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Is HRD legislation promoting or hindering education and training?

Is HRD legislation promoting or hindering education and training?

By Marietta van Rooyen
Assessment College
Cutting Edge Newsletter www.cutedge.co.za

# Introduction

In a recent survey of providers, both private and public, it became clear that training figures have been drastically reduced over the past two years. This situation is also getting worse rather than better at present.

Providers commented that they could accept the situation as an initial set-up phase in the year 2000 to 2001, but that they cannot understand why matters are getting worse in the second year of SETA set-up, namely 2001 to 2002. They expected the accreditation of ETQAs, especially those in the SETAs, to make a difference in education training demand.

The structures put up to promote education and training need to start doing so. For this to happen, learnerships must be registered, providers must be accredited, assessors must be registered and learners must be certificated. On certification of learners, employers should get their grants paid out.

This is where the priorities of the SETAs should lie. Not in submitting endless budgets, business plans and a skill plans.

This article tries to analyse the reasons for the reduction in training of workers and make suggestions on how it can be turned around.

# The new context for training and development in South Africa today

In the February 2000 issue of the Cutting Edge, Jane Hofmeyr writes:

The Skills Development Act and the Skills Development Levies Act are designed to address the above problem. The economy has been divided into sectors for the purposes of skills development and quality assurance, and all firms will have to pay an annual levy based on their total remuneration costs for the skills development of their employees. For the year beginning 1 April 2000 companies will pay 0,05% and from 1 April 2001 this will increase to 1%. Failure to pay will be a criminal offence.

Each of the defined sectors will develop a SETA that will formulate a skills development strategy and disburse grants from the collected levies back to employers for approved skills development of their employees and their workers.

The National Skills Fund (NSF) for national priorities in skills development will retain Twenty per cent of levies. Should a sector not establish a SETA, there will be no body to disburse the grants in that sector and all the levies will go to the NSF.

The plan was to have the levy money go back to employers to pay for certain education and training according to agreed criteria. This implies that more money becomes available for providers to train more learners, who become more productive and indulge in a process of Lifelong Learning.

As Jane Hofmeyr put it:

The levy-grant system provides opportunities for individual development and progression. It will also enable providers to make their contribution to building a firm foundation for learning for life and thus to the country's economic growth and social development.

But is the promotion of learning happening out there?

# Funding problems

The Skills Levy and Grants System

In another Cutting Edge article published in April 2000 an optimistic Russel McDiarmit wrote:

A major positive in the implementation of the NQF in an organisation is the structured approach to skills development, ensuring that this complements the strategic direction of an organisation and the facility for organisations to claim grants or rebates.

From April 1 2000 every employer who has an annual payroll in excess of R250 000 will have to pay a Skills Levy of 0,5% of total payroll to the South African Revenue Services. From April 1 2001 the levy will increase to 1%.

Each employer will be required to complete a series of forms before April 1 2000 to allow the S.A. Revenue Services to channel the funds to the correct SETA. (There will be approximately 24 SETAs in various economic fields)

The South African Revenue Services (SARS) can deduct two cents for every Rand for administering the collection of the levy. Thereafter there are only two recipients. Eighteen cents of every Rand will go to the National Skills Fund, administered by the National Skills Authority, primarily for unemployment training and learnership funding. The balance goes to the Sector Education and Training Authority (SETA) selected by the employer.

The primary function of the SETA will be the management of the Skills Levy. SETAs must ensure that money gets refunded to organisations by way of levy grants. In the first year of operation, as much as fifty cents will potentially find its way back to contributing enterprises.

# SARS as the Collecting Agent

It is clear from the information above that SARS plays a crucial role in the collection and dispersion of the levy money. It seems however that they are not taking this duty seriously, or do not have the capacity to do this.

SARS’s attitude towards the Department of Labour, the SETAs and the employers is callous and unhelpful. In September 2001 the April levy money has not reached the SETAs yet. If the money is paid over to the SETAs the amounts reportedly paid by each employer often has no bearing on the real levy payments made by the employers.

In addition the system is so confusing that thousands of employers paid their money into SETA Zero, a name given to a fund where levy contributions are paid in from employers who did not give a clear indication of which SETA they are affiliated to.

Due to the millions of Rands in SETA Zero, the Auditor General is reluctant to sign off the financial statements of SETAs, even though they have no control over the missing funds.

The money at SARS and SETA Zero should be funding education and training, and thus sustaining providers institutions.

# The SETAs as the distributing agents

SETAs are resorting to all kinds of measures to get rid of the levy money. Mostly this money is not going towards learning, but towards the appointment of Skills Development Facilitators and the handing in of workplace skills plans and reports. How much of this money is actually utilised for education and training is not clear, but judging from reports from providers it is not spent in that area.

SETAs have been very reluctant to endorse training and education with providers who are accredited by other ETQAs, or not accredited at all, due to the systems not being operative. This is unfair discrimination, and leads to unnecessary hardship for provider institutions. Some ETQAs had the good sense to do preliminary evaluation of providers to ensure that they are not supporting the wrong kind of providers, and thus caused no delays in the system.

Then there are the SETAs who rather than support providers, offer courses themselves, despite the fact that they undertook not to do so when accredited as ETQAs by SAQA.

# National Skills Fund for target groups

The National Skills Fund (NSF) is another body sitting on millions of Rands of education and training money. At first the National Skills Authority could not agree on the criteria for paying out funds. These criteria have now been agreed on, but they often cause barriers along the road for both learners and providers.

One example is the idea that NSF funding for the training of assessors is restricted to rural and unemployed persons. Any thinking person will realise that assessors need to have skills before they can become assessors. In addition they need to operate within a system, such as a workplace or educational institution.

The SMME window of the fund seems to be aimed only at NGOs and Community Based Organisations (CBO’s), as the mere mention of small and medium businesses benefiting has the employee bodies up in arms immediately. One such a person (with enormous influence) recently demanded in a meeting that only SMMEs that do not make a profit might be taken into account for NSF funding.

Of course one would like to see NGOs and CBOs benefiting from the fund if they offer the required education and training. It is however necessary to point out that private providers employ more staff and also pay tax, while not being funded by either the state or any other benefactor.

# Challenges to providers

>> Industry and business

A quick survey amongst training organisations that traditionally train in the work place shows clearly that there is a drastic reduction in training in the workplace. Instead of engaging external trainers and providers to do the training, many employers are just playing around with the figures reported to their SETA, in the hope that SETAs will not pick up the deception.

In addition, training managers are too scared to make use of the services of providers that are not accredited (or registered), even though they know full well that some ETQAs have no processes up for doing these services. They therefore put off the training until there is more certainty. Of course, by that time some emerging businesses and SMMEs will have gone under.

The fact that education and training offered in-house in industry also needs to be accredited, and registered has not been properly understood by most involved. Traditionally learning in the workplace takes place through short courses, designed to address the needs as they arise. Provided these courses are standards-based, assessed by a registered assessor and a moderation system is in place, such short courses should be seen as learning programmes.

It seems that bureaucrats are now sitting down to invent a whole new series of regulations for skills programmes which will confuse the providers, and learners even more than they are at present.

>> Government departments

The fact that the 1% of payroll now needs to be budgeted and set apart for training and education purposes is a step in the right direction. Outsourcing of training in government departments needs to be tendered for, and the tendering process is very cumbersome. It excludes emerging businesses, and SMMEs, as the time taken to complete the tendering forms cannot be spared.

The application of affirmative action in awarding education and training tenders is also highly suspect, when the large corporate companies still walk away with most of the contracts. When speaking to emerging black SMMEs in education and training, they are often surprised to hear their white colleagues express an opinion that they will get first bite at these contracts. They are also under severe stress and most of them are not surviving.

>> The effect on learners

Needless to say, the effect on learners is very negative. Time is a very important factor in the training of staff and if competency is not achieved in time, opportunities are lost. Learners lose heart and other interests take over to fill the time they could have spent learning.

It is simply not fair that the money that is obviously meant for training is not made available for that purpose. At present it is swelling the coffers of SARS and the DOL, paid out to the new bureaucrats of the SETAs, engaging plenty of consultants and hundreds of meeting and workshops. But is it actually training and education the workforce?

>> The effect on providers

The vicious circle of reduced learners, reduced reserves, cash flow problems, retrenchment of staff and bankruptcy stares most of the private providers in the face. Whether large or small providers, sustainable income is a prerequisite for any business.

The effects of punitive regulation were very clearly illustrated in the beginning of last year when the Department of Education published lists of providers who were not registered yet. Stocks of the JSE listed ETD companies fell sharply and some have never recuperated.

As the ETD industry shrinks, so do the learning options open to learners, as well as the job opportunities for ex-teachers and trainers who seem to be ousted by government and corporate in their droves.

>> The effect on the economy

The effect of not training on the economy has been pointed out by all and sundry in government, business and providers. We need hardly preach to the converted here. Suffice it to say that skills shortages remain one of the biggest challenges in this country. It leads to losses in foreign investment and low productivity.

A shrinking education and training industry leads to more unemployed people. More is the pity that these unemployed people are those who are skilled to educate and train others. What a waste! Many of these people are forced to go into other occupations or to immigrate to other countries where their skills are well rewarded.

# The role of The Government

SARS should take their role in the levy collection and distribution as seriously as they do their role in other taxes.

The Department of Labour must stop taking up all the time of the SETA staff with reports and business plans, and rather see to the implementation of the real purpose of the SDI.

The Department of Education must stop centralising and controlling and start developing and empowering the provinces and the private sector.

SAQA should play a more central role in protecting the provider from the potential abusing powers of ETQAs and the SETAs.

SETAs must start doing their core business, which is to get the money to providers in order to train and educate. They need to start trusting providers and helping them to improve on the quality of their systems and services.

Education and Training Quality Assurance bodies need to realise that the role of providers is key to the system. They need to start playing a developmental role rather than taking business away from providers and wondering how to spend the levy money, they must open up the system to make it easy for learners to learn and providers to provide.

# What can providers and practitioners do?

>> Practitioners can start to become proactive!

Begin to question the established order of things through your local business associations who are perhaps also out of touch with what is really happening with the implementation of the various Acts(added by Skill Development News Editor).

Universities can start learning from best practices amongst themselves. Start talking to one another and take up the challenges that are thrown out by the Minister of Education. What quality assurance systems are you using to ensure quality service to learners? Are you seeing your learners as clients?

>> As for private providers: Have you joined your lobbying body that is standing up for your rights? Davis Maropane currently chairs the Alliance of Private Providers for ETD (APPETD). APPETD is represented on SAQA, the NSA, many of the NSBs and the HEQC.

Providers need to use the opportunities that are created by the new systems, to make the best of the levy money. They need to ensure the quality of products and services. They need to benchmark against global practices. Present a united front to ensure that providers in general are not treated with undue contempt and are not subjected to unfair legislation and regulations.

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Gary Watkins

Gary Watkins

Managing Director


C: +27 (0)82 416 7712

T: +27 (0)10 035 4185 (Office)

F: +27 (0)86 689 7862

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