17 APRIL 2019
Senior Management of the Department of Labour
Ladies and Gentlemen
I am truly pleased with the turn-out this morning of our stakeholders for this very important session. I bring you warm greetings from the Minister of Labour, Ms Mildred Nelisiwe Oliphant. The overarching responsibilities of the Minister and I, as it is for all Members of the Executive, are policy formulation and enactment of legislation.
It is, therefore, of paramount importance that we not only monitor implementation, but we also assess and evaluate the extent to which the laws we introduce give effect to the spirit and the intent for which they were promulgated in the first place. There is no better way to get that sense than to engage directly with stakeholders themselves. I, therefore, look forward to this session
Secondly, I believe it is our collective responsibility as government as well as business to engage and find one another in order to be able to implement our laws in an effective and responsible way for the benefit of our citizens.
The Department of Labour is tasked with the regulation of the labour market in South Africa, and business needs a stable labour environment to thrive. The Department of Labour has, for the past 25 years, worked hard to ensure a transformative labour legislation regimen that is suitable for implementation for all businesses and society in general.
Ladies and gentlemen, our engagement with you this morning is premised on the ethos of sharing information with you and also listening to your views and experiences as you interact with and implement our laws.
My address will touch on some of the topics for discussion albeit at high level as detailed presentations will take place later on in our programme.
In my humble opinion, the most historic and progressive changes to South Africa's labour legislation since 1994 have been the passing of the Labour Laws Amendment Act in December 2018.
The National Minimum Wage, the first in the African continent and amongst a few in the international arena, is going to have a positive impact for many workers in South Africa. The R20 per hour wage will see 47% of the workforce enjoying a raise in hourly wages. Whilst the National Minimum Wage received criticism from many quarters as being too low, what critics have failed to recognize is how it will help millions of the most vulnerable workers to receive better wages. Workers in the following sectors stand to benefit: farming, domestic, petrol, cleaning, retail, hairdressing, hospitality, restaurant, and other impoverished workers.
We feel strongly about the piece of legislation as we believe it is going to put money in workers' pockets, food on their tables, and bring about a better life for their families. Another positive spin-off is that more money will flow into the economy, and stimulate economic growth that will in turn result in job creation.
It is my view that the national minimum wage will enable workers to have disposable income that can be spent in your businesses.
The National Minimum Wage is an example of how social dialogue and collaboration can assist to grow our economy and to fight poverty.
This policy illustrates genuine collaboration on a contested idea, acknowledging the difficulties facing everyone, from lowpaid employees to small businesses.
While the National Minimum Wage agreement focused on those in the labour market and on addressing wage inequality, it also acknowledges the importance of creating jobs, which would increase inclusion and mitigate the burden of financial support for the lowest paid employees. I believe that the national minimum wage process has created a template for greater collaboration between business and labour on similar terms in the future. This is an approach we must embrace and celebrate.
Secondly, the Unemployment Insurance (UIF) Act has also been amended to impact positively on many of our vulnerable workers. The amendments are going to significantly expand access to UIF benefits by increasing unemployment benefits from 8 months to 12 months, increase maternity benefits from 54 percent to a 66 percent of mother's salaries. Access to a deceased UIF contributor's remaining payments by the beneficiaries will also be increased, and so will separate maternity leave credits from unemployment benefit, thus protecting mother's unemployment cover, and extending UIF coverage to public servants among others.
I believe the most pertinent amendments to employers are the submission of declarations by the 7th day of every month.
Making consistent contributions and declarations is important because it helps prevent delays in claims payments. Monthly declarations also aid in fast tracking the issuing of compliance documents that are required for those businesses which tender for government work. These amendments enhance our overall objects rather than detract from them, as they diversify the benefits and amplify coverage.
Those businesses which are compliant to the UI Act are at an advantage especially when they need to access some of the programmes of the Fund, such as the Training Lay-Off Scheme and Turn Around Solutions. The two programmes are designed to assist companies in distress.
I would like now to address the third area of focus which is the Compensation for Occupational Injuries and Diseases Act. Unlike the other two Acts, amendments to COIDA are still in the form of a Bill whilst the first two have been promulgated into law, effective from the 01st of January 2019.
When employers register with the Compensation Fund in terms of Section 80 of the COIDA, they are allocated a rating industry class according to the sector in which they operate. Each industry rating class is risk-profiled to determine the applicable rates that they will be required to pay to the Compensation Fund. There are currently 24 industry classes used by the Compensation Fund and each class is further subdivided into sub-classes. There are 102 of these sub-classes, each with its own rate payable by the employers.
The complexity of having to manage 102 different rates has led to some inefficiencies in the revenue management space and frustration to many employers. It further contributes to low levels of compliance by employers as the burden of compliance is perceived to be onerous. During engagement with employers, amongst the reasons given for unhappiness with the Fund are;
➢ the complexities of COIDA
➢ sub-classes changes leading to late reporting / notification as it is required by the law,
➢ delays in auditing those employers who have been flagged for auditing, and
➢ disputes between employers & consultants/agents.
In the published revised assessment model, the Fund proposes to reduce the industry rating classes from 24 to 6 while retaining the 102 sub industry classes. However, the rates payable by employers will be determined only per each of the 6 main industry classes. In effect, this would mean that there won't be 102 different rates but only 6 rates.
The 6 new rates were developed working with actuaries to ensure they take into account the risk characteristics of the different industries based on the claims history of each industry.
The Fund believes that the new industry rating process will result in the following benefits:
➢ For Employers and Employees: The registration process will be easy and accurate for employers and will lead to accurate billing. The complaints from employers will be effectively addressed thereby improving the current turnaround period for class and subclass changes. As a result, employees will benefit through improved access to social security.
➢ For the Compensation Fund and Mutual Associations: It will assist in complying with the relevant Accounting Standards and reduce losses due to fraudulent activities.
In addition, the implementation of the regulation will ensure improvement in service delivery and contribute to a more effective enforcement process.
➢ In reducing fraud: The current classes also contribute to fraudulent conduct by different stakeholders who may not want to pay the assessment fees related to the industry in which the employer operates.
Managing the existing 102 different sub-classes also contributes to some inefficiencies for both the Fund and the employers, as disputes and audit referrals often delay the ability of employers to obtain their certification of good standing. Introducing reduced assessment classes will simplify the process of dealing with the Compensation Fund. It should also be noted that this revised assessment model process is not yet concluded as the National Economic Development and Labour Council (NEDLAC) is still engaging on the matter.
In 2014 the Compensation Fund embarked on a process to amend the Compensation for Occupational Injuries and Diseases Act, 130 of 1993. This was informed by, among other pertinent legislative issues, the Minister's provincial izimbizo with Domestic Workers, and the fact that some provisions of the COIDA were out of date with the current reality and not in line with the kind of service the Fund wants to offer to clients. The last amendments to the COIDA were made in 1997, hence the appetite to amend currently.
Subsequently, the Fund embarked on consultation processes with the National Treasury, the Economic Cluster, the Office of the State Law Advisor and the Department of Performance Monitoring and Evaluation.
The most significant amendments proposed to the Act are to enact the provisions regulating:
➢ Inclusion of domestic workers under the category of employees for purposes of benefits in terms of the Act,
➢ Introduction of a Rehabilitation and Reintegration framework of injured employees into the workplace. This is a provision that will lead to the fund introducing some vocational and social rehabilitation programmes in addition to the current clinical rehabilitation.
➢ Improvement of benefits;
The Fund's view is that these initiatives will benefit both the employers and injured employees by improving the lives of those whom the Fund is mandated to service.
I would like to urge you as business to embrace the recent legislative amendments and help us as government to implement them for the good of your employees and businesses.
The success of all these noble initiatives is aimed at taking our country forward. I need to restate that these bills and legislation are as a result of consultation and eventually consensus amongst Government, Business, Labour and Civic Society. It, therefore, behoves all of us to own this process and to work with due diligence to ensure that we join hands to deliver to our employees and in so doing to serve society.
I look forward to the presentations and a productive engagement this morning.
I thank you.
© 2019 - The South African Department of Employment & Labour