Eskom technical review team to deliver preliminary report in four weeks

The Eskom technical review team, appointed by the Public Enterprises Minister Pravin Gordhan and the Eskom board on March 4, will produce a preliminary report within four weeks, Cabinet said in a statement released on the same day, March 14, that Eskom resumed load-shedding.

Cabinet said the team started its work during the week of its most recent meeting, which was held on March 13.

The 11-member team is comprised of academics, engineers and power systems professionals and is being coordinated by Dr Tsakani Mthombeni and Ian Morrison.

It has been asked to assess: plant unavailability due to scheduled maintenance; plant unavailability due to unplanned outages and unscheduled maintenance; operator errors resulting in power plants tripping and shutting down; and technical and operator-associated inefficiencies resulting in lower than optimum electricity output from the power station units.

Cabinet also received a report from Deputy President David Mabuza on the work of the joint special Cabinet committee on Eskom, established in response to recent electricity supply disruptions and its negative impact on the economy.

The committee, which includes the Ministers of Public Enterprises, Energy, Transport, Finance, Police and State Security, will coordinate government’s efforts to bring financial, operational and structural sustainability to the embattled State-owned utility.

In February, Finance Minister Tito Mboweni announced that government would inject R23-billion a year for up to ten years into the utility, which currently has debt of more than R420-billion and is expected to report a loss of R20-billion for the 2018/19 financial year.

Eskom also had access to a R350-billion government guarantee, which had been extended to 2023.

Mabuza told lawmakers earlier in the week that the technical review team’s assessment would guide specific interventions at a power-station level to ensure that power supply disruptions are stabilised.

“Ultimately, Eskom must implement programmes that will improve the culture of accountability, productivity and efficiency at the utility. Where appropriate, it will have to dispose of non-core assets and increase its efficiencies thereby alleviating its current liquidity challenges in the short-term,” Mabuza said.

Meanwhile, Cabinet noted “good progress” made by Eskom to increase coal stocks across its power stations, but said further attention had to be given to the coal supply chain.

“Cabinet, however, remains concerned about the performance of the Medupi and Kusile power stations and has mandated the Minister of Public Enterprises to provide a comprehensive recovery plan based on a reassessment of the key drivers of the cost and time overruns for this new build project.”

BY: TERENCE CREAMER
CREAMER MEDIA EDITOR

Unemployment rate drops marginally to 27.1% at end of 2018

South Africa’s unemployment rate decreased to 27.1% at the end of the fourth quarter of 2018, Stats SA announced on Tuesday morning.

The unemployment rate at the end of the third quarter of 2018 was 27.5%, meaning the rate has fallen by 0.4 percentage points.

According to the Quarterly Labour Force Survey for the fourth quarter, there are 16.5 million employed people and 6.1 million unemployed people between the ages of 15 and 64 years in South Africa.

The unemployment figures were in line with the estimates of analysts. Investec’s Kamilla Kaplan predicted last week that the figures could show a decline in the unemployment rate to 27.1%, noting that seasonal hiring in the services sectors in the last quarter of the year results in an improvement in the number of individuals employed.

“However, this hiring is typically reversed in the following quarter,” she said.
– Stats SA

10 predictions for the global economy in 2019

The global economy started 2018 with strong, synchronized growth. But as the year progressed, momentum faded and growth trends diverged. The US economy accelerated, thanks to fiscal stimulus enacted early in the year, while the economies of the Eurozone, the UK, Japan and China began to weaken. These divergent trends will persist in 2019. IHS Markit predicts global growth will edge down from 3.2% in 2018 to 3.1% in 2019, and keep decelerating over the next few years.

One major risk in the coming year is the sharp drop-off in world trade growth, which fell from over 5% at the beginning of 2018 to nearly zero at the end. With anticipated escalation in trade conflicts, a contraction in world trade could drag down the global economy even more. At the same time, the combined effects of rising interest rates and surging equity and commodity market volatility mean that financial conditions worldwide are tightening. These risks point to the increasing vulnerability of the global economy to further shocks, and the rising probability of a recession in the next couple of years.

 

 

 

Our top 10 economic forecasts for 2019:

1. The US economy will remain above trend

Based on estimates about sustainable growth in the labour force and productivity, we assess the trend, or potential, growth in the US economy to be around 2.0%. In 2018, US growth was well above trend at 2.9%, though the acceleration was almost entirely due to a large dose of fiscal stimulus in the form of tax cuts and spending increases. The impact of this stimulus will still be felt in 2019, but will diminish as the year progresses. As a result, we expect growth of 2.6% in 2019 – less than in 2018, but still above trend.

2. Europe’s expansion will slow even more

Eurozone growth peaked in the second half of 2017, and has declined steadily since then. IHS Markit predicts a further decline to 1.5% in 2019. Political uncertainty, including Brexit, challenges to Emmanuel Macron’s government, and the winding down of Angela Merkel’s chancellorship, are contributing to a decline in business sentiment. Economic factors such as the tightening of credit conditions and heightened trade tensions are also driving the deceleration in growth.

3. Japan’s recovery will remain weak, and its economy will grow less than 1% in 2019

Japan’s economy is expected to expand by 0.8% in 2018, with this rate increasing only slightly in 2019 to 0.9%. The slowdown in China’s economy and the fallout from trade tensions between the US and China are drags on growth. Monetary policy will continue to be ultra-accommodative next year. The cyclical decline in Japan’s growth is occurring in an environment of very weak long-term growth. Adverse demographics – specifically a declining labour force – are not being offset by strong enough productivity growth. The “third arrow” of Abenomics, which was supposed to implement significant structural reforms and boost productivity, has been slow to materialize.

4. China’s economy will keep decelerating

The quarterly rate of Chinese growth has been steadily edging down since the beginning of 2017, hitting its lowest level in 10 years in the third quarter of 2018. On an annual basis, the pace of expansion has slowed from 6.9% in 2017 to 6.6% in 2018, and will fall further to 6.3% in 2019. In response to recent economic shocks – including the impact of US tariffs, which has so far been limited – policy-makers have unleashed a series of monetary and fiscal measures to help support growth and stabilize financial markets.

However, these measures are likely to remain modest. Credit growth will continue to be constrained by the massive debt overhang and the government’s commitment to deleveraging, at least in the medium to long term. On the other hand, the government’s stimulus efforts may well become more aggressive if trade tensions with the US (re)escalate and growth is seriously damaged.

5. Emerging market growth will decelerate to 4.6% in 2019

Some economies, including Brazil, India and Russia, experienced a mild pickup in growth in 2018, while others, such as Argentina, South Africa and Turkey, came under intense financial pressure and suffered recessions or near-recessions. Going forward, emerging markets face a number of headwinds, including slowing growth in advanced economies and in the pace of world trade; the strong US dollar; tightening financial conditions; and rising political uncertainty in countries such as Brazil and Mexico. A few countries will be able to buck these trends, especially dynamic economies with low levels of debt, notably in Asia.

6. Commodities markets could be in for another rollercoaster ride in 2019

Demand growth next year still looks strong enough to provide commodity markets with support, making the kind of price collapse seen during 2015 unlikely. However, volatility in commodity markets will continue in 2019, particularly in oil markets. We predict oil prices will rise a bit in the near term and average around $70.0 per barrel over the coming year, compared with an average $71.0 in 2018. That said, the risks to prices of oil and other commodities are predominantly on the downside, given slowing demand growth and rising supply. Despite volatility, we predict that by the end of 2019, prices will be little different from their current readings.

7. Global inflation rates will remain close to 3.0%

Most of the rise in consumer price inflation between 2015 and 2018 – from 2.0% to 3.0% – was due to a transition in the developed world from deflationary, or near deflationary, conditions to inflation rates that are close to central banks’ targets of 2.0%. Over the near term, we expect global inflation and developed economy inflation to remain close to 3.0% and 2.0%, respectively.

While there will be upward pressures in many economies as output gaps close and unemployment rates fall – in some cases to multi-decade lows – there are downward pressures as well. Outside the US, growth is weakening. Moreover, relative to 2018, commodity prices will be relatively flat on average in 2019. Finally, with the trade war in a “temporary truce”, the upward push from tariff increases will be on hold.

8. The Fed will raise rates, and a few other central banks may follow

With the world’s key economies at different points in the business cycle, it is not surprising that central banks are moving at different speeds and in different directions. However, given weaker growth and muted inflationary pressures, the pace of removing accommodation is likely to be even more modest than previously expected.

The US Federal Reserve is likely to raise rates three times in 2019. Other central banks, including the Bank of England (depending on the Brexit process), the Bank of Canada, and a few emerging market central banks – such as those in Brazil, India and Russia – may also raise rates.

The European Central Bank will not hike rates until early 2020. Similarly, we do not believe the Bank of Japan will end its negative interest rate policy until 2021. The People’s Bank of China is the one major central bank moving in the opposite direction; worried about growth, it is providing modest stimulus.

9. The US dollar will hold at current elevated levels for much of 2019

Continued above-trend US growth and more rate hikes by the Fed are the primary reasons for this anticipated strength. Given the recent relative calm in forex markets, especially relative to emerging market currencies, another big appreciation of the US dollar seems unlikely.

Nevertheless, the potential for volatility remains very high. Political uncertainty in Europe could be very negative for the euro and sterling; we expect that the euro/dollar rate will end 2019 at around $1.10, compared with $1.14 at the end of 2018. At the same time, we predict that the renminbi/dollar rate will hold fairly steady just below the psychological level of 7.0 – the result of the Chinese government’s desire for financial stability.

10. The risks of policy shocks have risen, but probably not enough to trigger a recession in 2019

Policy mistakes remain the biggest threats to global growth in 2019 and beyond. The simmering trade conflicts are dangerous, not because they have done damage so far – they haven’t – but because they could easily escalate and get out of control. In addition, rising budget deficits in the US, high debt levels in the US, Europe and Japan, and potential missteps by key central banks all pose threats to the global economy.

The good news is that the probability of such policy mistakes seriously hurting global growth in 2019 is still relatively low. However, IHS Markit believes that the risks of damage from policy mistakes will rise in 2020 and beyond, as growth slows further.

Understanding the National Minimum Wage Act- Jacques van Wyk / 10 January 2019

The National Minimum Wage Act 9 of 2018 (NMWA) came into effect on January 1, 2019.

It provides for, among others, a national minimum wage, the establishment of a National Minimum Wage Commission, a review and annual adjustment of the national minimum wage, and the provision of an exemption from paying the national minimum wage.

Who does it apply to?

The Act applies to all workers and their employers, except members of the South African National Defence Force, the National Intelligence Agency, the South African Secret Service, and volunteers who perform work for another person without remuneration. It applies to any person who works for another and who receives, or is entitled to receive, any payment for that work whether in money or in kind.

What is the national minimum wage?

The national minimum wage is R20 for each ordinary hour worked. There are, however, certain exceptions.

Farm workers are entitled to a minimum wage of R18 per hour. A ‘farm worker’ means a worker who is employed mainly or wholly in connection with farming or forestry activities, and includes a domestic worker employed in a home on a farm or forestry environment and a security guard on a farm or other agricultural premises, excluding a security guard employed in the private security industry.

Domestic workers are entitled to a minimum wage of R15 per hour. A ‘domestic worker’ means a worker who performs domestic work in a private household and who receives, or is entitled to receive, a wage and includes: a gardener; a person employed by a household as a driver of a motor vehicle; a person who takes care of children, the aged, the sick, the frail or the disabled; and domestic workers employed or supplied by employment services.

Workers employed on an expanded public works programme are entitled to a minimum wage of R11 per hour from a date that will be determined by the president in the Government Gazette. Expanded public works programme means a programme to provide public or community services through a labour intensive programme determined by the minister and funded from public resources.

Workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Act 97 of 1998 are entitled to the allowances contained in Schedule 2 of the Act.

Employer’s should note that within 18 months of the commencement of the NMWA (on January 1, 2019), the National Minimum Wage Commission will review the national minimum wage of farm workers and domestic workers, and within two years, will determine an adjustment of the applicable national minimum wage. The national minimum wage in respect of workers in the expanded public works programme will be increased proportionately to any adjustment of the national minimum wage.

How is the national minimum wage calculated?

The calculation of the national minimum wage is the amount payable in money for ordinary hours of work.

It excludes:

Any payment made to enable a worker to work – including any transport, equipment, tool, food or accommodation allowance, unless specified otherwise in a sectoral determination.
Any payment in kind including board or accommodation, unless specified otherwise in a sectoral determination.
Gratuities, including bonuses, tips or gifts.
Any other prescribed category of payment.
‘Ordinary hours of work’ means the hours of work permitted in terms of section 9 of the Basic Conditions of Employment Act 75 of 1997 (BCEA) (currently 45 hours per week) or in terms of any agreement in terms of section 11 or 12 of the BCEA. A worker is entitled to receive the national minimum wage for the number of hours that the worker works on any day.

An employee or worker who works for less than four hours on any day must be paid for four hours for that day.

This is applicable to employees or workers who earn less than the earnings threshold set by the minister over time, presently being R205 433.30. If the worker is paid on a basis other than the number of hours worked, the worker may not be paid less than the national minimum wage for the ordinary hours of work.

Any deduction made from the remuneration of a worker must be in accordance with section 34 of the BCEA, provided that the deduction made in terms of section 34(1)(a) of the BCEA does not exceed one quarter of a worker’s remuneration.

Does a worker have a right to the national minimum wage?

Every worker is entitled to payment of a wage not less than the national minimum wage. Employers will be obligated to pay workers this wage.

The payment of the national minimum wage cannot be waived and overrides any contrary provision in a contract, collective agreement, sectoral determination or law.

Must a worker’s contract of employment be amended in light of the Act?

The national minimum wage must constitute a term of the worker’s contract, unless the contract, collective agreement or law provides for a more favourable wage. Employers should thus, where applicable, amend their contracts of employment to make reference to the national minimum wage. An employer should note further that a unilateral change of wages, hours of work or other conditions of employment in connection with the implementation of the national minimum wage will be regarded as an unfair labour practice.

When do the provisions of the Act come into effect?

The Act came into operation on January 1, 2019.

Section 4(6) of the Act – which prohibits the payment of the national minimum wage being waived and further provides that the national minimum wage takes precedence over any contrary provision in any contract, collective agreement, sectoral determination or law – operates with retrospective effect from May 1, 2017.

Can an employer be exempt from paying the national minimum wage?

An employer or employer’s organisation registered in terms of section 96 of the Labour Relations Act 66 of 1995 (LRA), or any other law, acting on behalf of a member, may apply for exemption from paying the national minimum wage. The exemption may not be granted for longer than one year and must specify the wage that the employer is required to pay workers. The exemption process provided for in the regulations to the NMWA must be complied with when doing so.

An employer or a registered employer’s organisation may assist its members to apply to the delegated authority for an exemption from paying the national minimum wage.

The application must be lodged on the National Minimum Wage Exemption System.

An exemption may only be granted if the delegated authority is satisfied that the employer cannot afford to pay the minimum wage, and every representative trade union has been meaningfully consulted or if there is no such trade union, the affected workers have been meaningfully consulted. The consultation process requires the employer to provide the other parties with a copy of the exemption application to be lodged on the online system.

The determination of whether an employer can afford to pay the minimum wage must be in accordance with the Commercial, Household, or Non-Profit Organisations Financial Decision Process outlined in Schedule 1 of the Regulations to the NMWA.

The delegated authority may grant an exemption from paying the national minimum wage only from the date of the application for the exemption. The exemption must specify the period for which it is granted, which may not be more than 12 months.

The delegated authority must specify the wage that the employer is required to pay workers, which may not be less than 90% of the national minimum wage.

The delegated authority may grant an exemption on any condition that advances the purposes of the NMWA.

An employer exempted from paying the national minimum wage must display a copy of the exemption notice conspicuously at the workplace where it can be read by all employees to whom the exemption applies. Further, a copy of the exemption notice must be given to the representative trade union, every worker who requests a copy, and the bargaining council.

Any affected person may apply to the delegated authority for the withdrawal of an exemption notice by lodging an application on the online system in the prescribed format. Before the delegated authority makes the decision to withdraw an exemption notice, the delegated authority must also be satisfied that the employer has been consulted, and the representative trade union or affected workers have been given access to the application lodged.

If an exemption notice is withdrawn, the delegated authority must issue a notice of withdrawal on the Exemption System.

What is the role and responsibility of the National Minimum Wage Commission?

A National Minimum Wage Commission is established by the NMWA. The Commission must review the national minimum wage annually and make recommendations to the minister on any adjustment of the national minimum wage. The recommendations must consider: inflation, the cost of living and the need to retain the value of the minimum wage; wage levels and collective bargaining outcomes; gross domestic product; productivity; ability of employers to carry on their businesses successfully; the operation of small, medium or micro-enterprises and new enterprises; the likely impact of the recommended adjustment on employment or the creation of employment; and any other relevant factor.

Jacques van Wyk is a director and labour law specialist at Werksmans Attorneys.

The NMW exemption period is limited to 12 months-Department of Labour

The National Minimum Wage (NMW) exemptions will be limited to a maximum period of 12 months, Kekulu Padi: Assistant Director: Employment Standards, told the employers and employer organisations briefing session today, Tuesday 10, March 2018 at the Department of Labour’s Labour Centre in Port Elizabeth.

“The exemption system will be linked to the Unemployment Insurance fund, Compensation Fund, Department of Home Affairs and the South African Revenue Services. If granted, the exemption will be from the date of application and the period will be limited to a maximum of 12 months.” Padi said.

Padi said the advantage with the Department’s NMW exemption system is that it provides results of the application on the spot and there is no waiting period. She said the system will also provide reasons for the refusal and/or audit referral.

Before granting exemptions, the system will subject employers to an affordability analysis, focusing on liquidity status, profitability and solvency position. The system will not grant exemptions for applications that require immunity above the ten percent (10%) threshold of the national minimum wage. In addition, the system will provide for financial audit triggers as well as random audits. The financial audit triggers come in when information recorded into the system mismatch and random audits are done on randomly selected applicants. This will help determine as to whether the granted exemption is still relevant or needs to be withdrawn.

The system will require the employer’s particulars which will include full name of the employer, UIF reference, COIDA number, SARS number, company registration number, nature of business conducted, bargaining council details, address, personal and contact details.

The next employer briefing sessions will be held in Mpumalanga, one in Nelspruit at Promenade Hotel, c/o Samora Machel Drive and Hershall Street on March 12 and another one on March 13 at Piet Retief.

More briefing sessions are lined up for Limpopo (Tzaneen, March 16 and Polokwane, March 17) and the Free State ( Bloemfontein, March 19 and Bethlehem, March 20).

The sessions start at 10am and end at 1pm

Gigaba cancels urgent Monday meeting with PSA over use of GEPF funds to bail Eskom out

EWN reports that Finance Minister Malusi Gigaba on Monday cancelled an urgent meeting with the Public Servants Association (PSA) which was aimed at discussing various matters relating to the Government Employees Pension Fund (GEPF) and its investment manager the Public Investment Corporation (PIC).

The trade union is angry over the decision to bail out cash-strapped Eskom using GEPF funds and wants a labour representative to sit on the board of the PIC in order to safeguard workers’ money.  The PSA said that Gigaba’s postponement of Monday’s meeting once again indicated that the interests of public sector employees were not a priority.  The PSA’s Tahir Maepa stated:  “Today is the deadline that we gave to him to meet our demand for the reform of the PIC, so come this afternoon if this issue is not resolved, then obviously our attorneys will proceed with drafting papers to the court.”  The PIC is the investment manager of the GEPF and other statutory funds.

Agreement signed on Friday 26 January 2018 ends recent labour strike

The strike action at the University of South Africa (Unisa) has been called off with immediate effect following a protracted salary negotiation process, which commenced in August 2017. An agreement facilitated by the CCMA in terms of Section 150 of the Labour Relations Act, as amended, was reached on Friday 26 January 2018. This process has been conducted taking into account the financial situation of the university and the realities experienced by the sector as a whole.

The situation has been compounded by various factors affecting the fiscus as well as uncertainty linked to policy changes within the sector. The latest fee free higher education is yet to be clearer in terms of this impact later this year.

Against this backdrop it is clear that the negotiations remained challenging. Consequently, Unisa continues to seek an optimal balance amongst these demanding challenges to ensure institutional agility and efficacy.

In terms of the collective agreement signed by the parties, permanent and fixed-term employees will receive a differentiated salary increase of 7.5% and a special dispensation for the insourced employees.

The Principal and Vice-Chancellor, Professor Mandla Makhanya, thanks Unisa staff for their continued commitment and patience during this period.

Why skills mismatch and joblessness stem from failed education system

The unmet skills demands for labour in a country in which 7% of university graduates and 33% of Technical Vocational Education and Training (TVET) college graduates are unemployed illustrate the disjuncture between the education system and the world of work.  The youth unemployment rate is more than 38%, but recruitment specialists are desperate for solutions as vacancies remain unfilled due to the scarcity of suitable candidates for occupations in high demand.  Yet, the list of occupations in high demand was last released in 2016.  An undertaking to update its contents in 2017 was not fulfilled.  The Department of Higher Education and Training (DHET), which is supposed to collate all data provided by the Department of Labour and other contributors of skills required for the economy, has seemingly not met its mandate to guide the career choices of students and inform allocations by the National Skills Fund, sector education training authorities (Setas) and other bursary providers.  Additionally, Transman CEO Angela Dick, who is also a Business Unity SA director, says the practical skills that industry and business need are not forthcoming from institutions of higher learning.  Nonetheless, in December the DHET invited public comment on the proposed National Skills Development Plan, which was developed to improve the integration of the post-school education and training system and the interface between it, tertiary education institutions and the world of work.

Department of Labour resumes national worker briefing sessions on introduction of NMW and amendments to the BCEA and LRA

The Department of Labour’s national series on worker engagement/briefing sessions on the implementation of the national minimum wage (NMW) and amendments to labour legislation are set to resume this week.

The Department’s next worker briefing sessions will be on 18 January 2018 at Emnotweni Tsogo Sun Casino – 15 Government Boulevard Riverside Park Extension 1 in Nelspruit; and on 19 January 2018 at Protea Hotel Marriot Emalahleni – 167 Jellicoe Street in Witbank.

The objective of the worker briefing sessions it to ensure that the NMW as a new labour policy intervention instrument is communicated to all the intended beneficiaries (workers). This also includes educating the workers on the implications of proposed amendments to the Basic Conditions of Employment Act (BCEA), the Labour Relations Act (LRA), the Accord on Collective Bargaining and Industrial Action and the Code of Goo Practice on Collective Bargaining, Industrial Action and Picketing.

The worker engagement/briefing sessions started on 9 November 2017. The briefing sessions are targeting all sectors of the economy. Since the start of the roadshows – NMW and labour amendment briefing sessions have been held in Johannesburg, Pretoria, Cape Town, George, Pietermaritzburg, Richards Bay, Durban, Tzaneen, and Polokwane.

The National minimum wage is scheduled for implementation from 1 May 2018. The agreed national minimum wage at NEDLAC is pegged at R20 an hour for major sectors, with the exception of sectors such as farm workers, and domestic workers.

More worker NMW and labour amendments briefing sessions are still to be held in Klerksdorp (25 January), Rustenburg (26 January), Bloemfontein (01 February), Welkom (02 February), Umtata (07 February), East London (08 February), Port Elizabeth (09 February), Upington (15 February), and culminating in Kimberley on (16 February).

The briefing sessions on NMW and amendments to labour laws are held from 10-13:00.

Most SA-born junior doctors placed in internships, but fate of foreign graduates unclear

Although most SA-born junior doctors have been placed in a public hospital, albeit with complications, the future remains unclear for foreign graduates with permanent residency in SA.  Farah Jawitz of the Junior Doctors’ Association of SA (Judasa) said that most graduates had been placed and started their duties last week.  She could not give a final figure of those still unplaced by Friday.  “The small number of South African doctors who haven’t been placed yet are as a result of administrative errors and miscommunication,” Jawitz indicated.  The plight of medical graduates came to a head last month, just weeks before they were meant to begin their community service.  The issue stemmed from a lack of funded posts and insufficient accredited hospitals to host and train the medical graduates.  Meanwhile, when some excited junior doctors reported for work at Helen Joseph Hospital, in Johannesburg, on 1 January they were shocked to learn that there wasn’t anywhere for them to stay.  They were told that those who had completed their internships had not yet vacated their rooms and that the new juniors must confront the seniors and tell them they needed the rooms.