Executive Summary of the W&RSETA Annual Report to The

Executive Summary of the W&RSETA Annual Report to the

Portfolio Committee on Labour

17 November 2009, Parliament of South Africa

Delegation

The W&RSETA is represented by the Chairperson of the Board, Mr. Ivan Molefe (Labour representative), the Deputy Chairperson, Ms. Vikashnee Harbhajan (Business representative), Chief Executive Officer: Mr. Joel Dikgole, Chief Financial Officer: Ms. Daphne Matloa and Chief Operating Officer: Dr. Hennie Zwarts.

Governance

The Board of the W&RSETA comprises of 12 members with equal representation of labour and business.

In accordance with the Constitution of the SETA, the following organisations are represented on the Board:

Employer Constituencies:

 Retailers’ Association – RA (large companies)

 Furniture Traders’ Association – FTA (large companies)

 Home of Small Micro and Medium Enterprises Trust – HOST (SMMEs)

 Enterprise Mentorship Organisation of Southern Africa – EMOSA (SMMEs)

Labour Constituencies:

 South African Commercial Catering & Allied Worker’s Union (SACCAWU)

 Southern African Commercial Trade Workers Union (SACTWU)

 Entertainment, Catering, Commercial & Allied Workers Union of South Africa (ECCAWUSA)

 Hotel, Liquor, Catering, Commercial and Allied Workers Union (HOTELICCA)

 Federal Council of Retail & Allied Workers (FEDCRAW)

Staff

The permanent staff complement of the SETA is 89 composed of 65 females and 24 males.

The demographics of Management are made up as follows:

Senior Management

Chief Executive Officer is an African male;

Chief Financial Officer is an African female;

Chief Operating Officer is a White male

Executive Management

• 1 African female;

• 1 White female;

• 2 African males;

• 1 Coloured male;

• 1 Indian male

Middle Management

• 3 African males;

• 2 African females;

• 2 White females;

• 1 Coloured male;

• 1 Coloured female;

Sector Profile

The Wholesale and Retail sector employs over 3 million people; two million within the formal sector and

1 million in the informal sector respectively.

Over 60 000 organisations are registered with the W&RSETA. The majority of these companies are Small Medium and Micro Enterprises (SMMEs). 11 380 organizations pay skills development levies and only

5 036 of these organisations participated in the skills development processes by submitting the WSP/ATRs.

Highlights

2008/09 was yet another remarkable year for the SETA. We obtained a performance score of 4, 56 out of a total of 5 from the Department of Labour. This score is described as excellent performance. We achieved 17 out of the 19 National Skills Development Strategy (NSDS) targets. The only two targets we have not achieved relate to Adult Basic Education and Training (ABET) and people living with disability.

We are pleased to have obtained yet another unqualified audit report from the Auditor-General. We believe that this report attests to the Board and Management’s commitment to ensure sound financial management and good corporate governance.

During the year under review, we submitted our application for re-establishment in accordance with the Skills Development Act 97 of 1998 – regulations on the re-establishment of SETAs. The application was endorsed by our stakeholders during consultation forums which were held during March 2009.

The historic International Leadership Development Programme (ILDP) was launched in February 2009. The primary aim of the project was to accelerate the leadership skills of 15 highly potential middle Managers within the wholesale and retail sector who have been earmarked for promotion to senior positions by their organisations.

We also implemented other strategic projects to address issues such as skills development for people with disabilities, school learners and entrepreneurship. For instance the eDeaf project was a great success.

Finally, for the first time in the history of the SETA, we submitted a Workplace Skills Plan (WSP) to the Services SETA as required by the Skills Development Act. The plan details how the SETA will address skills development within the organisation. The SETA has for the past few years invested towards training and development of the staff and we believe that this process is a reinforcement of the SETA’s commitment to people development.

Annual Financial Statements

Statement of Financial Performance

The levy income for the year under review increased by 10% in comparison to the previous year which is attributed to a 10% increase in salaries of workers within the sector.

Whilst the levy income increased, it should be noted that the number of levy paying organisations decreased by 4, 4%.

Employer Grants and project expenses decreased by 2.7% vs. 14% decrease in 2007/200 due to low disbursements of discretionary grants.

The Mandatory Grants disbursement increased by 2% as compared to 2007/08 from R 207 m to R 211 m.

349 large companies received Mandatory Grants which represents 64% of the total WSPs/ATRs received. On the medium category, 676 organisations received the Mandatory Grants. 4 031 small, 24% of organisations received their Mandatory Grants.

Statement of Financial Position

The cash and cash equivalents increased by 29% due to a increase of 53% in interest on investments and an increase of 10 % in levy income.

Discretionary Reserves

As at 31 March 2009, the SETA had R717m in discretionary reserves. At year end, R240 m had been committed to projects and the balance of R487m has subsequently been allocated to new projects during the current financial period (2009/2010).

The huge reserves are attributed to the low participation of companies on skills development. An amount of R487m has been accumulated during the year under review.

The SETA has disbursed R82 m on discretionary grants. This figure decreased by 12 % from the previous year due to delays in completion of projects however, strategies have been developed to address this challenge.

As part of the strategies to reduce the high cash reserves, the SETA has allocated funding primarily towards the following projects:

 SMME Voucher project with a budget of R 51m

 R85m was allocated to region-specific projects

 Learning Programmes including programmes for retrenched employees with a budget of R100m

R100m has been allocated for the W&R sector and R20m for the clothing and textile sector towards the Training Layoff Scheme amounting to a total of R120m.

2008/09 Audit Report

The SETA received an unqualified Report from the Auditor-General with emphasis of matter in the following areas:

Basis of accounting – the SETA as a going concern.

The corresponding figures for 31 March 2008 have been restated as a result of an error in the prior year financial statements.

Fruitless and wasteful expenditure amounting to R123, 000 resulting from a late submission of VAT returns relating to 2005.

Outsourced Services

The SETA, from time to time, enlists the services of consultants on issues that require subject matter experts. Other services are required on an on-going basis. During the 2008/09 financial year, the SETA engaged the experts on the following services:

• information technology management which includes website management, technical support, SETA Management System (SMS) at a cost of R4, 7m;
• legal services at a cost of R830 000 is provided on an on-going basis on legal matters which require expertise;
• review of the SETA’s project management model at a cost of R500 000;
• review of organisational structure at a cost of R268 000; and
• recruitment and payroll administration is provided on an on-going basis.

Performance vs. SLA Targets

2008/09 DoL SLA Scorecard

As mentioned earlier in the executive summary, we obtained a performance score of 4, 56 out of 5 from the Department of Labour. The SETA was appraised on four key aspects, i.e. Equity Principles (disability), Governance, Funds Management, Provincial Linkages and SLA targets. We performed well in all other aspects with the exception of Equity Principles due to the low number of people with disability that are participating in our programmes.

Mandatory Grants

According to the Grants Regulations, the SETA pays back 50% of an organisation’s skills development levies for submitting a Workplace Skills Plan and an Annual training report (WSP/ATR’s). According to the ATR’s for 2008/2009 we analysed, 328, 155 employees received training with the focus in the following training occupations Sales Person, Retail Managers, Cashiers, General administration and finance, Store Persons, Office Cashiers, Merchandisers, Debt Clerks and Collectors.

Discretionary Grants Beneficiaries

During the year under review, 7 800 learners were enrolled on SETA funded learning programmes including Learnerships, New Venture Creation (NVC) and ABET. These learners will complete their programmes during 2009/2010.

It is also pleasing to note that 5 973 learners successfully completed their programmes by the end of the financial year. Of these, approximately 1 600 were unemployed and have now been placed in permanent positions.

Learner Placement

The SETA’s policy on Learnerships stipulates that all companies that implement learnerships must employ 90% of the learners who successfully complete their programmes.

In 2008/09, 1 741 learners were placed in employment positions within the companies that trained them. These organisations are Score, Shoprite/Checkers, Smollan Group, Edcon and Woolworths. It is important to note that 38 learners with hearing disabilities were employed by Shoprite/Checkers from our pilot project for deaf learners with eDeaf.

New Strategic Projects

We realize that in order to continue making an impact on the lives of the millions of people employed within the sector and those who have prospects of working within the sector; we have to accelerate our skills development interventions. To this end, the Board has approved new strategic projects which are currently being implemented. Some of these projects are being rolled out on a larger scale based on the success of the pilot phases.

Grassroots Pre-learnership Preparatory project

This project equips learners with fundamental life skills to cope with the demands of a learnership and focuses on changing the mindset of the learners and encouraging them to strive for success. The programme has proven to reduce the drop out rate of learners from learnership programmes. 22 learners completed the programme in the pilot phase and have been employed with Shoprite/Checkers on various positions including as Managers and trainee / designated Managers.

New Venture Creation

The learners are enrolled on a 12-month Learnership programme and upon completion are assisted to start their own ventures. The SETA is required to ensure sustainability of the ventures for a period of 12 months before the learner can be counted as a success. The SETA is currently implementing NVC projects in partnership with SEDA and the Free State Public Works for 100 and 30 learners respectively.

Fetola Mmoho SMME Crafts Project

This project has benefited 90 SMMEs from the rural areas ofthe Eastern Cape, Somerset West and Free State. The project is an endeavour to reach the outlying areas in the country.

International Leadership Development Programme

The W&RSETA Board approved this project as a pilot which was implemented in February 2009. 15 middle Managers from the sector, who have been identified for promotion to senior positions within their organisations, were afforded the opportunity to participate in this programme. The programme was facilitated by leading South African and overseas academics and industry experts. The candidates were also exposed to best practices in the wholesale and retail sector on their study tour to Canada and the United States of America. Due to the success and high demand of this intervention by our stakeholders, the Board has approved a budget of R 10 m for phase II of the programme which will benefit 30 employees from the sector.

SMME Training Voucher Project

The SETA is cognizant of the challenges facing SMMEs which have attributed to the poor participation of this sector on skills development processes. One of the challenges includes the inflexibility of the provision of training. To address this challenge, the SETA launched an innovative project; SMME Training Voucher. Organisations are issued with training vouchers which they can redeem at their convenience. 7 000 SMMEs will benefit from this project.

Association of Accounting Technicians South Africa

This project will benefit 50 learners to address one of the scarce and critical skills within the sector; accounting.

Thabo Mbeki Development Trust for Disabled People Phase II

The pilot phase of this project focused on the training 100 learners with disabilities to prepare them for participation in a Learnership NQF Level 4. This project was initiated in a partnership with the Thabo Mbeki Development Trust for Disabled People to address the challenge encountered by people with disabilities who are unable to gain entry on to the entry-level of learnership due to lack of the basic requirements. The Honourable Minister of Labour Mr. Membathisi Mdladlana hailed the project as ground-breaking and exemplary to other SETAs as well as government.

Although this is only a drop in the ocean in terms of achieving the equity target of ensuring participation of people with disabilities, we believed that this is a step in the right direction.

The learners who completed the first phase of the programme have now been enrolled on an NQF Level 2 learnership programme.

eDeaf Learnership for people with disabilities Phase II

The pilot project was implemented in 2008 in an endeavor to ensure that people with disabilities are afforded an equal opportunity to skills development. This project was implemented in partnership with eDeaf - an organisation run and managed by deaf people.

W&RSETA / CTFLSETA Collaboration

We recognize that for the SETA movement to make meaningful impact on the economy, SETAs cannot exist as separate entities but need to collaborate. The clothing and textile sector manufactures clothing for the wholesale and retail sector as a result it forms one of the strategic value chain inputs which has a direct impact on the sustainability of the retail sector.

To this end, A Task Team comprising of the CTFLSETA and W&RSETA CEOs and Board members has been established to discuss strategic issues between the two SETAs. The discussions have culminated in the following interventions:

• The W&RSETA has allocated R5m towards a joint project with the CTFLSETA to address cross-cutting skills development needs between the two sectors.

• As the economy is currently reeling from the effects of the global economic meltdown which has affected many sectors of our economy including the clothing and textile, the W&RSETA has allocated R20m to the CTFLSETA to assist companies within their sector to participate in the Training Layoff Scheme.

Success Stories

The following success stories are from our New Venture Creation project:

Tshinelela Tshimong

10 learners from NVC project operating from JHB Fruit Produce Market. They supply fruit and vegetable hampers to the Gauteng community.

Pick ‘n Pay – Sebokeng

Mohau Mosai and his brother operate a Pick ‘n Pay Family store in Sebokeng. Mohau is one of the beneficiaries of the SETA’s New Venture Creation project. The store employs 82 workers from the community and is also involved in other charities and community projects.

Letlhabile Pick ‘n Pay – Brits

Neo Paka came to Johannesburg from his hometown of Kroonstad in search of a better life. He opened his business on 8 October 2009 after completing the W&RSETA NVC project.

Challenges

Whilst the W&RSETA has made considerable strides on skills development, we are cognisant of the following challenges:

• SMME participation – only 50% of these organisations are participating in skills development processes;

• Poor learner employment placement and workplace experience participation. The SETA has implemented programmes to assist companies to provide workplace experience and employment to graduates in an effort to address the high level of unemployed graduates. However this initiative has not been successful due to the poor intake from organisations.

• Poor ABET uptake and completion – this is a national challenge and the SETA continues to try and find solutions to this problem. The Board has approved a project on the implementation of a Business Practice Learnership on NQF Level 1 (equivalent of ABET Level 4) which includes numeracy, literacy and business skills. We believe that this programme will assist in eliminating the stigma attached to the traditional ABET programmes.

• High learner dropout rate of 50% - although the percentage is still high, it is below the average university drop out rate of about 70%. We are continually strengthening our monitoring mechanisms to ensure that learner challenges are addressed timeously and hence reduce the drop out rate. It should be noted that these includes the number of learners who left the Learnership for full time employment.

• Non achievement of 4% target of people living with disabilities – this challenge has been alluded to in previous slides. The SETA is committed to ensuring that progress is made on this challenge;

• Few Rural/Semi Urban skills development interventions;

• R29m Discretionary Grants written back - under subscription on projects;

• Large cash reserves due to slow delivery and writebacks – this challenge can also be attributed to the non-participation of SMMEs.

Responding to the Economic Crisis

The wholesale and retail sector is one of the sectors that have been severely affected by the global economic recession.

An estimated number of 66 000 employees within the wholesale and retail sector lost their jobs in the second quarter of 2009 according to the Statistics South Africa - Quarterly Labour Force Survey.

In response to this economic crisis an amount of R 120 m has been allocated towards the Training Layoff Scheme in support of government’s framework response to the global recession.

The CCMA is currently processing 3 applications from organisations within the W&R sector. The SETA has set up processes for the scheme and is ready to process any claims that it may receive from our stakeholders.

In conclusion, although our SETA has achieved on its mandate in the past 9 years, we acknowledge that there are still many challenges that we must address. We couldn’t have achieved all these without the support of our stakeholders.

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