Mboweni's 'skills revolution' binds business and labour
'Upgrading skills is a crucial element in South Africa's drive for international competitiveness'
THE "skills revolution" proposed by Labour Minister Tito Mboweni when he unveiled his Green Paper on a skills development strategy this week, is the kind of revolutionary tune to which both business and labour can sing along.
There is a strong consensus that South Africa's poor competitiveness - last out of 46 developing countries in its human resource development rating by the World Competitiveness Yearbook - should be tackled by creating a more skilled and productive workforce.
According to the Green Paper, compared to its trading partners, South Africa spends only 2,7% of payroll on training compared to 4% and 7% in the OECD countries.
Even within the 2,7% of payroll spent, fewer than 60% of firms provide structured training and many firms provide no training at all to lower levels of the workforce.
Business agrees that the time has come for an overhaul.
Nic Segal, deputy chairman of Business South Africa, says: "Business recognises the critical need to upgrade skills. It is a crucial element in our drive for international competitiveness. South Africa has a poorly developed skills base partly because the economy itself did not demand skills. This must change dramatically."
Government's strategy aims to bring about a general increase in the country's skills profile and in particular in the "intermediate" level of skilled blue-collar workers. It aims to provide them with portable and high-quality skills through accrediting training via the National Qualifications Framework.
For workers this will open up career pathing and greater possibilities for employment in micro enterprises or at other plants if jobs are lost.
At enterprise level government aims to increase access to education and training and encourage a structured approach.
To achieve these objectives, the Green Paper proposes "expanded strategic investment" in skills development by ending the present voluntary system of industry contributions to training boards and replacing it with an obligatory payroll tax of between 1% and 1,5%.
The advantage of this, Mboweni says, is that it spreads the cost of training across firms and allows government to target its priorities.
But Mboweni concedes that everyone agrees on the importance of skills development, "until the debate turns to who should pay".
From a business perspective, a payroll tax will raise the costs of employment. Adrian du Plessis of BSA says: "Instinctively businessmen do not like levies. It raises costs; growth and employment will be jeopardised. But clearly we are going to have to look at the financing."
Segal believes that the levy is inevitable and it is a question of negotiating how much and how it will work so people do not pay twice for training.
National and industry training boards will be completely overhauled.
The national board will be replaced by a National Skills Authority which will develop strategic priorities for training, targets and policies. At industry level, Sector Education and Training Organisations (Setos) will replace boards and will set training priorities, standards for qualifications and accredit training providers.
An important part of Mboweni's skills revolution is to update and modernise the type and style of training offered. The apprenticeship system, which has fallen into serious decline, will be scrapped and replaced by a system of "learnerships" which link structured learning and experience to obtain a qualification.
The government proposes that of the funds collected centrally through the levy, 80% will be put into sectoral funds managed by Setos and used to fund training plans through grants and "learnerships". The remaining 20% will go into a National Skills Fund to fund priorities identified by government.
Apart from cost there are other reservations among business over the grant levy system and the emphasis on sectors.
Ray Johnston, who is likely to negotiate on behalf of BSA, says the levy mechanism does not allow for flexibility. "There may be enterprises that do not want to get involved in sector training because by doing their own training they gain a competitive edge."
The levy grant system is also too simplistic to allow enterprises to respond swiftly and creatively to specific training needs, he says.
Sectoral training governed by Setos could also inhibit flexibility.
Segal is also dubious about the extent to which it is possible to set targets and quantify needs.
"Setos are supposed to tell you what you need. This can only be done at a level of generality. Its unlikely that there will be any blinding insights."