DEPARTMENT OF PUBLIC WORKS

BUSINESS PLAN FOR

AN EXPANDED PUBLIC WORKS PROGRAMME JULY 2003

CONTENTS

EXECUTIVE SUMMARY i-iv PREAMBLE 01

1.0 INTRODUCTION 01

1.1. Economic and social context 01

1.2. Labour-intensive infrastructure programmes (LIIPs) 02

1.3. Labour-intensive infrastructure programmes in the South African context 03

1.4. Black economic empowerment through the LIIPs 05 2.0 NATIONAL PUBLIC WORKS PROGRAMMES 05

2.1. Requirements for successful public works programme 05

2.2. Favourable conditions now in place in South Africa 06

2.2.1. Political consensus and accumulated experience 06

2.2.2. Labour framework 07

2.2.3. Skills development framework 07

3.0 EXPANDED PUBLIC WORKS PROGRAMME 07

3.1. Accelerated public works programme (APWP) 08 3.2. Labour-intensive infrastructure programme 09

3.3. Jobs from labour-intensive infrastructure programmes 10

3.3.1. Possible budgets for targeted infrastructure 11

3.3.2. Employment creation from the labour-intensive

construction of the targeted infrastructure 13

3.4. Summary of overall job creation from the EPWP 15

4.0 TARGETING 16

5.0 TRAINING 17 6.0 INSTITUTIONAL FRAMEWORK 17 7.0 FINANCIAL IMPLICATIONS 21 8.0 PROGRAMME OF IMPLEMENTATION 21

8.1. Setting up the Expanded Public Works Programme Unit 22 8.2. Accelerated Public Works Programme 22 8.3. Capacity building for the LIIPs 22 8.4. Briefing sessions of various local` provincial, national

and parastatal institutions 22

8.5. Launch the Expanded Public Works Programme 22

9.0 CONCLUSION 22

ANNEXURES Annexure 1 – A selection of best practice public works

Programmes 25

TABLES Table 1- Approximate current employment levels in

selected programmes 08 Table 2- Growth in employment from the Accelerated

Public Works Programmes 09 Table 3- 2002/03 municipal budgets for civil infrastructure (including grants) 11

Table 4- Medium-Term Expenditure Framework (MTEF) grants to municipalities 12

Table 5- Estimated MTEF projections for civil infrastructure

in municipal budgets 12

Table 6- MTEF provincial roads budgets 12 Table 7- Projected estimated possible budgets for

labour-intensive projects 13 Table 8- Labour coefficients for targeted infrastructure 14

FIGURES

Figure 1- Jobs from the Expanded Public Works Programmes 15

BIBLIOGRAPHY 28

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EXECUTIVE SUMMARY

In December 2002 the ANC Conference resolved:

An expanded public works programme must be a major priority … providing infrastructure, in particular basic social and municipal services through labour-intensive methods to maximise job creation and skills development.

And in his State of the Nation speech in February 2003, the President stated that:

… the government has decided that we should launch an expanded public works programme. This will ensure that we draw significant numbers of the unemployed into productive work, and that these workers gain skills while they work, and thus take an important step to get out of the pool of those who are marginalised…

INTRODUCTION In the first decade of democracy in South Africa the processes of economic decline that were a legacy of the apartheid era have been reversed. Nonetheless, much more remains to be done. South Africa has experienced a persistent structural unemployment problem with associated poverty and vulnerability. Some 7.8 million South Africans are not in regular waged employment. About 5.6 million of these people are between 15 and 34 years old. Unemployment is a terrible waste of human potential and a source of human suffering. It also contributes to social pathologies such as crime and in the longer term could threaten political and social stability. International experience has shown that vital processes of economic reform of the kind embarked on in South Africa stand a better chance of long-term success if they are supported by transitional measures, which provide support to economically marginalised groups. Public works programmes (PWPs) are an example of a transitional measure that is particularly well suited to the South African context.

PUBLIC WORKS PROGRAMMES Since 1994 the government has been committed to achieving a major reorientation of public expenditure through PWPs. But in a context of major political restructuring, an

uncertain legal framework, inadequate levels of training, numerous inherited deficiencies and difficulties, and multiple demands on a new government, the programme has failed to gather momentum. Now, however, conditions are more favourable for a successful programme:

• There is clear political support for the expanded public works programme

(EPWP) to be implemented.

• A conducive labour framework, in the form of a code of good practice for special

PWPs, has been gazetted by the Department of Labour.

• At the Growth and Development Summit (GDS) 2003, agreement was reached between social partners on the need for an expanded public works programme.

• A qualifications framework for labour-intensive construction is already being put

in place under the National Qualifications Framework. Local and international experience has also established best practices for public works programmes, which can be drawn on in the development of the EPWP. These include:

• consistent political support and multi-year budgeting; • strong institutions to manage and coordinate the programme; • linking the speed of implementation to the pace of capacity building; • establishing quantifiable specific objectives; and • creating effective monitoring and evaluation systems at the outset.

EXPANDED PUBLIC WORKS PROGRAMME In the South African context the EPWP will create and/or maintain a socially and/or economically useful infrastructure while simultaneously alleviating unemployment. It will reduce alienation amongst the unemployed while providing exposure to the work place and contributing to skills development. It will be a suitable transitional measure which can be phased out quickly at the appropriate time. Comparative and local evidence shows that it will be effective in targeting the poor.

Less capital-intensive methods will reduce barriers to access for emerging contractors. As a result the EPWP will make a significant contribution to black economic empowerment in construction. The EPWP will have a significant impact, but it will not be the only solution to the problems of unemployment and poverty, should be seen as only one of an

array of initiatives. The EPWP will consist of two elements, namely: the accelerated PWPs and the labour-intensive infrastructure programme.

ACCELERATED PWPs

The accelerated programme will focus on the expansion of existing best-practice PWPs in South Africa, such as Working for Water, Zivuseni, and Zibambele.1 These PWPs involve work which is conventionally labour-intensive. The relatively low new capacity building requirements of this programme will result in the rapid delivery of jobs. Within a year approximately 90000 jobs2 will be created, and, by the third year of the programme, 170000 jobs will be created each year.

LABOUR-INTENSIVE INFRASTRUCTURE PROGRAMME (LIIP)

The LIIP will involve an expansion of the use of economically efficient labour-intensive construction techniques in the implementation of government-funded infrastructure projects. This would involve substituting labour for machines in works which are conventionally machine-intensive. It would also involve the promotion of technical designs for government-funded infrastructure projects that are more conducive to employment creation. For example, designs that enable the local manufacture of materials for construction projects. There is ample evidence both internationally and locally that these techniques, if properly used, are competitive in terms of cost and quality. There is overwhelming evidence of their effectiveness in creating additional employment. Thus, if existing budgets are re-oriented to labour intensive construction, a significant expansion of employment will be achieved without placing additional demands on the fiscus. The LIIP will also draw on local best-practice models, such as Gundo Lashu in Limpopo. South Africa has large backlogs of civil infrastructure in previously disadvantaged areas with high unemployment rates. Much of this civil infrastructure is suitable for a LIIP. The LIIP will therefore focus on provincial and municipal infrastructure such as roads, drainage, and water and sanitation reticulation infrastructure. According to the current Medium Term Expenditure Framework (MTEF), approximately R2-billion per annum will be spent on this type of infrastructure through the various provinces and municipalities. Through the use of labour-intensive construction methods, this R2-billion expenditure will result in 135000 jobs being created per annum. If machine-intensive 1 This is by no means an exhaustive list. 2 ‘Job’ means a work opportunity for a person for a certain period. The length of the period depends on the nature of the particular PWP programme, but is usually between six months and a year.

methods were used for this R2-billion, approximately 25000 jobs would be created per annum. Therefore, the introduction of labour-intensive construction methods for this targeted infrastructure will result in an additional 110000 jobs per annum.

INSTITUTIONAL ISSUES A unit focused on promoting labour intensive approaches within the construction sector will be established in the national Department of Public Works to co-ordinate and drive this process across the spheres of government, and to facilitate the development of the requisite capacity for labour-intensive construction. The unit will produce guidelines to advise departments and municipalities on how to procure projects and ensure that they are labour-intensive. The unit will also play a role in facilitating the rapid expansion of the existing best-practice PWPs under the accelerated PWP. The unit will be staffed by experts in the field. It will tap local expertise but will also seek assistance from international organisations such as the International Labour Organisation (ILO), which has long experience of public works programmes and labour-intensive approaches both in South Africa and internationally. As the number of professional engineers and contractors qualified in labour-intensive construction methods increases, the unit will work closely with the National Treasury to introduce gradually the conditions necessary for funding the infrastructure. There will be two key conditions. The first will be that provinces and municipalities will only appoint contractors and engineers for LIIP projects who have proper qualifications in labour-intensive construction. The second is that a proportion of infrastructure funds will be tendered as labour-intensive projects using the EPWP Unit tendering guidelines. Incentives will also be provided by making available additional funding to programmes demonstrably delivering within the required framework.

FINANCIAL IMPLICATIONS No additional funds will be required for the expansion of the use of labour-intensive construction methods. The projects will fall under this part of the EPWP are already funded under the MTEF and form part of the transfers from National Treasury to provinces and municipalities. The expansion or acceleration of existing PWP initiatives will require additional funding for the government bodies implementing these programmes, and this will need to be budgeted for.

CONCLUSIONS While the EPWP will make an important contribution, it will not solve the problems of unemployment and poverty in South Africa. Rather, it should be viewed as one of an array of government-led interventions aimed at addressing unemployment and poverty. The EPWP will focus particularly on unemployed, able-bodied but unskilled adults, who are not being reached by other aspects of the government’s social security net, such as social grants. It should therefore be seen as complementary to other components of the government’s social security net.

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PREAMBLE In December 2002 the 51st National Conference of the ANC resolved that an ‘Expanded Public Works Programme must be a major priority and be designed to make a significant contribution to reducing unemployment and providing livelihoods for the poor, women, youth and people with disabilities’. A key focus should be on: ‘Providing infrastructure, in particular basic social and municipal services through labour intensive methods to maximise job creation and skills development’. In his 2003 State of the Nation address, President Thabo Mbeki stated that

…the government is perfectly conscious of the fact that there are many in our society who are unable to benefit directly from whatever our economy is able to offer…. it…includes people who are unskilled and those with low levels of education in general. This reflects the structural fault in our economy and society as a result of which we have a dual economy and society. The one is modern and relatively well developed. The other is characterised by underdevelopment and an entrenched crisis of poverty. … the government must act to ensure that we reduce the number of people dependant on social welfare, increasing the numbers that rely for their livelihood on normal participation in the economy. This is also especially relevant to the accomplishment of the goal of enhancing the dignity of every South African.

…further improvement in the quality of the lives of our people also requires that we take new measures to increase the volume and quality of our investment in the social infrastructure. This includes such areas as housing and municipal infrastructure, hospitals and clinics, schools, roads, water, electricity and government facilities.

…To address this investment in social infrastructure, the government has decided that we should launch an expanded public works programme. This will ensure that we draw significant numbers of the unemployed into productive work, and that these workers gain skills while they work, and thus take an important step to get out of the pool of those who are marginalised…we will use the Expanded Public Works Programme to provide on-the-job training to the workers that will carry out this programme. Again this will concentrate on the section among our working people that is marginalised by virtue of low educational and skills levels.

The President indicated that additional resources would be set aside to meet this obligation.

1. INTRODUCTION 1.1. Economic and social context In the first decade of democracy in South Africa the processes of economic decline, which were a legacy of the apartheid era have been reversed. Several important conditions for improved economic performance are now in place including macro-economic stability, sound public finances and a robust legal and financial infrastructure. Nonetheless, much more remains to be done. South Africa has experienced a persistent structural unemployment problem and associated poverty and vulnerability. The pace of investment, job creation, productive asset distribution and institutional development remains inadequate to overcome the legacy of disadvantage and marginalisation that keeps millions of people out of the mainstream of economic opportunity and progress (Government’s position paper on the Growth and Development Summit, (GDS) 2003). The government has created an admirable framework for long-term economic growth, but in the short to medium term South Africa has to manage profound economic and social challenges. Perhaps the most acute of these are high levels of unemployment. Some 7.8 million South Africans are not in regular waged employment. Around 5.6 million of these people are between 15 and 34 years old (CDE 2003). Unemployment is a terrible waste of human potential and a source of human suffering. It also contributes to social pathologies such as crime and, in the longer term, could threaten political and social stability. International experience has shown that vital processes of economic reform of the kind embarked on in South Africa stand a better chance of long-term success if they are supported by transitional measures which provide support to economically marginalised groups. 1.2. Labour-intensive infrastructure programmes (LIIPs) It is important to distinguish economically efficient LIIPs from economically inefficient labour extensive programmes. In the apartheid years South Africa witnessed a number of programmes of the latter type which, although they provided some temporary employment, were wasteful and did not lead to the creation of lasting or significant assets. Economically efficient LIIPs are very different. They are ‘based on the economically efficient employment of as great a proportion of labour as is technically feasible… to produce as high a standard of construction as demanded by the specification. In short, [labour-intensive construction] techniques substitute labour for machinery where it is technically and economically possible to do so but do not compromise the quality or cost of the asset which is produced’ (McCutcheon 2001). They are about reorienting mainstream government expenditure on infrastructure so that it is designed, built and

maintained using socially appropriate technology, not about doing work which would not normally have been prioritised. There is ample evidence both internationally and locally that labour-intensive techniques can compete in cost terms with machine-intensive methods (Standish 2001; Taylor 1999). There is also ample evidence of their effectiveness in creating additional employment. In South Africa and elsewhere it has been shown that labour-intensive road building methods generate between two and eight times as much employment of unskilled labour as equipment based methods, depending on the construction methods used and the type of roads being built. If it is done effectively, this additional employment creation is achieved at no extra cost. There is also evidence that substantial increases in employment can be achieved by choosing designs for infrastructure which are more appropriate for local employment generation. For example, in some circumstances there is potential for sustainable local employment creation through the local manufacture of building materials for low-cost housing programmes or for school building programmes. Another example is to choose brick rather than pre-cast manholes to increase local employment creation in the civils works associated with housing projects. Over the years there has been large investments (‘sunk costs’) in the development of the established machine-intensive construction industry. These have included research and skills development for machine-intensive technology. Similarly, in order to implement economically efficient labour-intensive construction methods, it is also necessary to invest in the development of a labour-intensive construction industry. The successful reorientation of a portion of government’s expenditure on infrastructure therefore requires a government-led process of industry development. There is also good evidence of the macro-economic benefits of LIIPs. They generate about twice the additional national output of equipment-based methods. Over two-thirds of this is the result of indirect effects. They have a similar impact on household income, consumption and investment. They put less pressure on fiscal operations and save a significant amount of foreign exchange (Taylor 1999; McCord 2002). Both the cost advantages and the employment generating potential mean that if existing budgets are reoriented to labour intensive construction a significant expansion of employment will be achieved. The fact that LIIPs will be supported by funds, which had been designated for infrastructure also means that a substantial amount of additional employment will be created without additional demands on the fiscus. Economically efficient LIIPs will also result in any additional funding having a considerably magnified impact on employment creation. 1.3. Labour-intensive infrastructure programmes in the South African context In South Africa, labour-intensive infrastructure programmes are a particularly appealing option because they can create and maintain socially useful and economically vital

infrastructure while providing employment and skills development. In South Africa access to wage income is a key determinant of poverty, because of the high reliance on remittances, low levels of subsistence activity and a small informal sector. LIIPs can be used carefully to target unskilled people with little or no other income, to give them a chance to participate in the economy, to make a contribution to the development of the country, to earn income, gain valuable experience of the workplace, and obtain some skills development. South Africa, with major deficits in infrastructure especially in poor areas with high levels of unemployment is especially well suited to initiatives of this kind. LIIPs will provide jobs for unskilled local people who otherwise have little prospect of employment. These jobs are temporary. We use ‘job’ in this document to mean a period of employment of approximately six months.2 LIIPs are also a suitable transitional measure in that they can be phased out quickly once the conditions that prompted their establishment have altered. It is important to recognise that an expanded public works programme will not solve the unemployment problem in South Africa. Such a programme should be viewed as one of an array of government-led interventions aimed at addressing high levels of unemployment and poverty, with a particular focus on able-bodied but unskilled adults. It cannot directly cater to the needs of those too young, too old, too weak, or too ill to work. Comparative experience suggests that the basic needs of these individuals have to be catered to by a wider social safety net. It was agreed at the GDS 2003 that projects would be launched to ‘cover social services that are provided by social cluster departments with a view to meeting basic needs’. Examples of projects in this category include the following:

a. Integrated community home-based care for people living with HIV/AIDS.

b. Early childhood development (ECD) and integrated community home-

based care for children of working mothers.

c. Integrated community home-based care for the aged. d. Food distribution. e. School feeding.

These programmes will form other components of the wider social safety net, and will complement the EPWP. The expansion of LIIPs in South Africa will not pose a threat to the established machine intensive construction industry or to conditions of employment in that industry. LIIP

2 There is very little consistency in the use of the term ‘job’ in relation to existing programmes. The term can mean anything from employment for three months or less to more than eleven months. For the purpose of monitoring future initiatives it might be necessary to standardise the terminology.

projects will be ring-fenced within a special Public Works Programme framework which will only apply to temporary locally employed unskilled labour. The special PWP conditions of employment will not be allowed to apply to the permanent workforce or to local unskilled labour employed on non-PWP projects. In addition, government’s infrastructure spending is set to increase substantially over the medium term, so LIIPs will not result in a shortage of work for the established machine intensive construction industry. And the main focus of the LIIP will be on relatively small civil infrastructure projects in rural areas and in municipalities – projects not usually targeted by big established construction companies. Important to the potential impact of LIIPs will be the extent to which funds allocated to infrastructure are spent. While evidence suggests that provincial governments have enhanced their capacity to implement infrastructure expenditure, the capacity of local governments to spend capital budgets remains a concern (M. Altman 2003). However, an important initiative has been undertaken by National Treasury and the Construction Industry Development Board (CIDB) to develop an Infrastructure Toolkit aimed at ensuring that infrastructure spending at all levels of government is better managed and that allocations are spent timeously. One of the benefits of this initiative will be an expansion in the number of jobs that result from expenditure on infrastructure, simply by increasing the quantity of this expenditure. 1.4. Black economic empowerment through the LIIPs LIIPs will also support black economic empowerment. LIIP contracts tend to be relatively small scale and do not require expensive or sophisticated capital equipment. Small black owned start-up contracting firms are therefore ideal private sector partners in many LIIP contracts. They will also provide participants some of whom will not previously have been employed with exposure to the world of work and the opportunity to acquire skills in construction and training in other life and marketable skills. LIIPs will also prioritise the employment of people with little or no other income, with a focus on women and youth. It will, as a result, enhance household incomes and provide opportunities for some of the vast number of unemployed school leavers. 2. PUBLIC WORKS PROGRAMMES IN SOUTH AFRICA Commitment to labour-intensive public works is not a new feature of development policy in South Africa. In the run-up to the first democratic election in 1994, a major pre-investment investigation into their feasibility was conducted under the auspices of the National Economic Forum. Public Works were included in the Reconstruction and Development Programme under the name 'National Public Works Programme' (NPWP) as a critical element of job creation efforts.

The NPWP had two strategic thrusts. The first was a long-term programme to reorientate public expenditure on infrastructure towards labour-intensive techniques. The second was a short-term community based public works programme (CBPWP) intended to provide rapid and visible relief for the poor and to build capacity that could later be used in the longer-term programme. Under this programme, approximately 105 000 jobs were created between 1998 and 2002. Unfortunately the NPWP’s goal of achieving a major reorientation of public expenditure was not realised. In a context of major political restructuring, an uncertain legal framework, inadequate levels of training, numerous inherited deficiencies and difficulties, and multiple demands on a new government, the programme failed to gather momentum. 2.1 Requirements for successful public works programmes There is now a considerable body of work evaluating the experience of numerous international and local public works programmes. On the basis of this experience it is possible to identify errors to be avoided and best practices to be emulated. Errors to be avoided include:

• attempting to achieve too much too quickly;

• not allowing time to plan properly and to build the required capacity for effective and efficient implementation;

• many small projects without a common programme, resulting in loss of

economies of scale, duplication of learning and costs, and inconsistencies in performance;

• overloading the programme with too many objectives, with the result that the

programme fails to achieve any of them; and

• lack of consistent political support. PWPs which have suffered from the above

weaknesses have tended to have limited anti-poverty impact, poor quality and expensive products and limited job creation impact.

Best practices to be emulated include:

• Consistent political support and multi-year budgeting for the programme.

• Resources and time allocated to planning the programme, and to developing the capacity to implement it.

• Planning of programmes to ensure that the pace of implementation is linked to the

pace of development of the required implementation capacity.

• Strong institutions put in place to manage or coordinate the implementation of the programme.

• Programmes focused on particular quantifiable objectives.

• High priority given to effective systems of monitoring and evaluation.

2.2. Favourable conditions now in place in South Africa 2.2.1. Political consensus and accumulated experience Present conditions in South Africa are now more favourable to the implementation of an expanded PWP based on the above best practices. A climate of political and economic stability prevails. Government, business and labour agree that PWPs should be a key component of a growth and development strategy. The Growth and Development Summit agreed that ‘expanded public works programmes’ should be implemented to provide and/or improve ‘basic and essential infrastructure in the communities’ (Growth and Development Summit Agreement 7 June 2003). Over the last ten years a number of smaller programmes have been initiated, at both national and provincial levels which have resulted in important experience being gained.

2.2.2. Labour framework

A critical break through has been achieved in the form of a Code of Good Practice for Special Public Works Programmes gazetted by the Department of Labour. This provides for a task-based payment system for labour-intensive construction and for skills development for workers. This framework was developed with the full participation of all the National Economic Development and Labour Council (NEDLAC) stakeholders and is currently being used in a number of special public works programmes such as Working for Water (under the Department of Water Affairs and Forestry), the Zivuseni poverty alleviation programme (an initiative of the Gauteng provincial government), and the Gundo Lashu labour-intensive roads programme (an initiative of the Limpopo provincial government).

2.2.3 Skills development framework

Qualifications for contractors and supervisors on labour intensive construction are being developed within the National Qualifications Framework. Courses are currently being finalised at NQF level 2 for team leaders, NQF level 4 for construction process

supervisors (LI), and NQF level 5 for small contractors (LI). Wits University offers courses in Employment Creation in Construction, which are suitable for professional engineers, managers in the public sector, and directors of construction companies.

Training facilities specialising in labour-intensive construction have been established in South Africa and neighbouring countries. These could be expanded although on a relatively small scale to cater for a growing demand.

3. EXPANDED PUBLIC WORKS PROGRAMME The new EPWP has to ensure that it makes a rapid and significant impact in order to gain popular support. However, international experience also suggests that successful programmes, which create significant assets, need to be developed over three to six years. In order to meet these two requirements the EPWP will have two components. One of these components will be accelerated programmes, which will rapidly deliver a significant amount of employment while performing socially or economically useful tasks. These accelerated programmes will focus on the expansion of existing best-practice PWPs in South Africa, such as Working for Water, Zivuseni, and Zibambele. These PWPs involve work which is conventionally labour-intensive. A second component will be a labour-intensive infrastructure programme which will also deliver significant amounts of employment in the context of creating important and enduring assets such as roads and water pipelines, but will only expand as the required institutional and human capacity is developed. The labour-intensive infrastructure programme will involve expansion of the use of economically efficient labour-intensive construction methods in the implementation of government-funded infrastructure projects. This will also be based on best-practice models such as Gundo Lashu. 3.1. Accelerated Public Works Programmes (APWPs) As mentioned above, the Expanded Public Works Programme will achieve rapid and significant employment creation by expanding existing programmes that involve work that is conventionally labour-intensive. For example, the Working for Water programme involves the clearing of alien vegetation; Zivuseni involves painting public buildings, collecting recyclable materials, and once-off clean-up campaigns; and Zibambele involves routine road maintenance such as filling pot holes, cutting grass and clearing culverts and storm water drains. A similar programme, known as Vukuzakhe, is currently being introduced in the Eastern Cape.

Table 1 below shows the approximate current levels of employment of some of the better-known programmes in the country.3 It is an indicative list and does not purport to include all or even the most successful programmes and projects. Table 1: Approximate current employment levels in selected programmes PROGRAMME JOBS

2002

Zibambele 10000Working for water 24000National land care 2000Environmental and Tourism eg coastal care 30000Building for sport and recreation 16000Zivuseni 7000TOTAL 89000 Some of these programmes are successful provincial initiatives that are currently limited to the provinces in which they originated. There is potential for expanding them to other provinces, which would lead to a large increase in employment creation, for example, the Zibambele Programme in Kwa-Zulu Natal, which focuses on routine rural road maintenance (Annexure 1). There are approximately 10000 poor households contracted to maintain approximately one-third of the KwaZulu Natal rural road network. Each household is responsible for maintaining a specific length of road for a year at a time to an agreed standard. They are responsible for maintaining the road surfaces, verges and drainage systems and ensuring good roadside visibility. A recent study has concluded that if Zibambele were expanded nationally and focused solely on the maintenance of the 38% of the provincial road network estimated to be in poor condition, approximately 134500 jobs could be created at a cost of R691 million, on the basis of employing one worker per kilometre (McCord 2002). The Zivuseni programme in Gauteng focuses on minor repairs and renovations to public buildings and on waste management (Annexure 1). In 2002, 7000 people were employed in the programme, and the province is planning to employ 25 000 people under the programme in 2003. Table 2 shows a conservative estimate of the growth in employment which will result from the expansion of some of these programmes.

Table 2: Growth in employment from the accelerated PWPs

3 This list does not include all provincial or national programmes. Reliable figures for this wide range of programmes are not readily available and we have drawn on accessible estimates. Aggregated figures from National Treasury indicate that the number of temporary jobs created through grants from the special poverty relief allocation in 2001/2 was 79551.

PROGRAMME POTENTIAL JOBS (EXPANDED)

Zibambele 50000Working for water 24000National land care 2000Environmental and Tourism eg coastal care 30000Building for sport and recreation 16000Zivuseni 50000TOTAL 172000 3.2 Labour-intensive infrastructure programme There are enormous backlogs in the provision of public infrastructure in previously disadvantaged areas in South Africa. There is a political commitment to addressing these backlogs over time, and this is reflected in the increasing budgets for infrastructure in the MTEF.

While the accelerated programmes described above will ensure the rapid impact and high visibility of the expanded public works programme, there will also be a more fundamental and long term process of increasing the labour intensity of line ministries, provinces and municipalities in their asset creation and maintenance activities. A leading expert in the field has argued that ‘a public works programme should be aimed at fundamentally changing the way in which publicly-funded infrastructure is built so that employment and skills transfer are maximised for the unemployed’ (McCutcheon 1995). The EPWP will therefore also involve the expansion of the use of labour-intensive construction methods in the delivery of this public infrastructure. The main focus will be on substituting labour for machines in civil works in previously disadvantaged areas. It will focus on existing infrastructure budgets and the principal project implementing bodies will be provinces and municipalities. This expansion in the use of labour-intensive construction methods will also be based on expanding existing best practice. There is a wealth of international experience, to be drawn on this regard, and the Gundo Lashu programme in Limpopo, involving the reshaping and regravelling of rural roads and the installation of drainage structures, provides a local example of what can be achieved (Annexure 1). The programme has involved extensive training of contractors, professional engineers and site supervisory staff in labour-intensive construction methods. As a result, good quality roads are being built, with 35% of project costs going to local labour and without an increase in overall costs. Based on best practice, the pace of phasing in of labour- intensive construction methods in the EPWP will be linked to the pace of development of professional engineers and contractors qualified in the use of these methods. The EPWP will also build on the experience of LI construction in the provision of infrastructure

through the consolidated municipal infrastructure programme, the Department of Water Affairs and Forestry, and public enterprises. A unit focused on promoting labour intensive approaches within the construction sector will be established in the national Department of Public Works to co-ordinate and drive this process across the spheres of government, and to facilitate the development of the requisite capacity for labour-intensive construction in the industry. The unit will be staffed by experts in the field who have prior experience in research, policy development and monitoring of national programmes. It will tap local expertise but will also seek assistance from international organisations such as the ILO, which has extensive South African and international experience in all aspects of labour-intensive approaches. The unit will work closely with National Treasury to introduce gradually conditions for infrastructure funding, as the numbers of professional engineers and contractors qualified in labour intensive construction methods increases. The unit will produce guidelines to advise departments and municipalities how to design and procure projects to ensure that they are labour-intensive. The EPWP will be a national programme in that it will have national reach and impact. But it will achieve this end by facilitating the development of economically efficient LIPWPS at appropriate levels of government. It will not attempt to impose centralised co-ordination but will focus on developing capacity, promoting best practice and cautioning against wasteful duplication of effort.

3.3. Jobs from labour-intensive infrastructure programmes The main focus of the LIIP will be on certain targeted types of infrastructure, namely provincial and municipal government civil works. These civil works include lower volume provincial and municipal roads, municipal storm water infrastructure, and water and sanitation reticulation infrastructure. The reasons for targeting these particular areas are as follows:

• It is possible to use labour rather than machines for a substantial portion of the construction work activities required to construct or rehabilitate the targeted infrastructure;

• There are huge backlogs in the provision of such infrastructure in previously

disadvantaged areas, which are also where most of the unemployed people the programme is targeting are located; and

• These are likely to be priority areas for infrastructure spending by provincial and

local spheres of governments.

However, the LIIP will not focus exclusively on this targeted infrastructure. There is also scope for generating employment opportunities through the use of labour-intensive

construction methods on other government and parastatal projects. Many government departments and parastatals are already doing this. For example, appropriate construction methodologies have been used to generate additional employment in the huge Coega infrastructural project in the Eastern Cape. In some circumstances, it is possible to choose a design for a dam that is labour-intensive rather than capita intensive and the Department of Water Affairs and Forestry has done this with some of its dams. And, as discussed above, there is substantial potential for increasing labour intensity in the provision of low-cost housing and associated municipal infrastructure. As discussed elsewhere in this document, the EPWP will be a ‘national’ programme in the broad sense of the word. Like the Reconstruction and Development Programme, it will be embraced by all departments in all spheres of government, and by parastatals involved in infrastructure provision. All these institutions will attempt to utilise labour-intensive construction methods, where this is technically and economically feasible.

Some provinces and municipalities have already introduced labour-intensive construction methods for the targeted infrastructure. For example, reshaping and regravelling of provincial gravel roads in Limpopo is now carried out using labour-intensive construction methods. The aim of the EPWP is to expand on this existing work.

The potential for creating jobs by using labour-intensive construction methods for the targeted infrastructure has been calculated and compared to the extent of job creation which would result from using machine-intensive construction methods. The resulting total number of job opportunities from labour-intensive construction includes the job opportunities which will be created by government bodies such as Limpopo and the Department of Water Affairs that have already adopted labour-intensive construction methods.

If the focus is only on the targeted infrastructure, the estimated job creation figures are conservative, and provide a minimum target for the government as a whole. Additional labour-intensive work on other infrastructure (as mentioned above) should make it possible for government to exceed this minimum target. The number of job opportunities to be created using labour-intensive construction methods for the targeted infrastructure expenditure was therefore calculated as follows: 3.3.1. Possible budgets for the targeted infrastructure

Table 3 below indicates the municipal budgets for roads, storm water drainage, and bridges; and municipal water storage and reticulation, based on data in the 2003 Intergovernmental Fiscal Review (IGFR) produced by National Treasury (pg 34, Figure 3.2).

Table 3 - 2002/2003 municipal budgets for civil infrastructure (including grants)

Type of infrastructure Budget (R million)

Municipal roads, pavements, bridges, drainage 1 700

Water storage and reticulation 2 000 TOTAL 3 700

The IGFR provides information on national infrastructure grants to municipalities (IGFR,

pg 38, Table 3.9, CMIP, CBPWP, Water Services, and MIG). These are reproduced in

Table 4 below.

Table 4 - MTEF grants to municipalities

Type of grant Amount (R million) 02/03 03/04 04/05 05/06 CMIP 1671 2246 2724 3016 Water services 999 1102 948 1037 CBPWP 260 260 - - MIG - 47 117 97 TOTAL 2930 3655 3789 4150

Municipal infrastructure budgets are made up of funds from grants and funds from own revenues. For 2002/2003, infrastructure grants to municipalities (Table 4 above) totalled R2930 million, or approximately 80% of the total municipal infrastructure budget of R3700 million described in Table 3 above. Assuming that this ratio remains at approximately 80%, municipal budgets for these types of infrastructure over the MTEF may be estimated as in Table 5 below.

Table 5 - Estimated MTEF projections for civil infrastructure in municipal budgets

Type of infrastructure Amount (R million) 02/03 03/04 04/05 05/06 Municipal roads, pavements, bridges, drainage

1700 2099 2176 2383

Water storage and reticulation 2000 2470 2560 2804

Table 6 below shows the provincial roads budgets over the MTEF (IGFR, pg 141, Table

8.2).

Table 6 - MTEF provincial roads budgets

Type of infrastructure Amount (R million) 02/03 03/04 04/05 05/06 Provincial roads 4736 5089 5546 6214

Limpopo is currently spending approximately 15% of its total roads budget on rehabilitating gravel roads labour-intensively (including installing drainage structures, reshaping and regravelling). A higher proportion of municipal roads are lower volume roads. Assuming that 15% of provincial roads budgets; 30% of municipal roads, pavement and drainage budgets, and 30% of municipal water storage and reticulation budgets can be targeted for labour-intensive construction, the approximate budgets for labour-intensive construction may be projected as in Table 7.

Table 7 - Projected estimated possible budgets for labour intensive projects

Type of infrastructure Amount (R million) 02/03 03/04 04/05 05/06 Provincial and municipal roads, pavements, bridges, drainage

965 1078 1158 1290

Water storage and reticulation 600 741 768 841 TOTAL 1565 1819 1926 2131

3.3.2 Employment created by the labour-intensive construction of targeted

infrastructure

Based on the figures in Table 7 above, it is assumed that a budget of approximately R2.13 billion will be available for labour-intensive construction projects in 2005/2006. For the purposes of these calculations, it is also assumed that the necessary capacity has been developed in the industry to utilise labour-intensive construction methods cost-effectively. Using an assumed average task rate (i.e. the rand paid per task for work completed) and assumed labour coefficients of project costs, it is possible to estimate the number of employment opportunities which would result from the labour-intensive construction of the R2.13-billion-worth of targeted infrastructure.

The Gundo Lashu labour-intensive roads programme in Limpopo is being implemented in accordance with the code of good practice for special public works programmes, and a rate of R30 per task is currently being paid in this programme. Assuming that this task rate may be taken as a national average for labour intensive construction projects, and that it escalates at 8% per annum, the average task rate in 2005/2006 will be approximately R35.

Table 8 shows assumed labour coefficients (i.e. ratio of project costs to

labour), based on local and international practical experience of cost-effective labour-intensive construction of similar types of infrastructure. In order to be

conservative, the labour coefficients used were chosen from the lower side of those given in the literature. In machine-intensive construction of these types of

infrastructure, on average less than 5% of project costs go to locally employed labour.

Table 8 - Labour coefficients for targeted infrastructure

Type of

infrastructure Labour

coefficient

Sources of labour coefficient Roads and storm water

30% of total project costs

i) UK Department for International Development: Output to purpose review of Limpopo Gundo Lashu programme, 2003: 46% of direct costs, 34% of total project costs* ii) International Labour Organisation, Technology Choice, Man or Machines: Case Studies from Lesotho and Zimbabwe, 1995: 43% or 44% of direct costs iii) ILO, Labour-based Technology in Road Works, 1999: 44% - 60% of direct costs

Water reticulation

30% of total project costs

i) Phillips et al, Labour-based Construction of Municipal Services in Ilinge, 1992: 39% of direct costs, 30% of total project costs ii) Watermeyer, RB et al, An evaluation of projects with Soweto’s contractor development programme, 1995: local labour content 31% of construction costs

Assuming that the average construction project lasts for 6 months (or 135 working days),

one worker will earn approximately R4724 during the course of the project. Using the

labour coefficients from Table 8 above, the average project cost per labour intensive job

opportunity will be approximately R15750. A budget of R2.13-billion will therefore

result in approximately 135000 employment opportunities from labour-intensive

construction.

For machine-intensive construction (assuming that 5% of project costs go to

local labour, and an equivalent daily wage rate of R35 for local labour), approximately 25000 6-month job opportunities would be created from the expenditure of R2.13- billion.

Thus, approximately five times as many job opportunities would be created through the use of labour-intensive construction methods than through the use of machine-intensive construction methods, for these types of infrastructure. This ratio is confirmed in the international literature (Department for International Development 2002; ILO 1999). As discussed elsewhere, the introduction of labour-intensive construction methods should only take place at the pace at which the construction industry develops the necessary capacity to use such methods cost effectively. Thus, it will only be possible to achieve the job creation described above once this required capacity has been developed, i.e., once the EPWP is fully established. In the following section an estimate is made of the job creation from the LIIP over time, assuming an approximate budget of R2-billion for labour-intensive construction projects once the programme is fully established.

3.4. Summary of overall job creation from the EPWP

Figure 1 below shows the employment creation from the accelerated PWPs and the labour-intensive infrastructure programme, and the total number of job opportunities to be created per annum. As discussed above, the duration of a ‘job’ varies from project to project, and is usually between 3 months and 12 months.

As can be seen from the graph, the accelerated public works programmes will increase from the current 90000 jobs per annum to approximately 170000 jobs per annum within the first two years of the programme. The jobs resulting from the labour-intensive infrastructure programme (calculated from the R2-billion expenditure on the targeted infrastructure) will gradually increase as the required industry capacity is developed, until approximately 135000 jobs will be created from year four onwards. The total number of jobs created by the EPWP per annum will rise from approximately 125000 in

year one to approximately 300000 by year four (The total number of jobs is the sum of the jobs from the accelerated PWPs and the LIIP).

Figure 1- Annual jobs from the expanded public works programme

050000

100000150000200000250000300000350000

0 1 2 3 4 5 6

YEAR

JOB

OPP

OR

TUN

ITIE

S PE

R

AN

NU

M

machine-intensive accelerated PWPstotal labour-intensive

The graph also indicates the number of jobs per annum if machine-intensive methods

were used for the R2-billion of targeted infrastructure (25000). The actual ‘new’ or

‘different’ jobs from the LIIP are the labour-intensive jobs minus the machine-intensive

jobs. The figures reflected above are not cumulative. If one totals the jobs created over

the six-year period, the number of job opportunities created will be approximately 1.5

million.

The construction industry as a whole currently employs approximately 350000 people. Approximately 40% of its work comes from the public sector. Thus approximately 140000 people are employed in construction as a result of public sector infrastructure expenditure. The EPWP aims to add another 135000 jobs to this industry, by reorientating a portion of this public sector expenditure on infrastructure to the use of labour-intensive construction methods. 4. TARGETING Critical to the targeting and design of the EPWP should be the fact that the greatest infrastructure backlogs are in the poor provinces and the poor areas of the wealthier provinces. This is also where the poor people who need the employment opportunities are. Much of the infrastructure backlogs in these areas, such as roads, streets, storm water drains, and water pipelines are also most suitable for the use of labour-intensive construction methods, because the designs are largely relatively simple and it is technically feasible to use labour rather than machines for many of the construction activities. As is the case with all government expenditure, the expenditure on labour-intensive public works will be incurred in terms of the Preferential Procurement Policy Framework Act (PPPFA). No changes need to be made to the government’s regulatory framework for procurement for the EPWP. The PPPFA can be used to encourage the formation of joint ventures between established and emerging contractors. Such joint ventures may be utilised for some labour-intensive infrastructure projects. The emphasis on smaller provincial infrastructure projects and municipal infrastructure will also have important targeting effects in terms of ensuring that emerging black contractors benefit from the programme. The relatively small size of contracts will favour small and emerging contractors – the majority of whom are black. Comparative evidence also suggests that, if a conducive framework is created, this category of contractors is more likely to adapt readily to labour intensive techniques of construction. One of the standard devices in most South African poverty alleviation and job creation programmes has been the tight specification of wage rates for unskilled labour. The programme will have to keep wages below industrial levels in order to ensure that the programme does not attract people who are already gainfully employed in other sectors of the economy. The wage rates will also act as a self-selection mechanism, targeting those in need, instead of targeting people who can access other opportunities elsewhere in the economy.

Expanded public works programme projects will be carried out in line with the Code of Good Practice for Special Public Works Programmes (gazetted by the Department of Labour), which sets targets for the participation in projects of women, youth, and people with disabilities. 5. TRAINING The business plan places a strong emphasis on training. This is because the management and execution of LIIPs requires different and additional skills from the management of machine-intensive construction. Labour-intensive construction is also supervision-intensive. For example, the implementation of LIIPs requires the ability to manage task-based payment systems and to manage work planning and team balancing with large numbers of workers. While there are some pockets of relevant competencies, these skills are in very short supply in South Africa. It is therefore important that the existing process of putting qualifications in these skills into all the relevant levels of the construction industry, should be rapidly expanded and successfully completed. Training capacity in South Africa is at present very limited – especially in light of the extent of the labour-intensive programme being proposed. The EPWP will require a considerable expansion of market-driven training programmes. Once it becomes clear that a major LIIP is planned, training providers will have a strong incentive to develop appropriate training programmes. And an open-market approach will be taken to the training opportunities, which will allow any training provider which has achieved accreditation to provide training. Special attention will need to be paid to the training of infrastructure programme managers in municipalities and government departments. For the EPWP to be successful, these managers will need to have a good understanding of the aims of the EPWP, the code of good practice for special public works programmes, and labour-intensive construction technology. In terms of the code, workers on projects will be entitled to training. It is critical that this training is designed to provide workers with skills which match the predicted skills shortages in the labour market. A training plan will be put in place in this regard, in consultation with the Department of Labour, the Construction Education and Training Authority, and the Construction Industry Development Board. 6. INSTITUTIONAL FRAMEWORK

As noted above, over the past ten years vital elements of capacity and experience have developed in government in relation to labour-intensive public works programmes. But at present this expertise and capacity remains fragmented and limited and major capacity constraints exist both regionally and at different levels of government. There is also a lack of expertise with regard to labour-intensive methods in the construction industry, among both contractors and professional engineers.

Capacity constraints are likely to militate against the implementation of the Expanded PWP unless steps are taken to create a unit within government which will drive the implementation of the EPWP within and across the spheres of government. Together with the South African Qualifications Authority (SAQA), the Construction Industry Development Board (CIDB) and other industry organisations, the unit will drive a process of developing the requisite private sector (construction industry) capacity to implement economically efficient labour-intensive projects. This unit will be created in the Department of Public Works, given the Department’s experience in this area and its various statutory relationships with the construction industry. As described in the appendix, the Limpopo administration had to put a great deal of effort into capacity building of private sector contractors and engineers in order for its road works to be both highly labour-intensive and cost-effective. The main aim of the EPWP unit in the national Department of Public Works will be to remove this capacity-building burden from other provinces and municipalities, to enable them to adopt labour-intensive construction methods more easily. The EPWP unit will not implement projects or take over the work of any departments or municipalities. In addition, it will not be a conduit for funds to be transferred to departments or municipalities for projects. Rather, it will play a capacity building and supportive role. It will identify and communicate best practice for LIPWP. It will work closely with National Treasury regarding the phased implementation of the conditions attached to certain infrastructure funding to ensure that the EPWP delivers the envisaged numbers of jobs over time. One model which could be drawn on in the establishment of this unit is the Public Private Partnerships (PPP) Unit in National Treasury. The PPP unit was established as a capacity building and supportive unit with the aim of ensuring that all spheres of government adhere to certain good practice principles when planning and implementing PPPs. Without such a unit, many of the PPPs which are being put into place would not have been possible. This EPWP unit will be designed to be phased out after sufficient capacity has been developed within government and within the industry to make its role redundant. The Department of Public Works will recruit individuals from both the public and private sector with proven experience in the planning, implementation and monitoring of LIPWPs. It will also draw on the invaluable comparative experience of LIPWPs within international organisations such as the International Labour Organisation and the World Bank. In the light of the agreements reached at the Growth and Development Summit in regard to an expanded public works programme, an expert reference group will be established to support, monitor and advise the EPWP unit and to build confidence amongst key role players. All positions in the new unit should be advertised and competitive.

The functions of this unit will include:

• To work with SAQA to ensure that appropriate qualifications are in place for engineers, contractors, site supervisory staff and government programme managers for labour-intensive construction.

• To work with the training industry to ensure that the required programmes are in

place to provide training that will lead to the above qualifications.

• To source funding to pay for the training of emerging contractors who cannot afford to pay for the training themselves.

• To co-ordinate with the Department of Labour regarding the scope and content of

the training to be provided to workers on PWP projects in terms of the Code of Good Practice for Special Public Works Programmes, and to produce guidelines in this regard.

• In consultation with National Treasury, to provide the construction and training

industries with information on the planned phasing in of labour-intensive construction as described above, in order to communicate the market imperatives for the establishment of the training programmes and for people to become qualified.

• To work with National Treasury to formulate the conditions to be attached to a

portion of infrastructure funding to drive the phasing in of labour-intensive construction.

• In conjunction with the CIDB, to develop supportive guidelines for government

and industry, in order to promote best practice and to ensure that existing experience is effectively deployed and costly errors and inefficient methods are not replicated, including for example, guidelines on tendering for labour-intensive construction, contract documentation, and appropriate technical designs for infrastructure to be built using labour-intensive construction methods. These guidelines would need to cover the issue of the allocation of risk between the government and contractors for projects implemented under the code of good practice for special public works programmes. The roles and responsibilities of the various parties (government, contractor, engineer, community organisations) involved in projects would also need to be clarified in these guidelines.

• To facilitate accelerated PWPs through the expansion of existing initiatives, by

identifying best practices and by encouraging the transfer of knowledge and experience across and between spheres of government.

• To facilitate the development of the Labour Based Infrastructure Programme by

identifying best practice and promoting and communicating it across and between

spheres of government and to other relevant role players, including the private sector.

• To promote and support labour intensive technology in all government

infrastructure sectors, including low-cost housing.

• To monitor the implementation of all aspects of the EPWP and to carry out periodic evaluations leading to policy improvements.

One of the issues to be addressed by the EPWP Unit will be how best to specify the use of labour-intensive construction methods. Specifying a minimum labour content as a percentage of project costs is problematic because it encourages the inefficient use of labour in order to increase the labour content. For a given construction methodology, increases in labour efficiency reduce the labour content. It is very important that the efficient use of labour should be encouraged, and it is therefore preferable to specify that certain construction activities must be done manually, rather than to set out a minimum labour content. The EPWP unit will not have to start from scratch with all this work. It will take cognisance of the preparatory work which has already been carried out or which is currently under way in several of the above functional areas. For example, the SAQA has already started developing appropriate qualifications for labour-intensive construction. In addition, some training institutions have started to offer courses in labour-intensive construction. Among them is a course for professional engineers run by the University of the Witwatersrand (Johannesburg), and one for site supervisors run by an NGO called Labour Intensive Training and Engineering (LITE), which is receiving funding from the Umsobomvu Fund. In addition, the CIDB has initiated work on developing appropriate contract documentation, and the Gauteng Job Creation Committee is also doing work in this regard. There is also considerable comparative experience from elsewhere in Africa including Ghana, Kenya, Lesotho and Botswana, which can be drawn on. There is, in particular, considerable depth of expertise and experience in organisations such as the ILO, which has been involved in these programmes elsewhere in Africa. The EPWP unit will also attempt to identify best-practice agents to assist with the implementation of the programme. For example, the Roads Agency Limpopo is currently engaging with municipalities in Limpopo with regard to the expansion of the Gundo Lashu labour intensive roads programme to municipal roads budgets in the province. As mentioned above, the process of phasing in the use of labour-intensive construction methods for the targeted infrastructure expenditure will be driven by the introduction of conditions attached to funding transfers by National Treasury. The proportion of infrastructure spending to which these conditions will apply will be expanded over time until the targets set out in this business plan are reached.

The EPWP unit will take from three to five years to fully develop the required implementation capacity for labour-intensive construction, and the proportion of infrastructure spending to which these conditions will apply will be expanded as this capacity is developed. Among the conditions are:

• That a proportion of targeted infrastructure expenditure must be tendered as

labour-intensive projects, using the design and tendering guidelines prepared by the EPWP unit; and

• That government bodies must send programme managers for the targeted

infrastructure spending for training, and may only appoint contractors and professional engineers who have specific qualifications in labour-intensive construction for labour-intensive projects. The contractors’ register being put in place by the CIDB may be utilised as a tool for checking which contractors have obtained these qualifications, and for monitoring their on-site performance.

Discussions have indicated that the British Department for International Development (DFID) has expressed tentative interest in supporting the work of the unit with funding and international expertise.

7. FINANCIAL IMPLICATIONS The Department of Public Works will establish and run the EPWP unit within its existing MTEF allocations. In addition, as mentioned above, preliminary discussions with donors have indicated that there may be a willingness to assist with the work of the unit. Equally, at the GDS, business committed ‘to mobilise and make available its skills and expertise … with a view to enhancing the proper project design and management of [EPWP] project’. Support by business for the unit and for the development of institutional capacity at provincial and municipal levels would fall within the spirit of the GDS agreement and could make a key contribution. No additional funds will be required for the expansion of the use of labour-intensive construction methods. The projects falling under this part of the EPWP are already funded under the MTEF. As mentioned above, these funds form part of the transfers from National Treasury to departments and municipalities. They will not be channelled through the national Department of Public Works. However, while the EPWP is not dependent on any additional funds, the provision of additional funds to provinces and municipalities which have demonstrated capacity to develop efficient and effective LLIPs will provide an important incentive for the expansion of the programme. The Department of Public Works is engaging with National Treasury in this regard. It is important that such incentive funding should be provided in a planned manner so that it does not result in sudden peaks in infrastructure budgets.

The expansion or acceleration of existing PWP initiatives will require additional funding for the government bodies implementing these programmes. For example, expansion of the Zivuseni and Zibambele programmes to other provinces will require additional funding. The Department of Public Works is engaging with National Treasury in this regard. Providing additional funding for the Accelerated Programme is also a means by which business can express its support for the expanded public works programme. 8. PROGRAMME OF IMPLEMENTATION During May, June and July 2003, the Department of Public Works engaged in consultations with a broad range of stakeholders regarding the contents of this business plan. These stakeholders included the social and economic clusters in government and construction industry organisations. The results of these consultations have been incorporated into this document. This business plan has been prepared for presentation to the Cabinet Lekgotla in July 2003. The following implementation plan is based on the assumption that the business plan will be approved at the Lekgotla. 8.1 Set up the EPWP Unit Upon approval of the Business Plan, the Department of Public Works must establish an

EPWP Unit as indicated in the Business Plan. The unit will initially be staffed by

seconded staff, locally-sourced expertise, and international advisors on short-term

contracts, while longer-term positions are being established and filled.

8.2 Accelerated public works programme

The public works programmes that are to be accelerated will be identified in consultation

with other departments. From 2004/05 onwards, discussions will take place about

increases in budget allocations to facilitate this expansion, in order to meet the job

creation targets illustrated in Figure 1 above.

8.3 Capacity building for the LIIP The Unit will immediately start working on all the aspects of capacity building for the LIIP described above, in order to meet the job creation targets for the LIIP, as illustrated in Figure 1.

8.4 Briefing sessions with various local, provincial, national and parastatal

institutions On the basis of the approved business plan, the Unit will hold briefing sessions with

local, provincial, and national government and various parastatal institutions, and with

the construction industry.

8.5. Launch of the EPWP

On the basis of the above preparations, the expanded public works programme could be launched in February or March 2004. 9. CONCLUSION Since 1994 South Africa has made remarkable progress in achieving economic and social stability. Nonetheless, as the President has pointed out, structural faults in our economy have led to levels of unemployment which require urgent action. Accumulated experience, political consensus and a facilitative legal and training framework have created an environment conducive to an expanded public works programme. The EPWP will provide both employment and vital infrastructure. And it will underpin economic and social development. The EPWP will include two components. One of these is an accelerated PWP, which will involve an expansion of existing best practice PWPs in South Africa and will rapidly deliver a significant amount of employment while performing socially useful tasks. The other is a labour-intensive infrastructure programme that will draw on international and local best practice to expand the use of labour-intensive construction methods in the provision of public infrastructure. The expansion of this programme will be linked to the pace of development of implementation capacity. The success of the EPWP will be ensured by the establishment of a unit with expertise in labour-intensive construction in the National Department of Public Works. This unit will co-ordinate and drive this process across the spheres of government, facilitate the development of capacity in industry, and monitor the implementation and impact of the

programme. The total number of jobs that will be created by the EPWP each year will rise from approximately 100000 in year one to approximately 300000 by year four.

METHODOLOGY

This document is based on intensive reading of studies – both published and unpublished of international and local experience of PWPs. Some of the leading experts in the field have been consulted. They include Professor R. McCutcheon, (Wits University), Mr James Croswell (Croswell and Associates), Mr Ron Watermeyer (Soderlund and Schutte), Mr Dean Barnes (Team Work Solutions), Mr Morkel Stoffberg (Power Construction), Mr Brian Westcott (Brian Westcott Construction), Mr Gary Taylor, (I.T. Transport Ltd), Mr Dejene Sahle, (ILO ASSIST, Harare), Ms Anna McCord (South African Labour and Development Unit, UCT). In addition, key officials and decision-makers have been consulted including: Minister Stella Sigcau National Department of Public Works (DPW) Mr Bongani More Chief Director: DPW Mr Andrew Donaldson DDG: National Treasury Mr Ismail Momoniat DDG: National Treasury Mr Kuben Naidoo Manager: Budget Office, National Treasury Ms. Julia de Bruyn Senior Manager: Intersectoral Programme, National

Treasury. Dr Sean Phillips Head of Department: Limpopo DPW Ms. Seadimo Chaba DDG: Public Works & Management Services, Gauteng

Department of Public Transport, Roads and Works Ms. Lydia Bici DDG: National Public Works Programme, DPW. Mr. Spencer Hodgson CEO: Construction Industry Development Board (CIDB) Directors General from the Economic and Social Clusters Comments made during these meetings have been incorporated in the final document.

ANNEXURE 1 – A selection of best practice public works programmes Two examples of good practice PWPs which could be expanded under the accelerated PWPs arm of the EPWP are described below. They are Zibambele and Zivuseni. Thereafter the Gundo Lashu programme is described, as an example of a labour-intensive infrastructure programme (LIIP).

Zibambele rural road maintenance (‘lengthperson’ system) The Zibambele programme was initiated in 2000 by the KwaZulu Natal Department of Transport. Its objectives are to maintain the province’s rural road network and to provide poor rural households which have no other source of income with a regular income. The programme is based on the ‘lengthperson’ contract system which has been used extensively in Europe and Southern Africa. In 2002/3 there were approximately 10000 Zibambele contractors maintaining approximately one-third of the KwaZulu Natal rural road network. In return for eight days of work a month maintaining a length of road to an agreed standard, households received a transfer of R334 per month. The part-time nature of the work, which may be carried out flexibly within the month, is designed to accommodate engagement in household tasks and other wage or subsistence opportunities should they arise. The work is allocated on a household basis, so that if the participating household member falls sick or dies, another household member may take up the activity, and thus retain the monthly income. Households are selected for participation at a district level by representatives of the local community and by the elected Rural Road Transport Fora using criteria of poverty, unemployment and female or child-headed households. The scheme was initially reliant on support from external consultants, but in-house management and implementation capacity has been developed and the use of external consultants has been reduced. The Department planned to extend the number of contractors to 14000 by the end of the 2002/3 financial year and, ultimately, to a maximum of 40000 poor households. The budget for Zibambele in 2002/3 was R55.7 million. A recent study has concluded that the programme is cost-effective in terms of transferring resources from the state to recipients, the proportion of programme costs spent on labour and the cost of the creation of a day’s work (McCord 2002). McCord has also pointed out that if Zibambele were expanded nationally and focused solely on the maintenance of the 38% of the provincial road network estimated to be in poor condition, approximately 134 500 jobs could be created on the basis of employing one worker per kilometre, at a cost of R691 million per annum. Zibambele is a clear example of best practice which can be drawn on in the accelerated public works programme.

Zivuseni Poverty Alleviation Programme

The Zivuseni Poverty Alleviation Programme was initiated in 2002 by the Gauteng Provincial Government and implemented through the Department of Public Transport, Roads and Works. Its objectives are to alleviate poverty by promoting self-reliance through activities that emphasize renewing of community assets and building local capacity through development of local skills in an effort to break the poverty cycle. The programme was initiated as a multi-year programme with a budget of R420-million in the first three years of its operation (2002/03 to 2004/05). The budget for the 2002/03 was R70-million. An amount of R150-million was allocated for the current financial year (2003/04) and the remaining R200-million is earmarked for the 2004/05 financial year. The programme is based on the identification of various types of projects that have the potential to draw in as many people as possible within a very short space of time. These projects include repairs and renovations of government and community facilities, waste buy-back centres, clean up campaigns (in partnership with local government institutions), and also maintenance-related projects such as grass cutting projects along provincial roads in Gauteng. The programme aims to reach approximately 100000 people over a period of three to five years. During 2002/03 the programme managed to reach 7000 beneficiaries across the province. Beneficiaries are engaged for the duration of the project, not exceeding three months at a time. If the project is implemented within three months or less, beneficiaries are engaged for that period and if lasts longer than three months, new beneficiaries are recruited for the duration. The intention is to ensure that as many beneficiaries as possible have an opportunity to participate in the programme. The beneficiaries are paid on a fortnightly basis an allowance of R40 per day for work done. In addition to the R40 per day allowance, the programme offers training opportunities for all the beneficiaries. The training comprises basic life skills training (for the majority of beneficiaries), and technical training for beneficiaries with potential. The provincial government has appointed the Independent Development Trust (IDT) as the Programme Implementing Agent. The IDT has in turn established an internal capacity within the Gauteng Department of Public Transport, Roads and Works. A recent mid-term review report prepared by the Department revealed that despite the fact that the programme is still in its infancy, there is a lot of potential, especially with regard to reaching out to as many unemployed and unskilled people as possible (Mthombeni 2003). Another interesting aspect is the innovative institutional mechanisms that were put in place with the IDT. These worked very well and provided the provincial government with a model for use in other departments. It became clear that a cautious approach to the selection of projects is necessary. For example, a number of building projects (especially repairs and renovations) had a high material:labour ratio that made it difficult to spend the anticipated 40% of the programme

budget on beneficiaries. In other projects such as clean up campaigns and grass-cutting projects, among others, it was easier to achieve and exceed the anticipated labour:materials ratio. The results of the mid-term review indicate that this programme can be replicated across the country with minimal delays, because the implementation models are already in place. The programme could be replicated to create as many as 100000 jobs per year in all the provinces, on condition that the correct types of projects are identified and implemented. The implementation model for the programme could also be extended to cover areas that were not previously covered in terms of service delivery.

Gundo Lashu : Labour Intensive Rural Roads Maintenance Programme Gundo Lashu was implemented in 2001 by the Roads Agency Limpopo and officially launched as a special public works programme in October 2002. The vision of the programme is to establish labour-intensive methods as the technology of choice in the provision and maintenance of rural infrastructure and to contribute to the upliftment and support of communities and individuals previously deprived of opportunities and basic needs. The programme was designed to select 24 emerging contractors and to train them to build high quality roads using labour-intensive construction methods. Objectives in the first three years of the programme included to rehabilitate 300-500 km of rural roads and to create at least 500000 worker days of meaningful employment in the process. Workers employed on projects are also given training. Thus far 24 emerging contractors (of whom 13 are women) have been selected, trained in Lesotho and have started work at four pilot sites. The first 12 contractors have completed their trial contracts and are now ready to commence 12-month standard contracts. The second batch of 12 contractors has started their trial contracts. Effective methods, including meetings and strategically distributed posters, have been developed and implemented for making communities aware of the availability of jobs. A system of project steering committees and community liaison officers has been developed which plays a key role in community mobilisation and monitoring. Contractors employ local labour for each project and workers are employed on a task-based payment system. They are paid R30 per task. On average 51% of workers have been women, 58% youth and 1% disabled. The Roads Agency has allocated funds to the programme in its rolling MTEF budget. R20 million was spent in 2002/2003 and R50 million is to be spent in 2003/4. Overall the Gundo Lashu programme has increased the percentage of project cost that goes to local labour from 5% in machine-intensive road building to 35% without increasing the overall cost per kilometre of road upgraded. In May and June an initial review of the progress of the programme was undertaken by the UK’s Department for International Development, which has provided substantial financial support for the institutional capacity building aspects of the programme (Taylor, Bester and Delius 2003). The review team’s assessment was that ‘the project purpose is

likely to be largely achieved’ and ‘that the demonstration of the viability of labour based methods is likely to be completely achieved’. Clearly Gundo Lashu is another example of best practice which can be emulated. But it is a long-term programme which involves time-consuming processes of training of contractors and their site supervisory staff. These contractors will also need continuity of work opportunities if they are to survive. Gundo Lashu provides vital experience, which can be tapped in the design and development of the labour intensive infrastructure programme. BIBLIOGRAPHY

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