Sector Education Training Authority Performance 2006/7: Labour Department briefing

Meeting report

SETA Performance Review Process: Department of Labour (DoL) briefing
Mr Sam Morotoba, Senior Executive Manager: SETA Coordination,  DoL and Dr Florus Prinsloo, Senior Executive Manager, DOL briefed the committee on the SETA performance results from 2006/2007. They were accompanied by officials from the National Skills Authority and Department of Labour.
.
Mr Morotoba indicated that a committee from the National Skills Authority (NSA),  led by Mr Mabena, had, as part of the Sector Education and Training Authority (SETA) performance management and review process, advised the Minister of Labour to take over the administration of the Media, Advertising, Publishing, Printing and Packaging (MAPPP) SETA. Mr Morotoba explained that SETA performance was measured according to a variety of indicators and processes, which included the review of the day to day running of the SETAs in terms of the Skills Development Act (SDA), Service Level Agreements (SLAs), Annual Performance Assessment Score Card and the expenditure of funds they received. The SETA review process also included a comprehensive evaluation by New Economic Development and Labour Council (NEDLAC), which amongst other things assessed the SETAs in terms of governance. A current review of the SETA landscape in terms of the Skills Development Act (SDA), and the National Qualifications Framework (NQF) had been done. This involved repealing the Manpower Act in its entirety and replacing it with the Skills Development Act (SDA). The only remaining regulatory aspects of the Manpower Act were provisions on Artisans and Apprenticeships. He indicated that SDA amendment bills would be published for public comment and would be brought before the Committee for its consideration in June. All issues relating to delivery and those in the presentation would be addressed through the amendment bill. Mr Morotoba indicated that a third performance review process entailed a 5 year assessment in which the SETAs had to report on their impact on skills development and justify the need for the SETA’s continuation to the Minister of Labour. He added that a previous review that was conducted related to quality assurance problems identified by the Department of Labour. The review aimed to ensure that there was no overlap in the work done by SETAs, Further Education and Training (FET) colleges and Higher Education institutions. The presentation therefore outlined a partial feature of the SETA’s performance.

SETA Performance Results for 2006/07
Dr  Prinsloo presented the SETAs’ performance assessment results for 2006/07. He briefed the Committee on the evolution of the SETA system and landscape, as outlined in the graph on page 2 of the presentation. The National Skills Development Strategy (NSDS) had three phases, the first phase was from 1998-2004 and was essentially the policy development stage; the second covered 2005 through to 2010 and was essentially the implementation phase, the third would be from 2010 and would be the impact phase. He indicated that the current performance assessment according to the evolution of the SETA performance management system involved the Performance Assessment Score Card and the Review of the National Qualifications Framework (NQF), Quality Council for Trade and Occupations (QTCO), Department of Education (DoE) and Skills Development Act (SDA). The amendment bills were at NEDLAC and would be tabled before the Committee in June 2008. The NEDLAC comprehensive review was also under way, from 2008 till 2009. He added that this was all part of the second phase of the National Skills Development Strategy (NSDS) in 2005 to 2010. The Annual Performance Assessment Score Card included 5 Key Result Areas (KRAs) established by the NSA, which were applicable to the SETAs as part of the NSDS phase 2. The KRAs for the NSDS phase 2 included 20 success indicators, with 16 applicable to SETAs. Only 7 out of the 16 indicators could be measured in 2005/2006. 13 out of 16 could be measured in 2006/2007. Others would be measured at the end of the phase in 2010.

The 2005-2010 Performance Measurement Rating scale was indicated on page 5 of the presentation. Of essence was that a performance rating of 3, or 100%, indicated SETA compliance with the service level agreements (SLAs) performance requirements signed in 2005 and updated each year to include new information. The additional information incorporated into the SLAs, for example, included the measurement of the number of students enrolled and employed in specific occupations after completing learnerships. However, the SETAs were expected to attain a rating of 4 or 5 to be considered as performing, and the scores for the first two years of the NSDS phase were outlined in the presentation.

Dr Prinsloo indicated that governance and performance was an important KRA developed by the NSA. It was this KRA that the MAPPP SETA failed on, resulting in the sequestration of the SETA through the process indicated on page 10 of the presentation. Phase three of the sequestration process was undertaken after an investigation by the NSA.

The ISETT SETA was the best performing SETA in 2007/2008. The poor performing SETAs and the areas in which they under performed were listed from page 16 (see attached presentation). The SETAs’ problems would be addressed through the SDA and the interventions indicated in the outline of each SETA’s problems. A prevalent problem amongst most SETAs related to financial management and had necessitated the employment of two Chartered Accounts by the DoL to assist in rectification of the financial problems. The Local Government SETA was already making headway through the interventions indicated and the Tourism SETA had resolved its recurring legal issues. The Tourism SETA may overspend due to its rationalisation process. It had nonetheless made significant progress and actually initiated the set-up of a sub-committee for 2010 World Cup preparations. Dr Prinsloo commented that the continual problems faced by the Transport SETA related to the funds lost in the Fidentia scandal, and that the SETA had not thus far recovered anything. Other contextual work in progress indicated on page 25 was essentially ongoing work to improve the entire SETA landscape.

Discussion
Ms A Dreyer (DA) expressed her displeasure at the absence of the Minister and the Acting Director-General.

Ms Dreyer referred to the Performance Measurement Rating Scale. She asked whether the use of 100% as a measure for adequate performance, as opposed to the expected excellent performance, created confusion on what was expected of the SETAs.

Dr Prinsloo replied that the use of 100% as a reflection of compliance as opposed to performance was a purely a mathematical issue. He added that the rating scale was agreed upon following consultation with the SETAs and aimed to motivate them to progress beyond mere compliance to actual performance that alleviated the skills shortage.

Ms Dreyer asked for more clarity on the consequences of the forensic investigations conducted on under-performing SETAs.

Mr Morotoba replied that the DoL took the forensic investigations seriously and ensured that officials implicated in corrupt activities were prosecuted. He added that the DoL had engaged the Scorpions in previous cases when corruption was identified through the forensic investigations. There were several former SETA Chief Executive Officers (CEOs) serving long prison sentences. Funds embezzled from the Forestry SETA were recovered and R20 million was recovered after incorrect payment by the Forestry SETA. Curators, with the assistance of SCOPA, were presently trying to recover funds lost by the THETA SETA.

Dr Prinsloo commented that the consequences for poor performance by SETAs included reporting before the Committee, as had occurred last year. He added that the consequences for poor administration were much more severe and incurred the possibility of criminal charges.

Ms Dreyer asked why under-spending by SETAs was not included in the presentation.

Mr Morotoba replied that audit reports indicating expenditure were available. He added that the DoL had targeted and successfully resolved previous under spending by the SETAs. The SETAs previously had reserves equivalent to four months skills levy revenue amounting to R4 billion. However, this was resolved and the SETAs currently had reserves equivalent to only two months skills levy revenue, amounting to R1 billion. This was not much considering the R600 million revenue received by SETAs every month in subsidies.

Ms Dreyer asked to know how the reserves were reduced.

Mr Morotoba replied that this was achieved through spending the reserve funds instead of the funds received from the Department of National Treasury.

Ms Dreyer commented that the relationship between SETAs and their stakeholders appeared to be a problem.

Mr N Nene (ANC) asked whether there was capacity to monitor the interventions implemented to address the problems identified at the SETAs.

Mr Morotoba replied by affirming that the DoL had the necessary capacity to monitor the SETAs. The DoL had allocated sufficient Human Capital to oversee SETA management. However, the DoL was also victim to the Skills Shortage experienced by all government departments.

Ms S Rajbally (MF) aired her concern over the monitoring system.

Mr Morotoba replied that the SETA monitoring system was highly effective and had provided the information presented to the Committee.

Mr L Labuschagne(DA) referred to the governance problems being faced by SETAs and asked whether it was possible to identify under-performing individuals before their performance impacted upon the entire SETA.

Mr Morotoba replied that efforts were being made to put in place an effective governance monitoring system. In addition NEDLAC, through its review process, was also making efforts to address current governance problems as well as put in place prevention measures. He added that the governance issues were related to fact that SETAs were being run solely by Business and Labour who appeared to view the funds received through the skills levy as extra funds to complement the Education system.

Mr Labuschagne referred to interventions made to resolve the Energy SETA problems and commented that there was need to move beyond considering and implementing initiatives.

Dr U Roopnarain (IFP) asked to know the importance of financial performance on the overall performance of the SETAs.

The Chairperson asked for elaboration on the process of appointing CEOs.

Mr Morotoba replied that the SETA boards were responsible for the appointment of CEOs, which was done in accordance each SETA’s constitution, which had to be approved by the Minister of Labour.

Dr Roopnarain asked to know whether an impact assessment on the learners who graduated from the SETAs would be conducted.

Mr Morotoba replied that the DoL did conduct impact studies on the training done by the SETAs. These impact studies were conducted every five years through the NSDS phases described by Dr Prinsloo. The results of the impact studies, which assessed the productivity and performance in industries with SETAs, would determine how to proceed into the next NSDS phase. Due to cost considerations, it was decided against conducting impact studies every single year.

Mr B Mkongi (ANC) asked to know what happened to learners after the completion of their training.

A DoL delegation member replied that learners who had completed their training were assisted in getting employment through the Employment Services for South Africa (ESSA) system.

Mr Mkongi asked to know why there was not a Chief Executive Officers’ (CEOs) Forum similar to the Chief Financial Officers’ (CFOs) forum indicated on page 25 of the presentation.

Mr Morotoba replied that a CEOs forum, akin to the CFOs forum, was in place and met every second month. Nonetheless, problems relating to poor attendance at the forums had been experienced, and were being addressed.

Mr Mkongi asked to know why Quality Assurance Evaluation was only undertaken recently.

Mr Morotoba replied that Quality Assurance was addressed through the SDA, which required SETAs to meet NQF standards and through another quality body which was currently attempting to rationalise the accreditation process.

Mr Mkongi asked for an explanation on the correlation between SETA training and the Accelerated Shared Growth Initiative South Africa (AsgiSA) and the Joint Initiative on Priority Skills Acquisition (JIPSA).

Mr Mkongi asked for clarification on the Minister of Finance’s suggestion on shifting funds from SETAs to FET colleges and how the matter would be reconciled with the Department of Education, which was responsible for the colleges.

Mr Morotoba clarified that the Minister of Finance’s remarks were a suggestion. He added that there was a difference between experiential learning or training and classroom education. The SETA training or learning could not be equated to the education system, and thus the SETAs could not be replaced by FET colleges.

Mr Mkongi asked to know if there was any relationship between SETA training and the Industrial Development Policy.

Mr Morotoba replied that SETA targets were linked to the National Human Resources Development Strategy (NHRDS) as well as the National Industrial Policy Framework (NIPF).
 
The meeting was adjourned