Gauteng Business News

Send  Share  RSS  Twitter  29 Sep 2008

Business: Skills Shortage is South Africa


Recent Gauteng Business News

Peter Druker pointed out many years ago./ The task is not to make the poor wealthy but productive. With management development it cannot be done in a classroom. It has to take place on the job. The capacity gap the one between knowing and doing scuppers social and economic progress in developing countries as much as it hampers productivity improvement in businesses./

The wonder of modern institutions is not that they work so badly but that anything works at all.

South Africas best artisans, technicians, doctors and engineers are leaving the country for a variety of reasons. The problem is it is the skills that South Africa is most short of that is leaving. This then causes a double problem in relation to growth and sustainability prospects for South African enterprises.

The movement of skills is part of globalization and is not going to be escalated in South Africa unless issues like violent crime can be sorted out in the short to medium term. A survey by FutureFact finds that 40% of South Africans are considering leaving the country and thats not just whites but a similar percentage across all races. In 2000 the comparative number was a mere 18%.

So for enterprises to even maintain their current levels of business they have a major skills problem. Relatively South African enterprises have had a free ride on skills as the average South African enterprise spends about 1.5% of payroll on skills training. International best practice is in the range of 5%. In South Africa with its continuing skills shortages this spend should be higher than international best practice even if you are to even maintain your current competitiveness.

Looking at it another way, the fact that other countries are poaching our employees means we are doing something right. The big question is, were those skills maintained and reproduced in the last 10 years with the destruction of the apprenticeship system and many other training centres Put another way do we have the capacity to continue to produce such employees

Under the previous regime great institutions were created to produce the skills. Unfortunately they were utilized for the training of exclusive race groups hence the dismantling of the systems. If this was created then why can it not be done now Enterprises also have to ensure that they are in a position to get their own skills created in their own institutions (training centres) and encourage learners from even a school going age what specific skills that they need in specific enterprises.

A recent Economist Intelligence Unit study of 30 developed and emerging states shows that SA is least likely to attract people with top-end management and technical skills.

The Bureau for Economic Research Stellenbosch University has provided an accurate dissection of the SA educational landscape. Take the case of a black schoolboy in South Africa in 2003 had only a 28% chance of achieving a grade 12 pass 58% of his original grade peer group would have dropped out of school before grade 12. Contrast this with the case of a white schoolboy who had a one in 10 chance of achieving an A aggregate in 2003, while only one in 1000 black children achieved A aggregates. Our overall mathematics and literacy scores show that we lag far behind other developing countries and most African countries.

Lets look at some solutions. Most South African enterprises are looking at the attainment of a Broad Based Black Economic Empowerment (BBBEE) scorecard. Lets focus on the bottom four elements to help us advise our enterprises and to find a strategic imperative. The bottom four elements are skills development (15 points), preferential procurement (20 points), enterprise development (15 points) and socio economic development (15 points)

A practical example is Enterprise A realizes they are desperately short on skills now and in the future. They are busy implementing their Broad Based Black Economic Empowerment (BBBEE) strategy. Lets start on the last element. Socio economic development by Enterprise A is now directed to local black students at school. Enterprise A requires students with maths and science and so it directs its socio economic development spend into school holiday classes for say grades 6 to 12 on improving their maths and science ability. Schools will give the venues for free and the best of the best maths and science teachers will be recruited to delivery such in the school holidays.

Enterprise A further ensures that students parents and communities are aware of these initiatives. Enterprise A then has a golden opportunity to take the best of the students to its Enterprise at school leaving time.

In implementation of enterprise development Enterprise A decides to start a technical training centre in their local industrial area. They get a suitable black grouping as a 50% partner and encourage the local enterprises who needs such skills to participate in such centre. Their grants, loans or assistance will then qualify as enterprise development from a Broad Based Black Economic Empowerment (BBBEE) perspective. The real advantage of course is the output of skills from the technical training centre.

From a procurement perspective Enterprise A spends money with the technical centre for the training and development of its current employees and future employees. All this spend is multiplied by a benefit factor of 1.2 as they are recipients of enterprise development spend.

A simple but effective business strategy for Enterprise A. If we had majority of South African enterprises thinking this way would the landscape not be vastly changed by 2017, the expiry date of the Codes of Good Practice on Broad Based Black Economic Empowerment (BBBEE).

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