National Skills Planning and Development Series _APRIL… · National Skills Planning and Development Series MANCOSA ... The National Skills Development Strategy (NSDS) is a framework

Management College of Southern Africa Page 1

National Skills Planning and Development Series MANCOSA

INTRODUCTION

The Management College of Southern Africa (MANCOSA) is actively working with several Sector

Education Training Authorities (Setas) on applied skills development research projects through its

research arm, MANCOSA Consulting (Pty) Ltd. The spread of research consultation includes updating

sector skills plans (SSPs), doing PESTEL and SWOT analyses, future skills studies, tracer studies,

occupation-specific studies, occupational maps, skills audits, employer studies, validating scarce and

critical skills, analysing workplace skills plans and training reports, impact studies on skills development

interventions and well as developing impact study models. Conducting critical research in an

independent capacity has afforded us the opportunity to empirically study pertinent issues about the

national sectoral skills planning and the National Skills Development Strategy (NSDS) II from a sector-

wide perspective.

For example, we have identified serious limitations and inaccuracies with the construction of SSPs in

some Setas. This has implications for poor sector skills planning which exposes the levy grant system

to the inevitable risk of under- and over-investments in training and development. These have been

commented on in a previous research paper entitled, “Rethinking Sector Skills Plans: some thoughts for

policy-makers (2009)”.

We have identified serious limitations and inaccuracies with the construction of SSPs in some Setas.

Poor sector skills planning exposes the entire levy grant system to the inevitable risk of under- and

over-investments in training and development. These have been commented on in a previous research

paper entitled, “Rethinking Sector Skills Plans: some thoughts for policy-makers (2009)”. This paper is

available on request from the author.

This research paper is not intended to critique the present arrangements regarding the development of

the NSDS. We recognise the considerable improvements made towards improving national skills

planning over the years. The purpose is rather to identify some conditionalities that should inform the

development of NSDS III as well as encourage constructive debate and discussion on this issue. Our

intention therefore is to advance the project of national skills planning by expressing some thoughts to

policy and decision-makers to assist with this process.

We take the view that measuring skills shortages is not a perfect science. There is no universally

applied or accepted definition of skills shortages. No single empirical measure of skills shortages exists,

nor does it appear that one can be easily developed. Some researchers even go to the extent of saying

that we cannot make accurate estimations of skills shortages due to the constant dynamism of the

labour market and economy.

Skills shortages are difficult to directly observe and the fact that the labour market is in a constant state

of flux makes measurement of shortages extremely difficult. At best, we can conceptualise problems,

predict trends, identify patterns, make adjustments and formulate judgments on the basis of the weight

of labour market and economic evidence rather than making point estimates which are invariably off the

mark. Unfortunately, this reality has not been reflected in the development of SSPs by Setas or the

NSDS for that matter.



Our research on these matters has highlighted several lessons with direct implications for the NSDS.

This paper outlines a few of the more critical lessons that believe should inform the NSDS.

NATIONAL SKILLS DEVELOPMENT STRATEGY

The National Skills Development Strategy (NSDS) is a framework for sector skills planning in South

Africa. It outlines the national skills development priorities over a 5-year time horizon as identified by

organised business and labour. The Strategy is an important initiative because it supports from a skills

development perspective the most important social and economic goals of government in the areas of

job creation, poverty alleviation, local economic development, industry competitiveness, rural economic

development, SMME development and infrastructural expansion. Therefore the importance of the

strategy for human capital development cannot be underestimated.

NSDS I came into effect between 2000 and 2005 and NSDS II between 2005 and 2010 respectively.

The custodian of NSDS I AND NSDS II was the Department of Labour (DoL) with Setas incentivising

skills development in terms of clearly defined indicators and targets set out in these strategies.

However, the effectiveness and efficiency of these earlier National Skills Development Strategies for

upgrading the national workforce and improving the competitiveness of the economy have consistently

been questioned. Criticisms relate to a lack of sectoral understanding, insight and analysis, poor

labour market intelligence, rigid focus, strategy formulation and design flaws, technical deficiencies,

weak research culture, irrelevant indicators and measurement deficits, to list a few. Clearly, there are

lessons to be learnt from the mistakes of previous strategies.

NSDS III is expected to be implemented from April 2011 to March 2016 under the auspices of the

Department of Higher Education and Training (DHET). This presents an excellent opportunity for

stakeholders to create a national skills development strategy that works for the citizens of the country in

a way and manner that previous strategies did not.

The single most important challenge facing policy-makers, planners, organised labour and business is

to ensure that NSDS III is informed by an empirical analysis of, and grounded in, the structural and

contextual conditions of our economy and society – dynamism of the labour market and economy,

industrial and economic policies, investment climate, industry growth trajectories, social and human

development priorities, and so on. This is necessary not merely to plug prevailing skills shortages but to

support the broader goals of government such as halving unemployment and poverty and reducing

inequality by 2014.

So let‟s examine some of the lessons that can be learnt from the mistakes of previous strategies.



LESSON 1# UNDERSTANDING STRATEGY CONSTRAINTS

The custodians, crafters and implementers of NSDS I AND NSDS II failed to understand the limits of

strategy. There appeared to be a simplistic belief over the last decade that achieving numerical targets

contained in the strategies would somehow translate into the elimination of skills shortages across the

economy. Indeed, targets were largely met but the country continues to suffer from chronic skills

shortages. For example, the performance reports of most Setas and the Annual Reports of Department

of Labour boasted that NSDS targets were achieved year-on-year, yet skills shortages continued to

expand and intensify over the strategy cycles. Whilst this may indicate a measurement problem

(discussed later), it also demonstrates the need to conceptualise realistic positions on what a skills

strategy can and cannot accomplish.

A major misconception is to take the view that only way to remove skills shortages is to increase public

investments in education and training. Training is a necessary, but insufficient response, by itself to

alleviating skills shortages. An increase in the public provision of training may only be appropriate if

there is evidence of a decline in the ratios of persons being trained to total employment. These figures

are not readily available in South Africa.

Moreover, there are a range of other possible responses, in addition to training, by which the labour

market adjusts to skills shortages. These include:

Increasing wages; Recruiting more widely; Freeing wage price; Adopting a more expansive approach to skills immigration; Increasing over-time; Altering production methods to reduce the need for skills in short supply; Changing conditions of employment; Utilising skilled employees more productively; Substituting capital for skills in short supply; Changing the product mix; and contract out the work

Issues such as foreign direct flows, trade penetration, technological advancements, competition policy,

labour market policy, monetary and fiscal policies also determine which skills sets, and how much of

each, are demanded in the labour market.

Even in instances where education and training are necessary to alleviate skills shortages, the range of

provision in primary and secondary schooling, further education and training and tertiary education

should be considered as part of a total strategy. Setas on their own cannot be expected to resolve the

national skills crisis as so often demanded by its detractors.



As an example, let‟s look at the projected budgets for education and training for 2011 given by National

Treasury:

The total education and training budget for 2011 is R165,1bn (excluding skills levies which would range

between R7 to 8bn per annum). From the above, the major responsibility for skills development really

lies with tertiary education (R23,3bn) and FET & ABET (R5,7bn) with schooling (R127bn) providing vital

formative education to support vocational and occupational learning in later years .

Viewed from this perspective, the goals and objectives of NSDS III should take into consideration

budgetary constraints as well as proportionality in total education and training spending. In other words,

NSDS III should demonstrate a sense of realism of what can and cannot be achieved. If we cannot

solve the country skills crisis with a budget of R165,1 bn, how it is possible to do so with R7 to 8 bn

(skills levies).

It is therefore important of developers of NSDS III to determine the following at the outset in the

construction of the strategy:

Who develops the strategy ? Who approves the strategy ?

What are the guiding principles (assumptions) underpinning the strategy ?

What are the purposes, goals and objectives of the strategy ?

What are the parameters of the strategy ?

EDUCATION BUDGET

R165,1bn

(10,9%)

BASIC EDUCATION

BUDGET R127bn (11,8%)

TERTIARY EDUCATION

R23,3bn (12,4%)

EDUCATION

ADMIN R9bn

(0,6%)

FET & ABET

R5,7bn

(5,3%)

SKILLS LEVIES

R7 to 8 bn



What is the most appropriate structural framework ?

What are the key targets ? How must these targets be achieved ? How relevant are these

targets to the human capital development needs of the economy ?

What is the extent of alignment between the strategy and major policy and programme

pronouncements of government ?

What is considered strategy success ?

How is performance against the strategy measured, monitored and evaluated ?

What mechanisms exist to adjust the strategy ?

How is impact measured ?

These considerations would allow developers of NSDS III to consider the limits of what the strategy can

achieve.

LESSON 2# PRIORTISING RESEARCH

The lack of a credible research agenda to support the strategies appeared to be a glaring deficiency in

the formulation of NSDS I and NSDS II. The strategies, fashioned and approved by organised

business, labour and government representatives, were not informed by iterative research. Relevance,

thoroughness, accuracy and statistics, so vital in framing a national skills response, appeared to have

been overshadowed by a politically legitimating process with adverse consequences for investments in

skills development.

Crafting any strategy, whether industrial or skills development, is essentially an analysis-driven

exercise, informed by research. Decisions about what should be contained in a skills development

strategy should, of necessity, be informed by data gathering and analyses of the macro- and micro-

economic environments, labour market dynamics, major policy pronouncements and sectoral studies.

This mindset was conspicuously lacking in NSDS I and NSDS II.

Systematic and rigorous research results in evidence-based policy-making downstream to achieve

issue recognition, inform strategic choices, forecast future skills needs, monitor and measure strategy

implementation and evaluate strategy impact. Evidence-based policy-making is the only way of taking

public policy decisions which is fully consistent with a democratic political process characterised by

transparency and accountability. It also provides a measure of protection against the risks associated

with the growing convergence of policy priorities among various government departments.

Therefore the development of NSDS III should, of necessity, be preceded by research enquiry. In this

respect, research is needed to determine the following:

How have occupational patterns and skill structures changed in response to shifts in the

industrial composition, technological advances and other labour market changes?

What are likely to be the skill areas to experience an increase or decrease in importance and

what are the implications for training investments ?

What economic sectors are likely to experience growth and decline ? What are the implications

for skills development ?



What is the likely impact of proposed policy measures on job creation, enterprise restructuring

and job destruction on training and training policies and programmes?

How can the strategy be fine-tuned or reformed to produce a workforce flexible enough to meet

the demands of an increasingly dynamic work environment?

Who should benefit from training and what are the likely employment opportunities for which

these target groups ?

Without rigorous research, the positions taken in the strategy cannot be justified or defended. In other

words, the strategy is reduced to a collection of speculative, untested assumptions and is exposed to

the inevitable risk of irrelevance.

So the lesson is that stakeholders and the DHET should pay serious attention to ensuring the strategy

is underpinned by rigorous research. Notably the lesson on labour market analysis is an extension of

the emphasis on operating from a sound research base.

LESSON 3# POLICY AND PROGRAMME INTEGRATION

NSDS I and NSDS II had not factored other important strategies of government into its framework.

These include, but are not limited to the Human Resource Development Strategy for SA, National

Industrial Policy Framework, Customised Sector Programmes (CSPs), Science and Technology

Strategy, National Strategy for the Promotion of Small Business and BEE Strategy, and so on.

There is thus a vital need for integration between skills planning, economic planning and industrial

planning. This means that various government departments and industry partners should calibrate their

efforts towards creating a skilled workforce. The skills development agenda simply cannot be driven

solely by the DHET when industry strategy is residing in other departments such as Trade and Industry,

Sports and Recreation, Science and Technology, Health, Agriculture or Environmental Affairs and

Tourism. Ideally, skills development should fall within the realm of industry strategy.

History is replete with examples of countries such as Korea, Japan, Malaysia and Singapore who have

integrated economic planning with skills planning to achieve high-growth trajectories over a sustained

period.

Therefore NSDS III should incorporate the major industrial and economic priorities from a skills

development perspective into the strategy.



LESSON 4# FLEXIBLE STRATEGY

NSDS I and NSDS II appeared not to recognise that industries are organised differently in terms of

economic structure, employment and wages, markets, technology, skills profiles and work organisation.

Likewise, the manners in which they respond to external shocks are different, as are, indeed, their

linkages with each other.

This, in effect, creates a reasonable case for SETAs to be given greater autonomy by the DHET to

create seamless interfaces between skills development and industry strategy in collaboration with other

allied government departments. There is a need for regulated flexibility within an integrated planning

framework to drive the skills agenda. A „one size fits all approach‟ with a common set of performance

indicators for different economic sectors simply does not work.

For instance, a rigid 5-year NSDS should give way to incremental planning based on changing industry

priorities. Setas, and the industries they represent, should be enabled to respond rapidly to new skills

demands brought about by fast-changing market conditions, competition, economic restructuring,

advancing technologies and process and product improvements and new legislation.

Such flexibility would also enable Setas to focus their resources on skills that make maximum impact on

their industries rather than spreading resources across a quantum of interventions, much of which may

well be peripheral to the immediate or strategic needs of their respective industries.

A flexible NSDS III would, in essence, mean the integration of skills planning with economic and

industry planning in a more open system.

It would enable Setas to:

engage with various industry partners such as other government departments and agencies,

industrial councils, scientific and research bodies and education institutions in multiple

platforms to ensure that skills development takes place in the context of industry strategies;

pool resources with a range of industry partners and access new sources of funding; and

operate in trans-disciplinary and trans-institutional knowledge networks to address complex

industry problems that need to be underpinned by skills development.

In such an environment, the role of the DHET shifts from controlling to steering, co-ordinating, signaling

and supporting Setas. Other roles would include monitoring, measuring and evaluating the impact of

NSDS lll.



LESSON 5# IMPROVING LABOUR MARKET INTELLIGENCE

A major shortcoming of the previous strategies was its failure to understand the dynamism of the labour

market and economy. This was demonstrated by issuing 5 year targets at the outset as if the labour

market and economy is constant.

This lack of sophistication in the strategy cycle is indicative of poor state of labour market intelligence.

Moreover, poor analytical skills among policy-makers, planners, public officials and employees of labour

market institutions to make sense of statistics have exacerbated the situation. As a consequence, the

nature, scale and severity of skills shortages were often miscalculated, misunderstood, and misused

often resulting in bad policy choices and concomitant high levels of wastage.

As an example, the National Scarce Skills List (2008) which quite oddly identifies, among others, the

following occupations as „scarce‟ and go on to make point estimates of shortages: receptionists (745),

secretaries (665), packers and handlers (310), general clerks (5 625). Occupational forecasting of this

nature is prone to large predictive errors because it fails to acknowledge the capacity of the market to

adjust to skills shortages. Occupational forecasting also suffers from requirements for timely, detailed

and near perfect labour market data covering demand and supply of labour which, in many instances, is

not available. The quality of labour force statistics in SA is generally poor and occupational statistics are

of even poorer quality. In many situations, these statistics are available only in highly aggregated form

such as senior officials, managers, professionals, technicians, labourers, and so on.

In the absence of labour market intelligence, criteria other than iterative, evidence-based research are

often used to make public policy choices. In South Africa this “other criteria” are all too familiar – power

and influence of sectional interests, political ideology, arbitrariness and anecdote. When the diagnostic

capacity of state agencies for analysing labour supply and demand is weak, it exposes public spending

to the inevitable risk of over and under investments.

In this respect a more comprehensive diagnostic framework should be developed in NSDS III to

improve the quality of labour market information of state institutions and agencies to analyse skills

supply and demand. Currently this lack of capacity is resulting in a proliferation of new policies, reforms

and institutions creating confusion and chaos in the system. A more comprehensive framework will not

only strengthen the diagnostic capacity to analyse the labour market, it will also streamline the

proliferation of education and training policies and new institutions. Ideally, the best way to deal with the

problem is to frame a comprehensive package of synchronised responses which work in tandem state

department-wide.

Labour Market Information Analysis (LMIA) is a key element of labour market intelligence. LMIA

involves analysing a comprehensive array of market-based measures (signals and indicators) in the

economy for making public investments in education and training. Reliance on a composite of labour

market signals, rather than on a single forecast, allows the analyst to form judgments on the basis of

the weight of market evidence rather than on point estimates provided by Manpower Forecasting. As a

result, forecasting errors are likely to be reduced.



The objective of LMIA is not to forecast skill shortages or surpluses or to provide precise estimates of

training needs, but to estimate whether there will be upward or downward pressure on economic

returns to investments in specific skills. LMIA emphasises economic outcomes, measured in terms of

wages, employment and productivity instead of occupations. More importantly, labour market signalling

focuses on education and training qualifications rather than occupational classifications, which had

been the main concern of old-style manpower planners.

The identification and interpretation of labour market signals requires a basic understanding of the

analytical processes which can be applied to labour market supply and demand. It also implies the

availability of reliable labour market data for:

guiding private training decisions (basic information required includes - wage rises, job vacancy

rates, graduate placements, enrolment data)

managing training systems (basic information required includes - reverse tracer studies, cost

comparisons of alternative paths, rates of return, measurements of cost effectiveness,

experiences of new industries, productivity rates)

improving labour market efficiency (basic information required – wage levels, no productivity-

related wage differentials, evidence of labour mobility, public subsidies for training, labour

market segmentation, labour codes, obstacles to wage flexibility)

planning public investments in training (basic information required - private training capacity,

balance of skills demand and supply, market imperfections, structural changes.

Three main aspects of Labour Market Analysis can be distinguished:

Labour Market Signalling: Labour market signals convey warnings of important new developments in

the labour market or confirm trends previously observed. Labour market signalling is a vital output of

labour market information especially for those with immediate decision-making and daily operational

responsibilities.

Analysis of Labour Market Functioning and Processes: This involves in-depth research to try and

reveal the dynamics of labour market functioning. Labour market research probes more deeply into

medium and long term indicators, their determining factors as well as their inter-relationships.

Monitoring and Evaluation of Labour Market Policies and Programs: This is the systematic

assessment of the impact of labour market policies and programmes on specific target groups or on the

whole or part of the economy. Monitoring and evaluation is done to identify constraints or deficiencies in

labour market policies and programmes and to provide useful feedback for improving the

implementation of the monitored programmes as well as to facilitate the adjustment of national labour

policies to labour market requirements.

Therefore an investment in building strong labour market information systems and improving the state

of labour market intelligence among stakeholders can ensure better labour market outcomes in NSFDS

lll.



The dynamic nature of labour markets and the frequent monitoring of the signals they send also permit

a more flexible approach to public budgeting for schooling and skills training. The rigid 5 year National

Skills Development Strategy can be replaced by a series of rolling budgets and variable targets

adjusted annually at the margin in response to labour market demands. Incremental planning increases

the responsiveness of training systems to meet the demand-side needs of the labour market.

Labour market information requirements are likely to increase and become more complex as the

economy grows and integrates into global markets. Moreover, international competition and pressing

national priorities requires national education and training systems to become responsive and quick to

the needs of the labour market. Throughout the world a general criticism is that education and training

institutions are not delivering the skills required by business both in terms of quality and quantity. This

criticism applies equally to South Africa. Unless and until concerted efforts are made to improve the

research and analytical skills of users of labour market information, particularly planners and education

managers, the nature, scale and intensity of the skills crisis will continue to elude us to the detriment of

the nation as a whole.

Countries that lack a Labour Market Information System can still benefit by capacitating planners,

researchers, educationists, policy-makers and other users of labour market information with the

requisite skills, tools and approaches to analysis the labour market.

Labour market information requirements are likely to increase and become more complex as the

economy grows and integrates into global markets. Moreover, international competition and pressing

national priorities requires national education and training systems to become responsive and quick to

the needs of the labour market. Throughout the world a general criticism is that education and training

institutions are not delivering the skills required by business both in terms of quality and quantity. This

criticism applies equally to South Africa. Unless and until concerted efforts are made to improve the

research and analytical skills of users of labour market information, particularly planners and education

managers, the nature, scale and intensity of the skills crisis will continue to elude us to the detriment of

the nation as a whole.

Stakeholders should thus ensure that good labour market intelligence should inform the strategy.

LESSON 6# TECHNICAL EXPERTISE

NSDS I and NSDS II did not differentiate between the technical process of strategy design and

development and the political function of verifying the relevance of NSDS I and NSDS II for legitimacy

and accountability. Under this arrangement, strategy formulation consumed considerable time, energy

and costs without necessarily in an effective and efficient strategy. In addition, the process becomes

too large and unmanageable.

The participation of stakeholders (organised labour and business) is critically important to ensuring buy-

in and the democratisation of strategy formulation processes. However, placing too much emphasis on

representivity and not enough on technical ability and research expertise exposes the strategy to

irrelevance.



Stakeholder involvement has both technical and political aspects which up to now have tended to be

conflated. Technical aspects of strategy formulation need to be primarily the responsibility of specialists,

whereas political aspects refer to the role of the wider body of stakeholders in scrutinizing the outcomes

of the work of specialists. Furthermore the principle of stakeholder involvement must be related to the

issue of capacity, specialization, mandating and reporting.

Thus the criteria for nominating stakeholder representatives on the National Skills Authority should be

reviewed. There should be a clear distinction between stakeholder-based processes from expert-based

processes. More suitably qualified and technically competent people should participate in the strategy

formulation process. Those who have expertise should be supported to develop the strategy. Once

drafted it should be referred to stakeholders for scrutiny, verification and approval to ensure legitimacy.

In this way the principle of stakeholder participation would be strongly upheld but appropriately applied.

LESSON 6# CLARITY OF PURPOSE

The structural framework of NSDS I and NSDS II comes across as excessive, inflexible, repetitive,

overly complex, cumbersome, time-consuming and thus unsustainable. This is largely a result of the

way in which the performance indicators have been set out. The result is confusion, frustration and

erosion of support for these strategies. Moreover the language of the NSDS is not user-unfriendly even

to insiders and is baffling to employers and employees.

Simplicity, clarity, flexibility and trust should be the hallmarks of NSDS lll. Simplicity of language and

structure will enhance ownership and participation.

LESSON 7# RECOGNITION OF CUSTOMISED SECTOR PROGRAMMES

NSDS I and NSDS II appear to reinforce the disjuncture between various state departments and

support agencies around human resource development (HRD) issues. As an example, the DTI has

developed customised sector programmes for clothing and textiles and footwear and leather.

NSDS III should give sufficient flexibility for the respective Seta to frame its activities around the skills

development imperatives outlined in the CSPs. In other words, the skills strategy that underpins the

work, is informed by and resonates with the legitimate HRD needs of specific sectors. This is, in

essence, a demand-driven approach to skills formation.

LESSON 8# STRUCTURAL AND TECHNICAL DEFICIENCIES There are roughly 20 success indicators and levers each in NSDS II. This is far too many. The problem with having a large number of success indicators is that it dilutes key priority area deemed important by some economic sectors by spreading financial resources across all 20 success indicators, some of which may well be of peripheral or no importance to a particular sector. The development of career guides by SETAs in success indicator (1.2) cannot be part of a national skills development strategy. Career guides and guidance is the work of schools, FET colleges and



tertiary institutions. Furthermore, this success indicator expects skills development practitioners to undertake the role-function of career development counsellors in educations institutions. Similarly, surveys of BEE firms and BEE co-operatives (success indicator 2.5) cannot be part of a skills

strategy. It is a research exercise that should inform the skills strategy, instead of being contained in the

strategy as a success indicator. Again a skills strategy should focus on upskilling people.

Likewise, the development of SETA board members (success indicators 5.3) through capacity building

should not constitute part of the national skills development strategy. There are far more important skills

development imperatives to include in a strategy.

The strategy should take cognisance of the fact that SETAs are not job placement or employment

agencies (success indicators 3.1 and 4.2). They cannot intervene in the labour market in respect of

employment, yet they are expected to do so.

The above examples contained in the strategy are what I refer to as “noise” variables that unbalance

and disrupt the focus and continuity of a skills strategy. It demonstrates technical weaknesses in the

development of the strategy.

There are many instances where the success indicators are open to interpretation. For example, the

phrase “supported by skills development” is commonly used throughout a number of success

indicators. Skills development support could mean any number of things depending on how it is

interpreted.

LESSON 10# A PRESCRIPTIVE; SUPPLY-DRIVEN MINDSET

The strategy is prescriptive detailing all skills development activities that are to be carried out by SETAs

in terms of success indicators and levers. In addition, quantitative targets are supplied for some

success indicators. In short, the strategy is supply-driven.

In contrast, economic sectors require a demand-driven strategy. In order words, the strategy should be

grounded in the needs of economic sectors. This is not for expediency or fashion, but a demand-driven

mindset ensures that the strategy resonates with the skills development imperatives of different

economic sectors. It also ensures that the strategy can proceed against the suspicion of being

irrelevant.

LESSON 9# REVIEW MANDATORY GRANTS

With the end of NSDS I (2000-2005) the Department of Labour had an opportunity to effect systemic

changes to the mandatory grant system based on 5 years of experience. What it essentially did was

make superficial changes without going into any length to address the very serious structural

weaknesses and risks within the system.

Problems identified in the mandatory grant system include:

Submitting a workplace skills plan (WSP) and training report (TR) does not necessarily mean a levy paying company is training unless:



-all WSPs/TRs submitted to SETAs are verified through site visits -what is indicated in the WSP/TR is actually done by the claimant.

In this respect, it is not possible to verify all WSPs/TRs because it would be an immensely costly exercise for SETAs. Therefore what is not being measured and verified by SETAs is not being managed. It thus exposes the system to potential abuse, the scale of which is unknown. Such a scenario puts the effectiveness and efficiency of the entire mandatory grant system at risk.

Labour has tended to be side-lined in the development of WSPs/TRs.

Some levy paying companies continue to view the skills levy as another tax.

The mandatory grant system appears to be viewed by small companies as another form of bureaucratic compliance (poor participation rates).

Interface between SARS and SETAs is problematic.

Costly administration burden placed on SETAs to manage the grant disbursement of monies.

Managing the mandatory grant requires a SETA to expend a considerable amount of its administration budget on the financial management function. This involves either outsourcing the function to large accounting firms at excessive costs (monies that should have been spent on skills development) or hiring internal financial staff in increasing numbers (SETAs should be hiring skills development experts).

SETAs were formed to promote skills development in their sector. However, they spend a great amount of resources (people and money) in managing the greatest area of risk – finance. They are at times viewed as a clearing-houses to recycle the levy grants.

Companies can claim mandatory grants, irrespective of the type of training they offer (becomes a paper-based activity).

Despite attempts to loosen the grant funding regulations, small firms still appear to find the levy grant

system a “bridge too far”. They continue to perceive it as just another tax. Efforts to encourage small

firms to participate in skills development activities are still an enormous challenge.

If there is a consensus that small business are important drivers of economic growth and job creation, there is thus a compelling case for a user-friendly system. It is therefore recommended that the mandatory grant system be reviewed.



CONCLUSION

In summary, it following recommendations is offered in respect of NSDS III:

At an institutional level, it is necessary for the Department of Labour (DoL) to build an effective, efficient, relevant and reliable Labour Market information System for use by the public. Such a system should make provision for provincial and local labour markets through the establishment of labour market information analysis at provincial levels.

The custodians of the strategy should clearly define the anticipated outcomes.

The strategy process, in its entirety, should be underpinned by a strong research culture.

The strategy should be embedded within the major policy and programme pronouncements of

government.

The strategy should be flexible to accommodate the dynamism of the labour market and

economy.

There should be a considerable investment in improving the state of labour market intelligence. The capacity of stakeholders and general users of labour market information such as, education managers, planners, policy-makers, trade unionists, employers, community leaders and students to use labour market information should be improved.

Need for wide collaboration between research institutions and state departments with a view to sharing databases and developing joint research initiatives.

There should be a differentiation between the technical process of strategy design and

development and the political function of verifying its relevance for legitimacy and

accountability.

The structural framework of the strategy should be characterized by simplicity, clarity, flexibility,

accuracy and trust to enhance ownership and participation.

The strategy should be informed by a demand-led mindset.

The mandatory grant system should be reviewed for effectiveness and efficiency.

Greater attention should be given to policy and programmatic impact analysis. The findings should feed into the policy-making process.

This DHET and its stakeholders have a real opportunity to develop a strategy that focuses on an

analysis and evaluation of the problem as a first step towards devising meaningful and decisive ways to

respond to the skills development challenges over the next 5 years. In short, we need a strategy that

works.

__________________________________________________________________________________

____________________

Comments on this paper can be sent to: [email protected] or Attention: Prof Hoosen Rasool MANCOSA PO Box 49494 East End, Durban 4018 Tel: +27 31 3007200 Fax: +27 31 3007254

mailto:[email protected]

National Skills Planning and Development Series _APRIL… · National Skills Planning and Development Series MANCOSA ... The National Skills Development Strategy (NSDS) is a framework

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