The Cape Chamber of Commerce and Industry has called on the government to phase in skills training determined by business leaders, instead of relying on costly state institutions that fail to equip people for the job market.
“The problem is both technical and vocational education training (TVET) colleges and sector education and training authorities (Setas) are malfunctioning. They are not delivering the skills that are required by the market,” Cape chamber board member Eugene Cloete said.
The chamber was reacting to research by Vrei University PhD candidate Peter Courtney that found there is little evidence of a return on investment for the Setas.
SA’s 21 Setas are funded by the skills development levy, set at 1% of payroll for eligible companies. This levy is earmarked for the Setas, which are expected to receive R26bn in the 2025/26 fiscal year, according to the treasury’s Budget Review.
Despite generous funding, there is no systemic monitoring and analysis of the impact of the training programmes accredited by the Setas, but a tracer study conducted by the wholesale and retail Seta found just 6.1% of the people who completed a learnership found a job, according to Courtney.
His research found the average cost of enrolment per learner enrolled in a Setas-accredited course in 2021 was R75,900, higher than the R74,700 average enrolment cost of university students, who participated in much longer programmes at institutions with extensive research obligations.
Learners who failed to complete Seta-accredited programmes cost SA R2.7bn in 2021.
The Cape chamber has proposed the Setas fund internships based on a curriculum developed with the industry. This would ensure people who embarked on courses accredited by the Setas acquired skills that were appropriate for SA’s labour market, said Cloete.
“Companies should have a much larger say in what kinds of skills need to be developed, but they are sidelined at the moment,” he said.
The chamber drew attention to the salaries of the 21 Seta CEOs, which average R2m-R3m a year, saying it was a questionable expense.
“Squandering resources on underperforming Setas and TVETs is akin to sabotaging not only the job prospects of future generations, but also the broader economy. Government insists it is trying its best to create jobs; instead, it is creating a legacy of missed job opportunities,” it said.
The Setas were established by the 1998 Skills Development Act and were intended to improve the skills of the workforce, but have for years been dogged by controversy over their poor governance and weak financial management.
Most Setas have consistently received qualified audits from the auditor-general, and in the latest scandal, the former minister of higher education & training is accused of lying to parliament about the appointment of several ANC-linked individuals as Seta CEOs.
As the act ring-fences the money raised by the skills development levy for Setas, the treasury cannot reduce the budgets of underperforming Setas, or retain unspent funds, said Courtney.
“A point that is often overlooked is that the skills development levy is a direct cost to employers, so to economists this looks like a disincentive to employment,” he said.
By contrast, the employment tax incentive, which provides tax rebates to companies that employ people in specific categories, is just R6bn, he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.