SCARCE and CRITICAL SKILLS

Transcription

1 South African German Development Co-operation National Skills Authority Briefing Paper SCARCE and CRITICAL SKILLS October 2007 Commissioned by the Department of Labour and

2 TABLE OF CONTENTS ACRONYMS AND ABBREVIATIONS...3 METHODOLOGY AND CONSULTATION...4 Consultation during the development of the NSA Briefing Papers...4 Acknowledgements INTRODUCTION SCARCE AND CRITICAL SKILLS: A SOCIO-ECONOMIC PRIORITY National focus on addressing scarce and critical skills The development of a National Scarce and Critical Skills List Challenges in determining and addressing skills needs DEFINING, LOCATING AND CONTEXTUALISING SCARCITY Early recognition of the skills crisis Competing forces, interests and demands Defining scarcity Confusion and contestation around terminology Challenges faced in identifying scarcity Wage pressures and scarcity MEASURING SCARCITY Methods for identifying and measuring scarcity Promoting uniformity in identifying occupations on the OFO Key concerns relating to measuring scarcity The danger of double counting Validity of data on scarcity Veracity of data on scarcity Quantifying the impact of scarcity The methodology for measuring scarcity ADDRESSING SCARCITY NSDS and JIPSA focus on scarce, critical and priority skills Medium- to long-term interventions Short- to medium-term interventions Monitoring success and impact of SETA/NSF interventions Monitoring and analysing other scarce/critical skills interventions WAY FORWARD Implementation/operational level Capacity-building Addressing problems relating to quantitative data Enriching quantitative data Strategic/purpose level CONCLUSION...22 Page 2 of 22

3 ACRONYMS AND ABBREVIATIONS AsgiSA ATR DoL FET JIPSA NQF NSA NSDS NSF NQF OFO SAQA SETA SME SSP WSP Accelerated and Shared Growth Initiative of South Africa Annual Training Report Department of Labour Further Education and Training Joint Initiative on Priority Skills Acquisition National Qualifications Framework National Skills Authority National Skills Development Strategy National Skills Fund National Qualifications Framework Organising Framework for Occupations South African Qualifications Authority Sector Education and Training Authority Small and Medium Enterprises Sector Skills Plan Workplace Skills Plan Page 3 of 22

4 METHODOLOGY AND CONSULTATION The methodology used in compiling the four NSA Briefing Papers on Skills Development in the First Economy, Skills Development in the Second Economy, Funding Skills Development and Scarce and Critical Skills is closely related to the general value-added (results) chain 1. The results chain is the casual sequence of a development intervention, such as the NSDS, and stipulates the sequence for achieving the desired objectives. It begins with inputs, moves through activities and outputs, and culminates in outcomes and impact. The implementation of the current NSDS is funded from the skills development levy. Using these financial inputs, the institutions in the skills development system (e.g. the DoL, NSF, SETAs and others) launch activities that generate outputs in the form of skills development products, including learnerships, skills programmes, apprenticeships and internships. These outputs are then utilised by education and training providers to enrol learners from various target groups to participate in workplace-based learning. The objective is to achieve development outcomes, such as acquiring critical skills in order to improve the employability of learners, so that they will be able to enter the labour market or self-employment on the impact level. Consultation during the development of the NSA Briefing Papers The approach followed in developing these papers has included extensive reading and interrogation of documentation relating to the NSDS. The study focused on examining current legislation and policies, and then analysing whether the implementation processes and structures are having, or are likely to have, the planned impact in the areas covered in the four Briefing Papers. The Briefing Paper includes: a review of the policy and legislative parameters; a review and analysis of the principal criticisms of current skills development arrangements; a review of current skills development interventions and a gap analysis covering the strategic, policy and legislative environment as well as macro-capacity issues; and a set of alternative solutions framed as recommendations. Experiences and views are extensively recorded in the documents. In addition, there is sufficient awareness of these issues amongst the key role players to enable an informed debate. The original Briefing Papers were also tabled at the Skills Colloquium of the NSA with SETAs held on 3-4 May 2007 at Kopanong Conference Centre in Gauteng. As it is assumed that readers are familiar with the skills development system and the NSDS, background information and details on the current situation will be kept to a 1 OECD/DAC Glossary of Key Terms in Evaluation and Result-Based Management, 2002 ( Page 4 of 22

5 minimum. This is not an academic research study; therefore references will be limited. Acknowledgements This Briefing Paper has been prepared by Umhlaba Skills Services and has benefited from contributions by: Sam Morotoba, Deputy Director General: ESDS & HRD Branch of the DoL; Stakeholders who provided feedback on the papers at the NSA Colloquium in May 2007; Selected managers and staff from SETAs and the NSF; Selected people involved in skills development in the areas covered in the Briefing Papers; and Ellen Hüster (GTZ Technical Advisor) and Suzanne Hattingh (MD of Learning for Performance Improvement) who consolidated feedback and prepared the final documents. The development of the Briefing Papers was funded by German technical Cooperation (GTZ) on behalf of the Federal German Ministry of Economic Co-operation and Development. Page 5 of 22

6 1. INTRODUCTION This Briefing Paper has been compiled in order to provide the following information: A comprehensive outline of the environment impacting upon and the status of scarce and critical skills identification, monitoring and reporting. This includes the strategic, policy, regulatory, and implementation environments, as well as the following: o the national and sectoral suitability and applicability of current definitions of scarce and critical skills across the First and Second Economies; o the use, value and validity of scarce and critical skills lists at national, sectoral and provincial levels; o the value-add and use of the Organising Framework for Occupations (OFO); o the identification, monitoring and forecasting of scarce and critical skills; o the identification, planning and implementation of strategies to address scarce and critical skills; and o ongoing monitoring and reporting in respect of the data on scarce and critical skills, and the impact and success of initiatives intended to address these. Proposals on enhancing the current definition of scarce and critical skills, as well as intervention strategies to address these skills. Following the NSA Colloquium, these objectives have been clustered around two themes: 1. Defining, identifying, measuring (quantifying) and monitoring skill scarcity. 2. Identifying, implementing and monitoring strategies to address skill scarcity. The greater focus in this Briefing Paper is on defining and quantifying scarcity. This is particularly relevant given the lack of data and models used to estimate scarcity. Given the timing mid-way through NSDS II insufficient information is available on the interventions that are required to address scarcity, and information on meeting scarce or priority skills requirements is not yet available. In part, the focus on identifying and measuring scarcity has been driven by a need to provide decision makers in the skills development arena with informed estimations of scarcity, on which decisions can then be made to address scarcity. The intent is also to establish an informed platform of estimations on which supply against scarcity can be measured and monitored. 2. SCARCE AND CRITICAL SKILLS: A SOCIO-ECONOMIC PRIORITY 2.1 National focus on addressing scarce and critical skills Following President Thabo Mbeki s state of the nation address in 2004, there has been an increasing national focus on, and contestation about, critically scarce skills, critical skills, scarce and critical skills and priority skills and a bewildering array of suggestions on how to identify, estimate and address these. This national concern Page 6 of 22

7 with scarce and critical skills 2 is appropriately reflected in the NSDS II ( ), which was adopted in March The establishment of AsgiSA and JIPSA directed at ensuring that South Africa achieves the objective of 6% economic growth by 2010 served to highlight scarce skills in particular economic areas as a key constraint to this growth trajectory. Collaborative participation across AsgiSA/JIPSA priority skills-acquisition initiatives and SETA/NSF scarce-skills initiatives should maximise integration and allow South Africa to do the following: significantly increase the supply of skills in occupations identified as facing a scarcity of skilled people; improve productivity; and support new investments. In this regard, it must be noted that the adoption of skills development legislation and policy and reflects South Africa s commitment to the analysis of trends in labourmarket demand and supply. A number of commentators have raised concerns that the focus on skills development targets reflects a more traditional manpowerplanning approach. However, official explanations and commentary on the National Scarce and Critical Skills List stress that the figures reflected in the list are indicative of the extent of the scarcity of skilled people to fill available or anticipated posts in particular occupations. 2.2 The development of a National Scarce and Critical Skills List With the adoption of the NSDS II, SETAs, the NSA and the DoL have been engaged in a process of identifying and quantifying scarce and critical skills across all economic sectors, and within the First and Second Economies. The DoL has had a draft National Scarce and Critical Skills List from around June This list is based on SETA Sector Skills Plan information, as well as on information provided by key departments in the Government s economic cluster such as Education, Science and Technology, Trade and Industry, Public Enterprises and Home Affairs. The DoL is currently updating this list with the data provided by these departments, and based on information from the first round of updates of Sector Skills Plans (SSPs) for NSDS The information on scarce and critical skills has been compiled by counting scarcity in the different sectors against occupational titles used in the OFO. Out of a total scarcity of some 300,000 people, the first National Scarce and Critical Skills List developed by the DoL reflected the following scarcities: 58,000 managers (excluding farmers and farm managers); 106,000 professionals; and more than 40,000 artisans and technicians. 2 The terms scarce skill and critical skill are defined in section 3.3 below. Page 7 of 22

8 Other major occupational categories were excluded from the list, as most occupations in which scarcity was identified were incorrectly identified as scarce skills, as they were clearly linked to critical skills gaps. The Sector Skills Plan annual updates indicate important changes. The scarcity across all SETAs is currently about 968,000 people an eighth of the estimated formally-employed population. If one were to adjust this figure for farmers and farm managers 3 and for two major OFO categories (Machinery Operators and Drivers, and Elementary Workers) 4, this would still leave the country facing an estimated occupational scarcity of around half-a-million people. The drastic increase in the identification of scarcity across SETAs in no way reflects exponentially-increased demand or economic growth, which are usually factors considered in identifying and predicting shortages. Rather, it reflects the greater emphasis and national focus on scarce and critical skills and, of greater concern, the mistake of interpreting skills needs as an indication of scarcity. The development and implementation of coherent methodology for linking anticipated skills demand to current supply will assist in distinguishing between skills needs (i.e. skills that are needed, and are supplied because they are available in the marketplace) from scarce skills (i.e. skills that are needed, but are not being supplied). 2.3 Challenges in determining and addressing skills needs There is no denying that economic growth and social development are dependent on the appropriate supply of skills. However, accurate analysis of the extent and impact of the skills crisis as well as clear strategies to address the skills crisis is hampered by a number of inter-related problems. These include: defining, locating and contextualising scarcity that is frequently related to definitions and the use (or misuse) of terms; measuring scarcity according to accepted practices, and using a multi-faceted approach; and addressing scarcity by disseminating information that is generated through reliable approaches. These three issues are the focus of this Briefing Paper, and they are discussed in more detail in the following sections. 3 Among farmers and farm managers, scarcity stands at over 250,000 people and appears to include the demand for skills amongst small, emerging and survivalist farmers. 4 The occupational competence of Machinery Operators and Drivers, and Elementary Workers is mostly developed on the job through short, directed training or sit-by-nellie -type learning experiences. Page 8 of 22

9 3. DEFINING, LOCATING AND CONTEXTUALISING SCARCITY 3.1 Early recognition of the skills crisis Even at the beginning of the process of reshaping South Africa s labour-market policies and establishing a new legislative framework for skills development, it was acknowledged that South Africa is facing a skills crisis that nothing short of a skills revolution could address. This concern over the skills crisis voiced by the then Minister of Labour, Tito Mboweni, during his 1998 announcement of the skills development strategy, was echoed by Deputy President Phumzile Mlambo-Ngcuka in announcing the establishment of JIPSA in March Under NDSD I SETAs were required to address that skills crisis in SSPs. They were also required to develop a strategic plan to address skills development priorities against a skills demand-supply analysis of current and future political, economic, social, technical, environmental and legislative drivers of skills needs. 3.2 Competing forces, interests and demands During NSDS I skills needs were identified and addressed differently in different sectors because of the need to address a range of contending forces and specific interests. These forces and interests can be clustered as follows: competing economies i.e. the First Economy versus the Second Economy; competing purposes i.e. skills to meet economic growth demands versus skills for redress and access; and competing beneficiaries i.e. skills for the currently employed versus skills for new labour-market entrants. These broad, competing categories are further hampered by the following competing demands: skills demands of large (including some medium and small), high-tech, exportoriented and performance-driven firms, versus small, emerging and largely survivalist operations; and skills demands arising from emerging markets and global economic growth opportunities (such as bio-fuels and bio-technology), versus replacement demand (e.g. resulting from retirement, migration and mortality). In respect of replacement demand, the following should be noted: South Africa s population is predicted to decrease over time, as indicated in projected population figures for For the developed world and for most countries outside sub-saharan Africa the trend is towards lower population growth due to lower birth rates. In the South African population projection scenarios, the negative population growth is directly attributable to a sharp decline in life expectancy. South Africa s population is skewed towards the youth, with more than 60% of the population aged 15 years or younger. Page 9 of 22

10 3.3 Defining scarcity In view of different interpretations and mounting concern about critically scarce and priority skills which were seen as essential for achieving the 6% economic growth necessary to halve unemployment and poverty by 2014 NSDS II focused on critical skills within for the period In 2005 the DoL initiated a process to clarify terminology and to reach national consensus of the use of the terms scarce and critical skills in the skills development environment and for labour-market analysis. After consultation between the DoL, SETAs and the NSA, the following definitions were adopted: scarce skill refers to the inability to find suitably qualified and experienced people to fill occupational vacancies either at an absolute level of scarcity (no suitable people available) or at a relative level of scarcity (no suitable equity candidates available); while critical skill refers to the inability of people to perform to the level of occupational competence required due to gaps in their skills profiles. Unfortunately, the understanding and application of these definitions as well as the development of measures to identify and distinguish between them have proven to be both complicated and contested. This may be because a skill is not the same as an occupation, and trying to align skills needs to occupational categories (as contained in the OFO) is problematic Confusion and contestation around terminology An analysis of SETA SSPs indicates the difficulties experienced by SETAs, researchers and employers in understanding and applying these definitions consistently across different economic sectors and occupational levels. The difficulty in applying the definitions arises partly from a real, often implicit, concern that the focus on scarcity as defined above may result in a drive to import skills that will reduce the urgency to develop the skills of South Africans. In other words, the demand for scarce skills will lead to importing skills rather than implementing focused, short-term interventions to top up the skills that people already have. The fear is that importing skills would further marginalise under- and unemployed people, as this would detract from general education or occupationally-formative education that forms the basis for building occupational skills. This education is essential for developing the skills and knowledge base of a labour force that is sufficiently resilient and flexible to adapt to ever-changing technology, new forms of work organisation and new job requirements. At SETA level, the confusion regarding scarce and critical skills is principally reflected in one of two ways: 1. An inability to source the right people for key occupations: For example, there are a limited number of skilled (qualified and experienced) people available in the country, but a large number of employers competing to employ and/or retain Page 10 of 22

11 them. This is reflected in reports across sectors of a scarcity of thousands of professional engineers. On the other hand, there are large numbers of people who do not have the skill sets needed to meet the challenges of social redress and economic sustainability. Examples of the latter are of large-scale scarcity of farmers and farm managers in the hundreds of thousands, based on an analysis of the number of beneficiaries of the land restitution programme. 2. Incorrect application of definitions of scarce and critical skills: There are examples of the confusion between the two terms where scarcity is identified against occupations, but then critical skills are also listed against these occupations. This is followed by incorrectly indicating interventions that are appropriate for addressing critical skills, such as short courses or skills programmes. 3.4 Challenges faced in identifying scarcity Difficulties are experienced at sector and national level in identifying scarcity as a result of one or more of the following drivers of scarcity: replacement demand resulting from retirement, mortality and migration factors; changing job profiles and occupational requirements (i.e. new occupations); substantial and rapid changes in technology; and an increasing demand for more people arising from new economic or market opportunities. This difficulty is most evident in attempts by Government departments and particular sectors to estimate skills need on the basis of future economic growth strategies. For example, figures are provided of the need for thousands of skilled artisans for the national tooling initiative and the large number of scientists required to support new technologies and research and development. Both examples are based on future economic growth strategies which require significant capital investment and establishment of new industries and employers in the South African market. The numbers of scarce skills required to support these strategies are mere speculation. These needs cannot be realistically addressed within a five year SSP or NSDS. If such projections are made, they should be based on econometric models for predicting economic and sectoral growth, based on sound economic analyses and global growth trends. At the SETA level, the response has been to focus on Employment Equity considerations, replacement demand (principally due to retirement), data from Workplace Skills Plans, and commissioned research. This largely excludes considerations of shrinkage or forecasting against economic growth. Most strategies to predict skills needs apply a two-phased approach consisting of the following: a five-year focus, using econometric models to predict economic and sectoral growth; and Labour Market Analysis approaches to identify current shortages, anticipated shortages and labour supply via educational institutions. The result is a short-term (1-3 year) focus on quantifying both scarce and critical skills, without matching this to strategies required to address scarcity in a meaningful Page 11 of 22

12 and sustained manner. This means that interventions are only designed for a 1-3 year period. Consequently the types of interventions such as short courses, skills programmes and one-year learnerships are not appropriate for the level of qualification required for occupational competence. Key issues that are usually considered in research to identify scarcity mainly wage inflation and employer/individual investment in training are not reflected in SETA SSPs. There is also little appropriately-disaggregated information readily available on the current profile of people in occupations identified as scarce skills. Historical trends analysis has been complicated by changes in Stats SA s approach to the Labour Force Survey. 3.5 Wage pressures and scarcity The question of wage pressures is integral to a number of econometric and other skills-shortage identification models. Anecdotal evidence provided by SETAs and large employers/employer associations interviewed during the study of scarcity reveals that there are occupations that are experiencing significant wage inflation that is linked to absolute scarcity. These range from chartered accountants to spray painters, and include premiums being paid to some categories of apprentices in order to retain staff especially in the face of international demand and global opportunities. Whereas this anecdotal evidence was previously linked to the need to improve equity profiles particularly amongst senior and professional (relative scarcity) occupations this is now being linked to gaps in basic education. These gaps are a result of poor communication; a lack of mathematical and Information Communication Technology skills amongst school leavers, and even those with university exemption; and a lack of appropriate career guidance. 4. MEASURING SCARCITY 4.1 Methods for identifying and measuring scarcity Problems with identifying scarce and critical skills are not confined to a lack of common understanding or application of definitions. There are also problems with implementing common and agreed methods for identifying and measuring scarcity. The practice of identifying and predicting skills needs is itself highly contested. Many commentators feel that it is, in essence, impossible to identify and predict skills needs as the dynamics of economies and labour markets are too complex. A commonly cited example is the growth in the Information Communication Technology sector during the 1980s and 1990s, which created a skills demand that could not have been predicted 5. 5 CCL Is it possible to accurately forecast labour market needs? British Columbia Ministry for Advanced Education. Page 12 of 22

13 Since the practice of predicting shortages is directly related to econometric modelling which anticipates economic growth (specifically in sectors) as well as current and ongoing changes in the composition of the labour market more than one approach is needed to adequately address future occupational and skills needs. The time period over which such modelling is done is also crucial. As mentioned, the dynamics of the economy and labour market are complex and continually changing as the market tries to adjust to shortages and other variables. Consequently, the quality of a needs forecast decreases as the length of the forecasting period increases, since the variables that come into play become too numerous. In this regard, the SETA SSP model follows that of international models that attempt to predict skills demand or supply over a maximum of five years, with constant adjustments to accommodate unforeseen changes. 4.2 Promoting uniformity in identifying occupations on the OFO There are a number of challenges in identifying occupations to be classified as scarce skills. The OFO is becoming embedded throughout the skills development environment, and it facilitates the identification of shared and specific skills demands across economic sectors. However, it should not be assumed that a single occupational title means the same thing across (or even within) economic sectors. It also cannot be assumed that such an occupational title indicates the broad range of skills required by a person to perform occupational duties adequately. This will be partly addressed through the publication of the various occupational descriptors, which will be available electronically with the OFO. Currently, the lack of common descriptions of occupations makes it difficult to claim with any measure of certainty that the occupation against which scarcity is being counted is the same occupation in each and every economic context. This is particularly so when one considers that the final count of scarce and critical skills in the SSPs reports occupations in the First and Second Economies, as well as employers of all shapes and sizes together. This is particularly relevant when one considers that employees in small, micro and emerging enterprises generally perform multiple roles. The competencies of these employees are not necessarily related to training for specific occupations, but was developed through on-the-job experience and short, targeted interventions. Greater exposure to, and use of, the OFO may go some distance in addressing this difficulty. The OFO has given Government departments in the economic cluster an invaluable tool for identifying scarcity at same or similar occupational levels. This was evident during the development of the National Scarce and Critical Skills List, especially in the alignment of scarce skills across the Departments of Trade and Industry, Labour and Home Affairs. The Department of Public Service and Administration is introducing the OFO as a means of identifying and categorising occupations across the public sector at national level. This will contribute to the use of the OFO as a tool for reflecting scarcity across a wide range of sectors, and this will promote a common understanding and more widespread application. The development of sector-specific competencies to accompany each occupational category would be a corollary to this. Page 13 of 22

14 4.3 Key concerns relating to measuring scarcity In the absence of other data a constant complaint which is dealt with later the DoL is currently calculating scarcity on the basis of data provided by the SETA SSPs. While there is strong confidence in the short-term use of this method as a tool for indicating the extent of scarcity, there are key issues that need to be unpacked The danger of double counting Currently the danger of double counti ng arises in the economic cluster skills committee where aggregated scarce and critical skills information from the DoL is evaluated against information available from other Government departments. The danger of double counting in the development of the DoL s master Scarce and Critical Skills List is somewhat minimised by the fact that there are a number of SETAs that do not indicate the numerical extent of scarcity. This ranges from SETAs that indicate only that there is scarcity against an occupation, through to those that give a rating indication of scarcity, i.e. low, medium or high. There are key occupations in which one would have anticipated double counting especially in the face of the infrastructure and building environment namely engineers, technicians, technologists and artisans required across many sectors. However, analysis indicated that they appear to have focused more on operations and production, service delivery replacement demand rather than on the skills scarcity anticipated in view of planned building projects Validity of data on scarcity There are deep and ongoing concerns regarding the value of the information contained in the Workplace Skills Plans. SETAs have constantly raised a number of issues in this regard, ranging from unreliable and even false data (submitted simply to qualify for mandatory grants) through to a lack of clarity on data requirements and definitions. The information provided in WSPs on scarcity is distorted to cover training that will benefit the entity but that does not fall within the scope of the definition of scarcity. Examples of areas that are incorrectly indicated as scarce and critical skills are: what employers intend to train or are able to train within the WSP period; what has been negotiated as the organisation s training focus and recorded and agreed upon in the WSP; or what will maximise access to discretionary grant funding or tax allowances. This problem is compounded by concerns that SETAs may provide incorrect information in order to meet agreed Service Level Agreement objectives and targets. Because SETAs are under pressure to reflect numerical scarcity against occupations for which they have already identified interventions that they will support either through projects or through the weighting of discretionary grants, they may reflect some of this information as scarcity. This is particularly evident in SETA reports of Page 14 of 22

15 scarcity where the identified interventions are at NQF levels 1-3, but the occupation itself requires a qualification and experience at NQF levels 4-6 and above Veracity of data on scarcity As indicated above, the dominant method of measuring scarcity at present is through numerical counting as very few sectors are able to present this number against a baseline data. For example, in developed countries, ratios of professionals to technologists to technicians to trade workers are commonly used to estimate the severity of skills shortage. The common ratio (for developing countries) is one engineer to three technicians to eight artisans. Unfortunately, in the South African context there is little baseline data available to reflect what those ratios are for different sectors in the formal economy. There is thus no recent baseline data against which to evaluate the veracity of numerical reports from employers or SETA on the magnitude of scarcity Quantifying the impact of scarcity From the outset, the DoL indicated that the measure of scarcity could not be uniform across all occupations. The Department also indicated that numerical scarcity alone will not indicate the negative impact on production or service delivery. For example, the scarcity of a small number of people in some occupations may have a great negative impact, while the scarcity of large numbers of people in other occupations would not have such a significant impact. Formulas and tools for quantifying the impact of scarcity are not available. Therefore, employers, SETAs and Government departments have to make scarcity impact judgements that are highly contested. This is particularly evident where SETAs are aiming to meet aggregate numerical training targets. Other indicators and measures of scarcity such as poaching 6 within and across sectors, and the identification and measurement of wage inflationary pressures associated with hard-to-fill vacancies are not evident in the sectoral analyses provided through SETA SSPs. There is also no clear understanding of the various drivers of scarcity in the South African context, or of the way in which these change. Examples of such drivers of scarcity are the following: health-related changes, especially in the light of the ravages of HIV/Aids; the skills drain associated with emigration; economic and sectoral growth; the mobility of skilled people within industries; staff turnover within organisations; technological changes affecting the labour- or capital intensity of particular occupations; and wage inflation. 6 One of the key considerations in instituting the skills levy was the poor investment in training by the private sector that manifested itself (in times of sharp rises in economic growth and shifts in the sociopolitical climate) in employee poaching, wage inflation and large scale overseas skills recruitment. Page 15 of 22

16 Such drivers of scarcity would need to become quantifiable, and should be included in predictions of skills needs through econometric modelling. 4.4 The methodology for measuring scarcity A national strategy for addressing scarcity requires agreement about a methodology for measuring scarcity that is in line with accepted international practice. Such a model should incorporate more than one component or approach. For example: Component 1: Econometric model o Demand model: Employment profiles by occupation and sector (adapted Labour Force Survey), Sectoral growth forecasts, Develop a matrix of elasticities, i.e. change in employment relative to output growth, combined with sectoral forecasts; o Supply model: Use demographic and other data from the National Census (e.g. mortality and emigration), household surveys (e.g. Labour Force Survey) and General Household Survey (unemployment and income), as well as data indicating the number of people qualifying in certain areas after secondary education, as well as information from SETAs on workplace training completed; Component 2: Employer surveys o Sel ect a sample across all economic sectors and interview key employers in each sector on the shortages they experience and anticipated needs (with a bias towards high-level skills), o Check the outcomes of the econometric model against the data produced by the survey (primary data); Component 3: Panel of industry experts o Verify the outcome of the above two processes against information from industry experts, professional or occupational associations, and employer representative bodies. However, one problem with econometric models based on national statistics is that they do not measure skills required in the Second Economy. SETAs could possibly include representatives from SMEs in their quantitative surveys. Also, there must be other ways to quantify the informal sector, such as the information on small-business amnesty from SARS. 5. ADDRESSING SCARCITY 5.1 NSDS and JIPSA focus on scarce, critical and priority skills The scarce, critical and priority skills identified by NSDS and JIPSA reflect a common supply-side intervention proposals that are outlined below. set of Page 16 of 22

17 5.1.1 Medium- to long-term interventions These interventions focus on improving the standard and quality of provision at schooling, further- and higher-education levels with initiatives and policy/regulatory changes. These include the following: national and localised projects to improve mathematics, science and languageliteracy programmes and yield (i.e. qualified learners produced through the system) in the schooling system; the new national vocational certificate system aimed at establishing sound general vocational education in the FET college system; the establishment of Science and Technology Centres of Excellence, and improving the yield of technician and technologist educational training; the establishment of Centres of Training Excellence (Institutes of Sectoral or Occupational Excellence); improving the throughput and yield of engineers at university level; establishing structures and systems to address current blockages in the development and registration of qualifications on the NQF; identifying and implementing mechanisms to enhance the functioning and performance of skills development intermediaries including SETAs, the NSF and Employment Skills Development Agencies (ESDAs); and establishing a single legislative platform for skills development by amending the Skills Development Act to incorporate the active elements of the repealed Manpower Training Act Short- to medium-term interventions These interventions focus on increasing and improving the standard and quality of structured workplace experiential training and certification. These include the following: projects and incentives for employers to offer additional workplace-training opportunities for new entrants to the labour market, including: o projects to increase the pool of trainers, mentors, coaches and training supervisors; o amended Learnership Regulations (June 2007); o projects to modernise and improve the apprenticeship training system and the system of trade-test assessments; and o incentives for a variety of workplace-training interventions, including learnerships, apprenticeships, work-experience placements, internships, and candidacy for registration or licensing purposes; aligning different learning routes culminating in an occupational qualification, including: o adoption of four learning routes to artisan status by both the DoL and the Department of Education; and o closer and stronger partnerships between formal especially public education institutions and the private sector; rep rioritising SETA and NSF funding to provide resources for interventions to develop scarce and critical skills; and importing skills and projects to ensure skills transfer. Page 17 of 22

18 The national standard for good practice in skills development should make focus on making training integral to the work process. Those enterprises that are able to demonstrate that training is an integral component of the business that it is monitored and evaluated should be rewarded and given national recognition. Examples of such good practices should be made available for others to pursue as part of a national effort. Where enterprises include training against nationally-identified skills scarcity, they should receive additional rewards (such as incentives and national recognition). 5.2 Monitoring success and impact of SETA/NSF interventions In some respect it is difficult to make any judgement about the success of SETAs in addressing scarce and critical skills. This is particularly so given that greater clarity and agreement is only beginning to emerge at national and sectoral levels on what constitutes a scarce or critical skill or scarce occupation, and how to identify and measure scarcity. Nevertheless, whether addressing sector priorities or scarce and critical skills, SETAs should at least be able to report on and analyse skills demand trends/characteristics across both NSDS I and NSDS II. They should also be able to identify skills development interventions reported within and across the sector against the current numerical claims of scarcity. This should be possible despite the problems described above on the lack of baseline data, the definitions of scarce and critical skills, and interpretation and application of the OFO. The exponential growth in the number of occupations in which scarcity is being reported, and the numerical extent of that scarcity reflected in the SSP updates do not indicate that SETAs are not addressing scarcity. As previously indicated, this rise in reported scarcity is more likely due to increased awareness of and research focus on scarce skills. It is also too soon to evaluate Annual Training Reports (ATRs) to determine whether employers are addressing scarce and critical skills identified in the WSPs through recognised learning interventions. SETAs also do not appear to have the necessary capacity to conduct this evaluation. In fact, all levels of the data system for reporting on skills development interventions appear to require serious attention. For example, the DoL s strategic research partner has indicated that both SETAs and SAQA are experiencing serious difficulties in providing information and analyses of learning enrolments, throughput rates and successful achievement against which achievements in addressing scarce and critical skills could be measured. The factors contributing to the lack of accurate and reliable data include a large number of different data storage systems, as well as problems in obtaining learner information from training providers. A complicating factor is that SAQA stores information against unit standards or qualifications; and not against the type of learning programme, e.g. the learnership or skills programme title. The SETAs internal data-management systems are also contributing to a general concern about the quality of data. There are protocols for establishing learnertracking systems that will enable SETAs to develop reliable data on beneficiaries of Page 18 of 22

19 scarce and critical skills development strategies. However, such tracking systems are extremely expensive to establish and maintain, and a study on their effectiveness, impact, feasibility and value needs to be undertaken. 5.3 Monitoring and analysing other scarce/critical skills interventions In addition to the above-mentioned difficulties related to skills development interventions to address scarce and critical skills, there is the question of interventions to address scarcity from outside the scope of SETA or NSF/DoL systems. This includes those interventions undertaken by the following: employers that are funding or providing training that is not reflected in their WSPs or ATRs; employers, employer groupings, special-interest groups and the like who sponsor extraordinary skills development initiatives outside of the skills development levygrant system; employers who import skills to meet scarcity; individuals immigrating to South Africa to take up work in occupations in which there is nationally-identified scarcity; and initiatives by the Department of Education, particularly at FET-college level, to increase the numbers of work-ready vocationally-trained graduates, and the number of people attaining occupational or professional degrees and diplomas in scarce skill areas. 6. WAY FORWARD The foregoing has attempted to highlight the most evident problems in the skills development environment related to the identification, measurement and monitoring of scarce and critical skills in the South African context. These can be clustered at two levels: implementation/operational level and strategic/purpose level. These two areas are described below: 6.1 Implementation/operational level This level incorporates all those issues related to problems raised in this Briefing Paper around a coherent understanding and common application of the following: definitions of scarce and critical skills; scarcity of occupations; the OFO and occupational descriptions; indicators and measures of scarcity; the factors influencing scarcity; and skills forecasting and economic-growth modelling. There is general acceptance that while there are problems with the reliability of the currently available scarce and critical skills data both at sectoral and national level the lists of scarce and critical skills conform with reports of scarcity emanating from other sources within the country. The lists are also in line with emerging international trends on skills required to underpin sustained economic growth. Page 19 of 22

20 Scarcity currently reflected in these lists is held to be sufficiently indicative of both occupationally-related scarcity and intensity to serve a number of complementary purposes. Recommendations and proposals to improve the identification and monitoring of skill scarcity emerging from a variety of players including SETAs, the DoL s strategic research partner (HSRC), JIPSA and other players include the following: Capacity-building This involves implementing a comprehensive and interactive capacity-building process to develop a consistent understanding and explains the application of methods to identify scarcity. This capacity building should include the following: Expert input into the development of economic growth modelling and skills forecasting; (It should be possible to customise these models and activities to suit different economic sectors and scenarios. There should also be a clear and concise methodological approach that combines econometric modelling of economic and sectoral growth with approaches associated with Labour Market Analysis at sector level. These methodological approaches should be focused on five-year cycles.) Ongoing support in applying the OFO, and building consensus across sectors and employers in identifying occupations with greater accuracy and reliability; Identifying possible instances of negative consequences of the national and sectoral focus on scarcity; (This should include whether this focus coupled with current incentives has inadvertently resulted in SETAs, employers and others misreporting scarcity in order to maximise the achievement of skills targets or for accessing financial or other incentives.) Briefings to service providers specialising in research into skills development and the labour market to enhance the quality and veracity of information on skills demand, supply, development needs and scarcity; and Briefings to Government departments, particularly those within the Government s economic cluster Addressing problems relating to quantitative data The following are the main problems with currently available quantitative data: a lack of confidence in the reliability of the data obtained from WSPs; the current method of counting scarcity across occupations and sectors that could lead to significant over-counting and over-estimation of scarcity; the lack of data on the success and achievement of interventions; and the lack of baseline and longitudinal data. These problems could be addressed by: improving data gathering and transfer systems across SETAs and SAQA; improving communication between key role players; Page 20 of 22

21 incorporating topical indicators in existing household and employer surveys, such as the Labour Force Survey and the General Household Survey; integrating other sources of information linked to scarce-skills identification, such as wage inflation (wage premiums); identifying the drivers of scarcity, and how they change over time; establishing cost-effective mechanisms for SETAs and sectors to confirm and verify the extent of scarcity; including additional skills information requirements in the WSPs, and increasing the provision of information by employers by linking mandatory grants to the completed submission; and developing methods of information dissemination to relevant parties, such as those who are seeking employment, those entering higher-education institutions, and those counselling and advising learners at secondary and tertiary levels Enriching quantitative data The quantitative data needs to be further enriched by establishing strong qualitative methods for conducting trend analysis in relation to scarce and critical skills. These methods should incorporate both quantitative data analysis and in-depth studies of particular sectors, using a variety of interactive methods including in-depth interviews and focus groups with key and knowledgeable individuals and groups. Such an approach is consistent with accepted international practice, which prescribes a two-pronged approach of econometric modelling of economic and sectoral growth trends (which illuminates demand-side issues) together with Labour Market Analysis approaches (which illuminate supply-side issues). 6.2 Strategic/purpose level In addition to ensuring that the country has the skills base required to continue to support economic growth and development objectives, the DoL has identified the following specific purposes or sub-objectives for the National Scarce and Critical Skills List: For the DoL and its statutory skills development intermediaries, the national list provides a set of indicators for targeted and particular skills development interventions. For the Department of Education, the national list provides a set of indicators for programme development and career guidance that should be provided to learners and communities including schools, FET colleges, universities and universities of technology. This will ensure that learners are informed about a wide variety of careers and employment opportunities. It will also enable these institutions to assist learners to develop the specialised knowledge and skills they need to enter their chosen careers. o A common problem that contributes to skills shortages is the miscommunication of information around shortages and scarcity to those who are involved in supplying skills e.g. higher-education institutions. o Furthermore, identifying key competencies associated with each occupational category could assist in the development of qualifications that prepare learners for occupations. Page 21 of 22