Address by Mr Malusi Gigaba MP, Minister of Public Enterprises on the occasion of the launch of the ESKOM Welding School in Johannesburg
29 Mar 2012
I am truly honoured to address this important occasion of the historic launch of Eskom's Welding School this morning. We are moved by this initiative which affirms Eskom’s commitment to the pursuit of government’s objectives of creating jobs, developing skills and growing the economy.
This initiative is timely, coming as it does in the context of enormous socio-economic challenges facing our country, particularly to defeat poverty, inequality and unemployment.
The most urgent challenge confronting our democracy at this particular juncture is to transcend beyond the democratisation phase and usher in the second transition characterised by accelerated economic growth rates in order to create jobs and the wealth that enhances the standard of living for all South Africans.
We are challenged further to increase access to the labour market, develop industrial capabilities to decrease the country’s dependence on primary commodity exports, and transform the ownership and management profile of the economy to reflect the demographics South African population and build a racially inclusive economy.
Our democracy is confronted with a debilitating situation of youth unemployed, which has been persistent throughout the advent of our democracy and has been worsening as the time passed, linked with lack education, skills, capacity and general opportunities. It is quite obvious that one of the measures of an improving quality of life in our country will be the extent to which we succeed to address youth unemployment and the vicious cycle of poverty affecting black South Africans, particularly the poor, women and rural.
Because of its persistence for over eighteen years, youth unemployment has been said to be the biggest threat to the stability of our democracy. Already, the preponderance of youth in all social protests and unrest can be attributed to millions of youth who are not productively engaged. It is for these reasons that the government has taken a strategic decision to guide and actively intervene in the economy to drive investment in targeted sectors of the economy which could maximise economic development.
We have identified that investment in human capital to support economic development and industrialisation is one of the critical determinants towards building a de-racialised and inclusive economy.
Cheap and unskilled labour played a critical role in supporting the apartheid-colonial economy and determining the position of black people in relation to production and it continues even to this day to confine them to unemployment, the Second Economy as well as poverty, and inequality. It was because of its short-sightedness, indeed because it refused to recognise black labour and people as invaluable human capital and thus to invest in their development, that the apartheid system locked itself up in primary production and could not industrialise and thus diversify both production as well as the skills base.
Public investment in the supply side of labour facilitates vertical mobility in the economy and in society at large and also determines the development path and industrialisation trajectory of the economy. It fundamentally breaks the traditional social hierarchy, which refers to communities and households who have been subjected to intergenerational poverty and inequality.
The New Growth Path (NGP) calls for diversification of the economy – transitioning from a resource-base economy to a knowledge driven economy whose competitiveness will be dependent on the quality of our human capital as a national assert. It stipulates that to develop, the economy must address the skills mismatch and find the balance between labour intensive and capital intensive skills to encourage innovation and enterprise development. In South Africa, skills are already a significant constraint on our economy.
It is estimated that we face an immediate shortage of over 58 000 artisans, the bulk of whom are required in our manufacturing and engineering industries. This is the tip of the ice-berg as we are also confronted with ageing engineers and a brain-drain. Fifty two percent of the artisans in our manufacturing sector are unqualified – in other words, they have learnt their skills purely through on-the-job imitation, rather than through any systematic training process, which limits their adaptability and ultimately imposes a constraint on the productivity and competitiveness of these sectors.
This could delay our relentless commitment in building an industrially vibrant and innovative economy.
The recently announced public investment programme in social and economic infrastructure which will be rolled out over the next 5 to 10 years will change the structure of this economy. This magnitude of this rollout will increase the skills demand in the economy, while it presents an opportunity to enhance our country’s skills capacity and growing intermediate industries in the economy.
For instance, our energy build programme which involves the nuclear-build suggests that Eskom and its suppliers will require an additional 3 000 scientists and engineers and 24 000 artisans over a five year period from the commencement of the programme. This excludes highly specialised skills that would be required with technology transfers associated with nuclear design and manufacturing.
To date, through the construction of Eskom’s two coal power stations, the skills and employment impact it has generated, 160 000 people are directly or indirectly employed in the construction process. The building of the plants consumes 43% of relevant university graduates, such as engineers and project managers, while 48% of the yearly national output of artisans is employed on the projects. Over the next five years, the Eskom build programme will require over two thousand engineers and almost three thousand artisans per annum.
The challenge of producing adequate skills for these projects is compounded by the reality that 30% of Eskom and Transnet’s artisans, technicians and engineers are approaching retirement. Transnet needs to increase the number of engineers employed by 200% and the number of technicians employed by 40% as soon as possible. We have over seventy thousand unemployed matriculants and graduates with diplomas. We have a further fifty thousand unemployed people who have had experience as an artisan.
Clearly we need to mobilise our training system to provide these people with the skills that the economy urgently requires. We also have a challenge in the efficiency of our training system – only 64% of the artisans registered in 2012 passed their competency tests – we need to improve this pass rate as well as increase the number of people who are registered.
The NGP has the objective of creating five million jobs by 2020. In order to achieve this objective, the NGP has set us the target of producing 50 000 additional artisans by 2015. This will require us to expand both the scale of our artisan training programmes as well as their efficiency – in other words, we need to start training more artisans, in a way that will create prospective employment.
We must therefore look at the skills development system holistically – today’s opening of the welding school, is a step towards the alignment of training needs in the economy, industry requirements and long term objectives on the country. In order to do this on a continuous basis, we need to ensure that commercial enterprises play a leading role in the skills development process whilst business itself cannot abdicate its responsibility to ensure a dynamic and productive skills development system.
The NGP emphasises that the only way to achieve our national economic objectives is through building multi-stakeholder partnerships. As such, the social compact on skills development in the form of the National Skills Accord with social partners is government’s national commitment to building sustainable economy through co-ordination.
Our State-Owned Companies (SOC) have a key role to play in developing skills in their own right as they have organisational capacity and are further stimulating demand in the economy through their building programmes. We need to expand our output through SOC training facilities and enhance the Further Education and Training System through partnerships and sharing of knowledge.
In addition, SOCs should establish a collaborative effort between them and their key local and international suppliers, including special programmes with international original equipment manufacturers.
In order to ensure an adequate supply of skills for these programmes Eskom has implemented a number of special initiatives:
- They have established the Eskom Academy of Learning to coordinate and integrate all learning throughout Eskom,
- They have invested over R780 million in training over the last financial year,
- They have established 24 training centres while there are 244 on the job training sites,
- Presently more than 5 400 learners in Eskom are registered, about 4 200 of whom are in engineering and the technical fields,
- Currently, about 2 200 learners are matriculants in trade training and there are 1 400 graduates in internships respectively, and
- They have committed to train an additional 5 000 learners, 2 500 of whom will be unemployed matriculants in trade training and 2 500 will be unemployed graduates in internships.
Eskom has also mobilised its supply chain around the skills development challenge. They have leveraged the training of 6 130 people by suppliers as part of their contractual obligations in the building of the power stations – a number of whom are getting on the job experience overseas. In addition, Eskom’s suppliers are also adopting Further Education and Training colleges to enhance teacher competence, provide bursaries for local students and ensure that they are producing artisans with relevant and rigorous qualifications for the realities of the build programme.
Transnet has also significantly enhanced its skills development programmes with the establishment of special “schools of excellence” for each Transnet business unit. There are presently 20 campuses covering curricula relating to ports, rail, pipelines and engineering. Transnet is providing engineering bursaries worth R144 million per annum and is spending a further R73 million on artisan bursaries.
Transnet is already providing training for 854 artisans which is significantly beyond its business needs and is exceeding the targets agreed in the national skills accord.
We are committed to leveraging our SOCs to train beyond their immediate business needs to provide for the broader economy and they have already started this process on a relatively small scale. However to expand the scale significantly, we need to upgrade facilities and raise additional money for bursaries. For example preliminary estimates indicate that Transnet requires R212 million for an additional 1 000 trainees and R325 million for an additional 2 000 trainees.
The Department of Public Enterprises (DPE) is working with the Department of Higher Education and Training to see how this funding can be unlocked. All our SOCs, including SAA, Denel, SAX and SAFCOL have committed to the National Skills Accord and are leveraging their training facilities to produce scarce and critical skills for the economy.
Our department has also taken a proactive approach in its oversight role by developing a Youth Economic Participation programme which was launched in 2011, which seeks to create and exploit economic or employment opportunities within the SOCs for the youth. This programme strengthens the department’s capacity for structured coordination and alignment with national priorities and its central objective is to ensure that SOCs create opportunities that will lead to young people pursuing productive activities and generating income.
This will assist our SOCs to harmonise their youth training and skills programmes so that they impact to society in a meaningful way and lead to inclusive development and growth.
By 2010 there were only 10 Professional Welding Engineers and 5 Professional Welding Technologists still active in South Africa. In order to deliver the Medupi power station on schedule we were forced to import welders – we cannot allow this to happen again. It is in the context of Eskom’s specific challenges and our commitment to develop skills for the nation that we are here today to launch the Eskom Welding School. The School is part of Eskom’s professional welding capability development programme. Eskom will be investing R357 million in this programme over the next six years.
I congratulate everyone for their efforts in establishing the School and look forward to the school producing world class welders as a key component of our economic development process.
For further information, contact:
Cell: 072 869 2477
Issued by: Department of Public Enterprises
29 Mar 2012
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