President Cyril Ramaphosa made a decisive call on the skills levy system Thursday. The skills levy and sector education & training authorities (Setas) have been in the spotlight, with widespread criticism from employers and industry bodies and many calling for their closure.
A key decision announced was increasing the “mandatory grant”. This is the portion of the skills levy employers get back when they submit information about their skills needs to the relevant Seta. The amount was reduced to 20% in 2013, with the intention of allocating more funds to formal education and training programmes. Restoring it to 40% is the right decision for several reasons.
Industry needs to integrate skills development into their growth plans, and our research at the Centre for Researching Education and Labour (Real) at Wits University shows most South African employers conduct extensive on-the-job training. Returning these funds to employers supports them in continuing and expanding this critical workplace learning, which goes to the heart of reskilling and upskilling.
The idea of dedicating more funds to training that leads to formal qualifications or recognised programmes, rather than informal training linked to specific companies and work processes, was understandable. It’s better for workers to get qualifications that are portable and nationally recognised.
Accordingly, our policymakers have put energy and resources into developing many formal qualifications. But in many cases these qualifications don’t meet industry needs and are not valued in workplaces. The processes for designing them are slow and cumbersome. Mechanisms for keeping programmes updated are out of the hands of industry, and many are not needed. Many formal qualifications do not serve workers or employers.
Obtaining good information from employers is essential for education and training planning. The system was set up to obtain insights from employers into their priorities for training, the skills gaps they face and difficulties filling vacancies. Many employers, especially small and medium-sized firms, argue the 20% payment doesn’t sufficiently offset the cost of compliance (preparing the workplace skills plans and annual training reports).
Many don’t participate in the systems or submit the required documents, treating the levy like a tax. Others submit information that meets the bureaucratic requirements to get their levy back, but give poor insight into the skills needs of the economy.
There are many design flaws with how employers have to submit information to the Setas. Too much information is asked for. The forms are unnecessarily complex. The system creates an incentive to only report on the skills needs employers are confident they can train against, or those for which they want to access Seta funding. The system has perverse incentives to give skewed or partial information. An essential next step for the government will be to make extensive changes to what employers are required to submit.
The systems for getting data from employers are worth fixing, despite the frustrations of all who attempt to use the systems and the weariness of all who have been trying to make the skills systems work better. Getting good data from employers, in the context of outcries about skills shortages and mismatches, is important.
The governance and institutional challenges mentioned by the president also signal serious change. This is to be welcomed because extensive reform is needed. But having fewer, bigger Setas will not solve the problems. If the Seta system is maintained, these structures must primarily account to specific industries and not to the government, as is the case.
Bodies that are smaller and more directly controlled by industry associations and worker representatives in some industries may be a better alternative. In other industries, there may be no need for these structures at all. Industry (small, medium-sized and larger employers) needs to have greater ownership of the Setas and be better able to direct training.
Where Setas continue to exist, their roles and attitudes must change. They must do less and do it far better. Their mandate must be reduced to focus on the skills needed by the industries they work with.
The president’s announcement also recognises that the broader skills system needs to support unemployed people. This is to be welcomed. The government needs to do far more to support colleges to deliver second-chance matric and short skills programmes. Large-scale programmes that enable young people to access workplace experience are needed.
This is a moment of opportunity. Business needs to move from ongoing criticism to leadership by helping to actively shape the system. The Setas need to demonstrate real commitment to change if they are to continue to exist.
- Prof Allais is research chair of skills development at Wits University.
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.