President Cyril Ramaphosa’s state of the nation address (Sona) announcement that sector education & training authorities (Setas) are to be overhauled has been widely welcomed.
Employers will now be able to claim back 40% of their skills levy payments if they submit workplace skills plans and training reports to the relevant Seta — double the present 20% allowance. To improve governance and strengthen industry participation, the number of Setas will be reduced from the present 21 entities.
These may be helpful changes, but deeper reforms are needed to enhance the internal productivity of vocational education and training institutions.
South Africa’s skills deficit is largely a consequence of shortcomings in the quality and throughput of our technical and vocational education & training (TVET) colleges. Public colleges receive institutional funding from the department of higher education & training.
Private colleges are typically smaller and more specialised and are not subsidised, though they may benefit indirectly from the levy-grant skills funding system. The National Student Financial Aid Scheme (NSFAS) provides grants for rising numbers of vocational education students. The system is fragmented, with overlapping and poorly co-ordinated funding streams and capacity constraints in public and private institutions.
An in-depth reconsideration of the architecture of the Skills Development Act is needed. While it creates sectoral oversight bodies with considerable expertise and authority, it fails to recognise the importance of local or regional oversight and financing of colleges. To improve vocational education and training outputs the role of local industry structures in the oversight and accreditation of colleges and of employers and contractual partnerships in their funding has to be strengthened.
The system’s origins lie in the “industry training boards” whose role and responsibilities were extended in the 1980s as part of the post-Wiehahn labour market reforms. Though Setas now have broader statutory powers and a stronger revenue base than the former industry boards their dysfunctionality arises from the same basic design flaw.
It is a fallacy to think that occupations and associated vocational training requirements can be usefully organised for accreditation or quality assurance purposes along sectoral lines. Many occupations have training requirements that are common to several or all sectors — drivers, accountants, human resource personnel, marketing and communication skills, even metalworking and building maintenance skills.
And within sectors it is a fallacy to think that generic training standards and cost-recovery norms are the key to productivity and shared prosperity. Firms that aim to expand and grow recognise that their distinct training activities are central to their competitive advantage. Different businesses have different training needs and their optimal training expense patterns vary considerably.
There are, of course, critical quality assurance requirements across many occupations, in traditional artisan trades and in a wide range of services and industrial sectors. Partly in recognition of the unsuitability of sectoral arrangements for accrediting skills providers, with effect from June 2024 this responsibility was shifted from Setas to the Quality Council for Trades & Occupations. South Africa now has a National Qualifications Framework with three sub-frameworks: general & further education, occupational qualifications and higher education.
Though this provides an overarching classification system and perhaps some institutional capacity to monitor standards and improve the reliability of certification, these arrangements entirely ignore the institutional incentives needed to ensure that training providers operate efficiently and respond to industry’s skills needs. The key to ensuring that vocational education and training activities are well-managed lies in the contractual arrangements between colleges — public and private sector institutions — and the employers who rely on and pay for their course offerings.
The levy-grant system allows employers to select training institutions, but it provides no oversight mechanisms through which TVET colleges adapt their courses and programmes to employers’ needs. As colleges report to a national department they are not recognised as strategic assets in local or regional investment and development initiatives. Between the tax deductibility of learnership expenses, the youth employment incentive, grants for internships and the skills funding system, there is now so much complexity and overlap that it is hard to determine where the money is going and for whom.
Despite oversight and audits by Setas, there are too many opportunities for fraud and waste. Spending reviews by the Government Technical Advisory Centre demonstrate high costs and institutional failures in artisan training and the post-school education and training system. Unspent funds have been diverted to NSFAS in recent years.
The 2013 white paper on post-school education & training targeted enrolment growth of nearly 150% for universities and colleges in 2014-30, with even higher targets for community colleges. It is already clear that due to slow economic growth and the cost implications of student funding needs these targets cannot be met. But even if the funding could be mobilised for more rapid expansion, if the skills development and TVET systems remain dysfunctional, the social and economic gains from training and vocational education will not be realised.
Reform of the institutional architecture of the skills development system must be focused on the institutional links it creates between employers, industry associations and the colleges and training providers that serve local needs. Contractual partnerships and funding arrangements between employers and colleges play a critical role in promoting accountability and responsiveness of providers to training needs. Industry associations and organised business should also be more actively involved in the governance and oversight of public colleges.
• Donaldson, a former deputy director-general of the National Treasury responsible for the budget office, is a senior research associate with the University of Cape Town’s Southern Africa Labour & Development Research Unit.
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