New Seta grant regulations cause for concern

Advertisement

The new SETA Grant Regulations have unintended consequences to skills
development. The changes focus on qualifications offered by public institutions and
fail to recognise the individual training needs of a diverse national
organisation.


Advertisement

 


The new SETA Grant Regulations passed in December have unintended limitations
and consequences which could have a detrimental impact on skills development as it
fails to address a diverse skills need on a national level comments Suzanne Hatting.

The changes to the levy grant system in the 2012 Grant Regulations are very
good in addressing specific challenges in the funding of skills development.
However, by narrowly focusing funding from the skills levy on qualifications
offered by public institutions, the Regulations fail to recognise the wide range of
training needed to address the diverse national, sector, organisational and individual
skills needs.
It is unlikely that the Regulations will advance the skills agenda or promote
strategic government objectives in the National Development Plan and the HRD
Strategy for 2010-2030.
There are many unintended consequences that will have a detrimental impact on
skills development, for example, the inability of public institutions to address the
diverse skills needs, a reduction in training due to lack of incentives for employers to
support skills development in their companies, and the closure of many private
training providers that make a significant contribution to skills development.
Bodies representing employers and private training providers are encouraged to
study the Regulations and to engage with government to remove the restrictions on
the training that can be funded from the skills levy grants.
Key provisions of the Grant Regulations
The new SETAs Grant Regulations Regarding Monies Received by a SETA and
Related Matters come into effect on 1 April 2013 (Government Gazette no. 35940,
published on 3 December 2012).
The Regulations mainly govern the SETA allocation of mandatory and
discretionary grants from the skills levy contributions paid by employers. The
provisions of the Regulations that have major implications for the funding of training
for workplace competence are:
1.The mandatory grant paid to employers for submitting their Workplace Skills
Plans is reduced from 50% to 20% of their levy contribution.
2. The SETAs will pay the remaining skills levy funds to employers as
discretionary grants, after deducting 10,5% for administration costs.
3. The Regulations require SETAs to spend 80% of the discretionary grants on
PIVOTAL (professional, vocational, technical and academic learning) programmes that
result in qualifications or part qualifications registered on the NQF.
4. The SETAs will have to set out in their Discretionary Grant Policy "how
PIVOTAL programmes can be delivered through public education and training
institutions?.
Furthermore, in their Annual Performance Plans submitted to the Department of
Higher Education and Training, SETAs will have to "make it clear? how they will
allocate discretionary grants to prioritise programmes that address sector needs
through public education and training programmes.
The implications of the Regulations for skills development for workplace
competence
The funding system in the new Regulations is very good in addressing a narrow
range of skills needs.
It is clearly focused on using the money from the skills levy predominantly for
training towards qualifications offered by public colleges and universities. It is
understandable that the Minister wants to ensure that the financial resources are
utilised to address specific national priorities.
However, the funding system to drive the skills revolution should be multi-
dimensional and should make provision for mechanisms to address the diverse training
needs of a wide range of key stakeholders.
The national skills development system should strive to achieve a balance
between the often competing demands and objectives on national, sector,
organisational and individual levels, such as improving workplace productivity,
increasing employment, addressing inequalities, promoting Black Economic
Empowerment, social upliftment, providing workplace exposure and mentorship to
inexperienced graduates, and strengthening competitiveness to grow companies and
the economy.
The Regulations do not reflect recognition of the diverse needs of various
beneficiaries, actors and stakeholders, nor the complex interplay between the factors
that contribute towards the achievement of their objectives.
The National Development Plan stressed the need for different interventions to
address diverse needs. It argues that we need to "strengthen youth service
programmes and introduce new, community-based programmes to offer young people
life-skills training, entrepreneurship training and opportunities to participate in
community development programmes.
Over the longer term, South Africa has to do more to enhance competitiveness in
areas of comparative advantage that can draw more people into work. By improving
the skills base and increasing competitiveness, the economy can diversify' (pp. 30-
31).
A national skills development system must be demand-led and not supply driven.
Therefore, the point of departure when developing the system should be to ask
questions about the demand for skills:
What skills are employers looking for when recruiting staff? What formal, informal
and self-employment opportunities are there in the labour market? What skills should
be developed to strengthen the informal sector? What skills are needed by
entrepreneurs to start and run business enterprises? What skills should be developed
to improve workplace productivity? What skills do employed people need to advance
in their careers?
By focusing only on public providers offering qualifications the Regulations fail to
recognise the diverse skills needs that should be addressed by the funding system.
The Regulations reflect a supply-driven approach that focuses on preparing learners
for employment in the formal job market.
The danger of this approach is that it prepares the youth for employment
opportunities that are rapidly decreasing, and it is likely to increase the number of
graduates that are not able to find employment in an economy that is shedding
formal jobs. We already know this from the large number of college and university
graduates who are unemployed.
HRD Strategy for 2010-2030 (HRD-SA) - Strategic Priority 2.2: "To ensure that
skills development programmes are demand-led through substantive and systematic
input from employers in the determination of skills demands for the country.'
Professor Wolfgang Thomas from the University of Stellenbosch Business School
argues that the informal sector has to be publicly recognised as a highly significant
element in South Africa?s overall process of economic development and
transformation.
To tackle the challenges of the informal sector we need a broad range of
appropriate stakeholders - many of whom may not yet play prominent roles in our
economy.
Furthermore, we need to radically rethink ways to effectively educate and train
informal, survivalist and subsistence entrepreneurs (Cape Times, 13 September
2012).
The emphasis on formal qualifications as opposed to short skills programmes is
unlikely to address the employment problem. While it is true that unemployment rates
are lower amongst graduates, it is a false assumption that enabling more people to
gain qualifications will enable them to find employment.
We can even anticipate increased levels of social unrest from graduates with
raised expectations of employment who are no closer to employment than before
enrolling for a qualification.
The Regulations clearly require SETAs to focus funding from the skills levy on
programmes that enable learners to gain qualifications or credits towards
qualifications, while discouraging the funding of short training programmes. However,
this underestimates the significant need for short programmes in the labour market.

While qualifications are important in the formal employment sector, they are not
a prerequisite for smaller employers, franchises, family businesses, NGOs/NPOs,
entrepreneurial ventures, or the informal job market.
New applicants in this work environment are asked: What skills do you have that
we can use to provide services or produce goods?
The levy grant system must therefore make provision for short, focused training
programmes that address specific skills needs that are urgently required in the wider
job market and that can be acquired over a short period of time.
HRD-SA Strategic Priority 4.1: "To ensure that unemployed adults, especially
women, have access to skills development programmes which are explicitly designed
to promote employment and income promoting outcomes' and to "promote access to
employment and income promoting skills development programmes'.
Business support is crucial to the success of the skills revolution as a substantial
percentage of training is driven by business, either through formal training towards
qualifications or short skills programmes, or informally through on-the-job training,
mentorship, internships and work experience opportunities, or top-up skills training for
graduates.
Such training benefits companies and employees and contributes towards the
achievement of national objectives such as employment creation, Black Economic
Empowerment and economic growth.
The Government should not under-estimate the contribution of private sector
employers to skills development, and cannot afford to alienate them as they are key
players in the skill revolution.
Therefore, the skills levy system must provide appropriate incentives to business
to garner their support for the nation?s skills development strategy. Reducing
mandatory grants will negatively impact on business support, and restricting
discretionary grants is likely to further discourage employer support.
Yes, the government has signed a skills accord with key business players, but it
is unlikely that small and medium sized employers will be motivated to support this
accord - especially now that they will be receiving significantly less funding from
SETA grants, which constituted a substantial part of their training budget.
The National Development Plan "outlines a new development approach that seeks
to involve communities, youth, workers, the unemployed and business in partnership
with a capable state' (p. 61). It recognises that "long-term growth and investment
requires a shared vision, trust and cooperation between business, labour and
government' (p. 42).
Businesses need diverse types of training to improve productivity, to grow and
contribute towards a healthy society and economy. In addition to programmes
leading to qualifications, the national skills development system must recognise the
value of short programmes such as specialised training in processes or equipment,
and just-in-time solutions to addressing emerging needs, and training for innovation
for a rapidly changing and highly competitive work environment.
Furthermore, talent management is critical to business success, and employers
who fail to provide their most skilled employees with specialised top-up skills will lose
out in the competitive global workplace - with the consequent negative impact on
economic growth and employment levels.
"There must be a trade-off between the development of broad and extensive
knowledge and abilities in people, and enabling them to get skills in the short term for
employment and between responsiveness and the long-term value of qualifications'
(Dr. Peliwe Lolwana: Education Policy Unit, University of Witwatersrand and
Chairperson of the QCTO, October 2011).
The funding system should encourage the active participation of public and
private training providers to address the country?s scarce and critical skills needs.
While the Regulations do not directly prevent the use of private training providers,
the focus is clearly on the "expanded use of public education and training providers
for the provision of skills development programmes'.
The funding system must make provision for private providers who provide
specialised skills training, and who have the flexibility to customise programmes for
unique work contexts. They can respond quickly to develop new programmes for
addressing emerging skills needs in a way that public providers cannot due to the
time-consuming process for approving qualifications.
Private providers make a significant contribution to training NGOs/NPOs,
cooperatives and emerging entrepreneurs, and developing skills for a wide range of
community-based projects, for example in rural development, community health and
agriculture reform. These private providers arose precisely because of the need for
customised short programmes, which public providers are not geared to address.
Reputable private training providers are a key national resource and it will be
short-sighted to exclude and ultimately destroy a major contributor to achieving the
nation?s skills development objectives.
The government will not be able to address the diverse national, sector,
company and individual skills needs by "nationalising? the skills levy and using it only
for national training priorities and for funding public training providers.
The National Development Plan argues that "The state needs to develop and
support a coordinated system for providing a diverse range of further education and
training opportunities, through a range of state providers complemented by private
providers' (p. 287).
"economic competitiveness is measured not only by the aggregate skills of a
country?s workforce, but - perhaps more importantly - by the flexibility and capacity
of the workforce to adjust speedily to the rapid changes in technology, production,
trade and work organisation. Consequently, the ability to respond to these changes
with speed and efficiency has now become the area where many countries seek a
competitive advantage' (HRD-SA, p. 8).
Unintended consequences of the Regulations
The following are some unintended negative consequences of the funding system
in the new Grant Regulations for skills development.
Public training institutions will not be able to address all the skills needed for
workplace performance. Higher education institutions are not primarily "skills training?
institutions as they have a different role in society.
FET colleges across the country are well positioned to make a valuable
contribution to skills development. However, there are many challenges relating to
the quality of training and the competence of teaching staff in most of the colleges,
and it will take many years to address capacity constraints in these institutions.
Furthermore, it is not realistic to expect public universities or colleges to have
the expertise needed to cover the wide range of specialised skills that are needed in
workplaces, for example in banking, chemistry, construction, energy, health,
insurance, local government, manufacturing, mining, etc.
Quality skills development in these fields requires more than a curriculum and
training manuals; it demands lectures with real expertise in these fields, as well as
specialised equipment.
The Regulations should make provision for funding programmes delivered by the
many reputable private providers that have the necessary expertise in specialised
fields and that have served their sectors very well over many years.
The Regulations should not exclude the entire private training sector, and
thereby contribute towards massive job losses in this sector. There are sufficient
quality assurance mechanisms in place to weed out fly-by-night private providers.

The Regulations will reduce employer participation in skills development. It is likely
that the changes introduced will increase the number of employers who adopt a
compliance approach and pay the skills levy as another tax, without making any
practical contribution to skills development.
The reduction in the mandatory grant will substantially reduce the incentive of
small and even medium-sized employers to submit Workplace Skills Plans. The
mandatory grant received might not even cover the company?s cost in terms of
manpower and time required to compile the WSP, the Annual Training Report and the
PIVOTAL Training Report introduced by the Regulations.
This will impact negatively on the research SETAs are required to do on skills
needs in their sectors as fewer employers will provide information on their skills needs
and training conducted.
The changes to the grants will result in a significant reduction in training
supported by levy paying institutions. Employers will realise that to reach the same
level of spending on training, they will have to increase their training budgets to
make up the 30% reduction in mandatory grants.
Employers will also find it difficult to access discretionary grants as most of the
skills they require for workplace performance are not developed through programmes
leading to qualifications. However, employers are highly unlikely to increase their
training budgets as these are already cut to the bone due to the current economic
downturn.
This will also mean that employers will reduce the number of unemployed persons
they have been training beyond their own employment needs, as a social
contribution.
For example, a large South African company has been funding its training from
R50 million it received as mandatory grant and R30 million received in discretionary
grants. The company calculated that this R80 million will now be reduced to around R
30 million.
It will be difficult for the company to claim discretionary grants as most of the
training it needs are short programmes for highly specialised production processes
and innovation that is essential for remaining globally competitive.
The SETAs will find it difficult to fund the training that is needed in their sectors
to improve productivity, promote growth and improve global competitiveness as the
qualifications offered by public institutions are not always appropriate for these skills
needs.
The SETAs are required to strengthen their research role to improve the
relevance of their Sector Skills Plans, but the Regulations will limit their ability to fund
the skills needs identified through this research as a large portion of these needs will
be best addressed through short, specialised job-specific training.
Furthermore, SETAs can only pay discretionary grants to employers that have
submitted WSPs, so the anticipated reduction of WSP submission will further reduce
the ability of SETAs to fund training.
Recommendations for employers and training providers
As a major stakeholder, employers should lobby government to review the
Regulations in order to remove the restrictions that will negatively impact on skills
development on organisational, sector and national level.
Bodies representing private providers should similarly lobby against the
restrictions in the Regulations by motivating the valuable contribution they make to
skills development in areas that are not covered by public universities and colleges.

Advertisement


Advertisement


Advertisement



Advertisement




Advertisement


Advertisement