BRIEFING TO THE MINISTER OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING

Transcription

1 BRIEFING TO THE MINISTER OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING 9 OCTOBER 2014

2 The Context: Evidence-Based Labour Market Policy In the global economy it is important to understand what types of skills are required to support productive and inclusive growth, and also how they will be produced. Unfortunately, South Africa does not have a credible institutional structure to track changes in the labour market and thus lacks a credible planning mechanism for skills development. The 2009 administration requested a coherent skills planning mechanism. The HSRC was commissioned to support DHET to build the mechanism for skills planning and conduct research to support skills planning decisions. The Labour Market Intelligence Partnership (LMIP) was born, and we organized our research into six main themes. Theme 1: Establishing a foundation for labour market intelligence systems in South Africa involves drawing the architecture for a Labour Market Intelligence System (LMIS) and the decision making process of prioritizing skills investments through a Skills Planning Mechanism (SPM). The purpose of the LMIS and SPM is to provide an early warning mechanism to improve the interaction between the education and training system and the labour market to avoid skills imbalances. Theme 2: Skills forecasting: the supply and demand model is a project of the Wits Education Policy Unit. The main contribution is the creation and use of a Linked Macro-Education Model for South Africa. It builds on a macro-economic model used to predict the demand for labour in 45 sectors of the economy, and incorporates education modules. The aim is to develop a system for regular forecasting of the supply of and demand for skills. Theme 3: Studies of selected priority sectors aim to understand the critical link between sectoral growth, employment and poverty reduction in South Africa. The research agenda centres on a set of skills needsemployment and growth outcome sectoral studies. International research shows that job creation requires high absolute levels of growth and increased labour intensity in production. Theme 4: Reconfiguring the post-schooling sector investigates the ways in which interaction and alignment between diverse types of education and training systems and labour markets can be enhanced, in a differentiated post-school sector. It investigated the institutional capabilities, structures and mechanisms, and the curriculum structures, that facilitate and constrain interaction with labour market organisations in a range of public and private institutional settings. Theme 5: Pathways through education and training and into the workplace will develop a longitudinal national youth panel survey, to assess young peoples transitions and barriers to achieving greater efficiency and effectiveness in educational outcomes, in relation to the education and training system, and the dynamics of the labour market and economy. Theme 6: Understanding changing artisanal occupational milieus and identities proceeds from the argument that we have been unable to address key issues constraining the increased output of quality artisans, because of a limited understanding of the context within which artisanal skills development and practice is taking place, in terms of changing occupational structures and of changing knowledge and skills bases. 2

3 PRESENTATIONS FOR THURSDAY 9 OCTOBER 1. Architecture for the Labour Market Intelligence System, Skills Planning Mechanism and Scarce Skills List. Vijay Reddy Powell M and Reddy V (2014) Architecture for the Labour Market Intelligence System and Mechanism for Skills Planning. LMIP Policy Brief. September Powell M and Reddy V (2014) Approaches and methods of understanding what occupations are in high demand and recommendations for moving forward in South Africa. LMIP Policy Brief. May The Sectoral Nature of Our Economic Growth Trajectory: Three Observations. Haroon Bhorat Bhorat H, Goga S and Stanwix B (2013) Occupational shifts and shortages. Skills challenges facing the South African economy. LMIP Report 1. Bhorat H and Tian (2014) Growth, Employment and Skills. The New Growth Path Revisited. LMIP Report Skills planning in post-school education and training institutions: interactive capabilities approach. Glenda Kruss Kruss G, Petersen I, McGrath S and Gastrow M (2014) Responding to shifting skills needs: how do we get firms and post-school education and training organisations working together? LMIP Report 4. September

4 1. Architecture for the Labour Market Intelligence System, Skills Planning Mechanism and Scarce Skills List. Vijay Reddy In the global economy it is important to understand what types of skills are required to support productive and inclusive growth, and also how they will be produced. Unfortunately, South Africa does not have a credible institutional structure to track changes in the labour market and thus lacks a credible planning mechanism for skills development. Our studies investigated three interconnected areas, namely: the labour market intelligence system (LMIS), the planning mechanism for skills development and the scarce skills list. Our presentation draws from three reports (1) Powell M, and Reddy V (2014) Information Systems for Skills Planning: Lessons and Options for Reform in South Africa. HSRC, Pretoria South Africa. (2) Powell M, Paterson A and Reddy V, (2014) Approaches and methods for understanding what occupations are in high demand and recommendations for moving forward in South Africa. HSRC, Pretoria South Africa and (3) Powell M and Reddy V (2014) Roadmap for the implementation of a centralised skills planning and intelligence unit. HSRC, Pretoria South Africa. We approached the research exercise by reviewing lessons and experience of information systems, skills planning and scarce skill in South Africa; reviewed lessons from other countries; analysed key policy documents; produced a draft research report with recommendations (structures and processes for providing data, signals and intelligence and decision making); engaged and consulted with DHET; engaged and consulted with other key actors, especially through the Policy Roundtables and now enjoying the engagement process with the Minister. The global approaches for Labour Market Intelligence and Skills Planning can be categorized as (i) The Educational, Market or Voluntary Approach, (ii) Employment or Social Partnership Approach, (iii) Integrated Economic & Developmental State approach, (iv) Catch up Countries Approach. For South Africa we propose an Integrated Economic and Developmental State approach to Skills Planning. This approach to skills planning encompasses: (i) improved levels of education and training for the population, (ii) improved workplace skills training and (iii) higher emphases to a demand driven approach to planning where strategies for skills development are aligned to policies for industrial development and skills-biased growth strategies. 4

5 When tackling the area of the Labour Market Intelligence System (LMIS), we focused upon how data would be collected, analysed and types of labour market intelligence that need to be produced. At the heart of any system for producing labour market intelligence, there needs to be a central body responsible for coordinating the different processes associated with collection, collation and analysis of data. This structure must have political support and a significant budget to perform this function. It can be expected that the LMIS would collect data on the supply and demand for skills, covering current needs and expected future needs. The LMIS would be expected to perform a coordinating role in this process, and other agencies would carry out the data collection and analysis. The collection and analysis of data on the demand situation is more complex, and will have to involve different organizations. A significant proportion of the data on demand, particularly around the economy and occupational structure of the labour market would come from StatsSA and analysis of the skills demand from key government growth projects (e.g. SIPs, SKA). Skills planning refers to how labour market intelligence would be utilized to inform decision making processes at the national, sector and occupational levels. The intelligence and skills decision-making process together constitute the skills planning mechanism. The skills planning mechanism will cover the institutional structures for informing and undertaking the planning process, as well as the wider political economy and how this influences decisions on how resources are allocated for skills development. One of the functions of the CSPIU would be to analyse the match between supply and demand to identify skills shortages and produce a Scarce Skills List which will estimate the occupations are in high demand. Estimating which occupations are in high demand is a complex task and there is a limited consensus over which sets of occupations are in high demand, and what are not in high demand. From this set studies we recommend: An architecture for the labour market intelligence system and the skills planning mechanism. The skills planning approach for South Africa must give higher emphases to a demand driven approach to planning where strategies for skills development are aligned to policies for industrial development and skills-biased growth strategies. We need to establish a Central (national) skills planning and intelligence Unit (CSPIU). The CSPIU should be located in DHET and staffed by economists and planners. The DHET, with the Reformed National Skills Authority, through the Human Resource Development Council, needs to lead the debate, discussion and decisions about skills shortages and planning. DHET should develop a Scarce Skills framework, outlining short, medium and long term skills needs. 5

6 The Scarce Skills Framework must be used to develop the Scarce Skills List for different purposes: short term list for work visas (DHA); medium and long term list to inform prioritising resources for education and training programme (DHET). The DHET s Scarce skills list (for education and training) must prioritise intermediate skills development. 6

7 The Sectoral Nature of Our Economic Growth Trajectory: Three Observations Prof Haroon Bhorat, DPRU, University of Cape Town The DPRU broadly studied the relationship between sectoral growth patterns and their skills implications within the South African economy. Thus far, three research reports have been produced namely: 1. Occupational Shifts and Shortages: Skills Challenges Facing the South African Economy 2. Higher Education, Employment and Economic Growth: Exploring the Interactions 3. Growth, Employment and Skills: The New Growth Path Revisited Drawing on this research the presentation addresses three key issues: 1. The Skills Implications of a Growth Path Dependency 2. The Structural Transformation Challenge: From Sectors to Skills 3. Are our HED Institutions Growth Enhancing? The main findings from the research are: There was a collapse in Primary Sector Employment and lacklustre employment growth in the Manufacturing sector. This has been driven by the declining or stagnant shares of GDP in Agriculture, Mining and Manufacturing. It is crucial to note that not a single fastgrowing developing economy has managed to be successful without a dynamic, exportoreinted light manufacturing sector. Such a sector is absent in the South African economy. What we have instead is a heavy, capital-intensive manufacturing sector, which is not jobgenerating nor skills-enhancing. Instead, our growth and employment trajectory since 1994 has been built on a rapid rise in the share of GDP in financial and business services and to some extent consumption and service-oriented sectors. Ultimately, the public sector is a growing source of employment, whilst a dominant source of private sector employment has been the through temporary employment services more colloquially known as labour brokers. The upshot from this unbalanced growth and employment trajectory has been a continuation and reinforcement of South Africa s skills-biased labour demand trajectory. This trajectory and pattern of skills demand has been ongoing since the 1970s. The data for the period since 2001, suggests that there are uneven employment gains in high- and medium-skilled occupations, at the expense of less-skilled workers. Into this particular growth and employment trajectory, the National Growth Path policy document, sets out a series of job targets across a range of sectors for the society to achieve. Crucially, this NGP is essentially a document based on attempting to suggest a radical structural transformation of the South African economy. This structural transformation is to be viewed through the target of the NGP to increase the contribution of manufacturing jobs from 14% of total employment to 21% by In the different scenarios set out by the NGP, it is clear that this is a growth trajectory designed around trying to engender a more dynamic and dominant manufacturing sector for the South African economy. In terms of the skills implications, the NGP targets suggest that by 2020, there will be a skills shortage of 1.2 million jobs: skilled workers; unskilled workers and highly skilled workers. These shortage will be almost entirely accounted for by the Manufacturing industry, should the sector s employment and growth 7

8 targets be met. Finally, evidence from growth theory and empirical work around the world suggests that human capital investments should contribute positively to output growth. We thus ran a similar Cobb-Douglas production for South Africa over the post-apartheid period. Our evidence suggests a stark result though: That when we categorise employment by skill levels where skills are measured by the levels of education of the workforce it is only workers with a higher education degree who have generated significant and positive returns to economic growth. Of particular interest and concern here, is that these results suggest that the FET system is an insignificant contributor to economic growth, as are all other forms of schooling. 8

9 SKILLS PLANNING IN POST-SCHOOL EDUCATION AND TRAINING INSTITUTIONS: AN INTERACTIVE CAPABILITIES APPROACH Dr Glenda Kruss The research contributes to a Skills Planning Mechanism by providing intelligence on how firms and post-school education and training organisations can work together more effectively. It contributes in three kinds of ways: 1. By showing the value of a new approach that focuses on building national technological capabilities, and the capabilities of firms, PSET organisations, government and private sector intermediaries to interact with one another in networks with common goals 2. By providing empirical evidence of existing skills development practice at all occupational levels, in three sectoral systems of innovation, in order to identify spaces for policy intervention, and interactive mechanisms that could be replicated or extended more widely 3. By providing a research methodology and sets of templates that can be used by skills planners to understand their economic contexts and strategic opportunities, and to identify mechanisms to enhance their interactive capabilities An approach for understanding capability building and network alignment in a sector 9

10 SNAPSHOTS OF THREE SECTORAL CASE STUDIES: IDENTIFYING GOOD PRACTICE AND SPACES FOR INTERVENTION The LMIP has conducted three rich, detailed, multi-level case studies that reflect the complex and dynamic interactions evolved over time to address occupational and sectoral skills demands. We are in the process of analyzing these cases to draw out policy implications for specific actors and levels of the PSET system. Here we provide the main skills planning challenge in each of the three cases, and an illustration of the kinds of policy insight we can draw. The sugar sector in KwaZuluNatal historically developed a self-sufficient private sector system to meet routine skills needs of growers and millers. Foundational programmes are provided by selected universities, and local agricultural colleges, supplemented by sugar-specific training offered by private sector intermediaries (industry associations). There are very few linkages with local FET colleges. The growing number of land reform farmers and cooperatives bring new skills challenges that may drive stronger interaction with public providers. Tier 1 automotive suppliers in the Eastern Cape meet their routine skills needs at the basic and intermediate levels largely through in-house and on the job training. Interaction with selected universities involves research and innovation, and with selected FET colleges for engineering and artisanal training. Industrial policy recently targeted the need for local technological capability building and skills upgrading, to advance competitiveness in the global value chains that strongly discipline the sector in South Africa. This will need stronger collaboration to drive interaction between firms and PSET organisations, to build local capabilities. The SKA organisation, in the astronomy sectoral system of innovation, together with government, has led a process of technological foresight and capability building, to grow the high-level graduates required to support the SKA bid, in advance, drawing in public universities all over the country. Local universities, firms, private and public intermediaries are strongly connected into global innovation networks, through both tacit and formal linkages, providing many instances of good practice. Attempts to involve FET colleges to address artisanal skills needs have not yet been successful. Examples of cross-cutting policy insights that can inform recommendations and interventions at different levels: 1. A better understanding of routine and changing occupations skills needs of firms in key sectors is needed. This can inform strategic planning of programmes in niche fields and focal disciplines, to enhance responsiveness of SETAs, colleges and universities. 2. A better understanding of the nature of alignment between actors in a network and the strength of individual relationships is critical. This can assist DHET or SETAs to identify spaces for intervention, such as strengthening FET competences, or university interactive capabilities. 10

11 3. Public and private intermediaries are a valuable resource to link firms and PSET organisations, through funding, or brokerage or sharing expertise. DHET or PSET organisations need to create mechanisms to facilitate collaboration and network building. 4. PSET organisations need to develop dynamic interactive capabilities, to sense change in their environment, and build interface structures, competences and mechanisms that are coordinated and integrated within and across the institutions. Good practice policy, interface structures and mechanisms can be replicated or extended to support capability building across the PSET sector. METHODOLOGY AND TEMPLATES TO INFORM THE WORK OF SKILLS PLANNING ACTORS ACROSS THE PSET SYSTEM Drawing on the insights of the empirical studies, and informed by the interactive capabilities approach, the LMIP can now work with DHET actors to prepare manuals. The methodology and templates developed will be codified and packaged for use in other sectors and settings, to inform their task of skills planning as set by the White Paper (2013): 1. SETA Skills Planners: templates to guide research to identify economic dynamics, actors and interaction in networks at sectoral and regional levels, that can inform Sectoral Skills Plans 2. Higher Education and FET college planners: a framework to identify, and a set of good practices to inform, the introduction of new institutional policies, structures and mechanisms that can enhance dynamic interactive capabilities of academics and leaders 3. DHET: a framework to identify the nature of alignment, gaps, missing linkages and blockages to inform strategic policy interventions in skills development systems at sectoral or regional levels 11