Services Sector Education and Training Authority: oversight of its strategy & SWOT analysis

Meeting report

Services Sector Education and Training Authority
The CEO, Mr Ivor Blumenthal, was accompanied by Mr Devan Naicker, Deputy CEO and responsible for Strategy and Mr Sydney Moonsammy, Senior Manager for Learnerships. Mr Blumenthal said the Chairperson had unfortunately missed his flight, and the Deputy Chairperson was busy convening the next meeting of Exco. He provided the answers to the questionnaire and SWOT analysis that the Committee had asked of the SETA in its oversight capacity.

Mr Blumenthal noted that 180 000 companies resided under the Services SETA. These companies were spread across seven different industries and included labour brokers. The largest sector was the 37 or so blue collar industries such as hairdressing and funerals services. Under the white collar companies, typically project management would be one of those. The Services SETA was the leading SETA for apprenticeships. The Medium Term Strategic Framework (MTSF) directive “which we live by” was focussed on social transformation, rural development strategy, the health profile of the working population, crime and corruption, international cooperation, resource management, improvement of public services, local government infrastructure, amongst others. The Strategic Plan was linked to the MTSF, where the intention was to spend R1 billion, of which 9.7% would be spent on administration, 16.1% on mandatory grants, and discretionary funding would be 54.2% of the total income.

The Deputy CEO, Mr Devan Naicker, said discretionary funding would be spent according to a directive from the Minister. Within the directive, there was a requirement to spend a minimum of 50% of this fund. At least 10% of the fund would be spent on the vulnerable sector. He highlighted that a substantial portion of this fund would be spent on learnerships and adult education. There would also be funding for BEE companies as well as Community Based Organisations (CBO). Assistance would be given for both small businesses start-ups as well as getting cooperatives off the ground. There was an emphasis on spending on older people who had become retrenched, which the CEO pointed out, was a shift in thinking based on recent research. He said in contrast, it was a waste to allocate funds to the degree it had up until now, on the youth – rather there should be an equal emphasis on encouraging them to start their own businesses, and assisting them to gain experience so that they could comfortably enter the world of work. He elaborated on spending on provincial offices, as well as the earlier point of spending on older persons, that is, people over 50 who have been retrenched and would benefit from further training. The discretionary funding would also be utilised towards the establishment of call centres for career guidance.

Mr Blumenthal continued and pointed out that slide 11 and 12 depicted the targets against which their work was measured, and was the basis for their report to the Department of Higher Education. Slide 14 gave an analysis of the budget, while slide 15 showed the highlights achieved for the past financial year.

Mr Blumenthal was very firm that the reports that the SETAs “had been sleeping” for the last 10 years was a gross misrepresentation of the work done over the last 10 years. He said the list previously provided to the Committee (in the Annual Report) would clearly show the successful programmes run by the Services SETA.

In the SWOT analysis, the major weakness, and which he believed was shared by other SETAs, was that a relatively small team served a huge base. There were altogether five threats in the internal factors. There were six threats under the external factors.

In their contribution towards the fight against crime and corruption, the Services SETA had put close to 800 people in police stations who were focussed on customer management, so that police personnel could be freed up to do their actual work. Another 400 were about to be released into communities, for this same project.

He said all of the reporting here today was factual – he did not want to seen as though it was a bragging exercise. The apprenticeship programme was particularly successful, as was the bursary programme where 3000 bursaries had been created and disbursed in collaboration with the National Youth Development Agency (NYDA). Other successes were the training for the establishment of new businesses, and acquiring an occupational qualification which had been introduced as an extramural subject up to matric - the most successful of these being the paralegal subject. The latter however, was not yet well received by educationalists.

Discussion
The Chairperson asked the delegation whether there were any critical issues in terms of the NSDF III that needed to be addressed which the Committee should be informed about. Secondly, he asked in connection with the extramural subjects being rolled out to Grades 10, 11 and12, whether these would assist in addressing the problem of acquiring experience by the time that matriculants seek work. In the same regard, he asked whether the delegation was presenting an anomaly because the initiative looked promising, yet the education authorities, as was just presented, seemed opposed to the introduction of subjects which they felt were only appropriate at a level beyond matric. This needed to be cleared up.

Mr Blumenthal replied that with regard to Recognition for Prior Learning (RPL), 15 000 had very successfully gone through that process. What it aimed at was to test someone's level of competency without having to go through the normally required number of years of training. However, this system proved to have a kink in the chain in that the Minister had widely published that institutions were only legislatively compelled to do this by 2016, and that in the meantime, some institutions were still requiring the normal length of time of training. He said this was an aberration. Another such criticism was that the NSDF III was not in favour of private training providers. The funding was aimed at public training providers. This was very problematic because there were very many competent private training providers who had gone through the process to become accredited. In effect, all they had worked for over the years, including their competitive advantage, would be forfeited. His third point was the funding allotted to the disabled and vulnerable. Services SETA had spent 22% of their allocation and this was above the required target. However this year, there was no target set and it implied then that there was no compulsion on companies to spend any funding on disabled employees. He felt this was a step backwards in providing for the disabled and vulnerable sector of people. The next problematic issue in NSDF III was that there was no mention of Skills Development Facilitators (SDFs). SDFs were registered, and committed and understood the requirements of training. If there was no need to use registered SDFs, then the question was who would be used. The intention with the extramural subjects in Grade 10 to Grade 12, arose out of the fact that there was agreement on the problem of unemployed and unemployable matriculants. This initiative tried to address this problem so that by having studied such a subject, a matriculant had a fair idea where he or she slotted into the world of work because of good exposure in these subjects. This programme helped to fast track them into jobs. In the future, the intention was to place these matriculants into a learnership.

The Services SETA, with regard to the Department of Basic Education, pitched an opportunity to use the graduate programme and place the graduates as proposed above, into a project management learnership. This would be in the classroom, where typically, experience showed the educator to learner ratio was 1:40. This initiative proposed to use the opportunity for these graduates to assist teachers. Their answer was “no” with the response that it would create complacency amongst educators. This was disappointing since this programme would have helped to improve the quality, and increase the number of the matric passes by virtue of the fact that the ratio would be 2:40, and would lessen the burden on the educator's workload.

The Chairperson said that in his replies, it was interesting to hear Mr Blumenthal on the RPL issue, and the fact that it was not really being implemented.

Ms M Kubayi (ANC) asked what the targets were for employment equity as well as for skills layoffs, and what was spent on it. She said the level of support must be set at a satisfactory level, and this was a matter which went across SETAs so therefore what was the “uptake” for the Services SETA, and the spending per province. Thirdly, she asked what was the exposure afforded to rural and remote areas for this SETA, as well as towards the disabled community. She did not support spending on older persons at the expense of the youth. She felt that if the potential was there for youth to start their own businesses, this should be encouraged and funded, in order to assist them to enter the business sector.

Dr W James (DA) asked with reference to the audit committee's difficulties, whether the delegation could describe how that monitoring takes place. Was the auditing of the SETA open to public scrutiny? On the issue of management training, it had been announced by the Minister of Health, Dr Motsoleadi, the Departmentof Health had turned to the private sector to seek managers, and in regard to training for high level managers, that this training was to be realised this year. He asked if the SETA was engaged in this kind of training. Lastly, he asked if the SETA “was forced to” spend 80% of its funds on Further Education and Training (FET) (public) institutions, how that would affect the quality of the training and the strategic plan of the Services SETA? He said this against the background that FET institutions were currently “under-enrolled”, and the funding ended up going somewhere else.

The Chairperson asked for the response from the delegation.

Mr Blumenthal said that for the last ten years the SETA had received a favourable report with regard to its employment equity. As far as transformation in the sector went, 85% were previously disadvantaged individuals (PDI) and 90% were female, while for disabled it was 3%. This last statistic, he said, meant that “obviously we were on a learning curve”, because it was under-represented.

The response to the skills layoff question was prefaced by Mr Blumenthal saying that when people were retrenched they normally approached a temporary employment agency in an effort to find a temporary job, and this was seen by way of the increase in levies when people become temporary workers. The Minister had announced and set high level targets for assisting such retrenched employees. It had been agreed that where the CCMA approves the skills layoff, the Services SETA would assist by providing the skills funding. As a result, in the year past, up to 12 000 had made that application, and all of these, that is, 100%, had been rejected. The reason was because these retrenched employees originated from contract employment (such as cleaning) which did not qualify them for skills layoff funding. He noted that the Minister of Health had announced that in the health sector, nurses, etc were not to be secured from temporary employment agencies. It therefore severely affected this sector as well.

On the question of the provincial allocation, some targets were more achievable in urban areas than in rural areas, and vice versa. In the Northern Cape, for example, whole qualification training was not that popular, but skills qualification training was popular. However, membership in that province was lower than in other provinces. So non-member access to training had been allowed. In other words funding was not equal in all provinces based on this information. This allowed for meeting the targets although different in different provinces.

On the matter of rural access, Ms Kubayi was correct. There was no television, and in that case giving out the information on DVDs was used to overcome that problem. There was also an annual career guidance week and people were provided with busses to the venue. What would be the ideal, would be to have dedicated people in schools to deal with career guidance. Some schools did allocate teachers to this task but they were not always effective. Other kinds of problems were, for example, in schools in the Eastern Cape, which were given the directive not to attend career guidance programmes and cognitive enrichment training.

With regard to young people - whom he said, there were not enough jobs for - it did not serve as a suitable alternative “to put them into their own businesses”. Only one in 100 of these companies were able to sustain their companies. There was a 96% failure rate of these businesses where the person was under the age of 35, whereas the failure rate was 42% where the person was over the age of 35.

The Chairperson picked up on this thread saying that he was aware that the Services SETA's responsibility was to provide funding for training people, but it seemed when it came to obtaining money for business which would be the banks and in particular Khula finance through the banks, people often got turned down. This meant the support from other role players was problematic. The decision from Cabinet to engage some 16 other sectors to support the establishment of new businesses was “not kicking in”. He was sympathetic towards that statistic of only one in 100 being sustainable, because it emanated from this problem. He asked where would the SETA start correcting the problem, in other words, where was it failing.

Mr Blumenthal said that the quality of the SETA's training was accompanied by the difficulty in training for entrepreneurship. This was very difficult to teach, since one needed to be an entrepreneur before being able to teach it. Another difficulty, for example, was if one wanted to start a hairdressing business, such a person would be invited to first enrol in a learnership, then one would be in a better position to start such a business.

Mr Blumenthal said that the Audit Committee held eight meetings a year, and all these minutes were available to the public. The Committee was chaired by a member of the King Commission, and KPMG were the auditors. There was also an ombudsman, and the Auditor General had three encounters per year with the SETA. The audit will soon also include an audit of the IT support infrastructure and its performance indicators. It was to be understood that a bureaucracy might exist and that many unknowns could be hidden behind it. But the process was thorough and robust because of the factors mentioned above.

He said the high-level management training progressed all the way up to NQF8, which was the chartered management programme, and membership of a chartered institution.

In regard to the FET institutions, if a directive to spend 80% of funding were to be given, the SETA would certainly meet that challenge and “make it work”. He believed in the outsourcing of teaching, and that most of these institutions should be privatised, but even so, there would be no difficulty in spending that money.

Mr S Makhubele (ANC) said he had a follow-up question with regard to the layoffs - he wanted to know whether temporary employment services was “the same” as labour brokers. He also asked whether the SETA's Board was functional – what was actually going on. The targets on slide 11 and 12 must be based on something, and was it perhaps a low target from which to work. It seemed the FETs were junior participants, but his understanding was that these were service providers in their own right. He asked if they would be brought into the mainstream, so that a lot more training could be done through these. With regard to tender processes, he asked to what extent it was merely window dressing in terms of implementing BEE. On the matric re-training programme, he asked for clarity on how it worked. On the employment equity issue he said there were women who did not agree with that statistic, and this was an issue of concern to him.

Mr G Boinamo (DA) asked why there was a tendency for CEOs who come before the Committee, to each and every time present only the good and be silent on the bad. He asked what challenges the SETA was facing. The Committee needed to know where there were problems so that it could assist in facing those challenges. So often the reality was the opposite of what was being presented. He pointed to slide 5 on the creation of “decent work”. What was the target on this, and what was the timeframe to achieve those targets? On slide 8 on scarce and critical skills, he asked for more detail, as well as the timeframe for achieving this. He agreed that funding should be set aside for matured people who had been retrenched to start their own businesses because he believed that an added benefit would be that such businesses could employ young people who could learn the business, and eventually have acquired the skills to start their businesses. In so doing it would reduce the current failure rate for young entrepreneurs. With regard to assistance to the youth, he asked of those who had graduated and even those who had not completed their studies, how many of these young people had been assisted and trained? He asked if there was any intention to restructure this learnership because ultimately more funding had been allocated to this programme than to others.

Mr Naicker said that a meeting had been held with the National Commissioner of Commission for Conciliation, Mediation and Arbitration (CCMA). One of the outcomes was that funding for layoffs was very prescriptive. Clearly the retrenched employees wanted their package and employers want to build an element of trust. In essence employers were shying away, leaving all the role players with the challenge of what was to be done with retrenched people. He was not sure that the scheme could cope with the retrenched. In looking at ways to engage, the SETA was sending employers directly to the CCMA. However he did not have much hope that the situation would improve. He stated that next year this time the fund would still be under spent, and in fact, was in danger of becoming a white elephant.

Mr Blumenthal said that the trade unions had not obtained a mandate from their members, understandably because they did not want to lose their “package”. On the issue of the Board, he said it consisted of 250 members who were spread across 37 industries. Of these the Chairperson and Deputy Chairperson of each of the industries, formed the National Council, and was chaired by Cosatu. The average time they served was between 5 and 7 years, so institutional knowledge was present. Representivity was not 100%, with only labour being fully represented.

The information on the slide on the targets was gathered by means of a year on year measurement. The targets from year to year generally increased, so the target was always higher than the previous year. But it would be a good research exercise to analyse the information as far back as the year 2000.

With the FET institutions, Mr Blumenthal said the level of trust in their performance was not good.

With regard to tender processes as they concerned BEE, he said the largest training provider database was black, so this was certainly not window dressing. However, the actual teachers in the classroom may, he conceded, not be up to employment equity standards.

The survey on customer satisfaction was done by means of putting it out to tender, and the feedback was good and bad, and they worked with whatever needed to be done. The school programme was over a three-year period. The NYDA was part of the programme which re-trains for the matric re-write. The value of the bursary was R3000.

The discretionary plan was directed by the National Skills Development Strategy. It aimed to give bursaries to all the companies that apply. For example if there were 100 bursaries but 100 companies apply, each would receive one so in effect the benefit was evenly spread.

The SETA's rural development strategy gave away many bursaries in this sector. The problem was that there were no businesses in those areas. The SETA then becomes the cause of major urbanisation, because once a person has gained his or her qualification he or she does not want to stay. This was a problem but could be addressed by creating effective rural business nodes. Business must be created to absorb the learners who have been trained.

He said the poor image of the SETAs was rooted in the problem of public perception, including political parties who stir up public sentiment. He felt that the SETAs were getting a bashing. Another reason was that politicians had a poor understanding of financial reports. For a number of consecutive years, 18 of the SETAs have had a clean report, yet the perception persisted that SETAs had billions of rands of unspent money in the bank. The reality was that there were never more than 3 or 4 months of unspent money, and other money was paid out in tranches and/or based on success being rewarded with another instalment of the agreed amount. He said the majority of SETAs spend all their funding.

On the issue of scarce skills, their members brought forward that information and the SETA could then act on the information related to scarce skills. He cautioned, however, that while there were millions of unemployed people in the country, and for whom there was no database to record the skills they possess, it was national policy to seek people from other countries to fill posts. It was an imbalance to legitimise this.

Those who gained experience while placed with an employer after their learnership, had an 80% success rate for securing employment. He said that those employers were given a subsidy and this had worked so well that it was included in the NSDF III, so that converting the learnership to a work opportunity would continue.

Mr G Radebe (ANC) said he resided in Mpumalanga which did not have a university, and he wanted to appeal to the SETA to address this problem. He asked how long the youth employment strategy would be effective.

Ms W Nelson (ANC) asked if the occupational qualification had been effective, which provinces it had benefited, and how long the programme had been running.

Mr Blumenthal noted that in Mpumalanga there were two branch offices which could assist. With regard to targets he said the levy-paying industries were their target.

The Chairperson said that the Services SETA was one of two of the biggest SETAs. The indication of its spend was very good, and he was particularly impressed with the adult education programmes in urban areas.

Mr Blumenthal commented that the money would be spent where needed and as guided by the amount of activity in the sectors. He said a poor example was where a Member of Parliament had asked for assistance in the area of Vrygrond in Cape Town. Business training had taken place but the collaboration with the Department of Trade and Industry (DTI) had not produced any assistance to complete that programme.

The Chairperson said that a future joint discussion had been planned with the DTI. He reiterated that the RPL initiative was good but the Committee would try to address its problems. He was picking up serious concerns with the training layoff scheme, and would give it attention in view of the fact that a sum of R2.4 billion had been allocated to it. He asked members to carefully consider solutions for this problem. The Committee should also apply its mind to the youth issue, as well as the SDFs.

The Chairperson thanked the SETA for their excellent presentation and thanked members for their participation.

The meeting adjourned.