Picture: ISTOCK
Picture: ISTOCK

Productivity SA, the Department of Labour entity responsible for helping struggling companies reverse their fortunes, has found itself in a financial crisis that could force it to retrench staff.

The agency, whose mandate is to promote employment growth and productivity, says its turnaround solutions programme, the department’s flagship initiative for job retention, faces collapse should its cash crunch persist.

Staff have already approached the South African Parastatal and Tertiary Institutions Union (Saptu) amid indications that the entity will not be able to pay March salaries.

The financial crisis stems from the failure by the Unemployment Insurance Fund (UIF), which is a major financial contributor, to transfer R59m it had committed to Productivity SA.

This week the Department of Labour transferred R9.7m to help Productivity SA cover its operational costs.

However, Productivity SA CEO Mothunye Mothiba said the organisation will require more assistance to stay afloat in the long run.

Productivity SA cannot fail as it is carrying out an important mandate
Sthembele Tshwete
Labour minister spokesman

"Should the funding challenges remain unresolved, Productivity SA will be left with no other option but to suspend the services of the Turnaround Solutions Programme indefinitely and to initiate a retrenchment consultation process with employees," he said.

Business Day understands that the reason the UIF decided to withhold funds from Productivity SA was that the agency had misspent money allocated to it in the past.

In 2015, it was found that Productivity SA had failed to fully account for R36m of funds provided by the UIF.

"The UIF did not want to transfer the money because they do not trust the entity to use it for what it is intended.

"At the end of the day, this is workers’ money and it cannot be wasted," said a Labour Department source.

Saptu general secretary Ben van der Walt said despite Labour Minister Mildred Oliphant having raised the issue several times, it remains unresolved.

Oliphant has assured the Productivity SA management on a number of occasions that the matter would be resolved.

The labour minister’s spokesman, Sthembele Tshwete, told Business Day on Monday that Productivity SA could not fail as it was carrying out an "important mandate".

He said the department would ensure no retrenchments take place at the agency.

The agency’s mandate is to enhance the productive capacity of SA through promoting a culture of productivity in workplaces; developing relevant productivity competencies; facilitating and evaluating productivity improvement and competitiveness in workplaces; maintaining a database of productivity and competitiveness systems, as well as publicising these systems; and undertaking productivity-related research and support initiatives aimed at preventing job losses.