ESSA companies registered vacancies Prov.TargetActualDeviance EC FS GP KZN LP MP NC NW WC NATIONAL

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 19 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribution to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 5. Number of private employment agencies registered PEAs were registered Prov.TargetActualDeviance EC FS GP KZN LP MP NC NW WC NATIONAL

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 20 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribution to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 6. Number of jobs saved through social plan intervention jobs saved 7.SEF approved policy and legal framework developed SEF legal status and business case finalized Legal establishment provision is included in the ES Bill. National treasury approved a tender for the services provider for the 2nd Phase business case. 8. Increased sales of goods from Service Products leading to more intake of people with disabilities into SEF 30% in sales leading to 500 more people with disabilities employed in SEF subject to Government departments placing 30% of their orders from SEF Only 0.67% increase in sales was recorded. No additional people with disabilities were employed. Only 1.47% increase in sales/orders was placed by government departments Insufficient orders placed by government departments

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 21 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribution to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 9. Number of companies assisted to facilitate constructive dialogue between social partners, managers & workers, to improve productivity 120 companies275 companies assisted 10. Productivity month campaign conducted & best performing organizations awarded Five productivity brochures & one electronic newsletter published during productivity month 3 brochures printed and 8 electronic newsletters published Productivity month campaign conducted. 2 regional awards, & 1 national award function held One national Productivity award function held Five regional award functions held

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 22 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribution to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 11. No. of SMME managers assisted to manage matters related to intellectual property managers were trained 12. Research study conducted on the impact of municipal programs on SMMEs in relation to productivity and jobs created. Research report compiled and published in 2011/12 Research report completed and four seminars conducted 13. Number of public servants / expenses approved by Compensation Fund, paid Claims approved by the Compensation Fund Commissioner, submitted Outstanding claims inclusive of 1999 to September 2011, total outstanding R20.9m received from National Treasury Additional allocation was received from National Treasury = R26m Transferred to CF R36m from 1999 to March Outstanding claims to paid to CF = R1.2m

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 23 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 2: Promote Equity in the Labour Market KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Employment Equity Act (EEA) and its Regulations Amended Amended EEA promulgated NEDLAC negotiations on the Employment Equity Bill was postponed to commence in April 2012 due to prolonged negotiations on the LRA and BCEA Bills. 2. Code of Good Practice and Technical Assistance guidelines on HIV and AIDS reviewed and Amended HIV and AIDS Code and Technical assistance Guidelines amended The Code on HIV and AIDS and the World of Work reviewed and finalised by 28 March Income Differentials assessed to determine race and gender disparities in salaries 6058 Income Differentials assessed to determine race and gender disparities in salaries

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 24 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 3: Protecting Vulnerable Workers KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. BCEA amended Amended BCEA promulgated Bills were approved by Cabinet and submitted to Parliament. Information sharing sessions conducted country wide 2. Review existing sectoral determination Publish an amended SD for: Civil Engineering, Taxi, Contract Cleaning, Domestic Workers, Farm Workers, Wholesale and Retail, Forestry Five (5) Sectoral determinations reviewed. They are the following; Taxi published on 27/06/11 GG Contract Cleaning published 28/11/11 GG Domestic published on 28/11/2011 GG Farm Worker published 18/01/2012 GG Forestry worker published 18/01/2012 GG 34946

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 25 OUTCOME 11: CREATE A BETTER SOUTH AND CONTRIBUTE TO A BETTER AND SAFER AFRICA AND WORLD Strategic Objective 4: Strengthening bilateral and multilateral relations KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Ensure compliance with ILO’s constitutional requirements in terms of Article 19 and 22 of the Constitution of the ILO. Compile and submit reports in consultation with programmes and other departments on South Africa’s compliance in law, policy and practice. 2 Article 19 Questionnaires unratified on Social Security Convention submitted to the ILO 6 Article 22 reports on ratified Conventions were submitted to the ILO Refer to page 62.

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 26 OUTCOME 11: CREATE A BETTER SOUTH AND CONTRIBUTE TO A BETTER AND SAFER AFRICA AND WORLD Strategic Objective 4: Strengthening bilateral and multilateral relations KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 2. Develop briefing documents for: Arlac, AULSAC,ILO GB, and ILC and SADC ELS Develop briefing documents on and South African positions on the agenda items for: Arlac, AULSAC,ILO GB and ILC,SADC ELS SA delegations have participated in the Annual meetings of these Multi-lateral bodies. Details of these appear in the Annual Report. SA successfully hosted the 12 th African Regional meeting. 3. Projects in priority output areas identified, agreed on with social partners, implemented and reported on South Africa’s Decent Work Country Programme implemented Regular meetings of the Steering Committee and Technical Implementation Committee held to monitor implementation of projects in priority output areas as agreed 3. Review the implementation of the Memorandum of Understanding with Lesotho, Namibia, Cuba and China MOU’s with respective countries reviewed and signed Review of the memorandum of understanding with China has been finalised and is awaiting signature

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 27 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 6: Promoting Sound Labour Relations KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Extend collective agreements within 90 days 18 collective agreements published within 60 days of receipt 24 collective agreements Average turnaround time: 57 days 2. Decision to register new labour organisations taken within 90 days 90 days144 Average turnaround time: 104 days

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 28 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 7: Monitoring the impact of legislation KEY PERFORMANC E INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Annual Labour Market Review report developed and disseminated Four (4) Annual Labour Market Review report developed and disseminated (100%) Four annual labour market reports were produced, approved and published. These include: 1.Industrial Action report 2011: It provides a trend analysis on industrial disputes in the country. 2.Annual Labour Market Bulletin: It provides a general overview of key indicators regarding the performance of the SA economy, labour force and wage agreements in the financial year 2011/12 3.Annual Administrative Statistics report: It presents data series in the last 12 months of It considers only selected key indicators to assess progress made by each branch within the DoL 4.Job Opportunity and Unemployment in the SA labour market: It examines the deficiency in the demand and supply of labour based on the analysis of vacancies and unemployment insurance data in the financial year 2011/12.

3. Key Aspects of the DoL Strategic Plan 2011/12, Targets and Performance - continues 29 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 7: Monitoring the impact of legislation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 2. The impact of the Department’s Strategic Plan on stated goals and objectives researched and reported on Implementation of RME agenda 2 continues with the following projects. 1.Evaluation of the NSDS II 2.UIF noncompliance in the taxi, domestic and catering sectors 3.Assessment of the registration, recruitment and selection services in ESSA 1.The following RME 2 projects were completed, submitted to the Minister and disseminated through research seminars:  Evaluation of the NDSD II,  UIF Client satisfaction survey,  UIF noncompliance in the taxi, domestic and catering sectors,  Assessment of registration, recruitment and selection services in ESSA

4. Budget Allocations and Utilisation per Main Division of the Vote 30

4. Budget Allocations and Utilisation per Main Division of the Vote 31

4. AUDIT FINDINGS – 2011/12 32 Qualification - None Emphasis of Matter - None Other Findings: Predetermined Objectives: Performance targets not specific (25% of PES priorities) Performance targets not specific (28% of IES) Performance indicators not well defined (33% of IES) Procurement and contract management: Goods and services of a transaction value above R were procured without inviting competitive bids The Accounting Officer did not report the deviation from normal procurement processes to National Treasury and the Auditor General. Employees of the Department performed remunerative work outside their employment without written permission from the relevant authority.

4. AUDIT FINDINGS – 2011/12 33 Human resource management : Funded vacant posts were not filled within 12 months and vacant positions in the department were not advertised within six months. Expenditure Management: Contractual obligations and money owed by the department were not settled within 30 days.

5. SEF 34 SHELTERED EMPLOYMENT FACTORIES (SEF)

5.1 Background History of The SEF The Sheltered Employment Factories (SEF) were established more than 65 years ago to provide employment opportunities for those handicapped people who were unable to hold down employment in the open labour market due to the nature of their afflictions. There are more than 2.5 million handicapped people in South Africa of whom some 10% to 15% probably require an environment such as the Sheltered Employment Factories provide. Currently around 97% of the workers in our factories fit this profile. This is not merely a haven for the unemployed, but for those who cannot compete – often the emotionally / psychologically challenged. The Department of Labour inherited the SEF from the previous Government and has in the recent past taken a bold step of embarking on a turnaround strategy, that is aimed at converting the SEF into entities that: - have a clear and definable legal status - operate as efficient entities - serve to advance government’s national agenda on active participation in the economy of the country by people with disabilities. 35

5.1 Background History of SEF - continues The SEF now has 12 factories across South Africa operating in 7 of the 9 provinces, with only Mpumalanga and Limpopo without a facility. Factories are located in Bloemfontein, Cape Town, Durban, East London, Johannesburg, Kimberly, Pietermaritzburg, Port Elizabeth, Potchefstroom and Pretoria. Collectively they employ some disabled people supported by 120 administration, management and technical staff. With current premises – land, buildings and equipment - there is the potential to provide meaningful work opportunities for more than handicapped people. In time it is envisaged that these numbers will increase significantly as an awareness of the SEF and its purpose is created in South Africa and the potential market for products is addressed. 36

5.2 Business Case The Business Case is aimed at developing a turnaround strategy that will help the Sheltered Employment Factories to transform into legal entities that sustain themselves and increase employment opportunities for people with disabilities who cannot secure employment in the open labour market due to the nature of their afflictions. Progress to date The Employment Services Bill currently referred to parliament, makes reference of SEF’s legal framework in Chapter 6 and deals with the establishment of the SEF as Protected Employment Enterprise (PEE). Three reports have been produced by the appointed service provider and adopted by the Department, the reports are namely; Situational Analysis Which looks at the current situation at the SEF and the environment in which the factories operate. 37

5.2 Business Case - continues SEF Options Models This presents an range of options that the SEF has to consider in order to transform itself into viable entities; and Implementation Plan This is a detailed plan on the implementation of the agreed option(s) with time frames and milestones over the MTEF period. A detailed SEF budget bid was prepared and submitted to the National Treasury for consideration based on the Implementation plan recommendations. 38

5.3 Employment Equity 39 SEF’s financial situation has led to a decrease in the number of people with disabilities employed by SEF from to 926 and consequently SEF’ s ability to change the profile of their employees to be representative of South African society. SEF employs (1 063: 2008) 926 people with disabilities which constitutes 0.04% of the total South African population of people with disabilities SEF employees (67%: 2008) 60% White compared to the general population of people with disabilities which is 82% African SEF employees are (82%: 2008) 72% male compared to the general population of people with disabilities which is 52% Female

5.3 Employment Equity - continues 40 SEF race and gender profile exhibits racial and gender disparities. Reductions in work and the moratorium on recruitment SEF has impacted on the opportunity to redress these inequities. However, the change in statistics from 2008 demonstrates commitment to redressing equity balances. Management profile is 50% White, 29% African, 18% Coloured and 3% Asian of which 47% is male and 43% is female. Factory worker’s profile is of 62% White, 15% African, 22% Coloured and 1% Asian of which 76% is male and 26% female. The overall SEF profile is 60% White, 22% Coloured, 17% African and 1% Asian of which 72% is male and 28% is female. The SEF age profile exhibits an aging population with very little feed (6%) into the new generation and many employees (39%) older than 50 years..

5.4 Production Facility ProvinceFactoryProducts Specialisation (i)GautengPretoria Springfield Rand In total the factories have the manufacturing capability that produces different product types in the following fields: - furniture (wooden and metal for offices, schools and domestic use) - textiles (garments, bed linen, protective clothing, hospital and surgical garb - with printed or embroidered logos) - metal work (shaped and welded construction) - leather work - canvas work - book binding (beautifully crafted leather binding with gold lettering) - screen printing (printing onto promotional products e.g. T-shirts, logos, caps, linen, flags, bunting, banners). (i)Western CapeNdabeni Epping (i)KwaZulu NatalPietermaritzburg Durban (i)Eastern CapeEast London Port Elizabeth (i)Northern CapeKimberley (i)Free StateBloemfontein (i)North WestPotchefstroom 41 The SEF is complemented by these factories across the landscape of the country as follows:

5.5 Key Aspects of the SEF Strategic Plan 2011/12, Targets and Performance 42 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 1: Contribute to employment creation KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Approved policy and legal framework for SEF. Draft Report of the SEF 2 nd Phase Business Case available. Service providers for the 2 nd and final phase of the business case were evaluated in March 2012 and appointment will be done in April It is envisioned that the 2 nd phase of the business case will be finalised by July The SEF legal status is incorporated in the Employment Services currently at NEDLAC. -Delays in the procurement of the service provider by National Treasury Technical Assistance (TAU). -Protracted negotiations on the ES Bill at NEDLAC 2. Number of people with disability/ex- combatants and Compensation Fund beneficiaries assisted with skills for employment in SEF. Research and define (Position Paper) the SEF Centre by end of March Position paper not finalised due to its dependence on the business case outcomes. - Insufficient capacity in SEF

5.5 Key Aspects of the SEF Strategic Plan 2011/12, Targets and Performance - continues 43 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH Strategic Objective 2: Manage factories to be visible and sustainable enterprises KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Percentage increase in rand value of sales. 15% increase in sales comparison to 2010/11 financial year. 0.74% increase in sales compared to prior financial year: 2011/12 sales – R /11 sales – R Limited working capital to procure sufficient materials to service large orders. 2. Percentage reduction in production and delivery lead-time. Establish production schedule/ turnaround baseline/Action Plan. The Productivity SA piloted a productivity turnaround project at the Rand Factory and the project will be rolled out to other factories during 2012/13

5.5 Key Aspects of the SEF Strategic Plan 2011/12, Targets and Performance - continues 44 OUTCOME 12: AN EFFICIENT, EFFECTIVE, AND DEVELOPMENT ORIENTED PUBLIC SERVICE AND AN EMPOWERED AND INCLUSIVE CITIZENSHIP Strategic Objective 8: Strengthening the institutional capacity of the Sheltered Employment Factories KEY PERFORMANCE INDICATORS ANNUAL TARGETS ACHIEVEMENTS 1. Strategic risk monitored in line with the Risk Appetite Model/Framework. Strategic risk reviews done and operational risk assessments done for all factories by end of March Strategic and operational risk assessments completed at 10 of the 12 SEF factories are to be assessed by end of June Insufficient time allocated to complete all factories by end of March Percentage of Youth and Women employed in SEF. 20% of Youth employed in the SEF as at end of March % of Women employed in the SEF by end of March Equity profile as at 31 March 2012: 9.4% Youth employed % Women employed. Limited appointments made during 2011/12.

5.6 FINANCIAL MANAGEMENT OF SEF 45

5.6 AUDIT MATTERS OF SEF 46 Qualification - None Emphasis of Matter - Financial sustainability / going concern: The entity is unable to operate as a going concern Material losses: The entity disclosed material losses amounting to R and R due write down of inventory and criminal conduct by fraudsters, respectively. Irregular expenditure incurred: SEF incurred irregular expenditure due to the lack of Supply Chain Management processes.

5.6 AUDIT MATTERS OF SEF 47 Compliance with laws and regulations Procurement and contract management: Goods and services of a transaction value above R were procured without inviting competitive bids Consultants were appointed to render services for which there was sufficient time to recruit people to perform the work. Employees of the entity performed remunerative work outside their employment without written permission from the relevant authority

6. MANAGEMENT ACTION TO RESPOND TO AUDIT 48 The Department, including SEF, has developed a Management Action Plan to address all audit findings/queries. Progress reports are provided to Management Committees and the Audit Committee. Follow-ups are performed during the year by Internal Audit.

7. HUMAN RESOURCES – The DoL’s Staff compliment 49 ProgrammeNo. of postsNo. of posts filledVacancy Rate Number of posts filled additional to the establishment Administration (Corporate Services) COO PES LP and IR IES Social Insurance UIF: 455 CC : 711 UIF:421 CC : UIF: 25 CC : 418 Total*

7. HUMAN RESOURCES – Employment status 50

7. HUMAN RESOURCES – Equity by Occupational Band 51 Occupational Bands Male (44%) Female (56%) AfricanColouredIndianWhiteAfricanColouredIndianWhiteTotal Top Management Senior Management Professionally qualified and experienced specialists and mid- management Skilled technical and academically qualified workers, junior management, supervisors, foreman and superintendents Semi-skilled and discretionary decision making Unskilled and defined decision making Total

CONCLUSION 52  The Department of Labour has appreciated the tenable successes and acknowledged some of the challenges facing the organisation. And, we continue in our strides to address these challenges.  The Department received its second unqualified audit opinion consecutively. The Sheltered Employment Factories (SEF) obtained its first unqualified report in years. Issues raised by the Auditor General are being corrected and improvements in the control environment are on an on-going process.  Chairperson, the Department has significantly improved its internal efficiencies and focuses on service delivery; that is the reason for changes to the labour legislations are recommended.

Thank You… 53