The sector education & training authorities (Setas) have this year gone full circle: from underspending to overspending and from underperforming in producing learnerships to overextending themselves. Many of the Setas have run out of funds to finance learnerships and some have been victims of fraud.
The growth in the spending numbers shows that the Setas' learnership systems are finally being accepted by employers, after years of being held back by scepticism and bureaucratic red tape. But lack of funds is now emerging as the major issue.
The department of labour was unable to provide any details, but it looks as though most Setas will overspend this year, with the exception of the information systems, electronics & telecommunications technologies Seta (Isett), which has been bedevilled by management problems.
The construction Seta's (Ceta) financial problems are the most well-publicised: it is said to have overextended its learnership obligations by R250m, something acting CEO Tebogo Tejane denies.
"It's a misunderstanding. We do have 5 000 learners [not covered by funding] but they are not yet active; they have not entered the system yet."
But Tejane's statements are not reassuring : the financial management problems in Ceta have been so severe that it has still not approved the 2005/2006 budget, nine months through the year. Either way, Ceta is pulling back its spending. The 5 000 learners will have to enter the system next year and grants to employers for learners are to be slashed in future.
The services Seta took on no new learners in 2005, to avoid overcommitting itself, and the manufacturing, engineering & related services Seta (Merseta) ended the past financial year with a large liability, having overspent by about R30m on National Skills Fund (NSF) projects. The NSF has the task of supplementing the Setas by funding special skills projects .
Several Setas have looked to the NSF for more funds, but for reasons which the department of labour has yet to explain, the fund has sat on its huge cash pile and plans to release funds only in February. At the end of October the balance available in the NSF was R1,3bn, as only R451m had been disbursed during the 2005/2006 financial year, though the labour department says all this money is "committed".
Services Seta CEO Ivor Blumenthal says he has tried without success to get money out of the NSF. " I have turned away 60 000 learnership applications - all in scarce skills. I could have put them all into learnerships if I had had the money."
Part of the reason for the overcommitment by the Setas is that they have been in a race to meet their numbers - a target of 80 000 learners by 2005 was set by the growth & development summit in May 2003. So how have they done?
Labour minister Membathisi Mdladlana is immensely proud that the target of the summit was exceeded by 7 000, six months ahead of the deadline.
But do the learners match what industry needs?
The truth about drop-out rates and graduations is that most Setas quite simply don't know what happened to the learners they sponsored and whether they passed or failed. Research done last year was able to verify only that a small proportion of learners had completed their courses.
The types of skills development received by learners also need analysing. Several Setas trained large numbers of unskilled people in relatively low-skill occupations. These people usually don't find employment after their learnership - though they do get some workplace exposure .
The effect is that they push the numbers up without necessarily producing the required skills . For example, the services Seta, which with 28 000 learners has the highest number of any to date, includes large numbers of people trained in cleaning services (2 000 plus) and also includes learnerships in beauty, hairdressing and nail therapy.
Isett, a Seta responsible for a sector where skills are particularly scarce, also appears more successful than it is because of large numbers of learners at very basic levels of skill. To date Isett has sponsored 1 546 learners, but 94% of these were on the level of matric (NQF level 4) and most did not find employment.
However, CEO Oupa Mopaki says that employers are keen on the programme and want the Seta to train these learners further. "With the big numbers, the idea is to try to make an impact on unemployment, especially youth unemployment. Our strategy is to move them onto NQF level 5 and there is a demand for this from employers," says Mopaki.
Ceta's numbers are also positively boosted by a crash course for emerging contractors, which in a relatively short space of time qualifies emerging contractors as builders, with the ability to bid for various public-funded projects like housing and public works contracts. Out of its 7 100 learners to date, 1 400 have been certificated as "contractors".
But the hard skills - electricians, pipe-fitters, plumbers and other artisans - are located mostly in Merseta, the mining qualifications authority and the chemical industries education & training authority.
Here the numbers of learners are growing, but are way off what the old training system used to produce before the introduction of the Seta system in 1998. Merseta, for instance, has produced 6 935 artisan apprentices in the past five-year period in the engineering, auto, auto components and plastics sectors. Twenty years ago, in any one year, there were 13 000 artisans in training in the engineering sector alone.
Merseta also helps to inflate Mdladlana's 80 000 target significantly. By March 2005, Merseta had produced 11 268 learnerships (including the apprentices mentioned above). But 4 333 were trained in skills not in demand and were not offered jobs afterwards.
A problem common to many Setas is weak management. Several spent the past year preoccupied by corporate governance and financial problems, litigation and staff suspensions.
Mdladlana's unveiling of "a new landscape for the Setas" in March, which was intended to solve these problems, was a disappointment: all he did was to merge four Setas into two.
He also failed to address their unwieldy board structures, which are made up of large numbers of employer and trade union representatives, and consequently exercise weak oversight.
Isett, for instance, received a disclaimer on its financial statements last year and has two senior managers on suspension - the chief financial officer (CFO) and the accreditation manager. But both the CFO and CEO received substantial bonuses (though not their full bonuses) at the end of March.
Chairman Jake Rachidi says the bonuses were awarded because the board hadn't yet become aware of the problems at Isett, which later necessitated the CFO's suspension.
Ceta CEO Themba Dlamini left the organisation last month - more than 18 months after an internal report by Deloitte questioned his capability. The size of Dlamini's settlement is "confidential", says Tejane.
Weak internal controls have exposed Setas to corruption and fraud.
Tejane estimates that Ceta has lost R150m in fraud where employers did not give learners their full allowances or where training providers used the funds for other purposes.
Blumenthal says the services Seta has uncovered examples where employers took the grants but learners remained at home and did not get any workplace training.
Part of the problem with the learnership system is that an employer can profit from it. Employers receive yearly grants, which vary from R20 000 to R65 000/learner. They can also claim tax savings pf R10 000 when the learner begins training and on completion.
Ceta is the highest-paying Seta. Apart from the R65 000/learner grant it offers employers an extra R5 000 to keep a learner for five weeks after the completion of the learnership. The upshot is that construction companies are able to get free employees for a limited period. Ceta is now reconsidering the size of its allowances.
Numbers are no longer the problem: Mdladlana's challenge for the next year will be to shift from quantity to quality.
