FIVE YEAR SECTOR SKILLS PLAN FOR THE CHEMICAL

INDUSTRIES SECTOR EDUCATION AND TRAINING AUTHORITY

2011 – 2016

FOREWORD

The South African chemical sector is diverse and complex. On the one hand it comprises a well developed

upstream industry ; Basic Chemicals and Other Chemicals , with the former being highly capital intensive. On

the other is the more labour-intensive downstream Plastics industry. The chemicals sector is the fourth-largest

employer in manufacturing, behind food products, motor vehicles, parts and accessories, and metal products.

In 2008; its total global sales exceeded $3 trillion. Chemical products and technologies are used in almost every

area of the world economy. As the global economy grows, it increases the demand for the chemical industry’s

products. This growth drives product innovation, and the industry creates new products every year while

striving to improve production processes and uses resources more efficiently.

It invests around R2 billion annually in upgrades, with less than 1 per-cent of sales being spent on Research

and Development. Products of the chemicals and metals sectors are the basis for almost every manufacturing

activity. It is thus a crucial industry from the perspective of South Africa’s ongoing growth path for advancing

socio-economic development objectives.

The development of the chemicals sector has two major elements: firstly, to promote beneficiation of minerals

into primary products for exports and also to provide feedstock into higher value-adding manufacturing

activities; and secondly, to promote downstream fabrication of polymers, thereby creating more jobs and

adding significant value. Primary beneficiation faces constraints such as the risks and coordination problems

associated with large capital-intensive projects. Downstream plastics fabrications requires far more

competitive pricing of polymer inputs, skills development, support for company and industry level technical

capabilities such as R&D, tooling and stronger matching of final product demand patterns to intermediate

plastic inputs. The pharmaceuticals industry is threatened by high-levels of import penetration. The industry

faces coordination and regulatory challenges with regards to state procurement demand, medicine licensing

procedures, and price administration.

South Africa's chemicals exports have been growing at an annual average rate of around 19% since 1999, on

the back of new trade agreements and improved competitiveness as a result of low manufacturing costs and

plentiful mineral and organic supplies for manufacturing. Notwithstanding that energy costs are relatively low

in South Africa, we have witnessed a substantial spike in these costs over the past two years and the sector

benefits from efficient, cost-effective access to water and steam. However, much more is imported than

exported. The government aims to address this imbalance with its recently introduced national industrial

policy framework, which aims to boost the country's value-added exports. The local industry is biased towards

an internationally competitive upstream sector, neglecting a downstream sector that has great potential for

development.

Reversing this bias would help the industry to increase beneficiation (or value-addition), exports and

employment. Downstream production is more labour-intensive, and pulls in a larger number of smaller firms.

Beneficiation is key in this strategy. South Africa has a natural advantage in mineral feedstock, but most of

these are exported in raw form. However, there are substantial opportunities to convert these materials, using

local labour and capital, into value-added inorganic chemicals for export. The South African chemical industry

constitutes 23% of manufacturing and 5% of South Africa’s GDP.

Ours is therefore an important sector, and its fortunes, or lack thereof, have a major impact on the overall

performance of the country’s economy. It is interesting to note firstly the relative value of the contribution of

each sub-sector to South Africa’s GDP, and secondly South Africa’s relative position in world production. The

chemical industry consists of various sub-sectors as described below:

CHIETA Chambers CHIETA Sub-Sectors The dti’s Strategic Sub-sectors

Petroleum and Base Chemicals

Petroleum Liquid Fuels and Associated Products

Base Chemicals

Commodity Organic Chemicals

Primary Polymers and Rubbers

Commodity Inorganic Chemicals

Fine Chemicals

Fast Moving Consumer Goods and Pharmaceuticals

Fast Moving Consumer Goods

Consumer Formulated Chemicals

Pharmaceuticals Pharmaceuticals

Explosives and Fertilisers Explosives

Bulk Formulated Chemicals Fertilisers

Speciality Chemicals and Surface Coatings

Specialty Chemicals Speciality and Functional Chemicals

Surface Coatings

Glass Glass Not part of the Chemical Industry

The CHIETA has approximately 1646 levy-paying member companies as of April 2010. The largest three sub

sectors in terms of active levy paying companies are: Base chemicals with 476 followed by Speciality Chemicals

with 313 and Glass with 187. The three provinces with the most number of active levy paying companies is

Gauteng (644), Kwa-Zulu Natal (254) and Western Cape (216).

The population group distribution of employee’s shows an inverted pattern across the sub-sectors, where

whites predominate in the top-level jobs and occupations, while it is mainly black workers that are employed

in the positions at the lower end of the scale.

The current workforce is predominantly male, except for clerical and sales personnel which are evenly divided.

Sub-sectors that showed a different breakdown in the overall figures include Fast Moving Consumer Goods

and Pharmaceuticals that employ around 15% more women than the other sectors, and Petroleum and Base

Chemicals that employ around 8% less women.

During its 100 years of existence, the development of the chemical industry has been dominated by three

factors: the demand for explosives by the mining industry, the abundance of relatively cheap coal, and the

political and regulatory environment. Based in a country with no proven oil reserves, until recently little

natural gas and abundant coal resources it is not surprising that the gasification of coal became a major factor

in the development of the industry. This was aided and abetted by a political system which increasingly forced

the industry to look inwards and to focus on import replacement. It led also to the construction of small-scale

plants with production geared to local demand. As a consequence locally-produced commodity chemicals and

processed goods have generally been less than competitive in export markets.

For a developing country, South Africa has an unusually large chemical industry and it is of substantial

economic significance. Now that South Africa is once again part of the international community, the chemical

industry is focusing on the need to be internationally competitive and the industry is reshaping itself

accordingly. Exports were R49 billion and imports R95 billion in 2009 with the gap declining. Rationalisation in

some sectors of the industry as pointed out in this article has been drastic and the process is not yet complete.

However, signs that the industry is leaner and more competitive are clearly apparent.

2011-2016 will be the focus of continued consultation with the CHIETA sub sectors to ensure that the SSP

remains relevant and accurate in compliance to expectations of the department. The CHIETA will spare no

quarter in ensuring that through these rigorous consultative processes we not only enhance the content,

veracity and substance of our Sector Skills Plan – thereby directing and providing a strategic course for the

Chemical Industry. We acknowledge the weight of responsibility on our sector in furthermore augmenting the

overall Human Resource Development Strategy of South Africa.

Fazel Ernest

CHIETA Chief Operations Officer

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TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS ............................................................................................................

TABLES AND FIGURES ................................................................................................................................

EXECUTIVE SUMMARY ................................................................................................................................... i

1. Context ........................................................................................................................................ i

2. Sector Profile ............................................................................................................................. iii

3. Demand for Skills ...................................................................................................................... iii

4. Provision and Supply of skills ..................................................................................................... v

CHAPTER 1. CONTEXT .............................................................................................................................. 1

1.1 Purpose of SSP ....................................................................................................................... 1

1.2 National Skills Development Strategy III ............................................................................... 1

1.3 Industrial Structure and Dynamics ........................................................................................ 3

1.4 Economic Trade Analysis and Employment…………………………………………………………………… 11 CHAPTER 2. SECTOR PROFILE .................................................................................................................. 14

2.1 Industrial and Occupational Coverage ................................................................................ 14

2.2 Summary Profile of Employers ............................................................................................ 18

2.3 Profile of the Labour Force .................................................................................................. 20

CHAPTER 3 – DEMAND FOR SKILLS ............................................................................................................... 25

3.1 Time Series Analysis ............................................................................................................ 25

3.2 WSP and qualitative skills information ................................................................................ 30

3.3 Scarce and Critical Skills ....................................................................................................... 46

CHAPTER 4. PROVISION AND SUPPLY OF SKILLS ......................................................................................... 56

4.1 National Senior Certificate results ....................................................................................... 56

4.2 Output from Further Education and Training Institutions .................................................. 57

4.3 Enrolment and completion from HET institutions .............................................................. 57

4.4 Training by employers ......................................................................................................... 63

4.5 Priority qualifications ........................................................................................................... 66

4.6 Industry/provider links, SETA/provider partnerships .......................................................... 66

CHAPTER 5. STRATEGIC PLAN .................................................................................................................. 67

5.1 NSDS Alignment………………………………………………………………………………………………………………67 5.2 Relevance to SSP Implementation……………………………………………………………………………………73 REFERENCES .......................................................................................................................................... 83

APPENDIX 1 DEFINING SKILLS LEVELS ........................................................................................................ 84

NQF Levels......................................................................................................................................... 84

OFO Skill Level ................................................................................................................................... 84

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Comparing NSDS, NQF and OFO ....................................................................................................... 86

Appendix 2 SAPIA Industry Position and 2010 PESTEL Input………………………………………………………..87 Appendix 3 PFG Environmental Initiatives……………………………………………………………………………………99

Appendix 4 SAPIA Environmental Input for 2011-2016 …………………………………………… ……………… 102 Appendix 5 PETRO SA skills framework for Project Mthombo………………………………………………106

ABBREVIATIONS AND ACRONYMS ABET AIDS AMTS ATM ARV BBBEE CAIA CHIETA CPD COIDA CSEAC CSP CTL DHET DME DoE DoL dti FET FMCG GDP GHG GTL HET HIV HRDS IPAP MTSF NC(V) NIPF NQF NSDS OFO PESTEL PIVOTAL PG Dip/Cert QCTO SAPIA SARS SET SETA SIC SMME SSP UG Dip/Cert WSP

Adult Basic Education and Training Acquired Immune Deficiency Syndrome Advanced Manufacturing Technology Strategy Automated Teller Machine Antiretroviral Broad-Based Black Economic Empowerment Chemical and Allied Industries' Association Chemical Industries Sector Education and Training Authority Continuing Professional Development Compensation for Occupational Injuries and Diseases Act The Chemicals Sector Expert Advisory Committee Customised Sector Programme Coal-to-Liquid Technology Department of Higher Education and Training Department of Minerals and Energy Department of Education Department of Labour Department of Trade and Industry Further Education and Training Fast Moving Consumer Goods Gross Domestic Product Green House Gases Gas-to-Liquid Technology Higher Education and Training Human Immunodeficiency Virus Human Resource and Development Strategy Industrial Policy Action Plans Medium Term Strategic Framework National Certificate (Vocational) National Industrial Policy Framework National Qualifications Framework National Skills Development Strategy Organizing Framework of Occupations Political, Economic, Social, Technological, Environmental and Legislative Professional, Vocational, Technical and Academic Learning Post Graduate Diploma / Certificate Quality Council for Trades and Occupations South African Petroleum Industry Association South African Revenue Services Science, Engineering and Technology Sector Education and Training Authority The Standard Industrial Classification Code Small, medium-sized, and microenterprises Sector Skills Plan Under Graduate Diploma / Certificate Workplace Skills Plan

TABLES AND FIGURES Table 2.1: The CHIETA Chambers reconciled with the dti’s Strategic sub-sectors Table 2.2: Sub-Sectors and corresponding SIC codes for the Chemical Industry Table 3.1 Global list of scarce skills Table 4.1 Results of the National Senior Certificate Table 4.2 Results of examinations in selected National Certificate subjects at FET Colleges Table 4.3 Results of examinations in selected National Certificate(Vocational) subjects at FET Colleges Table 4.4 Analysis of throughput at higher education institutions Table 4.4 Selected University qualifications relevant to the Chemicals Sector Table 4.5 Apprenticeships 2008-2009 Table 4.6 Leanerships in the chemical industries 2005-2010 Figure 1.1: Chemical Sector Value Chain Figure 1.2 Real output, real fixed capital stock, real value added, and employment Figure 1.3 Employment and real wages 1970 - 2009 Figure 2.1 Levy Paying Firms by Chamber Figure 2.2: Firm Sizes by Chamber Figure 2.3: Levy Paying Enterprises by Province Figure 2.4: Enterprises Submitting WSPs by Province Figure 2.5: Gender and Race Profile by Occupation Figure2.6: Employee Profile by Race Figure 2.7: Race Profile by Skill Level Figure 2.8: Employee Profile of Sex Figure 2.9: Employee profile by Age Figure 2.10: Employee Distribution by Province and Occupation Figure 2.11: People with Disabilities Figure 3.1 SIC codes 331 - 332 Employment by Skill Level 1991-2009 Figure 3.2 SIC Codes 333-334 Employment by Level 1991-2009 Figure 3.3 SIC codes 335 - 336 employment by skill level Figure 3.4 Capital vs. labour productivity and cost indexed to 2005 Figure 3.5 Employment, Labour Cost and Capital : Labour ratio indexed to 2005 Figure 3.6 SIC codes 341-342 employment by skill level Figure 3.7 Chemical Sector Skills Demanded by Level and Occupation Figure 3.8 Age profile of the Chemical Sector by Occupation Figure 3.9 Employment in Base Chemicals by Occupation and Skill Level Figure 3.10 Age profile of the Base Chemicals Subsector by Occupation Figure 3.11 Real output, real value added, real fixed capital stock, employment Figure 3.12 Petroleum Subsector Skills demanded by Level and Occupation Figure 3.13 Age profile of the Petroleum Subsector by Occupation Figure 3.14 Real output, real value added, real fixed capital stock, employment Figure 3.15 Skills demanded in Fertiliser and Explosives Subsectors by Level and Occupation Figure 3.16 Age profile of the Fertiliser and Explosives Subsector by Occupation Figure 3.17 Skills demanded in Glass Subsector by Level and Occupation Figure 3.18 Age profile of the Glass Subsector by Occupation Figure 3.19 Real output, real value added, real fixed capital stock, employment Figure 3.20 Speciality chemicals employment by skills level and occupation Figure 3.21 Surface coating employment by skills level and occupation

Figure 3.22 Age profile of speciality subsector Figure 3.23 Age profile of surface coating subsector Figure 3.24 Employment in the FMCG subsector by Occupation and Skill Level Figure 3.25 Age profile of the FMCG subsector Figure 3.26 Pharmaceutical subsector employment by skill level and occupation Figure 3.27 Age profile of the pharmaceutical subsector Figure 4.1 SET Completion rates at higher education institutions by race and qualification type

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EXECUTIVE SUMMARY

1. Context

In terms of the Skills Development Act, the Chemical Industries Sector Education and Training Authority (CHIETA) is required to prepare a Sector Skills Plan (SSP) every five years within the framework of the National Skills Development Strategy (NSDS). The NSDS III has five areas of strategic impact that drives the planning process of CHIETA. They are:

1. Equity impact in the realm of class, race, gender, age, disability and HIV/AIDS. 2. Programmes to facilitate access, success and progression; 3. PIVOTAL programmes 4. Skills Programmes and other non-accredited short courses and 5. Programmes that build the academic profession and engender innovation.

The structure and dynamics within the chemicals sector have been fostered by a political and regulatory environment that promoted protectionism and isolationism. This has resulted in a large number of small firms and less competitive exports even though they are well placed to service their Southern African neighbours. Now that South Africa is fully integrated into the global community, chemical companies are striving to focus on the need to be internationally competitive and the industry is reshaping itself accordingly. The sector contributes strongly to manufacturing in South Africa. The coke, petroleum, chemical products, rubber and plastic and the glass and other non-metallic mineral products combined, comprised 31.5% of manufacturing output in 2008 (Statistics South Africa). In 2009 according to the Chemical and Allied Industries' Association (CAIA), the chemical sector comprised about 5% of GDP and 23% of the manufacturing sector. Two noticeable characteristics are to be observed about the sector:

(i) While its upstream segment is concentrated and well developed, the downstream sector, although diverse, remains underdeveloped;

(ii) The synthetic coal and natural gas-based liquid fuels and petrochemicals industry is prominent, with South Africa being the world leader in coal-based synthesis (coal-to-liquid – CTL) and gas-to-liquids (GTL) technologies.

Political stability has offered an enabling environment for economic development and various government strategies have prioritized the chemical sector for growth and development. However the change in government that resulted in new role players assuming decision making roles led to some uncertainty especially given the perception that the left has significant influence and this has been coupled with loud rhetoric about mine nationalisation, inflation targeting, reserve bank independence, etc. These have brought issues like transformation and BBBEE to the fore that the sector now has to contend with. In terms of economic issues, the global recession directly impacted the chemical sector with curbed demand for explosives and chemicals resulting in reduced sales volumes. The fall in international commodity prices in the second quarter of 2009 resulted in reduced demand, depressed prices and margins for the fertiliser and explosives subsectors. The above pressures have led to firms laying off staff or putting a freeze on employment and requiring that the remaining workforce become multi-skilled.

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The largest social factor impacting on the chemicals sector is that of HIV/AIDS. The disease has resulted in increased absenteeism, reduced productivity and the loss of skills where workers have succumbed to the disease. Due to the high risk of losing investments made in HIV positive learners, companies are resistant to training them. To address this CHIETA has supported 150 companies through conditional grants in the previous 5 year period, aimed at stimulating learning programmes for HIV positive learners and developing an understand of managing the impact of the pandemic. The other major social factor impacting on the South African chemical sector is crime. Due to the fear of crime, employees are sometimes reluctant to work late shifts, thus sometimes firms are forced to operate weekend shifts when they have increased demand (e.g. to service a tender). Added overtime costs become unattractive for the firms to operate. The technological context in South Africa focuses largely on upgrades and process improvements that will be essential in order to meet increasing environmental, efficiency and quality standards. Scientific and technological skills are a crucial limiting factor to future technological growth. In general the chemical sector’s R&D levels are low (except for Sasol) compared to the rest of the world, and this is not likely to change in the near future. The relative cost of R&D versus the expected outcome is too high to make it feasible. For this reason technology is mostly rather licensed in and modified for the local market conditions where needed. Environmental concerns are a key factor in the development of the chemicals sector. South Africa has adopted first-world standards in its environmental policies, introducing regulations to promote co-operative environmental management and providing guidelines for the disposal of hazardous waste. Export orientated sectors are becoming increasingly aware of the potential barriers which inadequate environmental standards present to trade and are seeking to improve environmental performance. A critical aspect of challenges for the green economy is the general lack of skills in many sectors in South Africa, and in particular the lack of engineers and technicians, Engineers and technicians will be essential in transitioning to a greener economy. A number of government initiatives to improve environmental performance, have recently been introduced or are imminent. This will have significant financial impact on the integrated synthetic fuel/chemical industry value chain. For instance the synthetic fuels value chain faces a significant number of regulatory challenges. Examples include the recently released Consumer Protection Bill and the Air Quality Act. Pending legislation on clean fuels and labour broking if enacted, may lead to additional challenges for the sector. Firms will have to invest in new plants that incorporate new technology which may require upgrades in systems which in turn will require an upgrade of skills for operators. Firms that rely on tenders are likely to be affected by the outlawing of labour brokers as their labour requirements fluctuate according to need. Concerns have also been raised in reference to the proposed National Health Insurance Act because of the need for affordable medication which could lead to company closures and job losses. Furthermore globalisation will continue to impact the sector with an increasing number of Free Trade Agreements coming into place, however regulatory compliance issues may hinder access to particular markets. Environmental issues in particular are becoming significant conditions for market access coupled with a greater understanding and requirement of Life Cycle Analysis resulting in cleaner production as well as the use of renewable resources.

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2. Sector Profile

The chemical industry can be classified into the following five chambers1:

Base chemicals and petroleum Fertilisers and explosives Fast moving consumable goods and pharmaceuticals Specialty chemicals and surface coatings Glass

According to the list of levy paying enterprises received from SARS, CHIETA’s membership is dominated by the Base chemicals subsector (31%) followed by the Speciality Chemicals (20%) with the smallest subsector being the Explosives (0.4%). Furthermore, the sector is generally dominated by small and micro-enterprises. However, relative to other sectors the pharmaceuticals subsector appears to have a proportionally higher number of medium and large enterprises.

The majority of enterprises appear to be spread between Gauteng, KZN and the Western Cape but in general Gauteng is the dominant locality in which firms are located and is home to about 47% of all firms in the sector. The occupational profile of the sector shows that it is dominated by Technicians and Trades Workers, followed by Machine Operators and Elementary Occupations. There is a large proportion of managers and professionals and while technicians and artisans (Machine Operators)have strong African representation, managers and professionals are still dominated by whites. About 55% of white males are at skill level 4 and 5, whereas 60% of African males are at skill level 1 and less than 10% are at skill level 5. Males dominate all occupational categories except the clerical workers. Approximately 80% of Managers and just over 60% of professionals are male. The sector as a whole has a fairly young workforce as 56% are younger than 35 years old, 38% are aged between 35-55 and 6% over 55. The sector needs to consider whether there are adequate numbers coming through the ranks for each of the occupational categories. People with disability make up approximately 0.4% of total employees and are mainly in the clerical worker category. This is well below the 2% employment target for people with disability.

3. Demand for Skills

The demand for skills in absolute numbers has been declining steadily over the last two decades with investments in capital equipment being largely used to replace labour. These reductions in employments have largely come at the expense of unskilled and semi skilled workers resulting in the skills mix tending towards the higher level skills. The exception to this rule is the glass industry that while also losing jobs has remained largely driven by semi and unskilled labour with reductions in employment affecting all skills levels. In general the economic performance of the sector has improved over the last twenty years with output and value-add increasing. The proportion of output that is being exported has also improved

1 SETA demarcation does not always correspond neatly with the standard industrial classifications, hence not all industries

that fall under the traditional umbrella of chemicals are included in the SETA’s mandate.

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signalling better international competitiveness. A concern that needs to be noted is that labour costs have risen sharply since 2007. Part of this is due to the higher average level of skills as semi and unskilled labour is replaced but the increase is disproportionate. Where the productivity of capital is reducing, companies may seek to increase employment but with a disproportionate increase in labour costs this is unlikely to happen and investment in capital is likely to continue. In terms of the nature of skills demanded, the sector requires workers from all skills levels but is relatively skills intensive with more than half the employees (52%) being employed as either managers, professionals or technicians. The sector includes activities from research, high level process development to manufacture. Therefore outside of the generic administration skills, the sector demands a high number of professionals (11%), technicians (27%) and artisans (17%). The sector does not demand a high proportion of labourers and unskilled labour with only 16% of employees being classified as elementary occupations. Even then 16% of elementary workers are considered semi skilled as their work is rated at skill level 2. Replacement demand due to retirement is likely to be most significant in the managerial occupations and machine operators where 11.9% and 10% of employees are older than 55 years of age. Professionals and technicians on the other hand are mostly young and thus there is not likely to be scarcity of skills due to retirement in those occupations over the next 5 years. A potential concern however, is that while it is positive that young people are being fed into key occupations such as technicians, when they represent such a high proportion of workers (nearly 50%) the ability of the sector to train and pass on key experiential learning needs to be examined. Engagements with stakeholders revealed the following projects that are likely to impact on demand in the future:

For the petroleum sub sector in KwaZulu Natal, pipeline projects such as the Transnet Multi Product Pipeline will place a significant premium on engineering skills in the professional occupational category.

In the Western Cape, there was concern that project Mthombo (Petroleum South Africa’s initiative to build a world class crude refinery project) would culminate in an exodus of key skills in the engineering and artisan fields from the Western Cape.

Additional projects identified by the South African Petroleum Industry Association (SAPIA) are: Project Mafutha (Potential project in Limpopo to build a coal to liquid plant) and Eskom’s power station build programmes.

Scarce and Critical Skills

While each of the subsectors have varying and often unique skills requirements, the drivers are overlapping and represent a potential synergy in terms of the interventions required to overcome them.

a. Company Specific Drivers of Scarcity are where companies report difficulties in filling posts but no real scarcity exists in the labour market. These factors include geographic location, unattractive remuneration packages and ineffective recruitment policies.

b. Poor quality of graduates was identified as a major driver of scarcity in that the graduates being produced by educational institutions are not matching the skills demanded by the sector.

c. Lack of information on career opportunities for learners. A driver of scarcity that was repeatedly mentioned for occupations from nearly all the major groupings in the OFO was that learners are not aware of the majority of career options in the economy and thus do not follow the required learning paths that lead them to the scarce occupations.

d. Subsector specialists. Each subsector has a small number of employees that have a specialisation in a given field relevant to that specific subsector. The demand in these

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occupations (both scarce and critical depending on the nature of the specialisation) is usually very low but represent an important aspect of the business.

e. Lack of succession planning. Often an occupation requires a very high level of company specific knowledge that excludes applicants from the general labour market. Therefore, for each such occupation, a pipeline needs to be established that is moving prospective employees through an identified career pathway; in effect creating a company specific supply chain for company specific demand.

f. New Skills. The ever changing modern environment requires companies to adapt in order to remain competitive. These adaptations will often require variations in the skills demanded in specific occupations or even whole new occupations to be created. In such cases scarcity is to be expected as providers have not yet been able to construct programmes and standards to train workers.

4. Provision and Supply of skills

The analysis of supply examines the output of various learning channels available to workers, unemployed people, and newly qualified youngsters entering the labour market for the first time. The skills required by the chemicals industries are grounded in the natural sciences, most notably chemistry. The pipeline for the supply of skills to the sector thus includes schools, colleges, universities of technology, universities, and training offered by employers in the workplace. Successive ministers of education have attempted to increase continuously the number of pupils learning and passing mathematics and sciences in high school. However, the education system has been slow to generate the critical mass of students who successfully sit for these subjects. Well below half of the pupils who sat for mathematics and sciences got a mark above 40%. Clearly, unless these numbers can be boosted significantly, the pool of students able to pursue engineering and related qualifications required by the chemicals industries will remain limited. The workforce of the chemical industries is concentrated in the Trades and Technicians, and Machine Operators and Drivers occupational categories. Training and development for these occupations principally occurs at FET colleges (and to some extent Universities of Technology). A comprehensive report was prepared by the Department of Higher Education and Training in 2009 on FET colleges and the pattern that emerges is worrying. Overall, the pass rates for most subjects are well below 50%, with few exceptions. The National Certificates (Vocational) have been introduced to replace the traditional National Certificates, with a view to broadening the scope of coverage beyond the trades and related occupations. At present, the available range of NC(V) qualifications relevant to the needs of the chemical industries is very limited, and much more capacity exists for the delivery of the old National Certificates. Furthermore, public providers indicated that employers understand and prefer the old qualifications over the new ones, thus learners emerging from college with NC(V) experience greater difficulty finding employment. Enrolment in higher education institutions has been steadily increasing over the years. Throughput rates however, also reflect relatively high attrition rates. Only a small proportion of students who enter a programme complete the requirements for their qualification within the scheduled timeframe – meaning the throughput is inefficient. The chemical industries draw on the general pool of graduates who pursue SET qualifications. A key drive has been to encourage and support more black students into these fields. The main challenge in this regard however is that the vast majority of black students still attend schools with limited capacity to teach maths and science at a level that will enable students to pursue those subjects at tertiary level. The irony is that, bursaries set aside

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specifically for these subjects are more likely to benefit white students, who generally attend better schools and are thus able to meet the entry requirements of tertiary education institutions. Employers receive grants each year when they submit workplace skills plans and training reports of training offered to workers in the previous year. For the period 2005 – 2010, the CHIETA and its employers have supported at least 17,056 learners through learnerships and 223 apprenticeships. Training was concentrated in the occupations that predominate within the sector – technicians and trades workers, and machine operators and drivers. At least 133 young people were assisted through the new venture creation learnership between 2006 and 2010. The SETA met with public providers and selected industry representatives in early August 2010 to begin dialogue on ways to partner on the skills development agenda going forward. Historically, delivery has been principally driven through private providers, as they are perceived to be more flexible and better able to respond to changing needs of employers. The NSDS III framework requires that SETAs engage with public providers more substantively going forward in order to broaden access learning opportunities for the majority of students who may not be able to afford the market related fees of the private sector. At present, the SETA has established partnerships with just a few FET colleges, mainly in KZN. Over the next five years, stronger links will be pursued between the SETA, industry and public providers, as provided for in the NSDS. The aim of the partnerships will be to facilitate greater alignment between industry needs and qualifications on offer across the various tiers of the education system.

Context 1

CHAPTER 1. CONTEXT

1.1 Purpose of SSP

In terms of the Skills Development Act, the Chemical Industries Sector Education and Training Authority (CHIETA) is required to prepare a Sector Skills Plan (SSP) every five years within the framework of the National Skills Development Strategy (NSDS). The SSP report is aimed at identifying:

The skills needs of industry / economic sectors (skills shortages, skills gaps and skills supply) based on the standard industrial classification codes allocated to each individual SETA by the Minister in the SETA establishment and re-certification process;

Possibilities and constraints in the effective utilisation and development of skills in relation to government’s priorities and the objectives of the HRDS, the NSDS, Provincial Growth and Development Strategies (including major projects) and relevant industry / economic strategies.

In order to fulfil this function, SETAs collect information, research sector labour market trends and analyse national and provincial growth and development strategies.

1.2 National Skills Development Strategy III

The 3rd National Skills Development Strategy further advances the drive for bringing alignment between the supply and demand for labour in the SA labour market. The key elements of the strategy are presented below (a summary of the Strategy is attached as Appendix XX. The full framework document can be obtained from the Department of Higher Education and Training): NSDS III seeks to contribute to the achievement of the country’s new economic growth and social development goals that are embodied in the Medium Term Strategic Framework (MTSF). The MTSFs priorities are listed as: 1. Improved quality of basic education 2. A long and healthy life for all south Africans 3. All people in South Africa are and feel safe 4. Decent employment through inclusive economic growth 5. A skilled and capable workforce to support an inclusive growth path 6. An efficient, competitive, responsive economic infrastructure network 7. Vibrant, sustainable rural communities with food security for all 8. Sustainable human settlements and improved quality of household life. 9. A responsive, accountable, effective and efficient local government system 10. Environmental assets and natural resources that are well protected and continually enhanced 11. Create a better South Africa and contribute to a better and safer Africa and World 12. An efficient, effective and development oriented public service and an empowered fair and

inclusive citizenship The DHET and SETAs are collectively responsible for delivering on the fourth priority. The initiatives and interventions that will form the core of the Strategy are hereunder listed in summary:

Context 2

1.2.1 NSDS III will rest firmly on Sector Skills Plans (SSPs) The NSDS will be guided by the SSPs which are built upon sector analysis and forecasts and informed by public strategies and plans in each sector.. The process will take into account the following:

I. High-level engagement between leadership of government departments and senior leadership of its social partners will be required

II. Some areas will require cross-sectoral collaboration before sectoral plans are submitted III. The draft Sectoral Skills Plans will be reviewed by the Technical Working Group of the

HRDSA Council IV. NSDS III is to be executed in a new environment V. NSDS III can learn from the lessons of the past

VI. It is expected that SETAs will take full account of the country’s many challenges 1.2.2 Strategic Areas of Focus for the NSDS III The new modality under which the NSDS III will operate recognises that sectors are different in their skill needs but share a common commitment to the national vision of an inclusive society – meaning that those that have been excluded should be actively embraced by actively addressing the following:

1.2.2.1 Equity impact

When this goal is analysed it transpires that there are at least six forms of exclusion, which too often compound to create insurmountable barriers for some. These are: Class, Race, Gender, Age, Disability and HIV / AIDS.

1.2.2.2 Code of decent conduct South Africa’s inclusive growth plans are currently being endangered by a range of unethical practices such as fraud, corruption and ‘tender-preneurship’. Ways need to be found to encourage ‘peer policing’ of ethical conduct – whilst, simultaneously avoiding tendencies for such practices from themselves becoming barriers for new entrants. 1.2.3 Planned interventions to be supported under NSDS III In the envisaged new context the need for a wider spectrum of programmes is evident, particularly programmes which lay a broader foundation for work in a variety of contexts. It is proposed that there are broadly four ‘kinds’ of programmes which it is believed SETAs should reference in their SSPs – with the sector’s needs determining the weight to be given to each:

Programmes to facilitate access, success and progression (under which the following ‘sub-programmes’ will be included - Information and career guidance, Recognition of Prior Learning and Raising the Base)

PIVOTAL programmes Skills Programmes and other non-accredited short courses (for both the employed and

unemployed) and Programmes that build the academic profession and engender innovation.

1.2.4 Programme Delivery Partners A special emphasis is to be paid to uplifting public providers to deliver programmes that are of the required relevance and quality and where private providers can assist with this task their contribution will be highly valued. . The improvements required may be in any one of a number of areas, including:

Infrastructure and facilities; Curriculum and qualification design; Lecturer, teacher or trainer development (a matter of national priority);

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Learning material; Student information and support; Facilitation of partnerships between public and private providers; and Even subvention of the wages of key staff members or the creation of dedicated ‘chairs’ for

required programmes.

1.3 Industrial Structure and Dynamics

The chemical industry in South Africa has been shaped by a legacy promoted by a political and regulatory environment which created a philosophy of isolationism and protectionism. This tended to promote an inward approach and a focus on import replacement in the local market resulting in:

The building of small-scale plants with capacities geared to local demand, which tended to be uneconomic.

Locally processed goods being generally less than competitive in export markets as a consequence of isolation of the industry from international competition in addition to high raw material prices as a result of import tariffs.

The building of chemical plants at inland locations close to the coal-based synthetic fuels plants which provided feedstock (raw material for the plants). This strategy was attractive at the time due to the additional benefit of being sited close to the heavily populated Gauteng area which is the largest domestic market.

As a result, plants are comparatively smaller than world scale and their cost structures are not highly competitive in export markets, partly because of the high transport costs to coastal ports. However, they are well placed for exports to neighbouring African countries such as Zimbabwe, Namibia and Botswana. Now that South Africa is fully integrated into the global community, chemical companies are striving to focus on the need to be internationally competitive and the industry is striving to reshape itself accordingly. The chemical industry in South Africa is the largest of its kind in Africa. It is highly complex and widely diversified, with end products often being composed of a number of chemicals that have been combined in some way. The sector dominates manufacturing in South Africa, the coke, petroleum, chemical products, rubber and plastic and the glass and other non-metallic mineral products combined, comprised 31.5% of manufacturing output in 2008 (Statistics South Africa). In 2009 according to the Chemical and Allied Industries' Association (CAIA), the chemical sector comprised about 5% of GDP and 23% of the manufacturing sector. However, according to the Chemicals Sector Expert Advisory Committee (CSEAC) the economic slowdown continues to be a serious challenge for the sector maintaining that most chemical companies have had to focus on maintaining their operations, rather than investing in new projects or expanding portfolios. Although the industry remains dominated by local companies, a number of multinationals have local distribution points and several have become involved in local manufacture. The primary and secondary sectors are dominated by Sasol (through Sasol Chemical Industries and Sasol Polymers), AECI and Dow Sentrachem. Some of these companies have recently diversified and expanded their interests in tertiary products, especially those with export potential. Two noticeable characteristics are to be observed about the sector: (i) While its upstream segment is concentrated and well developed, the downstream sector - although diverse - remains underdeveloped;

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(ii) The synthetic coal and natural gas-based liquid fuels and petrochemicals industry is prominent, with South Africa being the world leader in coal-based synthesis (coal-to-liquid – CTL) and gas-to-liquids (GTL) technologies. The chemical sector is divided into two main segments based on margin and production volume. Generally, commodity chemicals are produced at low margins, but in large quantities. In recent years, fine chemicals have also become commodities, and margins have fallen drastically. Higher margin products include those that are either patent protected or difficult to produce, referred to as designer chemicals (e.g. speciality ceramics and ethical pharmaceuticals) or are complex formulated products sold against a performance specification and hence are difficult to copy (e.g. flavour mixtures and water treatment chemicals, also referred to as speciality chemicals). Figure 1.1: Chemical Sector Value Chain

Source: DoL (2008)

The chemical sector is its own biggest customer with about 60% of production used in downstream manufacturing within the sector. In the commodity sector, market share is the determining measure and driver for performance. Increased competition from countries with significant competitive advantages such as access to markets and/or raw materials, will force down prices and margins. As a result, global production is moving to lower cost economies. The industry in South Africa produces roughly only 300 officially registered chemical compounds out of a possible complement of more than 80 000 types of basic or pure chemicals currently manufactured on a commercial basis globally. The sector is also a net importer of various types of chemicals for instance in 2007, it imported about R80 billion worth of chemicals and exported about R40 billion, a situation that needs to be reversed by building on comparative and competitive advantages. This is a clear demonstration of the existence of development potential for the industry. There has been a concerted effort to make the chemical industry more competitive with the South African Department of Trade and Industry (the DtI) spearheading various Petrochemicals, Plastics and Synthetic Fibres workshops to analyse the problems and opportunities of a sector of the

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economy which is considered to have great potential for the future, and to develop a way forward. To facilitate the realization of industrial policy goals of increased beneficiation, value addition, exports and employment requires reversal of the historical bias through a specific focus on growing downstream sub-sectors. Thus, according to the Industrial Policy Action Plan (IPAP, 2007), the development of the chemicals sector has two major elements:

(1) to promote beneficiation of minerals into primary products for exports and also to provide feedstock into higher value-adding manufacturing activities; and

(2) to promote downstream fabrication of polymers, thereby creating more jobs and adding significant value.

Further to the above the chemicals sector (plastics, pharmaceuticals and chemicals) is included in IPAP 2 (2010) in Cluster 2 where the focus will be to scale up and broaden interventions in sectors initially identified in IPAP 1. However for planning purposes it is useful to understand the dynamics that may influence the market as these may offer useful indications of factors that may for instance impact upon market growth or may identify potential opportunities or direction for future operations. The following section highlights some of the drivers of change that may impact the sector. 1.3.1 Drivers of Change

The PESTEL framework is a useful tool to help understand and categorize the external forces that may drive or influence the market. PESTEL refers to Political, Economic, Social, Technical, Environmental and Legislative factors. 1.3.1.1 Political Issues Political stability has offered an enabling environment for economic development and various government strategies have prioritized the chemical sector for growth and development. These include: The Chemical Sector Development Strategy, the Advanced Manufacturing Technology Strategy (AMTS), the National Industrial Policy Framework (NIPF) and the related Industrial Policy Action Plans (IPAP) and the Minerals Beneficiation Strategy managed by the Department of Minerals and Energy (DME) and the Customised Sector Programme (CSP) agreement. These strategies or programmes endeavour to give existing and potential investors in the chemicals sector some confidence on the strategic direction Government is taking thus making it easier for them to align their activities. The programmes (individually and/or collectively) seek to facilitate and expand beneficiation, exports and employment within the sector and also aim to highlight issues regarding investment, skills development, broad-based black economic empowerment (BBBEE) and small, medium-sized, and microenterprises (SMMEs) . However according to industry stakeholder interviews conducted by the CHIETA the change in government that resulted in new role players assuming decision making roles led to some uncertainty especially given the perception that the left has significant influence and this has been coupled with loud rhetoric about mine nationalization, inflation targeting, reserve bank independence, etc. these have brought issues like transformation and BBBEE to the fore that the sector now has to contend with. The need for transformation in all areas of BBBEE was mentioned by the petroleum sub sector in their submission2. The Petroleum sector together with the retail and the financial services sectors participated in research on employment equity in the Western Cape (Hall et al 2009). The main finding of the report is that African people, particularly in the Western

2 The complete South African Petroleum Industry Association (SAPIA) position and PESTEL submission for 2010

-2016 is appended to document as Annexure 2.

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Cape were under-represented and in contrast whites were over-represented in the various occupational levels across the participating sectors. Uncertainty may also influence investment decisions. Furthermore the potential change in the SETA landscape and skills development planning created uncertainty and has resulted in a strategic refocusing of the sector and has impacted the grant structure and the need to pursue pivotal learning programmes. Other political factors include regional instability for instance in Zimbabwe which affects export sales of fertilisers, stakeholders also felt that the government’s emphasis on rural development may have financial implications for enterprises as they may have to contend with increased costs if they wish to invest in rural areas where there might be a lack of infrastructure. These factors in general may have an effect on profits and investment decisions and may lead to loss of jobs and skills. Globally, political unrest and tension in regions where the country sources crude oil has on occasion led to price increases of crude oil which impacts the sector negatively. 1.3.1.2 Economic Issues The global recession directly impacted the chemical sector with curbed demand for explosives and chemicals, resulting in reduced sales volumes (CHIETA PESTEL Questionnaire, 2010). Sales to both the traditional export markets and local manufacturing sector have been affected e.g. supplies to the automotive sector were particularly affected. In addition the strength of the Rand exacerbates the issue of export sales and dampens possibilities of export growth. The strong Rand is one of the main challenges facing the plastic packaging category (which falls under the CHIETA as espoused in its recertification application). According to SAPIA the recession has in some cases led to restructuring and downsizing and capital plans have been revised, reduced or postponed depending on the recovery period. In some instances where downsizing has occurred, increased stress levels have led to reduced productivity among remaining workers. The recession has also led to increased consolidation and adoption of more advanced technology among some sub-sectors in order to improve productivity (CHIETA PESTEL Questionnaire, 2010). This is explored further in the analysis of demand for skills. The fall in international commodity prices in the second quarter of 2009 resulted in reduced demand, depressed prices and margins for the fertiliser and explosives subsectors (Sasol, 2009). Therefore despite relatively strong agricultural performance within the region some farmers delayed fertiliser purchases in the hope of further price reductions. The above pressures have led to firms laying off staff or putting a freeze on employment and requiring that the remaining workforce become multiskilled. In the same vein the SAPIA has stated that the recession has led to retrenchments in non-core areas, some opportunities for employed professionals to start business venture and to multiskilling where it exists. In the midst of the above, some sub- sectors have also had to deal with labour unrest and above inflation wage demands which have further affected their productivity and bottom line. The downscaling of the mining industry is also negatively impacting the explosives sector. Companies aim to deliver more value by enhancing the safety and improving on the reliability of their products coupled with service delivery excellence. The Chemicals Sector Expert Advisory Committee (CSEAC) has raised concerns about the deficiency of South Africa’s rail infrastructure (Engineering News, 2010). The committee suggests that most chemical companies would prefer to transport chemicals through State-owned transport utility Transnet; however the utility does not have customised wagons suitable to transport some chemicals. Unfortunately, the alternative is road transportation, which exposes chemical companies to another set of challenges, including higher transportation expenses, safety issues and, owing to

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the number of chemicals having to be transported by road, environmental impact concerns. Although a number of discussions between industry representatives and Transnet have reportedly been held, as yet no resolution to this challenge has yet been publicly proposed. Current ongoing and future projects for instance the expansion of Sasol Wax, the Coega Refinery project, Project Mafutha in Limpopo, the Transnet pipeline, continued government infrastructure projects and possible desalination projects (DoL, 2008) will require additional skills and given that companies draw from the same skills pool this may result in the migration of skills from one region to another. Internationally there exists competition for the same skills especially from Middle Eastern countries and when the émigrés are from previously disadvantaged groups then equity targets are further compromised locally (CHIETA PESTEL Questionnaire, 2010). The economic and trade context and its relationship to employment and skills is examined in more detail in section 1.4 below. 1.3.2.3 Social Issues HIV / AIDS has had an adverse effect on the sector, the disease has resulted in increased absenteeism, reduced productivity and the loss of skills where workers have succumbed to the disease. Firms have had to incur increased recruitment costs to replace staff, make additional investments in upskilling and multiskilling existing staff, and cope with increased overtime claims (CHIETA PESTEL Questionnaire, 2010). Further, the SAPIA has indicated that AIDS has affected tanker drivers who work in the logistics value chain area culminating in an acute shortage as these lost skills are not readily available in the market. SETAs have attempted to address HIV/AIDS through the provision of conditional grants for HIV/AIDS related training. The CHIETA has established a training and intervention programme in 150 of its registered companies (The Redpeg initiative), recognizing that learnerships may be at risk as training and replacement cost of HIV positive learners escalates and as training expenditure on learnerships, may decline, given the risk of losing such investments. The purpose of this initiative was to establish the potential impact of HIV/AIDS within the sector and to advise on strategies to mitigate this impact. Funded by CHIETA, it entailed an elaborate skills transfer strategy in which stakeholder organisations were consulted while concurrently facilitating a skills transfer to at least one employee (normally the HR manager) per workplace. The project culminated in the development of guidelines for the management of the impact of HIV/AIDS across the chemicals sector and the qualification of participants against all existing HIV related unit standards (part qualifications). The consequences of the scourge of crime have been adversely felt by the sector through theft of essential equipment, and stocks of finished products. This has led to the disruption of services and the dismissal of culpable employees resulting in the loss of skills. In addition firms have had to resort to the services of expensive forensic specialists (sometimes from abroad as this is a scarce skill in South Africa) and crime prevention and safety experts (CHIETA PESTEL Questionnaire, 2010). Due to the fear of crime, employees are sometimes reluctant to work late shifts, thus sometimes firms are forced to operate weekend shifts when they have increased demand (e.g. to service a tender). Added overtime costs become unattractive for the firms to operate (CHIETA PESTEL Questionnaire, 2010).

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1.3.2.4 Technological Issues New technologies, technology upgrades and process improvement will be essential in order to meet increasing environmental, efficiency and quality standards. The sector is generally under pressure to improve its environmental record and its sustainability. Competitive advantage guided by focused R&D will drive successful companies within the sector. These technologies tend to be labour replacing (CHIETA PESTEL Questionnaire, 2010). According to the Advanced Manufacturing Technology Strategy (AMTS) chemicals sector task team, non-renewable resources that have shown significant price increases over the last few years serve to a large extent as the chemical industry’s feedstock. There are trends towards the use of natural products, and the use of waste streams and multiple feedstock options through multi-step synthesis reactions. There is also a significant trend towards Coal-to-Liquid (CTL) and Gas-to-Liquid (GTL) technology for fuel and feedstock production. Nanotechnology will continue to benefit manufacturing industries. The advantages of the applications of nanotechnology have not reached their limits, but research and development in nanotechnology are both expensive and time consuming. In the chemical manufacturing industry, developments in nanotechnology will help conserve energy needed to produce chemicals and reduce the amount of waste products, making the manufacturing process more efficient. According to the dti publication ‘The Chemicals Industry Sector’, scientific and technological skills are a crucial limiting factor to future technological growth. However, South Africa does have current technological resources on which it can draw, although these are not widespread in industry. In general the chemical sector’s R&D levels are low (except for Sasol) compared to the rest of the world, and this is not likely to change in the near future. The relative cost of R&D versus the expected outcome is too high to make it feasible. For this reason technology is mostly rather licensed in and modified for the local market conditions where needed. The technology and background for generic pharmaceutical products are currently imported, whereas if sufficiently skilled expertise were available locally generic drugs and new forms of delivery of drugs could be locally developed. The limited range of government incentive programmes and associated difficulties of accessing them may be a contributing factor for low R & D levels. Other countries have government incentive programmes for R&D (the dti, 2009). In Malaysia for example qualifying Biotech firms are offered government sponsored office space and a tax holiday to attract innovation and start-up pharmaceutical and biotech firms. The technology and background for generic pharmaceutical products are currently imported, whereas if sufficiently skilled expertise were available locally generic drugs and new forms of delivery of drugs could up to some level be locally developed. The dti is making significant investments in establishing such capacity locally, with special emphasis on the production of generic anti-retrovirals over the coming years. Due to the high technical nature of the chemical sector a high proportion of its employees are engineers and scientists. Globally the sector is shedding jobs as a result of technical innovation, consolidation, and greater economies of scale. Thus employees will need to be more informed about a range of issues affecting their sector and how to leverage their skills and knowhow. There will be a greater demand for employees with multi-skills. 1.3.2.5 Environmental Issues Environmental concerns are a key factor in the development of the chemicals sector (South African Info, 2008). South Africa has adopted first-world standards in its environmental policies, introducing regulations to promote co-operative environmental management and providing guidelines for the disposal of hazardous waste. Export orientated sectors are becoming increasingly aware of the

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potential barriers which inadequate environmental standards present to trade and are seeking to improve environmental performance. Chemical products have a twofold effect on greenhouse gas emissions (GHGs). These gases are emitted during the manufacture of chemical products, whilst at the same time the use of many of these products enables significant reduction in global emissions (CAIA, 2009). The emissions reduction enabled by the use of these products can often exceed the amount of GHGs emitted during their production. In line with Responsible Care principles, the chemical industry recognises its responsibility to contribute to efforts to mitigate climate change. The mandate of the Department of Environmental Affairs is derived from outcome ten of the Medium Term Strategic Framework goals (environmental assets and natural resources that are well protected and continually enhanced) (DEA 2010). Further, output two of this outcome is particularly germane to the CHIETA. It concerns the reduction of greenhouse gas emissions, climate change impacts and improved atmospheric quality. In this regard, and in line with the KYOTO protocol the department has committed itself to reduce total CO2 emissions by 34% by 2020 and by 42% by 2030. The industry’s goals in this regard are to reduce its own emissions by improving its processes and to encourage the use of chemical products that create a net emission reduction along the value chain and the identification of carbon footprints will become increasingly important within this sector. In addition, output three is also relevant to the CHIETA. It addresses the issue of sustainable resource management and commits the department to the attainment of 50% to 80% of households with basic waste and disposal facilities and 25% of municipal waste gets diverted from landfill sites fro recycling by 2012. To this end, the glass sub sector3 (in the form of the PG Group) is engaged in the recycling of cullet (recycled glass). Recycling of cullet benefits the environment in that it supplements raw material, saves energy through lower melting temperatures, conserves landfill space thus benefitting the lifespan of the site, reduces litter, is linked to job creation (stakeholders in glass recycling have invested in 1 200 bottle banks in urban towns to assist in domestic recoveries) and has educational value as the importance of recycling and caring for the environment filters to consumers (Consol). The larger enterprises in the chemical industry seem to be aware of environmental commitments, however there needs to be focused environmental awareness campaigns targeting smaller concerns. Diminishing fresh water supplies and concern for the environment have led to increasing pressure on large-scale water users in the chemicals, plastics and pharmaceutical sector. More stringent regulatory limits on the discharge of organic compounds make compliance more difficult and costly to achieve with conventional treatment processes. Additionally, companies listed on the JSE are required to report on environmental compliance, which requires the skills of an environmental specialist (CHIETA PESTEL Questionnaire, 2010). Furthermore the handling and transporting of dangerous goods is another concern that the sector has to deal with. Volatile chemicals present a huge explosion and fire risk while even the more stable chemicals can incur spillage, pollution and poisoning (Alexander Forbes, 2010). A critical aspect of challenges for the green economy is the general lack of skills in many sectors in South Africa, and in particular the lack of Engineers, Technicians and Health and Safety Practitioners will be essential in transitioning to a greener economy. The green economy summit held in May 2010 resolved that one of the elements of the green economy plan would be to define the job creation potential and protection of a green economy growth path and the associated skills requirements (DEA 2010 et al).

3 The environmental initiatives of the PG group is appended to this document as Annexure 3.

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In terms of specific sectors, the summit considered the diversification of renewable resources by looking at nuclear energy. Despite the problems associated with the disposal of nuclear waste, the summit acknowledged that it was carbon free and should be given more attention. The summit viewed waste management as another possible renewable resource that can be converted into energy while also adding the benefit of green jobs. Waste management could potentially present a small business opportunity that could be taken up by the CHIETA through the SMME voucher system. According to the SAPIA, the petroleum industry needs skilled employees and new entrants who understand, are competent and are trained in future fuels, environmental issues and waste management.4 1.3.2.6 Legislative Issues A number of government initiatives to improve environmental performance, have recently been introduced or are imminent. This will have a significant financial impact on the integrated synthetic fuel/chemical industry value chain. For instance the synthetic fuels value chain faces a significant number of regulatory challenges. Examples include the recently released Consumer Protection Bill, which includes duplicate provisions for the management of hazardous substances, including chemicals; the Air Quality Act, under which one of the synthetic fuel sites is included in a scheduled hotspot area, which requires the development of an air quality management framework. In addition, implementation of the Environmental Impact Assessment regulations are placing increasingly stringent conditions on applicants, which are not related to demonstrated risks. Furthermore, compliance with water resource management requirements are increasingly demanding with the resultant costs (CHIETA PESTEL Questionnaire, 2010). Pending legislation on e.g. clean fuels and labour broking if enacted may lead to additional challenges for the sector. Firms will have to invest in new plants that incorporate new technology which may require upgrades in systems which in turn will require an upgrade of skills for operators for instance in the petroleum subsector. Firms that rely heavily on tenders are likely to be affected by the outlawing of labour brokers as their labour requirements fluctuate according to need. Concerns have also been raised in reference to the proposed National Health Insurance Act because of the need for affordable medication which could lead to company closures and job losses (CHIETA PESTEL Questionnaire, 2010). However the intended implementation of the National Health Insurance Scheme (NHIS) in which one of the founding principles is universal health coverage is likely to have implications for the broadening of access to antiretrovirals (ARVs). Furthermore globalisation will continue to impact the sector with an increasing number of Free Trade Agreements coming into place, however regulatory compliance issues may hinder access to particular markets. Environmental issues in particular are becoming significant conditions for market access coupled with a greater understanding and requirement of Life Cycle Analysis resulting in cleaner production as well as the use of renewable resources. To remain competitive companies will have to comply and adhere to generally stricter regulatory trends that may for instance favour one product or technology over another (e.g. emissions or the thickness of plastic bags). Companies are increasingly exploiting their intellectual property in addition to the sale of products and services. The ability to capture, share and use ideas or information generated within the business will increase (DoL, 2008). In reference to the safe handling and transit of chemicals legislation takes the ‘polluters beware’ line, i.e. full responsibility for the safe handling and transit of chemicals rests with the supplier. The Act also stipulates that, “a supplier should not provide chemicals to a client unless the client has met the requirements for the safe collection, transport and housing of the chemicals.” Therefore

4 The SAPIA environmental input is appended as Annexure 4.

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contracts that are entered into between suppliers and clients must be guided by professionals who understand the risk being undertaken (Alexander Forbes, 2010). There are key intellectual property issues that are raising concerns especially within the pharmaceutical industry (the dti, 2009). These include clarification of the “grey area” between the SA patent law and the competition law and clarifying the rules on data exclusivity (terms of protection of confidential data in the clinical dossier submitted for registration) and the need to establish communication channels between the SA patents’ office and the Medicines Regulatory Authority office, to prevent issuing market authorization for generic medicines before patent expiry or without valid licence. These factors have an adverse impact on investment on R & D and generics. In addition delays in regulatory approval and / or registration of medicines in SA (delays ranging from 18 months to 3 years, vis-à-vis the EU and the USA) is affecting both the R&D-based industry (which is losing 1½ to 3 years of sales before patent expiry) and generics (due to delayed entry of generic copies).

Employment equity considerations continue to impact the sector, as education institutions are not meeting the demand requirements for the sector. (CHIETA PESTEL Questionnaire, 2010). All companies in every CHIETA subsector are required to comply with the BBBEE Codes. Skills development as envisaged in NSDS III can be used as a lever for transformation for most of the seven BBBEE elements, particularly Management Control, Employment Equity, Skills Development, Enterprise Development, and Socio-Economic Development. In addition to reporting annually on the BBBEE scorecard, the Petroleum Sector is also governed by compliance to the Petroleum and Liquid Fuels Charter. The Petroleum and Liquid Fuels Charter is currently being reviewed with the intention to determine the way forward beyond 2010.

Therefore for the South African chemical industry to develop and compete effectively, and take advantage of growing international markets, enterprises need to constantly upgrade their production and organisational methods, tap opportunities to specialise, exploit economies of scale and scope, forge domestic and international linkages and networks, improve worker skills, access appropriate technologies, and adopt new marketing strategies.

1.4 Economic Trade Analysis and Employment

An analysis into the major economic variables of the chemicals sector shows that the sector has been in an extended period of jobless growth or even employment contraction, covering the last two decades. Even in the face of strong growth in Real Output and Real Value Add, there has been little or negative employment growth. This is likely to be exacerbated by the global recession with jobs being shed as companies restructure to cut costs and become more competitive.

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Figure 1.2 Real output, real fixed capital stock, real value added, and employment

Source: Quantec 2010 The period from 1990 to 2008 showed consistent growth in the chemicals sector. Output increased notably from R108 billion in 1990 to R281 million in 2008 translated as a 158% real increase in output over the two decades. Similarly, although less markedly, real value added for the chemical sector grew over the same period from R37 billion in 1990 to R70 billion in 2008 (90% real growth). This very positive economic performance did not however translate into increased employment opportunities. There was a net loss in jobs over the entire period with total employment remaining relatively stable around the 235,000 mark from 1990-1993 after which the sector began shedding jobs at a rapid rate. By 2002 the sector had contracted by a third to only 156,000 employees before total employment began to recover slightly. Total employment peaked in 2007 at 182,000 people but has subsequently declined again. The falling employment is contrasted by the steady increase in the real value of capital stocks which grew consistently over the two decades. It is clear that through mechanisation, investment in capital was preferred to labour in order to increase output. The fact that real remuneration per employee consistently moved in the opposite direction to total employment shows that the changes in employment were at the lower end of the pay scale. As lower paying jobs are created, the average remuneration falls and the opposite when employment contracts. Thus in the last 2 decades and more than likely for the foreseeable future as well, the most vulnerable employees are and will be the semi and unskilled workers in the sector.

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Figure 1.3 Employment and real wages 1970 - 2009

Source: Quantec 2010

The year 2009 was one of great change and heralded in the current economic recession. Figures 1.4.1 and 1.4.2 show the effect of this with a sharp decline in all variables bar the average remuneration per employee. Output and value add fell as demand globally slowed down. This resulted in severe financial constraints which led to a reduction in investment in capital as well as a reduction in the workforce. Once again, the reduction in the workforce seems to be most significant in the lower skilled occupations as the said reduction translated into an increase of the average remuneration due to the highly paid, highly skilled workers representing a greater proportion of the workforce Looking forward for the next 5 to 10 years, there is little to suggest that all else equal, the trend of jobless growth will change. In the immediate future, the effects of the recession are likely to continue the downward movement of output, value add, capital stocks and employment. As the economy recovers however, there will likely be a move to invest in capital stocks to adjust for the underinvestment during the recessionary period. This is especially likely given the current strength of the Rand against the US Dollar making investments in equipment more inviting. On the other hand, since investment in labour has a faster return, it is expected that there will be a brief uptick in employment as companies seek to increase output by increasing the workforce. It is possible that these two forces will be balanced by the likelihood that the initial increase in employment will be driven by atypical forms of employment which allow for a more flexible workforce. In the longer term some of these workers will become formal but the greatest investment and thus the primary driver for the growth in output is likely to remain capital. Therefore once the economy emerges from the recession, regardless of the scale of economic growth, there is not likely to be the kind of employment growth that the government strategies are demanding / expecting. In order for there to be large scale job creation there will need to be interventions to either stimulate new sub-sectors that require capacity building or incentives that overcome the attractiveness of capital investment. Based on discussions with the Dti, the former is to be the preferred medium for job creation. Details at this stage are not available as industry and government are still in discussions but the broad strokes will be highlighted per sub-sector in the demand chapter.

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CHAPTER 2. SECTOR PROFILE

2.1 Industrial and Occupational Coverage

2.1.1 Summary Profile of Industrial Activities Economists view the manufacturing sector as being at the forefront of an economy that is ascending the development ladder, taking it to higher levels of sophistication and efficiency. Gains in the manufacturing sector generally extend rapidly to other economic sectors, resulting in the balanced development of the economy as a whole. Manufacturing is a significant sector within South Africa economy, according to the IDC it contributed 17.2% to nominal GDP in the second quarter of 2009, whilst employing approximately 1.34 million people in 2009, down over 90,000 from 2008. However, in the recent past in light of the global economic downturn the manufacturing sector has suffered reduced demand resulting in the global recession. Although in some regions manufacturing volumes rose in recent months this has mainly been as a result of the stimulus packages that boosted demand to some extent. However, signs of sustained demand growth are still lacking, especially in the consumer market. The South African manufacturing sector’s recovery will be highly dependent on the revival of international demand - both consumer and industrial - as well as on the resumption of local consumer spending and private sector investment activity. Since inventories are likely to have been significantly run down, manufacturing activity is expected to respond fairly rapidly to an increase in domestic household demand and/or export demand. The chemical sector is integral to practically every other sector of the economy, and as such the overall performance of the global economy has a massive impact on the performance of the chemical sector, and vice versa. The chemicals industry plays an anchoring role by supplying a multiplicity of locally and internationally sourced chemicals to diverse industries. Products of the chemicals and metals sectors are the basis for almost every manufacturing activity. In 2009 the Chemical manufacturing sector contributed 23% of manufacturing and 5% of South Africa’s GDP (CAIA). In 2009 (based on Quantec data) the chemicals sector employed approximately 156,600 individuals, however this an approximation as it is based on SIC codes 331 – 336 and 341 – 342, within which some subsectors do not fall under the CHIETA while excluding some SIC codes for instance 87140 (fuel research). Given its broad overall influence on the economy, the chemical industry in South Africa has been identified by the government as one of the key drivers of economic growth. The IPAP (2007) states that it is a crucial industry from the perspective of South Africa’s growth path for advancing socio-economic development objectives. The chemical industry can be classified into the following five broad categories5:

Liquid fuels production, i.e. petroleum, diesel, etc. Synthesis, i.e. primary and secondary chemicals manufacturing such as commodity organic

and inorganic chemicals, primary polymers and rubbers, and fine chemicals. Formulation i.e. chemical-containing products manufacturing, e.g. consumer products

(household, cleaning, cosmetics, toiletries), pharmaceuticals, bulk products (explosives, fertilisers), specialty chemicals (paints, coatings, inks, adhesives, agricultural chemicals, etc.).

Conversion i.e. plastic & rubber conversion (excluded from the CHIETA).

5 SETA demarcation does not always correspond neatly with the standard industrial classifications, hence not all industries

that fall under the traditional umbrella of chemicals are included in the SETA’s mandate.

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Glass manufacturing from chemical raw materials such as soda ash, and glass conversion that includes cutting, blowing, etc.

The Chemical Industries Education and Training Authority (CHIETA) currently incorporates the chemical and glass manufacturing sectors. The chemical industry consists of various sub-sectors as described below, while the glass industry consists of glass manufacturing from chemical raw materials as well as glass conversion. The CHIETA has five (5) chambers incorporating nine (9) sub-sectors. These sub-sectors are reconciled with the dti’s strategic sub-sectors in Table 2.1 below: Table 2.1: The CHIETA Chambers reconciled with the dti’s Strategic sub-sectors

CHIETA Chambers CHIETA Sub-sectors The dti’s Strategic Sub-sectors

Petroleum and Base Chemicals

Petroleum Liquid Fuels and Associated Products

Base Chemicals Commodity Organic Chemicals

Primary Polymers and Rubbers

Commodity Inorganic Chemicals

Fine Chemicals

Fast Moving Consumer Goods and Pharmaceuticals

Fast Moving Consumer Goods Consumer Formulated Chemicals

Pharmaceuticals Pharmaceuticals

Explosives and Fertilisers Explosives Bulk Formulated Chemicals

Fertilisers

Speciality Chemicals and Surface Coatings

Speciality Chemicals Speciality and Functional Chemicals

Surface Coatings

Glass Glass Not part of the Chemical Industry

Source: CHIETA SSP 2009 Update

2.1.2 Chamber Breakdown and Description

Base Chemical & Petroleum

Liquid fuels include all liquid and gaseous products derived from mineral sources such as crude oil, coal, natural gas, biomass and other sources, and are exclusively used in energy applications. Also included are all forms of lubricants and greases. Major product types include petrol, diesel, jet fuel, illuminating paraffin, fuel oil, liquefied petroleum gas (LPG), bitumen, lubricating base oils (mineral) and blended lubricants and greases. Base Chemicals include all products that are manufactured by means of polymerisation synthesis into a primary form (e.g. beads), ready to be converted by means of mechanical or thermo-mechanical processes into fabricated plastic and rubber products. A basic or primary organic chemical is the first point at which a substance exists as an isolated and reasonably pure chemical. Before this stage, it will have been present in a raw material such as coal, petroleum, or will have been a component of a mixture such as a refinery gas stream. These chemicals are typically large, e.g. volume consumption, multiple application and generally below 3 USD per kilogram (kg). It includes those products generally referred to as petrochemicals. Organic Intermediate Chemicals and Solvents are chemicals for which a definite chemical precursor can be identified. In addition, most of the supply of an intermediate chemical will undergo further chemical reaction (transformation) to produce a variety of other chemicals. Inorganic chemicals are those products most often produced from metallic and non-metallic minerals, which have commercial properties indicating typically large consumption volumes, multiple application areas, and relatively low market prices (e.g. below 3 USD per kg). Although

Sector Profile 16

some inorganic chemicals are used to manufacture other chemicals, the description among basic, intermediate and end chemicals is much less clear than in the organic chemicals group. Inorganic chemicals are used less as building blocks than as processing aids in the manufacture of both chemical and non-chemical products. Ammonia and its derivatives are discussed in the bulk formulated product sector (fertilisers).

Explosives & Fertilisers

Bulk formulated chemicals are formulated products compounded from high volume, commodity based chemicals. This includes mainly fertilisers and explosives. Organic fertilisers that are more specialised and smaller volume products are included under this sub-sector.

FMCG & Pharmaceuticals

The FMCG sub-sector includes all formulated consumer chemicals such as soaps and cleaning chemicals, as well as cosmetics and toiletries. Excluded are industrial cleaning chemicals that are regarded as speciality chemicals. Formulated pharmaceutical products include all products in final application dosage and form for use in human and animal medicinal applications. Pharmaceutical products are in a separate sub-group due to their highly controlled (registration, manufacturing and distribution) environment, as well as the impact of Government in controlling the major share of the end-use market. The major product categories in terms of product form are: tablets, capsules, liquids, creams, steriles and injectables. The major product categories in terms of therapeutic use include: analgesics, anti-diarrhoeals, anti-microbials, urinary system, gastro-intestinal tract, respiratory system, central nervous system, endocrine system, muscular-skeletal agents, vitamins, tonics and minerals.

Speciality Chemicals & Surface Coatings

Speciality chemicals are differentiated products where one producer’s product can be distinguished from another producer’s. Prices of these products remain high enough above costs to produce superior profits. Speciality chemicals are generally sold to performance specifications for what they will do rather than to composition specifications for what they contain. There are two main types of speciality chemicals. One based on functionality and the other based on an industry type classification. In the first instance, one functional compound is targeted at many different industries for example, flocculants going into the pulp and paper industry, mining, and water treatment, or biocides going into paints, cosmetics, and oils. In the second instance a range of functional chemicals is packaged to provide a suite of products utilised in a specific industry for example plasticizers, colorants, flame retardants, lubricants, heat stabilizers, organic peroxides, antioxidants, chemical blowing agents, anti-static and UV radiation absorbers and all functional chemical products used as plastic additives. Fine chemicals are specific molecules of high value typically produced in low volumes and sold at prices above 3 USD per kg. Many cost thousands of Rand per kg. Fine chemicals include the active ingredients in drugs, pesticides, dyes, pigments, and photographic products. They are also used as food ingredients, nutritional chemicals and as intermediate purified reagents for further synthesis, especially in pharmaceuticals, agricultural chemicals, dyes, and pigments. Fine chemicals are undifferentiated products that are defined in terms of their chemical structure and are distinguished from speciality (formulated or performance) chemicals, which are differentiated products, typically sold under trade names. Fine chemicals differ from commodity (basic or primary chemicals) and specialities in terms of their technology, management focus, product application, consumer base, technical service, Research & Development (R&D) focus, product differentiation and the volume produced and sold. Fine chemicals can be categorised as end-use products. These, together with other categories of

Sector Profile 17

chemicals, are consumed as key ingredients of pharmaceutical, agricultural, photographic products, electronics, flavours & fragrances, and food chemicals and products

Glass

The glass sector involves the manufacture of sheet and plate glass used in the construction and other industries or for further conversion into products such as glass containers, scientific and laboratory glassware, and other glassware. It also includes glass bevelling and silvering, safety glass, and other glass products; excluding glass insulation fittings and the grinding of optical lenses. The manufacture of glass wool is also included. The Standard Industrial Classification (SIC) code coverage for the sector is tabulated below. Table 2.2: Sub-Sectors and corresponding SIC codes for the Chemical Industry

Chamber Sub-sector SIC-code

Base & Petroleum Base Chemicals 33300 Processing of nuclear fuel

Base Chemicals 33410 Manufacture of basic chemicals, except fertilisers and nitrogen compounds

Base Chemicals 33430 Manufacture of plastics in primary form and synthetic rubber

Base Chemicals 34000 Manufacture of other non-metallic mineral products

Base Chemicals 41210 Manufacture of industrial gases in compressed, liquefied or solid forms

Petroleum 33200 Petroleum refineries/synthesisers

Petroleum 61410 Wholesale trade in solid, liquid and gaseous fuels and related products

Petroleum 87140 Industrial research, e.g. fuel research

Explosives & Fertilisers Explosives 33592 Manufacture of explosives and pyrotechnic products

Fertilisers 11600 Production of organic fertiliser

Fertilisers 33420 Manufacture of fertilisers and nitrogen compounds

Fertilisers 33421 Manufacture raw materials and chemical compounds used in agriculture

FMCG & Pharmaceuticals FMCG 33501 Chemically-based general household and personal care products

FMCG 33541 Manufacture of soap and other cleaning compounds

FMCG 33543 Manufacture of beauty products

Pharmaceuticals 33530 Manufacture of pharmaceuticals, medicinal chemicals and botanical products

Speciality Chemicals & Surface Coatings

Speciality Chemicals 33502 Manufacture, sale and/or distribution of diversified speciality chemicals for industrial use

Sector Profile 18

Chamber Sub-sector SIC-code

Speciality Chemicals 36400 Manufacture of accumulators, primary cells and primary batteries

Surface Coatings 33520 Manufacture of paints, varnishes and similar coatings, printing ink and mastics

Surface Coating 39005 Power coating

Glass Glass 33100 Manufacture of coke oven products

Glass 34110 Manufacture of glass and glass products

Glass 34112 Manufacture of glass containers; glass kitchenware and tableware; scientific and laboratory glassware, clock and watch glasses and other glass product n.e.c.

Source: CHIETA SSP 2009 Update

2.2 Summary Profile of Employers

The following profile of constituent CHIETA chambers is based on data obtained from the analysis of 2010 Workplace Skills Plans (WSPs) submitted by employers within the sector and relevant sections of the South African Revenue Service (SARS) database of levy paying enterprises. The data indicates that industry membership is dominated by the Base chemicals subsector (31%) followed by the Speciality Chemicals (20%) with the smallest subsector being Explosives (0.4%). Figure 2.1 Levy Paying Firms by Chamber

Base

21%

Explosives

1%

FMCG

9%

Fertiliser

3%Glass

7%Petroleum

8%

Pharma

15%

Speciality

28%

Surface Coatings

8%

Base Explosives FMCG Fertiliser Glass Petroleum Pharma Speciality Surface Coatings

Source: WSP (2010) data

Sector Profile 19

2.2.1 Company Profile by Size The data obtained from SARS indicates that the sector is generally dominated by small and micro-enterprises. However, relative to other sectors the pharmaceuticals subsector appears to have a proportionally higher number of medium and large enterprises. Figure 2.2: Firm Sizes by Chamber

0

20

40

60

80

100

120

140

160

180

200

Bas

e

Exp

losive

s

Fertiliser

FMCG

Glass

Pet

roleum

Pha

rma

Spe

ciality

Sur

face

Coa

tings

Small

medium

Large

Source: SARS database of levy paying enterprises

2.2.2 Enterprises by Geographic Distribution

Figure 2.3: Levy Paying Enterprises by Province

Source: SARS database of levy paying enterprises

Sector Profile 20

The majority of levy paying enterprises appear to be spread between Gauteng, KZN and the Western Cape but these regions account for the other provinces submitting as well6. In general, Gauteng is the dominant locality in which firms are located and is home to about 47% of all firms in the sector. All the 630 enterprises claiming grants are drawn from all provinces which fall under one of the three regions as represented in the graph below. Figure 2.4: Enterprises Submitting WSPs by Province

Source: WSP(2010) database

2.3 Profile of the Labour Force

2.3.1 Employee Profile by Occupation

Figure 2.5: Gender and Race Profile by Occupation

0

2000

4000

6000

8000

10000

12000

Man

ager

s

Profe

ssio

nals

Tech

nicians

Comm

unity

& P

erso

nal

Clerica

l & A

dmin

Sale

s

Mac

hiner

y Oper

ators

Elem

entar

y

FemaleW

FemaleI

FemaleC

FemaleA

MaleW

MaleI

MaleC

MaleA

Source: WSP (2010) data

6 The Gauteng region includes Limpopo, North West, Mpumalanga and the Free State. The Western Cape

includes the Northern Cape and Kwa-Zulu Natal includes the Eastern Cape.

0

20

40

60

80

100

120

140

160

180

200

Base Explosives Fertiliser FMCG Glass Petroleum Pharma Speciality Surface

Coatings

Gauteng KZN WC

Sector Profile 21

The occupational profile of the sector shows that it is dominated by Technicians and Trades Workers, followed by Machine Operators and Managers. There is a large proportion of managers and professionals and while technicians and trades workers have strong African representation, managers and professionals are still dominated by whites. 2.3.2 Employee Profile by Race

Figure2.6: Employee Profile by Race

0

5000

10000

15000

20000

25000

African Coloured Indian White

Elementary

Machinery Operators

Sales

Clerical & Admin

Community & Personal

Technicians

Professionals

Managers

Source: WSP (2010) data

The workforce within the sector is predominantly African and there appears to be a disproportionately high number of white employees especially. 2.3.3 Employee Profile by Skill Level

Figure 2.7: Race Profile by Skill Level

0%

20%

40%

60%

80%

100%

Male

A

Male

C

Male

I

Male

W

Fem

aleA

Fem

aleC

Fem

aleI

Fem

aleW

Skill Level 5

Skill Level 4

Skill Level 3

Skill Level 2

Skill Level 1

Source: WSP (2010) data

About 55% of white males are at skill level 4 and 5, whereas just over 15% of African males are at similar levels. Slightly over 60% of female Coloureds are at skill levels 1 and 2 whereas white males make up less than 20% of this grouping.

Sector Profile 22

2.3.4 Employee Profile by Sex

Figure 2.8: Employee Profile of Gender

0%

20%

40%

60%

80%

100%

Man

ager

s

Profe

ssio

nals

Tech

nicians

Comm

unity

& P

erso

nal

Clerica

l & A

dmin

Sale

s

Mac

hiner

y Oper

ators

Elem

entar

y

Female

Male

Source: WSP (2010) data

Males dominate all occupational categories except the clerical workers. Just over 80% of Managers and 60% of professionals are male, while fewer than 15% of technicians are female 2.3.5 Employee Profile by Age

Figure 2.9: Employee profile by Age

0

2000

4000

6000

8000

10000

12000

Man

ager

s

Profe

ssio

nals

Tech

nicians

Comm

unity

& P

erso

nal

Clerica

l & A

dmin

Sale

s

Mac

hiner

y Oper

ators

Elem

entar

y

>55

35-55

<35

Source: WSP (2010) data

The sector as a whole has a fairly young workforce as 56% are younger than 35 years old, 38% are aged between 35-55 and 6% over 55. The sector needs to consider whether there are adequate

Sector Profile 23

numbers coming through the ranks for each of the occupational categories. This is discussed as replacement demand in Chapter 3. 2.3.6 Employees by Geographic Distribution

Figure 2.10: Employee Distribution by Province and Occupation

0

2000

4000

6000

8000

10000

12000

14000

Man

ager

s

Profe

ssio

nals

Tech

nicians

Comm

unity

& P

erso

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Clerica

l & A

dmin

Sale

s

Mac

hiner

y Oper

ators

Elem

entar

y

Western Cape

Northern Cape

North West

Mpumalanga

Limpopo

Kwa-Zulu Natal

Gauteng

Free State

Eastern Cape

Source: WSP (2010) data

The biggest proportion of workers are technicians and trades workers, of whom the vast majority are located in Mpumalanga due to the Sasol refinery being located there.

2.3.7 People with Disabilities

Figure 2.11: People with Disabilities

010

2030

4050

6070

80

Man

ager

s

Profe

ssio

nals

Tech

nicians

Comm

unity

& P

erso

nal

Clerica

l & A

dmin

Sale

s

Mac

hiner

y Oper

ators

Elem

entar

y

DisabledW

DisabledI

DisabledC

DisabledA

Source: WSP (2010) data

Sector Profile 24

People with disability make up approximately 0.4% of total employees and are mainly in the clerical and administrative worker category. This is well below the 2% employment target for people with disability. The sector profile identifies areas of where interventions can be effected to redress inequalities with regard to race, gender and disability, in order to achieve equitable representation in all occupational categories and levels of employment that broadly reflect the diverse profile of the South African population

Demand for Skills 25

CHAPTER 3 – DEMAND FOR SKILLS Ideally the demand for skills and in particular the future demand for skills is determined by establishing the occupational profile of the sector, which provides the total number of posts and thus skills that will saturate the market and then add the number of posts that will become vacant through the incumbents leaving, as well as new posts that are created by changes in the sector. In other words, the total demand for skills can simply be represented as:

Total Demand for Skills = Current Profile + Replacement Demand + New Posts However, gaining a realistic value for the above variables is dependent on reliable data being available, and fore-knowledge of impending developments within the sector. Currently, the ideal datasets are not available and thus the values are estimated based on broad economic trends, WSP data, and qualitative engagements with stakeholders. Some future developments are likely due to planned government policies; however these too lack sufficient detail to facilitate reliable estimation of future additional demand for labour and skills. For the current analysis, the skills demanded by the chemical sector and its various subsectors were assessed using a variety of sources. Firstly, time series data was examined to determine the economic and labour market effects on the demand for skills in the sector. Secondly, WSP data from the 2010 submissions provided a snapshot of the current occupational profile. Potential changes to the profile, i.e. trends and new posts are estimated through trends revealed by the time series data and qualitative input that relates to future projects that are likely to have an effect on the structure of the workforce. Finally, replacement demand was estimated by using retirement as a proxy. This under-represents the true replacement demand as people will leave the sector for other sectors as well as attrition due to illness and death. This shortcoming is acknowledged and the CHIETA has a number of research projects in the pipeline to supplement this information for later SSP updates.

3.1 Time Series Analysis

CHIETA purchased time series data for the chemical sector from 1970 until 2009 (Quantec 2010). Data from publically available sources were combined so that the relevant economic and labour related indicators that are used in this report could be calculated. The data is organised by SIC code and thus does not perfectly match the chambers defined by the SETA. Findings are reported as detailed as possible in order to indicate as much of the subsector specific influences as possible.

3.1.1 SIC 331-332 Analysis of data from SIC codes 331 and 332 provides very useful insight into the petroleum subsector of the CHIETA. In includes all elements relating to the manufacture of coke and petroleum products but excludes fuel research (SIC 87140). The data shows that employment in the petroleum sector has grown significantly with 2009 job numbers more than doubling their 2001 counterpart and almost reaching the equivalent level of the maximum employment experienced in the late 1980’s and early 1990’s. Employment as of 2009 was 19, 978 formal employees. While the subsector has been investing in capital equipment it has been predominantly to maintain and replace existing machinery with capital stocks remaining relatively flat over the last 2 decades. The net result is that capital intensity (capital labour ratio) has halved since 2001.

Demand for Skills 26

What is interesting to note is that the skills mix is evolving into a more skills intensive environment. The figure below shows that the increase in employment since 2001 has benefitted mid level and high level skills more than their semi and unskilled counterparts. The proportion of mid and high level skills have increased from 41.9% and 19.9% to 47.3% and 22.3% respectively while the proportion of semi and unskilled workers has fallen from 38.2% to 30.5%.

Figure 3.1 SIC codes 331 - 332 Employment by Skill Level 1991-2009

Source: Quantec (2010)

It is not clear why employment fell so sharply from 1991 to 2001 but the subsequent rapid increase follows the sharp increase in international crude oil prices.

3.1.2 SIC 333-334 SIC codes 333-334 is made up predominantly by base chemicals but also includes the fertiliser subsector (excluding organic fertilisers SIC 11600) and speciality chemicals used in agriculture. The base chemicals and fertilisers subsector have invested in capital equipment significantly over the last two decades. Real gross domestic fixed investment has increased by 620% since 1991 with real capital stock increasing by 78%. This has resulted in a constant loss of employment, rapidly until 2001 and then more slowly over the last decade. The losses that have been experienced have been concentrated predominantly in the semi and unskilled occupations meaning that the capital investment has replaced those lower functions. As is shown in figure 2 below, the period of 1991-2001 saw a massive decrease in employment with the semi and unskilled occupation seeing their demand halved. Since then the decline has eased but is still slowly shedding jobs, adjusting the skills mix to demand a higher proportion of mid and high level skills but fewer in terms of numbers at all levels.

Demand for Skills 27

Figure 3.2 SIC Codes 333-334 Employment by Level 1991-2009

Source: Quantec (2010)

It needs to be noted that the performance of the subsector has been positive in economic terms. Output and real value add have grown steadily and the subsectors have become increasingly competitive internationally with exports increasing as a proportion of output from 35% in 2001 to 51% in 2009.

3.1.3 SIC 335 - 336 The industries found in SIC codes 335 – 336 are very diverse and represent a number of CHIETA subsectors. Explosives, Fast Moving Consumer Goods, Specialty Chemicals for industrial use, Surface Coatings and Pharmaceuticals are all represented in the following analysis. Like the other subsectors in the chemical industry, those companies falling into SIC codes 335 and 336 have seen a steady drop in employment from 68,000 in 1991 to 45,500 in 2009 mostly at the expense of semi and unskilled labour. The 1991-2009 period has seen high, mid and semi/unskilled employment fall by 14%, 20% and 44% respectively. This has been due to the continued investment into fixed capital, growing capital stocks from R13.1 billion in 1991 to R20.3 billion in 2009 moving the capital labour ratio by 64% by 2001 and a further 28% by 2009.

Demand for Skills 28

Figure 3.3 SIC codes 335 - 336 employment by skill level

Source: Quantec (2010)

As can be expected the labour productivity has increased because fewer workers are being used to grow output. However, fixed capital productivity reached a high in 2005 and has been falling since. This could have resulted in an increase in the investment in labour over capital but over the same period the cost of labour increased by 60%. Therefore the reduction in capital productivity has been offset by an increase in the cost of labour and as a result the trend of labour substitution is likely to continue into the future.

Figure 3.4 Capital vs. labour productivity and cost indexed to 2005

Source: Quantec (2010)

While both output and real value added has improved steadily over time, the international competitiveness is questionable. The highest proportion of output that was exported over the entire period was experienced in 2009 at only 12%. If the focus of the sector is limited to the domestic market through import replacement, long term growth is also limited.

Demand for Skills 29

3.1.4 SIC 341-342

The glass sector comprises of SIC codes 340-342 which includes the manufacture of glass and glass products, manufacture of glass containers, glass kitchenware and tableware and the manufacture of other non-metallic mineral products. The time series data however only includes SIC codes 341 and 342 and thus the figures will slightly under represent the glass chamber as it excludes the manufacture of other non-metallic mineral products. Employment in the glass chamber is somewhat of an exception within the chemical sector. Firstly, while employment has dropped over time, there have been large cyclical movements up and down that were not evident in the other chambers. Figure 3.5 below shows how the capital labour ratio (indexed to 2005) has moved in opposite directions to total employment. In the late 1990s and then again in the mid to late 2000s the chamber embarked on mechanisation drives which replaced demand for labour with capital equipment. The latest investment in capital equipment was significant with the real fixed capital stock increasing from R19.4 billion in 2005 to R33.8 billion in 2009. This resulted in a sharp downturn in employment but a similarly sharp uptick in labour costs. One would expect this to be due to the increased complexity of production thus demanding a higher level of skills in the chamber. However, this does not seem to be the case; at least not to the point where semi-skilled operations are graduating to mid level skills as shown in figure 3.6.

Figure 3.5 Employment, Labour Cost and Capital:Labour ratio indexed to 2005

Source: Quantec (2010)

The second differentiating factor of the chamber is that the skills mix is notably less skills intensive. Only 4% of employees in 2009 were classified as highly skilled whereas mid-level and semi / unskilled occupations account for 20% and 52% respectively. In addition, the number of informal workers was negligible in the other subsectors but in the glass chamber, informal employees account for 24% of employment. Furthermore, unlike in the other subsectors, the loss of employment has not been

Demand for Skills 30

concentrated in the low skilled occupations. On the contrary: the proportion of highly skilled has diminished since 1991.

Figure 3.6 SIC codes 341-342 employment by skill level

Source: Quantec (2010)

3.2 WSP and qualitative skills information

The trend illustrated by the time series data is that the sector is shedding semi and unskilled jobs at a higher rate, thus increasing the proportion of highly skilled employees is supported by the current WSP data. Figure 3.7 below shows that the sector demands workers from all skills levels but is relatively skills intensive with more than half the employees (52%) being employed as either managers, professionals or technicians. The sector includes activities from research, high level process development to manufacturing. Therefore outside of the generic administration skills, the sector demands a high number of professionals (11%), technicians (27%) and artisans (17%). The number of labourers and elementary occupations is relatively low as expected with only 16% of employees being classified as elementary occupations. Even then 16% of elementary workers are considered semi skilled as their work is rated at skill level 2.

Demand for Skills 31

Figure 3.7 Chemical Sector Skills Demanded by Level and Occupation

Source: CHIETA WSP 2010

As mentioned previously, when examining replacement demand, one needs to consider all the reasons that an employee might leave the sector. This would include employment in other sectors, as well as retirement, illness and death. For the purpose of this analysis, data was only available for retirement but plans are in place for an HIV / AIDS study that will provide additional insights into replacement demand for skills in the chemical sector. Figure 3.8 below shows the age profile of the sector as reported in the 2010 WSPs broken down by occupation. Of interest is the proportion of employees in the 55+ age group because by the end of the 2011-2016 period under review, they will all be over 60 years of age and thus, if they have not already retired, they will be very near to it. Replacement demand in the managerial occupations and machine operators are likely to be most significant. While sales workers have the highest proportion of 55+ employees, there are fewer people employed in the occupation and thus it poses less of a potential problem than the 11.9% and 10% for managers and machine operators respectively. A very positive note is that the professionals and technicians are mostly young and thus there is not likely to be scarcity of skills due to retirement in those occupations.

Demand for Skills 32

Figure 3.8 Age profile of the Chemical Sector by Occupation

Source: CHIETA WSP 2010

A potential concern is that while it is positive that young people are being fed into key occupations such as technicians, when they represent such a high proportion of workers (nearly 50%) the ability of the sector to train and pass on key experiential learning needs to be examined. The overall summary as shown above reflects the broad movements in the sector but the contexts in the various subsectors differ notably and thus the skills demanded by chamber is detailed below.

3.2.1 Base Chemicals and Petroleum Chamber Base Chemicals Reflecting the sector as a whole, the Base Chemicals subsector has a low reliance on Elementary Occupations but differs in that it has a more even spread over all the occupations. There is a very similar proportion of workers in clerical and administration, machine operators, elementary occupations, technicians and management. The skills demanded tends towards higher level skills with only 18% of identified employees in the 2010 WSP data fall into Skill Level 1 but 52% fall into either skill level 2 or 3 and a significant proportion (31%) fall into Skill Level 5. Slightly surprisingly, the greatest contributor to employment in number terms are the Clerical and Administrative occupations drawing equally from Skill Level 2 and 3.

Demand for Skills 33

Figure 3.9 Employment in Base Chemicals by Occupation and Skill Level

Source: CHIETA WSP 2010

In terms of replacement demand due to retirement, just under 10% of the workforce is in the 55+ age category. The retirees for the next 5 years are most likely to come from the highly skilled occupations of managers and professionals. Nearly 15% of all managers and professionals are over 55 years old meaning that the number of people retiring is likely to be notable. Managers and professionals thus represent an area of potential scarcity over the next 5 years. The other two occupations where there is likely to be notable replacement demand due to retirement are technicians and clerical and administrative workers with 10.4% and 11.4% of workers being in the 55+ age category.

Figure 3.10 Age profile of the Base Chemicals Subsector by Occupation

Source: CHIETA WSP 2010

In terms of creating a skills pipeline, there is a good proportion of young employees across occupations as well as a solid base of experience (aged 35-55) to develop and impart skills to the younger workers.

Demand for Skills 34

Figure 3.11 Real output, real value added, real fixed capital stock, employment

Source: Quantec (2010)

Looking forward, the base chemicals sector is likely to consolidate following a notable fall in output during the early stages of the recession (29%). With a strong trend towards capital investment over employment, any recovery in the next 5 years is unlikely to create large scale jobs. Therefore the status quo should continue into the future without significant changes, meaning that current skills concerns are likely to remain the focus for the next 5 years. Petroleum 7 The petroleum subsector WSP 2010 data had nearly 30% of occupational data captured incorrectly and could not be used. Thus the figures presented below are based on only 70% of reported employees and as a result need to be read with caution. Petroleum subsector employees broken down by skill level and occupation is shown in the figure below.

Demand for Skills 35

Figure 3.12 Petroleum Subsector Skills demanded by Level and Occupation

Source: CHIETA WSP 2010

The petroleum sub sector is dominated by Technicians made up of occupations in skill levels 3 and 4 representing 46% of employment. This is followed by managers and professionals at predominantly skill level 5 making up a further 29% of employment. The balance of jobs in the sector fall into Clerical and Admin, Elementary Occupations and Machinery Operators making up 10%, 10% and 5% respectively. The replacement demand due to retirement is less pronounced in the Petroleum subsector than in the base chemicals subsector. Only 7.2% of workers are in the 55+ age category and will near retirement age by 2016. While the proportion of workers in the 55+ age category in sales and community workers are relatively high (11.1% and 12.7% respectively), the number of employees in those occupations are quite low and thus are not likely to affect demand in any way. Rather the area where replacement demand is most likely to be experienced in managerial occupations and machine operators with 10% and 9% in the 55+ age category respectively.

Demand for Skills 36

Figure 3.13 Age profile of the Petroleum Subsector by Occupation

Source: CHIETA WSP 2010

An additional point of interest is that over 60% of technicians are under the age of 35. There are therefore likely to be difficulties in transferring skills from the more experienced cadre. This presents the potential for critical skills shortages (see section 3.3 on scarce and critical skills) in technicians over the next 5 to 10 years.

Figure 3.14 Real output, real value added, real fixed capital stock, employment

Source: Quantec (2010)

Looking forward, the petroleum sector presents a much rosier picture in terms of potential employment than other subsectors. Recent trends have been to grow employment even in the face of large scale capital investments. This is due to the investments being expansion projects as opposed to labour replacement projects. Engagements with stakeholders revealed the following additional projects that are likely to impact on the demand for skills in the future:

Demand for Skills 37

For the petroleum sub sector in KwaZulu Natal, pipeline projects such as the Transnet Multi

Product Pipeline will place a significant premium on engineering skills in the professional

occupational category.

Project Mthombo is a Petro SA’s initiative to build a world class crude refinery in the COEGA

industrial development zone in the Eastern Cape to secure South Africa’s future energy

needs. The refinery is designed to process 360 000 barrels of crude oil per day to meet the

increasing demand for refined fuel. In terms of benefits, the refinery can contribute about

R18, 5 billion per year on balance of payments from the year of commissioning to 2035.

Further up to 27 500 temporary jobs will be created during the construction period of three

to four years and, when operational, another 18 500 permanent jobs owing to direct and

indirect effects in the South African economy. The multiplier effects will be considerable for

small and medium companies as a result of the opportunity to supply goods and services to

the refinery (Petro SA 2010).

Regarding progress, the project has passed the pre-feasibility and feasibility phases and will

be entering the FEED (Front End Engineering and Design) phase. Final approval will be

sought in early 2012 after FEED and a successful environmental impact assessment.

Construction is scheduled to commence and be completed by 2015 whereupon the refinery

will be commissioned in 2016. According to Petro SA there are eighteen positions that

are deemed mission critical for the project8. From the PESTEL discussion there was

concern that project Mthombo would culminate in an exodus of key skills in the engineering

and artisan fields from the Western Cape.

SASOL is investigating the possibility of Project Mafutha which is an initiative to build an

inland coal to liquid (CTL) project near Lephalale in the province of Limpopo. If approved, the

80 000 barrel a day project will contribute to meeting the future energy requirements of the

country (SASOL 2010).

Noteworthy benefits of the project are:

i. Significant savings on imports thus ameliorating the country’s balance of payments.

ii. The job creation potential associated with the project. Thousands of direct

construction jobs operational jobs will be created. The majority of the jobs that will

be created will be given to people from the local communities.

iii. Early indications are that in terms of skills requirements approximately 70% of the

construction phase jobs will be unskilled and semi skilled. The type of jobs will be

drawn from general labourers, artisan aides, shutter hands and painters amongst

others. The remaining 30% of the jobs will be from the skilled to highly skilled

category and will include artisans, project managers, engineers, technicians and

planners. The type of jobs required for the operations phase are similar to the

skilled category mentioned above but also include financial, legal, procurement and

section leader job categories.

iv. The creation of a new town might lead to jobs being created to establish and

manage the new town

8 The PETRO SA skills development framework for project Mthombo is Annexure 4

Demand for Skills 38

v. Enhancement of the industrial development potential of the Limpopo province.

Currently progress has been made with respect to pre-feasibility work, i.e. large scale coal

gasification test, preparation of a mining rights application and associated technical and

environmental studies. The project will only progress into the feasibility phase until: a more

definitive stance from government on the projects priority; the results from the large-scale coal

gasification project are available and indicates that the Waterberg coal is gasifiable once a practical

and commercially viable solution to the carbon capture and storage is realised to meet the carbon

emission reduction targets of the project and there is more clarity on government’s policy on climate

change and carbon taxes and the impact thereof on the project (Ibid).

The demand for skills, underpinning all these projects, according to the SAPIA, fall within the technician and trade worker category and include occupations such as fitters, turners, welders and chemical plant controllers amongst others. 3.2.3 Fertiliser and Explosives Chamber The fertiliser and explosives chamber makes up 3.4% of the sector in terms of the number of levy paying firms. Unfortunately there was insufficient data to report on the explosives subsector on its own so the chamber will be combined for the purposes of reporting in this document. The chamber is more skills intensive relative to the rest of the sector. Nearly 70% of employment is classified as Skills Level 3, 4 or 5. Technicians represent the largest occupation in the chamber with 40% of employees with Managers and Professionals making up 15% and 9% respectively. Unlike the other chambers in the sector, Explosives and Fertilisers have relatively few employees in the Machine Operators and Elementary Occupations combining to make up only 19% of the workforce.

Figure 3.15 Skills demanded in Fertiliser and Explosives Subsectors by Level and Occupation

Source: CHIETA WSP 2010

The workforce in the chamber is relatively young with 37.5% of employees younger than 35 and a further 54.2% are aged 35 to 55. Only 8.3% are older than 55 and thus be nearing retirement in the period under review. Technicians represent the biggest driver of demand in the sector and only 5%

Demand for Skills 39

of current employees are older than 55. However, the next biggest occupational group are the managerial occupations and they have a higher proportion of employees nearing retirement (12.4%).

Figure 3.16 Age profile of the Fertiliser and Explosives Subsector by Occupation

Source: CHIETA WSP 2010

3.2.4 Glass Chamber As mentioned previously, the glass subsector is less dominated by high level skills than the other subsectors with a small portion performing the managerial and developmental functions and the majority fulfilling a more operational role. By far the largest group of employees are those that fall into Skill Level 2. These employees represent 53% of all workers and fulfil a wide array of functions from clerical to elementary (product examiners and product testers) but are predominantly machine operators. The next biggest group of employees are technicians falling into Skill Level 3 and 4 representing a further 16% of workers. The balance is made up of Managers (9%), Professionals (4%), Clerical and Admin (5%) and Sales (1%).

Demand for Skills 40

Figure 3.17 Skills demanded in Glass Subsector by Level and Occupation

Source: CHIETA WSP 2010

The age profile of the sector shows that the workforce is very young with very little replacement demand due to retirement to be experienced in the next 5 years. The largest occupations (Machine Operators and Elementary Occupations) only have 4.0% and 5.8% in the 55+ age group. The only area of note in terms of replacement demand is that of professionals where 15.3% of employees are over 55 years old. This however, is coming off a relatively small base in terms of numbers and should thus be easily met by the labour market with the exception of the Specialists in the glass industry (discussed further in section 3.3 Scarce and Critical Skills).

Figure 3.18 Age profile of the Glass Subsector by Occupation

Source: CHIETA WSP 2010

A similar concern as in some of the other subsectors exists in glass in that a very high proportion (56%) of their key occupation group (machine operators) are under the age of 35. This presents the potential for gaps in the competencies of artisans in the future if the capacity for skills transfer from the 35-55 aged workers is not present and should be monitored.

Demand for Skills 41

Figure 3.19 Real output, real value added, real fixed capital stock, employment

Source: Quantec (2009)

Looking forward, a similar picture to the overall sector is revealed. The trends of investment in capital and falling employment numbers is likely continue especially in the face of falling demand due to the recession. Like the base chemical subsector, the glass subsector is likely to consolidate over the next five years resulting in little change to the status quo, meaning that the current skills concerns should remain the focus. One area of difference in the glass sector however is the potential for new jobs and occupations as a result of increasing environmental pressures. Recycling is likely to become increasingly important and thus related skills will probably experience increasing demand in the future. 3.2.5 Speciality Chemicals and Surface Coatings Specialty chemicals and surface coatings have very similar occupational profiles. Both subsectors demand have a heavy leaning towards Machine Operators and Elementary occupations on the one hand and Managers on the other. Machine operators and elementary occupations combined make up 46% and 51% in the two subsectors respectively and managers make up a further 18% and 15% respectively. The mid level skills are disproportionately under represented when compared with the other chambers in the sector with only 27% and 20% combined skills levels 3 and 4 for speciality and surface coatings subsectors respectively.

Demand for Skills 42

Figure 3.20 Speciality chemicals employment by skills level and occupation

Source: CHIETA WSP 2010

Figure 3.21 Surface coating employment by skills level and occupation

Source: CHIETA WSP 2010

While the occupational and skills profiles are very similar between the subsectors in the chamber, the age profiles are very different. The proportion of employees aged 55 or above in the speciality chemicals subsector is nearly double the proportion of the sector as a whole. Replacement demand is likely to be notable in the key occupations of managers and professional with 13.3% and 13.8% of employees being over the age of 55 respectively. As mentioned previously, the largest occupation grouping is that of machine operators. Therefore the potential of 10% of the group retiring in the next 5 years represents a large number of skills and experience to be replaced.

Demand for Skills 43

Figure 3.22 Age profile of speciality subsector

Source: CHIETA WSP 2010

The surface coating sector is notably younger with replacement demand due to retirement less likely to have a major effect on the subsector. A total of 5.6% of employees are over the age of 55. The one exception is in the managerial occupations where 13.7% of employees will reach retirement age in the next 5 years.

Figure 3.23 Age profile of surface coating subsector

Source: CHIETA WSP 2010

Both subsectors however have a good mix of ages so that the young workers in the key occupations are being fed into the system and suitable experience exists within the older age categories to transfer the required skills. Unfortunately no trend data was available specifically for this chamber but the employment and skills profiles of the subsectors may change in the future following government incentive programmes. According to the Industrial Policy Action Plan, downstream chemical production is to

Demand for Skills 44

be stimulated in order to increase output and employment. Engagements with the dti has also revealed plans to incentivise the production of downstream flouro-chemicals in particular. The exact nature of these programmes are unclear at this stage as discussions with the captains of industry are still underway. However, it needs to be stated that it is through interventions of this nature that the previously mentioned ‘jobless growth’ is to be overcome. The skills implications of these programmes will be monitored by the CHIETA and included in future SSP updates as details become available. 3.2.6 FMCG and Pharmaceutical chamber FMCG Subsector The FMCG subsector in general demands a greater proportion of lower level skills than the sector average with 56% of all employees falling into either skills level 1 or 2. The largest occupation groups are elementary workers (25%), machine operators (19%) and clerical and admin staff (17%). The highly skilled professionals proportionately lower demand than in the rest of the sector making up only 9% of employment.

Figure 3.24 Employment in the FMCG subsector by Occupation and Skill Level

Source: CHIETA WSP 2010

Replacement demand due to retirement is not likely to be a significant driver in the FMCG subsector over the next 5 years with only 5% of employees being over the age of 55. Furthermore, the largest occupational groups in terms of numbers (elementary occupations and machine operators) have 2% and 4% expected replacement demand respectively. The more skilled managers and professionals, while lower in number, do have an older workforce and presents a greater potential for replacement demand. A total of 10% and 8% of managers and professionals respectively will be nearing or reaching retirement age in the next 5 years.

Demand for Skills 45

Figure 3.25 Age profile of the FMCG subsector

Source: CHIETA WSP 2010

Pharmaceutical subsector Not surprisingly, the pharmaceutical subsector is highly skills intensive with 35% of all employees falling in skills level 5. The occupational category with the largest number of employees is the artisan occupations (24.5%??) followed very closely by professionals (24.2%). Managers and technicians make up a further 23.4% of employment meaning that only 28% of employees come from community and personal workers, clerical and admin, sales and elementary occupations combined.

Figure 3.26 Pharmaceutical subsector employment by skill level and occupation

Source: CHIETA WSP 2010

According to the WSP data, the pharmaceutical subsector has the oldest workforce in the chemical sector. This combined with the fact that it is also the most skills intensive means that replacement demand due to retirement is likely to be a significant driver over the next 5 to 10 years. Across all occupations 13% of employees are over the age of 55 and only 29.9% of employees are 35 years old or younger. Figure 3.24 below shows that the most affected occupation is the machine operators

Demand for Skills 46

and as mentioned already, it is the largest in terms of numbers. As many as 26.2% of artisans will reach / near retirement age by 2016. Other key occupations that have a high potential for replacement demand due to retirement are managers (9.4%) and technicians (10.3%). Fortunately arguably the most influential group of occupations, the professionals, will be least affected by retirements with only 4.3% of employees being 55 years or older.

Figure 3.27 Age profile of the pharmaceutical subsector

Source: CHIETA WSP 2010

The age profile shows concern in artisan occupations. In addition to having a large proportion over the age of 55 years, a very small proportion (20%) is under the age of 35. This means that it is likely that more people are retiring than entering the subsector as machine operators. The future of the pharmaceutical subsector is likely to be the most affected by government plans. The global pharmaceutical industry is worth in the region of R3.7 trillion (Genesis 2007) yet the South African industry’s performance has been relatively poor and declining. The d ti is thus planning to strengthen the pharmaceutical manufacturing base in South Africa by establishing capacity to produce ARV medication, vaccines and biological medicines. As was reported in the speciality subsector, the exact specifications and implication of these plans are not known. However, it is very likely that there will be much movement in the pharmaceutical sector over the next 5 years. CHIETA will monitor and assess the skills implications of the projects and plan accordingly as and when the details become available. The Genesis (2007) report did give some indication of the type of skills implications there may be. Whether development will be in generic production or R&D there will be a strong need for chemists, scientists, pharmacologists and engineers. Since there is a relative shortage of tertiary qualified workers in South Africa as compared to other manufacturing economies there is likely to be (increased) scarcity in these occupations over the next 5 to 10 years.

3.3 Scarce and Critical Skills

Scarce and critical skills are where the labour market fails to adequately match the supply and demand of skills. These shortages take two forms. According to the Department of Labour absolute scarcity refers to suitably qualified people who are not available in the labour market. Critical skills refer to particular capabilities needed within an occupation. It is important to understand the drivers

Demand for Skills 47

of scarce and critical skills in the sector so that the most appropriate interventions can be undertaken in order to overcome the scarcity. Therefore this section will firstly outline the drivers of scarcity derived from interactions with the various stakeholders and then detail specific areas of scarcity that were identified.

3.3.1 Drivers of scarcity While each of the subsectors have varying and often unique skills requirements, the drivers are overlapping and represent a potential synergy in terms of the interventions required to overcome them.

a. Company Specific Drivers of Scarcity The WSP data on its own represents a misleading representation of skills scarcity in the sector as many companies report difficulties in hiring employees for posts where there is no real scarcity in the labour market. Instead company specific factors are driving the perception of scarcity. These can include:

1. Geographic location: companies outside of the major urban centres and in particular those

in rural areas struggle to attract certain skills and may give the perception of scarcity.

2. Unattractive packages: if remuneration is not competitive with industry norms the requisite

calibre of applicants will not be attracted.

3. Ineffective recruitment policies: If recruitment processes are not effective, the likelihood of

attracting suitable candidates is also diminished.

The most appropriate intervention will vary from company to company since company specific factors are by definition unique. Therefore when companies are experiencing difficulty filling posts in a given occupation, the company specific factors should be considered and ruled out first as they are the easiest to counter based on internal policy. Once this is complete, posts can be filled from the existing pool of resources in the labour market.

b. Poor quality of graduates It was mentioned that a major driver of scarcity is that the quality of graduates being produced by educational institutions are not matching the skills demanded by the sector. This mismatch is not limited to specific occupations but examples were given by stakeholders during consultation for professionals (for example engineers)and artisans (fitters). The net result is that companies either have to pay a premium to compete in the smaller pool of competent talent or invest in upskilling the new recruits over a period of time to the point where they can be productive. Both are costly and neither represents an optimal long term solution. The most appropriate long term solution would involve the establishment of partnerships between providers and industry so that the difficulties of provision can be overcome by technical input from industry as well as feedback to improve curricula.

c. Lack of information on career opportunities for learners A driver of scarcity that was repeatedly mentioned for occupations from nearly all the major groupings in the OFO was that learners are not aware of the majority of career options in the economy and thus do not follow the required learning paths that lead them to the scarce occupations. For example, a number of sectors mentioned a shortage of instrument mechanicians (technician to complete electronic repairs). In order to become an instrument mechanician, a decision to study light current over heavy current needs to be made early in the learner’s academic career. Thus the most appropriate intervention in these cases is to engage in career guidance and

Demand for Skills 48

education at the levels where the decisions are being made so that learner’s choices are based on a full understanding of their employment options post graduation.

d. Subsector specialists Each subsector has a small number of employees that have a specialisation in a given field relevant to that specific subsector. For example glass architects are architects that have specialised in the technicalities of glass. Flavourists (FMCG) are specialists that are able to discern flavours in food, perfumes etcetera. Engineers specialising in explosives for example are also required. The demand in these occupations in terms of numbers (both scarce and critical depending on the nature of the specialisation) is usually very low but represent an important aspect of the businesses within those industries. The most appropriate intervention is a combination of:

1. Targeted career guidance so that suitable learners are aware of their option to specialise

and what the implications are for their careers.

2. Support programmes both financial and non-financial in order to incentivise learners to

specialise.

e. Lack of succession planning Often an occupation requires a very high level of company specific knowledge that excludes applicants from the general labour market. Process technicians for example are required to have a base knowledge as a technician but must be an expert in the processes that are specific to the company. This level of knowledge is gained through 5 to 10 years of experience depending on the process. Thus there is a 5 to 10 year lead time to fill a post from scratch. Therefore, for each such occupation, a pipeline needs to be established that is moving prospective employees through an identified career pathway; in effect creating a company specific supply chain for company specific demand.

f. New Skills The ever changing modern environment requires companies to adapt in order to remain competitive. These adaptations will often require variations in the skills demanded in specific occupations or even whole new occupations to be created. In such cases scarcity is to be expected as providers have not yet been able to construct programmes and standards to train workers. For example the growing concern over the impact of our businesses on the natural environment is leading to changing occupations as well as new occupations. Occupational health and safety officers are likely to become increasingly relied upon to monitor and manage the carbon footprint of the organisation (critical skill) or similarly an engineer would need to design processes to be efficient while still minimising carbon emissions (critical skills). Perhaps in the next 5 years new occupations will emerge that rely on composite skills such as a “Greengineer” (scarce skill) who combines the engineering expertise with knowledge of environmental legislation and drives / designs sustainable economic initiatives relevant to the chemical sector.

3.3.2 Scarce Skills List The list below combines scarce and critical skills derived from WSP 2010 submissions and workshops with stakeholders. All attempts were made to make sure that the list is as complete as possible representing all skills shortages in the sector while minimising company specific factors. Therefore the most commonly mentioned occupations are included and the more generic skills are excluded.

Demand for Skills 49

Table 3.1 Global list of scarce skills (numbers indicate estimated demand)

Base Explosives FMCG Glass Pharmaceutical Specialty Fertiliser Surface Coating Petroleum9

Accountant (General) x 38

Administrative Lawyer 1

Advanced Biological Scientist 1

Analytical Chemist 0 1

Architectural Glass Specialist x

Archives and records Manager 1

Assistant Operations Manager 1

Associate Legal Professional 6

Back Office Specialist 1

Biochemist 1

Bioinformaticist / bioinformatican 2

Biotechnologist x

Bulk Materials Handling Plant Operator x 80

Business, human resource and marketing professionals

4

C and I Business Consultant 1

Chemical and Biochemical Engineering Technician (Skill Level 4)

Chemical Engineer 4 4 2 x x 43

Chemical and Biochemical Engineering Technician

9

Chemical Engineering Technologist 4 2 x 8

Chemical Operator 5

Chemical Plant Controller x 49

Chemical Production Machine Operator 29 30 x x

Chemist x 2

Chemistry Technician x 2 5

9 The complete SAPIA scarce and critical skills list for 2010 will be submitted as a separate annexure.

Demand for Skills 50

Base Explosives FMCG Glass Pharmaceutical Specialty Fertiliser Surface Coating Petroleum9

Civil Engineer 1

Clinical Research Associate 1

Commercial Service Sales Agent 2

Commercial and Industrial Distributors 1

Computer Network and Systems Engineer x 4

Company Secretary 2

Commodities Trader 5

Conflict resolution practitioner 2

Corporate Finance Manager 1

Corporate General Manager x 3

Corporate Services Manager 15

Crane Hoist or Lift Operator 4

Credit or Loans Officer 2

Developer Programmer x 20

Diesel Motor Mechanic 80

Dispatching and Receiving Clerk 10

Driving instructor 4

e-Business strategist and system manager

2

Economist 3

Electrical Engineer 2 x x 23

Electrical Engineering Technician 3 x 15

Electrician (General) 31 30 2 x 35

Electronic Instrument Trades Worker 1 9

Electronics Engineer 5 x

Engineering Manager X x 15

Environmental Health Officer 2

Environmental Manager 1 6

Demand for Skills 51

Base Explosives FMCG Glass Pharmaceutical Specialty Fertiliser Surface Coating Petroleum9

Environmental Science Technician 3

Explosives Engineers 5

Explosives Technicians 5

Finance Manager 17

Financial Market Leader 2

Fermentation Technician 1

Fitter (General) 3 30 x 2 x 97

Fitter and Turner 12 10 x

Field Managers 8

Flavourists x

Foreman 29

Forklift Driver 3

Food and Beverage Manufacturing Machine Operator nec (Skill Level 2)

x

Food Technologist 2

Gas or Petroleum Controller 40

Glass Blower x 1

Glazier x

General Medical Practitioner 1

Geologist 39

Geophysicist 30

Governance Manager 1

Health Information Manager 3

Health and Safety Manager X

Human Resource Advisor x 58

Human Resource Manager x 13

Human resource specialists x X

ICT Business Analyst x 8

Demand for Skills 52

Base Explosives FMCG Glass Pharmaceutical Specialty Fertiliser Surface Coating Petroleum9

ICT Managers 2

ICT Project Manager x 6

ICT Customer Support Officer 16

ICT Specialist 1

ICT Support Engineer 10

Industrial Engineer 1 2 32

Industrial Pharmacist X

Inquiry Clerk 8

Instrument Technician (Light Current) x x

Instrumentation Mechanician x

Instrumentation Managers x

Instruments Artisans (Light Current) x

Internal Auditor x 19

Lab Analysts x X

Laboratory Manager x x

License to Operate Management 2

Maintenance Planner 8

Management Accountant 12

Management Consultant 8

Marketing Practitioner x

Marketing Specialist 7

Market Research Analyst 35

Materials Scientist 1 2

Mechanical Engineer 2 x x 62

Mechanical Engineering Technician 1 x 43

Mechanical Engineering Drafts Person and Technician

5

Medical Advisors 5

Demand for Skills 53

Base Explosives FMCG Glass Pharmaceutical Specialty Fertiliser Surface Coating Petroleum9

Medical Laboratory Technicians x

Medical Scientist 2

Metal Fabricator x 161

Metallurgical Engineer 4

Metrologists x

Microbiologist 1

Millwright x

Motor Mechanic 54

Network Administrator x 7

Nuclear Engineer 5

Nurse x x

Occupational Health and Safety Advisor 1 x x 54

Occupational and Environmental and Health Professional

2

Office or Unit Manager 2

Operations Manager/Non Manufacturing 7

Organisation and Methods Analyst 10

Organisation and Method Analyst 5

Packaging technologist 2

Payroll Clerk 16

Pharmacists 6

Petrol Tanker Driver 174

Petroleum Engineer 16

Pharmacists Assistants 10

Plant Engineers 4

Plasticians 5

Policy Analyst 4

Policy and Planning Manager 1

Demand for Skills 54

Base Explosives FMCG Glass Pharmaceutical Specialty Fertiliser Surface Coating Petroleum9

Precision Instrument Maker and Repairer x

Product Examiner x

Production/Operations Manager (Manufacturing) 1

3 x x 10

Product Quality Control Project Co-ordinator

1

Programme or Project Manager 2

Project managers x x

Property and Contract Administrator 2

Purchasing Officer 8

QA Auditors 2

QA Managers x

Radiation Protection Officer 20

Radiation Protection Officer 40

Recycling Engineer x

Real Estate Agency Principal/Real Estate Agency Licensee

4

Real Estate Agent 3

Refrigeration technicians 3

Refueling Operators

24

Registered Nurse (Medical)

2

Remuneration and Benefits Consultant

2

Research and Development Scientists x x

Reservoir Modeller 4

Reservoir Engineer 4

Retail Business Consultant 1

Retail Buyer 3

Retail Manager (General) 6

Road Vetting Specialist 6

Demand for Skills 55

Base Explosives FMCG Glass Pharmaceutical Specialty Fertiliser Surface Coating Petroleum9

Sales Rep (Medical&Pharmaceutical) 8 x X

Sales Rep (Industrial Products) 5

Sales Rep (Motor Vehicle Parts and Accessories) 3

Sales and Marketing Manager 16

Security Officer 20

Small Business Manager 1

Software Developer 1

Specialist Managers 15

Standards and Assurance 5

Storage and Handling Personnel 10

Supply and Distribution Manager x 33

Taxation Accountant 2

Team Manager 3

Technical Support Services Manager x x

Technician to repair production lines x

Terminal Manager 1

Tinters x

Tool and Diemakers 5

Transport Company Manager 7

Transport Analyst 5

Training & Development Professional x x 10

Tribologist 3

Urban and Regional Planner 2

Validations Analysts and Managers 9

Warehouse Manager 1

Web Developer 3

Welder 12 10 x

Supply of Skills 56

CHAPTER 4. PROVISION AND SUPPLY OF SKILLS The supply of skills into the chemical sector is influenced by a variety of factors such as the availability of suitable qualifications in institutions of learning, the quality of teaching available, the choices made by students on areas of specialisation for their studies, and so on. In consultations with stakeholders, it became evident that a critical element driving the availability of suitably skilled workers for the chemicals industries is the availability of reliable and credible information on career options within the sector. On the whole, stakeholders identified this as an important area to be addressed to ensure that learners make informed choices on their field of study, knowing the diversity of career paths that are available to them within the chemicals industries. The analysis of supply examines the output of various learning channels available to workers, unemployed people, and newly qualified youngsters entering the labour market for the first time. The skills required by the chemicals industries are grounded in the natural sciences, most notably chemistry. The pipeline for the supply of skills to the sector thus includes schools, colleges, universities of technology, universities, and training offered by employers in the workplace.

4.1 National Senior Certificate results

Successive ministers of education have attempted to increase continuously the number of pupils learning and passing mathematics and sciences in high school. However, the education system has been slow to generate the critical mass of students who successfully sit for these subjects. The impact on the labour market is widespread, and has led to persistent scarcity in certain occupations for which high school passes are required in these subjects for accessing further and higher education. In 2008, the overall pass rate for the National Senior Certificate was 62.2%, down from 65.2% in the previous year. This was the same year in which the school leaving examinations were based on Curriculum 2001 for the first time. The government has since abandoned this approach to teaching and learning, and returned to more traditional teaching fundamentals which had been eroded during the era of Curriculum 2001. The results for maths and science in 2008 are presented in the table below. Table 4.1 Results of the National Senior Certificate

SEX CANDIDATES NUMBER AND % WHO ACHIEVED

40% and above 30% and above

No. % No. %

LIFE SCIENCES Female 160,599 65,615 41% 114,144 71.1%

Male 137,611 51,868 38% 96,139 69.9%

Total 298,210 117,483 39% 210,283 70.5%

MATHEMATICS Female 160,996 43,187 27% 67,572 42.0%

Male 139,012 45,999 33% 68,612 49.4%

Total 300,008 89,186 30% 136,184 45.4%

PHYSICAL SCIENCES Female 109,187 28,603 26% 57,459 52.6%

Male 108,113 32,877 30% 61,747 57.1%

Total 217,300 61,480 28% 119,206 54.9%

Source: Education Statistics in South Africa 2008

Supply of Skills 57

Well below half of the pupils who sat for mathematics and sciences got a mark above 40%. Clearly, unless these numbers can be boosted significantly, the pool of students able to pursue engineering and related qualifications required by the chemicals industries will remain limited.

4.2 Output from Further Education and Training Institutions

The workforce of the chemical industries is concentrated in the Trades and Technicians, and Machine Operators and Drivers occupational categories. Training and development for these occupations principally occurs at FET colleges (and to some extent Universities of Technology, although these are examined in the section on higher education). These institutions offer programmes that more closely replicate the workplace environment, and generally include placement with an employer as a core element of fulfilling the requirements for attaining a qualification. Historical data for this tier of the education sector is not readily available. However, a comprehensive report was prepared by the Department of Higher Education and Training in 2009. The findings for qualifications most relevant to the chemicals industries are presented below. The pattern that emerges is worrying. Overall, the pass rates for most subjects are well below 50%, with few exceptions. Table 4.2 Results of examinations in selected National Certificate subjects at FET Colleges

Subject Level Entered Wrote Passed % Pass

Chemical Laboratory Technology N2 6 - - 0.0%

Industrial science N2 7 - - 0.0%

Plant Operation Theory N2 14 9 - 0.0%

Engineering science N2 5,407 4,058 1,167 28.8%

Mathematics N2 5,616 4,055 1,188 29.3%

Electrical trade theory N2 3,159 2,459 780 31.7%

Diesel Electrical Theory N2 965 752 371 49.3%

Fitting and machining theory N2 1,725 1,352 755 55.8%

Industrial chemistry N2 6 4 3 75.0%

Diesel Trade theory N2 130 91 69 75.8%

Chemical Laboratory Technology N3 186 140 27 19.3%

Diesel Trade theory N3 1,149 901 259 28.7%

Electrical trade theory N3 1,953 1,424 443 31.1%

Mathematics N3 22,578 17,789 6,077 34.2%

Industrial chemistry N3 429 363 152 41.9%

Plant Operation Theory N3 442 362 165 45.6%

Engineering science N3 2 2 2 100.0%

Mathematics N3 1 1 1 100.0%

Engineering science N4 30,810 26,705 8,291 31.0%

Chemistry N4 628 565 232 41.1%

Mathematics N4 37,575 32,580 13,379 41.1%

Chemical Plant Operation N4 536 484 208 43.0%

Chemical Plant Operation N5 372 332 129 38.9%

Mathematics N5 16,445 14,410 6,022 41.8%

Chemistry N5 354 324 223 68.8%

Chemical Technology N6 293 223 69 30.9%

Supply of Skills 58

Subject Level Entered Wrote Passed % Pass

Chemical Plant Operation N6 200 184 99 53.8%

Mathematics N6 7,887 6,922 3,986 57.6%

TOTAL 138,875 116,491 44,097 37.9%

Source: FET Colleges Report 2009

Table 4.3 Results of examinations in selected National Certificate(Vocational) subjects at FET Colleges

Subject Level Entered Wrote Passed % Pass

Welding L2 618 371 99 26.7%

Mathematics L2 42,345 30,975 10,171 32.8%

Fitting and turning L2 4,926 3,180 1,166 36.7%

Engineering Technology L2 14,341 9,554 4,568 47.8%

Engineering Fundamentals L2 14,050 8,970 5,479 61.1%

Mathematics L3 11,430 8,684 3,386 39.0%

Fitting and turning L3 1,512 1,013 444 43.8%

Engineering practice and maintenance L3 4,461 3,122 1,468 47.0%

Engineering practice - boiler making L3 887 606 363 59.9%

Welding L3 37 28 21 75.0%

Mathematics L4 2,100 1,596 832 52.1%

Engineering fabrication - boiler making L4 183 110 89 80.9%

Fitting and turning L4 382 285 239 83.9%

TOTAL 97,272 68,494 28,325 41.4%

Source: FET Colleges Report 2009

The National Certificates (Vocational) have been introduced to replace the traditional National Certificates, with a view to broadening the scope of coverage beyond the trades and related occupations. At present, the available range of NC(V) qualifications relevant to the needs of the chemical industries is very limited, and much more capacity exists for the delivery of the old National Certificates. Furthermore, public providers indicated that employers understand and prefer the old qualifications over the new ones, thus learners emerging from college with NC(V) experience greater difficulty finding employment. On the other hand, according to a report made to Parliament’s Higher Education and Training Portfolio Committee by the Department of Higher Education and Training10, 100% of all bursary funding is allocated to NC(V) studies. This severely constrains the options available to learners who are dependent of financial aid, should they wish to pursue studies in fields relevant to the chemical industries. Much more effort would have to be invested in converting the old N qualifications to NC(V)s, and to align them to the needs of employers in order to remove this constraint.

10

www.pmg.org.za/files/docs/100202het.ppt accessed 15/09/2010

Supply of Skills 59

Notwithstanding the above, the DHET has undertaken to expand enrolment in FET colleges significantly, as illustrated below:

YEAR NATIONAL ENROLMENT

2007 25 000

2008 60 000

2009 120 000

2010 177 000

2011 256 000

2012 371 000

2013 538 000

2014 800 000

www.pmg.org.za/files/docs/100202het.ppt The expectation is that SETAs will work closely with FET colleges to expand their capacity to deliver relevant training, particularly for artisans, as provided for in the NSDS III framework document.

4.3 Enrolment and completion from HET institutions

Enrolment in higher education institutions has been steadily increasing over the years. Throughput rates, however, also reflect relatively high attrition rates. Only a small proportion of students who enter a programme complete the requirements for their qualification within the scheduled timeframe – meaning the throughput is inefficient.

Table 4.4 Analysis of throughput at higher education institutions

UG Dip/Cert 1st Bach

PG Dip/Cert Honours Masters Phd

Enrolment 2007 80,722 95,749 2,809 6,053 16,758 4,617

Completion 2007 16,622 11,625 162 1,666 1,084 588

Throughput 21% 12% 6% 28% 6% 13%

Enrolment 2008 85,254 98,537 3,384 6,523 17,814 4,721

Completion 2008 17,137 12,469 152 1,985 1,039 573

Throughput 20% 13% 4% 30% 6% 12%

Enrolment 2009 102,339 169,725 9,139 18,949 21,600 5,211

Completion 2009 16,012 13,770 388 1,858 1,197 616

Throughput 16% 8% 4% 10% 6% 12%

Source: HEMIS 2007-09

The above calculation of throughput is a rough estimate, based on the ratio of science, engineering, and technology (SET) graduates to overall enrolment in a given year. A more accurate basis for the calculation should be based on tracing the attrition of a cohort from admission to completion of qualification requirements within the stipulated timeframe. Thus, for the throughput for the 3 year bachelor’s degree, tracing the fate of the intake of 2007 to completion in 2009, is 14%. Even so, the figures presented here present a reasonable estimate given that the completion figures are not changing significantly over time, even as enrolment is rising. The chemical industries draw on the general pool of graduates who pursue SET qualifications. A key drive has been to encourage and support more black students into these fields. The main challenge

Supply of Skills 60

in this regard however is that the vast majority of black students still attend schools with limited capacity to teach maths and science at a level that will enable students to pursue those subjects at tertiary level. The irony is that, bursaries set aside specifically for these subjects are more likely to benefit white students, who generally attend better schools and are thus able to meet the entry requirements of tertiary education institutions. The graph below illustrates the distribution of graduates by race within the SET fields between 2007 and 2009. Figure 4.1 SET Completion rates at higher education institutions by race and qualification type

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

B 2007 9,616 12,697 1,146 161 2,334 1,760 364

W 2007 1,572 4,355 177 1 1,109 990 224

B 2008 10,055 10,793 1,201 137 1,839 1,455 277

W 2008 2,146 6,800 378 15 1,910 1,568 296

B 2009 9,791 10,898 1,975 250 1,914 1,545 305

W 2009 1,960 6,394 462 138 1,930 1,510 312

UG Dip/Cert 1st Bach PG Dip/Cert PG Bach Honours Masters Phd

Source HEMIS 2007-09

Whereas black students are in a significant and growing majority of graduates achieving undergraduate diplomas and certificates, and first bachelor’s degrees, the numbers drop off dramatically for post graduate qualifications. Importantly, the number of black and white students receiving honours, masters, and doctoral degrees are very similar, which suggests that a much smaller proportion of black students move from the first degree onto further studies, compared to their white counterparts. The skills profile for the sector is shifting, with decreasing demand for lower skilled workers in favour of medium and high skilled workers. In order to support the equity objectives of government, much work needs to be done to encourage and assist more black students to pursue further studies in these fields. Tertiary institutions offer a number of qualifications that are specifically relevant to the chemical industries. These include chemistry, chemical engineering and technology, petroleum engineering, other engineering and technology, pharmaceutical science, other health care and health sciences, other life sciences and physical sciences, mathematics, other industrial arts, trades and technology, and other agricultural and renewable resources. The number of students emerging from institutions with these qualifications has remained relatively flat between 2007 and 2009. (The figures for 2009 show some decline across all qualifications; however, the numbers are provisional, and therefore should be read with caution).

Supply of Skills 61

Although Petroleum is provided for, at present none of the universities appear to be offering the programme, or no students are choosing to pursue such qualifications. Anecdotal evidence from representatives of industry and public providers suggest that, at present, employers prefer university graduates to graduates of FET colleges or Universities of Technology when filling vacancies. This notwithstanding that the university graduates are generally not necessarily the best trained for the jobs, and the graduates of the other institutions receive training that is often more relevant to the needs of industry. Employers place a premium on the quality of tuition learners obtain at universities over that at other institutions. In order to achieve a better match between newly qualified prospective employees, it will be necessary to address this disjuncture on two levels: first, the quality of provision will have to be improved to raise the credibility of the qualifications obtained. Secondly, employers will need to be given clarity on the links between particular occupations and qualifications across the spectrum of the education system in order to assist them to find candidates that are ‘fit for purpose.’

Supply of Skills 62

Table 4.4 Selected University qualifications relevant to the Chemicals Sector

UG Dip/Cert 1st Bach PG Dip/Cert Honours Masters Doctorate

2007 2008 2009 2007 2008 2009 2007 2008 2009 2007 2008 2009 2007 2008 2009 2007 2008 2009

0199 Other Ag. and Renewable Resources 5 5

17

16

18

17 - 1 - 9 9 7

42

28

47 7 1 -

0409 Management 2,547

2,654

2,555

3,339

3,581

2,477

297

311

290

508

447

281

869

815

491

29

35

23

0805 Chemical Engineering and Technology

408

417

410

514

537

561 - 3 0

29

48

30

58

64

52

11

14

13

0824 Petroleum Engineering - - - - - - - - - - - - - - - - - -

0899 Other Engineering and Eng. Tech.

72

57 0

61

67

281 2 2 2

95

96

163

96

106

142

12

12

13

0904 Pharmaceutical Science - - - 396

394

354 3

23

20

22

19

23

112

77

67

11 9

16

0999 Other Health Care and Health Sciences - 1 - 5

30 4

40

28

62

12

15 9

46

41

55 7 3 6

1199 Other Industrial Arts, Trades and Tech. 1 1 - 4 - - 2 - 1 - - - - - - - - -

1504 Chemistry 398

440

429

814

833

1,014 1 1

38

245

274

285

147

156

159

73

88

94

1599 Other Life Sciences and Physical Sc.

105

98

65

160

167

175 2 - 8

77

82

108

57

68

78

18

12

23

1601 Mathematical Sc., General Perspective

50

246

262

230

232

214

25

10

21

57

72

51

19

20

18

19 9

11

Source: HEMIS 2007-2009

Supply of Skills 63

4.4 Training by employers

Employers receive grants each year when they submit workplace skills plans and training reports of training offered to workers in the previous year. For the period 2005 – 2010, the CHIETA and its employers have supported at least 15438 learners through learnerships. For the period 2008-2009 223 apprenticeships were supported by CHIETA. Training was concentrated in the occupations that predominate within the sector – technicians and trades workers, and machine operators and drivers. Table 4.5 Apprenticeships 2008-2009

YEAR CAPTURED

QUALIFICATION NAME COUNT

2008 Trade Test - BOILERMAKER 10

2008 Trade Test - ELECTRICIAN 9

2008 Trade Test - FITTER 12

2008 Trade Test - Instrument Mechanician (Process Control) 8

2008 Trade Test - RIGGER 11

2008 Trade Test - WELDER 10

2009 Trade Test - BOILERMAKER 20

2009 Trade Test - ELECTRICIAN 8

2009 Trade Test - FITTER 85

2009 Trade Test - Instrument Mechanician (Process Control) 11

2009 Trade Test - RIGGER 9

2009 Trade Test - WELDER 30

Source: CHIETA database

Table 4.6 below shows a selection of learnerships implemented over the past five years. In addition to the leanerships and apprenticeships, employers reported on skills programmes and other short courses offered to both their own employees and to unemployed beneficiaries, which varied widely based on the needs of individual employers.

Supply of Skills 64

Table 4.6 Leanerships in the chemical industries 2005-2010

LEARNERSHIP NAME 2005 2006 2007 2008 2009 2010

Grand Total

Analytical Chemist Technician 29 41 18 22 27 22 159

Bachelor Of Technology: Engineering: Chemical 1 4 3 1 9

Chemical Boilermaker 14 16 70 125 124 97 446

Chemical Boilermaker (Pipe Assembly And Structural Steel) 48 21 58 91 42 8 268

Chemical Electrician (First Line Maintenance / Installation Electrician) 101 82 246 256 129 41 855

Chemical Electrician NQF 3 54 62 67 257 202 115 757

Chemical Electrician NQF 4 48 45 46 149 215 162 665

Chemical Fitter (First Line Maintenance) 194 110 243 387 215 71 1,220

Chemical Fitter NQF 3 57 64 171 241 330 156 1,019

Chemical Fitter NQF 4 56 52 51 215 293 158 825

Chemical Glass Container Operator 8 37 296 249 5 1 596

Chemical Instrument Mechanic NQF 3 23 38 64 164 65 74 428

Chemical Instrument Mechanician 82 58 155 118 96 32 541

Chemical Instrument Mechanician NQF 4 46 42 21 102 95 44 350

Chemical Manufacturing Operator 2 28 50 19 99

Chemical Operations Level 1 (Abet) 155 70 420 8 10 39 702

Chemical Operator Level 1 (National Certificate In Chemical Operations) 394 139 390 244 61 4 1,232

Chemical Operator Level 2 (National Certificate In Chemical Operations) 294 501 389 600 34 13 1,831

Chemical Operator Level 3 (National Certificate In Chemical Operations) 49 42 20 53 54 218

Chemical Rigger (Limited To 30 Ton Center Mount Crane And 5000 Kg Load) 26 20 45 55 3 5 154

Chemical Rigger NQF 3 5 5 23 37 36 14 120

Chemical Rigger NQF4 5 4 25 18 30 22 104

Chemical Turner (Centre Lathe) 7 7 6 9 2 31

Chemical Turner NQF 3 7 2 9 6 6 1 31

Chemical Turner NQF 4 7 7 2 8 24

Chemical Welder 162 17 105 158 99 6 547

Chemical Welder NQF 3 5 10 82 146 98 67 408

Chemical Welder NQF 4 8 8 13 74 131 60 294

Supply of Skills 65

LEARNERSHIP NAME 2005 2006 2007 2008 2009 2010

Grand Total

Glass Container Former 14 6 9 24 36 2 91

Glass Container Product Line Controller 35 30 33 131 10 3 242

Manufacturing And Assembly Operations Supervisor 16 9 25

National Certificate: Chemical Manufacturing 18 18

National Certificate Professional Driving 34 215 56 101 25 431

National Certificate: Chemical Process Operations - Chemical Operator 13 23 43 27 6 112

National Certificate: Construction: Plant Operations 17 17

National Certificate: Team Leader 86 33 16 58 193

National Diploma In Chemical Engineering 25 41 8 13 10 13 110

New Venture Creation (SMME) 100 33 133

Pharmacists Assistant Basic 40 1 2 11 54

Post Basic Pharmacist Assistant Learnership 17 2 1 20

Technician: Electrical Engineering 7 6 2 1 16

Technician: Mechanical Engineering 17 6 2 5 1 31

Technician: Polymer Technology (Surface ) 1 5 5 1 12

Grand Total 1,997 1,916 3,418 4,130 2,669 1,308 15,438

Source: CHIETA database

Supply of Skills 66

4.5 Priority qualifications

The main qualifications that will continue to be prioritised in the sector are chemical engineers, artisans, operators, and specific technical sub-sector qualifications as identified in the analysis of scarce skills. At the same time, some of the chambers have identified the absence of relevant programmes and qualifications as a significant contributor to skills scarcity within their industries. SAPIA member companies are working together, within the constraints of the Competition Act, to address industry scarce skills and develop technical petroleum qualifications to build a skills pipeline addressing attrition, attraction and retention in the sub-sector. Refer to Appendix 2 No 6.3.10 for more information.Examples include chemical engineers specialising in explosives, tinting specialists for surface coatings; flavourists within the specialty chemicals industries, and others. Although the numbers needed are not large, stakeholders identified the need to find ways to develop these capacities within the available resource and institutional constraints. One of the main contributors identified for scarcity experienced in some occupations is the lack of awareness by learners of the career options available within the sector. As a consequence, some occupations lack a pipeline of skilled workers who can progress from the entry level and progress to the specialist functions that exist within those fields. The examples cited above are illustrative of this point. To overcome this, a combination of career guidance and career path mapping is needed for those occupations to enable learners to maintain a long-term view as they make decisions about their choices of field of study.

4.6 Industry/provider links, SETA/provider partnerships

The SETA met with public providers and selected industry representatives in early August 2010 to begin dialogue on ways to partner on the skills development agenda going forward. Historically, delivery has been principally driven through private providers, as they are perceived to be more flexible and better able to respond to changing needs of employers. The NSDS III framework requires that SETAs engage with public providers more substantively going forward in order to broaden access learning opportunities for the majority of students who may not be able to afford the market related fees of the private sector. At present, the SETA has established formal partnerships with FET colleges, mainly in WC. CHIETA has embarked on an aggressive and proactive engagement with FET colleges and Universities of technologies. Over the next five years, stronger links will be pursued between the SETA, industry and public providers, as provided for in the NSDS. The aim of the partnerships will be to facilitate greater alignment between industry needs and qualifications on offer across the various tiers of the education system.

Strategic Plan 67

CHAPTER 5. STRATEGIC PLAN This chapter will outline the high level strategic plan of the CHIETA. The plan will commence with an alignment of the NSDS 3. Thereafter, the plan will look at relevant areas of the plan as it relates to SSP implementation.

5.1 NSDS 3 alignment

Strategic Objective 1: Develop and implement a shared Code of conduct for the sector

Key Performance Area/Output

Performance Measure Performance Indicator

Target (2011/12) Target (2012/13) Target (2013/14) Target (2014/15) Target (2015/16)

Code of decent conduct

The adoption of a proposal which enjoys demonstrated support in the sector.

CHIETA will facilitate development of sectoral code of decent conduct

Implementation of code

Implementation of code Mid-term review

Implementation of code

Implementation of code Impact assessment

Strategic Objective 2: Facilitate Access of prospective learners to all available career paths within the chemical industry

Key Performance Area/Output

Performance Measure Performance Indicators

Target (2011/12) Target (2012/13) Target (2013/14) Target (2014/15) Target (2015/16)

Information and career guidance

SETA submits a comprehensive occupational profile of the sector and guide to employment opportunities in the sector in the format prepared by DHET by March 2013. Such a profile and guide to be updated by March 2016.

SETA submits occupational profile to DHET in approved format

Guide updated

SETA provides information on the steps taken to expose prospective

Develop comprehensive

Disseminate career

Disseminate career

Disseminate career

Disseminate career

Strategic Plan 68

Strategic Objective 2: Facilitate Access of prospective learners to all available career paths within the chemical industry

Key Performance Area/Output

Performance Measure Performance Indicators

Target (2011/12) Target (2012/13) Target (2013/14) Target (2014/15) Target (2015/16)

learners to work in the sector. multi-media outreach and communication strategy giving career and job information for the chemical sector. Disseminate career information.

information through various media and channels. Statistics: No. of beneficiaries reached/users accessing media

information through various media and channels. Statistics: No. of beneficiaries reached/users accessing media

information through various media and channels. Statistics: No. of beneficiaries reached/users accessing media

information through various media and channels. Statistics: No. of beneficiaries reached/users accessing media Impact assessment.

Recognition of prior learning

All principal sectoral and national programmes to include RPL access routes by 2016. Number of learners assisted to access further learning to be counted against programmes entered.

At least 40 % of learning programmes to include a RPL component

At least 60% of learning programmes to include a RPL component

At least 75% of learning programmes to include a RPL component

At least 90% of learning programmes to include a RPL component

At least 100% of learning programmes to include a RPL component

Raising the base Where sectoral or national programmes specify an entry requirement of NQF Level 4 or above, these programmes must be complemented by the provision of either Adult Education and Training or Foundational Learning Programmes which enable those who do not meet these requirements to have the opportunity of doing so. Number of learners assisted to access further

At least 200 of training beneficiaries access AET/FL programmes to facilitate access to further learning

At least 200 of training beneficiaries access AET/FL programmes to facilitate access to further learning

At least 300 of training beneficiaries access AET/FL programmes to facilitate access to further learning

At least 400 of training beneficiaries access AET/FL programmes to facilitate access to further learning

At least 500 of training beneficiaries access AET/FL programmes to facilitate access to further learning

Strategic Plan 69

Strategic Objective 2: Facilitate Access of prospective learners to all available career paths within the chemical industry

Key Performance Area/Output

Performance Measure Performance Indicators

Target (2011/12) Target (2012/13) Target (2013/14) Target (2014/15) Target (2015/16)

learning to be counted against programmes entered.

Strategic Objective 3: (PIVOTAL occupational programmes)

Key Performance Area/outcome

Alignment to Occupational category

Performance Measure Performance Indicators

Target (2011/12)

Target (2012/13)

Target (2013/14)

Target (2014/15)

Target (2015/16)

Professional OFO 1,2 No of learners completed professional programmes

250 250 250 250 250

Vocational OFO 3,7 No of learners completed learnerships

1300 1300 1300 1300 1300

Technical OFO 3,7,8 No of learners completed technical programmes

1400 1400 1400 1400 1400

Academic Learning

OFO 1-8 Bursaries Internships

593 593 593 593 593

Strategic Plan 70

Strategic Objective 4: Skills programmes and other non-accredited short courses for the employed

Key Performance Area/Outcome

Performance measure Performance Indicators

Target (2011/12) Target (2012/13) Target (2013/14) Target (2014/15) Target (2015/16)

Skills programmes and other short courses for the employed

At least 80% of large employers submit WSP and ATR claims.

80% 80% 80% 80% 80%

At least 60% of medium sized employers submit WSP and ATR claims.

60% 60% 60% 60% 60%

At least 40% of small firms submit WSP and ATR claims.

40% 40% 40% 40% 40%

Number of non-levy paying firms assisted through discretionary grant programmes. (priority given to rural inclination)

10% of discretionary fund

10% of discretionary fund

10% of discretionary fund

10% of discretionary fund

10% of discretionary fund

Number of new venture creation initiatives assisted through discretionary grant programmes. (priority given to rural inclination)

200 200 200 200 200

Number of Co-operatives, NGOs or NPOs assisted through discretionary grant programmes. (priority given to rural inclination)

45 45 45 45 45

Strategic Plan 71

Strategic Objective 5: Skills programmes and other non-accredited short courses for the unemployed

Key Performance Area/Outcome

Performance Measure Performance Indicators

Target (2011/12) Target (2012/13) Target (2013/14) Target (2014/15) Target (2015/16)

Catalytic Grants Number of learners to be trained broken down by equity criteria.

Aligned to catalytic grant applications

Aligned to catalytic grant applications

Aligned to catalytic grant applications

Aligned to catalytic grant applications

Aligned to catalytic grant applications

Strategic Objective 6: CHIETA to contribute to the total number of researchers and innovators for the benefit of industry and society broadly

Key Performance Area/Outcome

Performance Measure Performance Indicators

Target (2011/12) Target (2012/13) Target (2013/14) Target (2014/15) Target (2015/16)

Programmes that build the academic profession and engender innovation

Increase in the number of people filling these ranks.

Within six months, develop and approve a framework for disbursing annual research and innovation grants for the benefit of the sector 5

5 5 5 5

Strategic Plan 72

Strategic Objective 7: Standardise and align academic qualifications to address the dislocation that exists between the three tiers of the education system

Key Performance Area/Outcome

Performance Measure Performance Indicators

Target (2011/12) Target (2012/13) Target (2013/14) Target (2014/15) Target (2015/16)

Service delivery partners

SETAS each partner with at least (25 number) institutions/faculties, of which at least 70% are public institutions/faculties. Arising out of these partnerships the institutions should attain accreditation for the delivery of the targeted programmes from the QCTO.

5 institutions of which FET colleges will be prioritised.

5 institutions 5 institutions 5 institutions 5 institutions

Each CHIETA sub sector (9) should seek to build at least one Network of Institutions of Sectoral Occupational Excellence.

Definition of criteria and identification of potential partners

MOUs in place Review and refine partnership model as needed during implementation

Review and refine partnership model as needed during implementation

Review and refine partnership model as needed during implementation Impact assessment

73 Strategic Plan

5.2 Relevance to SSP implementation

5.2.1 Grant management

Key Strategic Objectives

Performance Measure

Timeframe Performance Indicator

Systems and processes are in place for assessment , progress evaluation and monitoring and post – project follow up in order to ensure that the resources allocated are used in a manner that complies with priorities, applications ,proposal and contractual agreements

Monitoring and evaluation systems and processes are in place

Staffing allocated and responsibilities & performance standards defined for monitoring grants

Database management systems are in place for managing the process of allocating funds

Upon evaluation, a minimum of 90% of projects and programmes funded are successfully completed

Reviewed Annually

Templates and processes are in place for managing grants

Staff are properly allocated with well defined responsibilities and performance standards

Database management system is developed and used for monitoring Grants process

Evaluation report is prepared on the effectiveness of the Grants Management Process

90% programmes are successful

Strategic Plan 74

Key Strategic Objectives

Performance Measure

Timeframe Performance Indicator

Database and tracking systems to ensure effective monitoring, reporting & follow-up are developed and implemented

Features and specifications for database design and management are prepared

Guidelines explaining and presenting the features and instructions

Training conducted with Grants Practitioners

Evaluation report prepared for both Mandatory and Discretionary Grants

Updated Annually

Databases and other electronic systems are in place

Databases and processes have been developed both for Mandatory and Discretionary Grants

Specifications for systems are in place

Survey of member organisations reveal satisfaction with services and support in Grants Management

Verification systems are in place for grant monitoring

Verifying responsibilities for Grants Practitioners are specified

Verification schedules and instruments in place for different types of Grants

Schedule for verification visits are also prepared

Annually

This process is essentially a structure for checking the operation of projects in the field

An operational handbook is being developed

A list of indicators to determine verifications in place and part of the handbook

Strategic Plan 75

Key Strategic Objectives

Performance Measure

Timeframe Performance Indicator

Verification systems are in place for grant monitoring

Verifying responsibilities for Grants Practitioners are specified

Verification schedules and instruments in place for different types of Grants

Schedule for verification visits are also prepared

Annually

This process is essentially a structure for checking the operation of projects in the field

An operational handbook is being developed

A list of indicators to determine verifications in place and part of the handbook

Grants disbursements policies and plans are advertised and properly communicated within the sector

Advertisements placed in selected media to communicate CHIETA’s disbursement policies and plans

Grant Guidelines are updated and revised annually

Annually

Grants Management have developed the necessary policies and plans

Training on Grants Disbursements policies, plans and communication strategy with the Relationship Manager is in place

Equity in Grant Disbursement

Equity standards developed and in place for programming and evaluating all grant disbursements

Grant disbursement processes and results conform with DHET and Government Priorities

Equity principles are communicated in the Guidelines

Annually

Equity standards are in place

These are also communicated in our SLA

This forms the basis and is fundamental to the transformational agenda of the Grants Management Strategy

Strategic Plan 76

5.2.2 Quality assurance, Artisan Development Key Strategic Objectives Performance

Measures Timeframe Performance Indicator

NSDS 3 Targets: Programme delivery partners

FET Colleges supported and program approve them for CHIETA qualifications

Ongoing Up to 18 FETs are supported and programme approved NSDS Indicator 5.4

Promote QCTO related work processes and communicate this to stakeholders

1. Workshops held with targeted groups of stakeholders to communicate new landscape, and the changes that they would need to prepare for in terms of training and development

2. Reconfigure the MIS to have the OFOs as its basis and ensure that all companies have been assisted to align their job categories etc to the OFOs and the new MIS

At least quarterly workshops with targeted groups

Companies are visited and their systems are aligned to the OFOs

Up to 6 provider workshops

ALL accredited providers are visited and their systems are updated.

All companies that submit WSPs are supported as above

Promote Pivotal Programs

Partnering with Universities of Technology and FET Colleges

To commence as soon as QCTO systems are received

Set in place networks with 4 U of Ts

NSDS Indicator 5.5.1.1 and 5.3.2

Recognition of Prior Learning

Ensure that the CHIETA’s RPL system developed a few years ago is shared with providers, and their capacity is built in preparation for NSDS 3 outputs

2 RPL workshops are held

The CHIETA RPL Project is approved Indicator 5.3.1.2

Raising the base as per NSDS 3 Indicator 5.3.1.2

Ensure that CHIETA companies are capacitated to offer Foundational Learning Programs

August 2011 CHIETA providers are workshopped and capacitated to meet this NSDS 3 objective through a special project to meet NSDS 3 Indicator 5.3.1.2

Strategic Plan 77

Key Strategic Objectives Performance Measures

Timeframe Performance Indicator

APPRENTICE TRAINING

Accredit providers /DTTC / employers,

Providers / DTTC / Employers are supported and accredited

NSDS Indicator 5.3

Ongoing based on applications received

A minimum of 12 Providers / DTTC / Employers accredited

Re-accredit DTTC for new national trade tests

DTTC supported and re-accredited against new national trade test

NSDS Indicator 5.3

Ongoing as per policy

20 DTTC supported and re-accredited

Promote quality amongst providers / DTTC / employers

9 workshops are facilitated.

Best practice shared Stakeholders informed about legislative changes

Stakeholders informed of new revised CHIETA processes

NSDS Indicator 5.3

Ongoing as per policy

6 x national trade test pilot workshops

3 X EDTQA Capacity building with stakeholders workshop

Promote section 28 trade test process through voucher scheme

Section 28 candidates supported through voucher scheme

NSDS Indicator 5.3

Ongoing as per requests received

50 section 28 candidates certificated

Conduct Studies to ensure the implementation of apprenticeships in the chemical industries sector

Prepare for the QCTO’s 4 routes to artisanship, the CHIETA needs to understand the synergies and differences between the NQF system, the apprentice training system, the NATED courses and the

Ongoing as needed across the 3 ETDQA Units

Studies inform new and current apprenticeship & Learnership processes to ensure increased apprenticeship training and compliance to legislative processes

Strategic Plan 78

Key Strategic Objectives Performance Measures

Timeframe Performance Indicator

NCV at FET Colleges and develop appropriate interventions and tools:

o N2 compared to theoretical components of CHIETA learnership and NCV.

o Training Schedule and practical components of CHIETA learnership and NCV.

o Standard Science and Mathematics standard grade compared to various mathematics and science learning pathways.

o N2 Equivalent

Other areas identified as the training landscape unfolds

Develop new curriculums by DQP and qualifications and COSE related qualifications

Requested qualifications are developed to meet industry needs

Ongoing based on requests

Up to 6 qualifications developed using QCTO processes

Develop assessment s for DQP developed qualifications

Assessments available for developed curricula & qualifications

For the DQP qualifications developed

Up to 6 assessments developed with AQPs

Facilitate the N2 Equivalent process

Alternative route to the N2 is available to employers to ensure the successful implementation of apprenticeship in the chemical industries sector

Ongoing Timetable for quarterly N2 Equivalent exams

Strategic Plan 79

Key Strategic Objectives Performance Measures

Timeframe Performance Indicator

Ensure trade test process in chemical industries sector equals an acceptable high pass rate

Revised trade test process / pre-trade test evaluation process / trade preparation process / trade test process

Annual 20% increase in trade test pass rate

Ensure CHIETA deliverables are marketed and strategic directions are shared nationally and internationally

Attend conferences and present conference papers and ensure chemical industry sector apprenticeship is marketed and to remain informed about the requirements of the changing apprenticeship environment.

Quarterly

4 times a year

Accredit providers /DTTC / employers,

Providers / DTTC / Employers are supported and accredited

NSDS Indicator 5.3

Annual 12 Providers / DTTC / Employers accredited

Re-accredit DTTC for new national trade tests

DTTC supported and re-accredited against new national trade test

NSDS Indicator 5.3

Annual 20 DTTC supported and re-accredited

Monitor and audit constituent providers / employers / DTTC

Providers / DTTC / Employers are monitored and audited

NSDS Indicator 5.3; 2.8 and 4.1

Annual 25 Providers / DTTC / Employers monitored

Internships Seeking Internship opportunities for graduates

Up to 16 graduates are placed for workplace exposure NSDS Indicator 5.5.1

Strategic Plan 80

Key Strategic Objectives Performance Measures

Timeframe Performance Indicator

Promote quality amongst providers / DTTC / employers

9 workshops are facilitated.

Best practice shared Stakeholders informed about legislative changes

Stakeholders informed of new revised CHIETA processes

NSDS Indicator 5.3

Annual 6 x national trade test pilot workshops

3 X EDTQA Capacity building with stakeholders workshop

Promote section 28 trade test process through voucher scheme

Section 28 candidates supported through voucher scheme

NSDS Indicator 5.3

Annual Up to 50 section 28 candidates certificated

Report to SAQA: NLRD, QCTO, DHET monitoring & performance

Green NLRD status awarded by SAQA

NSDS Indicator 5.3

Quarterly

Unqualified audit reports

LED

Implement ISOE strategy

NSDS 3 Target: Programme Delivery Partners

At least five new Institute of Sectoral or Occupational Excellence are identified. (

Existing ones are supported and funded, they are sector based

30/11/2011 Up to 5 ISOEs identified and initial work done with them to put action plans in place

Learnerships at Higher Education. Levels 5 – 10. PIVOT programmes.

NSDS 3 Target: Programme Delivery Partners

Existing partnerships with Cooperative Education at various Universities, Universities of Technology and colleges are supported and expanded. (World of work). HET learners are

30/10/2011 Relationships are strengthened with University of Johannesburg, University of the Witwatersrand, Tshwane University of Technology and Vaal University of Technology.

Strategic Plan 81

Key Strategic Objectives Performance Measures

Timeframe Performance Indicator

assisted to complete projects at the workplaces and graduate in various fields of study

Review of Learning materials

NSDS 3 Target: Programme Delivery Partners

Learning Materials aligned as per QCTO way

30/9/2011

Develop and register new learnerships and revise expired ones with related curriculum frameworks

NSDS 2 targets: Development and Innovation

5 Expired Learnerships and related curriculum Frameworks reviewed as per DHET and QCTO specification criteria

6 New Learnerships and related curriculum frameworks developed in alignment with QCTO as per SSP

Up to 5 expired learnerships identified

At least 6 new scarce and critical learnerships identified from Sector Skills Plan

Learners placements

NSDS 3 Target: Programme Delivery Partners

Learners are assisted and placed at various workplaces in conjunction with Employment Skills Development Agencies (ESDA) and the Department of Labour

31/03 2012 Up to 2 ESDAs identified to support implementation, capacitated and appointed

Monitor the implementation of learnerships and skills programmes

NSDS 3 Target: Programme Delivery Partners

Monitoring visits are scheduled and visits reports generated

30/03/2010 Monthly schedule

Strategic Plan 82

83 References

REFERENCES AMTS report vol 1.doc (2004) A National Advanced Manufacturing Technology Strategy for South

Africa

AMTS, Chemical Sector Task Team (2008) Chemical Sector

CAIA (2009) Submission to the Parliamentary Portfolio Committee on Water and Environmental

Affairs Climate Change

CHIETA (2010) Questions for PESTEL Discussion

DoL (2008) South African Chemical Sector Report on Skills Development and the Government’s New Economic Policy Priorities Engineering News (2010) Poor Rail Infrastructure Weighs on Chemicals Sector (www.engineeringnews.co.za/.../poor-rail-infrastructure-weighs-on-chemicals-sector-2010-03-19 Accessed 20.08.10) Department of Education (2008), Education Statistics in South Africa 2008 Department of Environmental Affairs (2010). Measurable Performance and Accountable Delivery: Performance Agreement between the President of the Republic of South Africa and the Minister of Water and Environmental Affairs. Department of Environmental Affairs (2010) Green Economy Summit Report Department of Higher Education and Training (2009) , FET Colleges Report 2009 Gnavitas (2009) African People in the Western Cape. Cape Town. Genesis Analytics (2007) The growth potential of the pharmaceutical sector in South Africa. Johannesburg. Petro SA (2010) Project Mthombo a world class refinery in Africa Redpeg (n.d.) Redpeg’s HIV/AIDS in the Workplace Programme (www.redpeg.co.za accessed 20.08.10)Review and Summarised Financial Information 2009 South Africa Info (2008) South Africa's Chemicals Industry Sasol (2010) Project Mafutha Briefing Note ( http://www.southafrica.info/business/economy/sectors/chemical-sector.htm Accessed 23.08.10) The Dti (2007) Industrial Policy Action Plan (IPAP)

The Dti National Industrial Policy Framework (NIPF)

The Dti (2010) Industrial Policy Action Plan (IPAP)

The Dti (n.d.) The Chemical Industry Sector (http://www.dti.gov.za/publications/chemicals.htm Accessed 23.08.10)

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APPENDIX 1 DEFINING SKILLS LEVELS A number of terms are used in this document to refer to the level of skills and competencies required at different levels. The National Qualifications Framework (NQF) levels and Organising Framework for Occupations (OFO) skills levels are unpacked and compared below.

NQF Levels

There are 10 levels on the National Qualifications Framework and range from basic education at NQF1 up to Doctorate at level 10. The NQF refers to academic qualifications only and does not take into account experiential learning. Table A1 below shows all 10 NQF levels and the level of learning associated with it. Table A1 NQF level and equivalent educational attainment

NQF Level Educational Equivalent

1 Grade 9

2 Grade 10 and National Certificates (Vocational) NC(V) Level 2

3 Grade 11 and NC(V) level 3

4 National Senior Certificate and NC(V) level 4

5 Higher Certificates and Advanced National (Vocational) Certificate

6 Diploma and Advanced Certificates

7 Bachelors Degree and Advanced Diplomas

8 Honours, Post Graduate Qualifications and Professional Qualifications

9 Masters Degrees

10 Doctoral Degrees Source: Skills Portal (www.skillsportal.co.za)

OFO Skill Level

The OFO is a skills based coded classification system where all jobs are captured in the form of occupations and occupations are classified according to skill level and skill specialisation. The skill level aspect of the OFO is used in this SSP to gain additional insight into the demand for skill. Employers classified their employees according to the OFO and thus the skill level of those occupations could be extracted and analysed. There are 5 skill levels in the OFO and is related to the competent performance of tasks associated with an occupation. Skill level is an attribute of the occupation, not of individuals and can operationally be measured by:

The level or amount of formal education and/or training associated with competently

performing the tasks associated with that occupation;

The amount of work experience required for competently performing the tasks associated

with that occupation; and

The amount of on-the job training associated with achieving competent performance of the

occupation.

The Department of Higher Education and Training’s guide to using the OFO (2010) defines the Skill Levels as follows: Occupations at Skill Level 1 have a level of skill commensurate with one of the following:

85

National Qualification Framework (NQF) Level 1 qualification

Compulsory secondary education.

For some occupations a short period of on-the-job training may be required in addition to or

instead of the formal qualification. In some instances, no formal qualification or on-the-job

training may be required.

Occupations at Skill Level 2 have a level of skill commensurate with one of the following:

NQF Level 2 or 3 qualification or

At least one year of relevant experience may substitute for the formal qualifications listed above.

In some instances relevant experience may be required in addition to the formal qualification.

Occupations at Skill Level 3 have a level of skill commensurate with one of the following:

NQF Level 4 qualification

At least three years of relevant experience may substitute for the formal qualifications listed above.

In some instances relevant experience and/or on-the-job-training may be required in addition to the formal qualification.

Occupations at Skill Level 4 have a level of skill commensurate with one of the following:

NQF level 5 or 6 Qualification

At least three years of relevant experience may substitute for the formal qualifications listed above.

In some instances relevant experience and/or on-the-job-training may be required in addition to the formal qualification.

Occupations at Skill Level 5 have a level of skill commensurate with one of the following:

NQF level 7- 10

At least five years of relevant experience may substitute for the formal qualification.

In some instances relevant experience and/or on-the-job-training may be required in addition to the formal qualification.

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Comparing NSDS, NQF and OFO

The different levels discussed above are shown in the figure below and also include the NSDS descriptors of ‘Basic’, ‘Intermediate’ and ‘Advanced’ as well as the OFO major groupings

87

APPENDIX 2: SOUTH AFRICAN PETROLEUM INDUSTRY ASSOCIATION (SAPIA) INDUSTRY POSITION AND 2010 PESTEL INPUT

CHIETA Sector Skill Plan Submission Industry Position and PESTEL

1 February 2011

Final

Compiled by Althea A Banda-Hansmann with contributions by SAPIA staff and member companies

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Sub sector: Petroleum and Base Note: CHIETA to use the feedback in this document in conjunction with highlights from SAPIA Scarce and Critical Skills 2007-2010 Report already submitted

1. Industry Human Resource Development Issue The South African labour market does not produce enough skills required by the petroleum industry. In 2000, as part of the objectives of the Petroleum and Liquid Fuels Charter (the Charter) to transform the industry, SAPIA member companies undertook to build the skills of their employees and report on progress made. The industry also committed to create interfaces with statutory bodies such as the Sectoral Education and Training Authorities (SETAs) through consultative arrangements on skills development strategies to close scarce and critical skills gaps. In 2007, the promulgation of the Broad-based Black Economic Empowerment (BBBEE) Act with the BBBEE Codes of Good Practice (CoGP) further defined a concrete measurement framework to evaluate and monitor transformation. The industry is currently implementing two complementary, but different, transformation processes and reporting mechanisms and awaits the outcome of the Department of Energy’s 2010 Charter sectoral evaluation. 2. Background The outcome of the Ministerial Task Team looking at transformation in 1999, led to the promulgation of the Charter, the first industry charter in South Africa and, later, the Petroleum Products Amendment Act with the Charter annexed. In addition, a number of other inter-related pieces of legislation and national policies have been implemented by government and the South African petroleum industry. These include the Employment Equity Act; Skills Development Act; Skills Development Levies Act; BBBEE Act; National Skills Development Strategy I, II, and III; Department of Labour’s Framework for Scarce and Critical Skills and Human Resource Development Strategy; and the Department of Trade and Industry’s National Industrial Policy Framework. This raft of legislation is geared to redress human resource development and related economic deficits. These occurred as a result of apartheid and the failure of the South African labour market and educational institutions to produce sufficient skilled and diverse candidates required for employment by the petroleum industry - particularly women and black people.

3. SAPIA position SAPIA and its member companies remain committed to building the skills required across the petroleum industry value chain for transformation and industry sustainability. SAPIA and its members are actively working with learning providers, together and individually, to develop and deliver required human resource development interventions. 4. Progress on human resource development Progress on human resource development includes, but is not limited to:

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4.1 the development and implementation of an industry HRD strategy (2005–2010);

4.2 understanding and monitoring workforce trends;

4.3 the establishment of a Memorandum of Understanding (2005–2010) with the Chemical Industry Education and Training Authority (CHIETA) to co-operate and partner on industry skills development issues which support priorities of a sectoral skills development plan and addressing scarce skills;

4.4 petroleum scarce and critical skills identification (2007–2010);

4.5 the development and implementation of the Leadership in Oil and Energy (LOE)

Programme (NQF7) (2004–present), to give high-potential staff the leadership skills required by future senior managers in the industry. There is a special focus on women and historically disadvantaged South Africans to ensure sustained diversity in the industry. 273 industry managers and professionals, mostly women, have graduated from the programme and several were further developed and promoted. To date, the joint CHIETA and SAPIA investment in this programme is well over R19 million;

4.6 training artisans and process operators who represent scarce occupations in the

petroleum sector. Since 2007 the Oil, Gas and Chemical Manufacturing Companies Artisan Skills Training Project (OG and CM ASTP) has trained the artisans and process operators required by the industry through learnerships. By the end of 2010, 1 215 artisans and process operators had qualified and another 106 were completing training for qualification in mid-2011. To date, the industry’s contribution to increase the availability of skilled and qualified artisans and process operators resulted in a R263 million investment. In addition, mentorship, workplace experience training and resources to manage all levels of implementation has been provided. The CHIETA also invested R60 million into training artisans and process operators in the petroleum industry;

4.7 the development of a working relationship with the National Petroleum Employers

Association on common issues where it involves industry representation on the CHIETA Governing Board and the CHIETA Petroleum and Base Chamber.

4.8 the implementation by all SAPIA member companies of a range of internal and

external programmes against organisational skills requirements to deliver business needs, including the need to transform the industry. These programmes are reported to the CHIETA annually.

5. Way forward

Develop programmes that address industry scarce skills and labour market shortages particularly artisans, process plant operators, leadership (especially women) and petroleum technical skill shortages.

Work with CHIETA to prioritise and develop industry qualifications across the petroleum value chain, within the Sector Skills Plan.

Establish clear measurement for human resource development transformation.

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6. PESTEL Analysis 6.1 Political 6.1.1 Has your sub sector been affected by the change in government at national and/or provincial level? (In your answer please consider the debates on mine nationalization, inflation targeting, reserve bank independence and perceived leftist influence) Yes No 6.1.2 Has the sub sector in your region been affected by the change in government at national and/or provincial level? Yes No 6.1.3. If yes (to both or one question) how has your sub sector been affected nationally and

regionally?

Need for transformation in all areas of broad-based black economic empowerment and the Liquid Fuels Charter

Geopolitical changes in the region / New role-players in decision making roles

Election 2014

Price of oil and petroleum product 6.1.4. If yes (to both or one question) what if any is the impact on the demand and supply of

skills?

The change in the governing bodies (e.g. DoL, DoE, SETA’s) created uncertainty in these structures themselves that resulted in lower productivity. This had the result of lower / late grant payments that had a negative influence on planned training and the quantity of training (especially learnerships)

6.2 Legislative 6.2.1 Are there any current and pending legislative or policy changes that will have an impact on your sub sector at national level in the upcoming year? (In your answer consider the introduction of any levies or tariffs and the industrial policy action plan). Yes No 6.2.2 Are there any current and pending legislative or policy changes that will have an impact on your sub sector in your region in the upcoming year? Yes No 6.2.3 If yes (to both or one question) what is the legislation or policy and how will it impact on your sub sector at national and regional level?

Petroleum Products Amendment Act No.2 of 2005

Petroleum Pipelines Levies Act No.28 of 2004

Petroleum Products Amendment Act No.58 of 2003

Gas Regulator Levies Act No.75 of 2002

Gas Act No. 48 of 2001

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Petroleum Pipeleines Act No.60 of 2003

National Energy Regulator Acts 40 of 2004

National Environmental Management Amendment Act

Petroleum and Liquid Fuels Charter

Broad based Black Economic Empowerment Act No.53 of 2003

White Paper on the Energy Policy of the Republic of South Africa (Dec 98)

Petroleum Products Act. 120 of 1977

Petroleum Products Act with the Petroleum and Liquid Fuels charter as annexure

National skills development strategy III (2011-2016)

Establishment of Quality Council for Trade Occupations

Occupational Health and Safety Act

Competition Compliance Act

National Environmental Management: Waste Management Act and Regulations (various) National Environmental Management: Air Quality Act and regulations (various)

National Water Act and Regulations

Invoking of Sewer User Charge Provisions in eThekwini Sewage Disposal Bylaws

Act Mineral and Petroleum Resources Development Act (MPRDA) No. 28 of 2002

Major Hazardous Installations Regulations

Amendments to Environmental Impact Assessment Regulations

DTI Industrial Policy Framework

Business Sector Strategy to Support National HIV Counseling and Testing Champaign

National Climate Change Response Green Paper

National Energy Efficiency Strategy 6.2.4. If yes (to both or one question) what if any is the impact on the demand and supply for

skills?

Need for high skilled petroleum industry professionals with in depth knowledge of legal and legislative issues spanning the entire industry value chain

Need to attract and retain skilled employees, particularly women, black people and persons with disability

Managers, Health and safety , human resources, environmental, economic, finance transformation professionals with knowledge of the industry and intellectual property specialists

Need for skills in climate change and energy efficiency regulatory requirement, including internal validation and verification processes

Alignment of skills in the area of sustainability, including stakeholder engagement and communication

Need for skills especially in the field of groundwater and soil contamination with the invoking of Part 8 of NEM:WMA on Contaminated Land

Need for mentorship and specialized training of young professionals across the entire environmental spectrum.

6.3 Economic 6.3.1 Is there currently any competition among companies in your sub sector at national level? (The current five-year SSP mentions that the upstream portion of the chemical sector i.e. base and petroleum sub sectors is dominated by large players). Yes No

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6.3.2. Is there currently any competition in your sub sector in your region? Yes No 6.3.3 If no competition please give reasons for your answers? N/A 6.3.4. If yes (to both or one question) what if any is the impact on the demand and supply for skills?

Competition compliance legislation and a highly competitive environment that several employees are skilled in the application competition compliance when engaging competitors of issues of co-operation and competition

The petroleum industry requires people with economic competencies and background in areas such as but not exclusively:

o return on investment o pace of recovery from recession o Investment in infrastructure o Global economic crisis and the impact on the global and local oil industry o Impact of fuel demand o Forex (volatility) and crude price volatility and availability Strategic stocks o Application of economic legislation pertaining to the oil industry.

Employers are recruiting from the same skills pool, especially specialists as mentioned above.

Dominant players in the sectors are investing in skills development, but some generic disciplines (eg majority of trades) are lost to other industries / sectors

6.3.5. Is your sub sector still affected by the recent recession at national level? Yes No 14. Is your sub sector in your region still affected by the recent recession? Yes No 6.3.6 If yes (to both or one question) how is your sub sector impacted by the recession at national and regional level? As reflected in some companies that are reducing operations in the rest of Africa. Capital plans are revised / reduced / postponed pending on the level of recession and the recovering period. 6.3.7. If yes (to both or one) what if any is the impact on the demand and supply of skills?

A general shortage of professionals with petroleum industry expertise still prevails in SA.

Notwithstanding the global economic environment, it is still observed that talent shortage persists, especially within the seasoned and specialised talent pools

International trends indicate however that employment levels are increasing across the globe (excluded Europe) to the same levels as Q4 in 2007

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A retention risk exists that seasoned and/or critical skills in the industry could be targeted by international companies / companies in other sectors as the global economy recovers using the strength of US dollar based salaries as one means to attract.

Some opportunities for employed petroleum professional to start-up business ventures

Need a more skilled workforce- where multiskilling is prevalent

Retrenchments in non-core areas

6.3.8 Are there any projects that will impact your sub sector at national level in the coming year? Yes No 6.3.9 Are there any projects that will impact your sub sector in your region in the coming year? Yes No 6.3.10 If yes (to both or one) please identify the project/s at national and regional level

SAPIA Human Resource Development Project: SAPIA members working together, within the constraints of the Competition Act, to address industry scarce skills and develop petroleum industry learning programmes

– Leadership in Oil and Energy Programme – Process plant operator qualifications (NQF 3, 4, 5) – Post Graduate Diploma in Petroleum and Energy management – Certificate Programme in Energy Resources management – Petroleum industry qualifications which address skills along the value chain.

Artisan Training Programme – aims to development skills and close scarce skills gaps in all artisan trades required by the industry

Project Mthombo - PetroSA initiative to build a world-class crude refinery in the Coega Industrial Development Zone in the Eastern Cape

Project Mafuta – a potential project in the Limpopo province to build a Coal to liquate plant.

Various capital expansion projects by current industry role players

Possible upgrade of existing refineries to meet Cleaner Fuels 2 specifications

Eskom’s new powerstation build programme (Medupi,etc)

Transnet’s new multi project pipeline

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6.3.11 If yes (to both or one) what if any is the impact on the demand and supply of skills?

Need for skilled staff with refinery process and management expertise

Need for transformation, change management and human resource development specialists with background in the petroleum industry, BBBEE and skills development

Potential skills shortage in the construction industry to build the new plants. Besides typical artisan skills this will also require project management talent to manage mega projects within scope, schedule and budget

6.4 Social 6.4.1 Is your sub sector affected by crime at the national level at this present juncture? Yes No 6.4.2 Is your sub sector in your region affected by crime at the moment? Yes No 6.4.3 If yes to (both or one) how is your sub sector affected by crime at national and regional level? The priority crime and security focus areas for the SA Petroleum Industry are as follows:

Crime at operations-, Distribution- & Logistics-Facilities, including theft of bulk fuel; lubricants, products

Commercial crime such as fraud, theft and competition law infringements

Retail crime such as robberies; ATM bombings 6.4.4 If yes (to both or one question) what if any is the impact of crime in relation to the demand and supply of skills? The petroleum industry requires skilled existing employees and competent staff that have skills in the following areas of Crime prevention and safety management Crime at Facilities:

Tangible data generation and management on product losses

Co-ordination of crime intelligence between oil companies Commercial Crime:

Generating information management on fraud & theft

Co-ordination of crime intelligence with relevant role players / competition law

Retail Security:

Adequate reporting skills of incidents from retailers

Provision of service station information from oil companies Communication:

Need for protocols on communication

Proactive information not through to retailers

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Counselling skills required to deal with victims of crime 6.4.5 Is your sub sector affected by HIV/Aids at the national level at present? Yes No 6.4.6 Is your sub sector in your region affected by HIV/AIDS at present? Yes No 6.4.7 If yes (to both or one question) how is your sub sector affected by HIV/AIDS at the national and regional level? Mainly with long distance hauliers and retail staff impacted which are not employees of Sapia members but provide a critical service to Sapia member companies 6.4.8 If yes (to both or one question) what if any is the effect of HIV/AIDS in terms of the demand and supply of skills? High prevalence of logistics scarce skills, especially tank drivers, in the logistics area of the value chain, where skills are lost is difficult to replace and not immediately available in the market. 6.5 Environmental 6.5.1 Is your sub sector affected by the current commitment to reduce carbon emissions at the national level? (In your answer consider the commitment to reduce emissions by 34% agreed to at Copenhagen and the desire to pursue a low carbon economy) Yes No 6.5.2 Is your sub sector in your region affected by the current commitment to reduce carbon emission? Yes No 6.5.5 If yes (to both or one question) how is your sub sector affected by the commitment to reduce carbon emissions at the national and regional level?

Implementation of new fuels specifications

Managing environmental risk

Hydrocarbon vapour management

Domestic and international policies

Water availability and usage

Managing emission standards

Impact of Carbon/climate change policy/legislation and the use of alternative sources of energy

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Increased biofuel usage, without impacting on food costs

Impending clean air legislation – carbon taxes, etc.

Implementation of national energy efficiency strategy

Implementation of national climate change response green paper 6.5.6 If yes (to both or one question) what if any is the effect in terms of the demand and supply of skills?

Need for skilled employees and new entrants into the industry, who understand, are competent or who need to be trained in future fuels, environmental issues and waste management.

Need for skilled employees in the industry with skills in quantification, monitoring and mitigation of GHG emissions

Enhancement of industry employees skills in material process and energy efficiency

Additional environmental information provided in separate Excel document 6.6 Technological 6.6.1. Is your sub sector affected by any current technological changes at national level? (In your answer take into consideration clean coal technology if employed by your sub sector) Yes No 6.6.2 . Is your sub sector in your region affected by any current technological changes? Yes No 6.6.3 If yes (to both or one question) how has your sub sector been affected by technological changes at national and regional level?

The SA petroleum industry is significantly impacted by coal to liquid and gas to liquid technology. A few companies, such as Sasol and PetroSA also contribute to coal to liquid and gas to liquid technology in SA.

Carbon capture and storage will require extensive brand new technologies

Looking ahead to the future there remains the need for alternative fuels, alternative public transport and hybrid and/or electric car technology

6.6.4. If yes (to both or one question) what if any is the affect on the demand and supply of skills?

Need for skilled and diverse people resources who are competent in understanding and delivering petroleum industry outputs on:

– Coal to liquid technology – Gas to Liquid technology – Petroleum industry related environmental and clean air issues – Biofuels and alternative energy

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6.7 General 6.7.1 Are there any other factors that will impact on your sub sector at national level? Yes No 6.7.2 Are there any other factors that will impact on your sub sector in your region? Yes No 6.7.3 If yes (to both or one question) identify the factors?

The national decline in training providers due to the economic climate can have a negative effect on skills development in the long term.

Major industry projects will require significant numbers of qualified staff eg Project Mafutha and Project Mthombo (company submissions submitted separately)

Different standards and governance on training facilities have the effect that different standards of competence are delivered by training facilities

National broad-base black economic empowerment and degree of industry scarce skills requires:

– need to recruit, develop and retain more black people and black women and people with disability in particular; and

– Need for coaching, mentoring and practical skills transfer – Development and support for small and medium business enterprises – Implementation of industry Leadership in Oil and Energy Programme – Development and implementation of additional petroleum and energy

qualifications – Ongoing transformation measurement

6.7.4. If yes (to both or one question) what if any are the effects in terms of the supply and demand of skills?

The industry will require specialized petroleum industry learning programmes that close scarce and critical skills gaps and increase the diversity of workforce

Corporate social investment aligned to industry educational and scarce skills opportunities

Industry learning and development programmes to be developed against scarce occupations.

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Shanghai House, 52 Wierda Road West, Wierda Valley, Sandton

PO Box 783482, Sandton 2146 • Tel 011 783 7664 • Fax 011 783 5400 • www.sapia.co.za

SAPIA’s objectives are to:

• Understand the needs of its stakeholders;

• provide expert information and assistance to government, the petroleum

industry and all South African citizens;

• contribute to policy formulation;

• promote transformation, environmental leadership and a fair regulatory

framework for all;

• facilitate security of supply; and

• enhance the reputation of the industry by communicating its contribution to

economic and social progress.

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APPENDIX 3: PFG ENVIRONMENTAL INITIATIVES

Environmental Initiatives Initiative Skills and Knowledge

needed Target Learning

Programme Required

1 Retain ISO 14001:2004 accreditation

Basic Awareness of Requirements and Policy

All Employees and Contractors

In-house training programme

Disposal Instructions / Procedures

Departmental Managers

In-house training programme

Interpretation of Material Safety Data Sheets

Personnel handling chemicals

Handling Hazardous Chemicals; In-house training programme

Detailed knowledge of Standard

SHERQ Personnel

SAQI ISO 14001:2004 Course

Internal Auditor Skills SHERQ Personnel

SAQI Internal Auditor Course

2 Member of the Air Quality Forum

Air Quality Act SHERQ Manager

Seminar

3 War-on-Waste Segregation and Recycling of Waste

All Employees and Contractors

In-house training programme

Contaminants to the Glassmaking Process

All Employees and Contractors

In-house training programme

4 Recycle cardboard spacers and cullet (broken glass)

General Awareness All Employees and Contractors

In-house training programme

Specific cullet bin locations

Forklift Drivers and Batch Plant Personnel

In-house training programme

5 Reclaim broken windscreens Tasks related to the process

Windscreen Plant Employees

In-house training programme

100

Initiative Skills and Knowledge needed

Target Learning Programme Required

6 Clean-up after rebuild of SP3 glass manufacturing line: Redundant Refractory bricks – sold to Company that crush and re-use to manufacture bricks

None

7 Converted glass melting furnaces from using Heavy Fuel Oil to cleaner Natural Gas and electricity

Maintain gas firing equipment

Masons and Plumbers

End User Gas Certification (SANS 329)

Combustion Technology

Engineers Process Technologists

SAPGA Conference

Correct gas:air ratio and fuel settings to use

Furnace Process Controllers

In-house training programme

8 Maintain waste water quality within the Legal Requirements set out by Council

Sampling Points Standards

Laboratory Personnel

In-house training programme

Safe disposal of liquids (solvents, oil, etc.)

Artisans In-house training programme

9 Reduce glass making Raw Material Waste by Maintain good practices during mixing process

Batch Plant Process Control

Batch Plant Process Controllers

Chemical Operations NQF 1 and In-house training programme

10 Sell reject / contaminated glass making raw materials and cullet (broken glass)

None

11 Energy savings drive:

Electric boost will only be used with Senior Management approval;

Switch off non-critical air-conditioners and office lights

None

General Awareness

All Employees

In-house communication

Initiative Skills and Knowledge

needed Target Learning

Programme Required

12 Utilize road transport more effectively by:

Load truck to allowed maximum capacity (reduction on part loads);

Use trucks to transport cullet,

Correct truck loading procedure;

Optimize loads and return loads

Legislation with regard to road transport, foreign exchange and

Personnel from the following departments:

Logistics

Production Planning

Customer

In-house training programme;

Legislative Workshops;

Fundamentals of Demand Forecasting

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dolomite and broken windscreens on their return trips

demurrage costs

Care / Sales

13 Utilize semi-closed and closed water systems to supply cooling water to required equipment

Water systems

Water quality / chemical dosing

Plumbers

Laboratory Technicians

In-house training programme

14 Remove alien vegetation and trees. Replaced with indigenous trees

None

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APPENDIX 4: SAPIA ENVIRONMENTAL INPUT FOR 2011-2016 SSP

Annexure 4: SAPIA Environmental Input for 2011-2016 SSP

Section C: Sector Skills Plan Environmental skill requirements

Please indicate your choice through an arrow or tick next to the relevant statement

5.1. What the the key environmental drivers for the petroleum industry for 2011 - 2016?

1. Stakeholders concerns 2. Corporate citizenship 3. Government regulations 4. Sustainability (Economic, Social and Environmental factors)

5.2 Identify all the key pieces of legislation that will regulate and impact the petroleum industry between 2011 - 2016?

1. Air Quality Act. 2. Waste Management Act. 3. Green paper on climate change. 4. National Environmental Management Amendment Act. 5. White Paper on integrated pollution and Waste Management; 6. National Water Act; 7. Municipal Bylaws on Health and Water 8. EIA (Environmental Impact Assessment)

5.3 What are key barriers to achieving environmental sustainability in the industry between 2011 to 2016?

1. Human resources (lack of required skills)/ Available training and experienced staff. 2. People resources in context of a downsizing SA petroleum industry 3. Third party factor (contractors, suppliers, NGO's etc) 4.Legislative requirements changing too fast 5. Finance 6. Prioritiesing in an environmental business plan 7. Environmental Awareness

5.4 Do you believe that the focus on an environmentally friendly approach will affect skills?

Yes Yes

No

Do not know

5.5 If yes, do you think that this focus will create new occupations or new skills for existing occupations?

New occupations that require a new qualification

New skills in existing occupations

Both Yes

Do not know

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5.6 If you indicated that you think that it will lead to new occupations in Q 5.2, please identify the occupations, estimated demand, interventions and NQF level.

Occupation Estimated demand for 2011-2012

Estimated demand for 2012-2016

Intervention required

Environmental Laws To be established New employment

Energy and climate change To be established New employment

5.4 If you indicated that you think it will lead to new skills in existing occupations, please identify the occupations,skills gaps, interventions and NQF level.

Occupation Skills gap Intervention required

NQF level

Engineering processes Process efficiency and design

Training Postgraduate

Sustainability & Energy efficiency Managers

Validation and verification

Training Short courses

Environmental managers

Waste management

Training Short courses

Groundwater and Soil Contamination

Training Short courses

Effluent and stormwater control

Training Short courses

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Air Pollution Control and specialised subcourses eg Dispersion Modelling, Abatement

Training Short courses

Environmental Impact Assessment

Training Short courses

Environmental Law

Training Short courses

Environmental Management Systems and Assurance

Training Short courses

Environmental Monitoring, Data handling and reporting

Training Short courses

Emergency Response, incident investigation and spill prevention and control

Training Short courses

Product steward Product stewardship

Training Short courses

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Refinery Technical manager Refinergy energy efficiency management

Training Short courses

HSEQ Managers

Sustainability Managers

Energy Efficiency Managers

Environmental Scientists

Botanists

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APPENDIX 5: PETRO SA SKILLS FRAMEWORK FOR PROECT MTHOMBO

The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07

SKILLS DEVELOPMENT FRAMEWORK

PROJECT MTHOMBO

The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07

Skills Requirements Framework

• The skills required for the project from FEED to Operations

were detailed.

• Skills Clusters were used when identifying required skills

• The skills were grouped in terms of scarcity and criticality

• The table below indicates the skills deemed critical and

scarce for Mthombo

Mission Critical Positions

Chief Mechanic Chief Electrician

Manager: Planning and Optimisation Operations Engineer

Manager Strategy Principal Process Engineer

Process Optimisation Manager LP Modellers

Engineering Manager/Supervisor Manager: Economic and Schedulers

Production Planner Manager Business Analysis

Control system engineer Engineering Manager

Project Director Refractory Specialist

Cost Engineers Project Managers

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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07

Identified Skills Clusters

• Operations/ Production

• Engineering Maintenance

• SHEQ

• Finance

• Human Capital

• Information Technology

• Legal

• Supply Chain Management

• Corporate Communications

• Construction Management (Resources will not migrate

to Operations phase)

The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07

Primary Research Skills Availability- External

Percentage of employees on surveyed databases, available by Function. The

information was sourced from Recruitment Agencies Databases

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The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07

Primary Research Skills Availability- External

Note: Some support functions (IT, Legal and Corporate Communications)

did not have a big enough sample to provide valid results

Limited availability of senior and junior skills in core Functional areas poses a risk.

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