Forest Education & Training Authority (FIETA), Health & Welfare SETA (HWSETA); Insurance SETA (INSETA): performance briefings

Meeting report

Forest Industries Education and Training Authority (FIETA) Presentation
Mr Simangaliso Mkhwanazi, CEO: FIETA, and Mr Mike Truelock, Chairperson: FIETA, briefed the Committee on what had been done to assist companies and workers with training in the current financial year.

Mr Truelock gave an overview of the industry and pointed out that the total supply chain was under severe stress. He said that the effect of retrenchment was far reaching where as many as 20 people could be affected by the loss of one job. The exchange rate needed to be at approximately R8 to the dollar for the industry to be competitive.

Mr Truelock noted that a large number of related businesses had shut down resulting in the loss of hundreds of jobs across the sector. It was predicted that a further 700 jobs would be lost in the next six months.

Mr Truelock described the areas at risk where significant cost increases would affect the pulp and paper industry, and fire damage had resulted in a 9% loss of fibre which would take eight to 18 years for re-growth to occur.

Mr Truelock said that there were opportunities through various government interventions in the form of the Forest Charter, R200 million for post land settlement support agreements and land use agreements in the Eastern Cape and KwaZulu-Natal. He added that to achieve this, an integrated effort would be required from all parties involved.

Mr Mkhwanazi briefly looked at the delivery record of FIETA, with broad focus areas including Fire Fighting, small grower development and replenishing scarce and critical skills. He discussed the importance of fire fighting and the economic impact of forest fires in detail, with the total cost of lost timber amounting to R1.4 billion.

Mr Mkhwanazi discussed how FIETA would support Small to Medium Enterprises (SME), which included Siyazuza SMME Project in all provinces, which dealt with silviculture, chainsaw and harvesting training. Other methods of assistance included training on furniture making and charcoal making.

The FIETA/Mondi land claims project was discussed. It was noted that this was a problematic area as funds had dried up for the transferral of land.

Mr Mkhwanazi spoke about the creation of new ventures, which included charcoal making projects, upholstery and cabinet making and truss manufacturing. In total approximately 4000 learners were involved, and those that were unemployed received stipends. Support was also given towards the rehabilitation of offenders, and upholstery and cabinet making projects were conducted in prisons.

The replenishing of scarce skills was discussed in full detail, from research into this being undertaken to the launching of projects and the development of new qualifications.

Inter-departmental and sectoral collaboration was also discussed, along with the training lay-off fund to which FIETA contributed 50 percent of its discretionary grant funding.

Health and Welfare Sector Education and Training Authority (HWSETA) Presentation
Mr Corrie Smit, CEO: HWSETA, briefed the Committee on how HWSETA had been functioning and what had been put in place to ensure that they continued operating effectively.

Mr Smit noted that there were a total of almost 28 000 employees in the sector. The distribution of these amongst the nine provinces was described. The number of Non Profit Organisations (NPOs) was also discussed, with the majority being in the social development sector.

The number of employees according to status and gender was shown with 71% being women. Also discussed were the structure of the Board in terms of employment equity, along with the Audit Committee and the Management Team, the skills development placement strategy including a need to focus on scarce skills, the avoidance of training for the sake of training, and the requirement of employers to meet national equity targets.

Mr Smit said that the National Skills Development Strategy (NSDS) had three problematic areas, which included the support organisations and problems with Adult Basic Education Training (ABET). A breakdown of funds spent in this area was given.

The Industrial Policy Action Plan (IPAP) plans were looked at and the amount predicted for each was given. This included training 1325 learners in mathematics and science (at a post-school level), and funding bursaries in scarce and critical areas.

The Extended Public Works Programme was discussed in full detail along with the training lay-off scheme, where it was noted that the Board had approved R16 million to be reserved for this.

In the creation of new ventures, a target of 750 entrepreneurs were to be supported in gaining operational businesses.

Mr Smit outlined their provincial support along with the role played by the Quality Council for Trades and Occupations (QCTO). The Sector Skills Plan (SSP) was was now in its final year, and a list of scarce and critical skills in the sector had been devised. This included areas such as pharmacy, dentistry, veterinary services and medical aids.

Ms Elaine Brass, CFO: HWSETA highlighted the Auditor General’s report which had given HWSETA an unqualified opinion with only one Emphasis of Matter. There was a significant improvement in governance and compliance from the previous financial year. She discussed the discretionary funding of HWSETA, and it was noted that there was R20 million uncommitted in reserve.

Insurance Sector Education and Training Authority (INSETA) briefing
Ms Sharon Snell, Acting CEO: INSETA, briefed the Committee on INSETA’s performance, and what their plans were for ensuring security in the insurance sector.

Ms Snell shared the background of INSETA with the Committee along with its vision. A breakdown of what comprised the sector was given such as Unit Trusts, Pension Funds and Funeral Insurance amongst others.

She discussed the educational profile of employees in the sector. Employment growth over the previous seven years in terms of equity was shown. There had been a slow yet steady progress in achieving equity targets. However, the equity profile of the insurance sector showed that there were still a disproportionately high number of white employees in the sector.

It was noted that most people were employed in the Gauteng province, but there was also activity in the Northern Cape and KwaZulu-Natal.
 
The numbers of BEE providers were discussed, with the bulk going towards Human Resources and Administration.

Ms Snell noted the numbers of workers enrolled for Adult Basic Education and Training (ABET) which had increased in years 7 and 8. She discussed in full detail a number of projects that INSETA was undertaking, these included FAIS interventions, Black Broker empowerment and the training of black lecturers. The amounts spent on grants was shown. It was noted that 468 levy payers received mandatory grants.

Ms Snell spoke about corporate governance and said that INSETA had received unqualified audits for nine years, and enjoyed best practice in the policy environment.  

In terms of the financial management of INSETA, levy income was resilient, but that there were challenges in spending money timeously.

On the matter of training lay-offs, she said that no lay-offs were planned for the short term. Close work would be done with the CCMA. In conclusion, she said that there was a need to accelerate delivery. 

Questions from the Committee
Mr A Louw (DA) asked how INSETA convinced unemployed people that the insurance industry was a sector in which a living could be made. He said that the insurance industry was seen as a scapegoat for the unemployed. He asked how the youth were attracted to the industry. He asked how the use of call-centres impacted on INSETA, especially on brokers.

Mr Louw asked FIETA for clarity on the issues of cooperative governance and compliance as these issues were not mentioned in their presentation. He asked if people were being training for the sake of training or whether they were actually being prepared for a job market. Government was responsible for job creation, but asked why government did not employ those people who were trained for their own projects. He noted that the building industry seemed attractive to people and asked if this was an area where further development occurred.

Mr Louw asked why coloured people were under-represented in the management team of HWSETA, and what was being done to address this. He noted that 30 percent of workers were temporary and asked what measures were being undertaken to address this issue.

Mr I Ollis (DA) noted that FIETA was in trouble due to the exchange rate and was concerned that the industry was unsustainable.

Mr Ollis noted that there were issues around the placement of trainees because of the R200 million for land claims, and asked if there was a way around this issue.

Mr Ollis said that there was a problem of learners wanting to stay in learnership programmes because they received a stipend, and this resulted in people moving between programmes.

Mr Ollis asked FIETA how many applications from companies had been received for the training lay-off programmes.

Mr Ollis asked FIETA if they could give their total budget and the total number of people trained for the last financial year. He said it would be useful to undertake a cost benefit analysis to see how much it cost to train someone.

Mr Ollis asked HWSETA for clarity on why it was experiencing troubles in Adult Basic Education and Training (ABET).

Mr Ollis asked HWSETA for clarity on how many companies had applied for the training lay-off programmes.

Mr Ollis noted that there was a problem across all of the SETAs where small companies did not participate in the workplace skills plans (WSP). He felt that this needed to be addressed and assistance given to these companies where necessary.

Mr Ollis said that the insurance industry was an area where the barrier for previously disadvantaged people should be low. He asked why this was not the case.

Mr E Mtshali (ANC) asked FIETA what the educational requirements were for training in the pulp and paper industry.

Mr W Madisha (COPE) noted that new technology such as cell phones and computers did not require telephone poles to be laid throughout the country, and asked how this affected the industry and what could be done to minimise the impact.

Mr Madisha said that a report given by the Minister of Land Affairs in 2008 stated that the redistribution of land to the previously disadvantaged was at just over five percent. He asked FIETA to comment on this. He noted that the main owners of forests were large companies such as SAPPI, and that FIETA was responsible for promoting SMMEs, recycling of paper and so forth. This was not real ownership of the land, and he asked how this was going to be addressed.

Mr Madisha asked what measures were in place to ensure that those people who were trained were properly placed in a productive sector of the industry. He asked how these trainees were followed up on, and how skills were retained.

Ms A Rantsolase (ANC) noted that there was no clear plan in terms of prior learning. She said that if training was directed properly then lay-off would not be needed as necessary skills would have been developed in the various industries. She noted that skills development was not aimed to give trainees specialised skills.

Ms Rantsolase asked how schools were involved in the process, and whether there were any programmes in place to provide a direction toward skills development.

Ms Rantsolase said that for INSETA, the employer seemed to be favoured over the employees, and there was no discussion about individuals volunteering for skills development. He noted that SETA in general did not monitor employees who were trained, pointing out that SETA was not ‘hands on’ in this regard and that in some instances training was not undertaken properly.

Ms Rantsolase asked what labour brokers were trained to do, as it seemed that they could not provide training for permanent positions.

Ms Rantsolase asked for clarity on skill shortages among previously disadvantaged people. She said that more weight needed to be given to the prior learning of individuals.

Ms N Mnisi (ANC) asked FIETA if there was any assistance given to people who lost their land to banks and so forth in the form of ‘post settlement support’. She asked if there were any programmes in place to assist here.

Ms P Maduna (ANC) asked if the issue of gender equity was taken into account in the learnership programmes.

Mr E Nyekembe (ANC) noted that all three presentations spoke of ‘lay-off training’, but this issue was not effectively dealt with. Further information on this needed to be given by all SETAs. HWSETA had reserved R16 million in the event that they needed funding for lay-off training, but FIETA and INSETA needed to talk about actual funds being reserved for lay-off training.

Mr Nyekembe noted that FIETA had a problem around placement of trainees. He asked what the functions of FIETA were in agreements signed between learners, trainers and employers. Two roles needed to be played, namely coordination and consolidation of the WSPs which were provided, and then actual training. 

Mr Nyekembe noted that once sector skills were put in place, generally not much training occurred in terms of ABET because employers did not release workers for training.

Mr Nyekembe asked for clarity on ‘cooperative meeting’ training by FIETA, as this was unclear in the presentation. 

Mr Nyekembe noted that public hearings had been held on the 25 and 26 August dealing with the issue of labour brokers. He said that this showed their involvement in skills development, either through SETAs or independently and asked for comments on this. 

The Chairperson asked whether the companies involved took responsibility for the training of learners. She asked which companies were involved with the training and who was responsible for placing people after training.

The Chairperson asked which companies FIETA had assisted, and asked what companies had been used in the placement of learners.

The Chairperson noted that people do not always complete training programmes and asked what measures were in place to ensure that funds were not wasted.

The Chairperson noted that INSETA was based in Gauteng, but asked how schools had been assisted outside of the province in the past year.

The Chairperson asked how consultants were used in the various SETAs, and said that full time employees should rather be used where possible. She asked what the vacancy rates were in the SETAs and whether consultants contributed to filling those posts.

The Chairperson noted that INSETA had referred to the training of black brokers, and asked what the purpose of this training was and what exactly was meant by ‘black’ in that context.

The Chairperson said that when the Department of Labour gave their annual report, an indication needed to be given of which companies were used in terms of the demographics of the country, and how they benefited from the situation. 

The Chairperson asked for clarity on ‘discretionary funds’, how they fitted into the overall budget and who accounted for them.

The Chairperson noted that INSETAs equity profile indicated that there was a white majority in the sector, which amounted to an excess of 50 percent, while comparatively the Indian and coloured populations were under-represented. She asked for clarity on why such a large gap existed. 

The Chairperson asked for clarity from INSETA on their BEE providers.

The Chairperson noted that there were problems in training, and it was difficult to ascertain whether or not training programmes were undertaken in a correct manner and whether the outcomes were actually useful. She asked how training was monitored in this regard. 

Ms Rantsolase said that skills development and employment equity needed to be aimed at upward mobility. She said that the top positions were still held by white individuals, and upward mobility favoured them.

FIETA Response
Ms Asha Lakhoo, CFO, FIETA, said that FIETA was composed of board members with equal numbers of labour and business representatives. These made up two chambers, namely the furniture and wood chamber and the forestry department chamber. The chambers made decisions on how discretionary funding was spent. In addition to this there was an executive committee in place, which also had equal representation from labour and business. FIETA also had an audit committee with an independent chairperson.

Ms Lakhoo noted that FIETA had received an unqualified audit for a number of years.

Ms Lakhoo said that on average FIETA received R6 million levies per month, totalling R69.3 million for the full financial year. She said that 2008/09 had been a good financial year with an 18 percent increase in levies, but added that these were now decreasing from month to month, with an average of a R250 000 to R300 000 decrease. In the last financial year, money was also earned from investment in income amounting to R7.2 million which was used for discretionary funding. The last financial year had been good in terms mandatory grant payouts, where companies submitted WSPs and FIETA approved their applications for payouts. This had improved from 61% to 72.5% in the last financial year, meaning that small companies were beginning to submit WSPs.

In terms of the discretionary funding, the employers contributed one percent of their payroll as levies. She said that of this, 80 percent went to FIETA, and 20 percent was for end users. Of the 80 percent, 20 percent went to administrative costs, 50 percent was returned to companies once their WSPs were approved, and the remainder was for discretionary funding. She added that any unclaimed funds were transferred to the discretionary funds. These funds were allocated to projects that the board decided upon, and was monitored by the board.

Ms Lakhoo said that R6 million was available for lay-off training.

Mr Michael Mokoana, Deputy Chairperson: FIETA, said that currently land was in the hands of the previously advantaged. FIETA's role was to ensure that the transferral of land was used in a sustainable way to ensure that it contributed to the economy. It was also a transformation issue and FIETA played a role by ensuring that forests remained productive as land was being transferred to the previously disadvantaged. It was important that these people were able to manage the land in a sustainable manner and in the form of a business. It was important that those people were equipped with the necessary skills in order to do this.

Mr Mokoana said that over and above supplying companies like Mondi and SAPPI with timber, they were encouraged to start businesses such as charcoal manufacturing.

Mr Mokoana said that FIETA’s role in learnerships was that of ensuring that quality standards were adhered to. FIETA did not place people as in the form of labour brokers, but that employers were encouraged to accommodate students who were given bursaries and so forth.

Mr Truelock said that the paper industry was very reliant on imported chemicals and clay and so forth which accrued huge costs. The pulp exports were huge as South Africa was the largest cellulose provider in the world. International prices were paid, and these were governed by currency fluctuations. Products placed within the country, due to the freeness of trade in these items, affected the productivity of the industry and there had been a 30 percent cutback in sales over the last five months. That was why currency fluctuations affected the industry and added that if it remained where it was, then South Africa would not competitive in this market.

Mr Truelock said that in terms of government making use of trainees, there were written agreements between policy makers, industry ad labour. This indicated that there was a charter and written agreements on a number of sustainability models for the usage of transferred land. Over 50% of land held by large companies had been applied for by local communities. The ability to go through with these transfers was what was lacking.

Mr Truelock said that there were 30 000 hectares of afforestation permits that had been in that process for two years, and this would create 12 00 jobs in the Eastern Cape. Coordination needed to occur with other departments to bring this about as there were currently delays in payment at a higher level being experienced.

Mr Truelock said that technology challenges were being handled by finding new ways in which to use the products. He said the production of telephone-poles was still underway, although at a slowed pace, and these were exported throughout Africa. There were conversions to making fencing poles and ground poles, but that there was a short-term shortage at that time due to fires.

Mr Mkhwanazi said that no companies had applied for lay-off training fund, but that FIETA had received letters requiring assistance from five companies, which were spending all their funds on retaining employees and so could not come up with WSPs including training plans. FIETA had been asked to be lenient about contractual obligations in light of companies dealing with the retrenchment of employees. Advertisements around this had been undertaken but no applications had been received.

Mr Mokoana added that there was a need to be proactive on this issue and identify companies that were in distress and intervene in terms of training.

Mr Truelock said that there was a vigorous process with regard to prior learning. Learning guides and assessment guides were produced, and R3 million was spent on assessors for this process. There was a new vocational qualification being introduced in schools in order to increase the number of people entering technological careers rather than university careers after school.

Mr Mkhwanazi said that the sector was male dominated. There were more women than men in the furniture sector, but the rest were dominated by men. He added that the base of the sector was mainly composed of black people, while the peak of the industry was composed of white people. Usually equity targets were met in terms of training.

HWSETA response
Mr Ezra Mfingwana, Board Member, HWSETA, said that they were trying to head-hunt the right people to fill executive management positions when they became available, but overall HWSETA complied with equity standards.

Mr Smit said that the 30% of ‘temporary workers’ were actually volunteers who formed the ‘backbone’ of the South African civil society care sector. These included housewives and the elderly and large amounts were being spent to train them to an employable level. Training was aimed at creating social auxiliary workers and health auxiliary workers, which were both entry level qualifications.

Mr Smit said that ABET was a problem for all SETAs. There were issues around both part-time and full-time employees, in the first case much time was required from the individual, and in the second, employers were reluctant to release workers. It was difficult for the SETAs to make progress on this issue as employers and learners did not respond well.

Mr Smit said that there had been no enquiries about lay-off training scheme from companies, but that a total of R32 million was put aside to deal with this.

Mr Smit said that in terms of substance, draft guidelines were made available from the 26 August. These were being fleshed out into sectoral guidelines. Here there was also a need to be proactive.

Mr Smit said that there was poor participation on the WSP level for most small companies. They still participated in the grant system, and that a voucher scheme was being investigated to enable small companies to group together and organise their own training.

Mr Smit said that once an employed learner had completed a training programme, they would become a part of the total staff complement. There was usually a committee that dealt with the equitable distribution of training funds within the organisation, and a company would decide which employees were moved forward. HWSETA was usually not part of that discussion. Their role was to ensure that training was undertaken. 

Mr Smit said that there were approximately 2000 learners in the recognition of prior learning (RPL) project. There was usually a misunderstanding of the RPL, where people said that they had been working for long periods of time and so were eligible for a certificate, but if assessed they could only satisfy a portion of the outcomes for achieving a certificate. In these cases individual outcomes were given and the employer was made aware that there were learning gaps that needed to be filled.

Mr Smit said that there was indirect involvement with schools. Training of learners in science and maths occurred at a post-school level to ensure that that they could study further at university level. The Department of Higher Education was being co-opted into forming a National Certificate of Vocational Health, which would be presented by all FETs in the country.

Mr Smit said that there had been a decision taken by the board not to use consultants to fill positions. Currently there were two consultants being used.

Mr Smit said that most SETAs had a specialised unit that ensured that the workplace was structured for learning and that the quality and value of the learning was of a suitable standard. An evaluation of the assessments was also undertaken at the end of the learning period. Although the SETAs monitored this process, it was usually done in conjunction with their quality partners, such as health practitioners or social development practitioners.

INSETA response
Mr Terrence Berry, Board Member: INSETA, said that the insurance sector was resilient and was therefore a good employer as there was some job security available. There was a growing middle-class which would provide business for the sector in the medium term.

Mr Berry noted that three areas of the sector employed 75% of people in the industry, namely insurance and pension funds, life insurance and short term insurance. There was a need to develop long term skills in those organisations. The annual report showed that there were 23 qualifications available ranging from level two to level seven. In terms of self-employment in the sector, there were low barriers which enabled many to pursue this option. Legislation was promulgated in 2003 and it was ensured that this fitted into the financial services sector appropriately, and so individuals would be professionalised upon entering the sector. Thirty or sixty credits were needed by companies or individuals to be licensed by the end of the year.

Mr Berry said that in terms of the data, the optimal candidates would be black women in Gauteng.

He said that the recession was a good thing for call centres in South Africa, and added that this was the biggest growth area in the last ten years.  

Ms Snell said that all government schools had been visited and that this could be verified through the Department of Labour. Career guidance was also given to pupils at schools in Gauteng, and students were assured that the sector was very accommodating.

She said that there were cross-sectoral learnerships with other SETAs. It was the responsibility of all SETAs to ensure the quality of training was high. Soften there were disagreements with service providers on this issue, and assured the Committee that training was not simply done for the sake of training.

Ms Snell said that when companies submitted their WSPs, INSETA would like them to take their sector skills plan research into account and plan accordingly at a strategic level. Training was in line with individual development while at the same time taking into account skills which were scarce.

She said that when funding was provided, it was ensured that equity targets were in place, and black people were being trained in the scarce and critical skills identified.

Ms Snell said that SETAs were compelled to comply with employment equity targets, and the graphs in the presentation illustrated the current situation and the overall situation over a number of years. This was shown to illustrate that there had been some transformation in the sector. Equity targets had been met for Indian and coloured people, and that currently there was a need to focus on employing black people, which was why the term was not inclusive of previously disadvantaged people in that context.

She said that labour brokers did not do skills development training for INSETA.

Ms Snell said that RPL had been used successfully and 20 000 brokers had been trained through this process. An RPL exam was undertaken before these brokers were accredited.

Ms Snell said that the lay-off training issue had been dealt with to a large extent. The guideline document was available to all SETAs, and close work was being done with the CCMA. The Department of Labour had said to work with what was available and for INSETA this was the bursary funds, which had uncommitted funds of R8.4 million.

Ms Snell said the operational budget of 10% was focussed on BEE providers, and the supply chain management managed this process.

Mr Vincent Mulaudi, Corporate Services: INSETA, said that the challenges around ABET were that the majority of learners in the insurance sector were outsourced to employers. In the previous financial year the targets had been met.

Mr Mulaudi said that consultants were used on an ad hoc basis specifically on research projects. Currently there were only two major contracts.

Mr Louw asked what the general percentages for the repudiation of claims in the industry were.

Ms Snell said that she did not have that information, but added that research had been done on lapse ratios in the current economic climate which indicated that insurance fell at the bottom of the list of unnecessary expenditure that would be cut by people who had lost their jobs. This information could be supplied to he Committee at a later date.

The Chairperson asked why black people were not fully represented in the industry and what was being done to rectify the situation.

Ms Snell said that historically the insurance sector had been a white dominated industry. People could not be fired, but employment equity plans were in place and black people were given preference when funding for skills development was concerned. This was not only done at entry level but also occurred at management and leadership levels.

Mr Madisha recommended that there was a need to move beyond what was happening, and people needed to be skilled beyond running meetings to the point of handling wealth. Improvement needed to be made, and linked to this were issues of cooperatives. People were skilled by SETAs, but that there was no interest shown towards those people. The issue of transformation of companies was worrying because they tended to bring in black women simply to fill space, but there was no substance to what they worked for, and this was a concern that needed to be looked into the next time that the targets were met.

Mr Nyekembe said that the challenges around employers being reluctant to release workers for training was worrying. There was a need for there to be legislation making this training mandatory.

Mr Nyekembe said that there were problems around monitoring people on the ground. There was only the board and its supportive administration, but there was a lack of inspectors on the ground. The WSPs seemed to be heavily relied upon for giving out funds, but follow-ups of these needed to be done.

Mr Nyekembe said that in terms of lay-off training, there needed to be involvement on the part of the CCMA and the process needed to go further than FIETA was taking it. All parties in the process needed to cooperate.  

Mr Nyekembe said that training needed to be an ongoing endeavour and that science and technology should not be isolated. Training was a contributing factor in transformation because it was not only about employing a certain percentage of people, but about a commitment to developing the skills of those involved.

The Chairperson said that it was clear that overall the SETAs had reached or exceeded their targets, but was concerned that they were working only for the sake of working. The SETAs had the responsibility of training and that follow-up procedures were necessary. There was a need to ensure that this was done properly, and it was difficult to see that this was being undertaken because of the lack of follow-up processes. It was necessary for more careful scrutiny of companies which were used by the SETAs.

The meeting was adjourned.