Sector education training authorities: construction, education, training & development practices, energy & food & beverages manufacturing 2008/09 Annual Report

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Labour

02 November 2009
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

Several Sector Education and Training Authorities (SETAs) briefed the Portfolio Committee on Labour on their annual performances and financial statements for the year 2008/09.

The Financial and Accounting Services Education and Training Authority (FASSET) noted that it had been recognised as the top performing SETA during the 2008 National Skills Conference. It had fully used its budget, and held cash and cash equivalents of R129,3 million at year-end, and were held in trust pending deliverables by the projects to which they had been allocated. There was good participation by levy paying companies and planning for skills development was being taken seriously by the sector. R18 million(9.1% of SETA income) was spent on administrative expenditure. Fasset achieved a clean audit for the ninth year in succession and its good governance strategies were outlined. There had been high training numbers on one and two-day programmes, which enabled people to develop their own businesses. More than 30 000 learners were signed up for learnerships and 15 862 had 100% placement in full-time employment. R256 million went to Development Projects to assist matriculants with Maths and English problems to have access to universities. 41 686 learners completed lifelong learning programmes over the past nine years. Its challenges were described as the short supply of young people from school and tertiary level with the correct skills and competencies, the recession that impacted on availability of funds for training, and the need for clarity on the skills development strategy and SETA landscape.

The Bank SETA described its achievements against the five objectives of the National Skills and Development Strategy, and noted that it had exceeded all of its targets. BankSETA had introduced a number of programmes, including an International Executive Development Programme, a Lifelong Learning initiative, Doctoral and Post-Doctoral Funding and HIV/AIDS Training. On a customer satisfaction survey, it scored 4.1 out of a possible 5, and communications and marketing campaigns were undertaken. Its levy income had increased by 14%, and it had spent R98.9 million was spent on discretionary projects during 2008/09. The mandatory grant pay-out percentage was 97%, and it had allocated 96% of its surplus funds available for discretionary projects. It was participating in the stakeholder forum for the employee training lay-off scheme, but no applications had yet been received.

The Chemical Industries Education and Training Authority (CHIETA) firstly outlined the objectives of the SETA, and then indicated that the strategic objectives involved a systematic focus on scarce and critical skills, greater stakeholder participation and ownership, greater attention to the quality of Workplace Skills Plans (WSPs), supporting the emerging Small, Medium and Micro Enterprise (SMME) sector, and ensuring the availability of quality and relevant training providers. There were nine subsectors and five chambers. CHIETA had achieved an unqualified audit by the Auditor-General for eight consecutive years, and had won awards. It established a national initiative of celebrating and recognizing Grade 12 Maths and Science achievers, piloting this in the North West Province. R1 million in bursaries had been awarded to 51 students. It had ring fenced R10 million from Discretionary Grant funds for the training layoff scheme. All discretionary reserves were fully committed. A substantial increase in the number of member companies had been recorded. Total revenue increased by 31%.

The Clothing, Textile, Footwear and Leather Education and Training Authority (CTFL SETA) noted that all current CTFL qualifications would be aligned with the new Quality Council training requirements, and new Further Education and Training (FET) models for learnership would be provided. Scholarships for Textile Master's Degree students at TUL in the Czech Republic had been awarded. There had been discussions with the sector. There had been a demand for up-skilling of the workforce. This SETA was focusing on accreditation and monitoring of training providers, registration of assessors and moderators, development and registration of qualifications, unit standards and learnerships, quality assuring provisions and certification of all CTFL qualifications, and maintaining a national learner database. It described its other achievements. The skills development levy increased by 3% from the previous year to R61.8 million. Administration expenditure increased by 10% from the previous financial year but did not exceed the 10% levy income received. The CTFL SETA had committed R36.6 million of discretionary reserves to approved projects and grants, and R4.1million had been ring-fenced for future projects. Although it had experienced capacity constraints, it was complying with all relevant legislation, risk management and fraud prevention and internal audits.

Members asked all the SETAs to explain their administration fee rises, what they were doing to improve the poor matric results, and to comment on lay-off schemes. They were also requested to comment on programmes to communicate with rural areas, to explain the location of the resource centres, and specifically to comment on the North West Science and Maths Project of CHIETA. Members also questioned how the salaries were determined and benchmarked. Members asked for  comment on the use of consultants and duration of contracts, and specifically asked for progress on the students in the Czech Republic. 

The Construction Education and Training Authority was being reasonably successful. It had reached or exceeded most of the targets that it had set itself. It had received a qualified report from the Auditor General but most of the issues raised were historical ones. It was working to solve these problems. Members were concerned about conflict of interest issues with Board members but were assured that Board members had to declare their interests regularly and avoid discussing issues where such issues were raised. Board members were drawn from the industry.

The Education, Training and Development Practices Education and Training Authority realised the need for management and leadership capability. Focus areas were on the qualification of teachers, adult education and early childhood development practice. Reserves were sufficient to cover programmes and the Authority had received an unqualified report by the Auditor General. Members questioned the number of unqualified teachers and the effectiveness of adult education programmes. The SETA noted that there was a process of putting unqualified and under qualified teachers through a course. Although many were experienced there was a high failure rate. The Adult Basic Education and Training course needed to be revised for relevance. It was a difficult course to follow especially for those who could only study part time. Members were told that a better indication of the effectiveness of learnerships was the number that were successfully completed rather than the number of students who had started out.

The Energy Sector Education and Training Authority covered a diverse range of interests, including electricity, gas and water. They were trying to stay on the cutting edge of technology but faced some challenges. They received a disclaimer from the Auditor General. Members said that the finances were “a mess”. There had been a number of suspensions and resignations, but the Authority felt that it was now correcting the problem. It admitted to a serious lack of financial and accounting capacity.

The Food and Beverage Manufacturing Sector Education and Training Authority had achieved excellent results in the year under review. The sector made a significant contribution to the national economy and had been relatively untouched by the recession. Provision had been made for lay-off training but there was no demand for it at present. Members requested the rationale for the limited use of consultants and the outsourcing of integrated technology functions.

Meeting report

Annual Reports for 2008/09 of various Sector Education and Training Authorities (SETAs)
Financial and Accounting Services Education and Training Authority (FASSET)
Ms Cheryl James, CEO, Financial and Accounting Services Education and Training Authority (FASSET) stated that one of the highlights of the year under review was recognition by the Department of Labour (DoL) at the 2008 National Skills Conference, that Fasset was the top performing SETA in South Africa. Recognition was based on performance against Service Level Agreement targets entered into with the DoL for the 2007/08 financial year. Expenditure totaling R220 million was utilised during the year. The expenditure exceeded the levy income. The amount of cash and cash equivalents was R129,3 million at year-end. All these funds had been allocated by the Management Board and were held “in trust” by the SETA, pending the deliverables being achieved by the projects to which they had been allocated.

Fasset had an 83.9% claim rate on Mandatory Grants. This showed high participation rates by levy paying companies and also showed that planning for skills development was being taken seriously by the sector. R18 million was spent on administrative expenditure during the course of the year. This represented 9.1% of the income of SETA and was well below the 10% threshold allowed in terms of the Act.

Fasset achieved a clean audit for the ninth year in succession and was  proud of this achievement. As part of its commitment to good governance it had implemented Management Board and committee performance assessment processes, appointed an independent audit committee, undertaken an internal audit quality assessment review, and implemented a fraud prevention plan.

On NSDS Year 9 achievements, the participation rate from employers was high. It had managed to train large numbers of people for 1-day and 2-day programmes. The training programmes it had embarked on enabled learners to develop own businesses, whereupon those learners could then in turn take on new learners. 654 new ventures were created and 409 of those were in operation after 12 months.

Fasset described its organisational highlights and challenges. More than 30 000 learners were signed up for learnership and 15 862 of those had 100% placement in full-time employment. R256 million went to Development Projects to assist matriculants with Maths and English problems to have access to universities. 41 686 learners completed lifelong learning programmes over the past nine years.

Challenges facing Fasset were described as falling into three categories. Firstly, pipeline challenges were described as the short supply of young people from school and tertiary level who had the correct skills and competencies to enter the sector. Secondly, the recession was impacting on the availability of funds from which unemployed learners could be trained and the number of discretionary interventions that SETAs were able to fund. Thirdly, there was a need for clarity on the skills development strategy and SETA landscape, to enable the Management Board to facilitate the discussions on future skills development strategies.

BankSETA Annual Report presentation
Mr Max Makhubalo, Chief Executive Officer, Bank SETA, presented five objectives on the National Growth and Development Strategy. In respective of the first objective, to prioritise and communicate critical skills for sustainable growth, development and equity, the BankSETA had achieved 206%. On Objective 2, which promoted and accelerated quality training for all in the workplace, it had achieved 246%. This included mandatory grants, Small and Micro Enterprise (SME) support, Adult Basic Education and Training (ABET) programmes, learnerships and skills programme for employees. In respect of Objective 3, which promoted employability and sustainable livelihoods through skills development, BankSETA achieved 170%. This involved support given to Community Based Organisations (CBOs), non-government organizations (NGOs) and Cooperatives. With regard to Objective 4, which assisted designated groups, integrated learning and work based programmes to acquire critical skills to enter the labour market and self-employment, an achievement of 168% was recorded. Against Objective 5, which focused on improving the quality and relevance of provision, BankSETA had scored 300%.

With regard to Sector Strategic Imperatives, he noted that the BankSETA had introduced a number of programmes, including an International Executive Development Programme, a Lifelong Learning initiative, Doctoral and Post-Doctoral Funding and HIV/AIDS Training

Bank SETA  undertook a customer satisfaction survey to test its viability and scored 4.1 out of a possible 5. Communication and marketing campaigns were undertaken. This included the production of internal publications and the campaigns saw an improvement on brand awareness.

In regard to the finances, BankSETA noted that levy income had increased by 14% from R288million to R329million for the year 2008/09. R98.9 million was spent on discretionary projects during 2008/09. The mandatory grant pay-out percentage was 97%m compared to 96% in the 2007/08 financial year. Bank SETA had allocated 96% of its surplus funds available for discretionary projects as of 31 March 2009.

Bank SETA was committed to participating in the stakeholder forum for the employee training lay-off scheme. Details regarding participation criteria in the scheme had been communicated to the sector. So far, no formal applications for participation had been received from the sector.

Chemical Industries Education and Training Authority (CHIETA)
Ms Kelebogile Dilitsohle, Chief Executive Officer, Chemical Industries Education and Training Authority (CHIETA) firstly outlined the objectives of the SETA for the Committee to appreciate the kind of work that it did and the framework within which it operated. The strategic objectives of their sector remained as a systematic focus on scarce and critical skills, greater stakeholder participation and ownership, greater attention to the quality of Workplace Skills Plans (WSPs), supporting the emerging Small, Medium and Micro Enterprise (SMME) sector, and ensuring the availability of quality and relevant training providers.

In identifying levy paying companies, five chambers for the nine sub-sectors were noted, being the Petroleum and Base Chemicals; Glass; Pharmaceuticals and FMCG; Surface Coatings and Speciality Chemicals; and Fertilisers and Explosives. Charts were shown indicating levy paying companies by Chamber and by Sub-sector.

She then outlined the organisational highlights. CHIETA had received an unqualified audit by the Auditor-General for eight consecutive years. it had been awarded the South African Qualifications Authority (SAQA) green status and received an award from the South African Society for Co-operative Education (SASCE). CHIETA established a national initiative of celebrating and recognizing Grade 12 Maths and Science achievers, piloting this in the North West Province. R1 million in bursaries had been awarded to 51 students in order to address the needs of the Chemical Industry. Lastly, CHIETA continued to comply with the legislation relating to governance matters and adopted and applied good governance practices throughout the year.

In regard to the Training Layoff Scheme, the CHIETA Governing Board had ring fenced R10 million from Discretionary Grant funds. Currently, it was involved with the Department of Labour, National Skills Funds (NSF) and Commission for Conciliation, Mediation and Arbitration (CCMA) in streamlining operational processes. It was  awaiting an implementation announcement from the Minister of Labour.

Mr Farhad Motala, Chief Financial Officer, CHIETA, dealt with the financial statements. He said all discretionary reserves were fully committed. This amounted to R162 million in discretionary contracts, R90 million approved by the Discretionary Grant Review committee and R26 million in approved projects and skills priorities. R38 million of surplus reserves were swept to discretionary reserves for sector priorities and strategic projects. A substantial increase in the number of member companies had been recorded. A total return on investment funds for the year was R24.7 million. Total revenue increased by 31% from R221 million in 2008 to R291 million in 2009.

Clothing, Textile, Footwear and Leather Education and Training Authority (CTFL SETA).
Mr Patel Naicker, Chief Executive Officer, Clothing, Textile, Footwear and Leather Education and Training Authority (CTFL SETA) introduced his sector profile. The CTFL members were manufacturers of all types of apparel including outerwear, underwear, footwear, handbags, car seats and dealt with all types of textiles including natural and synthetic fibres, for use in apparel, home textile, upholstery and industrial applications.

He noted that in respect of new programmes and projects, all current CTFL qualifications would be aligned with the new Quality Council training requirements, and new Further Education and Training (FET) models for learnership would be provided. Scholarships for Textile Master's Degree students at TUL in the Czech Republic have been awarded, and these were co-funded by the Office of the Deputy President and Joint Initiative for Priority Skills Acquisition (JIPSA). Strategic discussions with the Customised Sector Programme for clothing and textiles had been conducted.

There had been an increase in the demand for up-skilling of workforce. The implementation of the FET Amendment Act 2006 saw threatened learnership provisioning in the sector, as the delivery of new FET model for learnership, and the 922 learnership grants worth R18 million were not sufficient to meet the demand. The national qualifications for Sewing Machine Mechanics at NQF 3 & 4 had been implemented.

This SETA, in order to ensure quality education and training in the CTFL sector, was focusing on accreditation and monitoring of training providers, registration of assessors and moderators, development and registration of qualifications, unit standards and learnerships, quality assuring provisions and certification of all CTFL qualifications, and maintaining a national learner database.

Education, Training and Quality Assurance (ETQA) and Apprenticeship Committees had been set up to serve as a forum for industry consultation, collaboration, and input. Other matters that were addressed included the enhancement of the CTFL Management Information System, progress was made towards registration of assessors and moderators, and new and revised learnerships were registered with the DoL against the NQF Level 2 National Certificate. The achievements against the National Skills Development System 11 targets were reported. Interventions included mandatory grants being disbursed to firms that submitted Work place Skills Plans and Annual Training Report, bursary and grant schemes for employed learners, including ABET, Management Development, Technologist Training, and Learnerships and critical scarce skills programme. There were also grants for unemployed learners, technology students, and students undergoing work experience.

Reporting on the financial matters, Mr Naicker noted that the skills development levy increased by 3% from the previous year to R61.8 million. Additional revenue included penalties and interest of R516 000, investment income of R5.8 million, and funding of R1.2 million from the KwaZulu-Natal Education Department for projects co-funded by the CTFL SETA, and the KZN Department of Education in collaboration with the TUL in the Czech Republic.

Administration expenditure increased by 10% from the previous financial year but did not exceed the 10% levy income received. Mandatory grant payments amounted to 80% of total mandatory levy income. The CTFL SETA had committed R36.6 million of discretionary reserves to approved projects and grants, and R4.1million had been ring-fenced for future projects.

The Audit Committee conducted its affairs in compliance with the Audit Committee Charter. Regular internal audits were conducted and no matters were reported that indicated material deficiencies in the system of internal control. The Auditor-General submitted an unqualified audit opinion, had found the overall governance framework of the CTFL SETA to be adequate, and had no significant findings from the review.

CTFL SETA noted that it had experienced capacity constraints as a result of staff vacancies during 2008/09. The Accounting Officer’s report also described the composition and mandate of the Council and its committees. It placed emphasis on compliance with relevant legislation, risk management, fraud prevention, and internal audits.

Discussion
Mr E Nyekembe (ANC) asked CTFL SETA to give details on why its administration fees went up by 10%.

Mr F Barnard, CTFL Chairperson, explained that the increase was due to external audit fees and this resulted in more strain on administration fees. Payment structures that the Board had approved for attending meetings, and frequent traveling to Johannesburg, contributed to the problem because the head office was in KwaZulu-Natal.

Mr Nyekembe also wanted to know what all the SETAs were doing to improve the poor matric results, and to comment on lay-off schemes.

Ms James explained that FASSET had a Thuthuka Programme running in schools to uplift maths and teachers in the Eastern Cape and Limpopo. It had also a bridging programme between schools and university. When solutions were hard to find, they would suggest to some students that they should find alternative career paths.

Mr Naicker stated that these were also a challenge to the CTFL-SETA, because it had limited financial resources. Its priority was on scarce skills. However, matriculants were taken to NQF levels of literacy and maths. The new Foundational Certificate that had been developed would look into the matter.

Mr Makhubalo said  that the Bank SETA was committed to participate in the stakeholder forum for the employee training lay-off scheme. Details regarding participation criteria in the scheme had been communicated to the sector. So far, no formal applications for participation had been received from the sector.

Ms Dilitsohle and explained that CHIETA had ring-fenced R10 million  for the scheme. So far no applications had been received for lay-offs. Roadshows about training lay-off schemes were held across the country. Weekly reports were received from the CCMA but the up-take was very slow.

Mr Naicker added that CTFL-SETA had contributed R2.4 million towards the scheme and another R20 million was sourced from another sponsor.

Ms S Makhubela-Mashele (ANC) enquired from the SETAs about programmes that they might have in place for communicating with rural people because there were no call-centres there.

Ms James explained that her SETA communicated with rural people via community newspapers and radio stations. It made use of professional bodies that went into rural schools and staged career guidance exhibitions.

Ms Makhubela-Mashele asked Bank SETA to explain why it had resource centres in the Eastern Cape, but not in other provinces.

Mr Makhubalo replied that in terms of the Service Level Agreements, the BankSETA was required to register three centres of excellence. It had chosen the worst performing districts in the province, after the Eastern Cape Education Department brought a proposal and indicated its willingness to arrange for transport. BankSETA was paying for the tutors.

Ms Makhubela-Mashele asked CHIETA to dwell on the achievements and challenges of the North West Science and Maths project.

Ms Dilitsohle explained that a positive aspect of this project was that it gave students exposure to industry chemical role models, thus was a window of opportunity for students to continue their studies, with the assistance of a bursary, and scientific calculators were provided through the bursary scheme. The biggest challenge was that this project was expensive. However it was trying to partner with provincial departments. Memoranda of understanding were in place to ease the matter with the provincial departments. Roll-out to other provinces was not a challenge, but the SETA would like to see this instituted in North West first.  The time-frames were reviewed yearly and measured against performance.

Mr T Nxesi (ANC) wanted to know from the SETAs which markets, private or public, they used for determining their salaries, and how they related to JIPSA.

Mr T Channing explained that CHIETA was using an internal method to benchmark salaries. It would make sure tat payment was in line with job specifications, and outside factors were also taken into account.

Mr Barnard and Ms James said their salaries were based on sector profile and decided internally.

Mr Makhubalo stated that the BankSETA benchmarked against the banks, and that its salaries were designed to attract and retain skills in the sector.

Mr Makhubalo and Ms James explained that their SETAs  had no structured relationship with JIPSA. However, within Fasset there were stakeholders involved with JIPSA.

The Chairperson requested the SETAs to comment on their use of consultants and duration of contracts. She also asked CTFL-SETA to explain to the Committee what was happening with the students at TUL in the Czech Republic. Further, she wanted to know how Bank SETA identified youngsters that needed to be placed in banks.

Ms James stated the SETA used a business model for consultants. The core business functions were performed in-house. Service providers came in at a demand level. Her SETA had got two contracts signed, one for one-year and one for nine months.

Mr Naicker said CTFL-SETA was against the use of consultants. It would hire them only for auditing grants and salary pay-roll, because this SETA did not have a dedicated HR function.

Mr Makhubalo and Mr F Motala stated that their focus was on internal skills development. They made less use of consultants, and used them only in areas where there was no internal capacity and expertise. Outside contractors were hired only for the short-term to train the internal staff. All contracts were to end on 31 March 2010.

Mr Naicker explained that so far the students in the Czech Republic were doing well. It was the third time that students were sent there. The students had access to the office of the South African Ambassador there. Concerns and issues had been, and were being constantly addressed. The only problems the students were experiencing were acclimatisation and demands of the programme.

Mr Makhubalo noted that in order to recruit youngsters for banks, advertisements were placed in the media, websites, and DoL centres. BankSETA were taking people from all the nine provinces.

The morning session was adjourned. .

Sector Education and Training Authorities (SETAs): Presentation of Annual Reports
Presentation by Construction Education and Training Authority
(CETA)
Mr Frank Fredericks, Deputy Chairperson, Construction Education and Training Authority (CETA), apologised for the absence of the current Chairperson, Mr Strydom, and the previous Chairperson, Mr Moloto, who had signed the AR for 2008/09. He introduced the delegation.

The Chairperson noted that no Board members were present.

Mr Petrus Maoko, Chief Executive Officer, CETA, presented CETA's vision and mission, noting that it would ensure that learnership programmes were carried out. It negotiated with the Department of Labour (DoL) on service level agreements. There was a well-researched sector skills plan in place. CETA had received R181 million from discretionary grants that would be used to provide benefits. CETA had created 250 skills development facilities within the industry. The targets relating to major companies had been achieved but the success with smaller companies had been less. The smaller companies found it harder to submit the required Workplace Skills Plans (WSPs) and Annual Training Reports (ATRs). Such companies had administrative challenges.

Mr Maoko listed a number of achievements. The target for EFMs was 20, whereas CETA had achieved 43. Only 2 394 updated targets had been achieved, compared to a target of 3 594. Most companies had however been covered. The target for learnerships was 3 210 but CETA had achieved 3 600. Many were with community-based organisations that had no strategy. Learners had been placed in various universities. CETA had a strategy to place the graduates in new ventures in particular. CETA had negotiated with big companies and government departments to take on some graduates. CETA had created 51 new ventures. Ten Centres of Excellence had been created, against a target of two. There was a geographical spread of these Centres. Two were in KwaZulu-Natal, three in Gauteng, three in the Eastern Cape and two in Cape Town. The principle was that these Centres should be accessible to learners. The CETA had mentored fifteen new ventures over the last twelve months, compared to a target of four.

Mr Maoko said that a number of companies had been encouraged to claim against the mandatory grant. The CETA had seen an increase in the year under review. A strategy document had been developed. The Board represented a wide range of role players in the industry. Seats on the Board were reserved for employer organisations, organised labour and Government Departments. The CETA worked closely with the relevant Departments.

Mr Maoko said that the CETA was communicating with the industry. There were a number of disgruntled stakeholders and the first priority was to rekindle trust. A road show had been organised. Schools had been involved. The CETA had also participated in Construction Week.

Mr Maoko said that the CETA was financially viable. R181 million would be used to deliver learnership programmes. It would ensure that WSPs were submitted. Accredited service providers would be used. A number of the stakeholders were now submitting WSPs. Support was being given to small, medium and micro-enterprises (SMMEs).

Mr Maoko said that women were becoming involved in the construction industry. He mentioned the example of thirty female contractors in Kimberley who were being capacitated. The CETA had a budget for bursaries that would be channelled towards needy learners.  It had approached the Department of International Relations to assist with contacting other Southern African Development Community (SADC) countries.

Mr Maoko said that internal audit and financial committees were in place. Board members were being capacitated in terms of corporate governance. He planned to have a skills audit for board members.

Mr Maoko said that revenue had increased from R31 million to R39 million. Increased employment had led to an increase in levies paid to CETA. It had R377 million in the bank, the vast majority of which was committed to projects.

Mr Maoko revealed that the CETA had received a qualified report from the Auditor-General (AG). This was a result of inadequate information being provided regarding the mandatory grant, and was a problem that had been present since 2005. A team had been established to address the matter. Inputs were expected from the AG and the DoL in order to resolve the issues. The CETA would meet with the AG later during November. The AG had included other matters in his report such as problems with other transactions. Board members would be declaring their interests. Issues surround discretionary grant payments had been cleared.

Mr Maoko said that the AG had also identified a number of issues as Emphases of Matter. During an internal audit a number of CETA employees had been dismissed. A forensic investigation had been conducted into irregular payments and this report was due to be presented during November 2009. A number of historic issues had been carried over to the new financial year (FY). CETA had requested the National Treasury (NT) to condone this. Correct procedures had not been followed. However, procedures were now in place to prevent further transgressions.

Mr Maoko said that a turnaround strategy was in place. New personnel had been appointed and they were working to transform this SETA. Five areas had been identified, namely service provision, risk management, staff retention, control of the environment and continuous engagement and development. A personnel development plan was in place.

Discussion
Mr E Nyekembe (ANC) said that it was important that Board members did not have a conflict of interests. He had noticed some contradictions in the financial highlights that had been presented.

Mr Maoko replied that the Board was drawn from the industry. The Board members had to declare their interests and recuse themselves from meetings where a conflict of interests was possible. They declared their interests annually. Most of the issues had arisen in previous years. Bad contracts had been terminated. Revenue was mainly from employer grants.

The Chairperson noted that many Board members had been serving since 2005. She asked when the problems had started.

Mr Fredericks said that there had been a problem with having the correct number of members. The majority of Board members, approximately 60%, had been there since CETA's inception. The new Board had been appointed in March 2009. Mr Moloto had signed the 2008/09 AR. The financial statements had been approved after the appointment of the new Board.

Presentation by Education, Training and Development Practices Education and Training Authority (ETDPETA)
Ms Nombulelo Nxesi, CEO, Education, Training and Development Practices Education and Training Authority introduced the members of the ETDPETA delegation. Its offices were in Johannesburg but it maintained visibility in all the provinces. She presented the achievements of the ETDPETA on the table as stipulated by the DoL.

Ms Nxesi said that there was a process of supply and demand in the labour market. Management and leadership were crucial skills. Education in mathematics, science and technology were essential. There was also a shortage of Early Childhood Development (ECD) practitioners. The definition of a large organisation was one having more than 150 workers, while a small organisation would have less than fifty.

Ms Nxesi said that discretionary funds were used to fund programmes. The SETA often did not know who the small companies were, as they paid the levies directly to the South African Revenue Services (SARS). These were often the companies that struggled to reskill their staff. The ETDPETA supported Black Economic Empowerment (BEE) and a voucher system was in place.

Ms Nxesi said that the ETDPETA had made a slow start in 2005/06. Since then, it had reached many of its targets. It was difficult to see some of the learners through the academic year. Support was given to organisations that were not expected to pay levies. One of the important aspects of the NSDS 3 programme was placement of newly qualified learners into critical areas. The SETA could not employ such people itself but still needed to track the whereabouts of learners. This was often difficult as the only form of contact was a mobile telephone number.

Ms Nxesi said that it was hard to support learners while they were busy with their studies. Teaching was described as the mother of all professions. The National Student Financial Aid System (NSFAS) supported some students. The ETDPETA did provide some assistance to learners during their practical phase. This was done in the rural areas and at present some 800 student teachers were being assisted.

Ms Nxesi said that the ETDPETA had a target of 267 in new ventures training. It had managed to train over 300 learners. This was a significant improvement. She was happy to report that the SETA had received an unqualified report from the AG. This reflected on the quality of the systems in use. A scorecard was used that showed a steady improvement over the last four years.

Ms Nxesi said that the ETDPETA had equity targets of 85% blacks, 54% women and 4% persons with disabilities. It was not doing well on the target for people with disabilities. Many learners were inducted into internship programmes but there was a high rate of unemployment.

Ms Nxesi said that there were regional offices in Limpopo, East London and KwaZulu-Natal. There were committees in the other provinces. At a recent board meeting, the SETA took the decision to establish offices in all provinces. These would be aligned to provincial growth and development strategies.

Ms Nxesi said that the ETDPETA was focused on the teachers. Some were still unqualified or under qualified. The Department of Education (DoE) had devised a diploma course while there were bursaries available for Bachelor of Education (BEd) courses. A lot had been done in the sphere of ECD. This was the foundation of learning and prepared teachers for Grade 1. Concentrating on ECD would create many jobs, especially in the rural areas.

Ms Nxesi said that another focus area was basic education and training. An Adult Basic Education and Training (ABET) programme had been devised. This would assist with community development. Unemployed people could be trained to the point where they could start their own businesses. The ETDPETA was working with the Further Education and Training Colleges (FETCs) and viable Centres of Excellence were being established. A summit meeting would be held in February.

Ms Nxesi said that support was given for quality assurance (QA) and service providers. Service providers were accredited and checks were conducted on the quality of the services they delivered. Qualifications were developed in conjunction with the South African Qualifications Authority (SAQA). A focus area was on library information services. If this was successful it would lead to encouraging the important culture of reading. Short programmes focusing on the environment were also being offered and she was disappointed that these were not more popular. The support services were used to market the ETDPETA and to focus on education.

Mr David Molapo, Chief Financial Officer, (CFO), ETDPETA, said that South Africa had fared poorly in recent international studies. The country had been placed 56th out of 57 in terms of worker competency, and 30th out of 57 in terms of business efficiency. This indicated a lack of skilled labour and a similar lack of management and financial skills. The ETDPETA had devised programmes to target these problem areas.

Mr Molapo said that there were three sources of income. R103 million had been paid to the SETA in mandatory grants, of which R80 million had been spent. R75 million had been received from discretionary grants and R120 million had been spent, some of which had come from ETDPETA's reserves. R86 million had been received for administration and R67 million of this had been spent.

Mr Molapo said that the ETDPETA had a bank balance of R295 million in March 2009. Of this, R244 million was ring-fenced for learnership programmes and R34 million was ring-fenced to pay creditors. This was a total commitment of R280 million. In 2007/08 contracts had been concluded to the value of R35 million. This increased in 2008/09 to R103 million and for the 2009/10 FY contracts had been approved to the value of R106 million.

Mr Molapo said that 11 439 organisations were registered with the ETDPETA, of which 2 002 paid levies during the last FY. Over 800 had submitted WSPs. There was a trend for administration costs to increase. The amount was 16% in the last FY. Mandatory grants had increased by 15% but discretionary grants had reduced by 7%. Administration expenses had increased by 32%. This covered the cost of levy collection. The ETDPETA had hosted a skills conference.

Discussion
Mr A Louw raised the question of unqualified teachers, especially in the rural areas. He asked how many of these teachers there still were, and if there was a programme to bring them up to speed. If so, he wanted to know when this would happen. He congratulated the ETDPETA on reaching its targets but wondered if the bar should not be raised. ABET was still a problem. He asked if money and resources were not being wasted due to the poor results. The programme should perhaps be shut down. If learning was the target then the establishment of ECD centres in rural areas was contradictory. The SETA's core function was to train.

Ms Nxesi said that unqualified teachers were those who had no diploma. Under-qualified teachers had only a Standard Teaching Diploma (STD) behind their name. The requirement was that a teacher have a three-year post-matric qualification. There were fewer than 9 000 unqualified teachers at present and fewer than 18 000 under qualified teachers. However, some of these had more than thirty years experience and could not be disregarded. All of those who were unqualified and under qualified were expected to complete a National Diploma course. Some struggled to pass this. Ten thousand had registered for the course but only 6 000 had passed. A bursary was available.

Ms Nxesi said that the ETDPETA relied heavily on the Department for support, as it was mindful of the 10% limit on administration costs. The SETA was taking leadership in this matter and had raised the issue at a recent summit meeting. The SETA would raise the issue with the Minister. The Department had the funds.

Ms Nxesi said that ABET was concentrated at Level 4, which equated to a Grade 9 standard. It was difficult to get the ABET learners to Level 4 standard. The report only reflected those who had reached Level 4. The curriculum was overloaded and was a particular challenge for those learners in employment, who could only study part time. Umalusi accredited the course. The number of learners who had completed the course as at March 2009 was 884, with another 2 000 still in the system. It was difficult to compress nine years of learning into four, especially for the part time students. She felt the ABET programme should be kept, but tweaked to ensure its continued relevance.

Ms Nxesi said that there was no contradiction with the ECD programme. It was a practical development that would create jobs. There were jobs waiting for these practitioners. Many were at the ABET centres. A lot of students had been placed in jobs, mostly through provincial Education Departments. The programme was costing hundreds of thousands. The ETDPETA might need to raise the bar. More support was needed for learners.

Mr Nyekembe noted the reference to the ETDPETA being established in 2005. He asked if this was correct, as there had been no progress in 2006. He asked how many learners had been placed. The CEO had only said that it was difficult to track these people. He asked if this was temporary or permanent employment.

Ms Nxesi said that all the SETAs had been formed in 2000. A trend report had been compiled over the following five years. A new strategy had been adopted for 2005/06 when the present system had been put in place. A challenge was the quality of the learners. The ETDPETA was clear on the direction to be taken. The particular focus was on teachers and ECD practitioners. The issue of placements had been raised and students had to be employable. ETDPETA was  working with the DoE on the BEd course. No bursary was awarded if the student was not employed. There was a challenge in the time it took to find a job. This was a four-year course, not considering failures. The ECD Level 4 course was 18 months.

Ms Nxesi said that 60% of ECD practitioners were absorbed into employment, and 100% of teaching students found jobs. The youth had to be employed or self-employed. The statistics only gave the number of students entering courses. The number qualifying and finding employment should be reflected. The ETDPETA had not been assessed on placements.

Presentation by Energy Sector Education and Training Authority (ESETA)

Mr Nkrumati Kgagudi, Chairperson, Energy Sector Education and Training Authority, introduced the ESETA delegation.

Mr Funamna Mankaya, Chief Executive Officer,  ESETA, said that ESETA was responsible for three sectors. These were electricity, gas and water. Its activities covered a whole range of Standard Industrial Codes (SICs). The generation of energy was a key activity. There was also a concentration on renewable energy sources.

Mr Mankaya told the Committee that the Board of ESETA comprised 23 members. Of these, ten came from labour organisations, ten from employer forums and the remaining three from Government. The Department of Water Affairs, Department of Energy and Department of Public Enterprises occupied the three Government seats. The Public Finance Management Act (PFMA) strictly governed its affairs. At present seven unions and seven employer bodies were represented. An Executive Committee was responsible to the Board and there were a number of functional committees. The water sector had been inherited by the ESETA recently. The staff complement was 28, but there was a need to revise this in order to ensure compliance with the regulations.

Mr Mankaya said that skills planning was central to the development of skills. Their NSDS 2 had been concluded recently. It had received R2 million from the water sector and R60 million from the electricity sector. There was R107 million in the bank.

Mr Mankaya said that sector skills plans were a challenge in the SMME environment but the ESETA provided support. There was a memorandum of understanding with the DoL. There was a serious challenge in identifying and supporting Centres of Excellence. The situation was not equal. Apart from Eskom, there were a large number of small organisations, which in fact formed the majority of ESETA's clients. Small companies faced challenges due to their lack of infrastructure for training. Steps were being taken to remedy this.

Mr Mankaya said that the ESETA wanted to stay on the cutting edge of technology. It was engaged in various other activities. There was a need to develop its policy on learnerships. Quality assurance was in place. There was a need to monitor activities.

Mr Mankaya said that 2 448 learners had been certified. Training was been given in lay-off schemes. There was a skills programme in the electricity industry. A process was operating within the water sector. There would be compliance with regulations. ESETA would work closely with the DoL and the CCMA.

Mr Mankaya said that the ESETA funded areas that addressed the National Qualification Framework (NQF) Levels 1 to 5. The SETA was informed by the needs of the industry. One challenge was the large spread of tasks for the water sector. Some of the SICs were covered by other SETAs such as the Local Government SETA. He said that the ESETA was using 10% of administrative costs to deliver programmes in good time.

Mr Mankaya said that some of the people in the organisation were unsure of the future. The SETA needed to find out what happened to the learners, of whom 8% remained unemployed. There was a service provider in KwaZulu-Natal that was doing wonders with unemployed people.

Discussion
Mr Louw said that the ESETA presentation said nothing about corporate governance compliance or finances. The AG had been unable to give an opinion on their affairs. This was very worrying. The ESETA finances were “a mess”. If shareholders drove it then he could not understand why the financial situation was so bad. He questioned the figures presented on learnerships and growth.

Mr Nyekembe noted that ESETA had a huge Board. He noted there was a seat for Black Economic Empowerment (BEE). He asked how this representation was determined. BEE companies spanned a wide range of interests. He asked what the SETA constitution said about this. He noted that there were two vacancies for skills planning and development management and for chamber management.

Referring to the Water Chamber, Mr Nyekembe asked if there was also an intention to form energy and gas chambers. He asked when the vacancies would be filled. There were two points in the presentation that he had not understood. He noted the 2 448 learners who would receive certificates but there was a percentage of those who would need further training. He asked what the unemployment trend was. He asked how much had been spent on training.

Mr Mankaya replied that he agreed on the point of the large number of Board members. This was mainly an inherited situation. He was happy that the Chairperson of the Board was present to hear this opinion. BEE companies were a large component of the electrical contracting industry. The presence on the Board came from the constitution of the SETA in its previous form. This had to be reviewed. Issues regarding gas were addressed within the energy sector. This was one of four sub-sectors under energy. There were different components at play in the water chamber. There was uncertainty over the future of SETAs, and this was the reason why vacancies had not yet been filled. A certain number of learners had been carried over into the next FY, as they were still busy with their studies. The figures were a snapshot of one employer. The figures on page 21 of the presentation represented the number of learners at entry level. The figure was ring-fenced.

Mr I Ollis (DA) found the ESETA financial situation shocking. The AG had written a fifteen-page report. He had never seen such a lengthy criticism of an entity's affairs. An amount of R15 million had been spent out of the 10% allocated for administration. The ledger balance was out by R15 million. This was unbelievable.

Mr Mankaya replied that the AG had given a disclaimer. The ESETA was trying to address the problems raised. The nature of the problems was historical. The previous CFO had resigned. A skeleton staff was in place. The management information system (MIS) was of poor quality and was in fact dysfunctional. It had been removed and a highly skilled information systems company had been appointed to replace it. This had happened towards the end of the 2007/08 FY. Getting the high level of skills needed was a challenge.

Mr Mankaya said that another challenge was the suspension of the CFO. The ESETA  was trying to turn things around. It would try to follow the best practice of other SETA's. The Board had decided to adopt this approach the previous week. A report could be prepared to explain this. There would be a better picture in the future.

Mr Kgagudi was also not happy with the financial situation. This was the only aspect of poor performance as the ESETA was doing well in all other areas. An effective internal audit system would have sorted out the problems earlier. The then-internal audit committee had resigned because the Board had demanded accountability. There was a need for a neutral committee. The Board had decided to reconstitute the internal audit committee on 1 September. The Chairperson had then resigned. A skeleton staff was now in place. There was a challenge of competencies. Their duties were unclear. There had been a number of suspensions and resignations.

Mr Kgagudi said that the board needed a business risk assessment to be conducted. The then CEO had made a presentation to the Executive and had given the impression that all was fine. An internal audit report had been submitted but some reports were withheld. As a result the CFO was suspended and the board had appointed an acting CFO. The finances were now being turned around. Competency was being built.

Mr Kgagudi confirmed that the stakeholders drove the strategy of the ESETA. It had a different approach to ABET. Theirs was a more stimulating programme. There was a need to improve in the rural areas where the shortage of electricians was being addressed. It needed creative ways to overcome the constraints of the 10% limit to administrative costs. Gas was a sub-sector of energy.

Mr Ollis had lost track of the number of CFOs. He concluded that ESETA now had an acting CEO and an acting CFO. He asked who was left.

Mr Louw believed that the former CFO, Mr Conrad Pieterse, had been fired because he had told the Board what was going on in the organisation. He asked if the Board members had been dismissed with or without a golden handshake. Some persons were accountable in terms of the finances, but he asked if the rest of the Board had been fired as well.

Mr Nyekembe said that the Board remained accountable. They might assign someone for a particular function, but the accountability rested with them. The CEO had responded to the Members' questions and the Chairperson had provided more information. The new Board had been appointed in September 2008. All the wrong things had been associated with the previous Board, and all the good with the new one. This was why ESETA was saying that it could turn the situation around.

Mr Kgagudi said that the Board was reconstituted at the Annual General Meeting. Six members had been elected to the Executive. Three of these represented labour and three employers. They were joined by the CEO and CFO ex-officio. The Executive met monthly. The reconstitution encouraged continuity. Members represented the stakeholders. The Board was not entirely fresh, but it was a new Board and could deal with new issues. The suspensions had helped the Board to nip the situation in the bud.

Mr Kgagudi then noted that Mr Pieterse was not the CFO. He did not recall any documentary complaint. The Board had acted on its intention to improve the SETA. The current CFO had been appointed on 8 August. The audit committee had been reconstituted.

Mr Kgagudi said that the 10% for administration was not enough. The SETA was unable to secure competent staff. Only the audit committee chairperson received any remuneration. The financial staff were still in place, but basic accounting competency was lacking. A competent person was being sought to lead the financial department. The goal of ESETA was to have an unqualified report by the end of the FY. Internal audit would empower risk management.

Mr Mankaya said that the ESETA had been historically successful in respect of performance against targets. There was a challenge regarding financial management. The previous Board had not provided a proper report.

Presentation by Food and Beverage Manufacturing Sector Education and Training Authority (FoodBev SETA)
Mr Ravin Deonarain, CEO, Food and Beverage Manufacturing SETA, apologised for the absence of his Chairperson, who had a meeting with the Minister of Higher Education and Training. There was also no Human Resources representative. The FoodBevSETA covered a diverse sector that was extremely price sensitive, with intense competition. Although large companies dominated the sector there were many smaller operators. The food sub-sector had an annual turnover of R83.2 billion and the beverage sub-sector R30 billion. According to statistics compiled by the Department of Trade and Industries for 2007, the sector contributed 17% of all manufacturing, 15.6% of employment and 13% of wages. This represented between 1.8 and 2% of the total economy.

Mr Deonarain said that the FoodBevSETA received R189 million from its institutions in 2008. He expected a growth in expenditure of 8%. The SETA had far exceeded its targets for the period under review. Performance had increased by 100%, the number of small companies assisted by 136%, BEE companies assisted by 150% and ABET by 301% at the entry level and 359% at completion level. He felt that this performance was commendable. Learnership programmes were 291% of the target value. Non-levy payments were 77% over the target. The target for unemployment learners had also been exceeded by 214%, comprising 127 people.

Mr Deonarain said that there was an emphasis on placing learners. There were no formal internship programmes. The target for new ventures had been exceeded. Two Centres of Excellence had been established against a target of one. Learners were placed where there was less economic activity.

Mr Deonarain said that the targets for black and female learners had been exceeded. However, the SETA had struggled with the 4% target for people with disabilities. Only 2% had been employed. He felt that it would be impossible to reach the target under present circumstances. In terms of NSDS 2, between 2005 and 2009 there had been 13 890 learner programmes. On average only 30% of learners had completed these. There were still 58% in progress. Generally it took learners fifteen months to complete a programme designed for twelve months.

Mr Deonarain said that there was an 83% completion rate on skills programmes. There was a dropout factor of 5%. These programmes were easier to implement. One hundred learners had been employed and 850 apprentices were being trained. There had been excellent reactions to service level agreements. He expected excellent results for 2008/09. A customer satisfaction survey had placed the FoodBevSETA on the positive side of the normal curve.

Mr Deonarain said that 80% of the SETA's employees were black and 70% were female. There was one person with a disability. The SETA did make use of consultants, but in each case this was a single person who was used. This person would be very specialised and would only be used for a once-off project. The information technology (IT) function had been outsourced.

Mr Deonarain said that lay-off training plans had been communicated through all the media. Briefings had been arranged. Three hundred skills programmes had been identified with a budget of R1.8 million and thirty new ventures with a budget of R750 000. To date there had been no applications for these programmes.

Discussion
Mr Louw requested more detail on the IT contract.

Mr Nyekembe was unsure of the figures and graphs presented. Members had not been given a hard copy of the graph. No problems had been reported by this SETA on ABET. This training was not only for the unemployed. He asked what was being done with people in employment. The motivation for consultants was for non-recurrent work. He asked how prior learning had been recognised before the inception of the SETA system. The food and beverage sector had not been affected by the recession. Other SETAs had committed amounts for lay-off training.

Mr Deonarain apologised for not including the graphs in the hard copy of the presentation. There had been a misunderstanding over what was required. Members needed to understand how the consultants were employed. There was an assessment process coupled with the recognition of prior learning. Most companies had their own assessors and moderators. The FoodBevSETA played a registration role. The SETA used twelve assessors who were used to assess the company assessors. The first priority in identifying these consultants was that they had to be experts in their fields. The FoodBevSETA was responsible for 34 SICs, and to service even one of these sub-sectors would take up the entire staff of the SETA.

Mr Deonarain said that 700 000 workers had gone through ABET training. Research had shown that there had been much success. The FoodBevSETA had heeded the advice. It would first assessed an employee, and prior learning was recognised. This was done upfront. Top-up training was then provided as appropriate. A final assessment was then made. There were 300 skills programmes for lay-off training and thirty new ventures. The SETA worked with the Food and Allied Workers Union. The applications came from the agriculture and hospitality sectors.

Mr Hennie Korff, Council Member, FoodBevSETA, had a background in Tiger Brands. He said that the food and beverage sector had not been spared the impact of the recession. It had managed to maintain performance levels. Two factors had assisted in this. These were the expectation of shareholders and the fact that many commodities were important. An improved exchange rate had helped. Consumers' disposable income was a factor. Capacity was strained. The industry had survived and there were no major threats. However, if the situation remained unchanged then it would be difficult for the smaller players. He was not aware of any planned changes regarding the employment situation, but this was unpredictable.

Mr Rajendra Rajcoomar, CFO, FoodBevSETA, said that the IT provider was Pathway. The two-year contract was at a cost of R17 000 per month. The MIS was provided by Praxis. The cost was approximately R40 000 per month. It was a level 3 contractor. The FoodBevSETA had felt that a fixed contract would be too expensive. It was looking for an alternate supplier.

The meeting was adjourned.

 

 

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