Whole and Retail Sector Education and Training Authority Annual Report: briefing

Meeting report

LABOUR AND PUBLIC ENTERPRISES SELECT COMMITTEE, ECONOMICS AND FOREIGN AFFAIRS SELECT COMMITTEE: JOINT MEETING
25 October 2005
WHOLE AND RETAIL SECTOR EDUCATION AND TRAINING AUTHORITY ANNUAL REPORT: BRIEFING

Chairperson: Ms M Temba (ANC, Mpumalanga)

Documents handed out:
W&R SETA 2004/05 Annual Report PowerPoint Presentation
W&R SETA 2004/05 Annual Report [available at www.wrseta.org.za]

SUMMARY
The Whole and Retail Sector Education and Training Authority (W&R SETA) outlined its organisational structure and provided details about the wholesale and retail sectors. This included highlighting the critical and scarce skills that were required in these sectors. Following this, the delegation discussed W&R SETA’s 2004/05 financial statements. The W&R SETA had a total income of R 349 456 000 in 2004/05. Of this, R 285 757 000 had been received from the Skills Development Levy (SDL). The total expenses of the W&R SETA for 2004/05 were R 388 189 000. Most of this had been spent on grants and projects. It was highlighted that the W&R SETA had received an unqualified audit report. The delegation then discussed the progress that the W&R SETA had made towards meeting the National Skills Development Strategy (NSDS) targets. It was noted that the W&R SETA had met most of the NSDS targets. Added to this, the delegation outlined some of the W&R SETA’s other achievements, which included developing 20 qualifications; registering 1 421 assessors; and approving 295 learning programmes. Nonetheless, the W&R SETA would be facing certain challenges in 2005/06. These included increasing the participation of small and medium sized enterprises (SMMEs) in skills development; developing exit strategies for learnership graduates; addressing the sectors scare and critical skills needs; and rolling out a provincial strategy.

During the discussion, Members noted that they were concerned about the gender profile of the W&R SETA’s delegation. This led them to raise questions about the gender profile of the W&R SETA’s top-level management. Added to this, Members enquired whether mandatory grants were conditional or unconditional; why some companies were not claiming skills development grants; whether temporary and casual workers were benefiting from skills development programmes; whether the W&R SETA had covered its 2004/05 deficit; why the W&R SETA had outsourced some of its functions; and whether it had a working relationship with other educational institutions or government entities.

MINUTES

W&R SETA 2004/05 Annual Report: briefing
Mr J Dikgole (W&R SETA Chief Executive Officer) began by outlining the W&R SETA’s profile. This included describing the structure of its Board; its governance and management structures; and the demographic profile of its staff. Following this, he discussed the profile of the wholesale and retail sectors. Approximately 2.5 million people were employed in the wholesale and retail sectors. This included those people employed in the formal and informal sectors. He added that there were approximately 24 000 levy paying companies in the wholesale and retail sectors. Approximately 9 000 of these companies had produced Workplace Skills Plans (WSPs); but only approximately 6 000 companies had implemented WSPs. Mr Dikgole then provided a provincial breakdown of the registered companies in the wholesale and retail sectors. Added to this, he outlined the scarce and critical skills that were required in these sectors. He also outlined the total income levy that W&R SETA had received between 2001 and 2005. He then compared these figures to the grants that W&R SETA had paid out over the same period.

Mr Dikgole discussed W&R SETA’s 2004/05 financial statements. He noted that the W&R SETA had received an unqualified audit report from the Auditor-General. During 2004/05, W&R SETA had a total income of R 349 456 000. Most of this income had been derived from the Skills Development Levy (SDL). The total expenses of the W&R SETA for 2004/05 were R 388 189 000. Most of this had been spent on grants and projects. Mr Dikgole stated that the W&R SETA had R 365 000 000 in cash or cash equivalents. Nonetheless, W&R SETA had R 151 740 000 in current liabilities, and it had committed a further R 281 784 000 to projects. As a result, W&R SETA only had R 23 694 000 in unallocated funds. Following this, Mr Dikgole provided an overview of the W&R SETA’s general financial status over the past five years.

Mr Dikgole discussed how the W&R SETA had faired in meeting the NSDS targets, which were:
- To develop a culture of life-long learning. The NSDS had stipulated that the W&R SETA needed to ensure that 8 000 learners completed Adult Basic Education and Training (ABET) programmes. The W&R SETA had met this target. The NSDS had also stipulated that the W&R SETA needed to ensure that 120 900 workers had undertaken structured learning programmes. The W&R had bettered this target by ensuring that 337 687 workers had embarked on structured learning programmes.
- To foster skills development in the formal economy for productivity and employment growth. The W&R 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 W&R SETA needed to provide skills development support for 5 500 small companies. The W&R SETA had bettered this target and had provided support to 10 061 small businesses.
- To promote skills development for employability and sustainable livelihoods through social development initiatives. In terms of this, the NSDS stipulated that 10 000 learners needed to be trained through Project Retrenchees and Victory to Entrepreneurs (RAVE). The W&R SETA had exceeded this target through ensuring that 10 200 learner had completed training and mentorship initiatives.
- To assist new entrants into employment. In terms of this, the NSDS had stipulated that the W&R SETA needed to register 3 000 unemployed people in learnerships. The W&R SETA had exceeded this target, and had registered 5 293 unemployed people in learnerships. Mr Dikgole then provided a provincial breakdown of these learnerships.

Mr Dikgole discussed some of the W&R SETA’s other achievements. These included developing 20 qualifications; being re-accredited by the South African Qualifications Authority (SAQA); accrediting 57 providers; registering 1 421 assessors; registering 125 moderators; and approving 295 learning programmes. He then provided a provincial breakdown of the providers, assessors and moderators that the W&R SETA had accredited. Added to this, Mr Dikgole outlined some of the challenges that W&R SETA would be facing during 2005/06. These included increasing the training and participation of SMMEs in skills development; developing exit strategies for learnership graduates; developing new demand-led qualifications; addressing scare and critical skills needs; and rolling out a provincial strategy.

Discussion
The Chairperson and Mr D Gamede (ANC, KwaZulu-Natal) were concerned that the W&R SETA delegation consisted of only men. They asked why there were no women in the W&R SETA’s delegation. Mr T Skenjana (W&R SETA Deputy Chairperson) responded that W&R SETA was committed to gender equality. Unfortunately, W&R SETA’s women managers were unable to form part of the delegation as they had prior work commitments.

Mr D Mkono (ANC, Eastern Cape) asked whether W&R SETA’s mandatory grants were conditional or unconditional. Some companies lacked the capacity to undertake skills development. It would, therefore, not be productive to disburse mandatory grants to such companies. Mr Dikgole replied that the mandatory grants were conditional. The Skills Development Act stipulated that the W&R SETA could only provide a grant to a company that had produced a WSP, and had active training programmes. The W&R SETA was also required to visit companies, which were claiming the grants, to ensure that they were offering skills training to their employees. Added to this, every company that claimed grants needed to have established an internal training committee. This committee had to include employer and employee representatives. This committee was required to sign off the company’s skills development reports. If any Member of the committee refused to do so, W&R SETA would not provide that company with a grant. All these measures were undertaken to ensure that companies were training people, and not falsely claiming grants.

Mr Mkono asked why some companies were not making use of the skills development grants. Mr Dikgole replied that the W&R SETA only paid out grants to companies that had trained staff. Hence, a company first needed to train their staff before they could receive a grant. Mr Skenjana added that the W&R SETA, through the National Qualification Framework (NQF), had made certain assumptions about the wholesale and retail sectors. For example, it had been assumed that employers were providing skills training to their workforces. As such, the skills development grants were aimed at assisting these companies. However, the W&R SETA’s assumption that employers were training staff members, proved to be incorrect. Indeed, many large corporations were not providing skills training to staff. This needed to be addressed through public/private/community partnerships.

Mr Mkono observed that South Africa was experiencing a migration of people from the rural areas to the urban areas. He enquired whether W&R SETA was involved in addressing this problem. Was it offering skills development training to people in the rural areas? Mr Dikgole answered that W&R SETA was unable to reach all the rural areas. It had, however, undertaken partnerships with Further Education and Training (FET) colleges to ensure that some of the rural areas benefited from skills development training. The roll-out of the W&R SETA’s Provincial Strategy would also enable it to have a greater impact in the rural areas. Mr J Brauns (W&R SETA Projects Manager) added that through Project RAVE, the W&R SETA was providing SMME development training to rural people. Nonetheless, Mr Dikgole noted that one could not stop the migration of people from the rural areas to the urban areas: people were migrating to find work.

Mr Mkono noted that the W&R SETA had stated that the wholesale and retail sectors contributed R 172 billion to the Gross Domestic Product (GDP). He asked whether the GDP was being measured at a national or provincial level. Added to this, he enquired whether the wholesale and retail sectors were creating employment. Mr Dikgole responded that the GDP was measured on a national basis. Mr T Motlana (W&R SETA Chairperson) noted the W&R SETA had embarked on the RAVE Project, which was aimed at providing skills to unemployed people. The learnership programme, in the wholesale and retail sectors, was also targeting unemployed people. Nonetheless, addressing unemployment was a massive challenge.

Mr Gamede observed that many people were employed on a temporary or casual basis in the wholesale and retail sectors. He enquired whether these people were being provided with skills training. Added to this, he asked whether training temporary or casual employees offered any value. These people’s skills would be lost to the sectors once their contracts ended. Mr Dikgole responded that temporary, causal and contract workers were provided with skills training. The training that was offered to these people improved their chances of finding permanent employment. In addition, many of these people had received ABET, which had provided them with important life skills. Mr Skenjana added that the training of casual and temporary workers should be prioritised as it would assist these workers to find full-time employment.

Mr Motlana added that there was a concerning trend towards increasing casualisation in the wholesale and retail sectors. The South African Catering and Commercial Allied Workers Union (SACCAWU) had undertaken a campaign to address this problem. Indeed, the campaign was aimed at ensuring that employees improved the working conditions of casual, temporary and contract workers. SACCAWU was also working towards ensuring that employees offered these casual and temporary workers permanent full-time positions.

Mr Skenjana stated that the business sector wanted to employ people on a casual or temporary basis in order to circumvent the labour legislation. Many businesses were also using employment agencies in order to avoid labour legislation. These businesses tended to view the Labour Relations Act as a barrier. Nonetheless, businesses needed to adhere to the LRA. In some cases, this would mean that they would have to change their behaviour.

Mr Brauns added that providing skills training to casual and temporary workers sometimes inspired these people to start their own businesses. Indeed, more casual and temporary workers needed be trained to start their own businesses. This would begin to address the problem of unemployment and underemployment.

Mr Gamede noted that the W&R SETA had experienced a deficit of approximately R 24 million during 2004/05. He asked how the W&R SETA had covered this deficit. Mr Dikgole replied that the W&R SETA’s 2004/05 deficit was an indication that its service delivery was increasing. Nonetheless, it had large reserves. These reserves would cover the deficit that it had experienced during 2004/05.

Mr Gamede noted that most of the unemployed people that had graduated from learnerships appeared not to be able to find employment. He asked how the W&R SETA was addressing this problem. Did it have placement plans for these learnership graduates? Mr Dikgole responded that the W&R SETA was examining how these learnership graduates could be placed in permanent employment. He added that W&R SETA would be meeting with all the stakeholders in the wholesale and retail sectors to ensure that these learnership graduates had the opportunity to become full-time employees. Dr H Zwarts (W&R SETA Chief Operating Officer) noted that under the new NSDS II targets, the W&R SETA would be striving to ensure that 90% of unemployed people that had graduated from learnership programmes were placed in full-time employment.

Mr J Sibiya (ANC, Limpopo Province) observed that 2 132 unemployed youths had completed learnerships. He asked for the gender breakdown of these youths. Mr T Mogabudi (W&R SETA Learnership Manager) responded that the Department of Labour had stipulated that 54% of all learnerships had to be set aside for women. He noted that more than the 54% of the people that had completed the W&R SETA accredited learnership programmes were women.

Mr Gamede noted that the W&R SETA was outsourcing certain functions. For example, W&R SETA had a vacancy for a Chief Financial Officer, and was currently outsourcing some of the functions associated with this post. He asked how long the W&R SETA would continue outsourcing these functions. Added to this, was the W&R SETA planning to fill the position of Chief Financial Officer? Mr Dikgole replied that the W&R SETA had recently employed a new Chief Financial Officer. The new Chief Financial Officer would be responsible for establishing finance, Information and Technology (IT), and supply chain support functions. This meant that these functions would no longer be outsourced.

Mr Gamede noted that most of the employees that had received training from their companies in the wholesale and retail sectors had been provided with skills that could enhance the profits of these companies. For example, most of these people had been trained in teamwork, customer relations, product knowledge and sales. He asked whether such training actually assisted these employees. In addition, he enquired whether W&R SETA had the ability to influence companies’ skills development programmes. Companies should be training people in scare skills, such as retail technical skills, IT skills, and financial skills. Mr Dikgole responded that the W&R SETA had only recently started to formulate NQF qualifications, and unit standards for scarce and critical skills. In the absence of these qualifications, it would be difficult to force employers to train employees in these scarce and critical skills. Over the next five years, there would be a drive to ensure that employers trained employees in scarce and critical skills. Added to this, all the training that companies offered would need to be NQF aligned. Mr Skenjana added that employees were actually responsible for selecting the courses that they wished to attend.

Mr Gamede asked when W&R SETA would formulate NQF accredited courses for the critical and scare skills. Mr Dikgole responded that the W&R SETA Board had allocated funds towards formulating high-level NQF qualifications for the scarce and critical skills.

Mr Sibiya observed that the W&R SETA mostly employed women. He asked how many of these women were in top and middle management positions. Mr Dikgole answered that sixteen women at the W&R SETA were in middle management positions. Added to this, five women were employed as top managers at the W&R SETA.

The Chairperson asked whether the W&R SETA had partnerships with other educational institutions or government entities. Mr Dikgole responded that the W&R SETA was seeking to expand the partnerships that it had with other SETA’s. The W&R SETA was also exploring the possibility of sharing provincial offices with other SETAs. This would be a cost effective way of reaching the rural areas. In addition, W&R SETA had entered into a working relationship with the Department of Social Development around the Expanded Public Works Programme (EPWP). The W&R SETA was also working with a number of local governments.

The Chairperson enquired whether the W&R SETA had an adequate system to identify the skills requirements of the employers and employees in the wholesale and retail sectors. Dr Zwarts replied that the W&R SETA had developed a computerised system, which allowed it to instantly access information on the number of organisations that were participating in skills development; the number of employees that were participating in skills development programmes; the demographic profile of the participants; how many participants had graduated; and which training programmes were the most popular. This allowed the W&R SETA to track, and effectively report on, skills development training trends in the wholesale and retail sectors.

Mr Skenjana commented that government, business and labour had formulated a number of resolutions on employment creation through the Growth and Development Summit (GDS) and the Learnership Indaba. There needed to be co-operation between the government, the business sector, the SETAs, the communities, and organised labour to achieve these resolutions and targets. He asked the Committee to be involved in promoting such a relationship.

The Chairperson asked the W&R SETA to forward a number of reports to the Committee. These included reports on the GDS and Learnership Indaba. Added to this, she also asked the delegation to forward a list of W&R SETA accredited service providers. This would allow the Members to visit the service providers that were situated in their provinces. Mr Dikgole responded that this information would be sent to the Committee.

The meeting was adjourned.