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Minister of Labour Mr Tito Mboweni today launched the Skills Development Bill that aims to sharpen the link between workplace education and training and economic growth and employment opportunities.

The Bill seeks to increase the quality and quantity of learning in and for the labour market. Such learning must be cost-effective, meet training needs and complement employment and economic growth in South Africa. The Bill is aimed kick-starting the skills revolution which is needed to help South Africa compete globally.

Decades of under-investment in skill development has resulted in a skills profile in which, of the economically active population in South Africa, only 3 million are skilled or highly skilled (some 20%) while 7 million are so-called semi-skilled or "unskilled" and 4 million are unemployed (together some 80%). This profile compares poorly to other middle income and advanced industrial countries. For instance, South Africa has 3,7% professionals in its labour force as compared to 7.8% and 10.5% respectively. The same shortage is evident in craft and related trade workers where South Africa's 12,4% compares to 18,3 in middle income and 16,5% of advanced industrial countries.

The South African economy can no longer absorb large numbers of relatively low skilled labour. In the 20 years from 1973 to 1993 the proportion of highly skilled jobs (needing at least a post-matriculation diploma) rose from 10% to 17,3%, the proportion of skilled jobs rose from 28,6 to 34,3%. However, the semi-skilled and unskilled categories decline from 61,3 to 48,4%.

The consequence is an alarming growth in unemployment, especially amongst the ranks of those with relatively low level skills. Youth unemployment is a particular problem. Half the 4 million unemployed are young people under the age of 30 with at least 9 years of schooling.

General schooling, on its own, is simply no longer a sufficient basis on which to gain access to the labour market. New forms of skill development is vital. The good efforts of individual companies and even one or two industries are not sufficient. This is a national crisis, and it requires a national strategic intervention.

The Skills Development Bill aims to provide such a national strategic intervention to improve industry training and the linkages between the education and training system and the labour market.

The mechanisms for achieving this include the establishment of a Research and Strategic Planning Unit to assist in the identification of skill bottlenecks in industry and track the growth and decline in employment and occupational categories across economic sectors. This will enable government to target skill formation and improve education and training decision making in industry and in the education and training system.

A new system of learnerships is proposed to replace the declining apprenticeship system (a decline of 85% over 20 years). The learnership proposal presents the opportunity for re-igniting intermediate level skill formation in the country, and creating effective specialised learning opportunities for those in the further and higher levels of the education system, as well as improving the education and training opportunities of the unemployed and underemployed. Mechanisms to improve the Department of Labour's employment services and the provision of education and training are further proposals in the Bill.

The strategy locates skill development within a broader policy context including macro-economic, industrial, labour market and science and technology policy, by proposing mechanisms for integrating skills development into these other policy approaches.

The Bill also contains proposals for a national levy-grant scheme and a National Skills Fund.

Levy schemes on payroll are in operation in over 30 developing countries, including Brazil, Korea, Nigeria, Kenya, Zimbabwe, Singapore, Malaysia and Mauritius. The World Bank has actively supported the development of these schemes, specifically those in Mauritius and Malaysia in the 1990s.

In South Africa there are a number of reasons why we believe that a national training levy is appropriate at this time:

* Firstly a strong case can be made for the large number of factors beyond the firm which need collaborative training efforts on the part of companies if the economy as a whole is to be able to adapt to rapid globalisation. These include rapid structural change, overall low skill profile reducing the rate at which productivity enhancing technologies can be learnt and diffused, poor general education base and rapid labour turnover at times of economic growth.
* Secondly, the premium that firms are placing on skilled personnel appears to be leading to high labour turnover. The levy ensures that all companies make a basic contribution towards training in their sector. If they choose not to utilise their funds to undertake their own training, they will at least have made their fair contribution to skill formation.
* Thirdly, the primary purpose of the levy is to raise the base of training in the country, and to improve the quality of this training. Small and medium sized companies will be encouraged to begin training, to develop a sustainable training capability, while larger companies will be encouraged to systematise the training they do and to target more of their training at the upgrading of people at the lower end of the occupational structure.
* Fourth, the levy will provide the resources for transforming existing training infrastructure and establishing new training infrastructure. This training infrastructure is critical to overcoming the information and resource constraints facing small and medium companies, to undertake appropriate training programmes as well as access grants and subsidies as well as comply with the levy. It will also contribute to the promote of quality learning, linked to the National Qualification Framework, within industry.
* Fifth, the levy will contribute towards worker ABE programmes.
* Sixth, the design of this levy will strengthen the existing voluntary schemes, by improving the scope and hence overall compliance, as well as improving the efficiency of collection. It will also release ITBs from the burden of collection. In addition it will expand the coverage of training to sectors of the economy where there has been little or no training, and to occupational groups that have previously been neglected such as production workers.

A national payroll levy at this stage of the skill development process in South Africa must be viewed as a temporary measure, which should built a "training culture" within industry and create more systematic approaches to training. The success of the levy will be determined by the speed with which it becomes redundant, by improving the private sector's response to training. So it is imperative that the levy itself be regularly reviewed to establish the degree to which it is achieving its objectives and whether or not it should be withdrawn.

The proposed National Skills Fund is a mechanism to channel special subsidies to target groups including the unemployed and disadvantaged groups. These subsidies will be channelled through learnerships, SME training support and unemployed training programmes.

The Bill's key proposals, which the Cabinet approved in August, will now be tabled for consideration in the National Economic Development and Labour Council (Nedlac). It is anticipated that the Bill will be presented to parliament this year.

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