Sector Education and Training Authority performance: Department of Higher Education &Training briefing

Standing Committee on Appropriations

18 November 2016
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Standing Committee on Appropriations was briefed by the Department of Higher Education and Training on the performance and expenditure of the Sector Education and Training Authorities. At the outset, Members noted that they had expected to see more slides of direct relevance to the Committee, which was engaged with budgets rather than performance reports, and Members also expressed their concern that Members of the Portfolio Committee on Higher Education and Training were not present at this meeting.

The Department noted the numbers of graduates in various subject areas from 2012 to 2014, and described the grant breakdown from the Skills Development Levy and National Skills Funds as an 80:20 split. One of the biggest problems was the lack of uniformity in the SETA operations which made it difficult for external stakeholders to comprehend the system. The challenges included uneven capacity and resources as well as negative public perceptions about SETAs. All SETAs were audited by the Auditor-General south Africa (AGSA) and directives were issued to address AG findings.

Members did not feel that the TVET colleges were addressing the challenges of skills needed in the country; hence South Africa was importing skills, and he particularly questioned why the entire budget was spent yet the targets were not reached and the challenge of skills remained. They were concerned that only 1 in 10 candidates seemed to be completing courses. One Member was critical of the description of the SETAs obtaining “clean” audits, pointing out that some had continuing challenges and that there seemed to be more of a focus on spending than on ensuring quality.
They asked for explanations on the needs and rationales of the work, and on the public engagement to persuade more employers to use the SETAs. Members also asked about public perceptions and satisfaction surveys, and admitted that many were of the view that the SETAs should be done away with and the budget redirected to other training, as they were doubtful that meaningful employment was the result of the training. They specifically asked whether DHET really needed the SETAs or whether some other system should not be contemplated. DHET conceded that there was a need to streamline the training. Some of the recent studies on employment and qualifications were set out. One Member suggested that those SETAs not performing should be named and shamed, and praise given to others where due, and asked how DHET aimed to improve performance. They felt that more information was needed, and asked, in terms, whether SETAs were indeed fulfilling the needs, what the cost was of training, and whether there was the right balance between university graduates and those with vocational qualifications and experience. The difference between learnerships and internships was outlined. Members asked to what extent the SETAs were helping those in the rural areas, how high unemployment in certain areas was being addressed and how they were meeting skills shortages. The impact of the “Fees must fall” protests was discussed. Members wanted a report back on SETAs under administration, and asked how much the intended skills planning unit at the Department was likely to cost. Members suggested that in view of the high unemployment, DHET should create a website linking export of skills opportunities to those seeking the skills internationally.

Meeting report

Opening Remarks
The Chairperson said that the Department of Higher Education and Training (DHET or the Department) had been asked to brief the Committee on the funding framework of the Sector Education and Training Authorities (SETAs), and to discuss critical issues of value for money and service delivery efficiencies. The Committee needed to consider whether money could be redirected to the DHET and institutions of higher learning, to promote faster growth in the economy. Key issues that Members would highlight today in the discussions would assist the Committee in processing the 2016 Medium Term Budget Framework, and formulate relevant information for the 2017 Medium Term Budget. The SETAs had to be better positioned as catalysts for growth and development.

She noted apologies from the Minister, Dr Blade Nzimande and the Deputy Minister, Mr Mduduzi Manana, and also from the Director General of DHET, Mr Gwebinkundla Qonde.

Mr A McLaughlin (DA) said that it was unfortunate that the documentation had not been presented to the Committee in advance. He thought only six of the slides to be presented were relevant to the work of this Committee, and the rest related to non-financial performance that was not within the purview of this Committee. He questioned the purpose of continuing with the meeting.

The Chairperson replied that the Committee had looked at the programme of action and had adopted it, and this should be seen as an information-seeking session. The Committee wanted to question whether there were benefits from the SETA outputs, particularly since consideration had been given to perhaps combining or collapsing some SETAs in order to leverage more money for other institutions of higher learning. She would have expected Mr McLaughlin to have objected at the programming stage, if he felt that this presentation was irrelevant.

Mr M Figg (DA) said the issue was not the programme itself, but what had been presented to the Committee in a attempt to convince the National Treasury (NT) to give more money. The Department had not spent its budget to date.

The Chairperson asked why the Members of the Portfolio Committee on Higher Education and Training were not present, as this was supposed to be a joint meeting.

Mr Anele Kabingesi, Committee Secretary, Portfolio Committee on Higher Education and Training, replied that the Chairperson of that committee, Ms C September, was abroad and most of the other Members had sent apologies for this meeting.

Mr Figg said the apologies could not be accepted and urged the Chairperson of the Standing Committee to write a letter to the Members to voice the Committee's concerns.

The Chairperson agreed that a letter would be written to Ms September asking for an explanation, as the aim of the meeting was to assist the Portfolio Committee.

Sector Education and Training Authority performance: Department of Higher Education &Training briefing
Mr Zukile Mvalo, Deputy Director General, DHET, set out the number of graduates as follows, from 2012 to 2014:
- Science, Engineering and Technology 157 598
- Business Management 145 474
- Technical and Vocational Education and Training (TVET)55 431 graduates in 2014

He noted that the number of young people not in Employment, Education and Training (NEET) in South Africa increased from 2 million in 1996 to 3.2 million in 2011.

Between 2012 and 2015 the Artisan Development programme produced 55 282 graduates, compared to the target of 52 110. Learnerships produced 247 802 from 2013/14 to 2015/16. Internships produced 37 212 from a target of 43 918 in the same period.

There were 67958 bursaries awarded out a target of 56 476.

Mr Mvuyisi Macikama, Executive Officer, National Skills Foundation, spoke on the funding framework for SETAs, and the  2017 Medium Term Expenditure Framework (MTEF) Priorities. He said the grant breakdown of the skills development levy was 80% for SETAs, and 20% for National Skills Fund. Out of the 80% given to SETAs, the use was 49.5% as discretionary, 20% for mandatory items, and 10% was for administration. Of the 20% given to NSF, 18% was in pursuance of the NSF mandate and 2% was for SA Revenue Services (SARS). SETAs were required to outline mechanisms to respond to demand, by setting out key skills priorities for the specific financial year.

Mr Malviwe Lumka, Chief Director, DHET, spoke on risks, opportunity and challenges in the SETAs. He said there was lack of uniformity in the SETA operations, as different SETAs used different systems which made it difficult for external stakeholders to comprehend the system. Some of the challenges included uneven capacity and resources among SETAs, lack of research capability which hindered sector skills planning, and negative public perceptions about SETAs. As part of ensuring value for money, all SETAs were audited by the Auditor-General South Africa (AGSA) and directives were issued to address AGSA's findings.

Mr A Shaik Emam (DA) said the TVET Colleges were not addressing the challenges of skills needed in the country and as a result South Africa was still importing skills from Cuba and other places. He asked what the rationale was for spending all the money yet still not addressing the challenge of skills. He asked also whether what was being done at TVET level was impacting positively, pointing out that only 1 in 10 candidates actually seemed to be completing their courses.

Mr Lumka replied that the TVET Colleges had only recently become a competency falling under the National Department of Higher Education and Training, as previously they had been a provincial department competence. Their performance was something that DHET was currently attempting to address.

Mr Shaik Emam said there seemed to be always a negative finding by the AGSA, and always the emphasis appeared to be on spending but not on quality. He asked if value for money was being achieved and pointed out that spending fully was meaningless unless there was a positive impact.  He asked about the need and rationale for the different systems. There were experiences of employers at the work place not opening up opportunities for learners to access learnerships. He asked what was in place to get greater collaboration.

Mr Lumka replied that the DHET had engaged in a huge campaign to invite employers on a number of occasions. There had been improvements in how employers now view TVET Colleges and they were beginning to accept students coming from these establishments. Quality interventions were undertaken by the DHET to improve the capacity of the system, and some of the interventions were beginning to bear fruit.

Mr Mvalo responded that there was both impact and value for money obtained from the work being done by the SETAs, particularly in regard to learnerships and artisan development. In one of the SETAs, in the Fibre, Processing and Manufacturing sectors, a study had been done. At the start of the learnership, employment was at 35%, but currently it was at 70%. In forestry there was also an increase in the number of learners being absorbed. In the printing sector, employment was at 66% but rose to 85% after learnerships – an improvement of 29%. In 2010, Human Sciences Research Council (HSRC) had undertaken a study to gauge the impact of the learnerships and apprenticeships. 86% of those who participated in the learnerships were absorbed afterwards, and 76% of those who went through apprenticeships were absorbed. DHET was trying to pay particular attention to artisan development as this would increase employment opportunities.

Ms D Senokoanyane (ANC) said there was no text to explain slide 19. She asked if, in respect of slide 23, there had been actual performance satisfaction. She noted the challenges around quality and enquired if there was then a structured mechanism for measuring quality. She asked what were the conditions for admission to the system. She pointed out that negative public perceptions were rife, and she herself was one of those who thought that the SETAs should be done away with. She wondered if people were in fact employable after going through SETA training; she knew somebody who had gone through the SETA but remained unemployed for a long time.

Mr Lumka replied that DHET was aware that a marketing and communication strategy needed to be put in place. Some employers were happy with the SETAs because they know they had the funding to do the training. Quite a number of SETAs provided funding to the National Student Financial Aid Scheme (NSFAS) who distributed the money to the institutions. There was a need to streamline the different systems and have the same platform.

Mr Mvalo said he appreciated the questions which gave the DHET food for thought and direction. Much had been done in regard to the employability of graduates. The University of Stellenbosch released its studies that said the more qualified a person was, the better the chances of employment. Work had also been done by Statistics South Africa, which looked at figures of employment in those who did not have a matric. In 2009, 57% of those with less than matric were employed, and this remained the same in 2014, which meant that interventions were needed. In 2009, 37% of those with Matric were unemployed and this rose to 38% in 2014. In 2009 1% of graduates were unemployed and the percentage remained the same in 2014.This made it clear that more education increased the employment opportunities. That is why the Department had said that particular attention must be paid to those without tertiary education.

Ms M Manana (ANC) said the perception was that all SETAs were bad. She would have preferred to see a list of those who fitted this description, so that they could be named and shamed, and separate out those who were doing good jobs.

Mr Mvalo replied that the Department had not suggested that all SETAs were doing well. The DHET was signing service level agreements with the SETAs on a quarterly basis, but this did not necessarily mean that all was going well. There was a need to improve, but he did say that the planning now done in terms of policies and intervention was making things easier.

Ms Manana said that as part of ensuring value for money, the Committee needed to know which of the SETAs did not have clean audits, and would then like to know what types of findings were being made. Many SETAs seemed to be quite far from being able to achieve that.

Mr Mvalo replied that DHET had information on the different SETAs and their various audit reports and this would be shared with the Committee. There were ten SETAs that got clean audits, which meant that the interventions were working, as there had been an improvement from the position in the past where none obtained clean audits.

Mr Figg asked if the indicated targets under slides 12-14 were based on specific disciplines and trades, and furthermore whether these targets met the needs of the economy. He asked whether the DHET really did need the SETAs, and wondered if it was possible to have the TVET College cater for every discipline.

Mr Mvalo replied that there was a process for all the 21 SETAs. There was a Professional, Vocational, Technical and Academic Learning Programmes (PIVOTAL) list of scarce and critical skills. The Department had asked the SETAs to come up with a credible research institution that would identify the skills required in a particular sector. A framework was developed so the employers needing those skills were also spoken to. The National Development Plan furthermore highlighted the skills that the DHET should be focusing on.

Mr Lumka added that every year, by 30 April, the employers submitted a list to SETAs indicating what their particular training needs were. SETAs combined this with the research that had been done, and came up with the scarce skills PIVOTAL list. The allocation of the budget was then done in line with what the employers required. This was how the targets were set.

Mr McLaughlin said he would have loved to see the procedures for the 21 SETAs, the amount of money sent to each and whether the money was being spent wisely or wasted. There was a need for far more specific information from the DHET, as what had been presented was too general. He asked in terms if the SETAs were filling the needs, as they had been set up to address some perceived needs in the economy.

Mr Lumka replied he thought that they were meeting needs, but at a low degree. The SETAs had their own board and accounting authority, and DHET essentially played an oversight role. Decisions on how money was spent were undertaken by the board, but the Department guided the Board to ensure that money was spent only in relation to the list that was provided to the Department.

Mr McLaughlin noted, in slide 9, that there were 240 University graduates, and he asked what had been the cost per graduate to get these students to this level.  He furthermore noted that the ratio of TVET to University Graduates was 1:5. he asked whether the country really needed that many university graduates  and so few TVET graduates. He furthermore wanted to know how many of the 55431 TVET Graduates were now employed.

 Mr Lumka replied that South Africa was the only country among its peers that was focusing more on university education, and this needed to be changed. There was therefore a need to fix the TVET system. Pointing out that only three out of every ten candidates who passed matric went to the university; this raised the question of where the other seven went. The White Paper anticipated that the DHET must increase participation to the TVET Colleges.

Mr McLaughlin referred to slide 12, pointing out that the Department produced 18 000 Artisans in 2014, but this figure had dropped to 16 114 in 2015. He asked what had gone wrong?

Mr Mvalo replied that there was a need to do more thorough research on this and find out what went wrong. He drew a corollary with the mines, saying it was always possible to have more miners but if the economy was not growing and the mines were shut down, this would have a negative effect, since those miners would not be placed in the field in which they had been trained.

Mr McLaughlin asked how the DHET understood the difference between learnerships and internships.
Mr Mvalo replied that a learnership happened through a learning programme that included both the theory as well as the practical component; 30% was theoretical while 70% was work-based learning, leading into a qualification. By way of distinction, he described an Internship as one where someone had completed a qualification, say engineering, and would then be assisted with post-qualification work-place experience, to increase the opportunities of that person being employed.

Mr McLaughlin said the Department should give the Committee a sense of how the bursaries operated, whether bursary holders had to repay the money. He asked if the SETA graduates were readily employed and whether any potential employers were actually seeking out people?

Mr Mvalo replied that because the bursaries were awarded for skills that were required in the economy, the people were not asked to pay back the money.

Ms S Shope-Sithole asked if the Department had any business in the rural area. She wanted to know which SETAs exactly were covered by this report, saying that Members needed to get the history. She personally aimed to mobilise support from other Members of this Committee, to do away with the SETAs altogether. In this tough economic climate, it would be necessary to deal with things differently.
 Mr Lumka replied that there were rural interventions; for instance, in Mpumalanga there were a number of projects funded by SETAs. The DHET would research and provide the list of projects to the Committee.

Ms Shope-Sithole said Bushbuckridge had been moved from Limpopo to Mpumalanga. This area had the highest levels of unemployment in the country and she wondered what the DHET was doing to address that.

Mr Shaik Emam asked if the Department could give the statistics as to exactly what the skills shortage in the country were as well as the demands in the different sectors and how to meet the demands. Everyone was aware that there were challenges in the quality of basic education, and therefore he asked if the DHET was engaging with the Department of Basic Education to solve some of the problems? There was a major difference between a clean and an unqualified audit. The SETAs did not have a clean audit – indeed he would suggest that there was no such thing in South Africa. The DHET should therefore be more accurate and say that the SETAs, where applicable, had received “unqualified” audits.

Mr Mvalo replied that on 19 January 2016, the Department published a list of 100 occupations in high demand in the country, which was gazetted. . This was aligned to international studies that cut across 42 countries last year. This studies had been conducted by interviewed high hiring managers. 83% in Japan said they had jobs that were hard to fill, but this figure was only at 31% in South Africa. The global average was 38%. This was due to lack of available applicants, level of experience and work place competence.

Mr Macikama added that part of the reason for the establishment of the DHET was a recognition of a lack of credible skills learning mechanism in the country, and the need to establish that. DHET had entered into a partnership with the Human Sciences Research Council to establish labour market intelligence, and this would assist the DHET in understanding the input from the side of the employer or labour market, which would in turn inform the skills on which the DHET must focus. The HSRC had issued a report that outlined how the study was put together and how the information was gained and would be used. The DHET was also in the process of establishing a skills planning unit which will coordinate the work to be undertaken by the partnerships, in order to be accessible to both the employer and those in the educational centre.

The Chairperson said in the 2015 budget review, the DHET had indicated that it would investigate how funds from SETAs could be used to support the universities and NSFAS. She asked that the DHET must now provide details of progress made and what had been achieved so far.
Mr Macikama replied that the “fees must fall” protests impacted heavily on the process of the DHET. R16 billion was required to enable the system to function properly, but only R2 billion was available. This meant that the DHET had to find a way of fixing the system, without the money that it needed. Even the R2 billion had ended up being used in other programmes, as the Minister always referred to the need to replenish the number of academics in the system.

The Chairperson said the Committee’s mandate was focused on spending issues and ensuring value for money. Under value for money, good governance was critical. A number of SETAs were still under administration, including those on safety, security, arts, culture and hospitality. She wondered when this would be resolved and how the Committee could assist in the turnaround of this situation. Had the Department conducted a social impact assessment programme for key sectors like ICT?

The Chairperson also wanted to know why only 1.6% of the unemployed participated in SETA supported learning programmes, and why this number was not far more, in view of the numbers of unemployed people

Mr Lumka replied that there were three SETAs that were under administration. The Wholesale and Retail SETA was placed under administration last month. Currently the CATHSETA (Culture, Arts and Tourism and Hospitality) was getting out of administration, because the Department was in the process of appointing a new board.

Mr Figg noted Mr Macikama's point that the DHET was going to have a skills planning unit. He enquired what would be the cost of that, and whether the Department was intending to appoint another CEO, pointing out that there were already 21 CEOs from the 21 SETAs.

Mr Macikama replied that the DHET was not going to have another CEO. The Skills Planning Unit would be a sub directorate within the Department, so that there was a continuation of that process.

Mr Shaik Emam said South Africa had a very high unemployment rate. The DHET should create a website to link with other parts of the world so that there would be the opportunity to export some of the excess skills that South Africa had.

Mr Macikama replied that South Africa was already one of the biggest exporters of skills such as doctors, nurses and, more recently, teachers to some English speaking countries.

The Chairperson thanked the Members for the relevant questions as well as the interactive and participatory engagement in which the issues were responded to adequately. She stressed that Members wanted to see the impact of what SETAs did, and the DHET should be reaching out to the far-distant rural areas as well, to make an impact there. The points raised would be incorporated into the report and recommendations on the 2017 budget.

The meeting was adjourned.


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