Briefing to the Select Committee on Labour and Public Enterprises (NCOP)

Briefing to the Select Committee on Labour and Public Enterprises (NCOP) DEPARTMENT OF LABOUR 02 September 2003

Areas to be covered • National Qualifications Framework • Sector Education and Training • Authorities and • 3. Skills Development Amendment Bill 2003

National Qualifications Framework presentation outline • Historical context • Aims of the SAQA Act 1995 • Achievements and challenges • NQF Review • Key Proposals • Process

THE NQF • A product of the democratic struggle process • A key objective of the RDP, HRD and Education and Labour policies

The NQF (cont) Part of an international movement to bring outcomes-based standards and qualifications within national and international frameworks, to ensure: • transparency • comparability • quality assurance • mobility of learners and workers

The NQF (cont) In SA, focus on: • advancing learning/career pathways • recognising prior learning • creating parity of esteem for workplace and institutional learning

THE NQF SO FAR • NQF was enacted by the SAQA Act, 1995 • Education and Labour have joint custody • SAQA started work March 1997 Major successes in creating • an integrated national framework of qualifications; and • a national quality assurance structure

The NQF so far (cont) NQF is widely supported by organised labour, business, professional bodies, education sectors But: there has been dissatisfaction with slow pace, discord among some learning constituencies So - it was time for a review of implementation

THE NQF REVIEW • Ministers of Education and Labour appointed an authoritative Study Team that reported May 2002 • Their report was highly constructive but provided incomplete treatment of the relationship between education and labour market interests

NQF Review (cont) Ministers of Education and Labour appointed inter-departmental task team to prepare a joint policy document on way forward The result: An Interdependent NQF System: Consultative Document (June 2003), a unanimous inter-departmental approach to the next stage of NQF development

KEY PRINCIPLES • The new NQF should work with the grain of innovation and discard unsuccessful practices • Workplace and institutional learning communities must retain their relative autonomy within the NQF so that the legitimacy of their standards is guaranteed

KEY PRINCIPLES (cont.) More efficient learning and career paths require communities of trust linking education & labour market actors— that is, interdependence Expertise & experience must be retained in the system, so implementation must be phased & flexible

KEY PROPOSALS: (1) GOVERNANCE • Reinforce strategic leadership of national HRD strategy and NQF by creating joint Education/Labour structures • Ensure that political decision-makers are advised by credible stakeholder forums afterconsultation

KEY PROPOSALS:(2) STANDARDS & QUALIFICATIONS • Discontinuethe present 12 National Standards Bodies under SAQA • Bring standards generation and quality assurance under one roof

KEY PROPOSALS:(2) STANDARDS & QUALIFICATIONS (cont) Create 3 Qualifications & Quality Assurance Councils (QCs): • For Trades, Occupations & Professions (TOP) • For General & Further Education & Training (GENFET) • For Higher Education & Training (HI-ED)

KEY PROPOSALS:(2) STANDARDS & QUALIFICATIONS (cont) GENFET QC & HI-ED QC will be built on existing statutory bodies, following the CHE model The Minister of Education will set the standards generated by the GENFET and HI-ED QCs TOP QC is a new concept, based on collaboration between SETAs & professional bodies

KEY PROPOSALS (3): SAQA A restructured SAQA, with smaller board & executive, would • fulfil Ministers’ annual remit • maintain NQF regulatory framework • oversee work of the QCs • liase with international counterparts • maintain National Learners’ Records Database (NLRD)

NQF Way forward • The Interdependence consultative document was published for consultation • Hearings will be conducted during October 2003 • Final NQF policy document & draft Bill to Cabinet during 2004

Setas and the SD Amendment Bill Presentation outline • SDA 1998 & SDLA 1999: Historical context • Skills problems & challenges in SA prior to 1995 • Institutional & financial framework • Media & other criticisms • Seta Achievements to date • Proposed legislative amendment

Why was the Skills Development Act introduced? A. To overcome market failure • Under investment by firms because of fear of poaching by competition. This resulted in SA being locked into a ‘low skill’ trap. • Poaching of skilled white workers drove up skilled wages • Workers with low levels of skills under-trained because of the cost of compensating for lack of schooling first. • Many black workers with low skills forced to accept low wages. • Together these trends fuelled wage inequality and workplace apartheid. • Poor articulation by industry of their training needs.

Some micro-economic effects • Low value adding bias in the economy as skill base inadequate to support • move up the value chain, • exploit the potential of new technology, • exploit the opportunities of niche markets, • to diversify product or service range. • “Old Boys Clubs” controlled access to the crafts and to the professions (and hence to decent jobs after training). These same clubs translated into networks which later controlled access to contracts and work opportunities – all of which lowered the level of competition and increased the entry costs post – 1994. • As shift from primary to tertiary sector occurred – low levels of employability for low skilled.

Why was the Skills Development Act introduced? B. To overcome past state failures • Racist and sexist construction of skill and its development (racist institutions, racist programme rules about access etc; • Relevance of many training programmes to employment limited due to state prescription of training content and weak linkages between training providers and industry / community needs; • Too many workers denied a general schooling and hence unable to access more advanced training opportunities (even if racist barriers overcome).

Purposes of the SDA (clause 2) • To develop the skills of the South African workforce • To improve the quality of life of workers, their prospects 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; • 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 entranats to the labour market to gain work experience; • To employ persons who find it difficult to be employed.

OBJECTIVES TO BE ACHIEVED BY INSTITUTIONAL AND FINANCIAL FRAMEWORK consisting of: 1. The National Skills Authority (NSA) Social partners to provide advice to the Minister and oversee the strategy 2. Sector Education and Training Authorities (SETAs) managed by social partners boards / councils 3. The Skills Development Planning Unit (SDPU) 4. Employment Services at Labour Centres 5. Learnerships, Apprenticeships & other Skills Programmes 6. Levy- Grant Scheme 7. National Skills Fund 8. Partnership between the Public and Private Sector

Skills Development Financing Framework A range of alternatives were researched under NEDLAC in 1995 including; • Voluntary arrangements ( status quo ante – which left low training base unchallenged, only islands of good practice in sea of inertia) • Levy exemption ( only those that don’t train – pay) Required very expensive monitoring; des not support shared investment for shared gain; individual firms “get on with it’ and Small firms are left out. • Levy / grant “levels the playing field” shared pain for shared gain> Rising skills levels overall

Skills Development Financing Framework • NEDLAC reached a Unanimous agreement on the levy / grant option managed by organised social partners. - It forces everyone to pay, and rewards those that train with grants to off-set threat of poaching as well as training costs; - Successful levy/grant schemes internationally depend on private sector influence on grant payments – hence governance of Setas based on social partner model; - 1% payroll levy agreed as a compromise - 20% of levy allocated towards National Skills Fund for the unemployed

SETA ROLE IN DISBURSEMETN OF FUNDSSD LEVIES ACT, 1999 Payment and Distribution of SD Levies payable to SARS Commissioner (Section 8) • SARS • Transfer levies collected to NRF • Transfer information to DG Labour • Maintain employer data (SETA) • Collect levies from all employers • National Revenue Fund • Levies funds are earmarked as part of • DoL budget item • Paymaster General transfer funds to • NSF & SETAs based on SARS informa- • tion and after approval by DG Labour • Department of Labour • Assume responsibility in verifying • calculations and authoraising • transfers by Paymaster General: • 20% plus revenue where no • SETA exists to NSF • 80% for each SETA Employer NSF Up to 2% of levies paid to SARS to cover collection costs SETA 80% 20%

SETAs were established 20 March 2000 • SETAs were established after 2 years (1998/9) of negotiation between interested parties; • Employers, trade union and where relevant, government collectively determine needs and direct training investments; • Responsiveness of education and training providers enhanced by industry having Setas through which to identify their skills need and increased levels of resources to ‘buy’ training that meets their needs.

NSA recommendedto Minister of LabouraNational Skills Development Strategy2001 – 2005 Launched Feb. 2001 The NSDS guides the work of Setas and NSF funded projects Provide skills to: 1. Promote Quality Lifelong Learning 2. Promote formal sector growth 3. Promote SME sector 4. Promote the development sector 5. Support access to labour market by the young people 3 EQUITY TARGETS Each with measurable success indicators

SETA Achievements • A consolidated NSDS implementation reports covering 2002 /3 will be tabled by the Minister at the SD Conference on 14 –16 October 2003. • 22 Seta Annual reports have been tabled since the 27th August 2003 indicating achievements to date • Some highlights include:- - 504 045 workers in ABET programmes - 37 797 learners engaged in learnerships and 10 872 in apprenticeships - Over 2Million workers participated in various skills programmes. - 93.6% allocation of social development funds through DOL Provincial Offices, 77% utilisation rate. - 86 377 persons trained, up from 40,377 in 2002 Equity targets: 98% Black, 59 women, 2.6% Disabled

Some of the Challenges • Isolated instances of fraud and corruption • Not all Setas Boards playing an optimal strategic and oversight role • Not all Setas achieved their 2002/3 NSDS targets as per their Business Plans • 2 Setas received qualified Audited statements for 2002/3 and one is still outstanding

First Response:Growth and Development Summit • Social partners accepted as an intergral part of the GDS that they need to take ‘ownership’ of their Setas • Captains of Industry have committed themselves to nominate more senior players and to hold their representatives to account • Trade Union leaders have committed themselves to ensure improved accountability through more senior people on Seta Boards from labour and ensuring that they are capacitated to play a leading role

Second Response: Amendment to the SD Act • No intention to undertake a fundamental review at this stage • Original Act did not allow the Minister to respond to problems or criticisms of excessive wages • To make it obligatory for Setas to address poor equity profile on their boards and staff • Amendments gives the Minister the power to intervene in cases of mismanagement and to hold Setas to account; • Others are technical amendments required to improve the operation.

Setting payment norms and performance standards: There are areas in which the payment norms and performance standards to be achieved by a SETA needs to be set nationally. What is proposed is the addition of a new Schedule to the Act, Schedule 3, which sets out a list of items that may be regulated. This is an illustrative list and not a closed list as amendment 23 (Section 36) makes clear.

Service Level Agreements • An new section is added which makes it obligatory for SETAs to enter an annual Service Level Agreement with the Department of Labour. • This will define performance targets in relation to the implementation of the National Skills Development Strategy and detail reporting requirements. • The content of the agreement and the procedure whereby it is to be entered and managed is also introduced. (Section 10A)

Regulation of Seta Administration: The power of the Minister is extended to enable him to influence the use of SETA administration funds. The new provision extends to the Minister a discretionary power to determine salaries and allowances of Board members, should he deem it necessary to do so (Section 14). Amendment 9 (introducing a new section 3B) clarifies that these prescriptions will apply to any outsourced agency, should the SETA outsource the function.

Public Finance Management Act • The PFMA came into effect after the Skills Development legislation. There are a number of amendments proposed which seek to bring the Skills Act into conformity with the PFMA – see for example amendments 1; 6 (Section 10(1)(h)); 9 and 11.

Dealing with underperformance The current Act does not give the Minister the power to undertake SETA mergers and changes of scope which may be required to improve performance or sustainability. The Act is therefore amended to do so. The Minister is required to seek the advice of the National Skills Authority and the affected SETA/s before exercising these new powers. Amendments 4 and 5 affect this change by amending section 9 of the Act and inserting a new section 9A.

A national standard for good practice in skills development A new SETA function is introduced – Currently the Department of Labour is piloting the internationally recognised Investors in People standard. The National Skills Authority is extensively involved in the piloting exercise. It is a standard with recognises organisations that have demonstrated their commitment to developing and recognising their people. The standard is also applicable to non-profit organisations and recently FEDUSA, the trade union federation, and SAQA have achieved the standard.

Private Employment Agencies Whilst there has always been an obligation for private employment agencies to register with the Department of Labour there has been some confusion about the power of the Director General to de-register and close unscrupulous private employment agencies. Recent cases of extreme exploitation and abuse in the domestic worker sector have highlighted the importance of addressing this matter. This matter is clarified in a number of proposed amendments (amendments 2; 4; 15; 16; 17; 21, 22 and 26 – in particular Schedule 3(n) and (o)).

Intermediate agency for learnerships To introduce a new concept that will allow an employer to contract a dedicated agency to perform the functions of of an employer in the learnership agreement and contract of employment.

Funding of the administration of the National Skills Fund: Amendment 18 changes Section 28 of the Act to provide for “a maximum of two percent of the money allocated to the Fund … to be used to administer the Fund.” This has been introduced to bring this fund in line with other labour market statutory funds such as the Unemployment Insurance Fund. The level has been set at the same point as that set for the payment for services provided by the South African Revenue Service for the collection of the skills development levy.

Amendment to the Mine Health and Safety Act, 1996 In consultation with Dept. of Minerals & Energy to amend the MHSA to clarify the status of the Mining Qualifications Authority currently functioning under both Acts.

Thank you

Briefing to the Select Committee on Labour and Public Enterprises (NCOP)