Manufacturing, engineering and related services SETA (merSETA)

Manufacturing, engineering and related services SETA (merSETA) Presentation to the Portfolio Committee on Higher Education and Training 19 May 2010 Dr Raymond Patel, CEO

The MerSETA Team • Chairperson: Ms JEANNE ESTERHUIZEN EMPLOYER REP RMI • Deputy Chairperson: MR XOLANI TSHAYANA LABOUR REP NUMSA • Dr Raymond Patel CEO • Mr Wayne Adams COO • Ms Beaula Dziruni CFO • Mr Tom Mkhwanazi GM Corporate Governance

The Mandate • To develop the skill of the South African workforce – • to improve the quality of life of workers, their prospect 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 • To increase the levels of investment in education and training in the labour market and to improve the return on that investment;

The Mandate … • To encourage employers- • to use the workplace as an active learning environment; • to provide employees with the opportunities to acquire • new skills; • to provide opportunities for new entrants to the labour market to gain work experience; and • to employ persons who find it difficult to be employed;

The Mandate …. • to encourage workers to participate in learnership and other training programmes; • to improve the employment prospects of persons previously disadvantaged by unfair discrimination and to redress those disadvantages through training and education; • to ensure the quality of education and training in and for the workplace; • to assist • work-seekers to find work; • retrenched workers to re-enter the labour market; • employers to find quality employees; and

What is the merSETA • merSETA, the Manufacturing, Engineering and Related Services Education and Training Authority is one of the 23 SETAs established through the Skills Development Act [no. 97 of 1998]. • It facilitates skills development for the following sub- sectors: • Metal and engineering, • Auto manufacturing, • Motor retail and component manufacturing, • Tyre manufacturing and • Plastics industries.

What is the merSETA (cont.) Together the five sub-sectors comprise approximately 44 000 companies, with a workforce of approximately 600 000. merSETA’s Vision Leaders in closing the skills gap. Mission To facilitate sustainable development of skills, transformation and accelerate growth in the manufacturing and related services sector.

SWOT Analysis STRENGHTS • Industry participation in NSDS 2 • Merseta’s infrastructure & capacity to manage information • Stable management structure • Provincial presence • Sufficient Qualifications registered on the NQF - Sufficient Learnerships registered • Tried and tested apprenticeship System • Good cooperation between Chambers & Stakeholders • Stakeholder support • Efficiency of Grant Disbursements System • Cost Effective • Leadership within Sector (manufacturing sector) Guidance to government (provincial and national) WEAKNESSES • Limited coordination between DTI and Merseta • Levy system is exploited for financial gain • Absence of effective Quality Management Systems • Limited lifespan of NSDS • Not prepared for global market • Limited skills programmes • Delivery & consistent customer service • Quality service • Merseta succession plan • Learnership progression • Not advocating our successes enough

SWOT Analysis OPPORTUNITIES • Economic growth • HRDSA • NSDS III • Increase Productivity • Increase quality service • Infrastructure & Network Management • Outsourcing as empowerment opportunity • Financial incentives for learnerships • Expanding the work of the Merseta – artisan related training THREATS • HIV / Aids • Global competition • Retrenchments • Poaching of skills internal • Poaching skills external • Insufficient delivery of learnerships • Brain Drain • Lead Times • SETA Landscape

Discretionary Grants 2009 / 2010

Mandatory Grants

2010/2011 Plan - Unemployed Candidates - Discretionary Grant

merSETA Budget 2010/11 –Financial Performance

merSETA Revenue and Expenditure 2008/9, 2009/10 and 2010/11 Rand millions

merSETA Budget 2010/11 The merSETA budgeted for • a very conservative 2% growth in levies due to the uncertainties prevailing at the point of compilation. The number of contributing firms are expected to stay constant at about 11,900 out of 44,000 registered employers. • R33 million from the National Skills Fund for our flagship AATP project • Decreased interest income due to reduced cash balances as a result of greater training expenditure • constant mandatory grant expenditure. The merSETA has limited say in the expenditure that companies incur which allow them to claim mandatory grants and can not ensure it is aligned with scarce and critical skills • Expanded discretionary grants and projects. First DG window closed end of April. Most of expenditure from contracts already signed. Regional offices constantly monitor and evaluate training being done by the employers. • Admin costs to be kept within the required limit. • A substantial deficit in order to reduce the large reserves the merSETA holds

merSETA Budget 2010/11 Financial Position • .

merSETA Budget 2010/11 - Commitments • .

merSETA Budget 2010/11 • merSETA has substantial reserves and cash balances which are 83% committed in training contracts and projects. merSETA may only commit funds it has and due to long term nature of some programs, reserves will build up. • merSETA enters into MOAs with employers which outlines its training commitment over certain number of years and pays in accordance with training implementation. At year end contracts worth R723 million were in force. Should training not proceed the merSETA implements remedial action and withdraws funds and allocates to other employers should the employer not be able to continue. • The merSETA plans to make significant inroads into its large reserves and cash balances through discretionary expenditure. • Cash above immediate monthly requirement invested on money market only at A rated financial institutions. merSETA takes risk adverse approach in investing. Security of funds is paramount. Investment committee has oversight over this function. • When re-established, the merSETA plans to limit rental expenditure by purchasing an office building for R30 million,

merSETA 2009/10 Financials

merSETA 2009/10 Financials • merSETA has nine years of unqualified audits • merSETA experienced a better year in terms of levy income than had been expected. Our sector saw some recovery towards the end of the year. • Interest rates dropped below budget towards the end of the year leading to interest income being below budget • merSETA received funds through the training layoff scheme increasing government grant funding • The response to WSP submission call was very good leading to a 73% mandatory grant claim ratio • merSETA achieved 67% of budget in discretionary expenditure. The economic recession which the industry experienced, lead some employers phasing down their training and/or delays in the implementation of training programmes • Admin costs were contained within the allowed limit.

Provincial Projects / Initiatives that merSETA is participating in to Assist/Support Unemployment

Strategic Imperatives • STOCK OF SKILLS Increase skills available to the sector to meet its short-term needs by investing and encouraging investment and innovative thinking • FLOW OF SKILLS Strengthen the skills pipeline in the medium to long-term supply of skills into the sector • WORKPLACE LEARNING Enhance the capacity of various types of employers in the sector to realise greater returns on training investment and to enable employees to benefit from training • GROWING THE BASE Empower beneficiaries and employers to realise greater benefit from training by improving the base level of learning in the sector • SKILLS INFRASTRUCTURE Strengthen sector mechanisms for skills planning, implementation and partnerships

merSETA Strategic Framework

Thank you, Any questions? ceo @ merseta.org.za 0115515338

Manufacturing, engineering and related services SETA (merSETA)