EXPLANATORY MEMORANDUM SKILLS DEVELOPMENT AMENDMENT BILL, 2008

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1 EXPLANATORY MEMORANDUM SKILLS DEVELOPMENT AMENDMENT BILL, PURPOSE OF BILL The Skills Development Act 97 of 1998 (SDA) was passed on 2 November Since then two amendments have been affected, namely on 30 April 1999 when the Skills Development Levies Act 9 of 1999 was passed, and on 14 November 2003 when the Skills Development Amendment Act 31 of 2003 was passed. The latter amendment was passed primarily to give the Minister greater powers to manage SETAs. The skills development environment in South Africa is a dynamic environment. It is also a new environment, with the primary implementing agencies, the Sector Education Training Authorities (SETAs) and the National Skills Fund, having been established only since 2000 and 1999 respectively. As a result of the dynamic and challenging nature of skills development, it has become necessary to propose further technical adjustments to the Skills Development Act 1998 as set out in this Skills Development Amendment Bill, These technical adjustments once promulgated and implemented will result in a more flexible and broadened policy framework that will allow implementers of skills development in South Africa to accelerate the delivery of scarce and critical skills in support of national economic growth initiatives such as the Accelerated Growth Initiative of South Africa (ASGI-SA) and the Joint Initiative for Priority Skills Acquisition (JIPSA). Both ASGI-SA and JIPSA are in turn aligned to the National Industrial Policy Framework, thereby ensuring alignment between skills development policy and economic growth policy. 1

2 2. MAIN FEATURES OF THE BILL The following five technical adjustments are necessary to remove specific challenges to skills development policy and thereby accelerate skills development implementation: 2.1 Promotion and development of artisans. The sustained robust economic growth being experienced in the country, supported by ASGI-SA, places an emphasis on massive infrastructure development over the next decade and has dramatically escalated the need for qualified artisans. The Bill proposes strengthening the institutional capacity of the Department of Labour to accelerate artisan development, in particular to refocus the role of the Institute for National Development of Learnerships, Employment Skills and Labour Assessment (INDLELA) located at Olifantsfontein in Gauteng as a national artisan moderation body for artisan development. In addition the Bill proposes giving the Minister of Labour powers to establish if necessary state funded or co-funded Institutes of Sectoral or Occupational Excellence to revive the role of state-owned enterprises in skills development and training, especially in respect of artisan development. 2.2 Transfer of the provisions in the existing sections of the Manpower Training Act 1981, Act No 58 of 1981, in respect of apprenticeships. The Skills Development Amendment Bill, 2007 seeks to integrate all learning programmes related to the workplace into a single piece of legislation by repealing the remaining provisions in the Manpower Training Act, 1981 dealing with apprenticeships which still relate to artisan training. In addition, it clarifies the manner in which various skills development routes apply to artisan training. 2

3 2.3 Strengthening the further implementation of Employment Services. Skills development remains a key factor for employment creation and, as a direct result, poverty alleviation. To enhance the contribution of skills development to employment creation, the Bill also proposes amendments to the employment services function of the Department of Labour as well as to those sections of the Skills Development Act which allow the Department to monitor and enforce compliance with the Act in support of employment promotion. 2.4 Establishment of the Quality Council for Trades and Occupations required by the Joint Policy Statement on the review of the National Qualifications Review To support an improvement in the quality assurance for learning in and for the workplace, the Bill establishes the Quality Council for Trades and Occupations (QCTO) as a centralized body for the development, monitoring and quality assurance of occupationally related learning, however excluding professional learning which falls under other pieces of legislation. This adjustment to the Skills Development Act is to be implemented in tandem with adjustments being proposed by the Department of Education through the National Qualifications Bill 2008 as well as adjustments to the Higher Education Amendment Bill 2008 and the General and Further Education and Training Quality Assurance Amendment Bill Listing of the National Skills Fund as a Public Entity. The Bill also repositions the National Skills Fund as a public entity under the Public Finance Management Act 1 of This is specifically in response to advice from the Auditor General on the legal status of the National Skills Fund. 3

4 3. EXPLANATION OF THE CONTENTS OF BILL SECTION BY SECTION 3.1 Section 1: Definitions A range of additional definitions have been added that attempt to clarify the meaning of terminology relating to artisan development and occupational or work based learning, the latter being the scope of work for the Quality Council for Trades and Occupations (QCTO). Numerous new terms are emerging as the QCTO develops policies and processes to implement the development and quality assurance of occupational learning. Learning programmes in the context of skills development in South Africa is also defined to include distinct ways of learning. These distinct ways of learning have become well entrenched in the skills development arena as a result of phase two of National Skills Development Strategy requiring in particular SETAs to support a wider range of learning opportunities as required by each economic sector. The concepts of placement and placement opportunities are also defined to ensure common understanding in South Africa of the purposes and outputs of the employment services function of the Department of Labour. 3.2 Section 2: Purposes of Act The Purposes of the Act is adjusted to broaden the focus of learning from learnerships to learning programmes as defined in the definitions. In addition the institutional framework that supports the implementation of skills development in South Africa is broadened to include: 4

5 Department of Labour provincial offices Artisan Development Institutes Institutes of Sectoral or Occupational Excellence Quality Council for Trades and Occupations Skills Development Forums in each province A National Artisan Moderating body. These additional institutional structures are proposed to accelerate skills development across the entire country, in particular the development of artisans, without surrendering the quality of learning. 3.3 Section 5: Functions of National Skills Authority The functions of the National Skills Authority are adjusted to remove the clause that advises the Minister on the allocation of subsidies from the National Skills Fund as this function is now transferred to the National Skills Fund Board as contemplated in the proposed Section 29 (6) (a). It is proposed that the National Skills Fund has a separate advisory Board from the National Skills Authority. The National Skills Fund Board will have specific functions related to the National Skills Fund only, as further explained in Section 29 (6). In contrast the National Skills Authority has the primary function of advising the Minister on the National Skills Development Strategy that includes objectives and targets to be achieved by not only the National Skills Fund but also other agencies such as the Sector Education Training Authorities (SETAs). In addition the functions of the National Skills Authority are broadened to include two additional liaison functions to ensure that there is a link between the National Skills Authority and the Quality Council for Trades and Occupations as well as the National Skills Fund Board. 5

6 3.4 Section 6: Composition of National Skills Authority and term and vacation of office. The composition of the National Skills Authority is increased by two additional non voting members to allow for representation on the National Skills Authority of persons from the Quality Council for Trades and Occupations as well as the National Skills Fund Board. This change is necessary to enable the liaison function as described in Section 5. An additional deputy chairperson for the National Skills Authority is also proposed to coordinate and lead the education and training provider constituency of the National Skills Authority. All four other constituencies namely organised labour, organised business, community and development interests as well as the State have deputy chairperson who coordinate discussions and activities within their constituency members. The period of office for a member of the National Skills Authority is proposed to be extended from three years to five years to allow for an alignment with the different phases of the National Skills Development Strategy. This will allow for a specific genre of persons who make up the National Skills Authority to develop and implement each specific phase of the National Skills Development Strategy. The act is also technically adjusted for the Minister of Labour to appoint a replacement Chairperson should the Chairperson vacate his or her office before the expiry of the period of office. At present the Act only provides that the Minister must appoint replacement members who vacate their office before expiry of the period of office. 6

7 3.5 Section 10: Functions of SETA The functions of SETAs are adjusted primarily as a direct result of the establishment of the Quality Council for Trades and Occupations as contemplated in section 26G. In line with current practice it is proposed that SETAs implement their sector skills plans through not only learnerships but learning programmes as provided for in the definitions. This broadens the scope of a SETA to implement relevant and appropriate learning interventions as determined by the stakeholder needs in each sector. SETAs are now also required to approve not only workplace skills plans but also annual training reports received from employers. This is to ensure that planning for skills development is carried through into implementation. A significant adjustment in the functions of a SETA will be the replacement of the current SETA function to accredit education training development providers with a more specific and direct SETA function to monitor education and training provision in it s sector within a process prescribed by the Quality Council for Trades and Occupations. In addition to this a SETA must also perform any functions delegated to it by the QCTO. As a result of SETA accreditation powers being replaced by monitoring powers, the current requirement for a SETA to apply to the South Qualifications Authority for accreditation will no longer apply once the Quality Council of Trades and Occupations is operational, and has delegated specific powers and functions to a SETA as contemplated in Section 26I. 7

8 It is important to note that under the transitional arrangements as contemplated in Schedule 2 Section 6 to the Bill, a SETA will remain accredited by SAQA and will continue to perform functions related to the quality assurance of education training development providers until such time as the Quality Council for Trades and Occupations delegates powers and functions to a SETA. Additional liaison functions for the SETAs are also proposed to further strengthen links between SETAs and provincial and regional structures of the Department of Labour inclusive of provincial skills development forums as well as between the SETAs and the Quality Council for Trades and Occupations. 3.6 Section 16: Learnerships The section dealing with learnerships is adjusted to clarify the manner in which learnership agreements apply to artisan training. In particular the section indicates that learnerships will include apprenticeships for trade qualifications. Learnerships and apprenticeships can thus be used for artisan development in future years. 3.7 Section 17: Learnership Agreements The section dealing with learnership agreements is adjusted to allow for a future transition for training providers currently accredited by the South African Qualifications Authority through a SETA to become accredited by the Quality Council for Trades and Occupations. It is important to note that under the transitional arrangements as contemplated in Schedule 2 Section 6 to the Bill, a training providers accredited by a SETA will remain accredited until such time as the Quality Council for Trades and Occupations delegates powers and functions to a SETA. 8

9 This section is also expanded to make direct reference to the regulations made by the Minister to register Employment and Skills Development Agencies or ESDAs. The regulations for ESDAs were included in Learnership Regulation Gazette published on 29 June 2007 in terms of Section 36 of the current Act. 3.8 Chapter 6: Institutions in Department of Labour and Regulation of Private Employment Services Agencies It is proposed to change the heading of this chapter to allow for a broader scope of work which will enhance and strengthen the work of the Department in Employment services in both the public sector and private sector. The chapter heading therefore becomes Institutions in the Department of Labour and Employment Services. This does not imply that the regulation for private employment services agencies is removed from the current Act as Sections 24 and 25 of the current Act that deal with private employment services agencies remains intact as is. 3.9 Section 22: Skills Development Planning Unit. This reference to a single specific unit within the Department of Labour is replaced with a broader heading that encompasses all the different institutional units within the Department of Labour that are involved in the administration of the implementation of the Skills Development Act. This section heading therefore becomes Administration of the Act by the Department Section 23: Employment Services 9

10 The provision of Employment Services in its broadest sense has been and continues to be a core function of the Department of Labour. Employment Services encompasses all the different services that the Department of Labour offers to residents of the country inclusive of : Influencing demand of labour o Enabling creation of jobs in the economy o Prevention of the destruction of jobs o Enabling creation of jobs for vulnerable workers e.g. disabled o Enabling self-employment Influencing supply of labour o Forecasts of skills requirements in the economy o Guiding choices in career and skills development o Provision of skills development o Rehabilitation of injured workers o Facilitation of the re-entry of workers who have been forced out of the labour market o Provision of short-term insurance to assist workers who have temporarily lost their jobs and enable them to continue participating in the labour market Facilitating labour market transactions that impact on employment o Provide policy framework for the employment transaction o Provision of information on placement opportunities and work seekers o Facilitate negotiations between workers and employers on issues such as wages, conditions of employment etc. o Facilitate resolution of conflict between workers and employers o Facilitate equitable termination of employment contracts 10

11 At the forefront of providing these services are the provincial offices and regional labour centres of the Department of Labour. To further strengthen this critically important work carried out by the provincial offices and labour centres, this section of the Act has been updated to reflect the most current and proposed future work of the provincial offices and regional labour centres in relation to the skills development element of employment services as well as placement opportunities for persons who are unemployed. The terminology placement opportunity is introduced and defined in the Bill to cover all the current options available to an unemployed person to access an opportunity to improve his economic status in life. This includes not only opportunities in work vacancies but also opportunities to learning, self-employment or community service. This broadening of the policy framework on Employment Services will accelerate access to opportunities to many more individuals and in particular address the eradication of poverty in the country Chapter 6A Artisan Development A new chapter is introduced in the Bill to promote the accelerated development of artisans in the country. The need for artisans is be clearly articulated in both ASGI-SA and JIPSA documentation. The Bill sets out a broad policy framework for artisan development in Section 26A to Section 26E that are described below. It must be noted that this Chapter transfers the provisions in the existing sections of the Manpower Training Act 1981, Act No 58 of 1981, in respect of apprenticeships to the Skills Development Act. However the proposed policy framework in the Bill differs from the Manpower Training Act in that it is aligned to the outcome of the process, namely a qualified and registered artisan, not the input 11

12 requirements or apprenticeship route to become an artisan as is described in the provisions on the Manpower Training Act Section 26A National Artisan Moderating Body Since the mid 80 s there has been a continued reduction in the number of qualified artisans available in South Africa. There are many reasons for this but primarily this is a result of the lack of investment in artisan training by the state, public enterprises (previously known as parastatals) and the private sector. This dearth of artisans has been further compounded by the lack of quality in the training and assessment processes for artisans. Pass rates for artisan trade test at the Department of Labour facility known as the Institute for the National Development of Learnerships, Employment Skills and Labour Assessment or INDLELA (previously known as the Central Organisation for Trade Tests or COTT) have been progressively falling over the years, despite the numbers of persons applying for trade tests increasing. In 2007 a total of trade tests were arranged, persons tested and only or 37% persons certificated as artisans. To address the lack of quality in artisan development, the Director- General of Labour will be required to establish a national artisan moderation body and to ensure that sufficient resources are available to the body to coordinate artisan development in South Africa. This body will derive its powers and functions from a delegation from the Quality Council for Trades and Occupations as contemplated in Section 26I of the Bill. As a national moderation body for artisan development, this institution will need to feedback back into the Quality Council for Trades and Occupations findings identified through the moderation of integrated 12

13 summative assessments (trade tests) that need to be addressed to ensure quality of learning. The Quality Council for Trades and Occupations as the designated authority for the development and quality assurance of artisan qualifications and curriculum, will then on a continuous basis improve such national artisan qualifications and curriculum to ensure that quality is built into the learning process and that the curriculum for artisan development is standardized nationally. In addition to the above role to support the quality assurance of artisan qualifications, the National moderation body will also be responsible for the ongoing developing and maintenance of integrated summative assessments (trade tests). Many trade tests that are currently used have been overtaken by improvements in technology and are no longer applicable to the actual work carried out by artisans in the work place. The National Artisan Moderating Body will rectify this by putting in place and maintaining a national ICT enabled databank of instruments for assessment and moderation of artisan trade tests. To further ensure quality of artisan development the National Artisan Moderating Body will also monitor the performance of artisan trade assessors and moderators as well as the accredited artisan trade test centres. Linked to this will be the critical functions of coordinating national artisan learning achievements, certification, appeals and registration and/or de-registration of artisans, the latter as contemplated in Section 26C of the Bill. In essence the National Artisan Moderating Body is being positioned in the Bill as the official State Regulator for artisans in South Africa, resulting in a single, centrally controlled point of contact for all artisan related matters. 13

14 It must also be noted that although the above functions are being proposed in the Bill as new functions, many of these functions in whole or in part are already being carried out by INDLELA. The Bill now gives a solid and firm legislative policy framework for this critical work to be accelerated and resourced by the Sate Section 26B Listing of Trades At present there is a huge proliferation of artisan trades, some of which have registered qualifications and others that do not. Some trades are referred to as designated, others are not, and the meaning of designated is also vague and subject to interpretation. More recently as a result of the JIPSA process a short list of scarce skill artisan trades was developed based on sector skills plans that derived their information from organisations within each sector, further modified by interaction with industry through the Department: Trade and Industry. There are also some industries or sectors of the economy that train artisans within their own organisations but since the training is not linked to an official national qualification but a company specific process, such artisans are not recognized or certificated nationally. This disadvantages the learner in that he or she is restricted from being able to find employment in other sectors of the economy should they loose their current jobs through retrenchment for example. This national list of artisan trades will be linked to the nationally published list of occupations as detailed in the Organising Framework for Occupations or OFO as published by the Department of Labour. The OFO not only lists the occupational designation for each trade but allows for specialization within each trade. Each occupation listed in the artisan trade list will then be linked to a formally registered artisan qualification that allows all learners to 14

15 eventually achieve a nationally (and internationally since the OFO is internationally bench marked) recognized qualification. This approach will also have benefits for career path guidance and planning Section 26C National Register of Artisans Artisans have traditionally been regarded as lower class workers and have many social stigmas attached to them, including stigmas left over from the past apartheid regime where artisan was the domain of white males only for many years. For South African to produce enough qualified artisans to continue to grow the economy these stigmas have to be progressively reduced and removed through explicit interventions. One such intervention is the process of professionalizing all artisan occupations. As a starting point in this process the Bill proposes an official and formal register of artisans is developed and all practicing artisans are registered with the Department of Labour for as long as they are active artisans. Persons who are not registered with Department of Labour will not be able to legally offer services as an artisan whether within employment or as a self employed artisan running a small business. Any person who brings the artisan profession into disrepute will be de-registered as well. This will serve to protect consumers and employers of poor work from any artisan. The register of professional artisans could also be used by the Department directly or indirectly through service providers to offer continuing professional education and skills upgrading courses to qualified artisans, as well as give qualified artisans opportunities to become either lead artisans or entrepreneur artisans as defined in the Bill. This will serve to further remove the stigma attached to artisans at present in that it is a dead end job with growth or personal development opportunities. 15

16 3.15 Section 26D Trade Tests A non negotiable and formal requirement for becoming a professional artisan registered with the Department of Labour will be to have completed an integrated summative assessment of trade tests, irrespective of the learning methodology or route that a person utilized to become an artisan. This approach is critical in ensuring that all artisans who are qualified for a specific trade are considered as equals. In the past as is the case still today, there are social stigmas attached for example to an artisan who has came through a time based process versus an artisan that came through a recognition of prior learning process, the latter being inferior to the former. A single, standard nationally used trade test for each trade, formally regulated and applied will remove this stigma. The Bill makes reference to various routes that a person can utilize to become an artisan that allows for a broad and flexible process of learning to become an artisan. In all cases a trade test will be required before certification as an artisan. The Bill also proposes the possible use of a pre-trade test preliminary evaluation process to ascertain whether a learner should proceed with a trade test or if additional learning is required before attempting a trade test. This approach will improve the numbers of learners passing the final trade test as they will have been better prepared and also ensure that the time of trade test assessors is utilized more effectively and efficiently. The Bill proposes that the Minister may, after consultation with the Quality Council for Trades and Occupations, issue numerous regulations that will very clearly and in detail explain the procedures, processes, costs and certification requirements for artisan trade testing. 16

17 3.16 Section 26E Artisan Development Institutes and/or Institutes of Sectoral or Occupational Excellence. A major weakness that has been identified in the development of artisans and other occupationally based learning programmes is the growing lack of capacity in the country of training provision. JIPSA research has unearthed facilities that could be re-capitalized to become artisan training centres or centres of learning for other occupationally based programmes. In addition there are numerous public FET Colleges campuses that have and could in the future also become artisan development centres inclusive of offering trade tests. To maintain and grow this capacity the Bill proposes that the Minister has powers to possibly establish and contribute resources to public and/or private institutions to ensure that there is national capacity to develop artisans in the first place as well as other scarce skill occupations. In essence this will allow the Minister to establish state owned training centres should the need arise. This approach is in line with the National Skills Development Strategy that requires SETAs to recognize and support Institutes of Sectoral or Occupational Excellence (ISOE) within public or private institutions and through public private partnerships. The Bill proposes that the State itself could become more directly involved in establishing key ISOEs in specific occupations or in specific geographic areas Chapter 6B Quality Council for Trades and Occupations A new chapter is added to the Bill to establish the Quality Council for Trades and Occupations (QCTO) as a juristic person. This is a direct consequence of the completion of the Review of the National Qualifications Framework and the issuing of the Joint Policy Statement 17

18 on the Review of the National Qualifications Framework by the Ministers of Education and Labour in October This new chapter in the bill must be read in conjunction with the bills published by the Department of Education on 15 th February 2008 namely the National Qualifications Framework Bill 2008 Higher Education Act Amendment Bill 2008 General and Further Education and Training Quality Assurance Act Amendment Bill The establishment of the Quality Council for Trades and Occupations will result in the centralization of quality assurance of work based or occupational learning. At present this has been achieved through a proliferation of SETA and other quality assurance bodies that has resulted in confusion and duplication of systems and processes. The Bill sets out a broad policy framework for the development and quality assurance of occupational (work place) learning in Section 26F to Section 26J that are described below Section 26F Policy on occupational standards and qualifications The bill requires regulations to be promulgated by the Minister after consultation with the Quality Council for Trades and Occupations on the two key frameworks that will guide the work of the Quality Council for Trades and Occupations, namely the: Occupational Qualifications framework, as one the three sub frameworks of the National Qualifications Framework as contemplated in Chapter 2 of the National Qualifications Framework Bill 2008 and Framework for Quality Assurance of occupational qualifications. 18

19 Both these policies are well advanced with draft versions already in use Section 26G Establishment of the QCTO The Quality Council for Trades and Occupations is one of three Councils that will develop and quality assure learning across all the different fields of learning in South Africa. To ensure a consistent approach and operational parity to the two established councils namely the Council for Higher Education and UMALUSI, the Quality Council for Trades and Occupations will be established as Schedule 3a Public Entity. The Quality Council for Trades and Occupations will therefore be a Board or Controlling Body with the Fiduciary duties of an Accounting Authority as described in Section 50 of the PFMA. The Quality Council for Trades and Occupations will report to the Minister of Labour as its Executive Authority. This positions the Quality Council for Trades and Occupations as an external arms length body to the Department of Labour similar to the SETAs. However the Quality Council for Trades and Occupations will be resourced by funds appropriated from the National Revenue Fund as part of the Department of Labour Vote with a transfer payment made to the Quality Council for Trades and Occupations to allow it to carry out its work Section 26H Functions of the QCTO The function of the Quality Council for Trades and Occupations are referenced in the Joint Policy Statement on the Review of the National Qualifications Framework. These functions are generic to all three Quality Councils but within the context of their fields of learning. 19

20 In the context of the Quality Council for Trades and Occupations the functions are to advise the Minister on all policy matters relating to occupational or work based learning. In addition the Quality Council for Trades and Occupations must then ensure such policies are implemented. An important function relates to the Quality Council for Trades and Occupations not working in a silo environment but liaising with both other councils as well as the National Skills Authority, South African Qualifications Authority and other professional bodies. This is critical to ensure articulation and progression across different fields of learning quality assured by different bodies Section 26I Delegation of powers and functions While the Quality Council for Trades and Occupations will have all necessary powers to develop and quality assure occupational qualifications inclusive of accrediting work based provision, the enormity of the task will require the delegation of powers and functions to individuals and/or organisations that will assist the Quality Council for Trades and Occupations to achieve its objectives. Apart from delegation of powers and functions to the Executive Officer and standing and/or ad hoc committees of the Quality Council for Trades and Occupations, it is expected that in respect of artisan trades that the Quality Council for Trades and Occupations will delegate all relevant functions to the National Artisan Moderating Body as contemplated in Section 26A of the Bill. SETAs will also have a very critical role to play in supporting the Quality Council for Trades and Occupations through the monitoring of education and training provision in their respective sectors as contemplated in Section 10 of the Bill. 20

21 A large volume of work in the developing of standards, qualifications and curricula for occupational learning will be carried out by communities of expert practice. These are temporary groups of individuals who are recognized experts in the relevant occupational fields of work. The Quality Council for Trades and Occupations will from time to time as is required establish such temporary structures with the assistance of industry and delegate powers and functions to them to carry out their work of developing standards, qualifications and curricula. These will be structures similar to current standards generating bodies (SGBs) but with a requirement for occupationally qualified experts to serve on these bodies in addition to education specialists Section 26J Regulations regarding occupational standards and qualifications To fully implement the Occupational Qualifications Framework and the Framework for Quality Assurance for occupational qualifications the Quality Council for Trades and Occupations will require a broad and comprehensive regulatory framework. This section lists numerous regulations that will be required, the list having been developed from current and future practice in occupational learning. However the list is not exhaustive and provision is made for any regulations that may be necessary but that are not included explicitly in the list. It must be noted that these regulations are separated from Section 36 of the Act that details other regulatory powers of the Minister under the Act made by the Minister after consultation with the National Skills Authority, not the Quality Council for Trades and Occupations as is the case for the regulations in this section of the Bill. 21

22 3.23 Section 28: Use of Money in Fund The current Chapter 7 of the Skills Development Act includes this section 28 that relates to the use of the money in the National Skills Fund (NSF). At present the Act allows for a maximum of two (2) percent of the money received from the skills development levy to be used to administer the fund. However the two (2) per cent is based on co-funding / top-up principle, and currently only the direct NSF staff at head office that are dealing with core business are paid from two (2) percent. All support services for the NSF staff are paid by Departmental funds under the Corporate Services Branch. In addition all of the actual work carried out on behalf of the NSF in provinces and labour centres is paid for Departmental funds through the Service Delivery Branch. Once the NSF is registered as public entity it will be required to pay for all activities/human resources including a portion for services that are shared with other units of the Department related to NSF. To allow for a more flexible approach and in light of the current process underway to list the National Skills Fund as a public entity (to ensure compliance to the PFMA) that could require additional resources to administer the fund as explained above, the Bill proposes that this provision be amended to allow the Director General of Labour to prescribe the limit of funds that could be used to administer the fund. Such a prescribed limit can in future be amended from time to time subject to any prevailing conditions that require an adjustment without the necessity to amend the Act. 22

23 It is important to note that the limit prescribed by the Director General will be dependent on the strategic framework that is developed by the proposed National Skills Fund Board as contemplated in Section 29 (6) of the Bill. Since the proposed National Skills Fund Board is composed of social partner representatives as nominated by Nedlac, the prescribed administration spend limit will in essence be determined by the social partners and not the Director General in isolation of the social partners Section 29: Control and Administration of Fund The National Skills Fund (NSF) is currently in the process of moving towards formal registration as a Schedule 3a Public Entity. This is a requirement as a direct consequence of the funding model that is currently in use to the administration of the Fund, namely a portion of the skills development levy. This results in the NSF not being funded through a portion of the appropriation of national revenue funds to the Department of Labour as detailed in Vote 15 of the Estimated National Expenditure or ENE. This alternate source of funding requires that the NSF accounts for and reports on revenues received and disbursed as an entity on its own, separate from the Department of Labour. However the Bill proposes that the Director General remains in charge of the NSF but as the Accounting Authority and not Accounting Officer as is the case at present. This is in line with Section 49 (2) (b) of the Public Finance Management Act (PFMA). This approach negates the need for a board or controlling body to be established that has the fiduciary duties of an accounting authority such like the Boards of the SETAs as described in Section 50 of the PFMA. These fiduciary duties remain with the Director General of Labour. 23

24 However the Bill does propose in the section that an advisory National Skills Fund Board be established that will advise the Minister on the strategic framework for the use of eth money in the fund. This strategic framework will be aligned to and therefore support the National Skills Development Strategy. The composition and broad constitutional requirements of the National Skills Fund Board are detailed in Schedule 4 to the Bill. In essence the National Skills Fund Board is made up of the identical social partner constituencies of the Nationals Skills Authority, but by having a separate and smaller National Skills Fund Board that focuses exclusively on the performance delivery of the National Skills Fund only, a more efficient and effective service delivery process will be achieved. It must also be noted that since the National Skills Fund is focused exclusively on the financing of skills development of unemployed persons and in particular specific designated groups that have special needs, the members of the National Skills Fund Board as nominated by NEDLAC can therefore be person who have particular expertise in assisting the unemployed and person with special needs. This would include persons from provincial and rural communities in particular Section 36: Regulations This section of the current Act deals with regulations that may be prescribed by the Minister after consultation with National Skills Authority. With the advent of the Quality Council of Trades and Occupations as described in the preceding sections of this memorandum, there are regulations that may be prescribed by the Minister after consultation with the Quality Council for Trades and Occupations (Refer Section 26D (5) and Section 26J) and not the National Skills Authority. 24

25 In a similar fashion the Bill proposes that the National Skills Fund Board includes in its constitution a procedure to advise the Minister on guidelines in respect of governance, administration, operation, functioning and obligations of the National Skills Fund as contemplated in Section 27 (7). As a result of this adjustment, the section of the current Act is adjusted removing the provision that allows the Minister to make regulations after consulting with the National Skills Authority regarding the administration, operation, functioning and obligations of the National Skills Fund, since this function is now carried out by the proposed National Skills Fund Board. Two additional provisions are added to the range of regulations that the Minister may make after consultation with the National Skills Authority. In the first instance a transition provision is made to ensure that any matter related to any repealed Act that might occur can be handled through a regulation promulgated by the Minister. This is primarily in reference to the repeal of the current outstanding provisions of the Manpower Training Act of 1981 that are being repealed through this Bill. In the second instance the Bill proposes that the Minister may make regulations after consultation with the National Skills Authority for the establishment of skills development forums in the each province. The National Skills Authority has identified this as a need since at present the provincially based skills development forums operate in different formats and are not always supported by relevant key stakeholders such as SETAs. The regulations will standardize and legitimize the operations of the skills development forums in each province. 25

26 3.25 Schedule 2 Transitional Provisions Transitional arrangements are included in this Schedule for such institutional or organisational arrangements that need to be allowed to continue under a legal framework that will eventually be phased out once various sections of the Skills Development Amendment Bill comes into operation after promulgation. This includes the handling of contracts of apprenticeship that were established and listing of designated artisan trades under the Manpower Training Act. Transitional arrangements are also included to ensure the continuation of accreditation of SETAs and providers by SAQA as such arrangements will remain in force until the Quality Council for Trades and Occupations comes into operation on a date determined by the Minister Schedule 3 Composition and Constitution of the QCTO The composition of the Quality Council for Trades and Occupations is partly defined by the Joint Policy Statement on the Review of the National Qualifications Framework as released by the Ministers of Education and Labour. The Joint Policy Statement requires that the following persons are permanent members of the Quality Council for Trades and Occupations: the executive officer of the South African Qualifications Authority; the executive officer of the National Skills Authority; the executive officer of the QCTO; 26

27 the executive director of the Higher Education Quality Committee the chief executive officer of Umalusi The balance of the members of the Quality Council for Trades and Occupations are made up of representatives of social partners based on the same structure of the National Skills Authority. The Bill proposes that the nominated members hold office for five years for a maximum of two terms, aligned similarly to the proposed five year term of office for National Skills Authority members. While there is no restriction on the same constituent members serving on the National Skills Authority and the Quality Council for Trades and Occupations, it would be pragmatic for constituencies to consider the functions of each body and where possible nominate members that have expertise in filed relative to the functions of each body. This schedule also describes a broad generic framework within which the Quality Council for Trades and Occupations will need to develop a constitution that will form the basis for its operations subject to approval of such a constitution by the Minister Schedule 4 Composition and Constitution of the National Skills Fund Board The members of the National Skills Fund Board are made up of representatives of social partners based on the same structure of the National Skills Authority. The exception is that Bill does not propose the inclusions of providers on the National Skills Fund Board as this advisory Board will deal with 27

28 a strategic framework for actual delivery of skills development within the scope of operations of the National Skills Fund. In such a context there could be a conflict on interest in that members of public or private provider organisation might be seen to have advantage over others that are not represented on the National Skills Fund Board. The provider constituency will still have an opportunity to comment and provide advice and insight into the operations of the National Skills Fund through the liaison linkage as proposed in Sections 5 and 6 of the Bill. The Bill proposes that the nominated members hold office for five years for a maximum of two terms, aligned similarly to the proposed five year term of office for National Skills Authority members. While there is no restriction on the same constituent members serving on the National Skills Authority and the National Skills Fund Board, it would be pragmatic for constituencies to consider the functions of each body and where possible nominate members that have expertise in filed relative to the functions of each body. This schedule also describes a broad generic framework within which the Quality Council for Trades and Occupations will need to develop a constitution that will form the basis for its operations subject to approval of such a constitution by the Minister Amendment of section 65 of the Basic conditions of Employment Act, 75 of Amendments as proposed in this Bill result in the need to adjust the above section of the Basic Conditions of Employment Act. 28

29 4 PARTIES TO BE CONSULTED The initial research and drafting work on the draft Bill was carried out by officials within the Department of Labour who are involved with the implementation of the Skills Development Act. The Bill was also discussed and adjusted with the National Department of Education. The Bill will be processed through all structures and constituencies of the FOSAD clusters, relevant Cabinet committees, Cabinet, National Skills Authority, NEDLAC before submission to Parliament. 29