SETA CEOs, Chairpersons and Deputy Chairpersons of the Boards, I am grateful that we have this opportunity to meet today and engage on a few matters that are of interest to us all. It is just over a year since the skills development function was transferred to my department by the president. While there has been some interaction between the SETAs and the department and I have had the opportunity to meet with some of you, this is my first formal interaction with this forum in the manner in which it is constituted today.
On 3 November I announced the new SETA landscape which is effective from 1 April 2011. Despite the calls from some circles to close down the SETAs, I have, with advice from the NSA and my department, opted for the announced option.
There are various reasons for this, but the most critical is recognition that SETAs are important institutions. The New Growth Path identifies skills shortages (poor quality of education and training/skills development) as one of the major constraints that need to be addressed to realise its objectives. High levels of education and training are also critical if we are to address the challenges of poverty and inequality in our country. The three summits held by the department during the course of this year, and particularly the Skills Summit in September, in fact underscored the importance of SETAs in the education and training landscape, and the critical role they must play going forward.
It would have been folly for me to close down the SETAs given the expectations and the challenges we face as a country. We therefore have to reflect critically and ask ourselves whether in their current form, SETAs are up to the task of addressing the skills development challenges facing our country.
Undoubtedly, over the past 10 years of their existence, work has been undertaken in the SETAs that has contributed positively to our skills development initiatives. However, challenges remain, some of them very serious, and I will raise these forthrightly in the interests of boldly addressing them. I am sure you will join me in this effort.
The configuration of government in the past has contributed to some of these challenges. The location of education and training institutions in the former Department of Education and the skills development infrastructure in the Department of Labour made it very difficult to bring about the necessary and required synergies in education, training and skills development. It also made it difficult to ensure articulation of programmes/qualifications between the sub-systems of post-school education and training, for example FET and higher education.
The integration of education, training and skills development in a single department, affords us the opportunity to address this major challenge.
Having indicated my view regarding the value I place in the SETAs, I nevertheless think we need to initiate some drastic changes in these institutions if we are to convince the public that they are worth having, but more critically if we are to achieve our goals of skilling our nation. I want to mention here today a few critical areas of concern for me.
Let me first clarify my relationship as the Minister of Higher Education and Training to the SETAs in order to properly contextualise this address to you today. The Skills Development Act establishes the Minister as the Executive Authority for skills development and SETAs as implementing agencies of the Executive Authority. The problem is that because SETAs have their own Constitutions and their own boards appointed in line with their Constitutions, and under the PFMA, these boards are the accounting authority and CEOs the accounting officers, SETAs have increasingly become organisations who believe themselves to be - or at least act in a way that presents themselves as being - ‘independent’.
Some SETAs have gone so far in defence of their independence (from the state) to consider taking the state to court, actually believing that an institution set up under an Act of Parliament to carry out a state mandate has the right to take its own government to court. Isn’t that bizarre? Not all SETAs go quite this far, but many SETAs are quite prepared to go to the press and publicly criticise their Executive Authority. Of course, this couldn’t have happened if the Executive Authority had used its executive authority in the way that was envisaged when the SETAs were established. Action by some SETAs in extending and defending their independence and inaction by the Executive Authority have combined to lead us to this position.
SETAs are criticised for failing to align their work with government and sector priorities. This has resulted in the public questioning the value-add of SETAs and the importance of SETAs has been reduced in the public mindset. Yet SETAs are critical institutions in our education, training and skills development landscape.
Perceived distance with its own implementing agents means there is a top down and compliance driven relationship; instead of a qualitative relationship where the department and the SETAs share responsibility for a common direction and where the Executive Authority is able to drive the transformation that is so critical to our growth and development via these institutions. We need to move away from this perceived distance and compliance driven approach. Next to the SETAs’ logos, there is the SA government mast. This joint branding is there to communicate to stakeholders and the public that SETAs are institutions of government and therefore carry a mandate of government.
There is a widespread perception, which I believe is at least to some extent true, that the SETAs have generated a whole new industry of service providers who have not prioritised training that matches the intentions of the SETAs. They have instead created parasitic and sometimes even corrupt relationships in the skills development arena.
SETAs are also not adequately making use of our public education and training institutions, even where these have capacity. Instead, they are opting in the first instance to use private providers, including some with highly questionable credentials and levels of quality.
All of the above are of serious concern to me, and I urge you to work with us to address these matters. Since taking over responsibility for the SETAs in November lat year, I have spent an enormous amount of time discussing the SETAs with departmental officials, as well as engaging a variety of stakeholders and listening to ordinary people about their views on the SETAs. We can have a theoretical debate about all of this but I would advise that this would be a wasteful use of our time. If necessary, legislation can be changed. So what I want to emphasise to you today, is that the Executive Authority IS going to be emphasised and SETAs ARE going to become partners with the Executive Authority in implementing the will of government.
In this regard, let me raise a number of critical issues that I think we must address if we are to make a difference in skills development and restore the credibility of our institutions in the public eye.
1. Addressing governance issues: the Constitutions of the new SETAs
Research done on the performance of SETAs has pointed out that the operation of SETA Boards and various related governance issues are a key challenge affecting the efficient functioning of SETAs. Before March 2011, I will be signing off the constitutions of the 21 SETAs as part of their establishment. I have instructed my department to finalise a framework of criteria to be used in determining and standardising these Constitutions. I must say upfront that I, personally, take these Constitutions very seriously. They represent a standard of governance for every SETA. By signing these Constitutions, I will be providing a platform for governance in the SETAs over the next five years.
I have therefore taken a close interest in the work the department is completing on the model Constitution to ensure the following are key interventions in that document.
a) Consistent governance standards across the 21 SETAs; and that these align to best practice standards. Boards in SETAs must maintain strategic focus and refrain from spending hours discussing procurement or operational management issues. Boards must become increasingly professional. There is no contradiction between the stakeholder representative model and professionalisation of Boards.
We believe that Boards will become more efficient through:
1. Introducing independent chairpersons
2. Limiting the number of Board meetings to a reasonable number
3. Reducing the size of Boards
4. Participation of the minister in the appointment of Board members
5. Having a standard remuneration rate for Board and committee members
6. Holding accountable Board members who do not carry out their duties as required
7. The minister’s participation in the appointment of SETA CEOs and other members of the Executive Committees of Councils, in line with similar practices in relation to public entities.
These measures will ensure that there is improved governance of SETAs and will free up the Boards to focus on strategy and sector skills development priorities.
b) We need to confront the problem of varying standards of Board fees in SETAs, as well as the varying salaries of CEOs. Some SETAs pay very high Board fees per sitting while others pay no fees at all. Without removing the flexibility of Boards to take some of these decisions, we must introduce some standards and benchmarks to ensure this does not affect the functioning of SETAs. Board members must be careful that they don’t trade in their authority by becoming vulnerable to excessive Board fees.
c) We must standardise financial structures and guarantee their establishment in the constitutions of SETAs. This is important to ensure that all SETAs align to best practice, PFMA and National Treasury regulations in setting up financial committees, their mandates and reporting.
I will not sign off a SETA’s constitution unless it adheres to this framework!
I will soon be appointing a Ministerial Task Team to be led by the General Secretary of Nehawu, Mr Fikile Majola, to look into the capacity and readiness of the SETAs to implement NSDS III, amongst other things. I have included in the terms of the Ministerial Task Team, a brief to find long-term and sustainable solutions with stakeholders on how to address the issue of governance of SETAs for the long term. Amongst other issues, the task team will look at the possibility of clustering services to address capacity issues in some of the SETAs, and also to achieve economies of scale. For example, there are certain administrative and IT services that could be shared by SETAs. Saying this does not give you licence to enter into large-scale contracts with service providers! In the short term, the SETA constitutions will be used to introduce the most obvious and standard best practice principles.
These Constitutions will take effect from 1 April 2011.
We will also seek to strengthen our own department so that it is able to effectively play its oversight role and, most importantly, give adequate support to the entire SETA system.
2. Training
I have serious concerns with regard to the relevance, quality, cost and access to training facilitated in the SETAs.
a. Sector Skills Plans
Developing Sector Skills Plans is core to the SETAs’ mandate. The submitted drafts raise questions about the seriousness with which these are accorded priority in some SETAs. Many SSPs don’t yield quality, credible information to guide learning programme plans by SETAs. The intense efforts in the Department over the last few months to restore the importance of SSPs, matched by the documents submitted by the majority of SETAs amplify my concerns.
Without credible information we cannot have proper skills planning, which raises questions about the relevance of training priorities developed by the SETAs. Concerns raised by many employers, who need middle and high level skills, that their needs are not met by the SETAs, are valid in this regard.
b. Quality and relevance of training
Only a third of training facilitated by SETAs leads to full qualifications and this is concentrated in a few SETAs. Overly focusing on training that does not lead to full qualification is not a good investment of the levy resources!
The attention paid to monitoring the quality of training by providers and workplaces is a great source of concern to me. SETAs must improve oversight over the area of workplace skills plans (WSPs) and annual training reports (ATRs) from companies. There is no point processing mandatory grant payments on receipt of WSPs and ATRs, without assessing whether the quality and distribution of training opportunities included therein results in benefits to the workers.
c. Per capita cost of training
The comparison between the per capita cost of training and the associated outcomes is disgraceful. The average cost of a learnership is R40 000 to R50 000 per year. Adding the associated administration costs, i.e. the planning costs, project management costs, costs associated with accreditation and procuring providers, certification etc – this could multiply threefold. Some of these learnerships are not even a year long.
SETAs accredit the training providers which they then appoint as service providers under them. Consequently, the favoured providers monopolise training and training material, escalating the costs further, but also playing the role of gate keeping.
d. Distance between SETAs and public training providers
Over the years SETAs have largely created strong partnerships with private training providers, neglecting public training providers. It is partly due to this reason that the type of training provided is of short duration not leading to full qualification, and very costly. As a result, we have not made a significant impact in the production of middle and high level skills through the skills development levy resources.
This does not mean that I do not value the role of private training providers. We have to achieve a balance and ensure that we take advantage of the subsidised public system in order to get more out of our resources.
3. Surplus funds in SETAs
Some SETAs have made requests to roll over funds to next year. This happens while at the same time there are serious constraints to supporting learning programmes in the public education and training institutions in particular. This is a sign of poor management and planning. We will introduce for the 2011/12 financial year a mid-term review similar to what we have in government's mid-term cycle where budget projections are taken into account. This will be used as a basis for revising the SLAs going forward. This practice will ensure we bring an end to the accumulation of surplus funds by SETAs; whilst the need out there for training is not being met.
I am raising concerns that I am sure the public out there also have. And these are the matters that should be worrying us as a collective here. If we do not attend to these and other matters, then five years later questions will be asked about the need for SETAs.
As government and the Department in particular, we will have to do more to support the SETAs as well while we exercise our oversight role.
The way forward
We are improving the planning framework to ensure the NSDS 3 provides a stronger base for the SETAs, through the service level agreements (SLAs), to set targets that align with the sector skills needs – i.e. not a one size fits all approach - and ensuring an improved focus on the core mandate of SETAs.
The DHET and the SETAs must continue working over the medium term on strengthening and improving the credibility of information in the SSPs. The immediate focus is to have an improved SLA between the DHET and the SETAs. The SLA provides a strong basis for the Executive Authority to ensure SETAs focus on sector and national priorities in the context of the new NSDS 3, the post school landscape, the critical alignment with delivery institutions and increasing access to work experience and placements for college and university students and graduates.
This means that the SLA is restored firmly to being a cooperative agenda between DHET and the SETA over the financial year. In the absence of quality SSPs, we need research to inform these SLAs. The process that has begun involving the SSP review panel will continue in order to provide a researched SLA framework for every SETA that is based on current draft SSPs, research on the economic profile of the SETAs, and demand for priority skills. The process will culminate in a short list of areas which is pertinent for the SETAs to address in their SLAs with the DHET with specified targets and timeframes. Each SETA will submit a final SLA in the context of its SLA framework.
I have signed a performance agreement with the president, as is the case with other ministers. I cannot achieve the goals of this performance agreement unless the SETAs are brought on board. The Boards and EXCO of SETAs will be held accountable for the delivery of the SLAs. The SLA indicators are not only focused on numerical targets, but will also include qualitative targets.
We will be improving the performance management system to encourage, foster and promote the continuous improvement of the SETAs. We want to ensure the work of the SETAs is focused on the most pressing priorities in supporting the decent work agenda, economic growth and human development in South Africa. We will be setting up a performance monitoring and evaluation system for the SETAs that will be more than just a compliance-chasing exercise of meeting numerical targets. It will monitor the progress that the SETAs are making to deliver according to their mandates. Just as I have had to sign a performance agreement with the president, it is my intention to have each of you sign a similar agreement with myself.
There is an expectation that, as a collective, the Department and the SETAs should deliver sector specific skills interventions that help achieve the goals of the NSDS III, address employer demand and deliver concrete results and make a decisive impact on our agenda for a skills revolution in our country. Recently, I held a very successful meeting with some 67 CEOs (in some cases, their representatives) of big private companies and state-owned enterprises. They committed to working with us especially in the training of young people, particularly as artisans. With R8 billion in the SETA system, supported by the National Skills Fund, there is no reason why we cannot make a decisive impact on skills development in our country.
As the Executive Authority I prefer not to have an arm’s length relationship with the SETAs. These are critical institutions and my department will exercise its support and oversight role. I would like all of us to work towards the common goal of improving skills development in this country, and I am confident that we can achieve this if we are all committed to working together. We should find better ways to communicate and work together.
Let me also say I will not hesitate to act in instances where there are inefficiencies. One bad institution taints all of us. I will not sit back and allow one bad apple to rot the entire bag. Challenging my decision in order to protect the self interest of a few, at the expense of especially the millions of young black people and workers, will only strengthen this resolve.
I therefore expect that when you enter into the new phase on 1 April 2011, you will make several fundamental changes to your leadership, governance and strategy in order to meet the objectives of the NSDS III and maintain high standards.
The vision I have is of SETAs bringing about cooperation between employers and their workforces, represented by their unions. Expanding the training opportunities and skills levels of our workforce is a national challenge to which every employer has to rise; it is the SETAs’ job to bring that about.
We have an historical opportunity to mend the bridge that was broken between the education system and the training system. We must rebuild a unified and coherent education and training system. We must end this terrible practice of ‘short-termism’ – one day and two day courses do not address the qualifications and skills crisis that we are facing in this country. We must work together to achieve a highly skilled and highly qualified workforce. This requires longer term, sustainable programmes. We must not tolerate shabby, low-quality, useless training interventions that do not do anyone any good, but just make money for the provider. We must have a zero tolerance for bad training, training that leaves people no better qualified than they were before.
And we must treat the economic development strategy of this country seriously. We now have the emergence of sector economic development plans. The SETAs must make a difference. The SETAs must engage with these plans. The SETAs must be seen as credible partners in making things happen. If we can get a coherent, agreed national skills development strategy, agreed between all the stakeholders, and if we could turn every SETA into a well functioning, efficient, service delivery structure, and we can transform the NSF so that we have funds available not just for the formal sector but also for the emergent sector, for the poor and unemployed, we will come out of this review process more unified and stronger than we have ever been. And the SETAs will have a deserved reputation for making a difference to this country.
I wish you all a merry Christmas and happy new year. Drive carefully and stay safe during the holidays and come back invigorated to take up this challenge!
Thank you.
