EPWP Phase II

Background to EPWP II• The first phase of the Expanded Public Works Programme

achieved its targeted 1 million work opportunities a year ahead of schedule

• The second phase of the EPWP will scale up further to contribute significantly to halving unemployment by 2014

• Cabinet approved the high level proposals for EPWP II in June 08 and the Business Plan at the Lekgotla in January 2009

• R4.1 billion was allocated in the form of an incentive over the MTEF to scale up the EPWP outcomes.

• Agreement at the PCC for DPW to set targets for provinces and municipalities and for them to report to DPW

• EPWP II implementation to start on 1 April 2009.

SONA address President JG Zuma – 3 June 2009

As part of Phase 2 of the Expanded Public Works Programme, the Community Work Programme will be fast-tracked.

Another important element of our drive to create job opportunities is the Expanded Public Works Programme (EPWP). The initial target of one million jobs has been achieved.

The second phase of the programme aims to create about four million job opportunities by 2014.

Between now and December 2009, we plan to create about 500 000 job opportunities

Given SONA and Economic Crisis: EPWP is a national priority and key component of government crisis response

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To create 4 million work opportunities for poor and unemployed people in South Africa so as to contribute to halving unemployment by 2014, through the

delivery of public and community services.

EPWP to enable government to act as an employer of last resort as part of the Anti-Poverty Strategy

Goal of EPWP Phase II

Critical Success Factors for EPWP II

• Make creation of paid work the primary objective of the programme (Employer of last resort)

• Locate clear political and administrative accountability for EPWP job creation targets across all spheres of government

• Align EPWP outputs with the core mandates and programmes of implementing public bodies

• Provide fiscal incentives to accelerate scaling up of EPWP outputs across all spheres of government

• Mobilise non-state capacity to deliver additional EPWP work opportunities

Key Components of EPWP II1. Targets and accountability across Government

– Each public body to have annual job creation targets– Political and Administrative heads to commit and held

accountable for achieving these targets

2. EPWP Incentive Grant a) Incentive grant for public bodies to create EPWP

employment through providing R50 for every person-day of work created above a set minimum threshold

b) Phased in over the next two years to other sectors, provinces and municipalities

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Key Components of EPWP II3. Non-State sector

– Mobilise the capacity outside the state (capacity of NGOs, CBOs, non-profit organisations) to create work for EPWP targets group

– Work will focus on a wide range of activities as indentified by local communities or the NGO’s and CBO’s

– Funding provided on the basis of the wage incentive

4. Technical Support to spheres, sectors and implementing bodies

– Implementing bodies requiring capacity can access support through the EPWP Unit and other support programmes like the Technical Assistance Unit from National Treasury

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1-Targets and Accountability

1-Targets and Accountability across all spheres of Government

Overall Phase II targets will be distributed across all spheres of government and the five year period so that: Each public body has a clear target for each financial year It is clear which programmes/ activities of the public body are

expected to contribute to the target The targets are adjusted annually over the MTEF in line with

budgets available and the performance of each public body Targets are calculated by applying an employment factor in FTE

per Rand million to grants received by public bodies Respective political and administrative heads to be held

accountable for achieving respective targets EPWP Unit to manage the setting, monitoring and

feedback process for performance in relation to all targets

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Phase II targets in 100-day work opportunities broken down per sphere

of government  Local Provincial National Non-State Totals

2009/2010 182 607 247 325 100 068 20 000 550 000

2010/2011 208 032 281 720 104 248 48 000 642 000

2011/2012 267 920 370 420 133 660 96 000 868 000

2012/2013 349 129 501 283 183 588 176 000 1 210,000

2013/2014 440 721 659 286 249 994 300 000 1 650 000

Totals 1 448 409 2 060 034 771 557 640 000 4 920 000

Breakdown of Targets for EPWP phase II for different sectors (work opportunities)

Year Infrastructure

Environmental

Social Non-state Total

09/10 300,000 150,000 80,000 20,000 550,000

10/11 342,000 156,000 96,000 48,000 642,000

11/12 440,000 200,000 132,000 96,000 868,000

12/13 572,000 275,000 187,000 176,000 1,210,000

13/14 720,000 375,000 255,000 300,000 1,650,000

Total 2,374,000 1,156,000 750,000 640,000 4,920,000

Phase II targets in 100-day work opportunities broken down per

ProvinceE Cape Free

State Gau-teng

KZN Lim Mpum N Cape North West

W Cape Totals

2009/10 32,078 18,115 36,618 50,680 30,649 19,505 13,031 31,763 23,807 247,325

2010/11 36,034 20,544 43,398 57,999 34,578 22,094 14,629 36,592 27,462 281,720

2011/12 46,798 26,979 56,023 76,373 45,142 28,993 19,085 48,226 35,560 370,420

2012/13 62,506 36,533 90,097 103,323 60,691 39,234 25,705 64,912 50,171 501,283

2013/14 81,326 48,124 118,581 135,713 79,439 51,660 33,744 84,939 66,769 659,286

Totals 258,741 150,296 344,717 424,089 250,499 161,487 106,193 266,432 204,770 2,060,034

Phase II targets in 100-day work opportunities for Local Municipalities by

Province Province 2009/2010

2010/2011 2011/2012 2012/2013 2013/2014

Eastern Cape 28,559

32,557

41,886

54,452

68,541

Free State 11,661

13,294

17,103

22,234

27,987

Gauteng 32,204

36,712

47,232

61,402

77,289

KwaZulu-Natal 38,201

43,549

56,027

72,836

91,681

Limpopo 23,497

26,787

34,462

44,801

56,393

Mpumalanga 12,212

13,922

17,911

23,285

29,309

North West 15,303

17,445

22,444

29,177

36,727

Northern Cape 3,678

4,192

5,394

7,012

8,826

Western Cape 11,523

13,137

16,901

21,971

27,656

Total 176,837

201,595

259,361

337,170

424,410

Actual performance April 08 - Dec 08

Planned targets to meet SONA Dec 09

SocialSector

60 021 60 000

Environment 79 542 100 000Infrastructure 255 300 300 000

Non state; CWP 3 000 50 000

Non state: NGO 10 000

Economic Sector 5 474

Totals 403 337 520 000

Acceleration of EPWP to meet SONA December 2009 Work Opportunity Targets

1-Targets and Accountability across all spheres of Government• Targets have been set for each Sphere of Government – and

for each Sector• Implementation Protocols will be signed between the Minister

of Public Works and the Premier of each Province committing them to agree, meet and report on targets over the next five years - Ministerial Event with Premiers (TBD)

• This will take place between now and mid July and will be Managed by the EPWP Partnership Development Directorate

Support for EPWP II planning• EPWP will assist public bodies to identify gaps between

targets and planned projects • Public bodies may request technical support from DPW to

work in the Province• All identified programmes commence reporting on the web

based reporting system, supported by the EPWP Monitoring and Evaluation Unit

1-Targets and Accountability across all spheres of GovernmentDetail of the Protocol• Purpose of the protocol:

– To establish an agreed framework for cooperation and coordination between the Parties to achieve EPWP objectives

– To promote the objectives of the EPWP by mainstreaming the use of labour-intensive employment

– To confirm the Province/ Municipality’s agreement and commitment to achieving the targeted number of full time equivalent jobs in the Province/ Municipality

• Specify the institutional structures that will oversee, monitor and report on EPWP progress

• Obligations and roles of relevant parties– Planning to meet targets– Comply with the rules of the programme in terms of reporting timelines

and audit requirements – Monitoring roles

2-EPWP Incentive Grant to Provinces and Municipalities

2- EPWP Incentive Grant• EPWP Phase I had a specific stipulation attached to the

Municipal Infrastructure Grant and the Infrastructure Grant to Provinces to implement such projects using “labour intensive methods”

• Follow through on EPWP principles and guidelines uneven• EPWP Incentive Grant aims to reinforce and reward public

bodies that actually implement labour intensive methods or increase the labour content of infrastructure delivery

• What is the basis of the Grant? Three key factors built into grant formula: – Aligned to the share of the unemployed in each province– Rural bias built into the allocations– Built in a ‘reality check’ to account for past performance on EPWP

specifically• R3.2 billion has been allocated to DPW over the MTEF to pay out the

incentive to public bodies and this is expected to grow to at least R5 billion by 2014

2- EPWP Incentive Grant - eligibility• How was Eligibility determined? In order for provinces and

municipalities to be eligible for the incentive grant, must meet 2 sets of criteria:– 1. PBs have to report EPWP performance on projects to DPW in a prior financial

year– 2. Meet minimum job creation targets based on the available infrastructure grant

budgets • Agreements: Eligible public bodies will enter into agreements with

DPW which will specify:– Targets to be met by the public body and the allocation that can be claimed for

EPWP work created– Reporting and verification and audit requirements

• Basis of payment: – While indicative performance targets and incentive amounts are set for each

eligible public body, they will only be able to claim the incentive upon proving that work has been created

– The EPWP incentive is based on paying all public bodies that create work above a minimum threshold for the EPWP target group an incentive of R50 per day for every day of work created.( Rural Municipalities do not have a minimum threshold).

2- EPWP Incentive Grant• Appropriation of funds

• Eligible public bodies should take into account in the planning processes; the fact that if they meet their job creation targets, they will receive the incentive allocation through a quarterly payment by DPW

• This payment should be used for any job creation programmes

• Basis for measuring EPWP performance• Number of FTEs per million Rand of the infrastructure grant

budget, taking into account the different portfolios of infrastructure and the rate at which each can contribute to job creation

• Each public body must meet a minimum eligibility threshold before they can start accessing the incentive (zero threshold applies to rural municipalities)

• The incentive is not paid out for work created below the eligibility threshold, but is paid for all work created above this threshold

EPWP Fiscal incentive allocation over the 2009/10 MTEF

2009/10R’000

2010/11R’000

2011/12R’000

TOTALR’000

Provinces 151,419 400,000 800,000 1,352,419Municipalities 201,748 554,000 1,108,000 1,863,748Non-State Sector 80,500 359,621 308,740 748,861Provision for Capacity to NDPW

22,033 33,149 56,000 111,182

Administration provision for intermediary for Non-state sector

9,500 21,030 18,360 48,890

TOTAL 465,200 1,367,800 2,291,100 4,124,100

2.1. Incentive Grant for Provinces

• The average Full Time Equivalent for the different infrastructure portfolios (e.g. Roads, Public Works, Education, Health) was

considered in calculating the incentive amounts • Full incentive amount = (FTE Performance Target – FTE

minimum threshold) X R50 per day X 230 days per FTE• DORA amount = 75% X Full incentive amount, because only 3

payouts fall into the 2009/10 financial year. Q4’s payment will fall into 2010/11.

• 4 Provinces, Western Cape, Gauteng, Limpopo and Northern Cape did not meet the FTE minimum threshold and were allocated a nominal incentive amount of R500,000.

• Total Incentive allocation to Provinces is R151 million for the 2009/10 financial year.

2.2 Fiscal incentive to Municipalities• In order to cater for rural municipalities in line with comments

from the Select Committee on Finance, the following was resolved: • That rural (non-urban municipalities, defined as those not

falling into the 9 cities as per the SA Cities Network) will have a zero minimum threshold. This means that rural municipalities will be paid for every FTE Job created from the very first one.

• Full incentive amount = (FTE Performance Target – FTE minimum threshold) X R50 per day X 230 days per FTE

• DORA amount = 50% X Full incentive amount, because only 2 payouts fall into the 2009/10 financial year. Q3 and Q4’s payment will fall into 2010/11.

• 68 municipalities will receive the incentive and 6 metros• 10 ISRDP nodes will be covered.• Total incentive allocation to municipalities is R201.7 million,

of which R147.2 million will go to rural municipalities and R54.5 million to Metros.

2.2 Fiscal incentive to Municipalities cont…• According to reports, at least an additional 25

Municipalities will become eligible for the 2010/11 financial year. Work being done to ensure more municipalities report so that they become eligible for incentive.

3- Wage Incentive for the Non-state Sector

3- Non-State Sector Wage Incentive• Phase II of the EPWP will also see the introduction

the wage incentive to non-state bodies like NGO’s, CBO’s and other non-profit organisations whose activities also create work for the EPWP target group

• R80 million of the wage incentive has been allocated to the non-state sector for 2009/10 and R749m over the MTEF

• The sector is projected to grow rapidly as many existing non-state programmes have the potential to grow rapidly through the injection of the wage incentive

• The non-state sector will be managed by DPW with oversight from other key departments, but will be implemented with the assistance of an intermediary

3- Non-State Sector• Two sets of programmes will be implemented:

• Area based programmes: – These will include programmes targeted at a specific area that will

generally involve a large range of different activities identified as necessary and beneficial work by the community in consultation with local government.

– For 2009/10, this will only involve the expansion of the Community Works Programme pilot programmes.

• Institutional based programmes: – These will include programmes to be delivered by non-state bodies

that have a specific focus area such as health care, child care, community safety, etc.

– For 2009/10, a pilot will be initiated by DPW through an intermediary to explore funding projects that will provide a social service and create jobs in the process.

Concluding thoughts• Employment creation remains the key priority of

government and the EPWP remains the most important vehicle for government to directly create employment for the poor

• Strong political leadership on the EPWP has proven to be critical in Phase I of the programme and will be equally important in Phase II

• The introduction of a framework to increase accountability on EPWP performance and a fiscal incentive to reward performance and increase budgets for those that are performing, is expected to provide a huge boost to increasing the scale of the EPWP over the next five years.