Progress & Challenges of the Chemical SETA; Food & Beverage SETA; Metal & Engineering SETA: briefings

Meeting report

LABOUR PORTFOLIO COMMITTEE
30 August 2005
PROGRESS AND CHALLENGES OF THE CHEMICAL SETA; FOOD AND BEVERAGE SETA; AND METAL AND ENGINEERING SETA: BRIEFINGS

Chairperson:Ms O Kasienyane (ANC)
 

Documents handed out:
Overview of the Sector Education Training Authorities PowerPoint Presentation
CHIETA PowerPoint Presentation
Chemical Industries Education and Training Authority Document
FoodBev SETA PowerPoint Presentation Part1
FoodBev SETA PowerPoint Presentation Part2
Manufacturing, Engineering and Related Services SETA PowerPoint Presentation

SUMMARY
A Department of Labour official provided an overview of the status of the Sector Education Training Authorities (SETAs). In 2004/05, all the SETAs had performed well and most had met the goals of the National Skills Development Strategy (NSDS).

The Chemical Industries Education and Training Authority (CHIETA) delegation then discussed the progress that they had made in meeting the objectives of the NSDS. CHIETA had bettered all of the NSDS targets. The delegation outlined a number of CHIETA’s other achievements, which included registering 3812 learnerships for formerly unemployed people; providing skills development support for small and medium sized enterprises (SMMEs); and making a contribution to the national objectives of growth, employment and poverty alleviation. It was noted, however, that CHIETA faced a number of challenges, which included a shortage of skilled artisans in the chemicals industries, and the slow progress of employment equity (EE) in the chemicals industries. The delegation outlined some of challenges and opportunities of the NSDS II. In the ensuing discussion, Members enquired about the slow rate of EE; whether learnership graduates were being placed in permanent employment; how the shortage of skilled artisans was being addressed; and whether CHIETA was ensuring that it reached rural areas.

The FoodBev SETA delegation provided an overview of the food and beverage sector. They discussed the structure and objectives of the FoodBev SETA. It was noted that the FoodBev SETA had surpassed the NSDF targets. In doing so, it had ensured that 3819 unemployed people were registered in learnerships; that 1292 people were enrolled in Adult Basic Education and Training (ABET) programmes; and that 40 companies complied with the Investor in People (IIP) standards. The FoodBev SETA’s other achievements included being re-certified by the Minister; receiving unqualified audit reports; and receiving positive feedback from beneficiaries. Some of the challenges that the FoodBev SETA faced included: the closer of the successful Hlumani project, difficulty in reaching rural areas, and limited funding. The delegation then outlined the contribution that the FoodBev SETA had made to the national objectives of growth, employment and poverty alleviation. Added to this, the delegation identified a number of opportunities and challenges that could arise out of the NSDS II. Members asked the delegation about the FoodBev SETA’s rural outreach initiatives; why there were vacancies in some key posts; and why the Hlumani project had been closed down.

The delegation from the Manufacturing, Engineering and Related Services SETA (MERSETA) outlined the structure of MERSETA. They discussed some of the challenges that MERSETA had faced during 2004/05, which included losing a number of key staff members, losing momentum in skills and learnership development, and experiencing certain difficulties around skills development support. MERSETA’s achievements in 2004/05 included increasing the intake of learners, and increasing the payment of discretionary grants. The contribution that MERSETA had made towards poverty alleviation, growth and employment was discussed. These contributions included registering 4 581 unemployed learners; registering 6 660 apprenticeships; and implementing a forecourt training programme for 2 571 people. In the discussion that followed, a Member raised a concern about a company in Atlantis, which had its funding for learnerships cut by MERSETA. The delegation explained that the funding had been cut due to the company’s poor performance around learnerships.

MINUTES

Department overview of Sector Education Training Authorities
Dr F Prinsloo (Department of Labour Executive Manager: SETA Performance Management) began by outlining the Department of Labour’s organisational structure, which included focusing on the Department’s SETA Performance Management section. The Department’s SETA Performance Management section was responsible for monitoring the SETAs’ performances, and offering them support. Dr Prinsloo noted that the overall performance of the SETAs had improved in 2004/05, when compared to 2003/04. Indeed, the SETAs had made improvements in meeting the National Skills Development Strategy (NSDS) targets; in governance, and in the manner in which they managed their funds.

Discussion
Mr G Anthony (ANC) enquired how the Department analysed SETA progress. Added to this, were the targets that were set for the SETAs met?

Mr Prinsloo replied that all the SETAs had performed well in 2004/05. Indeed, CHIETA was one of the top performing SETAs in 2004/05. In addition, the FoodBev SETA had performed well in terms of implementing learnerships. However, MERSETA had faced a number of challenges during 2004/05. These challenges had arisen because of the size of MERSETA. Added to this, MERSETA had experienced some management challenges. Nonetheless, one of the strengths of MERSETA was its bursary assistance programme for engineering students.

CHIETA briefing
Dr R Patel (CHIETA Chief Executive Officer) began by discussing the organisational structure of CHIETA. He noted that CHIETA was governed by a Board, which consisted of representative from trade unions, employers associations, government departments and professional organisations. CHIETA had five chambers that related to the chemical industries, which included the Petroleum and Base Chemical Chamber; the Pharmaceuticals and Fast Moving Consumer Goods Chamber; Explosives and Fertilizers Chamber; Speciality Chemicals and Surface Coatings Chamber; and the Glass Chamber. Dr Patel added that there were 4 920 registered employers in the sectors that were covered by CHIETA. Of these companies, 3 124 were paying the skills development levy. In 2005, CHIETA had received R126 043 198 in levies, and had paid out R135 776 749 in grants and other commitments. CHIETA had disbursed grants to 899 companies.

Dr Patel then discussed how CHIETA had faired in meeting the NSDS objectives, which were:
- To develop a culture of quality life long learning. In terms of this, the NSDS had stipulated that CHIETA needed to ensure that 70% of the workers in the chemical industries had a National Qualifications Framework (NQF) Level 1 qualification. CHIETA had managed to exceed this target by 19%. The NSDS had also stipulated that by March 2005, there should be 20 chemical industry enterprises committed to the IIP standards. CHIETA had also bettered this target, and there were 24 enterprises in the chemical industries that had committed to the IIP standards.

- To foster skills development in the formal economy for productivity and economic growth. In order to achieve this, the NSDS had specified that at least 75% of large enterprises in the chemical industries should be receiving skills development grants by March 2005. This worked out to approximately 100 companies. CHIETA had bettered this target and 135 large companies in the chemical industries were receiving grants. The NSDS had also stipulated that by March 2005, 40% of medium sized enterprises should be receiving skills development grants. CHIETA had made significant progress in reaching this target and by March 2005 140 medium sized enterprises had received grants. Added to this, the NSDS had specified that learnerships for workers should be available in the chemical industries by March 2005. CHIETA had set itself a target of making 60 learnerships available for workers by this date, but it had only managed to register 54 worker learnerships.

- To stimulate and support skills development in small business. The NSDS had set a target, which specified that 20% of small businesses should have received support in skills development initiatives by March 2005. By March 2005, CHIETA had dispersed grants to 614 small businesses, which meant that it had bettered the NSDS target.

- To assist new entrants into the employment market. In order to achieve this, the NSDS had set a target which stated that 1 675 learnerships, for people under 30, should be implemented in the chemical industries by March 2005. Added to this, the Growth and Development Summit had stipulated that 1 466 learnerships should be created in the chemical industries. CHIETA had registered well over 3000 learnerships, which meant that these targets had been surpassed.

Dr Patel highlighted the contribution that CHIETA had made towards the national objectives of growth, employment and poverty alleviation. These included:
- promoting the development of small- and medium sized enterprises (SMMEs),
- providing financial support to 148 tertiary level students;
- providing financial support for 463 learners;
- ensuring that 4 040 unemployed people completed Adult Basic Education and Training (ABET) Level 4 programmes;
- ensuring that 2 033 employed learners participated in ABET;
- training 163 HIV/AIDS workplace co-ordinators; and
- training 858 RPL practitioners.

Dr Patel discussed some of the challenges that CHIETA faced. These included a shortage of skilled artisans in the chemical industries; the chemical industries’ slow progress in achieving employment equity (EE) targets at a managerial and professional level; and the length of time it took to disburse levies. Dr Patel noted that the new NSDS II would present new challenges and opportunities for CHIETA. Due to this, CHIETA was being internally restructured.

Discussion
Mr S Rasmeni (ANC), Mr C Lowe (DA) and Mr O Mogale (ANC) asked whether the 3 812 people that had graduated from learnerships would be placed in permanent employment. Mr Lowe added that perhaps employers needed to be given tax incentives to encourage them to employ learnership graduates.

Mr F Ernest (CHIETA Chairperson) replied that the Skills Development Act had certain restrictions. The Act encouraged the SETAs to register qualifications, to implement learnership programmes, and to ensure that there were sufficient training providers. However, the Act did not impose an obligation on the SETAs to ensure that people received employment once they had completed learnerships. Dr Patel added that about 50% of the 3812 learnership graduates would be placed in permanent employment.

Mr Rasmeni noted that the SASOL accidents had been attributed to a lack of skills amongst the maintenance workers. He asked whether CHIETA was involved in addressing this situation. For example, were these maintenance workers receiving any skills development training?

Dr Patel answered that SASOL used contractors to undertake maintenance work. In order to address this, CHIETA was training a pool of plant shutdown and maintenance specialists. It was planned that these specialists would be deployed throughout the country, and that they would be aware of safety issues.

Mr Rasmeni noted that there was a shortage of skilled artisans in South Africa. As a result, companies such as SASOL were recruiting people from overseas to fill certain posts. He enquired how CHIETA was addressing this issue.

Mr Ernest acknowledged that CHIETA was concerned that a number of companies were importing skilled artisans to maintain and upgrade plants. In response, CHIETA had established a Shutdown Network Forum Project to train South Africans in the skills that were necessary to maintain or shut down plants. Dr Patel added that SASOL, Caltex and Engen had employed 4 500 artisans from Malaysia. The reason was that the Malaysian workers were highly skilled. For example, the welding error of an average Malaysian worker was six percent, while the welding error of an average South African worker was twenty three percent. This represented a challenge for CHIETA in terms of improving training and development.

Dr Patel noted that there was a shortage of 7 500 artisans in South Africa. To address this, CHIETA would be training 7 500 people as artisans over the next five years. Another problem was that the existing pool of artisans was mostly comprised of white men over the age of 50. As a result, there was a need to train young people as artisans. In order to achieve this, CHIETA was developing a programme entitled the Master Artisan Skill, which would employ many of the white master artisans to train youngsters.

Mr Lowe and Mr Rasmeni observed that there were a number of EE challenges in the chemical industries. Mr Rasmeni asked how these challenges were being addressed. Mr Lowe enquired whether the problem with EE targets had arisen due to a shortage of qualified people from historically disadvantaged backgrounds. Indeed, were people emerging from the schools system with the required skills?

Mr Ernest responded that one of the major objectives of CHIETA was to ensure that there was transformation in the chemical industries. Indeed, NSDS II would enable CHIETA to deal with EE in a strategic manner through aligning the Skills Development Act with the EE Act. Nonetheless, CHIETA faced certain limitations. For example, it did not have the authority to monitor whether companies were aligning the EE plans with skills development plans.

Dr Patel added that the school system was producing competent people; however, tertiary educational systems were competing for these learners. For example, most of the top learners wanted to attend universities while few top learners wanted to become artisans. Indeed, most learners that did well in maths and science went on to study at universities. Nonetheless, workplace training would begin to address the skills shortage problem.

Ms N Ngcengwane (ANC) and Ms L Moss (ANC) asked whether CHIETA visited schools to promote the training that it offered. Added to this, Ms Ngcengwane and Ms Moss enquired whether CHIETA offered bursaries to learners to entice them to study subjects that were related to the chemical industries. Dr Patel replied that CHIETA had a programme to attract learners to study courses that related to the chemical industries. He added CHIETA visited schools, through its road show programme, in order to inform learners about employment opportunities in the chemical industries.

Mr Maduma noted that under apartheid, disabled people were marginalised from mainstream employment. He enquired how CHIETA was addressing this. Dr Patel responded that employees in the chemical industries needed to be highly mobile. As a result, few disabled people were employed in the chemical industries. Nonetheless, CHIETA had trained 43 disabled people in the chemical industries to work as Information and Technology (IT) specialists and as switchboard operators.

Ms Ngcengwane and the Chairperson asked how many Africans and women CHIETA had trained. Dr Patel replied that out of the 3 812 people that CHIETA had trained, 2 350 were black and 1 143 were women.

Prince N Zulu (IFP) commented that there seemed to be a misplaced public belief that fertilizers and other chemicals were contaminating food. He asked whether this was the case. Dr Patel replied that the FoodBev SETA would be in a better position to respond to this question.

Prince Zulu noted that there had been a shift in the pharmaceutical industry away from manufacturing into retail. He enquired what impact this had on CHIETA. Dr Patel acknowledged that there had been a shift from manufacturing to retailing in the pharmaceutical industry. He noted that pharmaceuticals were produced at a very low cost in India and Brazil. South Africa could not match this: certain aspects of the legislation in South Africa made it difficult to produce cheap drugs. South Africa was, therefore, mainly involved in the secondary production, packaging and bulk dispatching of pharmaceutical products. The challenge for South Africa was to develop pharmaceutical manufacturing skills. Businesses also needed to be incentivised to open production plants in South Africa.

Mr G Anthony (ANC) commented that he was pleased that organised labour and organised employers were represented in the CHIETA delegation. Mr Ernest agreed that all the stakeholders were well represented in CHIETA. For example, all three of the major labour federations, and a number of independent trade unions, were represented in CHIETA.

Mr Anthony asked what happened to the 4 040 unemployed people once they had graduated from ABET. Did they find employment or were they encouraged to study further? It was no use training people if they remained unemployed. One needed to monitor what happened to these people.

Dr Patel responded that CHIETA was sourcing funds to offer 25% of the 4 040 ABET learners further training. One could not leave these learners with an ABET level qualification: they needed to be encouraged to continue to NQF Levels 1 to 4 programmes. Indeed, 1 000 of these learners would be undertaking NQF Levels 1 to 4 training. Added to this, a further 30 of the ABET learners would be entering universities. The Umsobomvu Youth Fund would also be involved in providing entrepreneurial training to some of the ABET graduates.

Mr Mogale asked whether CHIETA marketed itself in the rural areas and small towns. CHIETA needed to reach the rural areas. Dr Patel replied that CHIETA used a portion of the discretionary grants and National Skills Fund allocations for outreach projects. Most of the 4 040 ABET learners had come from the rural areas. CHIETA had provided accommodation to these rural people, which was close to the urban training centres. Nonetheless, CHIETA could not reach all the rural areas. He added that CHIETA tended to focus on the areas where the chemical industries were located.

Mr Mogale noted that the threshold for companies that needed to pay the levy had been raised. Only companies that had an income of more than R 500 000 per annum had to pay the levy. He asked how this had affected CHIETA. Dr Patel acknowledged that the change had impacted on CHIETA. Even so, the effect was minimal: due to the change, CHIETA would only lose R 4 million in levies out of a total of more than R100 million. CHIETA however would not neglect the small businesses that were no longer paying the levy.

Mr Lowe asked whether CHIETA was encouraging smaller businesses to claim skills development grants, and implement skills development initiatives. Mr Ernest replied that a significant number of levy-paying and non-levy-paying SMMEs had received skills development grants from CHIETA. CHIETA had even conducted research into certain issues around SMMEs. In the future, CHIETA would be offering even greater support to the SMMEs.

Mr Lowe stated that there appeared to be a problem around accreditation. Often people who had skills to provide training could not get accredited. It seemed that one needed contacts or political connections to receive accreditation. He enquired whether this was a problem in CHIETA. Dr Patel replied that most of the accredited trainers in the chemical industries were white men. This needed to change, but CHIETA was not prepared to sacrifice quality. If quality were sacrificed, one would end up with more SASOL type explosions.

Mr Maduma asked what criteria CHIETA used to select learners. Mr Maduma noted that, in the past, many people had gained skills in the workplace, but had never received any formal qualifications. Employees would then refuse to promote these people, and would not pay them according to their skills levels. He asked how CHIETA was addressing this situation. How could these people’s skills be formalised into a qualification? These people should also be trained in entrepreneurial skills so that they could become self-employed if they were retrenched. Dr Patel replied that such people could formalise the skills that they had through CHIETA’s Recognition of Prior Learning (RPL) programme.

Mr N Godi (PAC) asked how many registered companies were in the chemical industries. Dr Patel responded that there were 4 920 registered companies in the chemical industries. Of these, 3 124 companies were paying the skills development levy.

Mr Godi enquired why CHIETA had disbursed so few grants. Were companies not claiming, or were there capacity problems in CHIETA? Dr Patel responded that CHIETA was not disbursing too few levies; it was rather disbursing them too slowly. CHIETA, therefore, needed to increase the speed with which it disbursed levies.

Mr Godi noted that the delegation had stated that the NSDS had stipulated that 80 000 unemployed people should be assisted to enter into the labour market. CHIETA had then stated that it was assisting 1 675 people to enter into the labour market. He asked why there was such a huge difference between these figures.

Dr Patel answered that the figure of 80 000 referred to the target that the NSDS had set for all SETAs. CHIETA had received a target of 1 466. CHIETA had exceeded this target by training 3812 people for entry into the labour market.

FoodBev SETA briefing
Mr R Deonarain (FoodBev SETA Chief Executive Officer) began by discussing the characteristics of the food and beverage sector. He noted that the sector was divided into five sub-sectors, which were the beverages sub-sector; the food preparation products sub-sector; the baking, serials, confectionary and snacks sub-sector; the dairy sub-sector; and the processed and preserved meat, fish, fruit and vegetables sub-sector. He noted that the food and beverage sector produced high volume, price sensitive products. Added to this, it was a capital-intensive sector, which had intense brand competition. The sector was also characterised by many small-scale food manufactures. Its total contribution to the gross domestic product was R113.2 billion, and it employed approximately 176 000 people.

Mr Deonarain outlined the vision of the FoodBev SETA:
- to contribute to the growth of the sector through skills development;
- to ensure that the sector was safe and healthy;
- to promote access to quality education and training for all people in the sector;
- to redress past inequalities in education and training
- to achieve the sector’s NSDS targets, to manage operations within 19% of the total levy income; and
- to offer excellent service delivery.

Mr Deonarain discussed the structure of the FoodBev SETA. He noted that it had a Council, which was comprised of 10 members from organised labour and 10 members from organised business. It had five chambers, which were each responsible for one of the sub-sectors of the food and beverage industry. He noted that the FoodBev SETA had 25 permanent employees, and had an administrative budget of R10.7 million.

Dr Deonarain discussed how the FoodBev SETA had fared in meeting the NSDS targets:

- To develop a culture of life-long learning. In terms of this, FoodBev had exceeded the NSDS target of ensuring that 70% of workers in the food and beverage sector had at least an NQF Level 1 qualification. Added to this, the NSDS had stipulated that at least 20 organisations in the sector should be compliant with IIP. The FoodBev SETA had surpassed this target, and there were currently 40 organisations complying with IIP.

- To foster skills development in the formal economy for productivity and employment growth. The FoodBev SETA had surpassed the NSDS targets for providing skills development grants to both large and medium sized companies. It had also met the NSDS worker learnership targets.

- To stimulate and support skills development in small businesses. The NSDS had specified that the FoodBev SETA should be supporting 20% of small companies with skills development. The FoodBev SETA had bettered this target and was providing support to 54% of the small businesses in the sector.

- To spend 100% of the NSF on viable development projects. The FoodBev SETA had met this NSDS target. Amongst other things, the FoodBev SETA had spent the Fund on ensuring that 1 292 people received ABET; that 47 learners received bursaries; that support was given to 507 SMMEs; and that 60 university graduates, mainly in the accounting field, were placed in SMMEs around the country to offer support.

- To assist new entrants into employment. In terms of this, the NSDS had stipulated that the FoodBev SETA needed to register 2 400 unemployed people in learnerships. The FoodBev SETA had exceeded this target, and had registered 3 914 unemployed people in learnerships. It had also ensured that 68% of these people would be placed into permanent employment on completion of their learnerships.

Mr Deonarain outlined some of FoodBev SETA’s achievements. These included bettering the overall NSDS target; receiving re-certification from the Minster; receiving positive feedback from the customer satisfaction survey; receiving unqualified audit reports annually since 2000; and receiving a positive audit report from the South African Qualifications Authority (SAQA). Mr Deonarain discussed some of their challenges, which included uncertainty over the affects of the merger between the secondary and primary agricultural SETAs; the closing down of the successful NSF funded Hlumani Project; limited funding for learnerships; the delay in the announcement of the NSF funding window; and difficulty in reaching more rural areas.

Mr Deonarain highlighted some of the challenges and opportunities that the FoodBev SETA faced due to the implementation of the NSDS II. These included the possibility of creating new ventures, and collaborating with other SETAs and local governments around ABET and disabled targets. Mr Deonarain stated that funding was one of the major challenges that FoodBev SETA faced around NSDSII. Added to this, he discussed some of the contributions that the FoodBev SETA had made towards growth, employment and poverty alleviation.

Mr Deonarain noted that the FoodBev SETA had received R102 469 000 in levies in 2004/05. During the past year, it had made payments of R139 145 000 to stakeholders. Nonetheless, the FoodBev SETA still had a further R78 324 000 in investments and in the bank. It planned to disburse a further R28 693 000 in discretionary grants and R47 800 000 in employer grants.

Discussion
Mr Lowe commented that the FoodBev SETA needed to collaborate with the Department of Education to ensure that learners emerged from the schooling system with the necessary skills for employment.

Mr Deonarain replied that an important requirement in the NSDS II was for SETAs to develop critical skills guides for the sectors that they were involved in. People would then be trained to use, and make presentations on, these guides. These people would be deployed in the rural areas to address schools about the skills needed in certain sectors. This would allow learners to gain an understanding of the subjects that they needed in order to enter a certain sector.

Mr Lowe asked why there were four key staff vacancies in the FoodBev SETA. Added to this, he enquired whether these vacancies had affected the FoodBev SETA’s service delivery. Mr Deonarain responded that these vacancies related to the FoodBev SETA’s NSF project.

Mr Lowe observed that the FoodBev SETA had incurred interest costs of R6 000 on an overdraft, which was strange because the FoodBev SETA had R78 million in its bank account. He asked how this had happened.
Mr Deonarain acknowledged that the R6 000 overdraft cost had occurred during the period when the financial manager had resigned. The FoodBev SETA tried to maximise the amount of money that it had in investments. As a result, the FoodBev SETA would only transfer money into its current account when it was needed. When the financial manager left, this system briefly broke down and the R6 000 interest cost was incurred.

Mr Maduma commented that the FoodBev SETA should, in the future, provide a provincial breakdown of the initiatives that it was undertaking. This would allow Members to gain a sense of where the FoodBev SETA was operating, and where its strengths and weaknesses lay. Mr Deonarain replied that all the SETAs had been examining the viability of having a presence in each of the provinces. However, funds were a problem. In order to overcome this, there had been a proposal that the provincial labour centres should be used by the SETAs to have a presence in all the provinces.

Mr Maduma and Mr Godi stated that it was important for the FoodBev SETA to reach the rural areas. They then enquired whether the FoodBev SETA had a strategy to reach rural areas. Mr Deonarain acknowledged that the FoodBev SETA needed to improve its rural outreach programme. Dr Prinsloo added that the SETAs would possibly be involved in using the Department’s mobile units to reach remote rural areas.

Mr Godi stated that it was important for the FoodBev SETA to collaborate with provincial departments and local authorities around aspects of the NSDS II. This would also assist the FoodBev SETA in reaching rural areas.

Mr Godi asked why the Hlumani Project had been closed: it did not make sense to close a successful project. Mr Deonarain replied that the Hlumani Project had been funded by the NSF. It had been closed because its lifespan had ended.

The Chairperson enquired about the FoodBev SETA’s spending trends over the previous financial year. Mr Deonarain responded that the FoodBev SETA had maintained an 88% grant disbursal rate over the last year. FoodBev SETA had spent all of the funds that it needed to, and there were no rollovers.

Mr Ngcengwane congratulated the FoodBev SETA on its achievement of receiving unqualified audit reports since 2000. She enquired how they had managed to achieve this. Mr Deonarain replied that it was a matter of following policies and procedures. Added to this, most of the FoodBev SETA’s management and support staff had private sector backgrounds, which was a contributing factor in achieving unqualified reports.

The Chairperson noted that food was grown in rural areas, yet it was processed in urban areas. This, ironically, resulted in food being expensive in rural areas. She enquired whether the Department had plans to address this. For example, could processing skills and plants be developed in the rural areas? Dr Prinsloo acknowledged that there needed to be collaboration between all the role players to ensure that there was skills development in the rural areas. Under the NSDS II, the FoodBev SETA would be encouraged to work closely with the agricultural SETA. This could possibly lead to the development of processing plant projects in the rural areas.

The Chairperson asked why the FoodBev SETA had an Acting Chairperson and an outgoing chairperson. Dr Prinsloo answered that all the SETAs were governed by Boards. These Boards were established according to constitutions, which stipulated that Board membership needed to rotate. Thus, a person would generally serve a two- or three-year term as a Board member. Added to this, the chairperson of the Board would also have to change after a certain period. The FoodBev’s Board was currently undergoing such a change.

Manufacturing, Engineering and Related Services SETA briefing
Ms B Van Straaten (MERSETA Chief Executive Officer) began by providing an overview of MERSETA’s structure. She noted that MERSETA was divided into a number of chambers, which included the Metal and Engineering Chamber; the Motor Retail and Components Chamber; the Automotive Assembly Chamber; the Plastics Chamber; and the New Tyre Chamber. MERSETA had received levies from 24 946 companies. However, with the implementation of the new threshold, this number would be halved.

Ms L Heunis (MERSETA Deputy Chairperson) discussed some of the challenges that MESETA had faced during 2004/05. These had included uncertainties around the SETA demarcation exercise; a loss of momentum in skills and learnership development, a loss of certain managers; problems with the average standard Sector Skills Plan; and problems with general skills development support. Ms Heunis highlighted some of MERSETA’s achievements in 2004/05, which included:
- an enormous increase in the intake of learners;
- an increase in the intake of unemployed learners,
- an increase in the payment of discretionary grants to R104.4 million;
- a successful SMME initiative that led to the sponsored training for approximately 11 000 employees; and
- the accreditation of approximately 3000 trainers.

Ms Van Straaten then outlined the contribution that MERSETA had made towards growth, employment and poverty alleviation. These included registering 4 581 unemployed learners; registering 6 669 apprenticeships; developing 70 NQF qualifications; registering 90 learnerships with the Department of Labour; running a successful forecourt attendant training programme for 2571 people; and undertaking a SMME welding training project.

Ms Van Straaten commented on the challenges of the NSDS II, which included levy exemptions for small companies, meeting new objectives, and aligning the skills demand with MERSETA’s limited resources. She discussed the opportunities that the NSDS II offered, which were the potential to create strategic partnerships; the potential to use further education training colleges for practical training; and the growth in big development projects.

Discussion
Mr Lowe enquired why the MERSETA Chief Executive Officer (CEO), and other key staff, had resigned during 2004/05.

Dr Prinsloo noted that MERSETA’s succession plan had been a problem; however, this had been rectified. Ms Heunis added that the CEO and other staff members had left for various reasons. For example, one of the managers left to start their own business. It was simply an unfortunate coincidence that these staff members left at approximately the same time.

A Member stated that he knew of a company in the Atlantis area that had taken on board a number of people in learnerships. Halfway though this initiative, MERSETA had stopped providing grants to this company for these learnerships. This resulted in the company terminating the learnerships before they were complete. This had negatively impacted on the people that had been involved in these learnerships. He had taken this issue up with the Department and the Minister. These people’s learnerships needed to be completed.

Ms Van Straaten noted that she was aware of this issue. In 2004, the company in question had taken on 340 learners. MERSETA assisted the company with the management of these learners. These learners had submitted their portfolios of evidence. The problem was that, due to poor portfolios of evidence, only 122 of the learners were found to be competent. The company then requested to take on a further 280 learners in 2005. MERSETA declined to pay the discretionary grants for these 280 learners because of the company’s low success rate. MERSETA had undertaken to place the people, who had their learnerships terminated, in other companies in the Western Cape.

The Member replied that as late as the 26^th of April 2005, MERSETA was happy with the company’s performance. He reiterated that the issues surrounding the company and the learners needed to be resolved by the MERSETA Board. Ms Van Straaten responded that the MERSETA Board had met about this issue, and was aware of all the circumstances. Nonetheless, it would be willing to engage with the company in order to resolve the issue.

The Chairperson noted that few black people were qualified engineers. She asked whether MERSETA had made progress in rectifying this situation. Ms Van Straaten responded that MERSETA had offered 133 bursaries to black people to study engineering.

Ms Moss noted that there were a number of large projects taking place around the Western Cape. She enquired whether MERSETA was involved in any skills development initiatives around these projects. Ms Van Straaten responded MERSETA would be providing funding for 6 000 learners to be trained in critical skills through these projects.

The Chairperson noted that the Committee would be producing a report on the CHIETA, the FoodBev SETA and the MERSETA. The Committee would also remain in contact with the three SETAs.

The meeting was adjourned.