Seta Clustering – Very interesting article

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    Seta clustering: who wants to face the firing squad?
    By Jim Freeman
    Earlier this year, almost all the 23 Setas (sector education and training authorities) scuttled around the country, spending a great deal of time and money convincing stakeholders that they had done enough in the past five years to justify their continued existence.
    At stake was their reconstitution for the third phase of the National Skills Development Strategy, which comes into effect next April and runs till 2015. The Setas sought a mandate from their “social partners” (business and labour) to tell the National Skills Authority that things were hunky-dory and that the bodies should be given another five-year operating licence.
    That’s hardly surprising; which Seta chief executive on a R1 million a year package is going to volunteer to face the firing squad?
    At issue is the long-debated subject of Seta-clustering – reducing the number of authorities to achieve economies of scale, reduce bureaucracy and improve performance. During the reconstitution period, the only CEOs in favour of clustering naturally saw their Setas as heading a grouping with themselves (and their staffs) retaining their jobs.
    Of course, the worst-performing Setas are the ones most vehemently opposed to merger or incorporation.
    There are a couple of seemingly legitimate arguments against clustering. If one accepts that one of the motivations for clustering is to bolster under-resourced (those that don’t earn huge whacks of levy income rather than those that under-perform) Setas, the authorities that would effectively be underwriting them say this would be unfair to companies in their own sector.
    Services Seta CEO Ivor Blumenthal has used this argument. During his re-establishment roadshow, he said that using the levies paid by a company in the services sector to sponsor vocational training in, for instance, tourism and hospitality would contravene skills development legislation and tacitly admit that the levy was a tax on business.
    Now there’s a novel thought.
    It’s an argument, though, that decries the co-dependence of businesses in different sectors.
    Joel Dikgole of the Wholesale and Retail Seta felt that clustering could lead to a loss of focus and an increase instead of a decrease in bureaucracy. This would lead to even greater frustration among participating companies, he said.
    It’s also certain that the ongoing recession will see a significant fall in skills development levy income in the next few years.
    Yet, to greater or lesser extent, clustering is on the cards when the Seta landscape is clarified in October / November.
    Last year, there was considerable hullaballoo when the ANC mooted the idea of five “super-Setas” that aligned with the focus areas of the National Industrial Policy Framework.
    Frankly, that won’t work: there’s already sufficient trepidation now the Setas are relocating to the new Department of Higher Education and Training, and a wholesale revamp of the structures between now and next April will hamstring skills development for years.
    In conversation before the minister of labour’s budget speech last month, executive manager for Seta support Elizabeth Thobejane said current thinking leaned towards a marginal reduction … from 23 to 21 authorities. The implication was a merger of the two public sector Setas (LGSeta and PSeta) and the creation of a minerals and energy body that would incorporate the Mining Qualifications Authority (MQA) and the Energy Seta.
    Given that the imminent move to Higher Education and Training – as well as the impending establishment of the Quality Council for Trades and Occupations – will have huge consequences, limited clustering will still some beating hearts and ensure continuity in skills development. On the other hand, a good number of critics will see it as a lost opportunity.
    If the ANC proposals are “radical”, a reduction in the number of Setas to 15 or 16 would be widely regarded as a bold, positive development.
    “This is possibly the most exciting time in our skills development history because it has created an opportunity for change,” MQA chief Livhu Nengovhela told The Skills Portal last week … just days after proposing to the Department of Higher Education and Training that the number of Setas be cut to 11. However, he says, the issue is not how many Setas are left when the bloodletting is done, it’s how that number is derived and what restructuring model is adopted.
    “A Seta’s effectiveness depends largely on its levy income. A higher income is also usually linked to better corporate governance because those Setas are able to appoint skilled people to oversee their finances and operations.
    “We have to determine a baseline income level that will allow a Seta to be financially and operationally sustainable.”
    The MQA, he said, had a levy income of over R500 million a year. The clothing, textiles, footwear and leather Seta, he added, had exactly the same operational and corporate governance requirements but only a fraction of the revenue.
    “Our presentation on the 11 Seta model was based on simply halving the current number,” says Nengovhela. “The point was to present different models and to demonstrate the impact each will have.
    “I believe that the optimum number will be between 12 and 15 Setas.
    “The problem with the sector education and training authority environment is that it is stakeholder-driven and motivated by self-interest. This problem extends all the way up to the board of the National Skills Authority – and these are the people who make recommendations to the relevant minister.”
    Seta corporate governance has been one of the bug-bears of skills development in the first ten years of the National Skills Development Strategy. It has often been remarked that Seta boards lack experience and capacity, and this is a prime reason for systemic abuses.
    According to the MQA, full Seta mergers would have massive impact. “In terms of this, you have 11 – or whatever the number – of boards and a similar number of operational staffs.
    “Medium impact will be achieved if you have 11 boards but 23 operational structures.”
    There would be limited change and the least impact if the existing Setas maintained their board and operational autonomy and established formally agreed cluster projects. –

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