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LABOUR PORTFOLIO COMMITTEE
17 October 2005
ENERGY, LOCAL GOVERNMENT AND CHEMICAL INDUSTRIES SETAs: ANNUAL REPORT BRIEFINGS
CHAIRPERSON: Ms O Kasinyane (ANC)
Documents handed out:
Energy Sector Education Training Authority: PowerPoint presentation
Chemical Industries Education and Training Authority: PowerPoint presentation
Chemical Industries Education & Training Authority Annual Report 2004-05 ( see www.chieta.org.za)
Local Government, Water and Related Services SETA: presentation on Annual Report
Local Government, Water and Related Services SETA Annual Report 2005 (see www.lgwseta.co.za)
Local Government, Water and Related Services SETA Implementation Report 2001-2005
The Energy Sector Education Training Authority (ESETA), Local Government, Water and Related Services Sector Education Training Authority (LGWSETA) and Chemical Industries Education and Training Authority (CHIETA) briefed the Committee on their Annual Reports. The Reports included sector profiles relating to employer numbers and contributions. Each SETA also reported on its organisational structure. The Reports also included National Skills Development Strategy (NSDS) achievements, as well as annual financial and audit results. The SETAs further discussed the topics of committed funds and projects. The briefings ended with a report by each on key challenges. The Committee specifically praised the work of CHIETA and recognised the difficulties faced by LGWSETA in co-ordinating with local governments.
Dr Florus Prinsloo (SETA Performance Management, Executive Manager) oversaw the presentations of each SETA.
Energy Sector Education Training Authority briefing
Ms Ntombenhle Nkosi (ESETA CEO) and Mr Bafana Ngwenya (ESETA Deputy Chairperson) presented ESETA’s Annual Report 2004/05. Specific statistical figures are contained in ESETA’s PowerPoint presentation attached.
ESETA’s purpose was to increase education and training in the energy (mostly electricity) and water sectors. The water sector had been added to ESETA’s mandate in April 2005. ESETA’s programme the past year had involved 2 200 employers, with 50 employers contributing 90% of ESETA’s income. Eskom contributed more than 70% of ESETA’s total levies.
Ms Nkosi said that ESETA had noted a heavy loss in electricians. In response to concerns expressed by Mr M Mzondeki (ANC) and Mr N Godi (PAC) about these issues, she stated that 300 learners were moving into National Qualification Framework (NQF) level 1, but 1 300 black learners were still unemployed. ESETA was waiting for another commitment from Eskom for training another 4 000 learners. SETA also gave grant incentives to employers for employing women and other historically disadvantaged groups. Engineering skills were also scarce. Mr Ngwenya stated that, in the past three years, Eskom had taken on only women in the engineering and electrician fields.
Ms Nkosi covered the NSDS 2001-2005 target achievements. The number of workers at the NQF 1 level were 971, with a target of 1 063. The number of workers on structure learning programmes was 150 932, with a target of 7 969. Ms Nkosi reported that the annual financial statements did not completely reflect some of the challenges faced by ESETA. The report showed a net surplus of R11 813, whereas ESETA actually had a deficit. ESETA had used more than 60% of its administrative fees for salaries, which reduced flexibility for the organisation. ESETA had an inadequate 10% of administration funds, resulting in human resource constraints and an inability to attract entry-level employees. There was a specific constraint on provincial outreach programmes.
There had also been inadequate project funds, resulting in a lack of support for water and electrical qualifications. In addition, the payroll levy limit increase to R500 000 would result in loss of income and less contact with small- to medium-sized enterprises (SMMEs). Mr Ngwenya stated that the SETA had done much to change the roles of that sector. For example, the Electrical Contracting Association, which had formerly been a white association, had made progress in training the historically disadvantaged. Specifically, it was starting to work on training up black people who had formerly been assistants.
Finally, Ms Nkosi also reported non-compliance with the regulations because the supply chain framework had not been implemented. ESETA was in the process of solving that issue.
Mr Ngwenya then discussed the Eskom contribution of more than 70% of the total levies. There was a risk in relying too much on one stakeholder. Mr Ngwenya stated that the big players were doing well running learnerships. Eskom, for example, had trained 30% of learners from historically disadvantaged categories. Ms Nkosi stated that this also created a problem in the marketing arena because ESETA relied on stakeholders to market for the organisation.
Mr Godi asked for more information regarding the lack of targets, and the actual number of enterprises that had achieved the required national standards of staff development. Ms Nkosi stated that ESETA had initially approached Eskom and had gained their commitment to this project, but Eskom had later withdrawn in order to focus on another project.
Chemical Industries Education and Training Authority briefing
Dr Raymond Patel (CHIETA, CEO) and Mr Farhad Motala (CHIETA, Chief Financial Officer) presented their Annual Report. Dr Patel reported on the demographics of CHIETA’s employees, which included 23 black African employees (14 women and 9 men), one coloured woman, two Indian men and two white men. He reported that 1 543 learners had participated, with 85% at the NQF 1 level. CHIETA had also exceeded its target by 159% in the area of unemployed young people that had entered into learnerships or apprenticeships. In addition, 500 small enterprise companies had been targeted and 614 had participated in the programme. CHIETA had had unqualified audits during the past four years, and a net surplus of R47 million in the past year.
Mr Motala reported that CHIETA had been able to pay out more grants than CHIETA’s total levy income during the past year by applying savings from past years. Dr Patel reported that at the rate CHIETA was going, there would be no ‘imported’ employees in the chemical industry within five years. Dr Patel requested the Committee’s assistance in promoting the work of the SETAs and for the advocating more learnerships in general.
Mr Godi asked how CHIETA had spent less than 48% of its administrative budget, while the bulk of other sector SETAs’ funds went to administration and salaries. What advice could Dr Patel give to other SETAs on this? Dr Patel advised that only 48% be allocated to salaries. He had introduced the concept of "job enrichment/job enlargement." This meant that CHIETA paid larger salaries to existing employees, increasing those employees’ job duties, rather than hiring new employees. Also, CHIETA was not a large bureaucracy and, as a rule, avoided excessive expenses, such as flying business class.
Local Government, Water and Related Services SETA briefing
Mr Wander Nkosi (LGSETA CEO) and Ms Hazel Jenkins (LGSETA Deputy Chairperson) presented the Annual Report of LGSETA (formerly LGWSETA). Their report did not include the water sector, which had been moved to ESETA in April 2005.
Mr Nkosi reported that LGSETA had had an income of R169 519 million, with total expenditures of R125 684 million, resulting in a net surplus of approximately R43 million. It had also received an unqualified Auditor-General’s report for the year. It had a procurement policy in place, but outstanding issues included the lack of any procurement offices or officers. The Finance Committee was currently in the process of working on the procurement issues. Challenges in 2005/06 would include emphasising quality rather than just quantity. Stakeholders needed to have more appreciation of the role of the SETAs. The alignment of programmes to keep up with the changes in the legislature and responses to the needs of the sector, would also be a challenge. Finally, the drop-out rate of employed learners due to work overload, was a problem. Some of the specific performance numbers included 94 850 workers at the NQF 1 level, and 80 340 learners on structured learning programmes. No enterprises had achieved the national standard of people development due to the lack of readiness and sufficient finances.
Mr Nkosi identified the following specific challenges. First, there was insufficient capacity due to a small staff. LGSETA was outsourcing to some extent, but needed to keep two or three senior people to make sure that the proper advocacy was occurring. There were also governance issues involving co-ordination with local governments. Finally, there was insufficient funding to cover sector training needs.
Mr Godi asked about the outsourcing issue. Mr Nkosi stated that while it is possible to outsource some of the functions, the organisation still needed a core of employees to manage the programme. He expressed a preference for growing a new group of managers, rather than outsourcing.
Mr Mzondeki requested more information regarding the governance issue. Mr Nkosi responded that the SETA ‘politically’ drove the programme, but had trouble co-ordinating with and obtaining recognition from local government officials. Mr Nkosi suggested that the Committee go to the local government offices to better understand the situation. There also needed to be training from the senior leadership in the municipalities to achieve more stakeholder support.
The meeting was adjourned.