Government's ambition to grow SA's manufacturing base risks being stillborn unless the country addresses a worsening skills crisis.
For many years there has been a shortage of skills at the top end of the market - engineers, chartered accountants and IT specialists. Now the skills crisis has taken on an alarming new dimension: the serious depletion in industry of artisans, the skilled workers essential to every aspect of manufacturing and engineering production.
Though the shortage of top-end skills is due to SA lagging behind in innovation and technology, as well as the mobility of professionals around the world, the artisan shortage is due simply to the collapse of training.
Steel & Engineering Industries Federation of SA (Seifsa) chief economist Michael MacDonald says the shortage will be a "serious inhibitor" to growth once manufacturing attempts to expand and move out of recession.
"The backbone of manufacturing has to be artisans. In advanced economies, all workers on the shop floor are artisans. Even the smallest company needs someone with artisan skills," he says.
Preliminary findings of an investigation by the National Advisory Council for Innovation (Naci) suggest that SA will face a skills shortfall of between 15 000 and 40 000 skilled artisans, project managers and specialised engineers in key industries over the next five years. The study is based on planned projects in the petrochemical, mining, steel and energy industries.
"The skills crunch will severely hinder SA's ability to deliver on planned large capital investment projects, " says Naci chairman Roy Marcus. "Compounding the problem is that many of the proposed projects will overlap, forcing companies to compete for skills ."
"Manufacturing is the fulcrum through which growth, employment and equity can be leveraged," states the trade & industry department's manufacturing strategy, released last year.
There are only 1 800 apprentices in training in the metal sector and 1 900 apprentices in the motor industry. Twenty years ago, there were 13 000 apprentices in the metal sector alone.
The profile of qualified artisans is also ageing: the average age in several companies surveyed by Seifsa is 54, an indication that the problem will get a lot worse before it gets better.
The trades include electricians, specialist welders, refrigeration mechanics, tool-makers, fitters & turners and millwrights, among others.
In mining, the number of qualified apprentices has dropped by a third in the past five years, the period in which many companies appear to have stopped artisan training altogether.
This period coincides with the introduction of the new skills training architecture - the Skills Development Act of 1998 - which established, among other things, a new learnership system and sector education & training authorities (called Setas) for all economic sectors and imposed a payroll tax of 1% to fund training.
Adrienne Bird, a deputy director-general in the department of labour, says the old system of apprenticeship was supposed to continue after the new system was established.
"We always recognised that apprenticeship was an important part of the system, so we specifically did not repeal that part of the manpower training act. We assured industry from the beginning that apprenticeship was important . . . there was no legal rupture and they were free to continue hiring.
"But they didn't. They chose not to indenture - it was a decision on the part of employers," says Bird.
Bird says government also told industry that, for grant purposes, the apprenticeships would be deemed to be learnerships. Grants would continue and in fact increase.
"But we weren't able to persuade them, even though we went to great lengths," she says.
Seifsa, too, says it tried to encourage employers to keep up artisan training.
Seifsa skills development services head Janet Lopes says there was a widespread misconception about the imminent change to the learnership system. "Employers didn't want to start indenturing people in a system that was about to be phased out . . . Some employers thought it was finished. But it wasn't."
The confusion prompted the mining industry Seta - the Mining Qualifications Authority - to officially declare the end of the apprenticeship system from April 1 this year, even though, legally, the system remains intact.
In mining, it is widely believed that the apprenticeship system ended in 1998. Many mining companies seem to have been waiting for the new learnerships to emerge.
To make matters worse, in every industry each learnership qualification has to be defined and formally accredited by the SA Qualifications Authority (Saqa). This is turning out to be a slow process, says Chamber of Mines skills development head Vusi Mabena. "The main glitch is the amount of time it takes Saqa to accredit a learnership. " He adds that mining has had to revise drastically the targets it set for learnerships by 2005 - reducing them by two-thirds.
New systems, in any event, take time to settle. Lopes predicts that going by international experience it will be another five years before the system is fully fledged. With this in mind, the manufacturing, engineering & related services Seta (Merseta) has embarked on an urgent advocacy programme to persuade employers to reinstate the old apprenticeship system.
Says Merseta CE Jesse Maluleke: "We don't know when the minister of labour will officially end the apprenticeship system. Meanwhile, we are going back to employers and companies to ask them to please train artisans."
The shrinking number of artisans, heightened by the switch to new training systems, is part of a longer-term trend emerging from the restructuring of parastatals.
Since the 1920s, parastatals - in particular Iscor, Eskom and Telkom - trained many more artisans than they needed on the assumption that skilled labour (which was exclusively white because of job reservation) would be poached by private industry. However, with the restructuring that began in the 1980s and the drive to corporatise and become competitive, the parastatals scaled down training.
Rationalisation in the gold mining industry has also contributed to declining artisan numbers. The private sector became used to finding ready-made skills in the labour market, and thus never adapted.
Ironically, since the Skills Development Act came into effect, incentives to take on trainees have been increased. In some instances the training grants and related tax breaks for learnerships are so good that it is possible to profit from the scheme.
The incentives are three fold:
- First, an employer gets an annual grant for each learner. In the case of Merseta, the grant is R20 500.
- Second, wages for trainees are "incredibly low", says Bird. For instance, for a trainee at entry level NQF 1 (the equivalent of a grade 9 school pass ) the minimum is R120/week.
- Thirdly, the employer can deduct the total cost of the trainee's wages from taxable income at the beginning or end of the year. So if a trainee is paid R1 000/month, an employer can deduct R24 000 from taxable income.
"We have to make it really attractive or companies won't do it," says Bird.
But the damage has been done. Should manufacturing emerge from its present slump or infrastructure expansion actually happen as planned, there will be an urgent need to import artisans, who will be able to name their price.
Says MacDonald: "It's a problem when the people you need most are in short supply. It drives up wages. In the short term, firms will have to import artisans. That's difficult under the present immigration system and expensive - firms will have to pay top rates."
In the automotive component sector, the effect is already disastrous.
At the heart of component manufacturing is the trade of tool-making. But in 2001, SA imported the vast majority of its tools - R1,3bn worth - as opposed to R441m exported. As a result, SA component manufacturers lost out on many contracts, which went to the countries where tools are made.
National Association of Automotive Component & Allied Manufacturers (Naacam) head Clive Williams says the shortage of tool-makers is "desperate" and arose because "for the past 10 years we haven't been training. Right now , we have to go to Australia or Taiwan and often the business stays there."
A number of initiatives have been launched to address the skills crunch. The Council for Scientific & Industrial Research (CSIR) has initiated a tooling support project which aims to restore tool-making and make it globally competitive.
And in the Naci large companies, such as Sasol and Eskom, are working on a "Marshall Plan" to be presented to government next month. Marcus says key components of the plan include a skills register and using Seta funds for public-private training partnerships.
Yet another irony in the scheme of things is that not only does government reward learnerships better, but everyone agrees that learnerships are far superior to apprenticeships. The key difference between them, says Maluleke, is the inclusion of soft skills in learnerships - such as how to run a business, and the integration of practical work and theory provided by accredited training centres.
Trainees may also enter the system at different levels and leave at different levels. This accommodates both experienced workers and new entrants and makes it possible for small and medium companies to train people to levels they deem appropriate.
"There is no question about its effectiveness in the fullness of time," says Lopes. So far though, there are only 133 learnerships in the metal sector.
The recent growth & development summit took note of the slow progress in establishing learnerships across all sectors and committed to ensuring that 72 000 unemployed people are enrolled in learnership programmes over the next 12 months.
It's a start, but SA has a long way to go to catch up.
- Additional reporting by Sasha Planting
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