Skills Planning for the FPM Sector

1. Skills Planning for the FPM Sector Daryl McLean Pauline Matlhaela and Associates

2. Outline of Presentation • SSP requirements • Relationship between SSP/ASP/APP • Questions an SSP is trying to answer • The structure of a sector skills plan • “Performance-based” sector skills planning • Methodology and Project Plan • Analyses for • Leather and footwear • Clothing and textiles • Forestry, wood, pulp and paper • Furniture • Publishing • Printing and packaging • Print media • Priority Skills Interventions

3. The Legal Mandate A SETA must, in accordance with any requirements that may be prescribed: • develop a sector skills plan within the framework of the national skills development strategy; • implement its sector skills plan by- • establishing learnerships; • approving workplace skills plans; • allocating grants in the prescribed manner and in accordance with any prescribed standards and criteria to employers, education and training providers and workers; and • monitoring education and training in the sector; • promote learnerships by – • identifying workplaces for practical work experience; • supporting the development of learning materials; • improving the facilitation of learning; and • assisting in the conclusion of learnership agreements;

4. “Performance” Requirements and Framework Treasury Regulations 5 and 30 require FPMSETA to: • “Produce and table a Strategic Plan with a five-year planning horizon, outlining the planned sequencing of projects and programme implementation and associated resource implications and other prescribed information • Produce and table an Annual Performance Plan including forward projections for a further two years, consistent with the medium-term expenditure framework (MTEF) period, with annual and quarterly performance targets, where appropriate, for the current financial year and the MTEF • Identify a core set of indicators needed to monitor institutional performance • Adopt a quarterly reporting system, including submission of agreed information to executive authorities, the Presidency or Premier’s Offices, the relevant treasury and Parliamentary portfolio committees. Public entities are encouraged to submit the reports to their executive authorities and responsible departments. • Ensure that there is alignment of reporting between the Strategic Plans, Annual Performance Plans, budget documents and annual and quarterly reports”.

5. Content and Structure of Strat Plans and Performance Plans

6. Top-Down and Bottom-Up Planning Under NSDS1 and 2 • The targets were set in NSDS • These were cascaded to 22 SETAs • The budgets were divided by the targets in developing the plans Under NSDS3: There are top-down AND bottom-up processes

7. What is a “Sector Skills Plan”?

8. What is Required in Each SSP Section

9. Performance Information

10. Categories of Performance Information

11. Managing Performance What are we trying to achieve? Performance Measures What evidence do we use? Performance Indicators Where are we now? Baselines and Targets How do we add value? Actions and Outputs Using SMART Performance Measures

12. Measuring “Effectiveness”

13. Illustrative Framework of Indicators

14. Equity Baseline – Gender and Disability (ATR)

15. Equity Baselines - Race

16. Baselines for Effectiveness/EfficiencyCosts Divided by Pass Rates

17. SETA Performance Value Chain Management Steers Organisation Toward Goals / Responds to Context Gov Serv Fin Ops Sector Skills Planning Identifies Strategic Issues, Needs, Causes, Policy Options Projects Innovates Best Practice Solutions Grants Implements Best Practice Solutions Learning Programs Implements Best Practice Solutions ETQA Steers Provision Toward Needs Increased Workplace Participation in Planning/Delivering Skills Development Improved Correlation Between Provider Capacity and Sector Skills Needs Measured Against Framework of Indicators

18. METHODOLOGYAND PROJECT PLAN

19. Past Approaches to SSPs in SA Current approach WSPs/ATRs analysis Employer surveys Consultations with stakeholders Reliance on WSP/ATR and employer information Coverage of employer through WSPS WSPs skewed to large employers WSPs not necessarily based on best practice WS planning Partial picture of scale and shortages Not differentiate between frictional as opposed to structural causes Limited predictive potential 19

20. Sector Skills Planning models internationally Skills forecasting Labour market signaling Qualitative models Cost – benefit models Each model has weaknesses – mixture of different models more effective to achieve purposes of sector skills planning Appropriate mix of models depends on availability of data; resources available for planning; timeframes 20

21. Qualitative Methods “…Qualitative methods involve attempting to reach an assessment of skill needs through in-depth interviews with key stakeholders such as policy makers, and of course, employers. Wilson, Woolard and Lee (2004) conclude that where the data permits, standard occupational forecasts should be produced regularly, complemented by the more qualitative approaches, to produce a more rounded and enriched view of changing skill needs”. An Assessment of International Trends in Occupational Forecasting and Skills Research: IRNI 2008

22. Project Plan

23. Labour Market Forecasting Model 1 Macroeconomic model 2 Occupational employment model 3 Replacement demand model 4 Skills demand model

24. Growth Demand Calculations FORMULA: GROWTH IN OUTPUT = GROWTH IN DEMAND FOR LABOUR (LESS PRODUCTIVITY IMPROVEMENTS, CAPACITY UNDER-UTILISATION, CAPITALISATION, LABOUR ELASTICITY) • Separate growth scenarios were formulated based on conservative over- and under-projections of the previous average growth in the sectors in the FP&M SETA (-1%, 2%, 5%). • The total employment figures based on the Quarterly Labour Force Survey (QLFS) 2012 dataset from the first quarter • The capacity under-utilisation percentage was found in the Statistics South Africa document entitled Manufacturing: Utilisation of production capacity by large enterprises, 2012. (Except for forestry) • The productivity figures were calculated based on output data derived from the Quantec database • Capital intensity data was collected from the Quantec database. (Except for Forestry) • Labour elasticity was calculated based on sectoral output and wage data from the Quantec database. For the forestry sector, employment data was derived from Forestry South Africa’s Forestry and Forest Products and wage data was derived from the Quantec database.

25. Occupational Modelling FORMULA: DIVIDE THE TOTAL NUMBER OF JOBS FORECAST ACROSS THE VARIOUS OCCUPATIONS ACCORDING TO PERCENTAGES • The occupational employment figures and disaggregation were derived from the QLFS datasets from 2008 – 2012 • Some of these look odd, so • We are checking with Stats SA • We may use the WSP categories/percentages instead

26. Replacement Demand FACTORS: RETIREMENT, MORTALITY, MORBIDITY, MOBILITY • The retirement forecast figure was calculated using the age profile from QLFS 2012. It was assumed that all of the workers aged between 60 and 65 years of age will retire in the next 5 years; and those aged between 55 and 60 years of age will retire in the next 10 years. • The HIV/AIDS prevalence rate was modelled on various data sets (see following slides) but remains a very generic estimate compared to the modelling required • For replacement demand based on deaths from causes other than HIV/Aids-related issues, a figure of 5% was picked. This was based on the ratio of the number of working people who died in 2009 (the latest available Cause of death data from Statistics South Africa) to total employed people which was 4.4%. This was rounded up to 5%.

27. Mortality and Morbidity - HIV/AIDSOccupational Bands

28. HIV/AIDS – Education Levels

29. Impact of HIV/AIDS on Companies

30. Epidemiology of HIV/AIDS

31. SUMMARY OF FPM INDUSTRIES SKILLS PLAN FINDINGS

32. Clothing, Footwear, Textiles, Leather and General Goods- Shrinking Output -

33. Clothing, Footwear, Textiles, Leather and General Goods- Imports vs Exports-

34. Growth Prospects The growth prospects for the sector remain by and large unchanged for the future unless the sector fundamentally restructures itself and improves product offering and pricing. Growth for the sector in the next 5 years is more a matter of retaining market share against cheap imports than about growth. If the DTI strategy works growth may be an option post 2015.

35. Capacity Utilisation The overall sectoral utilisation of factors of production is down from 77.2% in 2009 and 74.1% in 2010. Stats SA conducted a sectoral survey on reasons for the under-utilisation of the factors of production…. The unused 22.6% was accounted for as follows: • Lack of raw materials : 2% • Lack of skilled labour : 0.9% • Lack of unskilled labour : 0.4% • Insufficient demand : 16.7% • Other : 2.9%

36. Productivity

37. Growth and Replacement Scenarios: Leather

38. Growth and Replacement Scenarios: Footwear

39. Footwear Occupational Modelling (Major Occupational Groups)

40. Footwear Occupational Modelling (Minor Occupational Groups)

41. DTI Industry Strategy • Leather is divided into cattle hides, ostrich, crocodile, etc • 2.5m cattle slaughtered in SA annually • 60% of the hides used in auto industry • 251m pairs of shoes consumed domestically, only 50m made here • Thus beneficiating the hides in footwear potentially brings these jobs back to SA • Footwear design, quality of workmanship, branding and international retail linkages are key constraints • Limited supply-side training to address these concerns

42. Leather and Footwear Strategy: Projections

43. Specific Skills PrioritiesLeather and Footwear Skills Strategy • Leather • Leather technologists NB • Quality control (ethical branding) focus • Career pathing from NQF2 upwards • Electrical and engineering NB • Footwear • “Collaborative clustering” to inform skills interventions • Bursaries for international design studies (short-term) • Design Institute

44. Growth and Replacement Scenarios: Textiles

45. Textiles Retirement Demand

46. Growth and Replacement Scenarios: Clothing

47. Retirement Demand (Clothing)

48. Clothing and Textiles CSP

49. Clothing and Textiles CSP/Charter CSP focus areas • Domestic market development (local sourcing, trade measures, combat illegal imports, promote local) • Exports (promote trade, market access) • Competitiveness (capitalisation, supply chain) • Sustainable HR (training of managers, avoid sweatshops…) Empowerment • Empowerment (charter commits to 30% BEE in textiles, 50% in clothing)

50. Clothing and Textiles • Technical textiles • Replacement demand – aging workforce • New equipment coming in • Critical skills: new equipment; technical artisan skills especially; mechanical engineers; technicians; mechanics; quality contollers • Challenges with existing provision: no external training capacity due to specialisation • Have to send people oversees, or bring people in from outside country – could look at partnerships with industry (esp india) or at increasing stipend since learning is international • Clothing • Replacement demand: aging workforce; provident fund debacle • Need for versatile/multi-skilled machinists • Three most important things: supporting more learnerships in companies and trying to see how we can multi-skill • Bridging courses from ABET to higher levels, to enable progress toward supervisor