STATEMENT BY TITO MBOWENI MINISTER OF LABOUR TO NATIONAL UNION OF METALWORKERS OF SOUTH AFRICA NATIONAL BARGAINING CONFERENCE
PROTEA GARDENS HOTEL, BEREA, JOHANNESBURG THURSDAY 3 APRIL 1997
Comrades and friends,
Thank you very much for the opportunity to address this National Bargaining Conference. I am well aware that this conference finalises your demands for the next bargaining round, and I am therefore pleased to be asked to contribute to your discussions.
I have been asked to focus specifically on our recently published Green Paper on "A Skills Development Strategy for Economic and Employment Growth in South Africa", which I am happy to do, although I would like to begin by noting that it is one of a number of policy interventions which need to be considered together as an integrated set of measures relating to the labour market. As this Conference itself emphasises, there is a clear relationship between skills development and collective bargaining. There is also a linkage between both of these and the work on employment and occupational equity and so on. There is also, and I made this point at the launch of the Green Paper on Skills Development, an important connection between labour market policies and industry policy on the one hand, and macroeconomic policy on the other.
Employment and economic growth cannot be achieved through labour market measures alone - labour market measures need to be aligned with these other issues for the desirable outcomes to be achieved. This alignment is not simply a matter to be addressed at national or industry level. It has to be achieved at enterprise level as well.
Much of the Skills Development Strategy is about how to achieve such an alignment. The principles on which the whole Strategy is based emphasise the importance of identifying the economic demand or opportunity to which the skills development must respond or promote. And while the Strategy stresses the need for employers and workers at enterprise level to make their own decisions about skills, nevertheless these decisions need to be informed by global trends in the industry as far as work organisation, markets and technology are concerned.
This would suggest that industries need to become more actively involved in discussions and research about the future of their slice of the economy - and then, as a specific and conscious intervention, consider the skills implications of this future. For instance, there are clear skill implications if companies choose to flatten management structures and promote semi- autonomous work teams. This is not news to a union such as NUMSA which has pioneered work in this area for a number of years and has been involved in the restructuring of the auto industry as well as the telecommunications industries. However, what may be new is the need to draw up specific training plans to augment the industry plan - and this is where the new Green Paper would be able to make a contribution.
Information and strategic planning is one important component of the new Strategy. There are five other components - three of which I will just mention. They are learnerships, employment services and the improvement of the quality and responsiveness of education and training providers.
Learnerships are qualifications which incorporate the old apprenticeship system. They are like the apprenticeship system in that they combine structured learning at a college for example, with structured work experience. The person who completes a learnership will earn a national, NQF accredited qualification, which will tell the labour market that they are competent in a particular occupational area.
Learnerships have been introduced to help young people and the unemployed to enter the world of work - in the formal sector or in the informal sector. They could also apply to workers in work - by agreement with employers at industry or enterprise level. The Collective Bargaining implications of learnerships are similar to those which applied to apprenticeships - what wage will a person in a learnership be paid? will it be a percentage of a qualified person's rate or should it be set nationally (say through NEDLAC)? The contracts of learning that accompany a learnership will have to be designed and managed through the restructured industry training boards.
Employment Services is the new name to what was previously called Career Guidance and Placement. It is envisaged that these services will have to be revamped so as to be able to give workers, employers and unemployed people useful information about the labour market - such as where vacancies are for unemployed people; where appropriately skilled workers are for employers; and where support measures and further learning opportunities exist for anyone who is interested. Of particular interest to this audience is perhaps the function they will play in respect of those companies and industries facing large scale retrenchments. It is envisaged that the staff of the Employment Services will assist with information about any new job or development opportunities and such assistance measures as are available, including access to further learning.
The section which deals with the improvement of the quality of education and training providers focuses on two aspects - quality and relevance. The quality side is simply a restatement of the arguments around the National Qualification Framework. The relevance side is new. It is about ensuring that the courses that workers and managers attend are actually useful - and help them to achieve the aims that have been agreed in the training plans, as part of an overall strategic approach to enterprise and industry restructuring. For a course to be relevant, it must impact positively on the entire change process within an enterprise or industry.
So far I have covered four of the six key components of the Strategy - information and strategic planning, learnerships, employment services and relevant provision. The remaining two components I will dwell on in a little more detail (as I was requested by the General Secretary to do so)- the institutions needed to support the Strategy and the levy/grant system.
The Skills Development Strategy is proposed to be co-ordinated at two levels - nationally and sectorally. I will begin by looking at the sectoral level.
Companies and firms - workers and managers - are frequently not yet in a position to develop training plans which integrate with their overall objectives and best practice. They need assistance to do this well. They are also often not in a position to find the best college or technikon or university to meet their needs. They also need help with interpreting the new world of the South African Qualifications Authority requirements. I will talk about the funding side in a minute - but firms may also need help with this aspect of work.
Some people say, well the firm should then just employ a consultant. This is all right for large firms which can afford this. But for the hundreds of small and medium sized firms who are currently not training at all anyway - they are extremely unlikely to pay large sums of money for a service they do not even perceive they need. So we are proposing that there be intermediaries - institutions that support firms to realise the importance of skills and then help them to translate this realisation into tangible plans with measurable results. These will be similar to the current industry training boards but with a wider range of functions. We are suggesting a new name - Sector Education and Training Organisations or SETOs - to signify this new important role.
We see six broad functions for SETOs:
1. General functions - which relate to advocacy, linkages to other important initiatives and to employment services and the like.
2. Strategic planning and information functions - they should be interacting with the strategic industry planners, as well as government initiatives such as the Cluster Study initiative under the Department of Trade and Industry to track future trends. They should also be assisting individual enterprises to understand these future trends and help them to translate them into specific training plans now.
3. Learnership functions - such as the design of learnerships and learnership contracts as well as their management and monitoring.
4. Quality assurance functions performed on behalf of the South African Qualification Authority - such as the accreditation of providers and the certification of learners.
5. Effect partnerships with relevant government departments and initiatives - such as occurred in the recent work on telecommunications which included Jay Naidoo's department.
6. Carry out such functions as are needed in terms of funding.
Who will be able to be a SETO? Well, our Green Paper specifies certain criteria - which suggest that an industry training board or boards which want to become an SETO will have to demonstrate equal representation between employers and unions, will have to be able to show that it can perform the six functions that I have just outlined, and certain other things.
The Green Paper lists twenty economic clusters - and of particular interest to NUMSA are: auto, motor, electrical, metal and engineering as one posts, telecommunications, broadcasting and information technology as another. We have not specified that there necessarily has to be ONE SETO per cluster. But have not precluded this possibility either. We have simply said that there must be full coverage of each cluster by one or more SETOs. NUMSA as a major actor in these areas needs to consider whether it believes it would be desirable to amalgamate the existing training boards together or whether it makes sense for them to be separate.
In regard to the relationship between SETOs and bargaining councils - the Green Paper says "as far as possible SETOs should have a rational relationship with Bargaining Councils ... in order that they can align Skills Development strategies with other productivity promotion and reward measures." This is clearly a matter on which NUMSA will have to deliberate.
As far as national co-ordination is concerned we are proposing that the National Training Board's name is changed to the National Skills Authority in order to convey a major set of new areas in which it is to operate. It is envisaged that this Authority will help the Minister of Labour to determine national priorities, targets and resource allocations. Its composition would be similar to that of the NTB, but there is question in the Green Paper as to whether or not providers should be part of the body. We have invited comments on this point.
I will now discuss the funding side of the strategy. We have proposed a one to one and a half percent levy on payroll to be collected nationally and disbursed by SETOs after they have submitted plans to the Minister of Labour. Why?
Our research shows that companies are training at low levels as compared to the countries and companies with which we trade. The market has not encouraged them to train more, and the existing voluntary system works well for large companies but is not assisting small and medium firms to come into the fold. The existing voluntary levy system has not helped stem the tide of apprenticeship decline either.
Some employers recommended to us that we re-introduce the old tax incentive system. But evidence from the years when this was in place suggests that the training which did take place was poorly targeted. Much of the training was given to managers and workers are justifiably sceptical of the "team building exercises on Mauritius" which qualified as training under the old scheme.
A levy system goes together with a grant system. The grant is the reason why the levy is collected. By having a grant system you are able to target the use of your funds very much more carefully and encourage people to behave in ways which are deemed desirable for growth and employment. For example, we say that production workers have not had enough training in the past - a grant can encourage more training for workers in the future by saying that grants will be paid to those companies that train production workers. We have suggested that companies get a grant payment when they produce a plan which meets certain basic criteria. The details of the plans will be developed by workers and managers at company level and then sent forward to their SETO for approval and payment.
The SETO will have to prepare a framework plan which it will present to the Department of Labour indicating the areas in which it plans to promote training in the sector. This will clearly be negotiated. The Department will put together all the plans from the various SETOs, comment on whether their plans meet the guidelines laid down - and then forward the consolidated plans to the new National Skills Authority for comment. Both the Department's comments and those of the new National Skills Authority will be forwarded to the Minister for him to make a final decision.
But the grants that the SETOs receive will have to be paid for. And this is where the levy comes in. We are saying that all companies should pay for training even if they decide not to train themselves. In this way, they will contribute to the cost of training of other companies - which is only right when you think that non-training companies end up poaching skills from these companies.
But it is not only employers who must pay. Government also has a responsibility to contribute to the revenues needed to support the grants. Government is committed to doing this - and the size of this contribution will of course need to be considered in a context of competing demands for limited funds.
The level of the levy was set at between one and one and a half percentage point of the wage bill. What constitutes the wage bill has not been decided - but could be interpreted to mean the wage and salary bill - especially if management training is also to be allowed under the grant.
Why not four percent? We are worried that if we set the percentage too high then we will encourage employers not to hire workers but rather to invest in labour saving technology. We believe that the level we are proposing this would not happen to any significant extent. We also believe that in a country with very different industries - clothing and agriculture as well as manufacturing and mining, it is difficult to set the levy at a level which will only be affordable to some and not others . Remember it is a national compulsory levy that we are proposing.
Such then are the proposals contained in the Skills Development Green Paper. We look forward to receiving your comments as well as to your participation in the various pilot projects which will be initiated towards the end of this year.
May I conclude by wishing you well with your conference and thanking you again for the opportunity to join your meeting.