Briefing on the

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Briefing on the Skills Development Amendment
Bill Labour Portfolio Committee 19 August 2003
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Presentation outline

• Skills problems challenges in SA prior to 1999
• SDA 1998 SDLA 1999 Institutional financial
  framework
• Achievements to date
• Challenges
• Proposed legislative amendments

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Skills problems challenges in SA prior to 1994

• Black people denied good general schooling and
  hence unable to access more advanced training
  opportunities
• Post-school training opportunities defined in
  racist and sexist terms (racist institutions,
  racist programmes, racist rules about access
  etc)
• Post-training workplaces defined on racist and
  sexist basis including trades and professions.

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Skills problems challenges in SA prior to 1994

• Workers with low levels of skills under-trained
  because of the cost of compensating for lack of
  schooling first.
• Many black workers with low skills forced to
  accept ultra low wages.
• Unemployment highest amongst those with low
  levels of skills
• Together these trends fuelled wage inequality and
  workplace apartheid.

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Skills problems challenges in SA prior to 1994

• Employers suffered as well
• Voluntary levy / training arrangements excluded
  the majority of firms, who competed for those
  with high skills (driving up the costs of those
  with scarce skills but without expanding the
  supply of such skills)
• Firms in general under-invested in skills because
  they feared that the competition would poach
  their skilled people and steal their
  investment. This worsened SAs low skill
  profile.

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Some micro-economic effects

• Low value adding bias in the economy as skill
  base inadequate to support
• move up the value chain,
• exploit the potential of new technology,
• exploit the opportunities of niche markets,
• to diversify product or service range.
• South Africa low on the World Competitiveness
  Report on skills skills inavailability inhibits
  investment.

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Purposes of the SDA (clause 2)

• To develop the skills of the South African
  workforce
• To improve the quality of life of workers, their
  prospects of work and labour mobility
• To improve productivity in the workplace and the
  competitiveness of employers
• To promote self-employment and
• To improve the delivery of social services

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Purposes of the SDA (clause 2) -continued

• 2. To increase the levels of investment in
  education and training in the labour market and
  to improve the return on that investment
• 3. To encourage employers to
• use the workplace as an active learning
  environment
• provide employees with the opportunities to
  acquire new skills
• provide opportunities for new entranats to the
  labour market to gain work experience
• employ persons who find it difficult to be
  employed.

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Skills Development Purposes to be supported by
new institutions
New Institutions introduced The National Skills
Authority (NSA) Social partners provide advice
and oversee the implementation of the overall
strategy 25 Sector Education and Training
Authorities (SETAs) implementation authorities
managed by social partner-based boards The
Skills Development Planning Unit (Department of
Labour - SDPU) provides planning, monitoring
and evaluation support for National Skills
Development Strategy Employment Services at
Labour Centres implementation to communities at
local level
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Skills Development Purposes to be supported by
new incentives

• A range of alternative financial models were
  researched under NEDLAC in 1995, including
• Voluntary arrangements (status quo ante which
  left low training base unchallenged, only islands
  of good practice in sea of inertia)
• Levy-exemption (only those that dont train
  pay). Requires very expensive monitoring. Does
  not support shared investments for shared gain
  individual firms get on with it. Small firms
  left out.
• Levy/grant - levels the playing field shared
  pain for shared gain. Rising skills levels
  overall.

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Skills Development Purposes to be supported by
new incentives

• Unanimous agreement on the levy/grant scheme
  option managed by organised social partners.
• Successful levy/grant schemes internationally
  depend on private sector influence on grant
  payments hence governance of SETAs agreed to be
  by organised social partners
• 1 payroll levy as a compromise
• 20 of levy for National Skills Fund for
  unemployed.

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25 SETAs were established 20 March 2000

• SETAs were established after 2 years (1998/9) of
  negotiation between interested parties.
• Employers, trade union and, where relevant,
  government collectively determine needs and
  direct training investments
• Responsiveness of education and training
  providers enhanced by industry having SETAs
  through which to identify their skill needs and
  increased level of resources to buy training
  that meets their needs.

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NSA recommended a National Skills Development
Strategy2001 2005, Minister launched Feb 2001.

• Work of SETAs and National Skills Fund guided by
• The National Skills Development Strategy
• Skills to promote Quality Lifelong Learning
• Skills to promote formal sector growth
• Skills to promote SME sector
• Skills to promote development sector
• Skills to support access to LM by the young
• 3 EQUITY TARGETS
• Each with measurable success indicators

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SETA achievements A consolidated report on the
NSDS will be tabled at the Skills Conference on
14 - 16 October 2003

• 2002/ 2003 implementation report
• By March 2002, some of SETA achievements
  included
• 504 045 workers in ABET programmes
• More than one in five of ALL workers in the
  labour market have received structured learning
  under the skills development strategy (over 2
  million)
• 37 797 learners were engaged in learnership
  programmes programmes which themselves did not
  exist prior to 2000.
• Over 17000 of apprentices continue to be funded
  by SETAs.

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Challenges persist

• Isolated instances of fraud and corruption
• Not all SETA Boards playing an optimal strategic
  and oversight role.
• Not all SETAs achieved their 2002/3 targets as
  per their business plans
• 2 SETAs received qualified Audited Statements for
  2002/3

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First response Growth and Development Summit

• Social partners accepted as an integral part of
  the Growth and Development Summit that they need
  to take ownership of their SETAs
• Captains of industry have committed themselves
  to nominating more senior players and holding
  their representatives to account
• Leaders of the trade union movement have
  committted themselves to ensuring improved
  accountability through more senior people on SETA
  boards from Labour and ensuring that they are
  capacitated to play a leading role.

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Second response Amendment to the Skills
Development Act

• No intention to undertake a fundamental review at
  this stage
• Original SDA did not allow Minister to respond to
  problems or to respond to criticisms of excessive
  wages, poor equity profile etc.
• Amendment gives Minister the power to intervene
  in cases of mismanagement and to hold the SETAs
  to account.
• Technical amendments to improve operation.

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5. Establishment and scope of coverage
The current Act does not give the Minister
the power to undertake SETA mergers and changes
of scope which may be required to improve
performance or sustainability. The Act is
therefore amended to do so. The Minister is
required to seek the advice of the National
Skills Authority and the affected SETA/s before
exercising these new powers. Amendments 4 and 5
affect this change by amending section 9 of the
Act and inserting a new section 9A.
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6. Setting norms and performance standards
There are areas in which the payment norms and
performance standards for SETAs need to be set
nationally. The Minister is given the power to
set these norms where needed. They, and other
standards, may be regulated according to a new
schedule to the Act, Schedule 3.
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Public Finance Management Act

• The PFMA came into effect after the Skills
  Development legislation. There are a number of
  amendments proposed which seek to bring the
  Skills Act into conformity with the PFMA see
  for example amendments 1 6 (Section 10(1)(h)) 9
  and 11.

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6. Equity considerations

• The law is changed to make it obligatory for all
  SETAs to address the question of equity both on
  its board and in its staff composition.

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7. Service Level Agreements

• An new section is added which makes it obligatory
  for SETAs to enter an annual Service Level
  Agreement with the Department of Labour.
• This will define performance targets in relation
  to the implementation of the National Skills
  Development Strategy and detail reporting
  requirements.
• The content of the agreement and the procedure
  whereby it is to be entered and managed is also
  introduced. (Section 10A)

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9. A national standard for good practice in
skills development
A new SETA function is introduced Currently the
Department of Labour is piloting the
internationally recognised Investors in People
standard. The National Skills Authority is
extensively involved in the piloting exercise.
It is a standard with recognises organisations
that have demonstrated their commitment to
developing and recognising their people. The
standard is also applicable to non-profit
organisations and recently FEDUSA, the trade
union federation, and SAQA have achieved the
standard.
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National standard for good practice in skills
development (continued)
The proposed amendment will empower the Minister
to recognise a standard, as a nationally
recognised standard for people development.
Amendment 6 to Section 10 (k) gives effect to
this and a new clause, 30B enables him to give
institutional effect to this commitment and
provides that the Director General may allocate
funds from the National Skills Fund to support is
implementation.
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10. Regulation of SETA administration
The power of the Minister is extended to
enable him to influence the use of SETA
administration funds. The new provision extends
to the Minister a discretionary power to
determine salaries and allowances of Board
members, should he deem it necessary to do so
(Section 14). Amendment 9 (introducing a new
section 3B) clarifies that these prescriptions
will apply to any outsourced agency, should the
SETA outsource the function.
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11. Funding of the administration of the National
Skills Fund
Amendment 18 changes Section 28 of the Act to
provide for a maximum of two percent of the
money allocated to the Fund to be used to
administer the Fund. The level has been set at
the same point as that set for the payment for
services provided by the South African Revenue
Service for the collection of the skills
development levy.
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15. Private Employment Agencies
Whilst there has always been an obligation for
private employment agencies to register with the
Department of Labour there has been some
confusion about the power of the Director General
to de-register and close unscrupulous private
employment agencies. Recent cases of extreme
exploitation and abuse in the domestic worker
sector have highlighted the importance of
addressing this matter. This matter is clarified
in a number of proposed amendments (amendments 2
4 15 16 17 21, 22 and 26 in particular
Schedule 3(n) and (o)).
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Intermediate Agency for learnerships

• To introduce a new concept and will allow an
  employer to contract a dedicated agency to
  perform the functions of the employer in
  learnership agreements and contracts of
  employment.

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Amendment to the Mine Health and Safety Act 1996

• To clarify the status of the Mining Qualification
  Authority and to bring it in line with other SETAs