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I am delighted to announce that the Cabinet today approved the tabling of the Skills Development Bill to Parliament.

This Bill promises to revolutionise skills development in South Africa. For the first time in this country's history, employers, labour and community constituencies representing all major sectors of the society will work together in a new partnership with government - across all departments - to tackle the skill shortages that hamper growth and job creation in this land of ours.

Everyone is contributing and those who train will benefit directly. Even employers who do not train will benefit - they will find more skilled people answering their advertisement. More skills will be good news for everyone - for employers in large and small firms looking for productivity improvements; workers looking for career paths; unemployed people looking for new jobs or wanting to create their own. New opportunities - in the form of learnerships - will open up for young people who up to now have found it hard to get their first job before they turned 30! Learnerships will give people work experience linked to courses for a specific occupational qualification in any field where there are work opportunities.

There has been a remarkable degree of agreement between the social partners in NEDLAC on the Skills Development Bill. Most notably, employers have agreed to contribute an amount equal to 1% of their payroll towards skills development. And equally importantly, trade unions have agreed to start at this level - although they have indicated that they would like the percentage to increase over time. Government too has committed itself to budget and spend at least 1% of their personnel costs on training - to increase the quality of the services they deliver to the country.

In the different sectors of the economy - health, agriculture, mining, tourism and so on - private sector employers, the relevant government department and the associated trade unions will get together to form Sector Education and Training Authorities- or SETAs. Private employers will pay their levies directly to these bodies. The government departments will include their 1% as part of the normal budgeting process.

Employers and unions will manage their own funds - within guidelines. I will decide the guidelines after I have received a recommendation from the National Skills Authority - on which all the main stakeholders are represented. It is a very decentralised and democratic system. The Bill envisages that grants will be paid to individual companies that meet these guidelines. So it is possible that a company can get the bulk of its levy back to support its own training. To get its funds back, a company will have to pay careful attention to the quality of the training it provides. Increasingly programmes will have to be quality checked by an accredited agent of the South African Qualification Authority. This goes to one of the central purpose of the Bill - to increase the quality of training provided by companies!

How, you may ask, am I so sure that SETAs will be formed across the country? Well, firstly there is complete agreement between all parties about the need to form SETAs, and secondly, the Skills Development Bill says that all employers must pay the levy - no exemptions. However they will pay the levy to a SETA, and control its pending, where they have formed a SETA. If there is no SETA, then they will pay it to a national Collection Agency which will use the money for "national priorities". Need I say more?

"National priorities" are those areas of skills development which, for one reason or another, are not likely to be addressed by employers within SETAs without some extra incentive. Let me give you some examples: skills for workers facing retrenchment; skills development needed to entice 'potential' employers such as a foreign or domestic investors into new areas, skills for people in very small businesses, skills for young people trying to enter a new career through a learnership and for community development programmes.

These "national priorities" are those skills development programmes needed to help South Africa adjust in the face of the massive changes sweeping across our economy as a result of falling tariffs and increasing global competition. Individual employers and workers cannot alone bear the full cost of training in the face of massive retrenchments, new and sometimes risky investments, social development programmes and the like. Government has indicated its commitment to make a significant contribution to a National Skills Fund for such programmes through the budget. However, given that the National Skills Fund is something like a skill insurance policy against tough and risky times - government believes that all SETAs to contribute 20% of the money they collect tot his Fund.

Trade unions have supported this idea - in NEDLAC they made it clear that this is their contribution to enhanced employment security and growth. They know that international evidence shows that employers often shift the cost of the levy onto them through lower wage increases and unequal sharing of productivity improvements. Nevertheless they have made this commitment. Sadly employers have yet to be unconvinced. They want the National Skills Fund to be funded by government alone. We trust that they will see the merit of the proposed scheme before long.

With contributions from both government and SETAs matching grants will be able to be provided for approximately 20 000 learnerships, 34 000 micro-enterprises; 10 000 retrenched workers; 10 000 unemployed people in Spartial Development initiatives and fully-funded programmes provided for up 66 000 unemployed people each year. All of these grants and programmes will be targetted to areas of employment growth - by the people who are be actively involved in the labour market - namely employers and unionists - at local, sector and national level. Funds will increasingly be used only for courses which lead to recognised qualifications on the National Qualification Framework - as high quality education and training is essential if we are to leapfrog into the 21st century.

Once the Bill is passed by Parliament and promulgated by the President later this year we see a period of about a year in which the majority of the SETA's will be established. Already there are sectors their constitutions and preparing themselves for registration - in Local Government, in Public Service and Administration, in the Food sector, in Tourism and Hospitality, in Mining, in Building and Civil Engineering to name but a few.

The European Union have generously granted us a R250 million support programme to assist the SETAs, the National Skills Authority and the Department of Labour staff to get up to speed with the many new functions they will be expected to perform. They levy will only be collected in the year 2000 once the SETAs are in place and able to starting handing out grants. In the interim funds from the fiscus and funds from the European Union will be used to pilot different aspects of the policy. For example, some 4000 learnerships are planned to be completed over the three years of the project. In some areas we have already begun - we have 250 learners in building and hospitality learnerships in Kwa-Zulu Natal right now, thanks to support from the Danish government. I invite you to contact the Department of labour Provincial Office and to write about these initiatives in your newspapers. Anticipating the National Skills Fund, we have also agreed to support the training of unemployed people for the new VW plant in the Eastern Cape where some 1500 new jobs will be created.

It is true that the financing of the National Skills Fund is an area where consensus has not yet been reached. However, I urge you to look beyond this issue and record the considerable areas of consensus. I believe that you should celebrate the achievement of this visionary programme - which is supported by all major social partners across all sectors of the economy whether private of public, whether in self-employment, or in the employ of a large or small firm or not yet employed. With this level of support I believe we are on the brink of the skills revolution of which I spoke when I launched the Skills Development Green Paper in March of last year.

For further enquiries contact Samantha Henekeman on 082-889-1517.

Issued by the Ministry of Labour, 13 May 1998

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