Employers must be recognised as the instigators and funders of this vital task, says Sean Archer.
The national development plan released last year by Trevor Manuel’s planning commission has had a mixed reception: high praise from some commentators is matched by disappointment from others. What the plan says about skills training policy certainly inclines me to the negative end of that spectrum of opinion.
The chapter devoted to education and training rehearses the same tired old statements of aspiration about our skills needs nationally, but there is no inkling of how to move state policy in the right direction. Why is that so and what issues need the clear understanding that remains missing?
First there is the ongoing neglect of the most important interest group in the skills training arena, namely employers. In the international literature, it is as clear as a bell that between two-thirds and three-quarters of all skills training in national economies is initiated and financed by employers. These are private, for-profit companies, state departments and state-owned enterprises, plus a wide range of non-governmental organisations, mostly non-profits. By far the biggest subgroup is private employers.
The relevant South African statistics are instructive and not at all ambiguous. In round figures, 9.6-million people were formally employed in 2010, of whom the private-sector share was 7.6-million (79%) and the public-sector share 2.1-million (21%). Informal employment comprised another 2.2-million and domestic work 1.1-million. Therefore no original insight is needed to see that private companies form the biggest employer subgroup and thus the most potent trainers of skilled labour.
The importance of private employers is explained further if one recognises that almost no workers emerge work-ready from formal institutions such as universities, further education and training colleges, industry training institutes and the like. Almost all workers have to undergo on-the-job training before they are useful in production. This must take place in the work environment, such as a functioning office for accountants, a clinical ward for doctors, a building site for carpenters and plumbers, a work station for operatives on an assembly line, and so on.
The biggest obstacle
This is the government’s biggest obstacle in pursuing more training of the economically active population. In contemporary mixed economies like ours, the government owns and controls only a minority of workplaces—one in five, according to the figures previously quoted. These are government departments (local, provincial and national), state-owned enterprises and a range of service providers in the public sphere, including hospitals, clinics, schools and universities.
Together they provide a diverse source of on-the-job training for workers who already have paper qualifications. Many provide relatively specialised competencies and thus, most importantly, the existing state sites for such training can cater only for a minority of the population who wants to acquire the skills valued in production.
My second point of criticism about the treatment of skills training in the national plan concerns what is wrong, in general, with planning at the national level. Inherent is the presumption that once a goal is stated, usually at a high level of generality, it is enough to generate action. The job of implementation can be left to get itself done. Decision-makers in society and the economy will see new opportunities and duties that they fulfil as best they can. These are the implicit inferences. So the critical reader wants to write in the page margins of the printed plan: “Who must do this?” “What information will these decision-makers have?” “How will they do it?” “What resource commitments are presumed?”
Planning makes sense when the planning unit coincides with the investing unit. A company or state department, or even workplaces such as a factory, mine or office, must plan the skills it needs and allocate resources accordingly. But this is not true with plans at the national or even the sector levels.
Plan projections are not believed. Information in the higher-level plans is aggregated and is therefore generic and non-specific. These are deficiencies centred on a lack of focus in all plans. They apply to skills-training planning as they do to other components of our national plan.
A third weakness in the plan’s discussion of skills training is that, although much attention is devoted to schooling and its problems, and rightly so, there is no attempt to link school failure conceptually with training failure. By contrast, the international literature is clear about this linkage, which has the following implications:
- All human capital investment is “self-productive”, from preschool to tertiary education and skills training. What does this mean? Ongoing research shows that skill begets skill: early advantages produce later advantages. In practice this entails that “early investment in cognitive and non-cognitive skills lowers the cost of later investment by making learning at later ages more efficient”, as American economist James Heckman puts it. Thus a well-functioning school system makes later skills training cheaper in resources and time, therefore training is more attractive to both workers and employers. The opposite is equally true: dysfunctional schools discourage employers from skills investment in a proportion of their hired school leavers.
- Investment decisions by the state must view all acquisition of human competencies as a single problem and allocate resources accordingly. Raising the volume and efficiency of skills acquisition for the production process will require both qualitative and quantitative (that is, more money) reform of the schooling system. New schooling institutions and regulations, appropriately designed, will have positive effects on the supply of skilled labour to the labour market.
To be adopted by the government
This holistic perspective must be adopted by the government. Unfortunately, the administrative split two years ago that gave us the departments of basic education and of higher education and training is likely to make the operational achievement of this policy perspective more difficult.
The same international literature already cited holds that remedial education of all kinds—filling in the cognitive and behavioural gaps of incompetent school graduates—is inefficient and relatively expensive. In the United States, for example, corporations and state institutions undertake investment in remediation only when the labour market is especially tight. This is decidedly not the case at present, with the country’s national unemployment percentage in the double figures.
A fourth weakness in the plan is its failure even to mention the most difficult obstacle state efforts face in reforming skills training and job creation—the need to change attitudes, engender trust and therefore reciprocity, and persuade the individual decision-maker that co-operation is mutually beneficial, and so to achieve the benefits of social co-ordination.
Even to state the problem in simple terms brings out the difficulty that faces reformers. How does one design and set up institutions that foster the kind of change that causes individuals to see self-interest lying in new kinds and patterns of behaviour favourable both to themselves and to the wider society?
It applies equally to workers and employers. There is initial evidence that many unemployed workers in South Africa lack outright the self-critical insights into what makes them unemployable in the eyes of employers. This issue—the deficient personal characteristics of the unemployed not conscious of them ... requires careful and extensive research input in policymaking that has to be mounted and financed by the state.
What is difficult to deny is that many potential workers lack the insights into their own failings that might spur their own remedial action. There are no simple precedents, though, of how the state should stimulate such insights in the groups affected with a reasonable chance of success.
Concerning investment in skills training, employers are suspicious that skills poaching by rival employers will lead to a low or even nil return on their investment. The skills of labour are a highly mobile asset. They are not like material inputs in production under the employer’s control, such as buildings, machinery, inventories of intermediate and final goods, sales outlets and so forth. The employer pays the largest share in the acquisition of skills, yet the worker retains ownership and sells these services to the highest bidder.
This raises once more the role of the sector education and training (Seta) bodies. In the past year, the department of higher education and training has introduced changes aimed at raising the Setas’ internal efficiency. These changes might work. For instance, we have seen the amalgamation of certain Setas and new regulations to improve internal governance and decrease the misuse of skills levy income.
But, as I have already argued, these are not the major obstacles that hold back training performance.
Do the Setas foster trust and commitment between employers and workers, between employers and employers and between both these interest groups and the state in its stimulatory and regulatory roles? As intermediating bodies this is the Setas’ most important function in meeting skills training goals nationally. But these are not the questions aired in the national plan.
Outside observers must hope that the next endeavours of the National Planning Commission will concentrate on these dimensions of the training system.
Sean Archer is a research associate in the Southern Africa Labour
and Research Unit at the University of Cape Town’s School of Economics.