Draft Report of the Portfolio Committee on Labour on its meeting with the SETAs held on 10 August 2004

The Portfolio Committee on Labour, having met and noted the presentations and submissions made to it, reports as follows:

A. Terms of reference

The Committee resolved to include the interaction with the SETAs as part of its annual programme for 2004. The objectives of the meeting were to:

1. Monitor progress and establish problems in the implementation of the Skills development Act (Act No 97 of 1998).
2. Determine the level of performance of SETAs since their inception.
3. Assess measurable outputs and indicators, which show the development of SETAs.
4. Identify the challenges and constraints faced by the SETAs,
5. Monitor the level of compliance with the PFMA.
6. Assist in formulating proposals which may assist in developing a way forward
7. Fulfil its mandate of overseeing the Department of Labour (DOL) and statutory bodies that fall within its portfolio.
8. Determine whether policy developments take place in accordance with the key objectives and aims as stated in the 15-point plan of the DOL.

The Committee agreed that a report would be compiled and tabled in Parliament after all the information had been collated and analysed.

B. Background

Nine SETAs and officials from the SETA Co-ordination Unit of the DOL appeared before the Committee.

The following officials represented the DOL:

Mr S Morotoba, Senior Executive Manager: SETA Co-ordination
Mr J Du Preez, Senior Executive Manager
Ms B Bulunga, Executive Manager: National Skills Authority
Mr ME Mashabane, Executive Manager: DOL
Mr F Prinsloo, Executive Manager: SETA Performance
Ms E Thobejane, Executive Manager: DOL
Mr M Ngwenya, Executive Manager: DOL
Ms P Telela, Manager: bOL
Mr C Machele, Consultant: SETA Performance
Mr J Mojapelo, Manager: Corporate Compliance
Mr H Hoon, Manager: SETA Performance
Ms L Madhlophe, Manager: SETA Performance
Ms L Gwebu-Gqada, Practitioner: SETA Performance
Ms N Gumbi, Administrator: DOL

Representatives from SETAs were as follows:

Mr SSW Nkosi, Chief Executive Officer(CEO): Local Government and Water SETA
Ms SN Nxesi, CEO: Education Training and Development (ETDP) SETA
Mr J Dikgole, CEO: wholesale & Retail SETA
Mr T Dlamini, CEO: Construction Education and Training Authority (CETA)
Mr F Groenwald, CEO: BANK SETA
Dr H Rasool, CEO; Clothing, Textiles, Footwear and Leather (CTFL) SETA
Ms S Dipadi, Co-Chairperson; CTL SETA
Mr M Henning, Co-Chairperson: ETDP SETA
Mr LW Hansen, Chairperson: SETASA
Mr M Moloto, Chairperson: CETA
Mr G van Zyl, Chairperson: CTFL SETA
Mr B Venter, Chairperson: Bank SETA
Mr S Ngidi, Deputy Chairperson: BANK SETA
Mr T Rachidi, Deputy Chairperson: ISETT SETA
Mr IL Holmes, Deputy Chairperson, CETA
Mr A Kriel, Deputy Chairperson: CTFL SETA
Mr HA Deysel, Deputy Chairperson: LGW SETA
Mr ES Mnyakenu, Human Resaurce (H~) & Corporate Manager: LGW SETA
Ms P Matlhaela, ETQA Manager: LGW SETA
Mr S Jappie, Provincial Manager: LGW SETA
Mr A Mathebula, Quality Assurance Manager: ETDP SETA
Mr T Thejane, Co-ordinator: Strategic Planning & Support: ETDP SETA
Ms S Fredericks, Manager: ETQA: SETASA
Mr GB Mistry, Financial Manager: SETASA/SETASA
Mr A Msizi, Board member: SETASA
Mr A Manuel, Regional Manager: CETA
Ms M Strydom, Senior Manager:Auditor-Generai

C. Introduction

The Committee received a broad overview on the functions of the Setas. The briefing included major successes of the establishment phase and challenges faced with respect to the implementation of the National Skills Development Strategy.

The SETAs' presentations focussed more on progress made and challenges
faced by the SETAs around the following:
- Skills planning and grant disbursements
- Quality assurance
- Learnerships
- Finances, and
- Governance

Input by DOL

The DOL gave an overview of the SETAs, their operations and role in learnerships. and accountability in terms of legislation.

Each SETA is expected to operate within the National Skills Development Strategy (NSDS) Framework, as well compiling an annual report, which must reflect how each SETA has managed to fulfil its mandates in term of delivery. One of the challenges highlighted is that the current strategy, NSDS 2001-2004, expires in 2004. A new strategy for 2005-2009 is currently being designed and will be launched in the National Skills Development Conference from 11-13 October 2004. The DOL has embarked on an extensive public consultation on the new strategy. Regarding the performance of SETAs, a Marshall Plan is currently being developed to look at the issue of SETAs that are under-performing. The DOL is also engaged in a process of reviewing the current funding windows. During the current financial year, the DOL is moving towards having each SETA report to be covered by the Auditor-General's report. The implementation report on the current strategy will also be tabled at the same Conference. The DOL is looking at inviting the Portfolio Committee on Labour to the National Skills Development Conference, which is scheduled to take place in October 2004.

The Committee sought clarity on whether there is a proper system to monitor and ensure compliance, or whether the DOL acts on reports provided by the SETAs. What were the identified weaknesses that result to qualified reports, and steps taken by the DOL to ensure that SETAs do not get qualified reports.

Responses to clarities sought were that, the DOL has Systems that allow it to check the validity of information provided in the reports. The Auditor-General's office is another whistle-blower. SETA boards are accountable in terms of funds forwarded to SETAs.

SETAs are expected to comply with the Public Finance Management Act. The ~OL is in future going to be linked to the Direct Trade Public Entities Unit which is drawing up a standardised approach that will enable SETAs to have uniform financial statements. There is also an ongoing interaction with the relevant bodies and the Chief Financial Officers of SETAs.

Inputs by SETAs

Areas covered by SETAs on their presentations included the institutional mission statement, key strategic issues and objectives, learnerships/Skills programmes, governance structure, grant disbursement, quality assurance, finance, achievements, problems identified and challenges.

The Committee was provided with a copy of each SETA's presentation. Each of these copies form part of the committee's records.


This is a statutory body established by the Minister of Labour in terms of the Skills Development Act 97 of 1998, to support and grow the level of current and future skills needed in the banking sector.

In relation to operational costs, the BANKSETA has thus far paid an amount of P345,8 million to organisations in the form of mandatory grants. All unspent operational savings, as well as unclaimed mandatory grants, are allocated to the Strategic grant account.

The Committee was informed that like any other organisation, the SETA is faced with a number of challenges, which relate to funding, infrastructure and the negative perception about SETAs. There is also a concern around the retroactive adjustments that have been made by SARS as far back as 2000 levy year. The lack of understanding from different stakeholders about the difference between cash and accrual accounting also creates confusion. It was suggested that the DOL and any other entity that make information available on SETA finances should be required to State in all instances whether cash or accrual information is used.

The Committee having received a briefing form the Bank Seta sought a clarity around the monitoring and evaluation on the work of people trained in the micro finance skills project, the performance of the BANKSETA at a regional level, how the SETA identified trainees, how far has the SETA progressed in terms marketing itself, projects funded out of the strategic accounts, progress made regarding compliance with employment equity, breakdown of statistics of provinces that have been covered by the SETA, whether the results on black economic empowerment are measured according to the banking charter, and how the SETA rate itself vis-a-vis the media publicity about SETAs.

The responses mentioned that, in almost all nine provinces the SETA has established the Micro Finance Skills Projects wherein people are trained in entrepreneurship. The BANKSETA is adamant that it has reached a strong niche in terms of its performance. It rates itself as a well performing SETA. In relation to compliance with employment equity standards, changes were made in the representativity of the board. Out of 12 board members, five are African and one is a female.

In relation to the identification of trainees, the Committee was informed that R45 million is earmarked for Letsema learnership projects. Provinces identified thus far are the Eastern Cape, KwaZulu-Natal, Gauteng, Western Cape, and Free State. The SETA accepts invitations to address universities and other institutions on their projects.

With regard to learnerships, the SETA announced that it has exceeded the Growth and Development targets for 2004. It should therefore be able to obtain additional funding. By March 2005 it will have exceeded the 3 000 learners targeted to be registered.

On the issue of race and gender breakdown, the SETA has met Black, Indian and Coloured targets for learners on learnerships. It acknowledges that it has not been able to meet the gender target. However, 3,64 %o of learners is from the disabled category.

On whether the SETA accepted people from other sectors, the Committee was informed that the SETA tries to make use of the existing programmes. Part of the BANKSETA training products includes a training programme in money laundering.

The Committee commended the work done by the BANKSETA, especially in relation to training the unemployed. Regarding making the SETA accessible, the Committee suggested that Parliamentary Constituency Offices be used for such a purpose.

Education Training & Development (ETDP) SETA

The presentation by the above SETA was on progress made as at 31 March 3004. The ETDP is demarcated into 13 constituencies, namely national and provincial departments of education, universities and technikons, independent schools, private further education and training providers, NGOs in the ETD Provisioning, private early childhood development organisations, libraries and archives, trade unions, political parties, research institutions, professional organisations, private higher education and training providers, and private ABET providers. The total fund5 disbursed thus far amount to 77 837,016.

The challenges raised included the shortage of accredited training providers in same provinces, the reluctance of some employers to buy into the idea of hosting learnerships within their organisations, increases in the intake of learners with disabilities and/ or special needs participating in learnerships, and building capacity of accredited service providers to implement RPL assessments.

The Committee sought clarity and raised some concerns around the geographical spread of 29 261 trainees, and the resources spent per learner in term of the first and second economies, more income versus expenditure, shortage of service providers, the challenge of scientific studies such as maths and science, funding for learners, the issue of urban and rural divide, inclusive education, organisational development, lack of African service providers, and accreditation of service providers.

Responses given were that, the DINALEDI project is Set to ensure improvement in maths and science. There is a campaign towards making girls understand that such subjects are not meant for boys alone. A submission on the issue of scarce skills has been forwarded to the ~OL. The SETA is forging ways by which such skills can be retained. Discussions are also held with the Department of Education (DOE), universities and colleges in enhancing critical skills.

The infrastructure problems contribute to the shortage of service providers. The ETDP has forged relations with other SETAs as a way of consolidating strength to assist service providers. Regarding organisational development, most service providers operate within the Batho Pele principle. The Committee was informed that accreditation of service providers is handled by SAQA.

On the question of first and second economies, the ETDP views the lack of financial management as a major problem. However, the SETA is working with other SETAs on strategies that can assist learners in marketing their products.

The response on the issue of income versus expenditure was that unspent funds are already committed for the payment of service providers after submission of their Workplace Skills Plans. The window period for cleaning up funds is six months.

In relation to funding for learners, it was noted that the ability to pay fees is determined by the socio-economic status of each province. Preliminary studies have shown that most learners from Gauteng are able to pay for their fees. However, struggling students are funded through the National Skills Fund.

With regard to the issue of inclusive education, a strategy that will make institutions accessible to the disabled has been developed.

The reluctance of some employers in buying in to the idea of learnerships remains a major problem.

The ETDP SETA raised the following as part of its prospects:

- Establishment of ETDP SETA at both regional and provincial
- Capacity building initiatives for skills development facilitators (SDFs), and skills development committee members( SDCs).
- Registration of learnerships in the areas of Information Communication Technology (ICT).
- Capacity building and quality promotion initiatives for constituent providers in rural areas.


The mission of this SETA is to create opportunities in the secondary agriculture sector for economic and employment growth through skills development.

In terms of the current state of affairs, problems were identified as lack of reliable baseline data and integrated MIS, the urgent need to fast- track delivery, protracted delays in registering qualifications and learnerships, inadequate staffing structure, dysfunctional governance structure and impractical working environment. Other challenges raised were the need to increase SETASA's profile within the secondary agricultural sector, and the need to meet the expectations of the secondary agricultural sector, the DOL and the public.

As part of its achievements, during 2004/04 SETASA has disbursed R31,3'5 million on mandatory grants. R13,7 million of unclaimed surplus was awarded as discretionary grants for learnership implementation and strategic projects. R6,7 million was spent on special projects.

The Committee having received its input sought clarity, and raised concerns around the R13,7 million surplus, the role of SETASA in capacitating emerging farmers, allegations around the mismanagement of funds, the role played by stakeholders such as FAWU in skills development, as well the dispute between FAWU and SETASA, and co-operative governance.

Responses given were that, the R13,7 million is as a result of risk management. Funds will be dispersed as applications are submitted. The role of capacitating emerging farmers falls within the scope of the Primary Education and Training Authority (PAETA). SETASA does not acknowledge the allegations around the issue of mismanagement of funds. The matter is investigated and will be handed over for civil proceedings.

On the role played by FAWU and other stakeholders in skills development, it was mentioned that FAWU was invited to be part of the skills development process. In relation to the dispute, a letter was sent to FAWU to resume talks about issues. The matter needs to be referred for dispute resolution.

SETASA informed the Committee that it has good co-operative governance. Further that it received a good report from the office of the Auditor-General. It acknowledges that there is a need to evaluate the board for good co-operative governance.

The key priorities set for 2004/05 were to ensure that 3000 additional ABET learners are in learner programmes, 40 moderators/verifiers are trained, 1000 learners are registered on learnerships, memorandum of understanding is signed with five additional Education and Training Qualifications Authority, all surplus funds were committed discretionary grants and special projects, and all staffing and governance problems are resolved.

The mission of the abovementioned SETA is to generate, facilitate and accelerate the processes of skills development for workers at all levels in the ICT sector by linking future technology trends with new development programmes.

The Committee sought clarity on accessibility of ISETT to students who are not rated as bright'. The SETA acknowledges the concern raised and is of the view that it relies an the government to come up with a strategy on how the issue can be addressed. The issue of ISETT being white-dominated was raised as a concern. It was agreed that proper measures should to be put in place to address the matter.

In the current year, greater emphasis will be placed on learnerships and permanent placement of qualifying graduate learners, developing an ICT Qualification

Framework in collaboration with the South African Qualification Authority (SAQA), and the accreditation of training providers.

The Committee was also provided with the National Skills Development Strategy progress report for 1 April 2001 to March 2004.


In terms of the sector profile out of 35 000 enterprises falling within the sector, 62,5% are registered with the South African Revenue Services (SARS) and only 30% are paying levies. Of the levy - paying employers, approximately 96% are SMMEs.

The Committee was informed that an amount of ~5O million is committed for the Extended Public Works Programmes (EPWPs) towards training 505 learners.

The CETA views the issue of HIV/AIDS as having a severe impact in the industry. It was noted that an amount of ~2 million is committed to support construction firms that have HIV/AIDS programmes in place.

In the event that a learners sustains injuries in the course of training, the service provider with which the learner is accredited becomes responsible for compensation.

The SETA is committed to enhance youth development programmes in order to assist district municipalities and ensure that the impact in rural areas is visible. The Committee was also informed that CETA has adjusted the benchmark NSDS targets to a realistic scenario in the industry.

Part of the challenges/constraints raised with the Committee included the accreditation of emerging SMME training providers, inadequate processes, a strategy to address skills development needs in the SMME, non levy paying and exempt levy sub-sector, the impact of HIV/AIDS in the workplace, availability of appropriate legislation to encourage employer organisations to submit Workplace Skills Plans (WSPs) and Annual Training Reports (ATRs)


The SETA expressed a concern that the legislation that administers accreditation is too academic, and therefore should be made user-friendly. In addition, more service providers should be awarded accreditation. The reluctance by companies to take more learners is seen as a hindrance to training.

The SETA is undergoing a restructuring process. It also acknowledges that although the Sector has a huge number of employees, the employers and employee unions are supportive of each other.


The Committee was informed that there has been an enormous increase in the number of registered organisations in the sector. The total number of registered organisation is 39 000. The number of participating companies has increased from 3 058 to 7 548. Almost 247 850 people are trained in the sector.

It was mentioned that the SETA is faced with a challenge of ensuring that learnerships that are developed are demand-driven, and that SMMEs are sensitised about the importance of training. Generally, it has been noted that SETAs sit with unspent funds as a result of the SMMEs that do not claim back levies.

The W&RSETA is also faced with a challenge of delays in the disbursement of project funds. The view expressed is that the process should be fast- tracked. The W&RSETA is of the view that the term of office of the board needs to be revisited and that the Constitution of SET As needs to be amended.


The SETA acknowledged that in July 2004 it received an under-performance assessment report from the Minister of Labour. At some point it has lost ground with other SETAs. That resulted in its programmes not being aligned to the needs of the SETAs. According to the LGWSETA, one of the contributing factors to its underperformance assessment was a lack of a proper Information Management System. However, it has since improved its organisational operations and performance. A detailed report indicating the shortfalls has been submitted to the DOL. The SETA is committed to attend to the concerns raised about its performance. Currently, the SETA has a proactive monitoring and evaluation system to ensure quality.


This is a value chain based SETA which predominantly operates in rural areas.

The SETA is of the view that, although is has been rated as an under-performing SETA, it has exceeded its targets relating to the GDS targets. With respect to accountability and transparency, it rates itself as the only SETA which managed to take action against the CEO and the CFO, which was as a result of fraud amounting to R2,8 million . The Asset Forfeiture Unit had since managed to recover R1,8 million, and The perpetrators were each sentenced to 20 years imprisonment.

The Committee noted that:

(a) The commitment shown by SETAs in responding to the President's call on enhancing skills development.
(b) the accessibility of SETAs to people in all spheres remains critical.
(c) Some SMMEs still do not know under which SETA to register.

It recommended that

(a) Labour Centres and Parliamentary Constituency Offices are used as information centres.