NATIONAL UNION OF PUBLIC SERVICE & ALLIED WORKERS
Tabling of the
NATIONAL BUDGET 2010/2011
NATIONAL EXECUTIVE COUNCIL MEETING: 20/03/2009
Dear Comrades, this year’s budget is tabled before you today against a very bleak background of membership loss of alarming proportions. While we have become accustomed to our membership dropping year after year, this year’s drop is phenomenal as the final tally of our loss sat at 1 226 members. While we have not been increasing provincial allocations since 2006/2007, we have managed to hold them at R2m every year since then despite the steady decline of membership. However, we have reached a point where we can no longer sustain this. This year’s Provincial allocations have been reduced by R723 604.00 (from R2 075 458 to R1 351 854), a hefty 53.5% drop. This has been as a result of a drop in membership from 25 706 to 24 480, a whole 1 226 or 5% drop.
Comrades this is happening despite our best efforts to recruit new members and to keep existing members happy. This is happening despite us spending hundreds of thousands of rand improving staff salaries by between 12% and 19% in 2007/08; despite us conducting provincial strategic planning sessions, training of shop stewards and financial and other training workshops; despite opening satellite offices in Mpumalanga, Free State and Eastern Cape and providing specialized recruitment assistance to the Eastern Cape. It is happening despite us providing members with union paraphernalia like t-shirts, golf shirts, tracksuits, and calendars and putting in place different incentives like the Nursing Council membership fee subsidies for member nurses, a free funeral benefit scheme for members, recruitment fees and an HR-assisted recruitment initiative.
Comrades, these things cost hundreds of thousands of rand but we do them in the belief that if we provide adequate marketing tools, non-members will be attracted to our union and those whose job it is to recruit, will be able to do their job successfully. But Comrades, I am very sad to say that it is not happening. We are letting ourselves down badly. PEC’s in some provinces are barely functional. There is little control and co-ordination of provincial activities is seriously lacking. Often, financial reports which are submitted are not even worth the paper they are written on. Other provincial activity reports are not being submitted. Organisers and shop stewards are not recruiting or servicing the membership as they should. I am happy to say that the National Finance Committee (FinCom), the Management Committee (Manco) and the National Executive Council (NEC) have always done their job. Every year we pass a budget and then we implement it. Every year we do carry out everything that is provided for in the budget. In other words, we do keep all the promises we make in the budget, and more. In this budget Comrades, we are yet again presenting a list of promises, a list of things that we promise to have achieved by the end of the forthcoming financial year. Despite the increase in membership fees to R40 per member per month, we could not provide for the following major expenditure: salary increases, training of shop stewards and provincial allocations have been reduced.
It is now part of the budgeting process that provinces submit their inputs for consideration when the budget is drawn up. This year, KZN was the only province that submitted inputs in which they proposed that we should make provision for the celebration of one of the national events; that we should provide them with diaries and that we should increase their photocopier rental. I am happy to report that all but one of their inputs were accommodated. The photocopier rental is administrative and all they need to do is to submit an invoice or a lease agreement to show how much they are paying for the photocopier and the photocopier rental paid to them will be adjusted accordingly.
SALIENT FEATURES OF THE BUDGET
▪ At R12.3m, this year’s budget is 10.5% more than that of last year (R11.3m).
▪ Membership fees: Expected income from membership fees is R11.7m, 8.8% more
than that of last year which was R10.9m.
▪ Membership figures: Membership has dropped from 25 706 to 24 480, a negative growth rate of -1 226.
▪ Commission: Decreased from R278 000 to R253 855.
▪ Provincial allocations: Dropped from R2.0m to R1.3m, a decrease of R723 604.
▪ Salary bill: Up from R3.7m last year to R4.7m this year.
▪ Agency Shop Budget: Down by 14.5% from R2.3m to R2.2m.
▪ Training: No head office-sponsored training is planned this year.
▪ Organizers’ traveling costs: Down from by 4.3% from R1.3m to R0.9m.
▪ Funeral Scheme: Dropped from R2.7m to R2.6m.
We are currently experiencing loss of membership and what is worse is that this is through resignations. I am not implying that it would have been better if membership loss was due to members dying instead. The point I am making is that, unlike deaths, resignations can be prevented and we are failing to do so. The fact that we are projecting the revenue of R12.3m which is more than that of the previous year (R10.9m) is thanks to the R5 increase in membership fees, not to an increase in membership.
Commission is derived from the membership of our members to two group schemes; Metropolitan and Old Mutual. When more members join the two group schemes, provinces benefit since 70% of the total commission received is distributed proportionally to them once the audited financial statements have been approved. Therefore, when members resign or cancel their membership with the scheme, less commission is received and therefore less is distributed to provinces. The expected income from commission this year is R253 855, which is 9.8% less than last year.
Long-Term Loan Repayment
KwaZulu-Natal is indebted to the national office by a balance of R332 056 (after they paid the initial R50 000 deposit) for the office building that the national office bought for them. The outstanding amount is payable over 24 months at R13 835 per month. The agreement is that they will start paying once they have been released from the current lease agreement with the present landlord. The projected income in this instance is R166 020.00.
This is an internal loan arrangement to augment the Operational budget since it had a deficit. This amount of R134 068 will be borrowed from the Agency Account and will be repaid during the year or when final year-end adjustments and transfers are done.
More than a third of our total budget (38.3%) goes to salaries which are R4.7m. This year’s staff salaries have not been increased due to the loss of income as a result of negative growth. However, it was decided that if by the end of June, the membership situation has improved, salary increase may be considered depending on the extent of the improvement. This year’s salary budget provides for the newly created (and filled) positions of Office Manager and Communication Officer and the secondment of the President.
[The detailed salary schedule is provided to the budget as a supporting document]
Nursing Council Fee Subsidy
In this item, we provide for reimbursement of our member nurses 30% of what they pay for membership to their professional organization (South African Nursing Council) as an incentive for them to join Nupsaw and to remain with Nupsaw. However, this incentive does not seem to be as attractive as it was meant to be as very few member nurses are interested in submitting claims for the subsidy and member nurses are not increasing. There are two reasons that might be the cause for this, viz. the scheme is not marketed fully or the amount of subsidy is too small to be worth the effort to fill the claim forms. We need to address both these causes for the scheme to achieve what it was established for. We propose that we increase the subsidy to at least 50% of what the nurses pay to their Council for membership up to a maximum of R150.00. Only R15 000 has been provided for this item and if this proposal is approved, this amount will not be sufficient to cover expected claims that would come in. Therefore, a further proposal is made that provinces agree to forego the Commission distribution due to them so that those funds could then be used to cover this item. We need to mobilize all our shop stewards and Organisers to market this scheme vigorously with the back-up of our Communications department.
Satellite Office Expenditure
We are still providing financial assistance to Mpumalanga, Free State and Eastern Cape in terms of financing their operational requirements and their provincial offices. We pay for the monthly office rental, telephones, printing & stationery and cost of the use of photocopiers. We are doing this in the hope that this assistance will enable them to grow and be able to stand on their own to eventually achieve own ‘provincial’ status. Another supportive initiative, a concentrated recruitment onslaught, is also being implemented as a last-ditch attempt to make these provinces viable. An assessment of their situation after this ‘onslaught’ will determine whether or not there is potential for growth in those areas and the appropriate decision will be taken.
Capital expenditure this year consists of renovations to the outbuilding to address the current shortage of office space due to the increase in the head office staff and to also address future office accommodation requirements.
Provincial allocations are down by R723 604.00 (from R2 075 458 to R1 351 854), a 53.5% drop. This has been as a result of a drop in membership from 25 706 to 24 480, a 1 226 membership drop or 5% drop. This year’s Provincial allocations are therefore based on 24 480 members.
[The schedule of Provincial Allocations showing allocation per province is attached to the budget.]
Additional Provincial Allocations
This is in terms of an NEC resolution that R3 of the R5 membership fee increase which was implemented from November last year, be paid to the provinces as additional allocation. An amount of R881 280 is going to be distributed to provinces as such beginning April 2010.
[A schedule of the calculation and allocation of this amount is provided.]
A total of R253 850 was received in the previous year as commission from group schemes according to previous year’s financial statements. 70% of this amount is payable to the provinces according to the proportion of their members who are members of the group schemes. An amount of R177 695 has been set aside for distribution to provinces.
[A distribution schedule showing each province’s allocation is attached.]
Last year we did all the training we needed, at least for the time being. We did financial training for Provincial Treasurers, Chairpersons and Secretaries; para-legal training for Organisers; administration training for the admin staff; leadership training for provincial leaders and lastly, training of Shop stewards. Therefore no head office-sponsored training is going to take place this year. However, this does not prevent provinces from doing their own training. Ring-fenced unused previous year funds may also be accessed depending on the cash-flow situation at any given time.
HR-Assisted Recruitment Initiative
This is a Provincial Chairman’s fund to assist the province in enlisting the assistance of Human Resources sections in recruitment. Although Provincial Chairpersons did not show any interest in sourcing their allocation from this fund during the year, provision is still made in it this year’s budget in case they decide to get interested.
Members will recall the decision that was taken last year to try and clothe all members of our union with at least one golf shirt each. An amount of R642 650 which was the total of R5 membership fee increase (for five months up to end of March 2010) was used to buy 15 790 golf shirts. In addition to this, part of the funds budgeted for Memorabilia (R276 000) was also used to buy 7 263 additional golf shirts bringing the tally of golf shirts bought last year to 23 053. We have this year budgeted R54 226 to buy the remaining 1 427 golf shirts to reach the total membership of 24 480.
Bargaining Council Grant
We are projecting that we will be receiving R2.2m from the Bargaining Council this year 14.5% less than the previous year. The Agency Shop budget is wholly based on this grant.
Advertising and Promotions
The budgeted amount of R90 500 includes R20 000 for 5000 diaries which include the 250 diaries that were requested by the KZN.
Provision for National Congress
Last year, we put aside R231 000 for this purpose. We have since discovered that this was short by R25 650 due to a miscalculation of the inflation factor. The last national congress expenditure was R652 500 for 1% of membership as delegates. The projected 2011 national congress expenditure based on a 6% inflation rate for the three years is R769 950. To save for this amount over three years since last Congress, we have to put away R256 650 each year. Therefore, this year we are putting away R411 375 which is made up of R256 650 for this year plus previous year’s shortfall of R25 650 (when we saved R231 000 instead of R256 650).
We were asked to work out what the expenditure would be if we increased the number of delegates. Working on 25 706 members:
1% equals 257 delegates and total congress expenditure is R769 950
1.5% equals 386 delegates and total congress expenditure is R1 154 925
2% equals 514 delegates and total congress expenditure is R1 539 900.
Workers’ Day Celebrations
This budget includes R30 500 has been set aside for the celebration of Workers’ Day. This was one of the budget inputs submitted by the KZN. The idea is for this celebration to be held by a different province every year on a rotational basis starting with the KZN.
NOB’s Engagement with Provinces
National Office Bearers will be playing closer and a more active role in trying to assist the provinces achieve their strategic objectives in order to achieve growth.
This is an internal refundable inter-account transfer to cover the deficit in the Operational budget.
Comrades, we need to turn the tide of membership loss soon. More attention has been given to providing the tools for recruitment in this year’s budget in order to assist that process. The memorabilia, the paraphernalia, the employment of two senior officials in the union and the general restructuring which is taking place points to how serious we are in putting in place things that would assist growth efforts and addressing this growth deficiency we are suffering from.
We are also happy to announce that we are ready to purchase another office building for the next qualifying province during the course of this financial year.
In closing Comrades, I want to indicate that the budget is the product of a collective effort of all the members of FinCom. I, therefore, take this opportunity to thank all the members of this committee for their dedication and for helping me to come up with this budget. I thank the President for assisting me with the tedious task of calculations. He could easily be a national treasurer!
It is now my pleasure to table this budget before you for your consideration and approval.