Health & Welfare Sector Education & Training Authority (HWSETA), Manufacturing, Engineering & Related Services Sector Education & Training Authority (merSETA): oversight by Committee

Higher Education, Science and Innovation

18 May 2010
Chairperson: Mr M Fransman (ANC)
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Meeting Summary

This was the first meeting for the Committee with the Sector Education and Training Authorities as in the past they reported to the Department of Labour. The Committee received reports to nine questions that the Committee had put to the SETAs about the landscape and reconfiguration of the SETAs including the performing, non-performing and non-compliant aspects. The Chairperson said that the Committee was going to be an activist Parliament about solving concerns that people on the ground lacked access to SETAs and the huge under-spend by them.

The Health and Welfare Sector Education and Training Authority (HWSETA) informed the Committee that their mandate was to facilitate, co-ordinate and monitor the implementation of the National Skills Development Strategy (NSDS) in the Health and Social Development Sector; to identify skills shortage in the sector; to support the development of the skills of employees in the sector; to improve the quality of life, prospects and labour mobility of employees in the sector.

HWSETA outlined their strategic objectives for 2010-2011 which were to create a strategy that would direct the HWSETA and align all organisational resources to achieve both its national and sectoral objectives. They wanted to build and manage the HWSETA performance, ensure congruence between the professional image of the HWSETA and service delivery standards experienced by all stakeholders. Another objective was to ensure effective utilisation of financial resources, and take overall accountability for the financial health and success of HWSETA. The SWOT analysis and the budget were discussed.

Members were concerned about problems of underspending and the impact that had on communities. Inconsistent expenditure on different provinces was also discussed. Surplus was a huge issue as there was a crisis of unemployment in the country and a great need for resources to be poured into skills training. The insufficient distribution and delivery of learnerships was addressed.

Merseta’s mandate included encouraging employers to use the workplace as an active learning environment; providing employees with the opportunities to acquire new skills and providing opportunities for new entrants to the labour market to gain work experience. They wanted to encourage workers to participate in learnership and other training programmes; to improve the employment prospects of persons previously disadvantaged by unfair discrimination and to redress those disadvantages through training and education. The SWOT analysis and the budget were discussed.

Members enquired about students not progressing past level two to level three or four; learnership hopping and issues of skilled workers leaving South Africa and not returning. It was suggested that a gender imbalance in the service SETAs needed to be addressed.

Meeting report

In the Committee’s first meeting with the actual SETAs, the Chairperson said that there was a general perception on the ground that it was difficult for people “to get” to SETAs and there was a serious under-spend of billions of funds in the National Skills Fund. The Committee had circulated a questionnaire to the SETAs and they were analysing the responses. Some SETAs had given lots of information and others had not been so forthcoming. Currently they knew that on the ground it was very difficult to get to SETAs and that SETAs had failed to have an impact. The Committee might be viewed as meddling but they were going to be an activist Parliament and were unapologetic about that.

Health and Welfare Sector Education and Training Authority (HWSETA)
Mr Corrie Smit, CEO of HWSETA, presented their mandate which was to facilitate, co-ordinate and monitor the implementation of the National Skills Development Strategy (NSDS) in the Health and Social Development Sector; to identify skills shortage in the sector; to support the development of the skills of employees in the sector; to improve the quality of life, prospects and labour mobility of employees in the sector. They wanted to strengthen the institutional capacity of the HWSETA in order to improve productivity and the quality of services it provided to its stakeholders; to increase the levels of investment in skills development and to improve returns on s?uch investment; to improve performance and productivity in workplaces in the sector; to improve the employment prospects of persons previously disadvantaged by unfair discrimination. HWSETA’s mandate was to access additional funds from the National Skills Fund for the benefit of the sector; to support the implementation of the National Qualifications Framework (NQF); to support the South African Qualifications Authority (SAQA) and its three councils; and to support the implementation of the Quality Council for Trades and Occupations.

HWSETA’s strategic objectives for 2010- 2011 were to create a strategy that would direct the HWSETA and align all organisational resources to achieve both its national and sectoral objectives. Secondly, to build and manage the HWSETA performance, ensure congruence between the professional image of the HWSETA and service delivery standards experienced by all stakeholders. Thirdly, the objective was to ensure effective utilisation of financial resources, and take overall accountability for the financial health and success of HWSETA. It was envisaged that a HWSETA culture would be created that empowered and enabled staff to perform in line with the HWSETA strategic objectives and established and maintained a management team that added value to the HWSETA deliverables. They wanted to develop and implement sustainable internal business processes that supported the HWSETA in achieving its objectives. The plans that would deliver on these objectives could be found in the HWSETA business plan.

Budget
Ms Elaine Brass, Chief Financial Officer, HWSETA, presented the previous budget for 2009/10, saying their actual levy income had far exceeded the budget, with a surplus of R13 million. Interest on cash holdings income and government department levy contribution had also exceeded the budget. Total administration expenditure was R44 million but the budget was R49 million – reducing administration costs which was a good place to be. They underspent on the expenditure of mandatory grants which was not a great position to be in. However, there had been 70% employee participation in workplace skills plan (WSP) programmes in 2009/10 instead of 62% of 2008/09 so there was a substantial improvement in participation.

The discretionary expenditure of R88.5 million compared to the R60 million budget meant that they now tapped into their reserves which was a good thing. At year-end, the surplus of R24 million went into discretionary grants which meant they had more to spend as discretionary grants. Of that, R2 million was spent on capital expenditure. Resources were obtained and utilised in accordance with the budget. Tight control over administration expenditure was exercised as described. The budget amounts were not exceeded except where indicated. Discretionary grant expenditure exceeded the budget which was a good position to be in. Participation of employees in mandatory grants had increased substantially from the prior year (72% instead of 66%).

In the year ahead, the Skill Development Levy (SDL) revenue had a 7.4% increase at R181 840 000 million. They budgeted for government department levies of R30 million (which was conservative if compared with the previous year’s R34 million income from levies). Interest was much lower as they would be spending more on discretionary grant funding. Mandatory grants were estimated at R140 million – there they were estimating 100% participation. This did not happen in reality but for budget purposed, they put it in as 100%. Administration expenditure was budgeted at R51 million, though the trend in the last couple of years is that they would come under that. Capital expenditure was estimated at R1 million. Projected Discretionary Grant income was R178 112 million (from reserves, surpluses, interest from mandatory grants). Those expenditures supported learnerships, bursaries, and other items indicated in the presentation document. Most of that expenditure supported youth and unemployed. R60 million had been set aside for the important government lay off scheme. That left them with an estimated surplus of 59 million.

Ms Elaine Brass said that discretionary reserves for the previous year came to R312 839 999 with R215 357 000 (68%) of that set aside for commitments. Additional income (SDL, interest on cash reserves and mandatory grants that were not fully utilised) was indicated in the presentation slide. Additional projects had been earmarked where the smaller employer could tap into training. She noted some exciting projects that would help them get down to the ground, and support the youth and unemployed (see document).  Thus by the end of the 2010/11 financial year they would have about R59 million reserves left.

Mr Smit said the under expenditure in administration was by design not default, using austerity meansures, as a consequence of the economic downturn. The R34 million was taken back from the provinces that did not use it. Provinces not rolling out projects that they initially applied for was a problem.

SWOT Analysis
Swot Analysis strengths were they had strong internal leadership; unqualified audit reports two years in a row; financial stability; legislative compliance; good stakeholder support; good governance structures in place; competent management team; targets were achieved; good internal business processes; and lastly staff were trained and developed.

The weaknesses were a tendency to work in silos which was a problem in most SETAs; a difficulty in filling vacancies quickly; managers were slow to install a progress monitoring culture; commitment failures were sometimes experienced; document control issues; customer care focus.

The SWOT Analysis opportunities were seen as: provincial presence could be strengthened (at the moment there were three: Western Cape, KwaZulu Natal, East London with a fourth opening by year-end in Polokwane); measure the impact on people’s lives using RIME evaluation (research, information, monitoring and evaluation) to obtain an unbiased view of the projects they implement; benchmark against other business, management, SETAs; utilise special funding more effectively (taking R34 million back because of non-delivery bothered them); build on positive stakeholder perceptions; focus on underdeveloped sub sectors (such as emergency care); improve branding and marketing.

The SWOT Analysis threats were: the SETA landscape change; move to the new Ministry in November 2009; top down approach with the NSDSIII targets though they were pleased with how this was going; high expectations of the general public to access SETA opportunities and funding; the impact of economic slowdown; undetected stakeholder fraudulent activities.

Provincial support for the different provinces showed an uneven distribution across the provinces. ABET Entries: participation was large in the Gauteng and KwaZulu Natal but not other provinces. A concern was the uneven distribution amongst provinces. He went through the other items showing this uneven distribution. New Venture Creation showed that these ventures were sustained for about three quarters and then failed by the fourth quarter, which showed in the numbers. He looked at the difference between employed and unemployed learnerships and the gender distribution. Special Project funding was used by Western Cape significantly. He also showed graphs dealing with
IPAP Projects, Learner Age Profile, Employment Equity, Senior Management Employment Equity, Management Employment Equity, Staff Employment Equity, and its Board Profile. In answer to a question, the 26 board members received R1600 per board meeting.

The HWSETA Training Provider Analysis showed which were BEE companies. HWSETA Training Providers Analysis Cost – HWSETA did not fund providers directly. They worked with their employers exclusively. The employer would get the money and he would pay the provider with a few exceptions: HWSETA funded two providers for the
Institute of Sectoral or Occupational Excellence (ISOE) Project: R255 258 and the New Venture Creation Project R591 250.

The HWSETA Deputy Chair emphasised the issue of the Mandatory Grants. A challenge was non-compliance where employers complied with the law but did not act in the spirit of the Act. They submited the WSP but did nothing more than that.

Discussion
The Chairperson commented on the turnaround strategy in HWSETA during the last three years. They were now receiving unqualified audit reports and HWSETA was in good hands. He complimented them on their detailed report and suggesting other strategic management questions which would strengthen the Committee’s ability with oversight and drilling down to the problematic matters. There was a provincial concern firstly with allocations being used. After three years of regional business plan being submitted reactively, HWSETA was following a different approach. Towards the end of the financial year, provinces that were not spending were identified, their money was pulled back, and reallocated elsewhere which was proactive for good accounting. The downside was that with the weaker provinces, where there was instability with high staff turnover rates providing very little consistency and leading to unspent provincial finances, the problem was systemic. Was there a relationship between the provinces which received the funding and the more capacitated, urban provinces? Was there a link between the money not going to certain provinces and the rural provinces where far more clinics and social development outlets (community health and social workers) were required?

The Chairperson said there were now good management structures in place at HWSETA and good employment equity status. However did the anchor offices in the SETA reflect equity? Who was driving the real delivery and the real implementation? Those are the hard questions. He asked about the success in fulltime and even medium term employment take-up of trained learners? What were the critical issues for provinces not spending?

Ms M T Kubayi (ANC) asked about the financial budget of the levy exempt sector? HWSETA had a problem of staff turnover for many years. Previously it was very high, was it stable now? She asked about the ability of the SETA to provide support for employers by means of skills development facilitators (SDF). There were no formal qualifications for SDF, which created a gap and raised a problem with the submission of Workplace Skills Plan (WSP) and the implementation of the WSP.  In many instances one found that the implementation of the WSP was done as a compliance tool. There were issues regarding the correlation of the submission of WSP and the report on employment equity and other reports that were submitted to the Department of Labour. How would there be synergy between the information submitted to the Department of Higher Education and Training and the information submitted to Labour? How could they manage to bring them back into correlation with SETA’s work and employer compliance in terms of legislative requirements? There was therefore a lot of work that the Committee needed to do in reviewing some of these legislative frameworks.

Ms Kubayi asked why there was surplus when there was a national crisis of unemployment in the country caused by the lack of skills. It was not ideal to have a surplus or to even have situation where a surplus was projected. It could be that this surplus was as a result of under expenditure in a particular environment. However, unless the Committee was unable to correct the legislation in a particular environment, then the departments would continually fail to reflect good health in their finances. Therefore there was a huge challenge as there were large numbers of young people out there who needed this opportunity but could not be funded.

Ms Kubayi asked how one could find a way of channelling all this money that was sitting somewhere as a surplus and produce what was required in terms of skilled labour and skilled young people who could be absorbed by the market. The learnerships for health workers and community workers were there but there was a huge gap in scarce skill learnerships. Had they bridged that gap? What was the support provided by the SETA? There was a target of 15 000 in scarce skills yet there was a debt of learnerships and non response from the sector.

Biotechnology was a scarce skill yet the youth did not know about it, what was the support that SETA provided for that? How do they bridge that gap? This sector was dominated by white people and it did not reflect the demographics of the country in terms of race.

Ms Kubayi commented that there was a challenge, as a Portfolio Committee, about how to bring their own colleagues in the provinces to a discussion. There were no policy interventions in Limpopo and North West which were rural provinces, to address high illiteracy and there needed to be an initiative from the provinces to drive that. The Committee had a responsibility to push for that.

Ms Kubayi asked what caused the low uptake of special funding. What were the challenges and were they looking at a different way of improving the situation so that they obtained returns in skills development.
 
The Chairperson asked how they could ensure that they were not just pumping money into the programme for the benefit of another country, especially in the Health and Welfare Sector.

Mr Smit responded that the R37 million that was taken back from the provinces was rerouted to another province that could better utilise the funds. They needed somebody in the province to act responsively. The comment on employment equity was very valid. This was not by design but by default and the Board would ensure in a year or so that the profile on race distribution was changed. Tracking of learners was a major issue. The Research Information Monitoring and Evaluation (RIME) project’s task was to find learners and write a progress report which would provide this necessary information. It would be interesting to reveal those findings to the Committee because it would give the Committee sufficient information about different sectors.

The levy exempt sector consisted of small companies such as non-government organisations and the non-profit sector. They were not withholding any funds or support from them. HWSETA had a specific project known as the voucher scheme that had been successfully implemented to give these small companies an opportunity to train their employees without necessarily having to spend their own money.

Ms Kubayi commented that she had thought that “levy exempt” referred to those entities that earned 80% of their income from government. She therefore asked who was responsible for monitoring them.

Mr Smit responded that those were the government departments that had contributed R30 million. They had in fact given more this year than they had in the previous year. 

Mr Smit said that in terms of their staff turnover, HWSETA had been plagued by this two to three years earlier and there had been chaos at the top. However the board and other senior positions were now stabilised. The Vice Chairperson had played a significant role in stabilising the Board and ensuring that the members of the Senior Executive of the management were stabilised. The SETA landscape showed that the best people wanted to get out first. The HWSETA was now well funded and well-staffed, so low level vacancies could be dealt with in the future.

Support to employers especially in the form of skills development facilitators, had been a major problem as they had had a high turnover. The skills development facilitators played a significant role in both the private sector and the public sector. Now there had been workshops for them nationally and special workshops for the public sector. The skills development facilitators of all the provinces were called in and they had communicated with them on a frequent basis. That was not a problem this year because they had worked hard to stabilise the environment.

The surplus was R56 million, R16 million of that was money that was lying idle at the moment. Not a single company had come forward to apply for the money in the training lay-off scheme. He felt fairly comfortable that they had dealt with the crisis effectively. It was their intention to ensure that even the R56 million would be worked down over the year to about R12-15 million as an emergency reserve.

The Chairperson said it would be interesting to unbundle further why no companies had applied. Government had cut down on Social Development. Welfare organisations and NGOs had been reduced which were linked with the social workers and health workers. The notion of unemployment equity spoke to transformation and it was about embracing the impact of change and transformation. Another issue was the anchor mandatory structures in any institutions and what was taking shape in the society.

Dr W James (DA) commented that the Minister had done the right thing by taking control of the SETAs and putting them towards the centre. The question now was what role did the provinces play in all of this, because clearly the provinces had in many respects failed. The failure was one of governance. It was an inability to organise the demand in, for example, the Eastern Cape in for instance having a Provincial Chamber of Commerce. This was a question actually as to why? Who had decided that? Why did they not give money to trade unions? There was great need for nurses in the Eastern Cape. How did one actually help provinces to organise the demand more properly so that they could in fact absorb that money? The logic behind the SETA was a compelling redistributive logic.

Mr James suggested companies spend money on training if they wanted companies to contribute on a national level. Government generated the funds and their job was to distribute them; have efficient project turnover and get them to where they were needed. They were supposed to train and educate the nation which would have positive effects on unemployment. If they had a surplus then it was not working. There was a long history of turbulence in the sector. If board members were getting paid and had unscheduled board meetings then they had a vested interest. That was highly unsound in government protocol. There was a history of bad governance in the SETA then the turnaround project occurred. Something had gone wrong here because the money going towards training young people in a measurable way was not happening. This was the fault of the provinces something was wrong with the system so he wanted to work towards solving that. What was the size of the surplus? R56 million needed to be spent in the next financial year, who decided that? Were their limits? Schedules of authority? What was the responsible way of moving that money? When did the surplus need to be spent by and how?

Mr Smit said the new NSDC (National Staff Development Council) made it clear that it had a specific focus on government priorities. The document was not signed off by the HR council until they had spoken to the provinces. It was an upfront requirement. He congratulated the Minister because it was going well.

Mr Smit said the surplus was R56 million but before the end of March R156 million needed to be spent. R100 million was earmarked and R56 million available. It was not the CEO’s discretion; there was a specific structure that was in place. An expression of interest was first used and made known to the public. There were then applications for specific learnerships, skills programmes and internships. There was in addition, a special funding window, which was not necessarily linked to learnerships or skills programmes. Where money for special funding was concerned there were two criteria that had to be met by an employer. The first was addressing scarce skills and the second was that an employer had to demonstrate that there would be an exit strategy for the learners that had been trained. The employer had to demonstrate how the criteria would be fulfilled upfront before receiving any funds. There was a government structure that monitored the applications and the decision-making surrounding the allocations of funding. The board also monitored if the money was allocated sufficiently. Employment was fundamental otherwise the organisation would not be given money. This was part of the internal audit which had mega controls. As the CEO, he was one of the inspectors and distanced himself from the process.

Ms Elaine Brass CFO said the surplus came from administration so they were underspending which she was proud of because it allowed further money for discretionary funding.

Ms N Gina (ANC) was concerned with the usage of the discretionary grant. In the SWOT analysis they did not address how they intended to strengthen the position of the province? She was worried about the announcement of the new landscape being a surprise.

Mr G Lekgetho (ANC) said one of their mandates was to identify skills, yet the uneven distribution of funds showed they sat in offices and waited for application - there was no identification. Two provinces received more than the rest of the funding. What will be done on the ground? What was the staff complement? He asked what the challenges were in filling vacancies and said they must prioritise the filling of vacancies.

Mr K J Dikobo (AZAPO) commented on the issue of vacancies. He wanted to know what percentage the vacancies listed was and how that affected service delivery. If it did not affect it then those posts were not needed. Surplus reflects an unhealthy system. In terms of fraudulent activities, he asked if the hot line was busy and what the follow up was. There was no credibility if it was located within the organisation. Where was it located? What was the capability of it to deliver quality service? What was the feedback?

In the presentation on special funding nine provinces were listed and a national Province. Why national and what did that reflect? The board was outgoing with 26 members - what was the new size? What was the ability of that number to deliver quality service? Tracking of learner placements and the New Venture Creation people - what follow-up was happening? How successful were they?

Mr G G Boinamo (DA) said the discretionary grant expenditure exceeded the budget for the year - what caused that to happen? What qualified one province to receive a huge amount of the budget in comparison to the others? How long did it take learners to get employment? Were they casual or permanent jobs? On the issue of provinces and funds, was it the problem of the budget not being used due to ignorance or the availability of funds or reluctance to skill the people. Should the Committee engage on an awareness campaign in those provinces?

Mr Smit discussed the SWOT analysis in terms of the provincial presence and how they had allowed the uneven distribution of funding and learnerships to happen. For that reason, they had strengthened their presence in the various provinces and would continue strengthening their position now they had a mandate or a possible mandate for the next five years. They knew the capacity problems in the provincial structures and were anticipating it. The new and existing officers were going out of their way to establish relationships and networks with the various provincial officials involved in the application for funding and utilisation of funding. The money distributed was done “on paper”; if you applied for funding there had to be a memorandum of understanding or a service level agreement. The principles as stipulated in the agreement had to be honoured otherwise they would not receive the money as they did not meet the criteria. This was where the bottleneck came in. The bottleneck was caused by the roll-out of the funds based on the inconsistent conditions of the service level agreements. This was to say that the process was very much a stop/start affair.

On the question of the “new landscape” surprise, although they were involved in some of the research during the last year or two by the Department of Labour but they were not part of the decision of how the SETAs would be split. It was assumed that the decision was done by the Department of Higher Education and Training making use of the research reports available at the time. It was a surprise when the Minister announced the new landscape and that their SETA would be split into a health component and social development component. The Director General had said that by 31 May the consultation documentation had to be in and a formal presentation would be made in June.

The shortage of skills had been identified in their sector – there was a small booklet in the document pack that showed this and had been communicated to the Department, private and public employers. The funding was directed at scarce skills only.

On the matter of staff complement, the hold-up was mechanistic as their licence had expired 31 March 2010. The Minister had extended it to 31 March 2011. They were nervous to appoint permanent positions if the licence was going to expire. Contacts that expired on 31 March 2010 were extended to 31 March 2011. They had to be careful so they were reluctant to take on people. There were service delivery problems in the past yet they were proud of their results. Low level positions needed to be filled but senior positions were stable.

Undetected fraud was an issue so they had developed a fraud hotline which was managed outside of the SETA and was working well. They were dealing with 13 external cases which he was happy to say did not involve SETA staff, for instance a problem with a provider charging the learners and getting funds from the SETA. Seven were criminal cases and were being dealt with by the SAP.

Service delivery organisations and employers had a national spread serving five or six provinces so they were referred to as national.

The Board had 26 members. They would complete their service at the end of March 2011. The Board was operating well. It had assisted with business and strategic planning and process rejuvenation.

On the matter of tracking of the ‘New Venture Creation’ learners, they had signed an MOU with the Small Enterprise Development Agency (SEDA) who were assisting with continual support of learners after their six-month training. SEDA was the hand holding agency there to guide learners into establishing businesses properly. They were delighted with the support they had received from SEDA. Where there was a bit of a drop-off after nine months, they had reported this to SEDA and were working on finding ways for them to get back with their businesses.

The Discretionary Grant for the first time had spent more money than planned and they were eating into the reserve which they wanted. It was exceeded by R38 million. This year, the R56 million was part of that pie which would help in reducing it to the lowest level.

Learners all got permanent jobs. The Departments of Health and Social Development had taken decisions to eliminate labour brokers and were appointing nurses on a permanent basis.

They were impressed with the NSDS framework which contributed to the further development of the targets and formulation of the targets. They had been worried that it would be a top-down approach but it definitely was not. The Department was quite willing to sit down with them in formulating targets and they were working together well and HWSETA was delighted with this.

Mr James (DA) asked who decided that HWSETA only gives money to companies.

Mr Smit said it if it was whoever the employer was – be it government, private or the unions - it was the employers in the true sense.

The Chairperson said the obvious follow-up concern was the provincial-national issue and how to bring provinces into a strategic discussion and made aware of their responsibilities. If truth be told, provinces were never part of the governance-institutional framework. Money was sent to provinces but everyone did their own thing. Provinces had no mandatory and legal processes in connection to SETAs. That was an area that needed to be cleaned up in the future. There was also the concern of scarce skills and what had happened to the learners that had been trained. Where were they? How many had left the country or had been recruited internationally?

Manufacturing, Engineering & Related Service SETA (merSETA)
Ms Jeanne Esterhuizen, merSeta Chairperson and Employer Representative (Retail Motor Industry), said that their mandate was to develop the skills of the South African workforce by improving the quality of life of workers and their prospects of work and labour mobility; to improve productivity in the workplace and the competitiveness of employers; to promote self- employment and to improve the delivery of social services; to increase the levels of investment in education and training in the labour market, and to improve the return on that investment.

Their mandate was to encourage employers to use the workplace as an active learning environment; to provide employees with the opportunities to acquire new skills; to provide opportunities for new entrants to the labour market to gain work experience; and to employ persons who found it difficult to be employed. They wanted to encourage workers to participate in learnership and other training programmes; to improve the employment prospects of persons previously disadvantaged by unfair discrimination and to redress those disadvantages through training and education; to ensure the quality of education and training in and for the workplace; to assist work seekers to find work; retrenched workers to re-enter the labour market; employers to find quality employees and to provide and regulate employment services.

Mr Xolani Tshayana, Deputy Chairperson and Labour Representative: NUMSA, explained that merSETA, one of the 23 SETAs established through the Skills Development Act, facilitated skills development for the following sub-sectors: metal and engineering, auto manufacturing, motor retail and component manufacturing, tyre manufacturing and plastic industries. Together the five sub-sectors comprised approximately 44 000 companies, with a work force of approximately 600 000. MerSeta’s vision was to become leaders in closing the skills gap. Their mission was to facilitate sustainable development of skills, transformation and accelerate growth in the manufacturing and related services sector.

SWOT Analysis
Dr Raymond Patel, the CEO of MerSETA, explained the SWOT Analysis saying the strengths were huge industry participation in NSDS 2; merSETA’s infrastructure and capacity to manage information; stable management structure (not one senior executive manager had left in the past three year); provincial presence in every province; they had done sufficiently well in registering qualifications on the NQF; a tried and tested apprenticeship system; good co-operation from chambers and stakeholders; stakeholder support; efficiency of the grant disbursements system; administration cost effectiveness; leadership within sector (manufacturing sector) and guidance to government (provincial and national); they had been cited as one of the 39 best companies to work for in South Africa.

Weaknesses were: Limited coordination between the Department of Trade and Industry (DTI) and merSETA; the levy system was exploited for financial gain – such as a full training system set up with merSETA funds by a company but no contributions made by them to merSETA; absence of effective quality management systems; limited lifespan of NSDS, training for local market not a global market; limited skills programme; delivery and consistent customer service; quality service; merSETA succession plan; learnership progression; not advocating our successes enough.

Opportunities for the merSETA were: economic growth, the
Human Resources Development Council of South Africa, NSDS III, increase productivity, increase quality service, infrastructure and network management, outsourcing as empowerment opportunity, financial incentives for learnerships, expanding the work of the merSETA for top artisan-related training.

Threats for merSETA were: HIV/ AIDS, global competition, retrenchments, poaching of skills internally and externally, insufficient delivery of learnerships, brain drain, lead times, SETA landscape.

Budget
The details of merSETA’s discretionary grant expenditure were fully explained in the presentation document showing the percentage of levy paying companies compared to the percentage of registered learning programmes for each province. They were spending more in provinces were the income was less in order to address two key issues: poverty and illiteracy. The literacy and skills levels were the highest in the Western Cape, therefore they had the lowest number of registered learning programmes. He outlined the mandatory grants spend per province.

Initiatives that merSETA was participating in to assist and support unemployed people were numerous and very successful. The budget for this was R600 million (which included 2300 apprenticeships costing R260 million). Mr Patel spoke about the success of the New Venture Creation programme of over 370 people who were continually tracked by merSETA itself – this was not outsourced. He also spoke in detail about the
Accelerated Artisan Training Programme (AATP). They had also identified a lack of career guidance so they created a career guidance gateway.

Ms Beula Dziruni (merSETA CFO) said that the MerSETA budget for 2010/11 had been steadily increasing training expenditure over the past two years and planned to continue. They budgeted for a small levy increase in 2010 leading to the total revenue being slightly above 2009/10. They had substantial reserves and commitments and aimed to increase discretionary expenditure to deliver training. A number of programmes were due to be evaluated in 2010/11.
More details were provided about provincial projects and initiatives to help the unemployed.
 
Discussion
The Chairperson said merSETA had done exceptionally well in terms of strategy and operations. The difference between mersSETA AND HWSETA was that in the former there was a strategic reflection on the provinces and the alignment to poverty as well as a skills gap analysis per province. It was interesting that even though there was a percentage member company in a province at times based on the type of interventions, the investment there would be a little lower taking into account the strategic reflection on what the county’s need would be, in particular provinces or municipalities. There was a model there that needed to be unpacked further. In terms of the NSDF what were the things they felt needed to be raised? What was the impact on the SETA?

Mr James said merSETA was a model for what a SETA should do. He commented on the range of technologies they had in terms of training and asked what the overlap was with the health sector. Did they do any joint projects with any other SETAs?

Mr G Lekgetho asked if there were regional offices in all provinces. He was happy that they took unemployed learners from the street. He asked if they thought they were doing enough?

Mr Dikobo commented on the terminology used in the presentation where ‘regions’ were used to reflect the provinces. On the issue of the invisibility of FET colleges, he asked why have they been paid under ‘provider analysis’. They were only dealing with unemployed learners 18.2% but he stated those that were employed also needed to be skilled. Was the decision a policy decision or because there was no request to assist those that were already employed.

Mr Boinamo asked why the region Gauteng was coupled with the Free State in the presentation. He suggested it would be better if Gauteng had a percentage of its own and each of the provinces accordingly. He asked to what extent the SETA was effectively and actively spread in the provinces especially the rural areas where the majority of young people resided and skills shortage was glaring.

Ms Kubayi commented on transformation and gender, saying that there were a very limited number of females and perhaps they should encourage more females to participate in that industry. Why was there insufficient delivery of learnerships and what were the challenges? RAP had 4000 on board - what was the target? The industry had been hit hard by the global crisis. What were the responses by the industry? She expected there should be more than 4000 people. She asked if financial support was coupled with career guidance. Were financial opportunities provided as a SETA or did other sectors provide financial support to the student?

Dr Patel raised the issues about the NSDS and said they had done an analysis and the formal response was around the signing of the SSD. He said it was good to get so many partners but it would be a practical nightmare. On the issue of grants, he raised his personal experience that he was involved in skill development since its inception in year 2000. During that year he was a consultant for two years and became a CEO later in 2003. He was exposed to discretionary grants (the Transformational grant). It was a grant that accelerated training and addressed past imbalances and also achieved, for instance, women representativity. If they had a 50% mandatory grant it would not address the issue of scarce and critical skills in the industry. He had studied Brazil which had had a levy scheme since 1942. The companies there who trained did not submit a WSP because it was a waste of time. They should research how to give incentives to companies to train more without giving them the bureaucratic burden of training. There was a need to increase the discretionary grant to address unemployed youth and the community which was half skilled.

Dr Patel said in his home town of Boxburg, everyone was a welder. In Mitchells Plain there were welders but not arc welders. The only way to take skills to the next level was through government intervention. It needed to be driven by government, and NSDSIII was the instrument and vehicle for that. If one skilled people, one should do it from a high level such as in Singapore they did it from a government level and had a high literacy rate.

Dr Patel said in terms of joint projects they were beginning to work with other SETAs. They crossed over with the ServiceSETA because they both trained artisans. They worked well together, and had a good relationship at a management level.

He said in terms of the
Education, Training and Development Practices SETA (ETPD-SETA), he was the chairperson of the artisan development committee which oversaw all artisan training within all SETAs. This had led to collaboration with six large companies including Transnet, Sasol and two mining houses, called the Big Six, and they trained extensively.

Dr Patel said that regional offices, versus provincial demarcation by province, had been done by the board. This was a financial decision. For the Northern Cape and Free State there was a small office in Kimberly and a main office in Bloemfontein. The number of companies in the area was also a determining factor for their services.

They did not only train unemployed workers last year they trained 80 000 employed trainers - 6800 were very active.

Dr Patel said they had a direct relationship with colleges, they paid them directly. In the financial report two colleges were recognised as Institutions of Excellence, such as Saldanha and Eastern Mid- lands College where they set up welding schools. They needed to create trade incentives and get their own institutions to deliver. Of 6.8 million aged 18 to 24 years, 1.8 million were actively employed that was a time bomb. Out of 6.8 million, 2 million had matric and further. The problem SETAs faced was funding if they had more funding they could do more. The merSETA wanted to do more and was capable.

On the gender question, he replied that in the four years he had worked there, they had trained from 50 women to 350 employed women on management progammes including MBAs, 18% of manager were black ,17% were women across all colour.

The target for the Training Lay off Scheme was driven from the outside and they had no control over it. Companies experiencing problems went to CCMA, the Department of Labour and then to SETAs, to raise retrenchment plans. They had set aside R80 million to cater for at least + 10 000 people. In the previous quarter 6000 people had been retrenched

He said they wanted to popularise the career centre taking it to the shopping centre in Mitchells Plain and exposing kids on a Saturday morning. He suggested they exposed them to a massive tractor and show them how they could become an artisan. A lot of money was paid for kids at university. Repetition problems were difficult where a four year degree took six years. A maths scientist specialist had been employed to support the university.

Mr Wayne Adams, the Chief Operations Officer of merSETA, explained that the insufficient delivery of learnerships was a twofold problem: firstly lack of learning material and curriculum to deal with the implementation of learnerships. They dealt with that by investing R40 million into developing learning material and curriculum, all qualifications within sector were there to fast track delivery of learnerships. He said there was an issue around students progressing to level two but never progressing to level three or four. Learnership hopping was also a challenge. In order to deal with those issues they were considering creating a three year learnership agreement which would take them from level two to four. Only then could they become fully employable and fully fledged artisans.

Mr Tshayana said merSETA had a good strategy in that they not only looked inward for skills development but supported the objectives of the state. For example they needed to align their strategy with current NSDS III and human resources development strategy. The five merSETA sub sectors should develop strategies for new opportunities. Two examples given were recycling plastic, tyre recycling and to what extent they could ensure skills development. The
Retrenchment Assistance Programme (RAP) challenge was due to the economic recession. They had reduced working days to two or three days a week. Now it was five or four days which meant they could not apply for the training lay off scheme.

The Chairperson said the merSETA model showed dynamic interaction between the board and management. There were many people with skills in the management industry with no qualifications. He asked how enhancement could take place there. They were extremely concerned that government language was rife but implementation was not there. The perspective needed to be tested and drilled into the RPL thereby up scaling to requirement. The training lay off scheme needed reflection. On Grootvlei and Correctional Service partnership they wanted to get into that. The reality was they upscale technical people but there were over 1000 engineers in the UK. SA engineers were recruited internationally yet 80% of municipalities were without technical skills. There was a gap between universities and technical opportunities. He said the reason why engineers did not want to go into the public sector was that they became paper pushers but working in the industry lead to competence after five years.

The Chair suggested a better reality was where the flight of trainees would turnaround after getting international experience and they would come back. They needed to find how they would achieve that because the flight issue was a concern.

He congratulated them on their model and research unit and asked if it was possible to get their success factor methodology. What was the process and what did a board need to look like. What methodology was working in management? He asked if they could analyse and research their success and present it in August. What was their opinion of the success factor for the purpose of guidance for the new landscape? What were the lessons learnt from the turnaround strategy from their instability to now?

The meeting was adjourned.




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