DURING a recent radio interview, former president Thabo Mbeki was asked what one could do to address the challenge of the large pool of unemployed graduate youths. “What are they graduating in?” he asked. “We have many people in the country who are unemployed, but in reality they are unemployable because they do not have the skills required by the economy.”
This underlines some of the central tasks the country faces in terms of skills development, which is vital to addressing unemployment. Obviously, a workforce that has the skills the economy needs to grow is crucial to lowering unemployment.
So, South Africa needs to incentivise the correct training. Various successful economies around the world, such as Germany, Switzerland and Japan, have long grasped this and they apply it for all kinds of work, blue or white collar.
A properly trained workforce will improve South Africa’s competitiveness — which is a function of a number of things, including costs, prices, wages and better business performance through innovation and productivity.
The truth is that we will not rev our economic engine up to growth rates triple the current levels, as envisaged by the National Development Plan, without investing in skills development.
The private sector and the government seem to realise this. Preliminary reports on the skills development and youth employment accords are already showing that skills development programmes are having an effect.
But there are still some rather weighty challenges that must be addressed before we can say we’re on the right track.
Take the case of training for artisans. Overall, there has been some good progress on this front in recent years — a total of 13168 artisans completed their trade tests in 2012 against a skills development accord target of 10000. But the projections for 2013 are not looking good.
The estimated cost of training an apprentice over three years is R350000 once you strip out the benefit of R115000 available to the company through grants. The current grant amounts vary considerably between the different sector education training authorities (Setas), but none of them covers the net cost to employers of training an apprentice.
This isn’t likely to improve.
The recently revised Seta grant regulations remove a large proportion of the levy, taking this money away from programmes used to support workplace and sectoral skills development.
Although Business Unity South Africa shares the concerns about the performance of Setas and the need to improve the quality of workplace skills plans, our organisation cannot support measures that it believes will remove a substantial proportion of this levy funding from workplace initiatives. All our members are levy-paying employers and ardent supporters of skills development.
If these revised Seta grant rules are implemented, it will mean our economy will have to shoulder the legacy of a reduction in training and skills development — at a time when we should be doing exactly the opposite. As we all know, South Africa can scarcely afford this.
The challenge of unemployment and competitiveness is way too serious to be approached in a fragmented and self-destructive way.
History will not forgive us.
• Majokweni is CEO of Business Unity South Africa
• This article was first published in Sunday Times: Business Times