Manufacturing, engineering and related services SETA (merSETA)

Manufacturing, engineering and related services SETA

(merSETA)

Presentation to the Portfolio Committee on Higher Education and Training

19 May 2010Dr Raymond Patel, CEO

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The MerSETA Team

Chairperson: Ms JEANNE ESTERHUIZEN EMPLOYER REP RMI

Deputy Chairperson: MR XOLANI TSHAYANA LABOUR REP NUMSA

Dr Raymond Patel CEO

Mr Wayne Adams COO

Ms Beaula Dziruni CFO

Mr Tom Mkhwanazi GM Corporate Governance

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The Mandate To develop the skill of the South African workforce –

to improve the quality of life of workers, their prospect of work and labour mobility;

to improve productivity in the workplace and the competitiveness of employers;

to promote self-employment; and

to improve the delivery of social services

To increase the levels of investment in education and training in the labour market and to improve the return on that investment;

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The Mandate …

To encourage employers-

to use the workplace as an active learning environment;

to provide employees with the opportunities to acquirenew skills;

to provide opportunities for new entrants to the labour market to gain work experience; and

to employ persons who find it difficult to be employed;

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The Mandate ….to encourage workers to participate in learnership and other

training programmes;

to improve the employment prospects of persons previously disadvantaged by unfair discrimination and to redress those disadvantages through training and education;

to ensure the quality of education and training in and for the workplace;

to assist

•work-seekers to find work;•retrenched workers to re-enter the labour market;•employers to find quality employees; and

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What is the merSETAmerSETA, the Manufacturing, Engineering and Related Services Education and Training Authority is one of the 23 SETAs established through the Skills Development Act [no. 97 of 1998].

It facilitates skills development for the following sub- sectors:

Metal and engineering,

Auto manufacturing,

Motor retail and component manufacturing,

Tyre manufacturing and

Plastics industries.

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What is the merSETA (cont.)

Together the five sub-sectors comprise approximately 44 000 companies, with a workforce of

approximately 600 000.

merSETA’s Vision Leaders in closing the skills gap.

Mission To facilitate sustainable development of skills,

transformation and accelerate growth in the manufacturing and related services sector.

SWOT AnalysisSTRENGHTS

Industry participation in NSDS 2 Merseta’s infrastructure & capacity to

manage information Stable management structure Provincial presence Sufficient Qualifications registered on the

NQF - Sufficient Learnerships registered Tried and tested apprenticeship System Good cooperation between Chambers &

Stakeholders Stakeholder support Efficiency of Grant Disbursements System Cost Effective Leadership within Sector (manufacturing

sector) Guidance to government (provincial and national)

WEAKNESSES Limited coordination between DTI and

Merseta Levy system is exploited for financial

gain Absence of effective Quality

Management Systems Limited lifespan of NSDS Not prepared for global market Limited skills programmes Delivery & consistent customer service Quality service Merseta succession plan Learnership progression Not advocating our successes enough

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SWOT AnalysisOPPORTUNITIES

Economic growth HRDSA NSDS III Increase Productivity Increase quality service Infrastructure & Network Management Outsourcing as empowerment

opportunity Financial incentives for learnerships Expanding the work of the Merseta –

artisan related training

THREATS

HIV / Aids Global competition Retrenchments Poaching of skills internal Poaching skills external Insufficient delivery of learnerships Brain Drain Lead Times SETA Landscape

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Region

Company

Analysis

% of Levy Paying

Companies

Apprentices

Learnerships

Skills Programm

es

Monetary Value in Rands

% of Registere

d Learning Program

mes

Eastern Cape 748 6% 57 290 132 14,465,079 9%

Free State/Northern Cape

485 4% 128 3 169 13,536,600 8%

Gauteng / North West 6,628 52% 432 586 605 45,777,000 27%

KwaZulu-Natal 1,822 14% 449 416 404 56,695,800 34%

Mpumalanga/Limpopo

779 6% 303 54 78 29,779,200 18%

Western Cape 2,236 18% 26 85 301 8,321,400 5%

Grand Total12,698 100% 1,395 1,362 1,689

168,575,079

100%

Discretionary Grants 2009 / 2010

Mandatory Grants

Region

Number of

Companies

%Mandatory Grants Paid

%

Eastern Cape 258 7 21,417,003.67 9

Free State/Northern Cape

239 6 5,439,453.61 2

Gauteng / North West

1,829 48 172,876,081 62

KwaZulu-Natal 470 12 33,646,959.37 12

Mpumalanga/Limpopo

212 6 17,464,071.96 6

Western Cape 800 21 26,118,988.68 9

Grand Total 3,808 100 276,962,558.30 100

2010/2011 Plan - Unemployed Candidates - Discretionary GrantDescription

Number of

Candidates

Monetary Value in Rands

Apprentices 2,310 260 million

Learnerships 2,000 92 million

New Venture Creation 250 11 million

Incubation 350 8,75 million

Workplace Experiential 760 11,4 million

Graduate Trainees 380 22,8 million

CGO/NBO, Co-Ops 13,5 million

ABET 1,000 31 million

AATP – NSF / merSETA UIF/Dol

405170 64.68 million

Maths and Science Project (SET) 900 6 million

People with Disabilities 100 10 million

Bursaries Project 420 22 million

RAP – Retrenchment Assistance Programme 4,000 50 Million

merSETA Career Gateway (Career Guidance, Counseling) 11,0 million

Grand Totals 6,050 602,13 million

merSETA Budget 2010/11 –Financial Performance

merSETA Revenue and Expenditure 2008/9, 2009/10 and 2010/11

Rand millions

merSETA Budget 2010/11

The merSETA budgeted for a very conservative 2% growth in levies due to the uncertainties

prevailing at the point of compilation. The number of contributing firms are expected to stay constant at about 11,900 out of 44,000 registered employers.

R33 million from the National Skills Fund for our flagship AATP project Decreased interest income due to reduced cash balances as a result of

greater training expenditure constant mandatory grant expenditure. The merSETA has limited say in

the expenditure that companies incur which allow them to claim mandatory grants and can not ensure it is aligned with scarce and critical skills

Expanded discretionary grants and projects. First DG window closed end of April. Most of expenditure from contracts already signed. Regional offices constantly monitor and evaluate training being done by the employers.

Admin costs to be kept within the required limit. A substantial deficit in order to reduce the large reserves the merSETA

holds

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.

merSETA Budget 2010/11 Financial Position

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merSETA Budget 2010/11 - Commitments

merSETA Budget 2010/11

merSETA has substantial reserves and cash balances which are 83% committed in training contracts and projects. merSETA may only commit funds it has and due to long term nature of some programs, reserves will build up.

merSETA enters into MOAs with employers which outlines its training commitment over certain number of years and pays in accordance with training implementation. At year end contracts worth R723 million were in force. Should training not proceed the merSETA implements remedial action and withdraws funds and allocates to other employers should the employer not be able to continue.

The merSETA plans to make significant inroads into its large reserves and cash balances through discretionary expenditure.

Cash above immediate monthly requirement invested on money market only at A rated financial institutions. merSETA takes risk adverse approach in investing. Security of funds is paramount. Investment committee has oversight over this function.

When re-established, the merSETA plans to limit rental expenditure by purchasing an office building for R30 million,

merSETA 2009/10 Financials

merSETA 2009/10 Financials

merSETA has nine years of unqualified audits merSETA experienced a better year in terms of levy

income than had been expected. Our sector saw some recovery towards the end of the year.

Interest rates dropped below budget towards the end of the year leading to interest income being below budget

merSETA received funds through the training layoff scheme increasing government grant funding

The response to WSP submission call was very good leading to a 73% mandatory grant claim ratio

merSETA achieved 67% of budget in discretionary expenditure. The economic recession which the industry experienced, lead some employers phasing down their training and/or delays in the implementation of training programmes

Admin costs were contained within the allowed limit.

Region Initiative Project Description

Western Cape Tooling Initiative – Special Purpose Vehicles (Provincial Government)

Western Cape Tooling Initiative has trained 25 unemployed people on a pre-apprenticeship system. merSETA is currently working together with WCTi to find placement for the apprentices at relevant companies. 10 out of the 25 apprentices are female.

25 more unemployed people will go through the same process.

Training provider linked to project is Northlink College (Wingfield Campus)

Provincial Projects / Initiatives that merSETA is participating in to Assist/Support Unemployment


Western Cape Cape Town Boatbuilding Initiative - Special Purpose Vehicles (Provincial Government)

The industry is looking at training 15 unemployed learners on the small craft construction qualifications, once registered. Falsebay College (Westlake Campus) will be the training provider

Western Cape South African Oil and Gas – Special Purpose Vehicles

The South African Oil and Gas Alliance has trained approximately 300 unemployed people over the past year, of whom 100 have been placed. However, we will be working very closely with SAOGA to ensure that participating companies give the learners whom have not yet been placed, the opportunity of an apprenticeship and/or learnership to receive grants from the Merseta through the funding window. Falsebay and Northlink are the identified providers



Western Cape Mitchells Plain Summit Project A commitment to support Mitchells Plain with the unemployment problems has taken place. The commitment of approximately R 10m to 1)Retrain 50 -100 previously retrenched persons, 2)50 Learnerships at Cape College of Cape Town and Northlink, 3)75 learners to attend skills programmes particularly New Venture Creation, 4)25 bursaries, and 5)25 learners to have the opportunity for experiential learning.

Western Cape Beaufort West Provincial Government Project

Beaufort West has approximately 45 youth that passed with matric exemptions. We will be meeting with NGO`s CBO`s, municipality, DoL and various other organisations and Merseta stakeholders to find placement for these unemployed matriculants to enter the skills development arena .



Eastern Cape The Nelson Mandela Metropolitan (Co-Operation Agreement)

Avail bursaries for BEng: Mechatronic programs.Placement of students in the IndustryPromoting Women in Engineering

Eastern Cape The Eastern Cape DoE, Mercedes Benz South Africa and Merseta private and public partnership

Closely working with Public Sector Colleges in upgrading the instructors’ specialist and methodological skills.

20 apprentices to undertake training during this year.

The training of 20 Educators and 500 learners Maths and Science – improve pipeline

Eastern Cape Government Lay-off Scheme linked to the merSETA Retrenchment assistance plan

Retrenchment assistance plan (903 employees stand to benefit from merSETA companies across Eastern Cape).

The merSETA RAP participating companies makes more than 95 % of all Eastern Cape companies participating in the government funded training lay-off scheme).


Region Project Name Project Description

Eastern Cape Coega/merSETA (Provincial) Coega/merSETA: through the NSF funding and merSETA employers, more than 200 unemployed learners will be trained. The spread from L2 – L4.

Eastern Cape National Skills Fund/merSETA partnership (Provincial) Source merSETA host companies to place NSF funded

learners Buffalo City Municipality, Nelson Mandela Bay Municipality and Lukhanji local Municipality. (150 unemployed learners)

KwaZulu Natal KZN Provincial Government & ASGISA 2/ merSETA partnership

Training of more than 250 apprentices in the Manufacturing and Automotive Sectors from NSF funding.

KwaZulu Natal KZN Special Presidential Project The project aims to develop 76 youth either through apprenticeship or learnership programmes into employable individuals sponsored by merSETA.

Of these 76 learners 65 are apprentices and 11 are learners.



Free State & Northern Cape

AATP Project Training 10 automotive body repairers and 12 spray painters to artisan status within 2 years. Partnering with Public College


Current Project: Programme for 20 handicapped youth

20 learners from Dr Bohmer Special School to be trained in welding application and practice (NQF2)


Grootvlei Correctional Services Project(Provincial/merSETA)

Training 40 inmates from Grootvlei Prison on welding application and practice (NQF2). These learners are at the point of being discharged on parole and will then be absorbed into the industry.


Science and technology support to learnersmerSETA and Schools

Target 100 x grade 12 learners. To be extended to grades 10 and 11 too.


Premier of the Free State Project

250 unemployed youth trained in motor mechanics and welding (NQF 1 and NQF2) and were placed at merSETA employers





Initiation Phase:Empowerment of CBO’s/NGO’s and Co-ops (target 10 per year)

Management and OD training with hand holding / mentoring to grow capacity and impact.


Initiation Phase:Douglas Civil Society

Rural CBO support – 40 learners in welding, air conditioning and motor mechanics.


Initiation Phase:Retrenchment Assistance Programme

Individuals who have lost employment due to economic downturn. Target of minimum 50 individuals per annum.


Initiation Phase:Expanded Public Works Programme

Electrical Skills Programmes for 78 individuals.


Limpopo & Mpumalanga

Vulamatjuba Artisan Training Project

The actual intake is 200, and 60 apprentices have already started. The project is funded by the Mpumalanga Premier’s Office. The aim is to create a pool of artisans in the Province. merSETA companies are hosting the apprentices


Public Works Artisan Training - Limpopo Province

24 apprentices have already started the programme and will be hosted at merSETA companies


Sekhukhune Municipality and Capricorn FET College

Sekhukhune Municipality and Capricorn FET College will be embarking on training of 100 artisans. Funding is done by Development Bank of Southern Africa (DBSA). merSETA will assist with host companies


Phalaborwa Artisan Training Phalaborwa has been identified as an area to train artisans in the Province. A partnership will be looked at with the Provincial Government, the training Centre and merSETA



Gauteng South Gauteng Department of Economic Development

merSETA and the Gauteng Department of Economic Development are looking at extending the partnership to continue training to the next level for the 250 learners that have successfully completed level 2 air-conditioning learnership

Gauteng South Gauteng Department of Public Works/ merSETA partnership

merSETA regional office is in the process of carrying out workplace approvals for the training of about 2 000 unemployed learners in partnership with the Gauteng Department of Public Works.

Gauteng North / North West

Industrial Policy ProjectDepartment of Economic Development / FET / AIDC / merSETA

Is aimed at training the retrenched workers for employment on some of the scarce skills areas. These areas include panel beating; spray painting; warehouse skills and logistics.

200 candidates will being earmarked for the initial training phase.

Gauteng North / North West

Provincial Government National Skills Fund project / merSETA

300 unemployed learners on the merSETA aligned programme will be trained. merSETA to assist with host employers


Project Name Project DescriptionABET Current ABET training provided to the unemployed:

• Accelerated ABET = 1 769• Business = 1 020• Occupational = 511

ABET Currently proposing that grants/bursaries be made available for the unemployed ABET learners that have achieved certification at level 4 to be assisted in getting into FET colleges.

ABET Plans for this year is to provide ABET training to 1 000 unemployed learners.

ABET Training for 50 unemployed deaf learners – plans to provide training to another 50 once current research has been completed.

Bursaries 400 bursaries will be made available to young people wishing to undertake further studies at a University or a University of Technology

Bursaries Targeting companies who are providing work experience to (and are receiving merSETA grants for) National Diploma students where merSETA will sponsor B Tech and the companies will offer 1 year employment to the students on completion of the B Tech. This may lead to full time employment. This will increase the pool of qualified and experienced workers.

Bursaries Mentorship processes in place to find out where the students have difficulties and intervening when it counts, before the student fails. Various life skill and personal development workshops to assist our students will be implemented.


Project Name Project Description

New Venture Creation 250 grants will be made available for young unemployed people to participate in the New Venture Creation Project

Retrenchment Assistance Currently 6 000 people have gone through the projectA voucher system will be put into place to assist and train retrenched people. The project is based on demand.

Math's and Science 1 000 learners will be sponsored from grade 10 to 12. Target group being school children

AATP 500 apprentice are targeted for this year on accelerated artisan training program

Gauteng South DoL / UIF (merSETA incubating)

336 previously employed are being trained. merSETA is incubating the provincial government employees to build their capacity. merSETA is assisting with workplaces to do the on the job training.

Unemployed Learners in a learning program

2 400 unemployed learners to be placed into learnerships 1 600 unemployed learners to be placed into apprenticeships 200 unemployed learners to be placed into skills programs

Experiential Learners supported 1 375 learners seeking integrated learning will be placed at merSETA employers to obtain the relevant experiential learning to obtain a qualification


Strategic Imperatives STOCK OF SKILLS Increase skills available to the sector to

meet its short-term needs by investing and encouraging investment and innovative thinking

FLOW OF SKILLS Strengthen the skills pipeline in the medium to long-term supply of skills into the sector

WORKPLACE LEARNING Enhance the capacity of various types of employers in the sector to realise greater returns on training investment and to enable employees to benefit from training

GROWING THE BASE Empower beneficiaries and employers to realise greater benefit from training by improving the base level of learning in the sector

SKILLS INFRASTRUCTURE Strengthen sector mechanisms for skills planning, implementation and partnerships

KPA KPI Measurement TargetStrategic Disbursement

Effective Business Systems Levy Income/Disbursement

Current Level + 20%

Strategic Fund Allocation Surplus/Disbursement

Current Level – 20%

Addressing Identified Training Needs Rand Amount of Sector Skills Requirement: Disbursement

Ratio Improvement + 20

DHET Service Level Agreement

Targeted Performance per Sector Requirement

SLA Performance Criteria 100% Compliance

Merseta Functional Operating Metrics

Corporate Services 5 Year Retention of Critical Skills Minimum Level 90% Candidates @ minimum 4 years

Finance Financial Health and Governance Un-Qualified Report and/or Zero Matters of Emphasis for 5 year term

Corporate Governance The Board is supported in achieving it’s purpose

Report on the effectiveness of the Board

Projects Critical Skills Identification by Chamber as approved by the Board

Itemized Implementation Plan (IIP) Priority by deadlines set

Operations Workplace Accreditation by Chamber linked to Sector Skills Plan

Large Companies 70%Medium Companies 50%Small Enterprises 30%

Leadership(People Management)

En-Visioning the Merseta Culture to Customer Centric Focus

Current Level + 20% Improvement Y-o-y

Establish Sound Employee Engagement(To be assessed via Climate Survey on 6-monthly basis)

Merseta BrandHealth

Position Merseta as an organ delivering to Training Mandate of its Sector(Monitoring Service)

P-Factor or Equivalent Measurement 5 and More by the end of the term and/or 0.25 factor improvement p.a.

merSETA Strategic Framework

Manufacturing, engineering and related services SETA (merSETA)

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