Manufacturing, engineering and
related services SETA
(merSETA)
Presentation to the
Portfolio Committee on Higher Education and Training
19 May 2010
Dr Raymond Patel, CEO
The MerSETA Team
Chairperson: Ms JEANNE ESTERHUIZEN EMPLOYER REP RMI
Deputy Chairperson: MR XOLANI TSHAYANA LABOUR REP NUMSA
Dr Raymond Patel CEO
Mr Wayne Adams COO
Ms Beaula Dziruni CFO
Mr Tom Mkhwanazi GM Corporate Governance
2
The Mandate
To develop the skill of the South African workforce –
to improve the quality of life of workers, their prospect
of work and labour mobility;
to improve productivity in the workplace and the
competitiveness of employers;
to promote self-employment; and
to improve the delivery of social services
To increase the levels of investment in education and training
in the labour market and to improve the return on that
investment;
3
The Mandate …
To encourage employersto use the workplace as an active learning environment;
to provide employees with the opportunities to acquire
new skills;
to provide opportunities for new entrants to the labour
market to gain work experience; and
to employ persons who find it difficult to be employed;
4
The Mandate ….
to encourage workers to participate in learnership and
other training programmes;
to improve the employment prospects of persons
previously disadvantaged by unfair discrimination and to
redress
those
disadvantages
through
training
and
education;
to ensure the quality of education and training in and for
the workplace;
to assist
•
•
•
work-seekers to find work;
retrenched workers to re-enter the labour market;
employers to find quality employees; and
5
What is the merSETA
merSETA, the Manufacturing, Engineering and Related Services
Education and Training Authority is one of the 23 SETAs established
through the Skills Development Act [no. 97 of 1998].
It facilitates skills development for the following sub- sectors:
Metal and engineering,
Auto manufacturing,
Motor retail and component manufacturing,
Tyre manufacturing and
Plastics industries.
6
What is the merSETA (cont.)
Together the five sub-sectors comprise approximately
44 000 companies, with a workforce of
approximately 600 000.
merSETA’s Vision
Leaders in closing the skills gap.
Mission
To facilitate sustainable development of skills,
transformation and accelerate growth in the
manufacturing and related services sector.
7
SWOT Analysis
STRENGHTS











Industry participation in NSDS 2
Merseta’s infrastructure & capacity to
manage information
Stable management structure
Provincial presence
Sufficient Qualifications registered on the
NQF - Sufficient Learnerships registered
Tried and tested apprenticeship System
Good cooperation between Chambers &
Stakeholders
Stakeholder support
Efficiency of Grant Disbursements System
Cost Effective
Leadership within Sector (manufacturing
sector) Guidance to government (provincial
and national)
WEAKNESSES











Limited coordination between DTI and
Merseta
Levy system is exploited for financial
gain
Absence of effective Quality
Management Systems
Limited lifespan of NSDS
Not prepared for global market
Limited skills programmes
Delivery & consistent customer service
Quality service
Merseta succession plan
Learnership progression
Not advocating our successes enough
8
SWOT Analysis
OPPORTUNITIES









Economic growth
HRDSA
NSDS III
Increase Productivity
Increase quality service
Infrastructure & Network Management
Outsourcing as empowerment
opportunity
Financial incentives for learnerships
Expanding the work of the Merseta –
artisan related training
THREATS









HIV / Aids
Global competition
Retrenchments
Poaching of skills internal
Poaching skills external
Insufficient delivery of learnerships
Brain Drain
Lead Times
SETA Landscape
9
Discretionary Grants 2009 / 2010
Region
Company
Analysis
% of Levy
Paying
Companies
Apprentices
Skills
Programmes
Learnerships
Monetary
Value in
Rands
% of
Registered
Learning
Programmes
Eastern Cape
748
6%
57
290
132
14,465,079
9%
Free State/
Northern Cape
485
4%
128
3
169
13,536,600
8%
Gauteng /
North West
6,628
52%
432
586
605
45,777,000
27%
KwaZulu-Natal
1,822
14%
449
416
404
56,695,800
34%
Mpumalanga/
Limpopo
779
6%
303
54
78
29,779,200
18%
Western Cape
2,236
18%
26
85
301
8,321,400
5%
Grand Total
12,698
100%
1,395
1,362
1,689
168,575,079
100%
Mandatory Grants
Number of
Companies
%
Eastern Cape
258
7
21,417,003.67
9
Free State/Northern Cape
239
6
5,439,453.61
2
1,829
48
172,876,081
62
KwaZulu-Natal
470
12
33,646,959.37
12
Mpumalanga/Limpopo
212
6
17,464,071.96
6
Western Cape
800
21
26,118,988.68
9
Grand Total
3,808
100
276,962,558.30
100
Region
Gauteng / North West
Mandatory Grants
Paid
%
2010/2011 Plan - Unemployed Candidates - Discretionary Grant
Description
Number of
Candidates
Monetary Value in Rands
Apprentices
2,310
260 million
Learnerships
2,000
92 million
New Venture Creation
250
11 million
Incubation
350
8,75 million
Workplace Experiential
760
11,4 million
Graduate Trainees
380
22,8 million
CGO/NBO, Co-Ops
13,5 million
ABET
1,000
31 million
405
170
64.68 million
Maths and Science Project (SET)
900
6 million
People with Disabilities
100
10 million
Bursaries Project
420
22 million
4,000
50 Million
AATP –
NSF / merSETA
UIF/Dol
RAP – Retrenchment Assistance Programme
merSETA Career Gateway (Career Guidance, Counseling)
Grand Totals
11,0 million
6,050
602,13 million
merSETA Budget 2010/11 –Financial Performance
Rand Millions
REVENUE
2010_11
Budget
2009_10
Actual
Levy income
Penalties & interest
Government grant income
Total non-exchange revenue
Interest received
729
4
33
766
50
715
7
22
744
75
Trade test fees received
Total exchange revenue
TOTAL REVENUE
50
816
EXPENSES
Mandatory grants
Discretionary grants
Project expense
Government grant expenditure
Total discretionary expenditure
Employer Grant and Discretionary
Expenditure
Operational administration costs
TOTAL EXPENSES
Net deficit)/surplus
Change
2008_9 Actual
2%
-31%
47%
3%
-33%
697
5
702
115
75
819
-33%
0%
115
817
330
155
526
33
334
264
235
22
-1%
-41%
124%
47%
304
172
97
-
714
521
37%
269
1,044
91
1,135
855
86
941
22%
5%
21%
573
84
656
-319
-123
160%
161
merSETA Budget 2010/11 –Financial Performance
DISCRETIONARY EXPENDITURE
Rand Millions
Indicator
Indicator
2010_11
Budget
2009_10
Actual
Change
Supporting National & sectoral Growth and equity
1.1 priorities
10.
3
297%
1.2 Critical Skills Communication & Priorisation
17.
5
258%
2.1 Promoting training in large & medium cos
41
152
-73%
2.2 Promoting training in small cos
53
64
-18%
2.7 ABET Support
36
25
43%
176
6
3000%
8
3
161%
280
205
36%
4.2 Workplace experience
35
21
71%
4.3 New venture Creation
11
20
-46%
5.1 ISOE Support
18
1
2603%
5.3 Other, SAQA Scorecard, EE/BBBEE etc
29
16
49%
714
521
37%
2.8 Training in workplace -Learnerships/apprenticeships
3.2 NGOs/CBOs Support
4.1 Training unemployed learners
TOTAL DISCRETIONARY SPEND
merSETA Revenue and Expenditure 2008/9,
2009/10 and 2010/11
Rand millions
900
800
700
600
500
2010_11 Budget
2009_10 Actual
400
2008_9 Actual
300
200
100
Levy income
Total revenue
Mandatory grants
Discretionery
expenditure
merSETA Budget 2010/11
The merSETA budgeted for

a very conservative 2% growth in levies due to the uncertainties prevailing at
the point of compilation. The number of contributing firms are expected to
stay constant at about 11,900 out of 44,000 registered employers.

R33 million from the National Skills Fund for our flagship AATP project

Decreased interest income due to reduced cash balances as a result of greater
training expenditure

constant mandatory grant expenditure. The merSETA has limited say in the
expenditure that companies incur which allow them to claim mandatory
grants and can not ensure it is aligned with scarce and critical skills

Expanded discretionary grants and projects. First DG window closed end of
April. Most of expenditure from contracts already signed. Regional offices
constantly monitor and evaluate training being done by the employers.

Admin costs to be kept within the required limit.

A substantial deficit in order to reduce the large reserves the merSETA holds
merSETA Budget 2010/11 Financial Position

.
31 March 2011
Budget
31 March
2010
31 March 2009
50
25
124
512
969
931
Other current assets
15
9
23
Total current assets
577
1002
1078
Assets held for sale
-
-
-
Plant and Property
40
10
10
617
1012
1088
62
147
100
NET ASSETS
565
865
988
Discretionary grant reserves
520
850
974
40
12
10
5
3
4
565
865
988
Rand millions
Prepayments
Cash and investments
Total assets
Current Liabilities
Admin reserves
Employer reserves
TOTAL RESERVES
17
merSETA Budget 2010/11 - Commitments
1200.
1000
800
Commitments
600
DG Reserves
400
70%
200
54%
83%
0
2010/11
2009/10
2008/9
18
merSETA Budget 2010/11





merSETA has substantial reserves and cash balances which are 83%
committed in training contracts and projects. merSETA may only commit
funds it has and due to long term nature of some programs, reserves will
build up.
merSETA enters into MOAs with employers which outlines its training
commitment over certain number of years and pays in accordance with
training implementation. At year end contracts worth R723 million were in
force. Should training not proceed the merSETA implements remedial action
and withdraws funds and allocates to other employers should the employer
not be able to continue.
The merSETA plans to make significant inroads into its large reserves and
cash balances through discretionary expenditure.
Cash above immediate monthly requirement invested on money market only
at A rated financial institutions. merSETA takes risk adverse approach in
investing. Security of funds is paramount. Investment committee has
oversight over this function.
When re-established, the merSETA plans to limit rental expenditure by
purchasing an office building for R30 million,
merSETA 2009/10 Financials
2009_10
Actual
2009_10
Budget
Variance
%
Variance
715
669
46
7%
6
5
1
44%
22
744
16
690
6
54
38%
8%
75
80
-5
-7%
Total exchange revenue
TOTAL REVENUE
75
819
80
770
-5
49
-7%
6%
EXPENSES
Mandatory grants
Discretionary grants
Project expenses disbursed
334
264
235
273
376
381
61
-111
-146
22%
-30%
-38%
Government grant expenditure
Subtotal discretionary expenditure
Employer Grant and Project
Expenditure
22
521
16
773
6
-252
38%
-33%
855
1,046
-191
-18%
Operational administration costs
TOTAL EXPENSES
86
942
89
1,135
-3
-193
-3%
-17%
-123
-365
242
Rand Millions
REVENUE
Levy income
Penalties & interest
Government grant income
Total non-exchange revenue
Interest received
Net surplus/(deficit)
merSETA 2009/10 Financials
DISCRETIONARY EXPENDITURE
R Millions
Indicator
Supporting National & sectoral Growth
and equity priorities
Critical Skills Communication &
Priorisation
2009_10
2009_10
Actual
Budget
%
Variance
Variance
3
9
-6,
-72%
5
6
-1
-23%
152
169
-17
-10%
64
98
-35
-35%
-
6
-6
-100%
25
75
-50
-66%
6
10
-4
-43%
3
10
-7
-69%
205
308
-103
-33%
Workplace Experience
21
26
-5
-18%
New venture Creation
20
20
-
3%
1
5
-4
-85%
16
31
-15
-51%
521
773
-252
-33%
Promoting training in large & medium cos
Promoting training in small cos
BEE support
ABET Support
Training in workplace Learnerships/apprenticeships
NGOs/CBOs Support
Training unemployed learners
ISOE Support
Other, SAQA Scorecard, EE/BBBEE
TOTAL DISCRETIONARY SPEND
merSETA 2009/10 Financials







merSETA has nine years of unqualified audits
merSETA experienced a better year in terms of levy income than had been
expected. Our sector saw some recovery towards the end of the year.
Interest rates dropped below budget towards the end of the year leading to
interest income being below budget
merSETA received funds through the training layoff scheme increasing
government grant funding
The response to WSP submission call was very good leading to a 73%
mandatory grant claim ratio
merSETA achieved 67% of budget in discretionary expenditure. The
economic recession which the industry experienced, lead some employers
phasing down their training and/or delays in the implementation of training
programmes
Admin costs were contained within the allowed limit.
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Western Cape
Initiative
Tooling Initiative
Purpose Vehicles
Government)
– Special
(Provincial
Project Description
Western Cape Tooling Initiative has trained 25
unemployed people on a pre-apprenticeship system.
merSETA is currently working together with WCTi to
find placement for the apprentices at relevant
companies. 10 out of the 25 apprentices are female.
25 more unemployed people will go through the
same process.
Training provider linked to project is Northlink
College (Wingfield Campus)
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Initiative
Project Description
Western Cape
Cape Town Boatbuilding
Initiative - Special
Purpose Vehicles
(Provincial Government)
The industry is looking at training 15 unemployed learners on the
small craft construction qualifications, once registered. Falsebay
College (Westlake Campus) will be the training provider
Western Cape
South African Oil and Gas
– Special Purpose
Vehicles
The South African Oil and Gas Alliance has trained approximately
300 unemployed people over the past year, of whom 100 have
been placed. However, we will be working very closely with
SAOGA to ensure that participating companies give the learners
whom have not yet been placed, the opportunity of an
apprenticeship and/or learnership to receive grants from the
Merseta through the funding window. Falsebay and Northlink
are the identified providers
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Initiative
Project Description
Western Cape
Mitchells Plain Summit Project
A commitment to support Mitchells Plain with the
unemployment problems has taken place. The
commitment of approximately R 10m to
1) Retrain 50 -100 previously retrenched persons,
2) 50 Learnerships at Cape College of Cape Town
and Northlink,
3) 75 learners to attend skills programmes
particularly New Venture Creation,
4) 25 bursaries, and
5) 25 learners to have the opportunity for
experiential learning.
Western Cape
Beaufort West
Government Project
Beaufort West has approximately 45 youth that
passed with matric exemptions. We will be meeting
with NGO`s CBO`s, municipality, DoL and various other
organisations and Merseta stakeholders to find
placement for these unemployed matriculants to
enter the skills development arena .
Provincial
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Initiative
Project Description
Eastern Cape
The Nelson Mandela
Metropolitan (Co-Operation
Agreement)
Avail bursaries for BEng: Mechatronic programs.
Placement of students in the Industry
Promoting Women in Engineering
Eastern Cape
The Eastern Cape DoE,
Mercedes Benz South Africa and
Merseta private and public
partnership
Closely working with Public Sector Colleges in
upgrading
the
instructors’
specialist
and
methodological skills.
20 apprentices to undertake training during this year.
The training of 20 Educators and 500 learners Maths
and Science – improve pipeline
Eastern Cape
Government Lay-off Scheme
linked to the merSETA
Retrenchment assistance plan
Retrenchment assistance plan (903 employees stand
to benefit from merSETA companies across Eastern
Cape).
The merSETA RAP participating companies makes
more than 95 % of all Eastern Cape companies
participating in the government funded training lay-off
scheme).
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Project Name
Eastern Cape
Coega/merSETA (Provincial)
Eastern Cape
National Skills Fund/merSETA
partnership (Provincial)
Project Description
Coega/merSETA:
through the NSF funding and
merSETA employers, more than 200 unemployed
learners will be trained. The spread from L2 – L4.
Source merSETA host companies to place NSF funded
learners Buffalo City Municipality, Nelson Mandela Bay
Municipality and Lukhanji local Municipality. (150
unemployed learners)
KwaZulu Natal
KZN Provincial Government &
ASGISA 2/ merSETA partnership
Training of more than 250 apprentices in the
Manufacturing and Automotive Sectors from NSF
funding.
KwaZulu Natal
KZN Special Presidential Project
The project aims to develop 76 youth either through
apprenticeship or learnership programmes into
employable individuals sponsored by merSETA.
Of these 76 learners 65 are apprentices and 11 are
learners.
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Initiative
Project Description
Free State &
Northern Cape
AATP Project
Training 10 automotive body repairers and 12 spray
painters to artisan status within 2 years. Partnering with
Public College
Free State &
Northern Cape
Current Project: Programme
for 20 handicapped youth
20 learners from Dr Bohmer Special School to be trained
in welding application and practice (NQF2)
Free State &
Northern Cape
Grootvlei Correctional Services
Project
(Provincial/merSETA)
Training 40 inmates from Grootvlei Prison on welding
application and practice (NQF2). These learners are at the
point of being discharged on parole and will then be
absorbed into the industry.
Free State &
Northern Cape
Science and technology
support to learners
merSETA and Schools
Target 100 x grade 12 learners. To be extended to grades
10 and 11 too.
Free State &
Northern Cape
Premier of the Free State
Project
250 unemployed youth trained in motor mechanics and
welding (NQF 1 and NQF2) and were placed at merSETA
employers
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Project Name
Project Description
Free State &
Northern Cape
Initiation Phase:
Empowerment of CBO’s/NGO’s
and Co-ops (target 10 per year)
Management and OD training with hand holding /
mentoring to grow capacity and impact.
Free State &
Northern Cape
Initiation Phase:
Douglas Civil Society
Rural CBO support – 40 learners in welding, air
conditioning and motor mechanics.
Free State &
Northern Cape
Initiation Phase:
Retrenchment Assistance
Programme
Individuals who have lost employment due to
economic downturn. Target of minimum 50 individuals
per annum.
Free State &
Northern Cape
Initiation Phase:
Expanded Public Works
Programme
Electrical Skills Programmes for 78 individuals.
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Initiative
Project Description
Limpopo &
Mpumalanga
Vulamatjuba Artisan Training
Project
The actual intake is 200, and 60 apprentices have
already started. The project is funded by the
Mpumalanga Premier’s Office. The aim is to create a
pool of artisans in the Province. merSETA companies
are hosting the apprentices
Limpopo &
Mpumalanga
Public Works Artisan Training Limpopo Province
24 apprentices have already started the programme
and will be hosted at merSETA companies
Limpopo &
Mpumalanga
Sekhukhune Municipality and
Capricorn FET College
Sekhukhune Municipality and Capricorn FET College
will be embarking on training of 100 artisans. Funding
is done by Development Bank of Southern Africa
(DBSA). merSETA will assist with host companies
Limpopo &
Mpumalanga
Phalaborwa Artisan Training
Phalaborwa has been identified as an area to train
artisans in the Province. A partnership will be looked
at with the Provincial Government, the training Centre
and merSETA
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Region
Project Name
Project Description
Gauteng South
Gauteng Department
Economic Development
of
merSETA and the Gauteng Department of Economic
Development are looking at extending the partnership to
continue training to the next level for the 250 learners that
have successfully completed level 2 air-conditioning
learnership
Gauteng South
Gauteng Department of
Public Works/ merSETA
partnership
merSETA regional office is in the process of carrying out
workplace approvals for the training of about 2 000
unemployed learners in partnership with the Gauteng
Department of Public Works.
Gauteng North /
North West
Industrial Policy Project
Department of Economic
Development / FET / AIDC /
merSETA
Is aimed at training the retrenched workers for
employment on some of the scarce skills areas. These
areas include panel beating; spray painting; warehouse
skills and logistics.
200 candidates will being earmarked for the initial training
phase.
Gauteng North /
North West
Provincial Government
National Skills Fund project
/ merSETA
300 unemployed learners on the merSETA aligned
programme will be trained. merSETA to assist with host
employers
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Project Name
Project Description
ABET
Current ABET training provided to the unemployed:
• Accelerated ABET = 1 769
• Business = 1 020
• Occupational = 511
ABET
Currently proposing that grants/bursaries be made available for the unemployed ABET learners
that have achieved certification at level 4 to be assisted in getting into FET colleges.
ABET
Plans for this year is to provide ABET training to 1 000 unemployed learners.
ABET
Training for 50 unemployed deaf learners – plans to provide training to another 50 once
current research has been completed.
Bursaries
400 bursaries will be made available to young people wishing to undertake further studies at a
University or a University of Technology
Bursaries
Targeting companies who are providing work experience to (and are receiving merSETA grants
for) National Diploma students where merSETA will sponsor B Tech and the companies will
offer 1 year employment to the students on completion of the B Tech. This may lead to full
time employment. This will increase the pool of qualified and experienced workers.
Bursaries
Mentorship processes in place to find out where the students have difficulties and intervening
when it counts, before the student fails.
Various life skill and personal development
workshops to assist our students will be implemented.
Provincial Projects / Initiatives that merSETA is
participating in to Assist/Support Unemployment
Project Name
Project Description
New Venture Creation
250 grants will be made available for young unemployed people to
participate in the New Venture Creation Project
Retrenchment Assistance
Currently 6 000 people have gone through the project
A voucher system will be put into place to assist and train retrenched
people. The project is based on demand.
Math's and Science
1 000 learners will be sponsored from grade 10 to 12. Target group being
school children
AATP
500 apprentice are targeted for this year on accelerated artisan training
program
Gauteng South DoL / UIF (merSETA
incubating)
336 previously employed are being trained. merSETA is incubating the
provincial government employees to build their capacity. merSETA is
assisting with workplaces to do the on the job training.
Unemployed Learners in a learning
program
2 400 unemployed learners to be placed into learnerships
1 600 unemployed learners to be placed into apprenticeships
200 unemployed learners to be placed into skills programs
Experiential Learners supported
1 375 learners seeking integrated learning will be placed at merSETA
employers to obtain the relevant experiential learning to obtain a
qualification
Strategic Imperatives

STOCK OF SKILLS Increase skills available to the sector to
meet its short-term needs by investing and encouraging investment
and innovative thinking

FLOW OF SKILLS Strengthen the skills pipeline in the medium
to long-term supply of skills into the sector

WORKPLACE LEARNING Enhance the capacity of various
types of employers in the sector to realise greater returns on training
investment and to enable employees to benefit from training

GROWING THE BASE Empower beneficiaries and employers
to realise greater benefit from training by improving the base level of
learning in the sector

SKILLS INFRASTRUCTURE Strengthen sector mechanisms
for skills planning, implementation and partnerships
merSETA Strategic Framework
KPA
Strategic Disbursement
KPI
Effective Business Systems
Addressing Identified Training Needs
Measurement
Target
Levy Income/
Current Level + 20%
Disbursement
Surplus/
Current Level – 20%
Disbursement
Rand Amount of Sector Skills Requirement: Disbursement Ratio Improvement + 20
DHET Service Level
Agreement
Targeted Performance per Sector Requirement
SLA Performance Criteria
100% Compliance
Merseta Functional
Operating Metrics
Corporate Services
5 Year Retention of Critical Skills
Minimum Level 90% Candidates @
minimum 4 years
Finance
Financial Health and Governance
Corporate Governance
The Board is supported in achieving it’s purpose
Projects
Critical Skills Identification by Chamber as approved by
the Board
Workplace Accreditation by Chamber linked to Sector
Skills Plan
Un-Qualified Report and/or Zero
Matters of Emphasis for 5 year term
Report on the effectiveness of the
Board
Itemized Implementation Plan (IIP)
Priority by deadlines set
Large Companies 70%
Medium Companies 50%
Small Enterprises 30%
Strategic Fund Allocation
Operations
Leadership
(People Management)
En-Visioning the Merseta Culture to Customer Centric
Focus
Establish Sound Employee Engagement
(To be assessed via Climate Survey on 6-monthly basis)
Current Level + 20% Improvement Yo-y
Merseta Brand
Health
Position Merseta as an organ delivering to Training P-Factor or Equivalent Measurement
Mandate of its Sector
5 and More by the end of the term
and/or 0.25 factor improvement p.a.
(Monitoring Service)