The New Age Business Briefing Address by Minister of Higher Education and Training, Dr BE Nzimande 11 April 2013 at Monte Casino Ballroom, Johannesburg
Dr Blade Nzimande
(Minister of Higher Education and Training)
Programme Director, Mr Peter Ndoro
Deputy Minister, Mr Mduduzi Manana
Leadership of the New Age, including Moegsien Williams, the Editor
Leadership of the SABC with us today
Asher Bohbot – EOH CEO (panelist)
Oupa Mopaki – CEO MICT SETA (panelist)
Peggy Sue Khumalo - Investment Banker from Investec Bank Limited (panelist)
Viewers of Morning Live
Comrades, Ladies and Gentleman
The recent “Global Competitiveness Survey” found that nearly 20% of their respondents felt that an ‘inadequately educated workforce’ was the single greatest reason why foreign companies do not invest in South Africa. This problem is not an academic one because South Africa has a low level of savings and relies on foreign capital to finance its investments. In other words we need foreign investment to finance job creation, but it is currently not happening because, inter alia, we do not have the skills investors need for sustainable development. A catch 22 situation, because without the investment we do not have the resources to address the problem. The reasons for this lie in our past, not only in the apartheid state’s failure to train the majority of our citizens, but also its failure to invest in the means to do so in both quality and quantity terms. Growing our economy and expanding employment is essential for ensuring that our people can earn and make a living for themselves, have the satisfaction of contributing to the creation of wealth, and pass on to the next generation a positive attitude to work and to society as a whole. Research has shown, and as confirmed by Stats SA 2011, that we currently have over 3 million people between the ages of 18 and 24 who are not in employment, education or training (NEET) and we probably have a larger number in this position between the ages of 25 and 35. These figures are of serious concern to us as government, and unless drastic measures are taken, the situation has the potential to cause harm to our hard-fought democracy, escalate economic deprivation and social instability. I must acknowledge that creating employment opportunities is neither an event nor is it a one-diagonal venture. It depends wholly on multiple attributes including but not limited to; economic growth and its structure, public and private policy regiments, the relationship between the demand side of the industry and the supply side of the labour force, partnerships between training sector and employers, entrepreneurship ventures and removing obstacles in the skills production pipeline.
The National Development Plan (NDP) has been adopted by South Africans to ensure that many more jobs are created, poverty is reduced and inequality dramatically narrowed. It mandates every Ministry and Department to take reasonable steps to expand job opportunities and build sustainable livelihoods that will enable South Africans to contribute to, participate in, and benefit from the economy. The Medium Term Framework (MTF), the New Growth Path (NGP), and the Industrial Policy Action Plan (IPAP) set out the government’s economic and industrial strategy, and they all place premium on the importance of education and training. In essence, the NDP proposes that our developmental state agenda must ‘crowd-in’ private investment by itself taking the lead and investing in areas that will make further investment by the private sector much more attractive whilst at the same time addressing the problems of inadequate infrastructure inherited from our past. The NDP proposes “to enhance human capital, productive capacity and infrastructure to raise exports, which will increase resources for investment and reduce reliance on capital inflows. Higher investment, supported by better public infrastructure and skills, will enable the economy to grow faster and become more productive. Rising employment and productivity will lead to rising incomes and living standards and less inequality. Shifting the economy towards more investment and lower consumption is necessary for long-term economic prosperity.” The investment in ‘human capital’ is thus a necessary component to create jobs and improved living standards. It is worth emphasizing that building the skills of our nation is key to our country’s growth and well-being. Without an improved skills base, we will remain dogged by high unemployment rates, inequality and poverty. The NDP sets it as one of three priority goals which are interwoven and interdependent: the first being to raise employment through faster economic growth, the second is to improve the quality of education, skills development and innovation, and the third is to build the capability of the state to play a developmental and transformative role. In essence, investment in ‘human capital’ is vital to optimize economic outputs and social justice.
Expanding numbers within the Post School Education and Training (PSET) is the first challenge and government has made considerable progress in the last year or two. For example, the number of students at TVET colleges has increased from 358 393 in 2010 to 657 690 in 2012, with TVET academically deserving poor students receiving funding support in the form of bursaries increasing from R318 million in 2010 to R1.988 billion in 2013 through the National Student Financial Aid Scheme (NASFAS). Within the current year, the Department plans to reach 178 000 TVET students with bursaries. These students should, however, meet the eligibility criteria, which are that the student demonstrates academic potential to pass his/her programme of study and also demonstrate financial need. The increased production of qualified and highly qualified artisans to support our economy is our priority. However simply growing the sector without focusing on quality is likely to be expensive and demoralising for young people, further stigmatising the TVET system.
Labour Demand and Supply
This focus on employability forces us to shift our focus on the other side of the fence, the demand side in the areas where skill improvements are needed: In the private sector, in the short-to-medium term South Africa is likely to maintain its dependency on commodity exports to new emerging markets, however in the mediumto- longer term, South Africa has to bolster its competitiveness in higher value-added industries. This can only be achieved by improving the skills base and increasing competitiveness in order for the economy to diversify and offsetting the distorting effects of elevated commodity prices on the rand. The question is how best should we link the supply side with the demand side? 5 To this end my Department is investing more than R74 million from the National Skills Fund (NSF) into a project we’re calling the Labour Market Intelligence Project (LMIP), a programme we are executing in partnership with the Human Sciences Research Council (HSRC) and our universities. The goal is to devise ‘a credible institutional mechanism for skills planning in our country. The programme is made up of various work-streams ranging from information mining, to forecasting based on various future scenarios, to more in-depth work in some sectors and for artisans, as well as building the capacity to run the planning system itself. This will be an important planning tool for the country and at the disposal of both the private and public sectors.
Strategic Integrated Project (SIPs)
One of the most exciting of our initiatives is our work in relation to skills for infrastructure. As indicated above, in order to attract private investment, so critical for job creation and rising standards of living for our people, our government is prioritising investment into infrastructure. Eighteen bold Strategic Integrated Projects (SIPs) are already well underway. These include, for example, unlocking the Northern Mineral Belt with Waterberg as the Catalyst, building the Durban-Free State–Gauteng Logistics and Industrial Corridor, a range of energy and water projects as well as addressing basic service infrastructure in the poorest 23 districts in our country. These projects are bold and innovative, however so were the building of the stadiums for Soccer 2010, but these were lost opportunities from the perspective of skilling our people. We do not want this to happen again. I have therefore been mandated to ensure that the building of these bold projects provides learning opportunities for our people on a significant scale. It is important to note that in terms of its key mandate, the main contribution of the Department of Higher Education and Training towards the creation of jobs is primarily through the supply of skills required to build the various sectors of the economy. However, in executing this core function, it also contributes directly to the creation of jobs through the employment of academic and support staff. The second opportunity presents itself in the creation of jobs through its post-school infrastructure expansion 6 programme. The third opportunity is providing a mechanism for skilling and training individuals within the build environment, artisan development and placement of students for Work Integrated Learning (WIL) across all 18 SIPs. SIP 14 is one in which we have a particular interest as it relates to the building of 2 new universities (in Mpumalanga and the Northern Cape), various university infrastructure projects, building 12 new TVET college campuses and extensive upgrading of 2 existing TVET college campuses. SIP 14 on its own is a R12.6 billion rand initiative, i.e. R2.5 billion for TVET infrastructure, R8 billion for various university infrastructure projects which includes R2 billion cofunding from universities themselves and R2.1 billion for the 2 new universities. SIP 14 projects will produce 65 742 jobs over the three year period. The infrastructure programme will amongst others yield jobs in construction-related areas, such as building construction, built environment professional space, engineering in different manifestations, construction material manufacturing, construction material retail, training, as well as other potential entrepreneurial activities. Skills development opportunities such as Learnerships, apprenticeships, internships and graduate placement will also be created whereas within the institutional environment this will also extend to the creation of academic and support services employment opportunities.
Work Integrated Learning (WIL) and Relevance
As you would know, I have been campaigning and urging all South Africans to embrace the commitment that ‘together we can turn every workplace into a learning space’. To hold-out your hands to our graduates and to provide them with a meaningful induction to the world, employers and business need to build and consolidate partnerships with training providers (particularly TVET colleges) to assist them to become incubators of SMMEs, cooperatives and entrepreneurs, and to create a link between education and training to job creation. This is not exclusive to students, but also includes the creation of workplace opportunities for lecturers to keep them up-to-date with new technologies. I strongly urge that training initiatives must be underlined by quality and not just simple compliance or ‘intent to please’.
SETAs and Quality
I have taken the first step by restructuring the Sector Education and Training Authorities (SETA) grants in such a way as to reward those employers who provide quality assured training through the PIVOTAL grant. I am emphasizing the value of quality in our programmes because of the sad memories involving wasted millions by SETAs, who invested heavily on poor quality and unaccredited short courses. While certain courses are useful, I urge SETAs to work closely with employers/business and our TVET colleges. I am happy to mention relations between the SETAs and collages are beginning to take shape with about 12 SETAs having opened offices in some of the TVET colleges. If you embrace quality, then you will qualify for grants that may well exceed your individual contribution and benefits.
SMMEs and entrepreneurship (and not tenderpreneurship), are globally considered as major catalysts of economic development. In South Africa, it is estimated that 73% of all workers work in firms with less than 50 people and 45% of all workers work in firms with less than 10 people. It is on record that given the high levels of poverty and unemployment in South Africa, there is an immediate need for an expansion of measures to stimulate entrepreneurial activity for purposes of creating more jobs. However, there are various factors that militate against this endeavour, and often leading to high failure rates for SMMEs. Public information reveals that between 50%- 80% of new ventures fail within 5 years of their establishment, with most dying out in their infancy stages, at a huge cost. Central to this failure rate include among others; lack of skills to run an enterprise, lack of market opportunities, lack of mentorship, inadequate institutional support, poor access to finances and lack training opportunities.
In conclusion, I want to highlight one of the most concerning tendency in the skills production pipeline, particular in workplaces is what is commonly referred to as Artisan Aides. These are skilled workers and potential artisans who are doing work which they 8 are not paid for. Also, discrimination against women (black in particular) people with disability is still an area that requires urgent attention. Let me reiterate once again: I urge business and everyone here, and at home, to strive to establish partnerships with and build capacities of TVET colleges. I must also acknowledge the recent announcement by the Executive Mayor of Tshwane, Honourable Ramokgopa for committing to at least absorb 500 TVET trainee-graduates in the City on annual basis. I do hope others in both the public and private sector organizations, will emulate this positive gesture.
I thank you.
Dr BE Nzimande