Joint Sector Education and Training Authorities Skills Development: briefing

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Employment and Labour

21 May 2002
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

21 May 2002

Chairperson: Ms E. Thabethe

Documents handed out:
Joint Presentation by Services Sector & FoodBev (See Appendix)
Background material for Fasset (e-mail

The Committee heard that c have collectively demonstrated reasonable success. The second Memorandum of Agreement with the Department of Labour has just been signed.

Sector Education and Training Authorities have registered 200 learnership programmes with the Department of Labour. By the end of this month indications were that Seta's would have registered 9,000 employed and unemployed persons in learnership contracts with companies.

The Committee was also informed that Seta's were confident in achieving the National Target of 80, 000 learners by 2005. Seta's have disbursed grant rebates to companies to an average of around 52% with some Seta's recording disbursement rates as high as 75% and 80%. Most Seta's have already started funding viable skills related sectors projects and leanerships from the discretionary fund.

Joint Sector Education and Training Authorities (Seta's) Presentation
Mr. Ravin Deonarain, the CEO of FoodBev Seta presented the joint briefing of
Seta's to Committee. Mr. Deonarain said that the presentation had been prepared by obtaining and incorporating the inputs from the eight seta's invited as well as the Department of Labour and that it would cover some of the challenges, successes, and constraints. He added that it would also highlight some thoughts on how parliament could facilitate and assist in a more speedy and efficient delivery of the National Skills Development Strategy.

Mr Deonarain said that at present each seta operated with different combinations of contextual issues and had different organisational perspectives and that each had a unique identity that had been shaped by its particular combination of contextual issues. He noted that this would explain the different stages of development, establishment and delivery each Seta had. Mr. Deonarain informed the Committee that the heavy set of responsibility each seta carries is such that five Seta CEOs have been diagnosed with hypertension since the establishment of the seta regime.

Mr. Deonarain took the Committee through the functions of the Seta's which included development of a Sector Skills Plan (SSP) that undertook research into the sector to determine the current labour skills profile and the Learnerships and skills programmes which were work-based routes to attaining a nationally recognised qualification. In September 2000 each Seta prepared its Sector Skills Plan, which it submitted to the Department of Labour. A panel of five experts, both international and local evaluated these and that all Sector Skills Plans of the Seta's were approved. Many Seta's were faced with establishment priorities at the time when these Sectors Skills Plans had to be developed. The major constraint at the time was the level of knowledge of legislation by companies, which contributed to this scepticism and low participation rates.

Mr. Deonarain said that one of the many successes that Seta's had recorded include Fasset, the sector education and training authority for finance accounting, management consulting and other financial services which covers a broad range of professional services including accounting firms, tax practices, management consultants and stockbrokers. Fasset has increased its participation rates by over 320% with targeted SMME intervention in just over which years existence. He pointed out that despite all the challenges Seta's have collectively demonstrated reasonable success. He added that a memorandum of interest and enthusiasm had been generated by Seta's and the Department of Labour.

Mr Deonarain contended that the pace at which the National Qualifications Framework was being rolled out and the capacity of the South African Qualification Authority (SAQA) to handle the pace at Qualifications and Learnerships was not satisfactory. He singled out one example of the development of Learnerships where FoodBev seta has developed and registered 34 brand new leanerships programmes and 5 more are in the pipeline this year. He also sited Merseta who have developed and registered 22 learnerships programmes and plan to develop and register a further 15 by end of May.

Mr Deonarain explained that in total 200 Learnership programmes were registered with the Department of Labour and that by end of this month indications are that Seta's would have registered 9,000 employed and unemployed persons in leanership contracts with companies. He said that seta's were confident in achieving the National Target of 80, 000 learners by 2005. At last count Seta's have disbursed grant rebates to companies to an average of around 52% with some Seta's recording disbursement rates as high as 75% and 80%. Most seta's have already started funding viable skills related sectors projects and leanershiop from the discretionary fund. Last week the Minster of labour had approved projects submissions of 18 seta's who had applied for funding of viable socio, economic and development initiatives in their sectors. He pointed out that the value of all the projects funded was in excess of R 1 billion projected for three years ahead.

The Chair said that the Committee was genuinely sympathetic to the work pressure the Seta's had to deal with. She said that this phenomenon was, however, not peculiar to the Seta's only and pointed out that her acting as the chairperson was occasioned by the absence of the chair who was on a stress related leave of absence.

Mr Durand (NNP) noted that there had been considerable negative publicity regarding the performance of Seta's. Why were some Seta' s not represented in the team that was before the Committee.

Mr Boshoff (POSLEC) said that the suggestion that the Setas were not represented here were the ones struggling was not true. There were setas that were present but were still in infancy and yet to build the requisite capacity.

Mr Mshudulu (ANC) acknowledged the fact that there were indeed teething problems in the skills development programmes. The best approach to training should be to adopt a problem solving approach and asked how the Seta's identify the skills needs for the country and where the SMME stood in this process. What was the role played by Labour and the employer in this set up.

Ms Julie Reddy (CHIETA) noted that much progress had been made to strengthen Seta's so far pointing out that the participation of SMME had been increased and that appropriate support mechanisms had been put in place. She explained that administrative staff had been appointed to help the small business entrepreneurs and that work place skill plans were in place to assist these up and coming entrepreneurs with their business plans.

Mr Blumenthal (SERVICES) informed the committee that six centres for SMME had been set up around the country and that his seta was implementing a voucher system which would enable employees to access the skills levy benefit directly without having to go through the employer. He added that a SMME Council had been set up to direct all incentive schemes so that applications to this facility could go in one direction.

Mr Machiel van Niekerk (PAETA) informed the Committee that about 80% of commercial farmers fell under the SMME bracket. His organisation had developed three learnerships programmes on grade 1 for 45 emerging farmers adding that there were school programmes for 50 emerging black farmers who were being trained in cotton framing.

Ms Lopes (MERSETA) suggested that the level of information sharing should be raised within the Seta's. She said that their approach was to get the SMME to claim the skills levy and explore business training and that they were pursuing ways of identifying qualified SMMEs to be incorporated in the programme.

Mr Hutcheson (FASSET) lamented that there were no specialists in the unions to identify the training needs of their members hence one had to depend on employers to supply this important data. He added that the problem with this system was that the relationship between employers and employees often rendered progress slow and tenuous.

Mr Nkomo (FOODBEV) pointed out that for the skills development programme to succeed, there had to be an all inclusive participation and co-operation in every sector. He added that sectoral priorities informed the process of identifying the training needs of the economy but that this has to tie in with company priorities as well.

Mr Pillay (DP) asked if there were any specific plans to increase qualification standards and asked for an explanation regarding the standards which bodies set for trainees to qualify. Where could the unemployed person could go for skills training programmes?

Mr Blumenthal (Services) informed the Committee that they were not responsible for the standard bodies but the services they generated. Standard bodies were used for industry certification competency and that this was done in conjunction with the South African Qualification Authority (SAQA).

Mr Makaba (MERSETA) said that his organisation inherited the system of standardisation and that these bodies assisted in putting necessary guidelines to fast-track the process of accreditation. He added that the bodies gave guidelines to the training processes and at the same time provided on-site support to the trainees. He said that his organisation planned to go on road show to provide workshops on quality management standards.

Mr Pillay (DP) inquired what became of workers who were declared redundant and whether they were incorporated in the training programmes. He asked how data on the training needs were gathered and how people come to learn of the availability of opportunities in this respect. He also questioned the large bureaucracy the Setas maintained and asked if this did not deplete the funds meant for skills development.

Mr Mabuza (Services) informed the Committee that his organisation partners with
Access College to provide accountancy courses to unemployed persons. He said that they had embarked on a drive within all sectors towards incorporating unemployed people and that this was done through the work skill plan. They had created career centres so as to identify those skills in urgent need so as to create opportunity for the unemployed people.

Mr Mabuza pointed out that his organisation had liased with different tertiary institutions to advertise what they do and that pilot sites have been set up to act as information centres.

Heins Leiters (PSETA) said that mechanisms such as work-place skills plan were in place to gather relevant data on the changing needs of industry in order accordingly to retrain people rendered redundant. They were in constant communication with all the alliance partners on the issue of redundancies. He pointed out that legislation had made funds available for specific needs and redundancies fell under this rubric of development.

Mr Blumenthal (Services) urged the Committee to get involved in the process through its caucuses so as to advocate ownership of the skills development process. He lamented that in big corporations workers were subjected to immense bureaucracy before they come around to get processed for training.

Mr Hutcheson (FASSET) explained that 91% of the skills development levy was spent on the core programmes of the projects and that only a small fraction of resources went into administration explaining that measures had been put in place to severely cut down on bureaucracy.

Mr Middleton (IFP) requested that in future presenters should hand out documents in advance so as to enable members to peruse and get the sense of the presentation in order for them to interrogate issues from an informed point of view. He asked for clarification on what exactly the setas require from the Committee in terms of assistance to augment their difficult task of skills development.

Mr Deonarain pointed out that the skills development project was a new endeavour and owing to the country's beleaguered history it would take some time for a turn-around to be experienced in this regard. He said that the Seta's experience teething problems in implementing legislation partly owing to the fact that the Department was not remitting funds in time and that the Seta's had to deal with three different departments at the same time. He urged the Committee to prevail upon Departments to play their part expeditiously to cut down on the current delay of 90 days before the Seta's could continue with their programmes.

Mr Moropa (ANC) lamented that the salient issues of inequality and poverty eradication were not clearly presented. He advised that Seta's should ensure that all interventions were sustainable. Are Setas satisfied with the current legislative framework and did the framework render their projects sustainable? The maco-economic environment did not, in his view, provide an atmosphere conducive for the sustainability of these programmes. He added that it was crystal clear from the National Productivity Report that employment was on a decline in the country.

The Chair clarified that issues of macro-economic structures was for the Committee to debate during its own session. She pointed out that the purpose of interacting with Seta's was to gather relevant facts, which the Committee would then interrogate, and if need be re-examine the legislative framework. She said that her main concern was that some Seta's were not represented hence it was not possible to gauge their level of development.

Mr Morotopa (DOL) acknowledged the fact that a lot remained to be done but that there were notable achievements that needed to be recognised and applauded. He said that he concurred with the chair that macro-economic issues should be incorporated within the wider political spectrum.

Ms Malebana (ANC) enquired if training programmes targetted matriculants as well. She also asked if Seta's access and if so how, the deep rural areas where there were high levels of illiteracy.

Mr Khumalo (PAETA) said that matriculants fell in the area of priority covered by the national skills fund since the affected group was drawn mostly from the youth in the rural areas. He pointed out that R 60m had been set aside to target youth training in the Eastern Cape and that there were many ongoing projects in the rural areas which offer courses such as maths and accountancy. He explained that primary agriculture was a rural occupation and that fire-fighting projects had been started as well. He added that workshops were being conducted to popularise these rural projects.

Mr Blumenthal (Services) said that his organisation had set up offices in many rural areas and that many matriculants had been taken into internships. He faulted the current legislation which he said focused only on learnerships instead of looking at a broad spectrum of fields. He added that they work with schools to vocationalise curricular so that learners were exposed to the available opportunities at that crucial level.

Ms Malebana (ANC) asked if there are any cases of corruption among the Seta's and how they are dealt with when unearthed.

Mr Boshoff (POSLEC) admitted that there were high risks of corruption and other malpractice setting where there was huge sums of money going around. He however noted that the Seta's had so far acted responsibly in terms of the PFMA and that individual Seta's were taking regular auditing and that accountability levels were satisfactory.

Mr Boshoff explained that three factors affected the level of funding in Seta's and these were working with an entirely new system, which took time for money to get around, the pressing needs on resources and governance issues. Seta's had adapted a code of good practices to ensure that governance issues were a top priority.

Mr Morotoba (DOL) made final remarks said that the real challenge lay in interacting with different Parliamentary Committees. Legislation was still in its infancy and admitted that there were clear inadequacies, which would need to be addressed at the appropriate forum.

He noted that the prime concern was to market the skills development programme while at the same time addressing the twin issues of HIV/AIDS, productivity and retrenchments. He however cautioned that the National Skills Development Strategy must be consulted to ensure that there was no deviation from the core functions of the programme.

The Chair said that the intention of this session was to gather relevant facts and data for proper engagement on the vital issue of skills development. She noted that so far the Committee had accomplished that goal but hastened to add that there would be more opportunity in the future for interaction between the Committee and Seta's. She said, for instance, that it would be interesting to pay a visit to some of the projects undertaken by the various Seta's.

The meeting was adjourned.
Opening Remarks by CHERYL JAMES, CEO,Fasset

Chairperson, on behalf of the Seta's represented here today I would like to take this opportunity of thanking the committee for the invitation extended to us to engage with you on skills development matters. It is indeed a privilege to be part of the broader seta community as we all strive to increase the skills base within our country and open up opportunities for learners to enter the labour market.

The group of Seta's represented total 8 out of 25 Seta's established in terms of the Skills Development Act. During discussions between representatives of the Department of Labour and the Chairperson of this committee it was indicated that the Seta's represented should be made up on the basis of:

-A range of different sectors
-A mix of size
-A representative group of Seta people
-Setas from both predominantly private and public sectors and
-Seta's that are making progress and those that are experiencing problems

We believe that the Seta representatives present cover the spectrum as requested.

It is important to note that each Seta represented here today is by the very nature of the Seta environment well qualified to comment on the affairs of our own Seta, and in addition as a group support the views portrayed in the presentation, which is to follow. It may however be difficult for us to comment generally and we are not in a position to speak for, or represent, the Seta's that are not part of this delegation. We therefore request your understanding on this matter.

Allow me to introduce the Seta representatives present:

- Chieta (Chemical Industries Seta)
-Fasset (Financial and Accounting Services Seta)
-Foodbev (Food and Beverages Manufacturing Seta)
-Merseta (Manufacturing, Engineering and Related services Seta)
-Poslec (Police, Private Security, Legal and Correctional Services Seta)
-Paeta (Primary Agriculture Seta)
-Pseta (Public Services Seta)
-Services (Services Seta)

As set out on the agenda agreed with the Chairperson, a short presentation will follow these opening remarks covering those areas identified in the brief provided to us. Further information on the individual Seta's can be obtained from the packs that have been provided to all members of the committee, or in the answers to the questions from the members which may arise.

I trust that the question session following the presentation will be fruitful in providing you with the information and answers sought from the Seta's represented here and thank you once again for the opportunity afforded us to engage with this committee.

I would now like to call on Ravin Deonarain, CEO of the Foodbev Seta, to do the presentation.


By Ravin Deonarain, Executive Officer, FoodBev Seta

Thank you Cheryl, I must reiterate that it is indeed an honour and a privilege to the Seta's invited to appear before and meet with the Labour Portfolio Committee. I say this because there are very high expectations of the major stakeholders in national skills development, broadly Business, Labour and Government, that a great pressure and responsibility rests on the Seta's as the delivery vehicles and implementation agents of the national skills development strategy. Vehicles that must begin delivering the benefits of skills development legislation to every sector in the economy in the near future. Therefore, the SETA's present here today would like to record their appreciation and acknowledge the foresight of the Minister of Labour, the Chairperson and Committee for this opportunity to meet with you.

This presentation has been prepared by obtaining and incorporating the inputs from the 8 Seta's invited as well as the Department of Labour and will attempt to cover the following, which represent the objectives and functions for which the Minister of Labour has established Seta's. For each of these functions I will attempt to provide the committee with some of the challenges, successes, constraints, and, perhaps highlight for discussion, some of our thoughts on how parliament can facilitate and assist us in a more speedy and efficient delivery of the National Skills Development Strategy.

However, before I proceed I should like to provide the contextual environment within which Seta's are required to function. I believe that much of what I say are bread and butter issues for parliamentarians and therefore I shall cover these very broadly and succinctly. Nevertheless, I do believe that of some these contextual issues need to be highlighted to provide a glimpse of the scenario within which the skills development strategy operates.

It is important to note at this point that each Seta:

-Operates with different combinations of contextual issues,
-Has different organisational perspectives, and,
-Has a unique identity that has been shaped by its particular combination of contextual issues.

And therefore you will find that each Seta is at a different stage of establishment, development and delivery.

Some of the more important issues that form this contextual environment:

-Each Seta operates in one of 25 discrete economic sectors with their own characteristics, with their own profile and own specific needs.

Have stakeholder organisations that comprise different mixes of government, public and private entities

Setas are stakeholder driven organisations with each stakeholder advocating and lobbying particular perspectives, expectations, value systems and interests.

Have employers, labour, employees, learners, the unemployed, institutional bodies and the government as their customers, beneficiaries and masters.

International corporations, local big business, small businesses and the informal sector are served by Seta's.

Is replacing old, established and entrenched structures such as the industry training boards (I should think that the audience here needs no further explanation on this challenge)

Is Replacing an old training and development system by developing, advocating and implementing a totally new way of training and development in South Africa that is in many respects philosophically different to the old one.

Has to serve and work with different government departments such as the Department of Labour, Department of Education and Department of Finance and their various sub-structures.

I think, I should add at this point… that since their establishment 5 Seta CEO's have been diagnosed with hypertension… You can well imagine why!

The Minister of Labour has promulgated the Skills Development Act in 1998 and the Skills Development Levies Act in 1999 - with the purpose of providing an institutional framework to devise and implement national, sector and workplace strategies to develop and improve the skills of the South African workforce. This framework is being developed with the aim of enabling us to succeed in the global market and to offer opportunities to individuals and communities for self-advancement to enable them to play a productive role in society.

Given this purpose and within this contextual environment I should like to take you through some of the major functions of Seta's, outline some performance issues and touch on typical constraints experienced. You may find this a little detailed but I think it will serve to demonstrate to you the magnitude of the process and undertaking.

The 1st set of functions of Seta's relates to the development of a Sector Skills Plan (SSP). This involves:

Undertaking research into the sector to determine the current labour and skills profile

Determining the economic characteristics of the sector and forecasting areas of growth and specific skills needs of the sector

Developing skills development objectives in line with National Skills Development Strategy

Providing an enabling environment for the achievement of these objectives by enterprises, labour, individuals

Monitoring the achievement of these objectives and providing a continuous loop of feedback to stakeholders.

I other words this research and strategic document forms the "blue print" for each seta's focus areas and activities.


In September 2000 each Seta prepared its Sector Skills Plan, which they submitted to the Department of Labour. A panel of 5 experts, both international and local, evaluated these and I am pleased to report that all the Sectors Skills Plans of the Seta's were approved. This was achieved just 6 months into the establishment of the Seta's.


Important to note is that many Seta's were faced with establishment priorities at the time when these Sectors Skills Plans had to be developed. And the submission of information (in the form of WSP's which I will touch on later in this presentation), which formed the primary source of information for input into the development of SSP's, was a problem.

The Skills Development Act was very much in its infancy then and there was much scepticism surrounding the new legislation by businesses and therefore a reluctance on their part to participate fully in the process of claiming back Grant Rebates by submitting information to Seta's. The relatively low numbers of companies submitting information made the development of SSP's particularly challenging. A challenge remains to increase participation rates by companies especially the SMME companies. We will later on cite examples by some Seta's here that have resulted in increases in participation rates by SMME companies.


A major constraint at the time was the level of knowledge of the legislation by companies, which contributed to this scepticism and low participation rates. This was further compounded by the flood of new legislation at the time in the form of the Employment Equity Act and BCEA. Companies were busy gearing themselves up for compliance with these new pieces of legislation and, this perhaps diverted some of their energies from the Skills Development Act. On the other hand investment in training and development by companies has been traditionally low when benchmarked against some international companies. (Average investments range between 0% to 4% of payroll for most South African companies compared with some higher end 1st world companies.) This has been noted in the Food and Beverages Manufacturing Sector but may differ for other sectors. Nevertheless, changing the culture of training and development in SA will continue to be a focus of the National Skills Development Strategy and the Seta's.


One of many examples of successes that Seta's have recorded include FASSET, which has increased its participation rates by over 320% with targeted SMME interventions in just over 2 years existence.


I think that it is important to note that management of the achievement of national targets and objectives is through formal performance agreements called "Memoranda of Agreement" signed between the Department of Labour and each Seta. The agreement defines the responsibilities and obligations of both the Department of Labour and the Seta. These annually renewable agreements set out the five-year National Skills Development aims and objectives and each Seta develops annual targets, business plans and five-year plans to achieve these. We have just signed our 2nd Memorandum of Agreement with the Department of Labour and I am proud to add that most Seta's invited here are on track in achieving their annual and long-term targets.

To illustrate how these agreements work I shall examine a typical objective under Skills Planning, which is:

"Fostering skills development in the formal economy for productivity and employment growth."

And an accompanying success indicator for Seta's is as follows:

"By March 2005, 85% of the enterprises with more than 150 workers are receiving grant rebates and contributions towards productivity and employer/employee benefits is measured"

To date, for e.g. PSETA has already achieved 50%, FASSET 75%, FoodBev 75%, MERSETA 90%, CHIETA ….%, Services Seta …..%, etc…

(You will find more detailed statistics for each of the Seta's here in your information packs.)

Learnerships and Skills programmes is the next major functional area of Seta's.

These are one of the brand new concepts in training and development that has been introduced by the Act which Seta's have to develop, sell and implement in their sectors. As they are new concepts I shall touch on what they are very briefly.

"Learnerships are work-based routes to attaining a nationally recognised qualification"

They are developed by each Seta from the strategic areas as identified in their Sector Skills Plans. (demand driven)

Each Seta registers these officially with Department of Labour, which makes the qualification that it leads to recognised by The Department of Education.

Involves contractual relationship with employer, employee, training provider

Comprises a minimum of 120 credits on the NQF - for +- 1 year

Each Seta registers, administers and is the custodian of each contract of learnership

Seta's monitor progress, assists employers and employees and provides quality assurance

Quality assurance by the Seta's forms an intrinsic part of learnership delivery system which ensures that qualifications attained are nationally recognised and comparable to qualifications obtained through mainstream educational systems

And, because it is demand led it provides for employable skills sorely needed by our economy


The major challenge for Seta's generally is to develop these Learnerships within their respective sectors and to advocate and market their benefits to the stakeholder companies. Pivotal in achieving our national stretch target set by the Minister of Labour of having 80 000 employees/learners/unemployed people on learnerships by 2005, is to get buy-in from businesses and other enterprises. This is particularly challenging because on a business/employer level:

The practical implications of transforming workplaces into "centres of skills development and delivery" and of having trained and registered assessors, moderators and qualified training personnel is quite an ask, given that their primary existence is to produce and sell goods and services

It involves changing traditional learning environments into outcomes-based ones, which involves a philosophical change in the way training is carried out.

Changing the mindsets of and convincing employers that there are broader, long-term economic and social benefits to be derived are phenomenal tasks of Seta's.


However, despite all of those, Seta's have collectively demonstrated reasonable success. A momentum of interest and enthusiasm has been generated by the Seta's and the Department of Labour. Of course, the budget speech by Minister Manuel did not do any harm.


A constraint recorded by Seta's is the pace at which the National Qualifications Framework is being rolled out and perhaps the capacity of the South African Qualifications Authority (SAQA) to handle the pace at which Qualifications and Learnerships are being developed. However, this is recognised and acknowledged as a tremendously complex process as well, and plans are underway to increase capacity and speed up the delivery by our partner organisation.


On the development of Learnerships the FoodBev Seta is a good example (not because I am the CEO), but FoodBev has developed and registered 34 brand new learnership programmes and 5 more are in the pipeline this year. As a "kick-start" and catalyst for SMME's with little or no training infrastructure FoodBev is developing accompanying Training Material and Assessment Guides to assist them with implementation.

Merseta, as another good example, has developed and registered 22 learnerships programmes and they plan to develop and register a further 15 by end May.


In total some 200 learnership programmes are registered with the Department of Labour, and by the end of this month indications are that Seta's will have registered 9 000 employed and unemployed persons in learnership contracts with companies. I sincerely believe that, with the learning curve behind us, we can achieve the National Target of 80 000 learners by 2005.

The 3rd set of functions relates to quality assuring the education and training provision in the sector. Some of the key functions provided by the Seta include:

- Development of requirement guidelines for the evaluation and accreditation of education and training providers
- Accreditation of assessing bodies
- Provision of external moderating services
- Co-ordinating and funding standards generating bodies (SGB'S)
- Transformation of current apprenticeships and trainee schemes into learnerships
- Maintaining a sector learner record database to feed into the National Learner Record Database.
- Implementing a Quality Management System within the Seta's and advocating the implementation of similar systems within training provider organisations


Again the particular common challenge facing Seta's is the implementation of a completely and fundamentally new system in companies. This has to be done within the complex contextual environment that I have mentioned earlier.


Particularly notable was the successful accreditation of all 25 Seta's as Education and Training Quality Assurance Bodies (ETQA's) only 18 months into the establishment of the Seta's.


An outstanding example that I can cite is the CHIETA (Chemicals Sector) who have piloted and implemented a best practice Quality Management System in their Seta.

The 4th set of functions relate to the receipt and disbursement of levies to companies which involves the:

- Receipt of levies from SARS and DoL
- Proportioning of these levies into ring-fenced grants
- Providing grant rebates to companies that have successfully complied with requirements
-Administration of payments to enterprises


Much has been reported in the media around this issue and I will attempt to provide some insights into how the system works which I hope will provide answers around the perceived surpluses of levy monies lying with Seta's.

Setas receive levy funds from SARS via the Department of Labour on a monthly basis. The processing of these levies before they reach each Seta sometimes takes up to 2 to 3 months after a company has paid the levy to SARS. Consequently Seta's are unable to pay back the 15% of the levy to companies on a monthly basis. Simply because they do not yet have that money in that particular month to pay back to a company. Therefore you will find that most Seta's disburse grants rebates to companies on a quarterly basis.

This quarterly grant rebate comprises only 15% of the 70% of funds that are held in trust for companies. The requirement from Seta's to disburse the remaining 55% of levy is the production and submission of an annual training report by a company. This takes place only at the end of the financial year and consequently Seta's accumulate 55% of their levies during the course of a financial year, which they hold in trust for companies until they submit their annual training reports, whereafter it is paid out.


At last count, Seta's have disbursed grant rebates to companies to an average of around 52% with some Seta's recording disbursement rates as high as 75% and 80%. Again the diverse contextual environment in which each Seta operates is a determinant.


A major constraint facing most Seta's is the participation rate by companies within each sector. Typically SMME's show a reluctance to participate in the grant claim scheme simply because their levy contributions are so small that it is just not cost effective for them to go through the process of claiming back their grant rebates.

What this leads to, is an accumulation of surpluses within Seta's from these unclaimed levies. Typically between 20% and 30% of the surplus funds are due to unclaimed levies.


One may ask then, "What is being done about this?" And the answer lies in the revised funding regulations of the Department of Labour, which makes provision for a discretionary fund to be formed by each Seta.

This discretionary fund may be used to provide funds for "Learnerships Grants" which is intended as an incentive to employers to recover operational expenditures related to putting an employee through a learnership.

In addition it makes provision for Seta's to pay unemployed learners an "allowance" to cover expenses incurred if the employer is not paying a wage.

Other areas in which this fund may be used include funding of skills-related Projects that may be submitted by stakeholders in each sector.


Most Seta's have already started funding viable skills related sectors projects and learnerships from this discretionary fund. In the information packs provided to you will be able get an idea of the projects that each Seta is undertaking.

I realise it's been long and I am now nearing the end of my presentation but I will be remiss in my duty if I did not mention that last week the Minister of Labour had approved project submissions of 18 Seta's who have applied for funding of viable socio, economic and development initiatives in their sectors. The value of the all the projects funded is in excess of R 1 billion and these are for projects in the 3 years ahead.

Conclusions and Recommendations

In concluding my speech I hope that I have been able to:

- shed some light on the complex contextual environment in which we operate
- give you an idea of the magnitude of the undertaking of the National Skills Development Strategy and the Seta's, and,
- highlight some successes and constraints of the different Seta's.

If I failed to include particular issues highlighted by my fellow Seta colleagues please accept my apologies. The alternative being that we would need to spend 2 more days with the Labour Portfolio Committee.

I thank you Minister, Chairpersons, Members of Labour Portfolio Committee and my colleagues from the Seta's represented here.


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