PRODUCTIVITY SOUTH AFRICA

PRODUCTIVITY SOUTH AFRICA
PRESENTATION TO THE SELECT COMMITTEE ON THE ANNUAL REPORT 2015/16 31 January 2017 Presented by: Mothunye Mothiba Chief Executive Officer Working together as a team to achieve common goals

PRESENTATION OUTLINE Mandate of Productivity SA
Linking to DoL’s Mandate Vision and Mission Values Productivity SA Offices Alignment with the National Development Plan Agenda Functions of Productivity SA Productivity SA Value Proposition Priority Economic Sectors Targeted Organizational Structure Strategic Objectives Achievements Key Challenges and Remedial Actions Audited Performance 2015/16 FY Annual Performance Plan /17 FY Finance and Administration Priorities for 2017/18

THE MANDATE OF PRODUCTIVITY SA
Productivity SA is established in terms of section 31 of the Employment Services Act, No. 4 of 2014 as a juristic person. It is an Entity of the DOL, with the mandate to promote employment growth and productivity, thus contribute to South Africa’s socio-economic development and economic efficiency. Governed by a Tripartite Board appointed in terms of section 33 of the Act, consisting of 7 Members: Chairperson Six members 4 drawn from NEDLAC (2 representing Organised Labour and 2 Organised Business), and 2 members representing the Government.

LINKING PRODUCTIVITY SA MANDATE TO THE DEPARTMENT OF LABOUR’S MANDATE
Department of Labour mandate: To regulate the labour market through policies and programmes developed in consultation with social partners, which are aimed at - improving economic efficiency and productivity - creation of decent employment - promoting labour standards and fundamental rights at work - providing adequate social safety nets to protect vulnerable workers - sound labour relations - eliminating inequality and discrimination in the workplace - enhancing occupational health and safety awareness and compliance in the workplace and - give value to social dialogue in the formulation of sound and responsive legislation and policies to attain labour market flexibility for competitiveness of enterprises which is balanced with the promotion of decent employment. .

WHO IS PRODUCTIVITY SA? VISION AND MISSION
Vision: To lead and inspire a productive and competitive South Africa. Mission: To improve productivity by diagnosing, advising, implementing, monitoring and evaluating solutions aimed at improving South Africa’s sustainable growth, development and employment through increased competitiveness.

VALUES • Service excellence through the implementation of relevant solutions • Market leadership through creative and innovative solutions • Working together as a team to achieve common goals • Partner with stakeholders pursuing solutions to South Africa’s productivity challenge • Honesty, integrity and professionalism are the cornerstone of all our relations

Productivity sa OFFICEs
Delivery grouped as follows: Region 1 Gauteng - Physical presence Limpopo Northwest Delivery grouped as follows: Region 2 Western Cape - Physical presence Northern Cape Free State Region 3 Kwa-Zulu Natal - Physical presence Eastern Cape Mpumalanga

PRODUCTIVITY SA AS THE PRE-EMINENT ORGANISATION WITHIN THE
NATIONAL DEVELOPMENTAL AGENDA – The Productivity and Competitiveness Movement Productivity SA embraces the National Development Plan, The Medium Term Strategic Framework 2014–2019 and the Industrial Policy Action Plan – as reflected in the following Key Outcomes: Outcome 4: Decent employment through inclusive growth Outcome 5: A skilled and capable workforce to support an inclusive growth path Outcome 12: An efficient, effective and development-oriented public service 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

FUNCTIONS OF PRODUCTIVITY SOUTH AFRICA
Section 32 of the Act read together with sections 2 (1) (e) and (g), section 7, and 12 (2) (b) and (c) enjoins Productivity SA to amongst others, improve the productive and competitive capacity of the economy through interventions that encourage social dialogue and collaboration between partners. Our core services are aimed at: (i) Promoting employment and income growth by developing productivity and competitiveness competencies; (ii) Supporting initiatives aimed at improving the employment and re-employment prospects of employees facing retrenchments and preventing job losses, which include Turn- Around Strategies, Lay-offs, retraining or alternative employment opportunities; (iii) Promoting dialogue and inculcating a culture of productivity and competitiveness in the workplace and all spheres of the nation’s economic and community life; and (iv) Developing productivity improvement and competitiveness measures and research on socio-economic systems, productivity and economic sectors as well as collection and supply of information. systems, productivity and economic sectors as well as through the collection and supply of

PRODUCTIVITY SA VALUE PROPOSITION
Service Offering: Productivity and Competitiveness Improvement Solutions to accelerate wealth and decent employment creation. HOW : By enhancing the productive capacity and operational efficiency of enterprises throughout the business lifecycle to accelerate wealth and decent employment creation .

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

PRIORITY ECONOMIC SECTORS TARGETED
PRODUCTIVTY SA ECONOMIC PRIORITY SECTORS PUBLIC SECTOR MANUFACTURING AGRO PROCESSING MINING State of the nation address talks about 5 Priorities – Education, Health, Fight against crime and corruption, land reforms and Creating decent work

ORGANISATIONAL STRUCTURE
PROGRAMME HEADCOUNT PER PROGRAMME NUMBER OF VACANCIES VACANCY RATE PER PROGRAMME Office of the CEO 4 0% Programme 1:Turnaround Solutions 10 2 17% Programme 2: Productivity Organisational Solutions Programme 3: Value Chain Competitiveness (Research) 11 1 8% Programme 3: Value Chain Competitiveness (Workplace Challenge 20 9% Programme 4: Marketing & Communications 8 Programme 5: Human Resources 20% Programme 6: Corporate Services 16 6% Kwa-Zulu Natal Regional Office 7 Cape Town Regional Office TOTAL 97 9 8.5%

STRATEGIC OBJECTIVES ACHIEVEMENTS
2015/16

SUPPORT INITIATIVES AIMED AT PREVENTING JOB LOSSES
STRATEGIC OBJECTIVE 1: SUPPORT INITIATIVES AIMED AT PREVENTING JOB LOSSES 43 companies facing economic distress supported through turnaround strategies R utilised for the interventions in 2015/16 FY 6976 jobs saved through the turnaround interventions 39 future forums established with 374 employees trained 112 champions trained

CCMA STATISTICS - JOBS SAVED VS JOBS LOST 2015/16
Due to s189A facilitations, the CCMA assisted in saving 35% (20,661) of jobs of those likely to be retrenched (58,450), with actual retrenchments recorded at 36,483 for the year 2015/16. For 2015/16 Turnaround Solutions has assisted in saving 19% (6976) of those jobs actually lost (36483). Turnaround Solutions impact was however insignificant given the level retrenchments which exists for this period.

STRATEGIC OBJECTIVE 2: CAPACITATED ETD SERVICE PROVIDERS AND SMMES IN ORDER TO CONTRIBUTE TO SUSTAINABLE EMPLOYMENT CREATION 6 917 beneficiaries were capacitated in 2015/16 on productivity-related concepts: 642 Educators , 4837 Emerging entrepreneurs, 934 Workers , 299 Skills Development Facilitators (SDFs) and 205 Managers The strategic partnership with the South African National Apex Cooperatives Organisation (SANACO) is bearing fruit, resulting in 1463 Cooperatives Members trained and capacitated, 1136 of whom are women, 327 males, 726 youth and 14 people with disabilities.

PRODUCTS AND SERVICES OF ASSISTED COMPANIES BECOME
STRATEGIC OBJECTIVE 3: PRODUCTS AND SERVICES OF ASSISTED COMPANIES BECOME WORLD-CLASS AND COMPETITIVE Total of 610 companies are implementing the Workplace Challenge (WPC) Programme 184 new entrepreneurs joined the WPC 278 companies implementing WPC 332 enterprises in aftercare 9 Success stories

STRATEGIC OBJECTIVE 4: WPC SUCCESS STORIES
Companies assisted by Productivity SA WPC programme that reached the National Productivity Awards H & M Rollers and Tshedza Concrete Art H & M Roller improvements through the intervention; Reject rate decreased from 4.8% to 1.2% Sales increased from 6% to 14.8% Staff increased by 78% Tshedza Concrete Art Employees increased from 4 to 25 Production output increased 85% to 95% Reject rate decrease from 12% to 5% Rework decrease from 15% to 6% Absenteeism decrease from 6% to 2% Real time improved from 90% to 98%

NATIONAL AWARENESS CAMPAIGN
STRATEGIC OBJECTIVE 5: NATIONAL AWARENESS CAMPAIGN 51 Workshops and seminars conducted on productivity awareness Productivity awards held in 7 provinces excluding Free State and Northern Cape 28 companies in various categories of the awards went through as finalists for the National awards The following companies were National winners for 2015/16; Cooperative Sector Bakutudi Cooperative Limpopo province Emerging Sector Tshedza Concrete Art Limpopo (WPC client) Public Sector Transnet Port Terminals (PE) Eastern Cape Corporate Sector K-Way Manufacturer (Pty) Ltd Western Cape Gibb Africa Gauteng H&M Rollers Kwa-Zulu Natal (WPC client) 19 strategic partnerships with stakeholders Names What transpired out of those partnerships

STRATEGIC PARTNERSHIPS
PROJECT DURATION Description SANACO Three years, MOU ending October 2016 Cost-sharing Annual training and certification of 2400 Cooperatives nationally South African Forestry Company Limited (SAFCOL) 3.5 years Productivity Improvement project SAWEN One year Cost-sharing Capacitation of 150 female entrepreneurs on productivity related matter ILO Ad-hoc Implementation of SCORE productivity training in Tourism industry SEDA Three years R3 498 per smme Aftercare training for graduates from SEDA incubators. DoE One year (2016/2017) Training of educators in 13 disadvantaged schools in conjunction with BMF dti Training of cooperatives

STRATEGIC OBJECTIVE 6: TALENT MANAGEMENT
17 Career paths maps generated for: 6 Senior Managers 4 Middle Managers 7 Junior Managers Culture climate survey completed and 62 employees participated. Employment Equity demographics within the organisation: 70% African 9% Coloured 10.5% Indian 10.5% White Male – 44 Female – 58

OTHER STRATEGIC ACHIEVEMENTS
Self generated revenue of R Mil Attainment of a Level 3 BEE Contributor International Relations Secretariat of PAPA which serves as an organ of the African Union Commission in the implementation of the Productivity Agenda for Africa Strategic partnership with the Asian Productivity Organisation and Japan Productivity Centre Compliance by the Accounting Authority Four Board meetings scheduled for the year were conducted Approval of the new Business Model by the Board

CHALLENGES AND REMEDIAL ACTIONS

CHALLENGES FOR 2015/2016 The decline in economic activity and the increase in companies in distress, including number of affected workers places great strain on our resources to cope with the demand for support and services. Productivity SA is underfunded and undercapitalised for effective delivery of its mandate to promote employment growth and productivity in South Africa. Funding for Turn-Around Strategies (i.e. UIF funding) to support companies in distress for job retention and preventing job losses is not guaranteed for long-term and is insufficient to respond to the demand. The Memorandum of Agreement is only for 3 years. Funding appropriated by Parliament is insufficient to enable Productivity SA to attract appropriate (skills and expertise) human capital and to invest in product development and upgrading of product offering. Productivity SA is not appropriately profiled and limited awareness and culture of productivity and competitiveness

REMEDIAL ACTIONS FOR 2016/2017 The UIF has committed to provide additional funding (over R97million) and work together with Productivity SA to explore other sources of funding (PIC and IDC). Working closely with the Department of Labour to review funding for Public Employment Services/ other sources of funding towards schemes to minimise the retrenchment of employees, including turn-around strategies, lay-offs, re-training of retrenched workers for alternative employment opportunities. Research Agenda, with a focus on measuring and evaluating productivity improvement, and competitiveness in workplaces and the economy; maintain a data-base of productivity and competitiveness systems and to publicise same; and disseminate information;

AUDITED PERFORMANCE 2015/2016

PERFORMANCE PER STRATEGIC OBJECTIVE - 2015/16 FY
PROGRAMME 1:TURNAROUND SOLUTIONS Strategic objective Key Performance Indicators Target Remarks on deviation to targets Planned Actual Number of future forums established 150 39 With funding received in the last quarter (4th Dec 2015) of 2015/16 year the annual targets were proportionate to the (3) months left in the financial year and thus we couldn’t achieve the targets set in the Annual Performance Plan Number of work-plans developed 43 Number of close out reports 100 Number of impact assessment 15 Productivity champions training 19 Number of companies with Productivity champion training done *50 Number of jobs saved 7 500 6976

PROGRAMME 2: PRODUCTIVITY ORGANISATIONAL SOLUTIONS Strategic objective Key Performance Indicators Target Remarks to deviation of targets Planned Actual Number of emerging Entrepreneurs trained 5500 4 837 Training postponed by the partners. Number of Educators trained 950 642 Limited access of educators for the year Number of Workers trained 900 934 Number of Skills Development Facilitators 550 299 Low access of skills development facilitators for training through SETA’s Number of Managers trained 160 205 Number of graduates engaged 5 2 Target reduced due intensity of the training require for graduates

PROGRAMME 3:VALUE CHAIN COMPETITIVENESS (Research) Strategic objective Key Performance Indicators Target Remarks to deviation of targets Research Planned Actual Annual productivity statistics report 1 Report No Report Lack of capacity Annual Competitiveness indicators position for IMD WCY 2015/16 report published Annual study on public sector productivity and performance and service delivery Report developed but not published Awaiting sign off from DPSA and LDoE Develop a report on the best way to manage performance, productivity and remuneration in the PES Awaiting approval from the client, Public Employment Services Reports conducted on identified sectors as commissioned 3 Report Reports not published Funding of the reports as well as delayed submission

PROGRAMME 3: VALUE CHAIN COMPETITIVENESS (Research) Strategic objective Key Performance Indicators Target Remarks on deviation to targets Planned Actual Number of seminars conducted 9 8 Industry experts to be consulted with the remaining sectors so that the relevant seminars are conducted

PROGRAMME 3: VALUE CHAIN COMPETITIVENESS: WORKPLACE CHALLENGE Strategic objective Key Performance Indicators Target Remarks on deviation to target Planned Actual Number of new entrepreneurs that joined WPC programme 201 184 The dti approved 170 entrepreneurs in its business plan Number of capacity building workshops 30 31 Number of companies implementing WPC 200 278 Number of Facilitators and interns coached 15 15 Facilitators & 3 interns Number of enterprises in after care 335 332 Number of quarterly newsletters 4

PROGRAMME 3: VALUE CHAIN COMPETITIVENESS: WORKPLACE CHALLENGE Strategic objective Key Performance Indicators Target Remarks if not achieved Planned Actual Research and development Roll out and M&E reports of participating companies M&E report on KZN companies Number of success stories 9 11

PROGRAMME 4:MARKETING AND COMMUNICATIONS Strategic objective Key Performance Indicators Target Remarks on deviation to targets Planned Actual Number of media articles published 395 414 Number of productivity awards held 9 8 Budgetary constraint Number of annual reports produced 1 Number of Productivity SA magazines produced 4 3 Not sufficient articles to produce a magazine Number of electronic partnerships with stakeholders 19 Number of workshops and seminars conducted 12 51

PROGRAMME 5: HUMAN RESOURCES Strategic objective Key Performance Indicators Target Remarks if not achieved Planned Actual Generate career path maps Career Path Maps Not achieved List of development areas of individuals Development Paths 100% IDP of Person: Identify development Reviewed IDP’s Some employees did not require training as they were furthering their studies. Establishing goal setting process that facilitates total participation and alignment of goals 100% completion of performance contracting level 2 to 9 2 employees did not contract in this financial year System process for assessing performance in a fair and equitable manner (scorecards) 100% completed performance reviews 4 employees did not conduct the reviews Salary surveys to determine “market relatedness "of remuneration Salary survey/benchmarking Culture survey and interviews to check and changed conducted to improve Culture Shift Annual survey Project commitments and inability to connect regional team members

PROGRAMME FOCUS 2016/2017

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

AUDITED 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 & Communication) 2 67% 71% 69% Human Resources Management 40% 55% Overall Performance 40 28 33 20 23 11 15 70%

FINANCE AND ADMINISTRATION

Employment Services Act – Finances of Productivity SA
Finances of Productivity SA - Section 40 (1) Productivity SA financed from: Money appropriated by parliament for this purpose; Income earned from services rendered by it Grants or donations made to it Money received from any other source

INCOME STATEMENT: INCOME GENERATING PROGRAMMES
POS VCC TAS IN PRODSA 2015/16 2014/15 Variance DoL Grant 7 740 7 330 410 7 285 6 899 386 - Revenue 8 039 1 956 6 083 8 733 7 774 959 10 756 10 187 569 Total Income 15 779 9 286 6 493 16 018 14 673 1 345 Salaries 7 288 6 548 740 17 880 17 378 502 6 231 5 236 995 Travel and Subsistence 579 582 (3) 295 194 101 122 123 (1) Fixed Cost - Office Rent 522 533 (11) 1 041 1 044 510 403 107 Good and Services 591 931 (340) 3 494 1 320 2 174 263 425 (162) Total Expenses 8 980 8 594 22 710 19 936 2 774 7 126 6 187 939 Surplus/(Deficit) 6 799 692 6 107 (6 692) (5 263) (1 429) 3 630 4 000 (370)

INCOME STATEMENT: REGIONS
CAPE TOWN DURBAN 2015/16 2014/15 Variance Revenue 2 543 4 379 (1 836) 1 144 505 639 Total Income Salaries 4 131 4 383 (252) 2 945 2 343 602 Travel and Subsistence 374 560 (186) 338 285 52 Fixed Cost - Office Rent 707 656 51 630 644 (14) Good and Services 388 1 003 (615) 279 348 (69) Total Expenses 5 600 6 602 (1 002) 4 192 3 620 572 Surplus/(Deficit) (3 057) (2 223) (834) (3 048) (3 115) 67

INCOME STATEMENT: SUPPORT PROGRAMMES
CEO CORPORATE SERVICE HUMAN RESOURCE MARKETING 2015/16 2014/15 Variance DoL Grant 3 187 3 018 169 10 017 9 486 531 8 196 7 761 435 9 106 8 624 482 Revenue - 161 221 (60) 13 Total Income 10 178 9 707 471 8 209 448 Salaries 2 739 2 661 78 6 549 6 714 (165) 5 548 5 045 503 4 662 4 427 235 Travel and Subsistence 417 231 186 37 126 (89) 133 137 (4) 379 296 83 Fixed Cost - Office Rent 304 244 60 943 994 (51) 279 248 31 362 321 41 Good and Services 694 452 242 5 950 7 212 (1 262) 2 552 2 282 270 4 125 3 585 540 Total Expenses 4 154 3 588 566 13 479 15 046 (1 567) 8 512 7 712 800 9 527 8 628 899 Surplus/(Deficit) (967) (569) (398) (3 301) (5 339) 2 038 (303) 49 (352) (421) (417)

INCOME STATEMENT: SPONSORED PROGRAMMES
TAS - UIF WPC - DTI TRANSNET 2015/16 2014/15 Variance UIF/ DTI Grant 21 916 19 438 2 478 8 094 9 170 (1 076) - Revenue 4 203 7 480 (3 277) 2 678 1 532 1 146 1 325 747 578 Total Income 26 119 26 918 (799) 10 772 10 702 70 Travel and Subsistence 989 1 455 (466) 1 439 1 512 (73) 286 232 55 Salaries 6 (6) Office Rent 15 (15) Cost of Project Implementation 11 054 17 838 (6 784) 404 415 (11) Good and Services 9 873 145 9 728 8 667 10 152 (1 485) 634 100 534 Total Expenses 10 105 11 685 (1 580) Surplus/(Deficit) 667 (983) 1 650

CONSOLIDATED PROGRAMME EXPENDITURE
2015/16 2014/15 Actual Budget Variance Administration 34 223 46 194 11 971 43 661 67 979 24 318 Productivity Organisational Solutions 8 980 9 092 112 8 594 9 749 1 155 Value Chain Competitiveness 22 710 21 092 (1 618) 19 936 16 371 (3 565) Workplace Challenge 10 105 8 903 (1 202) 11 664 10 514 (1 150) Turnaround Solutions 21 916 22 706 790 19 438 8 982 (10 456) Transnet 1 325 4 538 3 213 747 - (747) Total 99 259 13 266 9 555

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE AS AT 31 MARCH 2016
2015/16 2014/15 REVENUE Transfers and Subsidies 66 234 71 947 Rendering of Services and Sale of goods 19 682 15 648 Finance Income 170 1 006 Other Operating Revenue 10 668 10 115 Total Revenue 96 754 98 716 EXPENSES Employee Costs 57 974 54 741 General Expenses 27 908 29 776 Cost of Project Implementation 11 458 18 247 Other Expenses 1 919 1 231 Total Expenses 99 259 Deficit for the Period (2 505) (5 279) Gains and (Losses) 15 (45) Total Deficit for the Period (2 490) (5 324)

PRIORITIES FOR 2017/2018

PRIORITIES FOR 2017/2018 Financial sustainability of the organisation
Provide support to National Strategic Initiatives and Programmes (Economic Cluster Departments and their Entities) aimed at sustainable employment and income growth and workplace productivity. 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.

PRIORITIES FOR 2017/2018 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. Priority sectors: Revitalising agriculture and the agro-processing value chain; Advancing beneficiation or adding value to the mineral wealth; Unlocking the potential of SMMEs, cooperatives, townships and rural enterprises, by partnering the Department of Small Business Development in implementing the informal sector support policy which includes the provision of business training; Supporting the Manufacturing sector by committing resources towards Manufacturing Productivity and Competitiveness Enhancement Programmes.

THANK YOU

PRODUCTIVITY SOUTH AFRICA

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