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16 August 2010

Despite a massive skills shortage that the Reserve Bank has warned is impeding economic recovery, South African companies are investing around a third less than peer countries in skills training. They also showed no intention of improving their performance over five years assessed by the World Bank.

The Bank in its recent Enterprise Survey done in conjunction with South Africa’s Department of Trade and Industry painted a gloomy picture of an economy held back by serious skills shortages but business are doing little to remedy the situation unless forced to by unions.

Liza van Wyk, CEO of major training organisations, AstroTech and BizTech said that although some sectors, for example, the financial services sector were consistently assiduous trainers, other sectors including mining had cut back in recent times. “What we also see is that although attention is paid to management and executive training, not enough thought is given to improving the skills profile of essential support services staff. And if administration is not up to scratch then management cannot perform at peak capacity, nor the layers under the essential middle layer of organisations which is effectively the engine room of enterprise.”

According to the World Bank Enterprise Surveys, South African firms are less likely to provide formal training to their workers than their peer group counterparts. In the 2008 sample, about 46 percent of SA firms were providing training, compared to more than 67 percent of firms in Brazil, Chile, Thailand, and China.

The World Bank noted: “There was no significant change in South Africa in the incidence of training between the 2003 and 2008 surveys. The profile of firms that provide training also remained unchanged between the two surveys. In 2008, as in 2003, larger firms were more likely to provide training than smaller ones, and exporters were more likely to do so than non-exporters. The likelihood of training was also greater where the unionisation rate was higher.

Van Wyk said: “Skills shortage came out strongly as a growth bottleneck in the 2003 and 2008 DTI-World Bank survey, in which a large percentage of respondents reported that growth of their businesses was being held back by a shortage of skilled manpower.”

The latest World Bank report concludes that SETAs are supporting much of the ongoing investment in job training and that there is greater appreciation of their role than was the case in 2003. It said: “It is also clear that the rate of investment needs to increase to attain parity with South Africa’s peer group, and that SETAs need to target their support more to smaller firms, which continue to under-invest at a rate higher than larger businesses.”

The survey which covered a sample of 1 056 businesses in Johannesburg (68 percent), Cape Town (14 percent), Port Elizabeth (6 percent), and Durban (12 percent) saw two-thirds of the sample drawn from manufacturing industries. Retail services represented about 22 percent of the total. One hundred and twenty microenterprises, employing less than five workers, were selected from Johannesburg. In addition, the survey also collected labour market information on a sample of 1 732 workers. About 12 percent of the enterprises had foreign investment.

The World Bank-DTI survey found that more than 65 percent of firms with 200 or more employees provide formal training to their workers, compared to about 35 percent for firms with 20 to 40 employees. It said: “A strong correlation between provision of training and firm size may signal a variety of constraints that are stronger for smaller enterprises than larger ones. These may include financing constraints and smaller firms' lacking the critical mass of trainees needed for profitable training programs.

“Smaller firms also may not have the extra workers needed to fill the gap when someone takes a training course. This, in turn, has implications for the role Sector Education Training Authorities (SETAs) and their targeting policy, or lack thereof, especially as larger firms are currently far more likely to receive SETA support than smaller ones. Since the majority of the newly employed are likely to work in small and young firms, the skills development opportunities for these workers will likely be limited.”

Van Wyk agreed with this finding saying: “We tend to find that big companies or government departments send significant numbers of staff on courses or run inhouse courses, however, small businesses which employ 75 percent of the workforce tend to only send one person at a time to training and then it is most often an executive rather than business support staff and that is often where the training need is greatest. These findings are a clarion call to give greater assistance to SMMEs for training.”


Liza van Wyk, CEO AstroTech 011 582 3200 cell: 082 466 8975 or

Issued by Charlene Smith Communications