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STATE OWN ENTERPRISES’ SUSTAINABLE HUMAN CAPITAL DEVELOPMENT
AND CATALYST OF SCARCE SKILLS: D&T TOR4
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Table of Content
Abbreviations and Acronyms
Executive summary
1. Introduction
2. Background
2.1 Understanding ‘Skill’ and Its ‘Deficiency’
2.2 South Africa’s response to the skills shortage – the first lifecycle
2.3 The second lifecycle – ASGISA, JIPSA and NSDS II
2.4 The third lifecycle – New Growth Path, NSDS III
2.5 The National Skills Accord
3. Problem statement
4. Research questions
5. Method of research
6. Research findings
6.1 Role of government (and SOEs) in the delivery of artisans
6.2 Business approach to training
6.3 Lose of focus on intermediary skills
6.4 Incentives/funding
6.5 Transformation of the industrial relations system
6.6 Department of Public Enterprises (DPE) – Case example
6.7 Establishment of a DPE-SOE Skills Development Forum Steering Group
6.8 Skills Development Assessment Dashboard
6.9 Alignment, Collaboration and Cooperation with other stake holders
6.10 Skills identified for strategic focus
6.11 Department of Water Affairs
7. Conclusion and recommendations
7.1 Conclusion
7.2 Recommendations
Reference
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Appendices
Legislation related to transformation and skills development
National skills strategies and initiatives
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Abbreviations and Acronyms
ANC
ASGISA
BEE
BPO
BRICS
CEO
CESA
CHE
COSATU
CSIR
DBE
DHET
DoE
DoL
DPE
DPSA
DST
DTI
FET
GEAR
HE
HEQF
HRD
HRDS-SA
HRDC
ICT
JIPSA
KBE
MSTF
NAMB
NCOP
NDP
NGP
NHRD
NIPF
NPC
NSDS
NSF
OER
PBMR
African National Congress
Accelerated and Shared Growth Initiative of South Africa
Black Economic Empowerment
Business Process Outsourcing
Brazil-Russia-India-China-South Africa Alliance
Chief Executive Officer
Council of Engineers in South Africa
Council on Higher Education
Congress of South African Trade Unions
Council for Scientific and Industrial Research
Department of Basic Education
Department of Higher Education and Training
Department of Education
Department of Labour
Department of Public Enterprises
Department of Public Service and Administration
Department of Science and Technology
Department of Trade and Industry
Further Education and Training
Growth Employment and Redistribution
Higher Education
Higher Education Qualification Framework
Human Resources Development
Human Resources Development Strategy for South Africa
Human Resource Development Council
Information and Communications Technology
Joint Initiative on Priority Skills Acquisition
Knowledge Based Economy
Medium Term Strategic Framework
National Artisan Moderating Body
National Council of Provinces
National Development Plan
National Growth Plan
National Human Resource Development
National Industrial Policy Framework
National Planning Commission
The National Skills Development Strategy
National Skills Fund
Open Educational Resources
Pebble Bed Modular Reactor
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PFMA
PLP
QTCO
R&D
RDP
SAA
SAACE
SACP
SDA
SAICA
SAQA
SASAC
SCOPA
SETA
SOC
SOE
UN
UNESCO
UoT
US
USAASA
UYF
WIL
Public Finance Management Act
Parliamentary Learning Programme
Quality Council for Trade Occupations
Research and Development
Reconstruction and Development Programme
South African Airways
South Africa Association of Consulting Engineers
South African Communist Party
Skills Development Act
South Africa Institute of Chartered Accountants
South African Qualifications Authority
State Owned Assets Supervision and Administration Commission
Standing Committee on Public Accounts
Sector Education and Training Authority
State Owned Corporation
State Owned Entity
United Nations
United nations educational, Scientific and Cultural Organisation
Universities of Technologies
United States
Universal service and Access Agency of South Africa
Umsobomvu Youth Fund
Work Integrated Learning
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Definition of terms:
Skills: Skills are understood to refer to both qualifications and experience
Skills shortages: There are divergent views about the definition of skills shortages.
‘Skills shortages’ is an amorphous concept that encapsulates many specific
components, but at the heart of the matter is the idea that the demand for certain skills
exceeds supply. In the discourse of labour economics, labour supply refers to the
individuals who participate in the labour market with given endowments of human
capital, whereas labour demand refers to the private and public entities that employ
individuals. Intermediating between these is the set of institutional arrangements that
help form and shape the nexus between labour demand and supply, including
educational institutions in civil society, training providers in the private sector and the
public sector.
Scarce skills: in the vernacular of Sector Education and Training Authority (SETA),
referred to occupations in which there is ‘a scarce qualified and experience people,
currently or anticipated in the future, either (a) because such skilled people are not
available, or (b) because they are available, but do not meet employment criteria.’1 This
shortage might be the due to relative scarcity (i.e. suitable skilled people are available,
but do not meet other job requirement such equity consideration, geographic location
and replacement demand), or absolute scarce (i.e. there are few people, if any in the
country with requisite skills, education and training).
Critical skills: refers to specific skills within an occupations such as numerical skills,
solving problems and communication skills.
Generic skills: including problem solving and learning to learn; language, literacy or
numeracy skills; and working in teams.
Particular occupational skills: required for performance within that occupation .
Priority skills: as a concept refers to the scarce and critical skills that are needed at a
point in time; and will be established through scarce and critical skills identification
processes
Core skills: as a concept are scarce and critical skills that are specific to a particular
organization and more often than not similar to Critical Skills. Core skills are usually
the basis for a competitive edge for an organization.
1
Sector Skills Plan, 2011. Scarce and Critical Skills in the Wholesale and Retail (W&R) Sector. pp124
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Executive Summary
Pre-1994, the education and training capital in South Africa was gratuitously prejudiced
towards furthering white progress. The effort to build and preserve white power gravely
distorted the economy, bringing about excessive capital intensiveness in high-skills white
enclaves juxtaposed to low-skilled native labour.2 While this deliberate under-skilling proved
unsustainable in the long run it remains quite clear that the guiding principle of separate
development denied the majority of South African workers access to formal education and
training.
It is evident that employer commitment to training was minimal, and what training existed was
nowhere near sufficient. The majority of native workers were trapped in low-paying, unskilled
positions, with the unskilled section of the labour market further divided along gender lines.
Moreover, positions and wages were not linked to training, so those workers who did manage
to improve their skills were not rewarded appropriately. In the long run, these ill-conceived
practices resulted in a disparate and unbalanced educational and economic legacy; hence the
colossal skills crisis.
Since the advent of democracy in 1994, South Africa has made significant gains and progress in
overcoming the skills development legacy of its past. But despite this progress, low levels of
skills among the majority of the formerly disadvantaged population and stubbornly high
unemployment rates, especially among youths (age 15-24), still remain one of the country’s
most pressing concerns and greatest impediments towards a better future for all.
Unquestionably, the future prosperity and well-being of a country depends on how well it
educates its citizens. The importance of focused and targeted skills development is a
fundamental ingredient for supporting the development of any country. South Africa’s current
skills development approach has lived through a number of lifecycles yet the shortage of skills
is still visible and stifles economic growth and human social progress.
The government of South Africa has resolved to make reducing employment its priority
concern, and to ensure that every Ministry and Department takes whatever action is possible to
expand job opportunities and build sustainable livelihoods, and enable all South Africans to
contribute to, participate in, and benefit from, that expansion. This must include interventions
2
McGrath, S. (2004). Shifting Understandings of Skills in South Africa: Overcoming the historical imprint of a low skills regime. (S.
McGrath, A. Badroodien, A. Kraak, & L. Unwin, Eds.) Cape Town: HSRC Press.
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to ensure redress of the injustices of the apartheid past and the progressive introduction of free
education for the poor up to undergraduate level.
Given the colossal skills crisis and higher unemployment rate in South Africa, the paper
concludes that the skills development is critical for economic growth and human social
progress. It is a conviction of this paper that the SOEs can play a pivotal role and serve as a
platform and catalyst for advancing the skills development initiatives and sustaining human
capital. Conspicuously, based on the evidence much progress has been made but the SOEs’
have not fully and effectively exploited their potential in the process of sustaining and
developing human capital in this country. State owned enterprises (SOEs) should assist in
achieving transformation measures that will help in the development and provision of relevant
and appropriate skills not only for the SOEs but also for the broader economy.
State owned companies are crucial enablers for government’s participation in economic
activity. They are an important enabler for government to achieve its socio-economic goals.
The responsibility of a state owned company like Transnet is not only to provide rail and ports
infrastructure and ensure that they perform efficiently, but also to ensure that they increase the
participation of people in the mainstream economy. It is the conviction of this document that
the SOEs’ and the DFIs’ should creatively be utilised as key instruments of skills development
and skills transfer.
South Africa suffers from the inability to adequately address its human capital development
needs for a developing economy. As a result, it remains a resources-based economy dealing
with all the challenges related to the external factors such as rand-dollar fluctuations which
impact the economy unfavourably most of the time. Further on, this exposes the economy as it
has failed to develop and retain human capital and concomitant intellectual capital to leap the
country forward into a knowledge-based economy.
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1. Introduction
South Africa’s new dispensation has been faced with the enormous challenges of reintegration into world market as a global economy, while at the same time positioning itself to
realise the high expectation of its populace regarding a successful transition to a more
democratic order. The better life for all, economic growth, employment generation and
income distribution and poverty alleviation were at a top of the agenda of a new South
African democratic order. Within this context, less attention was paid on the skills
development that the new dispensation and the globalisation might need for the country to
gain economic growth and prosperity – sustainable development.
In the late 90s towards early 2000s, the government has unrelentingly intervened with policy
to effect change in skills situation of the country. South Africa’s current skills development
approach has lived through a number of lifecycles yet the shortage of skills is still visible and
stifles economic growth and human social progress. The paper serves as an attempt to provide
a comprehensive picture of the developmental thinking that the skills development imperative
has undergone to date. It also locate the state own enterprises (SOEs) as a platform and a
catalyst for sustainable human capital development.
2. Background
South Africa’s new dispensation has been faced with the enormous challenges of reintegration into world market as a global economy, while at the same time positioning itself to
realise the high expectation of its populace regarding a successful transition to a more
democratic order. The better life for all, economic growth, employment generation and
income distribution and poverty alleviation were at a top of the agenda of a new South
African democratic order.
Within this context, less attention was paid on the skills development that the new
dispensation and the globalisation might need for the country to gain economic growth and
prosperity – sustainable development. In the late 90s towards early 2000s, the government has
unrelentingly intervened with policy to effect change in skills situation of the country. South
Africa’s current skills development approach has lived through a number of lifecycles yet the
shortage of skills is still visible and stifles economic growth and human social progress.
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2.1 Understanding ‘Skill’ and Its ‘Deficiency’
It would be pointless to rally on a debate about ‘skills shortage’ – and interventions thereof –
if there is no lucid understanding of the dimensions this phenomenon takes in. In a nutshell,
the general term ‘skill’ refers to the level of technical education and experience a worker is
inclined to possess; the lack of which, dialectically, implies a shortage. However, ‘skills
shortage’ – often interchanged with scarcity – is a vague concept that encapsulates many
specific components. But at the heart of the matter is the idea that the demand for certain
skills exceeds supply.3
‘Scarce skills’, when framed by the Department of Labour (DoL) and the SETAs’, is defined
to refer to occupations in which there is “a scarcity of qualified and experienced people,
currently or anticipated in the future, either (a) because such skilled people are not available,
or (b) because they are available but do not meet employment criteria.4 Scarcity of skills is
primarily a result of either absolute or relative scarcities. Hence absolute scarcity refers to the
absence or shortage of suitably qualified individuals, for instance engineers in South Africa.
Contrary, relative scarcity refers to a situation where suitably skilled people exist, but do not
meet other employment criteria, like geographical location or economic equity.5
‘Critical skills’ refer to specific technical knowledge and experience within an occupation.6
Nonetheless, skills shortage is not solely about scarce and critical skills and therefore the,
notions of ‘skills shortage’ should appreciate the concept encompasses everything from the
most complex qualifications to the most basic. And that ‘skills development’ is needed across
occupation level and trade i.e. training different people at different stages of their trade cycle.
2.2 South Africa’s response to the skills shortage – the first lifecycle
In 1995, government officially responded to skills impasse with the publication of a White
Paper on Education and Training, and the South African Qualifications Authority Act; made
provision for the establishment of an NQF. In the new dispensation; the skills development
environment was enabled by at least three policy documents:
the Cosatu PRP document (1993)
the Skills Development Act (1998), and
3
Daniels, R. C. 2009. Skills Shortages in South Africa: A Literature Review. Development Policy Research Unit. Cape Town:
Uviversity of Cape town.
4
Department of Labour, 2007. Scarce and Critical Skills. Pretoria: Department of Labour.
5
Ibid 5
6
Ibid 5
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the National Skills Development Strategy NSDS1 (2001).
the Human Resource Development (HRD) Strategy (2001)
2.3 The second lifecycle – ASGISA, JIPSA and NSDS II
The ASGISA document – like all other government policies on development – categorises
skills shortages as a priority along other five constraints. Accordingly, skills shortages have
long been a contributory factor in the growth stubbornness of the economy as structural
unemployment (the possession of non- priority skills by the unemployed) impedes economic
productivity and poverty reduction.7 The policy has two broad imperatives; the first relates to
economic growth and the second is geared towards unemployment and poverty reduction.
JIPSA was initiated as an intervention not as an institution to coordinate and implement the
operational strategies of ASGISA. The initiative was created to enable a multi-stakeholder
working group through which government, business and labour would join forces to fast-track
the provision of priority skills required to support accelerated and shared economic growth
for the country.8 JIPSA instead of being too general and rampant it remained focused on
areas identified within ASGISA, hoping that once skills had been created in these areas they
would be unleashed into the rest of the economy. The intervention identified the following
five skills clusters for urgent attention:
High level, world class engineering and management skills for the “network industries
– transport, communication and energy”.
Town, city and regional planning and management skills.
Artisanal and technical skills, with priority attention to infrastructure development and
other areas of FET provision in strong demand in the labour market.
Management and planning skills in education and health.
Mathematics, science, ICT and language competence in public schools.9 (Mantashe,
2006).
Though these were the cumulative areas of urgent attention, there was recognition that some
would be easily attainable relative to others. As such the intervention further devised a
package of key deliverables in the short term. These comprised of artisanal and technical
skills. These would be delivered through three overarching training pathways:
7 SANGOCO.
2006. ASGISA. Available at: http://www.sangoconorthwest.org.za/ASGISA.htm. [Accessed 12 December 2011].
EDC. 2007. Promoting Relevant Education & Training for Employment: Youth Development & Education in South Africa's FET
College Sector. USAID Education Development Center. Newton, MA: USAID.
9 Mantashe, G. 2006. FASTRACKING JIPSA: DELIVER CRITICAL SKILLS. Johannesburg: Development Bank of South Africa.
8
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Apprenticeships programs
Learnerships
Section 28 artisans
Whilst there were targets set and resources dedicated to this intervention – as with the first set
of interventions – what appeared different now was the explicit commitment to a state-led
economic growth approach. It was an action which illustrated commitment to the national
agenda of development and a level of autonomy on behalf of government.
However, some argue that this formed part of a response to pressures from industry and not
so much from the need to address concerns of the most vulnerable. Nonetheless, unlike
before, government had committed to lead the skills revolution and not to the exclusion of
business but rather at a united strategic level.
The revised NSDS (NSDS II) – which itself was influenced by objectives of ASGISA and
JIPSA The object of the second phase arose out of lessons learned from NSDS1 and also from
a reorientation of macro policy to accommodate the aims of the new national development
strategy; ASGISA. Most notably, it was hinged on dealing with the structural boundaries
which separate the under-developed informal economy from the more advanced formal
economy.10 It hoped to introduce a set of major socio-economic reforms which would impact
positively on the employability and livelihoods of the poorest and most vulnerable sectors of
society. Five key objectives were identified:
Alignment of all skills development activity with the economic growth, job creation
and poverty alleviation policies of government.
Improvement of critical skills at three levels: advanced, intermediate and entry-level
skills.
The deepening, consolidation and expansion of enterprise training in the large, medium
and small enterprises of the formal economy.
The expansion of social development initiatives particularly with regard to the training
of the unemployed, the provision of Adult Basic Education and Training (ABET) to
adults requiring such up skilling, support for the Expanded Public Works Programme
(EPWP), and the development of SMMEs.
The promotion of quality training across all sectors and institutions (public and
private).
10
EDC. 2007. Promoting Relevant Education & Training for Employment: Youth Development & Education in South Africa's FET
College Sector. USAID Education Development Center. Newton, MA: USAID.
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The aim was to refocus attention on broader interventions and not only on learnerships –
which became the main focus during NSDS1 and were now seen as the primary vehicle for
developing skills. Others areas of intervention included the prioritisation of scarce and critical
skills, efforts to build relations between SETA and institutions for occupational excellence,
especially FETs and an attempt to begin to measure the impact of SETA interventions.11
2.4 The third lifecycle – New Growth Path, NSDS III
The NGP is premised on a consensus that creating decent work, reducing inequality and
defeating poverty can only happen through a broad approach founded on the restructuring of
the South African economy; so as to improve its performance in terms of labour absorption as
well as the composition and rate of growth.12 Most significant about the NGP is its reapproach
to national development, in particular the direct outlook it employs towards the achievement
of a development state.
Government has committed itself through the NGP to provide bold leadership, imaginative
and effective strategies to create the millions of new jobs the country needs. Also, lay out a
dynamic vision for how we can collectively achieve a more developed, democratic, cohesive
and equitable economy and society over the medium term, in the context of sustained growth.
At the same time the reiteration of need for novel, creative and collective efforts of all
sections of society to assures the realization of a developmental state.
Succinctly, the aim of this policy shift is to target capital and capacity at activities that
maximise the creation of decent work opportunities. This necessitates the use of both macro
and micro economic policies to create a favourable overall environment and to support more
labour-absorbing activities. The main indicators of success will be:
Jobs (number and quality),
Growth (rate, labour intensity and composition), and
Equity (lower income inequality and poverty)13
The NSDS III it is assumed that is framed in this policy shift (NGP). At the core, NSDSIII
will thrive to improve the effectiveness and efficiency of the skills development system. The
strategy represents an explicit commitment to encouraging the linking of skills development
to career paths, career development and promoting sustainable employment and in-work
11
Grawitzky, R. 2007. Setas – A Vehicle for the Skills Revolution? Cape Town: Development Policy Research Unit.
12
Edigheji, O. 2010. Constructing a democratic developmental state in South Africa: potential and challenges. In O. Edigheji (Ed.),
Constructing a democratic developmental state in south africa (p. 1). Cape Town: HSRC Press.
13 Ibid 12
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progression. The focus is directed at those who do not have relevant technical skills or
adequate reading, writing and numeracy skills to enable them to access employment.
In ensuring delivery on these objectives, the strategy promotes partnerships between
employers, public education institutions (FET colleges, Universities of Technologies and u
Universities), private training providers and SETAs, to ensure that a network of needs is
addressed and that there is a huge support base for delivery. The core objectives of the NSDS
III have been translated into eight strategic objectives that are to be attained:
Establishing a credible institutional mechanism for skills planning.
Increasing access to occupationally-directed programmes, both intermediate level as
well as higher level professional qualifications.
Promoting the growth of a public FET college system that is responsive to sector, local,
regional and national skills needs and priorities.
Addressing the low level of youth and adult language and numeracy skills to enable
additional training.
Encouraging better use of workplace-based skills development.
Encouraging and supporting cooperatives, small enterprises, worker-initiated, NGO and
community training initiatives.
Increasing public sector capacity for improved service delivery and supporting the
building of a developmental state.
Building career and vocational guidance.
The NSDS III will be measured against, and guided, by the same developmental and
transformation imperatives as the previous strategies, only with an addition of two others;
geographic considerations and the HIV/AIDS pandemic.14 According to Nzimande, this new
approach will ensure a broader coverage of skills development in all key sectors of the
economy, and further guarantees that each SETA is located as close as possible to its relevant
economic sector.15 It is important to note that the emphasis on closeness to ‘relevant economic
sector’ can, evidently, be traced to pronunciations made in the NGP and IPAP2.
The role of skills development is central – but anticipating what skills will be needed, and
when, is no easy matter. Careful planning is needed to support the human development needs
14
Hammond, A. 2011. Minister Blade Nzimande Introduces NSDS 3. Available at: http://www.skillsuniverse.com/forum/topics/minister-blade-nzimande?commentId=2671568%3AComment%3A86618. [Accessed 02 January 2012].
15 Nzimande, B. 2010. Press briefing by the Minister of Higher Education and Training on the launch of the National Skills
Development Strategy (NSDS) III. Available at:
http://www.info.gov.za/speech/DynamicAction?pageid=461&sid=15635&tid=26727. [Accessed 10 December 2011].
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necessary to fuel our inspirational growth path NSDS III.16 SOEs through dedicated human
resources and skills development initiatives should contribute to the achievement of the
country’s new economic growth and social development goals. These are embodied in the
new Medium Term Strategic Framework’s strategic priorities, which are:
Speeding up growth and transforming the economy to create decent work and
sustainable livelihoods
Massive programme to build economic and social infrastructure
Comprehensive rural development strategy linked to land and agrarian reform and food
security
Strengthen the skills and human resource base
Improve the health profile of all South Africans
Intensify the fight against crime and corruption
Build cohesive, caring and sustainable communities
Pursuing African advancement and enhanced international cooperation
Sustainable resource management and use
Building a developmental state, including improvement of public services and
strengthening democratic institutions MSTF 2014.17
Given the importance of skills and capacity development, the Constitution of the Republic of
South Africa, section 195 (1) (h) and (i) sets the foundation of the regulatory framework
which enables mechanisms for development of skills of employees in the Public Service. The
provisions are articulated as follows:
(1). Public administration must be governed by the democratic values and principles enshrined in the constitution,
including the following principles:
(h). Good human resources management and career development practices to maximise human potential, must be
cultivated
(i). Public administration must be broadly representative of the South African people, with employment and
personnel management practices based on ability, objectivity, fairness and the need to redress imbalances of the
past to achieve broad representation
(2). the above principles apply to –
(a). Administration in every sphere of government
(b). Organs of state
(c). Public enterprises
16
Framework For The National Skills Development Strategy 2011- 2016 ; First Draft for Consultation, 29th April 2010.
Together Doing More and Better: Medium Term Strategic Framework. A Framework to Guide Government’s Programme in the
Electoral Mandate Period (2009 – 2014)
17
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These provisions are further amplified in amongst others the Skills Development Act, 1998,
the National Skills Development Strategy (NSDS).18 The issue of human resource
development and skills development as a fundamental requirement for effective management
and service delivery by the state and its organs is enshrined in the constitution. SOEs should
serves as active platforms for delivering on the constitutional requirements as articulated in
support of a democratic developmental state
South Africa, like many developing countries, particularly its recently acquired partners, the
BRIC countries, is finding itself with myriad of challenges. As an economic giant in Africa
with a relatively small country of 50 million citizens compared to its counterparts like China
and India with each one topping a 1 billion people, it has to set pace for developing not only
its economy but mainly its people.
The legacy of South Africa has saddled the government with a responsibility of closing the
gap between the races in terms of both the wealth gap as well as in terms of human capital
development. The South African government has to deal with a wide range of backlog issues;
the National Development Plan refers to these as central challenges: NDP19
a)
b)
c)
d)
e)
f)
g)
h)
i)
Too few people work
The standard of education for most black learners is of poor quality
Infrastructure is poorly located, under-maintained and insufficient to foster higher growth
Spatial patterns exclude the poor from the fruits of development
The economy is overly and unsustainably resource intensive
Widespread disease burden is compounded by a failing health system
Public services are uneven and often of poor quality
Corruption is widespread
South Africa remains a divided society
The National Development Plan emphasises the fact that the country need to address the
identified issues in order to drive economic growth and overall citizen prosperity. The plan
further postulate that failure to address a these challenges is likely to result in economic
decline, failing living standards, rising competition for resources and social tension. This
country’s development path has to be sufficiently broadened to create inclusive opportunities
particularly emphasising the previously disadvantaged, including women and youth. It is in
this vein that the crucial and important role of SOEs in human resource and skills
development is envisaged.
18 Constitution of
19
the Republic of South Africa,
National Development Plan 2011
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Furthermore, the ANC Economic Policy document issued for discussion, indicate that there is
a need to “position SOEs, state departments and other agencies to assist graduates from the
tertiary education system, in cases where the private sector is unable to do so. This will
require a focused planning and co-ordination function within the Economic Cluster, which
should link with social partners at Nedlac, to deal specifically with national human resource
flow planning economic transformation ANC.20
This policy discussion paper further propose that full utilization of the training space within
the public service and expansion of the intake of interns into the public service, especially
municipalities and State Owned Entities (SOEs) be prioritized. The importance and
significance of SOEs as a platform for sustainable human capital development and a catalyst
for scarce skills in a developmental state is frequently emphasised by various stakeholders in
government and society in general. The constitution of the country offers the strongest voice
and opinion in this regard. It is important therefore that an overarching strategy for SOEs
should give unequivocal articulation on matters of human resource and skills development.
Clear guidance should be given by government as shareholder in the mandates of SOEs.
In 1970s, for instance; 27% of the economically whites, mostly Afrikaners were said to have
been employed by the state and its SOEs. In 1976 the figure escalated to 60%. Government
then used the SOEs as instruments to action programmes that facilitate economic
empowerment of its political constituency”. Those who could not make it in the private sector
were employed in the state sector. As part of their empowerment they were exposed to
apprenticeship and artisan training programmes, which enabled them to acquire skills that
made them marketable in the labour market.21
Succinctly, the apartheid government model of the SOEs, points clearly that the mandate was
discriminatory, it was defined to benefit the select minority community whilst reinvesting in
the economy. There seems to have been a focus on social, political and economic imperatives
of entities the state owned then compared to privately owned companies that respond to
market forces. Against the historical backdrop, it is clear that on the human capital
development side, South Africa stands an opportunity to redefine the role of its SOEs as a
training ground for many of the skills the knowledge-based economy requires on a continuous
basis.
20
Economic TransformationPolicy Discussion Document March 2012
21
Maserumule 2011
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As a democratic nation, South Africa therefore found itself not only having to deal with the
legacy of “Bantu” education and the skills shortages. But also with the too few workers with
adequate technical skills, resultant to skills supply not matching the skills demand. This
contradiction is known as the mismatch between labour demand and supply.
The growing complexities of the workplace have placed the question of HRD at the heart of
contemporary public policy and development strategies. Developments in the global context
make it imperative for all countries to respond effectively to the dynamic and competitive
forces that impact on how national economies relate to the global economy.”22 The growing
percentage of wealth in the world’s largest economies is created by knowledge-based
industries that rely heavily on human capital and technological innovation.
The Department of Science and Technology (DST) supported by other governmental
departments [mainly the Department of Education] aims to lead a programme of interventions
over the next decade to drive South Africa’s transformation towards a knowledge-based
economy. The knowledge-based economy rests on four interconnected and interdependent
pillars:
- Human capital (education)
- Knowledge generation and exploitation (R&D/ Innovation)
- Knowledge infrastructure (information)
- Enablers to address the ‘innovation chasm’ between the research results and socioeconomic outcomes (economic and institutional infrastructure)23
The SOEs’ as economic engines for a developmental state are seen as a relevant platform to
support the knowledge based economy objectives. SOEs shall play a pivotal role in relevant
human resources development
2.5 The National Skills Accord
In 2011, representatives of business, organized labour, civil society and government have
agreed to a partnership of achieving objectives of the New Growth Path. The parties in
signing the accord agreed on eight key areas
- Expand the level of training using existing facilities
- Make internship and placement opportunities available within work places
22
23
HRD-SA 2010-2030
DST, 2008 piv, p3
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- Set guidelines and ratios of trainees: artisans as well as across the technical vocations to
-
improve the level of training
Improve funding of training and the use of funds available for training as well as the
use of incentives for companies to train
Set annual targets for training
Improve the governance, financial management as well as stakeholder involvement for
SETA’s
Align training to national imperatives
Improve the role and performance of FET Colleges
The accord underscores the importance of human resources coordination, collaboration,
partnerships and the realisation that more can be achieved by working together. It is also a
good driver for a consolidated approach to national development imperatives. The SOE’s can
be effective platforms in an environment where there is collaboration and co-ordination. The
role played by the Department of Higher Education of coordinator is crucial to align all other
stakeholders including the SOEs. The Human Resources Development Strategy 2010-30
should be a guide through which various stakeholders navigate the skills development terrain.
3. Problem statement
South Africa’s current skills development approach has lived through a number of lifecycles
and yet the colossal skills crisis in South Africa is widely acknowledged. The Terms of
Reference (ToR) is about the review of “State Owned Enterprises (SOEs) as a platform for
sustainable human capital development and a catalyst for scarce skills”. This is invariably
requiring to review and the assessment of whether the current SOE practices serve as a
platform for sustainable human capital development and catalyst for scarce skills or not in a
developmental state –South Africa.
4. Research questions
The primary question to be answered is whether the State-owned Enterprises including DFI’s
serve as a platform for sustainable human capital development and a catalyst for scarce skills
in a developmental state? Subsequently, the following auxiliary questions will be addressed:
Are there any clear articulated skills development objectives for the SOEs?
Are the skills development objectives aligned with the country’s national
development imperatives?
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Is there a clear process or approach for shareholder oversight to contract on human
resources and skills development strategies as well as plans?
Is monitoring and evaluation of the Human Resource Development (HRD) and skills
plans formalised, tracked and impact reported upon?
What is the level of coordination and collaboration across various shareholding
departments, policy ministries as well as amongst the SOEs to ensure the coordinated
delivery on the national objectives?
What interventions required to ensure that the HRD and skills plans optimally meets
the country’s skills needs as well as developmental imperatives?
What support (financial and otherwise) will be required by the SOEs to efficient
advance and to become the role players’ human resource development?
What can be gleaned from of SOEs’ historical perspectives in developing human
capital and scarce skills?
What has worked and what has not?
5. Method of research
In carrying out this paper, the hybrid method was adopted although it is predominantly
extensive literature review. Desktop research on various policies related to the skills
development landscape, TOR was undertaken. Also, a further review and analysis of
documentation provided by various participating parties; these include previous reports and
various piece of strategies was undertaken and public submission was invited and considered
Key informant interviews were carried out to collect information relating to the subject. The
key informants were drawn from various entities of the SOEs. Structured and semi-structured
key informant interview guides capable of allowing flexible discussions, issue-focusing and
probing were used. This enabled the collection of multiple perspectives on the subject.
In addition, other entities and individuals came forward voluntarily to share their perspectives
with the Presidential Review Committee (PRC). The work stream also commissioned papers
from selected experts. Lastly benchmarking exercises as well as policy dialogues were
conducted. The work stream met frequently to discuss the key observations arising from the
review. In this report, a combination of both less structured and formal techniques of data
collection techniques and some sources are employed.
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Data Collection Methods and Instruments
Data Collection
Method &
Instruments
Both Formal and
Less Structured
Interviews
Literature Review
Review of the Official Documents,
Policies, ToRs and Strategies and
Research Papers
One-time
Survey
Key Informants & Public
Submissions
Questionnaires
6. Research findings
The state is a product of and is embedded in society, and represents a site of interest
articulation, aggregation and realisation by social forces24. As such, the state cannot be
detached from society, but rather advances group interests in tandem with the national
development agenda. It is within this outlook that the crafting of the legislative framework on
skills and the role of the SOEs as a catalyst and their role in advancing and sustaining
development of human capital is considered. This section presents the results of our findings.
The single greatest contributors to poverty are unemployment and low paid work.
Government’s position is clear: the new development and growth path for South Africa
requires the participation of all economically active South Africans in productive activity.
Government’s policy levers to achieve faster growth, higher employment and reduced levels
of poverty include skills development which must assist not only support the formal private
sector growth but also labour-intensive industries, infrastructure investment, public service
delivery and rural development. Quality education and training is needed at all levels.
The findings show that the role of skills development is central – but anticipating what skills
will be needed, and when, is no easy matter. Careful planning is needed to support the human
development needs necessary to fuel our aspirational growth path NSDS 2016.25 The SOEs
through dedicated human resources and skills development initiatives should contribute to the
achievement of the country’s new economic growth and social development goals.
24
25
Adjumobi, A. O. 2011. State, Economy, and Society in Post-military Nigeria. Logos: Nigeria
Framework For The National Skills Development Strategy 2011- 2016 ; First Draft for Consultation, 29th April 2010
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The SOEs should be the breeding ground for the human capital development in this country
complemented by the private sector. Evidently, pre-1994 the government of then; had used
SOEs as training ground for minority White people the table below provides racially
classified figures from 1977-1981. In 1977 there were no Blacks registered as apprentices. Of
the 10527 indentured apprentices in 1980, 8568 were White (81%), 1406 were Coloured
(13%), 471 were Asian (4%) and 82 were Black (0.8%).
Apprentices registered: 1977-1981 HSRC26
Apprenticeships
1977
1980
1981
W
A
C
B W
A
C
B
W
A
C
B
10066
871
323
-
1406
471
82
9232
1595
645
495
8568
W= White; C= Coloured; A= Asian; B= Black (African)
6.1 Role of government (and SOEs) in the delivery of artisans
In the past, the state played an active role in the supply of artisans whether it was through the
SOEs or national government departments such as the Defence Force. These interventions
coupled with the funding of training facilities, incentives and the importation of skills where
necessary, contributed towards the building of a strong skills base recognising although that
the opportunity was reserved for the minority sector of the South African population. Aside
from these direct interventions, government provided an enabling environment for the
training of artisans. What remained an area of critical concern critical concern was the issue
of relationship and collaboration between the involved government departments to coordinate
efforts of delivering the required skills for the economy. Even to date, the government
through the SOEs can provide a training ground for the scarce skills such as artisans and
others.
6.2 Business approach to training
Reviews reveal that business got rid of the expense for training artisans seeking to shed off
cost of paying for skills. It has been seen as a short-sighted move as training is at best a
collaborative effort between interested and concerned stakeholders.
26
Research Consortium, Artisans and Trades 2008 : Scarce and critical skills Research Project, Human Sciences Research Council
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It is not just a responsible thing to do but it is also the right thing to do. The country’s history
reveals that it has for extended periods in the past during boom periods resorted to importing
skills as a stopgap.
In the future, this option might prove increasingly more difficult in view of the global demand
for artisans. It should be noted that whilst in the past, South Africa was only an importer of
skills; this is no longer the case, it is also an exporter of the very scarce skills; artisans are
currently working on projects in Russia, China and the Middle East while others have
immigrated to Australia and elsewhere. These developments could impact on the costs of
doing business in SA
6.3 Lose of focus on intermediary skills
The current artisan shortage has been exacerbated by the fact that a large number of the
learnerships that were initiated from 2001 were at the lower (NQF 1) rather than intermediary
skills levels. This as such did not benefit SOEs much as most of their skills requirements lie
in the intermediate and high level skills. This might partly be a result of a drive by
government to meet specific targets to employ unemployed youth and for redress. The NQF 1
learnerships were bridging learnerships, which is critical if workers, previously denied access
to training, could have the opportunity of moving up the skills ladder. This did not however,
address scarce or critical skills needs. A balance needs to be achieved between redress
learnerships and skills interventions at the intermediary and higher end of the skills spectrum.
6.4 Incentives/funding
These have worked at different points in time and should be reviewed if industry is expected
to actively participate in the training of artisans beyond its immediate needs. This is equally
true for SOEs. Alternatively, the National Skills Fund should be restructured so as to provide
funding for specific projects relating to the training of scarce and critical skills needs.
6.5 Transformation of the industrial relations system
Many of the changes outlined above such as those related to growth of labour hire and
increased outsourcing of functions have been facilitated by reduced union influence in the
workplaces, the broader deregulation of the labour market and changes in the industrial
relations system. In turn, these changes to the industrial relation system have also contributed
to the decline of the apprenticeship system. Sustained cooperation amongst all relevant
stakeholders is required in the provision of specific and general skills in the economy.
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It is argued industry wide coordination is essential if workers are to be encouraged to invest in
acquiring these industry specific skills. The existence of a recognised occupational labour
market for these skills, established career paths and comparability of wages across firms
encourages uptake for training.
In the context of a developmental state, SOEs should play their part in skills development,
transformation, and other such imperatives. The challenge to deal with complex areas such as
balancing of the commercial and non-commercial interests of SOEs, issues which are
universal, global structures such as the Organisation for Economic Cooperation and
Development (OECD) countries continue to grapple with similar complexities
6.6 Department of Public Enterprises (DPE) – Case example
Reviewing literature, DPE as a shareholder of several state owned entities, depict some
positive approaches that can be adopted by SOEs to respond to National Development Goals
relating to skills development. Recent developments in the Department of Public Enterprises
reflect a good attempt to ensure alignment with the SOEs’ plans to national development
imperatives. The developments further reveal that intentional efforts are made to foster better
collaboration of the states skills development role players. The following are some of the
noticeable developments:
6.7 Establishment of a DPE-SOE Skills Development Forum Steering Group
(DPE- ESDA)
The DPE-SOE Skills Development Forum is an important component for both the DPE and
SOE whereby common skills related interventions can be discussed. The DPE ESDA was
initially established to facilitate partnerships between relevant government Departments,
SETAs and SOE and their suppliers, with the aim of increasing the national pool of certified
artisans available to meet the needs of the industries. The role of the ESDA has been
expanded to include facilitation and coordination of development of skills of engineers,
technologists, technicians, artisans and other sector specific scarce and critical skills related
occupations. The ESDA in its function focus on various activities aligned to the national
skills development initiatives including monitoring and evaluating the following key result
areas linked to SOE shareholder compacts:
Sufficient skills acquired within each SOE
Sufficient skills acquired within the SOE supplier network linked to the infrastructure
investment programmes.
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As a consequence the DPE-SOE Skills Development Forum will ensure:
Priority scarce and critical skills identified be each SOE are attached to the shareholder
compacts singed annually with the Minister
Skills development interventions are aligned to the broad national human resources
development programme.
A coherent and coordinated approach towards participating and supporting the national
skills development age
DPE explain that the scope of the forum is
To establish process for the identification of priority scarce and critical skills.
To implement plan to ensure sustainable monitoring and evaluation supporting system.
To encourage and share best practices to improve effective reporting.
To engage on processes to support national human resources development initiatives.
To maintain sustainable partnerships within and with other stakeholders to ensure
support to national skills development initiatives
The establishment of the forum gives a good example of a shareholder manager who seeks to
give clear guidance from an oversight perspective on what the owners requirements are in
terms of human resource and skills development. The intervention creates a natural platform
for SOE collaboration and cooperation. Furthermore the participating entities shall reap the
benefit of peer exchanges. The platform also offers structured and direct engagement with the
shareholder manager. There are clear intentions to update mandates and to ensure that
performance indicators are clearly articulated to all stakeholders. Overall, there is a
transparent platform for ensuring alignment with national developmental goals.
6.8 Skills Development Assessment Dashboard
DPE has developed a skills development assessment Dashboard. The purpose of the
dashboard is to create a tool through which the Shareholder Manager can effectively conduct
tracking trends, monitoring and evaluation of the SOE skills development programme as well
as aligning such programmes to the national development imperatives. The information shall
also inform the planning and collaboration of other critical stakeholders’ e.g. DHET skills
development activities are monitored by DPE team in terms of the following facets:
Scarce and Critical skills within each SOE
Scarce and Critical skills within the supplier networks linked to the infrastructure
investment programmes and maintenance programmes
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SOE performance oversight is critical, the development and an implementation of an
instrument such as the dashboard ensure that SOEs operate in such a way that they achieve
and realize their mandates and business objectives. A performance criterion is also made open
and transparent.
6.9 Alignment, Collaboration and Cooperation with other stake holders
Towards the end of 2010 – The New Growth Path (NGP) key priorities were presented in
the SOC Chairperson’s Forum to solicit support for the national agenda. DPE as
Shareholder manager took the responsibility to create awareness as well as to give
guidance with regards to the expectations they had from an oversight perspective
In early 2011, SOE’s made commitments for implementation over a period of five years
to support the NGP. Subsequently, DPE engaged SOC to ensure clear articulation of these
commitments and translation into Shareholder Compacts:
 SOE skills commitments were incorporated into the National Skills Accord thus
Shareholder Compacts indicators should be aligned accordingly.
 During 2011, the NEDLAC Social Dialogue process comprising of Business,
Organised Labour, Community and Government concluded four Accords for
implementation by social partners.
6.10 Skills identified for strategic focus
In the current Strategic Plan 2011-2014, the following priority areas have been aligned as
follows:
Contribution to the New Growth Path
Skills Development
Transformation
Youth Development
Procurement Leverage
Driving the African Agenda
Local and Provincial Economic Development
Positive progress is registered by DPE as the shareholder manager for a significant number of
SOEs:
Agreement on primary skills to be focused upon aligned to national development goals
Five year targets made by SOC to support NGP
NGP targets translated by SOC for inclusion in Shareholder Compacts
SOC targets incorporated in National Skills Accord.
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Collaboration between DPE and DHET established to optimize SOC training facilities
to train additional artisans for the national pool.
Coordination and collaboration between SOEs in the portfolio
Structured reporting and accounting by SOES
Track, monitor and evaluate progress
6.11 Department of Water Affairs
The Water Sector Leadership Group (WSLG) Skills Development Task Team27 was
established in order to explore the phenomena of:

Skills gaps and skills shortages in the South African water sector.
 The observation of an aging workforce while there are insufficient young people
coming through the system,
 Reported failures on guided learning,
 multitudes of interventions currently underway causing fragmentation
(“uncoordinated skills development initiatives that waste resources”)
The strategic objectives focus on engineering, management, socio-economic and artisan
skills, and looks at occupational learning (or workplace learning).
Attempts are made to quantify skills shortages and gaps, give reasons for the existence of
these skills shortages and gaps and outline recommendations to address them.
Information and recommendations is used by WSLG and the water sector as a whole to
address the problems of skills gaps and shortages in a holistic, integrated and coordinated
manner.

The Department of Water Affairs’ (DWAs) developed Education and Training
Strategy, which calls for a coordinated approach.
The following reflects upon a summary of the water sector interventions;
a) A comprehensive coordinated approach that to provide major benefits to water sector
employees and employers, communities and the country is recommended.
b) Rationalise and clarify roles based on the developed long term 2020 Human
resources Development Plan
c) Sector Coordination - The main role of all water sector stakeholders involved in skills
development is to take part actively in the WSLG Skills Development Task Team,
27
Report of the Water Sector Leadership Group Skills Development Task Team : A Coordinated Approach to the Water Sector
Skills Crisis
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ascribe to the plans made and conduct their own skills development activities in
accordance with these plans, objectives, KPIs, etc.
d) Addressing engineering skills
 Confirming immediate sector needs
 Meeting immediate water sector needs
 Focus on gender issues.
e) Focus on Management Skills- Despite the array of available degrees and
qualifications in “management”, practice has shown that management skills are
generally not acquired through formal education or a degree – rather through
experience. It takes time and deliberate effort to develop them sufficiently.
f) Artisans/technicians : a deliberate effort for accelerating training of artisans is focused
upon
Short term and immediate response :
 The Development Bank of Southern Africa (DBSA) through Siyenza Manje
has launched Artisan Programme for 16 low-capacity municipalities
 ESETA to define the trades that are critical to Water Sector and for which the
ESETA and Water Sector should become training custodians (Rigorous
artisan programmes need to be redeveloped).
 ESETA should speed the registration of the water sector trades with the
department of labour before the closing date which is next year April 2010.
Long term responses
 Identify and accredit training centres for trade test and support this system
 The sector needs to develop a national plan for career awareness among
schools
 Partnership between FET Colleges and SETAs should be established to ensure
that learners who successfully complete their diplomas can acquire workplace
experience for trade tests.
 Lastly, Identify experienced artisans to be registered as trade test assessors a
g) Funding – ensure that there is funding for the planned human resources and skills
development plans
h) Making the sector attractive for recruitment and retention
i) Develop a Skills Intelligence and Tracking Unit – ensure that responsibility for
reporting and accounting to the on the Human Resources Development Strategy in
the water sector is adequately supported.
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Like the DPE case example, it is clear that development of a sound human resources and
skills development response requires
Intentional leadership by the shareholder management department
A focused medium to long term plan aligned to sector needs as well as national goals
A collaborate and coordinated approach within and across various stakeholders
Clear identification of needs and gaps to be addressed, this should be confirmed by
stakeholders concerned
Development of relevant training interventions as well as confirmation of targets
Clear accounting framework as well as monitoring and evaluation systems
6.12 Are there clear articulated skills development objectives for SOEs?
It is evident that there are great efforts from various state stakeholders to define and articulate
skills that are required to drive development and economic development in the country. These
are evident in the skills priorities identified by shareholder ministries (i.e. Departments of
Public Enterprises and Water Affairs selected as examples in this paper) as well as policy
ministries such as Economic development identifying new economic focus sectors and related
skills gaps.
The Department of Science and technology also contributes to the broad focus articulation by
sharing the Ten- Year Innovation Plan which highlights the five Grand Challenges. The
Department of Higher Education is also emerging strongly and coordinating various efforts
for human resources and skills development. The Human Resources Development Strategy
2010-30 should be a catalyst guide through which various efforts are advanced in skills
revolution in this country.
6.13 Are the skills development objectives aligned with the country’s national
development imperatives?
The departments of Public Enterprises and Water Affairs, for example; are becoming more
and more aligned with the national development imperatives. Furthermore, efforts such as the
National Skills Accord and the establishment of the Skills Forum champions by the
Department of Higher Education and Training will positively drive stakeholders towards
better alignment with national imperatives. The engagement with the shareholder
management approaches to develop and foster alignment for delivery and performance is
paramount.
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6.14 Is there a clear process or approach for shareholder oversight to contract
on human resources and skills development strategies as well as plans?
There certainly is a lack of a standard approach in the manner in which shareholder
management portfolios approach matters of oversight with regards to entities delivering on
the Human resources and skills development remit. There are emerging best practices such as
the shared experiences of DPE and Water Affairs that can be further developed as
benchmarks:
Agreement on primary skills to be focused upon aligned to national development goals
Five year targets made by SOC to support NGP
NGP targets translated by SOC for inclusion in Shareholder Compacts
SOC targets incorporated in National Skills Accord.
Collaboration between departments and DHET as coordinator
Coordination and collaboration between SOEs in the portfolio
Structured reporting and accounting by SOES
Track, monitor and evaluate progress – the Skills Development Dashboard
6.15 Is monitoring and evaluation of the HRD and Skills plans formalised, tracked
and impact reported upon?
It has been discovered that there is significant inconsistencies exist in this regard. There are
no recorded standard approaches for tracking, monitoring and evaluation. It is further noted
that even in areas where compliance was utterly required such as compliance to the BBBEE
as the government’s codified policy for transformation, the SOES could elect whether to
comply or not and were not even required to submit reports. The BBBEE amendment Bill is
now going to make reporting and accounting compulsory for all public entities. This will also
includes the skills performance indicators in the shareholder compacts and it is a necessary
practice that needs to be encouraged
6.16 What is the level of coordination and collaboration across various shareholding
departments, policy ministries as well amongst SOEs to ensure coordinated delivery on
the national objectives?
The observation is that this is an area that is experiencing positive development:
The co-ordinating role played by the DHET it has been seen as the long term HRD
strategy
The development of a skills development Green paper
The development of a skills development forum in which multiple departments participate
The development of focused overarching legislative framework for skills development
The ardent of the National Skills Accord
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The amendment of the BBBEE code with clearer guidance and accounting enforcement
6.17 What interventions are required to ensure that HRD and Skills plans optimally meets
the country’s skills needs as well as developmental imperatives?
Need for strategic leadership and clear national frameworks
Strong focus on planning
 National strategic objectives
 Clear development sector objectives and cascading same to SOEs
 Alignment with National imperatives
 Development of performance targets
Ensuring that plans are well resourced and funded to ensure delivery
Advocacy and inter-sector engagement
Co-ordination and collaboration
 Communication
 Partnerships
 Role clarification
Intelligence and critical analysis including gap analysis and relevant responses
Quality assurance
 Tracking progress
 Strategic level reporting
 Performance monitoring and evaluation
Innovative interventions
6.18 What support (financial and otherwise) shall be required by SOEs so that they can
be efficient role players’ human resource development?
The shareholder and the Entity governance should ensure that human resources and skills
development plans are adequately resourced
At the barest minimum, entities should comply with the required stipulated Skills
Development Targets of BBBEE
Where training requirements put pressure on the viability requirements of an entity,
 isolation of those aspects that should be categorised as social objectives should be
made and such be funded
 Alternative training funding from funds such as the skills levy be negotiated
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6.19 What can be gleaned from of SOEs’ historical perspectives in developing human
capital and scarce skills? What worked and what did not work?
Although not much research on skills training approaches of the state pre- 1994, however;
evidence posits that there were successful skills training and job creation initiatives. SOEs
were used as a platform and catalyst for advancing the skills training initiatives and sustaining
human capital. SOEs can play a much more significant role in developing skills for
themselves as well as for the general economy
The reasons for difficult in fill the job- Manpower Group 2011
Reasons for difficulty in filling jobs globally
Skills, Experience &
Scarcity top the bill.
Lacks the right personality
Lack of interpersonal skills
Don’t possess the right values
Looking for more Pay
Lack of Technical Skills
Lack of available applicants
Lack of Experience
0%
5%
10%
15%
20%
25%
30%
7. Conclusion and recommendations
7.1 Conclusion
The dawn of South Africa’s democratic dispensation has required the government to commit
itself to remedying the follies of the separate development system. In this basket, the
restructuring of the apartheid era industrial education and training was, and continues to be,
an overarching imperative in the democratisation and transformation of the local economy.
Notably, a key component of that economic empowerment is addressing the structural
problems that act as blockages to key macroeconomic policy initiatives. Undeniably, the
skills shortages that hold South Africa at ransom are the highest epitome of such structural
nuisances. In the late 90s towards early 2000s, the government has unrelentingly intervened
with policy to effect change in skills situation of the country.
Given the colossal skills crisis and higher unemployment rate in South Africa, the paper
concludes that the skills development is critical for economic growth and human social
progress. It is a conviction of this paper that the SOEs can play a pivotal role and serve as a
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platform and catalyst for advancing the skills development initiatives and sustaining human
capital. Conspicuously, based on the evidence much progress has been made but the SOEs
have not fully and effectively exploited their potential in the process of sustaining and
developing human capital in this country.
The SOEs can play a meaningful role in terms of enhancing the employability of young
people in this country. Through the SOEs the country can be able to sustain and generate the
skills required by the broader economy. It is our conviction that the government ought to lead
the skills development agenda and being complemented by the private sector. It further note
that the explicit political commitment and goodwill on the part of all social partners to skills
development is essential if South Africa is to succeed in its quest to alleviate the skills deficit
in the medium-to long-term.
7.2 Recommendations
The following recommendations can be considered:
 Need for a strategic leadership and clear national frameworks for human resources
and skills development. The coordinating efforts initiated by DHE should be enhanced
and embraced by other stakeholders in government to fortify the strategic leadership
required.
 Strong focus on skill planning:
- Medium to long term development of National strategic objectives aligned to sector
needs as well as the National Development Plan and other related policies
- Clear development sector objectives and cascading same to SOEs
- Alignment with National imperatives
- Development of performance targets
 Role on provincial skills development forums
The efficient and effective operation of Provincial skills development forums as
established requires meaningful participation of key role players in skills
development. SOEs have much more bigger role to play in these forums and as such
should play a proactive role. These forums provide an opportunity for engagement by
stakeholders and share best practices in addressing skills development and map up
strategies aligned to the national government priorities for economic growth as well
as government policies and strategies.
 Work Integrated Learning (WIL)
Work integrated learning is one of the identified critical components of skills
development and as such SOE have a greatest role in facilitation this component of
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



learning. In the Higher Education Qualification Framework (HEQF) ‘work integrated
learning’ is defined more broadly as a characteristic of vocational and professionally
– oriented qualifications, and may be incorporated into programmes at all levels of
the HEQF. WIL may take various forms including simulated learning, work-directed
theoretical learning, problem-based learning, project-based learning and workplace
learning. This is one of the major components in the articulation of post school
education system and requires and integrated approach in skills development whereby
both the public and private institution partner with industry to facilitate skills
development.
Work Experience Component
Work experience is defined as the exposure and interactions required to practice the
integration of knowledge, skills and attitudes required in the workplace. Work
experience includes the acquiring of contextual or in depth knowledge of the specific
working environment. The SOEs can therefore be one of the key providers of work
experience component in the integrated post school education system. Provision of
this critical component of skills development will enhance employability of the
unemployed learners that are being prepared for the world of work.
Promotion of artisan development
Artisan development has been mentioned as one of the priority areas in skills
development that need to be addresses and the role of SOEs in this regard is vital. The
SOEs should be able to create conducive environment for the advancement of
development of artisan development related skill by providing necessary resources
and facilities needed in these learning fields i.e. provide learning centres, coaching
and mentoring for practical learning and assessments of such learning.
Establishment workplace assessment centres
Work place assessment centres are an integral part of work integrated learning and the
SOEs are also better placed to establish the assessment centres within the work place
to facilitate work integrated learning. The QCTO and NAMB will ensure the
accreditation of these work assessment centres to ensure the standardised assessments
are implemented.
Research and innovation
It is very critical for the SOEs to continuously invest on research and innovation of
human capital development. Such research may also include but not limited to;
impact evaluation studies on skills development programmes.
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
Monitoring and Evaluation
The development of monitoring and evaluation policy framework that assist and
guide the ongoing monitoring and evaluation on skills programme implementation by
the SOEs with other partner organizations, i.e. SETAs and institutions of higher
learning.
 Collaboration with FETs, UoTs, Technical Vocational stream in post school
education system
Collaboration and partnerships with the institutions of learning as proposed by DHET
in the green paper addressing post school education provides an opportunity for SOEs
to participate in the process by being one of the key partners in the delivery of
learning. Their role in this regard is also articulated in the skills accord.
 Career guidance support services
Career guidance is one of the strategic goals of NSDS 111 and the DHET is in the
process of establishing a strategy framework for the delivery of efficient and effective
career guidance. SOE could also be one of the critical stake holders in the facilitation
of career guidance as a critical component of developing scarce and critical skills.
 Funding model – PIVOTAL grants, SETA Discretionary grants and NSF
The funding for services related to development of scarce skills should be sourced
from various funding institutions including but not limited to: National Skills Fund
(NSF) and Sector Education and Training Authorities (SETA) discretionary funds.
The portion of PIVOTAL grants from SETA discretionary funds should also be
allocated for SOE delivery and facilitation of skills development.
 Advocacy and inter-sector engagement to be prioritised with the purpose of
promoting optimal coordination:
- Co-ordination and collaboration
- Communication
- Partnerships
- Role clarification
 Intelligence and critical analysis including gap analysis and relevant responses:
- Quality assurance to be assumed by shareholder management portfolios
- Tracking progress
- Strategic level reporting
- Performance monitoring and evaluation
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

The state should drive alignment of legislative provisions for human resources and
skills and development to drive optimal benefits overall economic benefits in the
country.
Compliance by the SOEs to skills development programmes should be made part of
their key performance indicators (KPIs).
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Appendices
Legislation related to transformation and skills development
LEGISLATION RELATED TO SKILLS DEVELOPMENT
South African Qualifications Authority (SAQA) Act No. 58, 1995 To ensure quality in education and training;
To ensure training delivery
Skills Development Act No 97, 1998
To finance training and make training
Skills Development Levies Act No 9, 1999 and Income Tax Act
affordable
No. 58, 1962
To transform public and private training
Further Education and Training Act No 98, 1998
institutions for high quality delivery;
To ensure equitable training;
Employment Equity Act No 55, 1998 and Broad-Based Black
and Economic Empowerment Act No. 53, 2003
To formalize and regulate training;
Basic Conditions of Employment Act No 75, 1997
To ensure a transparent training process;
Labour Relations Act No. 66, 1995
National Skills Strategies and Initiatives
National Skills Development Strategies and Initiatives
Human Resource Development (HRD) Strategy (2001)
Provides the overarching framework for the government’s approach towards skills development and its overall
vision “… a nation at work for a better life for all.”
National Skills Development Strategy II (NSDS II) (2005-2010) ( Now revised NSDS III):
The successor strategy to the government‟s first five-year NSDS (2001-2005). It is introduced and monitored by the
Department of Labour (DoL) under advice from the National Skills Authority (NSA). Its main purpose is to set out
national priority skills areas and the primary objectives for skills development.
Accelerated and Shared Growth Initiative for South Africa (AsgiSA) (2006)
It was launched to promote the governments mandate from 2004. This mandate is first to halve unemployment
(from 30% to 15%) and poverty (from one-third to one-sixth of the population) by 2014 and second to accelerate
employment equity.
Joint Initiative on Priority Skills Acquisition (JIPSA) (2006)
The objectives and constraints envisaged in terms of skills by the AsgiSA gave rise to the Joint Initiative on
Priority Skills Acquisition (JIPSA) task team in March 2006. Its primary mandate is to lead and support the
implementation of AsgiSA and its objectives through the alignment of education and training with identified skills
priorities.
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