A skills shortage in South Africa has been identified as one of the critical constraints to economic growth and employment creation. In its effort to address the problem, the government established the sector education and training authorities (Setas) in 2000 with the aim to assist in fighting poverty, boosting job creation and fulfilling equity employment targets.
Although some of the employment agencies have performed exceptionally well in the past seven years, some have failed to live up to expectations.
Local government, water and related services
Despite an increased demand for local municipalities to accelerate service delivery, as part of government’s effort to halve unemployment by 2014, this Seta has done little to help attain the goal. It was recently rated among the poorly performing Setas by Minister of Labour Membathisi Mdladlana following an extensive performance evaluation by his department.
Although the Seta exceeded its learnership target by 2 440, it performed badly in other areas such as institutional development and financial management, according to the department’s evaluation report.
Mining
The new CEO of the mining qualifications authority (MQA), Livhuwani Nengovhela, will have his job cut out in trying to turn the MQA around.
In the past two years, the MQA not only failed to spend more than R80-million allocated to develop skills in the mining sector, its former CEO Menzi Mthwecu was accused of violating the organisation’s internal procedures when authorising payments for projects.
Mthwecu was hauled in to appear before the MQA internal disciplinary committee after he extended a contract to an IT company without the approval of the board.
Mthwecu was issued with a written final warning by the board after he authorised expenditure for another project worth millions of rands without the board’s approval.
The Seta only registered half of its learnership target of 7 340.
Manufacturing, engineering and related services
This Seta appointed Dr Raymond Patel as its new CEO in December last year, after the resignation of Jessie Maluleka in August 2005. Maluleka was forced out in disgrace after the release of a forensic report containing allegations of financial mismanagement against him.
His resignation came after the Mail & Guardian revealed extensive violations by Merseta’s management of procurement policy, employment procedures and corporate governance structures involving amounts of up to R5-million. According to the Seta’s internal report, Maluleke contracted several companies for work ranging from curriculum formation to recruitment of learners and project management without the approval of the executive committee. In other cases, the report says, companies were hired without contracts or were paid before a contract had been signed.
In 2004, the Seta failed to spend over R120-million meant for skills development training. The Seta also came under criticism after it spent more than R8-million on consultants.
Wholesale and retail
Despite the high salary (R885 283) paid to its CE, this Seta has not performed well.
It failed to spend more than R103-million of its skills training budget and it spent more than R7-million on consultants in 2004. The Seta was recently embroiled in a travel scam involving more than R400 000, in which officials allegedly booked weekend getaway flights to Durban and Cape Town for themselves and their friends.
Construction
Despite the high level of skills shortage within the construction sector, this Seta is failing to provide the much-needed skills demanded by the industry. It has come under the spotlight recently when its officials were investigated for fraud and mismanagement of funds amounting to R150-million. The Seta disclosed early last year that about 40% of the claims made to it were fraudulent. It failed to spend more than R73-million allocated to it for skills development in 2005.
Media, advertising, publishing, printing and packaging
Senior officials within this Seta are currently being investigated by the Scorpions in relation to irregular payments amounting to R47-million to contractors.
The Seta’s CEO Melanie Bernard-Fryer says she has received death threats after she exposed the irregular payments since she joined the Seta in May last year. The Auditor General qualified his report last year after discovering that payments were made to training institutions without valid supporting documentation. Investigations revealed that a company linked to one of the Seta’s board members, Chris Sykes, received a R43-million contract from the Seta.
Two years ago, the Seta failed to utilise more than R60-million allocated to it for skills development.
Forest industries
The forestry Seta has been riddled with financial mismanagement ever since its establishment. It made headlines in 2002 when two of its senior members — the CEO and head of finance — were arrested, tried and jailed for 20 years for corruption and fraud amounting to more than R3-million.
Recent annual reports for the forestry Seta suggest the training agency has done little to improve its financial management. This Seta has failed to spend R13,6-million of its budget allocated for skills training and it used more than R1,8-million on consultants.
Safety and security
This Seta was created as a result of a merger between the defence and intelligence Seta and the police and private security Seta after the two organisations failed to perform.
The police and private security Seta was investigated by the Scorpions two years ago after allegations of financial mismanagement against its former CEO Peter Nkuna. The defence Seta, on the other hand, had struggled to meet its learnership target.
Information system, electronic and telecommunications technologies industries
The information system, electronic and telecommunications technologies industries (Isett) Seta’s learnership record — about 4 000 learners were registered in the past two years — is impressive. What remains a challenge though is the number of learners who get employment after completing their learnships.
Isett CEO Oupa Mopaki is on record as saying that only half of Western Cape learners who had completed high-level Seta training were still unemployed. This, for an industry that is short of about 20 000 IT specialists, according to the department of labour, should be a worrying factor.
Public service
One of the key factors attributed to the lack of service delivery in the public service sector is the lack of adequate skills and the high vacancy level. Despite this, the public service Seta has failed to come up with appropriate strategies to address the skills problem. According to the department of labour’s evaluation report, the Seta only trained 220 learners against its target of 10 000 in the past two years.
Tourism and hospitality education
Since its establishment in 2000, the tourism Seta has been in the news for all the wrong reasons. In 2002, it suspended and dismissed three CEOs in the space of one year. The Auditor General remarked on a weakness of internal controls, missing board approval for expenses, and fruitless and wasteful expenditure of R167 820 for the use of consultants to prepare financial statements.
Last year, Labour Minister Membathisi Mdladlana asked the Scorpions to investigate allegations of fraud involving some R13-million against the Seta.
Agriculture
This Seta is currently facing a court challenge by one of its service providers on allegations that companies linked to board members were given contracts worth millions of rands without tender procedures.
Two years ago, this Seta’s board became dysfunctional after the withdrawal of the Food and Allied Workers Union following allegations of financial mismanagement and racism against senior officials. An Auditor General’s report submitted to the department of labour showed a trail of irregularities, including the award of a R1,1-million contract to a company that listed the then CEO among its shareholders. This Seta fell far short of its target and was found by the department to be lacking in corporate governance.
Banks
This Seta was recently rated the best performer by the department of labour. It exceeded its growth development summit (GDS) target by 6%. During 2002/03, it trained 1 261 ‘historically disadvantaged individuals” (HID) while 50 poorly educated HID staff were working towards a matric.
Yet, despite its achievements, this Seta also failed to spend more than R9-million allocated for skills development.
Services
Given its scope of work from training domestic workers to postal services, property management and labour recruiting services, many have argued that the R1-million annual salary paid to the services Seta CE, Ivor Blummenthal, was justifiable.
Unlike many Setas with not-as-much responsibility, the services Seta’s performance has been impressive. It doubled its learnership target last year. This Seta has been innovative in many ways, setting up call centres to assist its members and establishing regional offices in at least four provinces, covering the main metropoles.
Chemical industries
The chemical Seta, under the leadership of its former CEO Dr Raymond Patel, was rated as one of the best-performing Setas over the past years. The Seta doubled its target in 2005 by registering 1 195 learners.
But, Patel came under criticism from shareholders late last year amid allegations relating to the misappropriation of over R100-million budgeted for the Seta’s discretionary grants.
Several companies in the chemical industry were forced to abandon their training programmes after Patel decided to withdraw the Seta’s funding support for discretionary grants. Sources within the Seta say the reason behind Patel’s decision came after the Seta misappropriated the funds budgeted for discretionary grants.
Clothing, textiles, footwear and leather
This Seta has done exceptionally well in the past few years by exceeding its learnership target by 834. Its only weakness was the failure to spend over R23-million on skills training.
Energy sector
This Seta was cautioned that its skills qualification assessment conditions and criteria were not up to scratch. It has since responded with an action plan to correct the situation. In mid-2003, the Auditor General found inadequate staff training and a lack of proper delegation of authority and separation of duties.
Food and beverages manufacturing industry
According to the Auditor General’s report, this Seta has not updated its financial policies and procedures since inception. It does not have an effective management information system to regulate and manage skills development levy income and disbursements. This Seta has failed to spend more than R6-million aimed for skills training.
Health and welfare
With a large number of doctors and nurses leaving the country for greener pastures, the health and welfare Seta is faced with a daunting task to accelerate the development of skills within the industry. So far, the Seta has done an excellent job. It doubled its GDS target. Yet, the Seta is still sitting with over R22-million allocated for skills development in its coffers.
Insurance
Exactly as promised, this Seta has reached its learnership target of 350 and was recently applauded by Mdladlana for work well done. Seventy-six percent of monies were paid out for training — among the best ratios for Seta disbursements. The insurance sector has had to struggle to come to grips with learnerships; there had never previously been apprenticeships in the sector. Of the 28 accredited learning providers, 22 are corporate in-house trainers. This Seta has set out to attract African high-school learners with a special six-month programme.
Transport
This Seta has been in the spotlight recently after it suffered losses amounting to over R245-million as a result of its dealings with the troubled asset management company, Fidentia.
The scandal has forced the labour department to consider possible withdrawal of Setas’ investment exemption.
In 2005, the transport Seta also came under criticism after the Auditor General raised concerns about the ineffectiveness of the audit committee. The Auditor General’s report noted, among other things, that the committee had failed to review performance of internal audit against the internal audit plan and the service level agreement with the outsourced service provider, and only convened once as opposed to the four meetings required by the audit committee charter.
Although it surpassed its learnership target, the transport Seta has failed to spend over R43-million set aside for skills development.
Financial and accounting services
Rated as an average performer by the department of labour, this Seta, more than any other, has recorded the highest number of learnership — four times its GDS target of 3 000. But its failure to meet the employment equity target overshadows its achievements. About 33% of the learners registered by this Seta fall within the previously disadvantaged group and less than 1% were disabled.