Skills Development Act: Department briefing

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Employment and Labour

08 August 2007
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

08 August 2007


Ms O Kasienyane (ANC)

Documents handed out:
Skills Development Act, 1998/National Skills Development Strategy (PowerPoint Presentation)
National Skills Development Strategy Implementation Report (1March 2005- 31March 2006)
Skills Development Levies Act, 1999
Establishment of Sector Education and Training Authorities(SETAS)
Skills Development Service Level Agreement Regulations
Skills Development Amendments
Skills Development Learnership Regulations
Skills Development Regulations Regards to Employment Services

Audio recording of meeting

The Department of Labour briefed the Committee on the Skills Development Act of 1998, and on the National Skills Development Strategy 2005 - 2010. It was noted that there had been attempts to repeal all pre-1994 labour legislation and integrate the concepts. The National Economic Development and Labour Council played an instrumental role in constructing the Skills Development Act, but it was now implemented collectively by trade unions, government, employers and employees. It encouraged workers and employers to participate in  learnerships, apprenticeships and critical skills programmes. It was stressed that this Act was intended to supplement efforts by the Department of Education, and the Sector Education and Training Authorities were similarly not intended to replace learning in classrooms. The structure of the Act was outlined. The need for funding gave rise to the Skills Development Levies Act, and the purpose and implementation of this legislation was explained. The functions of the National Skills Authority and the Sector authorities were outlined. The distribution ration of the funding was described. The presentation set out the vision, mission, objectives and projections of the Skills Development Strategy for the period 2005- 2010.
A breakdown of the skills levies allocation was given. Suggestions were made on the way forward and the proposed amendments to the Act to enhance its operation.

Members raised the problem of delays in the issuing of certificates by the SETAs, capacity building, the reasons why so many of the grants had not been claimed, the responsibility for decision-making on the training, the implementation of the Human Resources Development, and compliance levels by government departments. The Committee also scrutinised the attempts by the Department to attract back skilled South Africans who had left the country,  monitoring of workplaces, the assessment of market needs in determining training, and the monitoring of work by the Retrenchment Response. It was agreed that there was a need for further engagement with the Department.


Skills Development Act (SDA) of 1998 and National Skills Development Strategy (NSDS) : Briefing by the Department of Labour (DOL)
Mr Sam Morotoba, Deputy Director-General: Employment and Skills Development Services & Human Resources Development, DOL, briefed the Committee on the Skills Development Act of 1998 and on the National Skills Development Strategy (NSDS). He explained that the Integration Amendment Act, together with the Manpower Training Act, had sought to integrate and repeal all labour legislation that was established prior to 1994. Government had then initiated several Green Papers that ultimately resulted in the creation of the Skills Development Act (SDA) of 1998. The National Economic Development and Labour Council (NEDLAC) played an instrumental role in the construction of this legislation. Consequently, the Council successfully advanced that trade unions, government, employers and employees assume collective responsibility for the implementation of this Act. 

Mr Morotoba explained that the main purpose of the Act was to encourage workers to participate in scarce skills learnerships, apprenticeships and other critical skills programmes. Employers also derived benefits from this Act in the form of improved productivity and competitiveness.

A graph was utilised to illustrate the debates and challenges in relation to the NSDS. It was explained that the SDA was never intended to be the sole answer to addressing the country’s skills shortage, but was only meant to supplement the interventions of the Department of Education (DoE). Mr Morotoba noted that graduates often complained about the lack of opportunities and the failure of the labour market to accommodate them. Industry countered this criticism with the claim that there were not enough suitably qualified people and that the kinds of jobs that existed in the labour market did not necessarily match the qualifications of the graduates. The core debate should focus on the quality of education provided by DoE. The Sector Education and Training Authorities (SETAs) were not fashioned to replace learning in the classrooms and were thus ancillary in nature.

The SDA of 1998 consisted of a legislative framework catering for objectives, National Skills Authority, SETAs and Skills Programmes. The Act inserted a transitional provision that provided for the revocation of the Manpower Training Act of 1981, but certain of its sections (sections 12-32), remained in force. The need to generate funding for the SDA gave rise to the Skills Development Levies Act. This new legislation concentrated on skills levy contributions, collections, administration and financial management. Provision was made for collections to be done by the South African Revenue Services (SARS) or the SETAs themselves. The South African Qualifications Authority Act (SAQA) was pertinent and directly applicable to the SDA because it impacted on the work done by the SETAs. The other salient features of the implementation framework comprised of the NSDS 2005-2010, SETA Grant Regulations, Service Level Agreement Regulations, Learnership Regulations and National Skills Funding Windows. All of these concepts were defined in the presentation.

Mr Morotoba outlined the functions of the National Skills Authority (NSA) and the SETAs. He also looked at the distribution ratio of the funds generated through the Skills Development Levies Act. This legislation compelled companies that fell within a R500 000 threshold to pay an annual levy of 1% of their payroll to SARS. 80% of this money (referred to as collected levy) was then allocated to the SETAs and the remaining 20% to the National Skills Fund (NSF). 

Mr Morotoba then tabled the vision, mission, objectives and projections of the NSDS for the period 2005- 2010. He explained that NSDS was a component of the National Human Resources Development Strategy (NHRDS). The Departments of Education, Science and Technology, Public Services and Administration and Labour were all part of this structure. The Department of Education was charged with the primary responsibility of leading the NHRDS. It was reasoned that condemnation of the Department of Labour was therefore unfair and misdirected because the SETAs was designed to address a specific objective and not to be the ultimate solution.

The presentation included a breakdown of the skills levies allocation to the SETAs. 50% was prescribed for mandatory grants, 20% for discretionary funds and 10% for administration.  He described the implementation framework of the NSF and itemised the cross-cutting criteria. His report examined how the NSDS supported the Accelerated Shared Growth Initiative for South Africa (AsgiSA) and other sector strategies. In conclusion, Mr Morotoba submitted suggestions for the way forward and proposals for amendments to the SDA (see attached presentation).

Mr L Maduma (ANC) voiced confusion about the number of SETAs that existed. He was also worried about the delays in the issuing of certificates.

Mr Morotoba clarified that there were 23 SETAs in existence. Furthermore, a commitment was given that the question of delays would be brought to the attention of the CEOs of the various SETAs.

Mr Maduma commented that there was a challenge arising from uneven role players in the work place. In light of this, he questioned whether workers were being capacitated and given the space to participate in matters affecting them.

Mr Morotoba acknowledged that this was a huge problem. He pointed out that one of the funding windows attempted to address this matter through the provision of capacity building for stakeholders.

Ms A Dreyer (DA) was impressed with the completeness of the presentation. She queried the reason why some companies were not claiming the 50% mandatory grants.

Mr Morotoba replied that there was a low claim rate previously because there were a large number of companies in the system with a low payroll. This had since been reversed, due to the elimination of many small companies after the threshold for eligibility had increased to R500 000. The claim rate had now risen to 97%. There was very little money left for discretionary funds

Ms Dreyer sought to establish who decided on the training of workers.

Mr Morotoba explained that this was normally the function of the line managers, working together with HR. This was often not ideal because it excluded other stakeholders from the process. Therefore, the SDA made provision for the establishment of workplace committees. The interests of workers would be represented and articulated by the trade unions that would form part of such a structure.

Mr W Spies (FFP) alleged that the Department and other national strategies failed to investigate and consider how to attract back skilled South Africans who had left the country. He added that these people would be valuable because of their expertise and international experience.

Mr Morotoba answered that efforts were being made to attract back skilled South Africans who had left the country. The Joint Initiative for Priority Skills Acquisition (JIPSA) was instrumental in this process. He added the Deputy President often addressed skilled South Africans abroad on the opportunities available to them in the country. Lastly, the Department of Labour worked closely with the Department of Home Affairs in issuing work permits, especially in areas where there was a large skills shortage.

Ms B Twala (ANC) was interested in the implementation of the Human Resources Development (HRD).

Mr Morotoba responded that the SETAs published annual reports and made presentations before this Committee. In turn the Department consolidated everything the SETAs did, as well as all projects concluded by the NSF. The implementation of HRD was hampered by the Department of Education’s failure to co-ordinate and combine the reports produced by the SETAs themselves and the Department of Labour. He agreed that implementation was not taking place satisfactorily.

Ms Twala posed two additional questions. The first centred on whether the work of the Department overlapped with AsgiSA and JIPSA. The second question was on the compliance level by government departments.

Mr Morotoba confirmed that there was no overlap. The Department had previously expressed its concern on compliance issues, particularly with the Department of Public Services and Administration. He continued that this problem had to some extent been reduced because all government departments were required to disclose the amounts set aside for skills development and training in their Medium Term Expenditure Framework. Lastly, a firm commitment was made to deal with this matter.

Mr M Mzondeki (ANC) valued this engagement with the Department. He advised the Committee to prepare itself for the upcoming amendments that the Department wanted to introduce. Lastly, he wondered who determined the funding windows and who could initiate a project.

Mr Morotoba welcomed the Committee’s input regarding the introduction of legislation and proposed amendments. He declared that the NSA determined the funding windows. Anybody could initiate a project as long as it was in line with the planned strategy.

Ms S Rajbally (MF) asked how workplaces were monitored to make sure that they conducted training.

 Mr Morotoba admitted that it was impossible to monitor all workplaces. He recommended that the onus should shift to the trade unions and those on the ground to ensure compliance.

Ms Rajbally queried whether there was a market for the people whom the Department trained.

Mr Morotoba stated that the Department attempted to avoid any problems by studying the market before training people with a particular skill.

The Chairperson asked the Department how it monitored the work done by the Retrenchment Response.

Mr Morotoba articulated that the National Productivity Institute assisted the Department in intervening in companies that were in distress. A four-step approach was followed. Firstly,  the Department went in and improved productivity. Secondly, the Department would intervene and instruct the company on how to cut its losses. Thirdly the Department could consider what relief measures could be instituted and lastly the Department re-trained people as part of the retrenchment package.

The Chairperson commended Mr Morotoba for his methodical presentation and responses. She called for a further interaction with the Department, as there were some outstanding issues that needed to be addressed.

The meeting was adjourned.


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