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Sector Skills Plan: Update For financial year: 2015 – 2020

Maximising skills development for a sustainable future

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Table of Contents Foreword ..................................................................................................................... 4 List of Tables ................................................................................................................ 6 List of Figures ............................................................................................................... 7 List of Acronyms ........................................................................................................... 8 Chapter 1 Introduction and Background .................................................................. 10

1.1 Introduction ........................................................................................................................... 10 1.2 Preparation of the SSP Update Document .............................................................................. 16 1.3 Guiding Principles .................................................................................................................. 11 1.4 Key Research Questions ......................................................................................................... 12 1.5 Limitations ............................................................................................................................. 13 1.6 Key Sources of Information and Data ..................................................................................... 14 1.7 Structure of the SSP ............................................................................................................... 16

Chapter 2 Sector Profile ......................................................................................... 18 2.1 Definition of the FP&M Sector .......................................................................................... 18 2.2 Size and shape of the FP&M sector and its sub-sectors..................................................... 21 2.3 Economics of the sector and its importance to the national economy .............................. 25 2.4 Linkages with other sectors .............................................................................................. 26 2.5 Distribution of FP&M sector across the country ............................................................... 28 2.6 Employment..................................................................................................................... 29 2.7 Stakeholders in the sector ................................................................................................ 40

Chapter 3 Sector Analysis ....................................................................................... 44 3.1 A Value Chain Approach to Sector Analysis ....................................................................... 44 3.2 Summary PESTEL Analysis ................................................................................................ 45 3.3 Economic factors impacting on growth and development in the sector ............................ 47 3.4 How the FPM sector relates globally ................................................................................ 51 3.5 Environmental Factors Impacting the Sector .................................................................... 54 3.6 The Political and Policy Environment ................................................................................ 55 3.7 Labour Market Trends ...................................................................................................... 65 3.8 Social Factors Impacting the Sector .................................................................................. 68 3.9 Technology ...................................................................................................................... 69 3.10 Legislation ........................................................................................................................ 69 3.11 Broad Based BEE and how it is understood and being promoted in the sector .................. 70 3.12 Strengths and Weaknesses across the Value Chain. .......................................................... 71 3.13 Scenarios to Facilitate Skills Planning ................................................................................ 75

Chapter 4 Demand of Skills ..................................................................................... 80 4.1 Approach to the demand analysis .................................................................................... 80 4.2 Scarce and Critical Skills in the FP&M Sector .................................................................... 81 4.3 OCCUPATIONS IN THE FP&M SECTOR ............................................................................... 83 4.4 Scarce Skills per Sub-sector .............................................................................................. 87 4.5 Critical Skills ..................................................................................................................... 91

Chapter 5 Supply of Skills ....................................................................................... 94

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5.1 Introduction ..................................................................................................................... 94 5.2 Supply Pipeline ................................................................................................................. 94 5.3 Current provision of Education and Training ..................................................................... 98

Chapter 6 Fibre Processing and Manufacturing Sector Strategy ................................ 108 Overarching strategic framework: skills development along value chains................................... 108 6.1 Strategic Objective 1: Improved supply and demand information ................................... 109 6.2 Strengthening value chain linkages. ................................................................................ 110 6.3 Building capacity in small and emergent enterprises ...................................................... 115 6.4 Supporting workplace education and training ................................................................ 117 6.5 Improving supply............................................................................................................ 118 6.6 Partnerships ................................................................................................................... 122 6.7 Flexibility and accessibility of systems: ........................................................................... 124

Chapter 7 Monitoring and Evaluation ..................................................................... 125 7.1 Strategic Objective 1: Improved supply and demand information ................................... 125 7.2 Strategic Objective 2: Strengthening value chain linkages ............................................... 126 7.3 Strategic Objective 3: Building capacity in small and emergent enterprises .................... 127 7.4 Strategic Objective 4: Supporting workplace education and training .............................. 128 7.5 Strategic Objective 5: Improving supply .......................................................................... 129 7.6 Strategic Objective 6: Partnerships ................................................................................. 131 7.7 Strategic Objective 7: Flexibility and accessibility of systems .......................................... 132

REFERENCES.............................................................................................................. 133

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Foreword The FP&M SETA has been through a lengthy period of change and transition. After amalgamation of three SETAs, there were operational challenges that had to be addressed, whilst at the same time maintaining a focus on implementation of strategy. It was a hard balance to strike but with the support of a very pro-active and engaged Board, an innovative and strategic CEO and a hard working management team the work has been done. With strategy now in place and most operational challenges resolved, through the implementation of a new business model and operational design, the FP&M SETA is now in full implementation mode.

One of the concerns with the previous versions of the SSP was that it seemed like a “piecing together” of three separate plans of the three ex-SETAs. The management and board were concerned to rectify this and to produce a plan for the sector as a whole. The discussions related to the FP&M “value chain” have been particularly helpful in this respect. There is a sense that all of the 13 sub-sectors are now working together to achieve economic growth and development, and there are opportunities within the value chain to address further growth and sustainability of the FP&M sector. This is very positive.

Another concern was that the data and information available in the sector has not been used to optimum effect. Industry provides the SETA with an enormous amount of valuable information, but the SPP was not reflecting that. It was important to analyse the data and make meaning of it and to interpret the results of research in a manner that informs strategy. Whilst there will always be improvements that can be made we have now found a way of analysing the sector and presenting the results in a manner that enables strategic discussions, not just within the SETA board, but more broadly in the sector.

In September 2014 the senior management and board engaged over a period of two days on the sector strategy contained in this SSP, on the strategic five year plan to implement the strategy, on some of the strengths, weaknesses and risks involved in taking them forward and on the challenges of allocating both financial and human resources to achieve effective service delivery. There is strong buy in at board and management level for the plans that are now in place. It is important to emphasise that this is a “sector” plan not just a SETA plan. The challenge now will be for the SETA to engage with each of the sub-sector stakeholders and to develop partnerships, joint projects and delivery mechanisms and processes to implement the plan. There is a strongly held view in the sector that development and expansion can be achieved, and that jobs can be safeguarded and even expanded. This will require that the sector has the human capacity to achieve growth and improve competitiveness. Skills development has an important role to play in that. This sector skills plan provides the framework for sector stakeholders to work together to achieve real impact in the years ahead.

The development and implementation of the Sector Skills Plan (SSP) is one of the primary functions of a Sector Education and Training Authority (SETA). The SSP aims to identify employment and growth trends, the skills requirements of the relevant sectors and to prioritise these in terms of skills development. The process takes account of the environment, the nature of the sector and the demand and supply of skills. We trust that the capacity we have built in our sector will drive the plans toward achieving the results envisaged.

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Signed

____________________________________

Felleng Yende

Chief Executive Office

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Sipho Ngidi

Chairman

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List of Tables Table 1: FP&M SETA Standard Industrial Classification (SIC) Codes.......................................... 18 Table 2: Sub-sectors of the FP&M Sector ..................................................................................... 20 Table 3: Employer Profile in the FP&M Sector .............................................................................. 22 Table 4: Levy paying employers as a percentage on the employers per sub-sector .................... 23 Table 5: Summary of Employer Participation in the FP&M Sector ................................................ 24 Table 6: Employee race per sub-sector ......................................................................................... 36 Table 7: Employee gender per sub-sector .................................................................................... 38 Table 8: Employee disability per sub-sector .................................................................................. 38 Table 9: Employers organisations in the FP&M sector ................................................................. 40 Table 10: Government stakeholders in the FP&M sector.............................................................. 42 Table 11: Trade unions in the FP&M sector .................................................................................. 43 Table 12: Global Economic Outlook .............................................................................................. 48 Table 13: Scarce Skills Clothing Sub-sector ................................................................................. 87 Table 14: Scarce Skills Footwear Sub-sector ................................................................................ 87 Table 15: Scarce Skills Leather Sub-sector .................................................................................. 88 Table 16: Scarce Skills Textiles Sub-sector .................................................................................. 88 Table 17: Scarce Skills Furniture Sub-sector ................................................................................ 88 Table 18: Scarce Skills Publishing Sub-sector .............................................................................. 88 Table 19: Scarce Skills Printing Sub-sector .................................................................................. 89 Table 20: Scarce Skills Print Media Sub-sector ............................................................................ 89 Table 21: Scarce Skills Packaging Sub-sector .............................................................................. 90 Table 22: Scarce Skills Pulp and Paper Sub-sector ...................................................................... 90 Table 23: Scarce Skills Wood Products Sub-sector ...................................................................... 91 Table 24: Scarce Skills Forestry Sub-sector ................................................................................. 91 Table 25: Critical Skill .................................................................................................................... 91 Table 26: Recent FP&M HET Institutional partnerships ................................................................ 98 Table 27: Learning interventions through TVET Colleges........................................................... 100 Table 28: Number of learners per qualification ............................................................................ 103

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List of Figures Figure 1: FP&M Levy Paying Employer per Sub-Sector ............................................................... 23 Figure 2: FP&M WSP Submission 2014-15 by Sub-Sector .......................................................... 24 Figure 3: FP&M sub-sector output ................................................................................................. 25 Figure 4: Levy Contributions per Sub-Sector ................................................................................ 26 Figure 5: FP&M Sector Value Chain .............................................................................................. 27 Figure 6: Provincial Breakdown ..................................................................................................... 29 Figure 7: Employment Trends in the FP&M Sector ....................................................................... 30 Figure 8: Number of employees per sub-sector ............................................................................ 30 Figure 9: Employee Profile per Sub-sector .................................................................................... 31 Figure 10: Employees per Gender ................................................................................................. 37 Figure 11: HIV prevalence by province, Source HSRC HIV Report (2012) .................................. 39 Figure 12: Sector output trends ..................................................................................................... 49 Figure 13: Output per Sub-Sector .................................................................................................. 50 Figure 14: Annual growth 2000-2013 ............................................................................................ 50 Figure 15: FP&M sub-sector contribution to output ....................................................................... 51 Figure 16: Exports per Sub-Sector ................................................................................................ 52 Figure 17: Imports per Sub-sector ................................................................................................. 53 Figure 18: National policies impacting on the sector ..................................................................... 57 Figure 19: Sectoral contributions to employment (within P&M Sector) ......................................... 66 Figure 20: Percentage change in total employment within the FP&M SETA ................................ 67 Figure 21: FP&M Sector Skills Pipeline ......................................................................................... 95 Figure 22: Aggregate Pass Rates on FP&M-SETA Accredited Programmes ............................. 105 Figure 23: Accredited Training Providers per Province ............................................................... 105 Figure 24: Pass Rates on FP&M-SETA Accredited Programme per Province ........................... 106 Figure 25: FETC Learnership Graduation-Clothing, Footwear, Leather &General Good and Textiles ......................................................................................................................................... 106 Figure 26: Learnership Retention Rates-Clothing, Footwear, Leather& General Good and Textiles...................................................................................................................................................... 107

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List of Acronyms Abbreviation Description AAI Average Annual Increase AG Auditor-General ATR Annual Training Report BBBEE Broad Based Black Economic Empowerment BCM Business Commerce and Management CBC Community Based Co-operative CBO Community Based Organisation CC Close Corporation CoE Centres of Excellence CSP Customised Sector Plan CTCP Client to Client Protocol DHET Department of Higher Education and Training DoL Department of Labour DTI Department of Trades and Sub-sector EDI Electronic Data Interchange ETQA Education and Training Quality Assurance FET Further Education and Training FSC Forest Stewardship Council GDP Gross Domestic Product GWFME Government Wide Framework for Monitoring HET Higher Education and Training HIV Human Immunodeficiency Virus HRDSA Human Resource Development Council of South Africa HSS Human and Social Science IPAP Industrial Policy Action Plan KRA Key Result Area MFA Multi Fibre Agreement MTSF Medium Term Strategic Framework NEDLAC National Economic Development and Labour Council NGO Non-Governmental Organisation NLP Non Levy Paying NLRD National Learner Record Database NMMU Nelson Mandela Metropolitan University NPO Non-Profit Organisation NQF National Qualifications Framework NSA National Skills Authority NSDS National Skills Development Strategy NSDS I National Skills Development Strategy 2000-2005

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Abbreviation Description NSDS II National Skills Development Strategy 2005-2010 NSDS III National Skills Development Strategy 2011-2016 PACSA Packaging Council of South Africa PAMSA Paper Manufacturers Association of South Africa PRINTING SA Print Sub-sectors Federation of South Africa

QCTO Quality Council of Trades and Occupations QLFS Quarterly Labour Force Survey RoI Return on Investment RoO Return on Objective SA South Africa SACU Southern African Customs Union SADC Southern African Development Community SAQA South African Qualifications Authority SDA Skills Development Act SDL Skills Development Levy SET Science Engineering and Technology SETA Sector Education and Training Authority SIC Standard Industrial Classification SLA Service Level Agreement SMME Small, Micro and Medium Enterprise SSP Sector Skills Plan WSP Workplace Skills Plan WTO World Trade Organisation

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Chapter 1 Introduction and Background

1.1 Introduction “Education, training and innovation are central to South Africa’s long-term development.”

(National Skills Development Strategy III (2013:23).This according to the National Development Plan (NDP), is the key to addressing some of the country’s biggest developmental issues such as poverty, unemployment and inequality. One of the country’s biggest developmental challenges is high unemployment especially amongst young people leaving the education system, which is further aggravated by misalignment between skills demand and skills supply. SETAs have an important role to play in addressing this challenge. Their relationship and close proximity to industry enables them to intervene proactively to assist in the process of matching the skills of those leaving full time education to the needs of industry. The regular contact with industry stakeholders as well as individual companies enables the SETA to be one of the most important sources of skills planning data and information.

SETAs are the key institutions in the effort to bridge the gap between education and work; as established in terms of the Skills Development Act (No.97 of 1997). On 30 April 2010 the Minister of Higher Education and Training released the first draft framework for the National Skills Development Strategy 2011/12 to 2015/16 (NSDS III) for comment and response from stakeholders. According to this document the all SETAs are mandated to provide institutional framework to implement national, sector and workplace strategies to improve skills development in South Africa through the Sector Skills Plan (SSP). The FP&M SETA developed this document over several interactions to serve as the final submission for the 2014-2015 SSP Update. This SSP serves as a coherent framework for (industry-level) data collection that facilitates both the analysis and implementation of policy for better skills planning for all the 13 subsectors represented in the FP&M SETA.

According to the SSP Framework and Requirements for SSP Submission for 2014/2015 outlined by the Department of Higher Education and Training, the SSP has the following purpose:

• Identify factors influencing the demand and supply of skills in the different economic sectors

• Identify occupational shortages, surpluses and gaps • Identify occupational demands and supply • Research and promote new career pathways • Strategic training partnerships • Alignment with key government development strategies e.g. NDP, NGP, NSDS III and

IPAP etc. • Contribute to key skills development interventions • Providing signal to Education and Training institutions (supply) about skills demanded

in the different economic sectors • Guide strategic planning within the SETA outlining the needed skills planning

interventions • Cater as a performance and monitoring tool for the impact of the SETA

The SSP is a critical instrument used for bringing together labour market information from all sub-sectors as well as broader signals within the economy, and so become an evidence based

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strategy for skills development to be better coordinated and achieve greater impact within the FP&M sector. It assists with the outlining of current and future competency and qualification needs for workers and their employers and articulates the collective skills needs of their stakeholders. The SSP is also a means of informing the national skills agenda. Labour market and skills needs information from the different clustered sectors in the economy from each SETA feeds into skills development and skills planning initiatives of the country.

FP&M SETA defines the SSP as follows:

This document serves as the annual SSP Update for the NSDS III period and covers a five year period from 2014-2019.

1.3 Guiding Principles In working towards the 2014-2015 SSP update the FP&M SETA was guided by the DHET

SSP Guidelines and Requirements. The following principles were followed:

a) Evidence based research The FP&M SETA’s Skills Planning and Research Unit is working towards gathering quality

data, conducting rigorous research and ensuring that the SSP is based on sound evidence of

supply and demand in the sector. This is an iterative process that will result in improvements

annually. Initiatives such as research partnerships, annual surveys, focus groups and

interviews will be supplemented by tracer studies and impact evaluation studies.

b) Capacity building The White Paper on Post School Education and Training (2012) places emphasis on the need

for SETAs to acquire adequate capacity to enact its mandate, specifically in relation to the

SSP. In order to produce the necessary depth and research standards for the SSP Update

the FP&M SETA is embarking on collaborations with research institutions and universities

through its Research Chair Initiative (RCI) which is currently in its establishment phase. This

will help capacitate the FP&M SETAs research staff to both understand the sector and become

competent in labour market analysis. It will also help establish capacity in the sector to do

supply and demand modelling and forecasting.

c) Consultation with our sub sectors

“an SSP is a five year report or roadmap developed by a SETA, updated annually in consultation with stakeholders in a specific economic sector (in our case the Fibre Processing and Manufacturing Sector) to develop a highly skilled workforce, improve firm-level productivity and increase the competitiveness of the sector through skills development.”1

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Efforts have been made to engage extensively with stakeholders and informants in the SETA’s

13 sub sectors. Employers and sectoral professional bodies have been consulted as well trade

unions and bargaining councils. There will be ongoing discussions with stakeholders in the

FPM industries to strengthen the SSP and build consensus on the strategy for skills

development support to the sector.

d) Systematic analysis of sub sector skills needs

One of the weaknesses of previous SSPs has been the reliance on WSP and ATR data. This

weakness remains to some extent, but efforts have been made to access data from a variety

of sources including StatsSA, Quantec, industry research, university faculties and others.

There has been a great deal of data and information gathered and the challenge has been to

make meaning of the data through rigorous analysis and testing of conclusions with

stakeholders. This is the first time that an SSP has been produced that has direct input from

all 13 sub-sectors and some inputs were better prepared and more detailed than others. In

future years it is intended to ensure that all sub-sectors are able to input quality information so

as to ensure the SSP increasingly accurately reflects the real needs of industry.

1.4 Key Research Questions In applying the principles mentioned above the SSP has to maintain focus throughout the

document and address a number of key questions that will provide and adequately outline a

detailed perspective of the 13 economic subsectors skills planning environment through the

interactions between supply and demand. The entire SSP document is dedicated to help gain

a better understanding of the fibre processing and manufacturing industry and in as far as

possible anticipate their skills needs, what they regard as the key drivers of skills needs in

their subsectors and explore the skills gaps as well as scarce and critical skills. The following

key guidelines are highlighted as the main focus of the entire SSP Update for the fibre

processing and manufacturing industries:

1. An analysis of skills demand and trends, supply issues within the fibre processing and

manufacturing industry; to determine skills development priorities.

2. Identification of sector specific skills development objectives, goals that will meet the

sector’s needs, economic and industrial growth strategies.

3. Identify sector specific scarce and critical skills lists

4. Reporting on the industry performance in relation to these skills development goals

and objectives.

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1.5 Limitations FP&M SETA recognizes that despite the procedural planning and attention to detail employed

through the SSP Update process, some aspects of the work will fall outside of our control.

This section speaks to some of the limitations we foresee through this process.

a) Response Rate One of the most important aspects in the SSP Update process has been to ensure sufficient

participation of all the relevant stakeholders. WSP/ATR submissions, the response from

survey questionnaires, attendance of regional focus group sessions, availability of key

informants to be interviewed – all these factors influence the quality of the research. In general

there was a good response though in relation to WSPs larger companies were better

represented than smaller enterprises and survey responses were better in some in some sub-

sectors than others. Lessons have been learned and it is anticipated that improved response

rates will be achieved through better planning and targeting.

b) Data There are challenges in scoping the sector precisely, since WSP data (the primary data source

for this purpose) is known to be skewed in favour of the larger companies. For instance

although reference is made to the SMME sector in particular it is not properly represented

through the WSP data. WSP data however been used where no other data source is available;

but for the most part, data from Statistics South Africa (the Quarterly Labour Force Survey) or

Quantec has been used. In some cases this has been supplemented by sub-sector-specific

statistics where there were challenges in disaggregating other data sources to the industrial

classifications for FP&M SETA. (For example, the Forest sector data is commonly clustered

with agricultural data, and it has not always been possible to disaggregate it specifically). WSP

data has therefore been used where no other data source is available.

c) Time Constraints A key issue to be considered is time limitations linked to the new planning cycle for the

development of the SSP. Some aspects of the research were conducted more speedily than

would be ideal. The process for the 2015 review will commence earlier and time will be

allocated to improve the quality of the research and give stakeholders the opportunity to input

more substantially.

d) Internal SETA Research Capacity

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The FP&M SETA is currently working towards a strengthened and capacitated in-house

research division. Although a lot of progress has been made in this regard there is still a need

for more improvements through staff training, acquiring of the necessary in-house resources,

as well as securing more in-house researchers.

1.6 Key Sources of Information and Data The following section outlines the key sources of information and data that were used and

aided the compilation of an informative and structured SSP. A clearly planned data collection

process was followed; this helped provide focus on objective information and in-depth analysis

data, of the labour market dynamics within the fibre processing and manufacturing industries.

The data collection process was to a very large extent reliable, valid, and timeous and more

importantly it covered both qualitative and quantitative methods of data. The following methods

of data collection were employed for the SSP Update:

a) Review of Key Literature One of the key methods utilised to gather relevant information for the compilation of the SSP

is through a literature review. FP&M SETA undertook a comprehensive review of relevant and

current skills planning literature. This included a review of the sector trends, highlights and the

main role of the sectors in the economy both nationally and internationally, employment trends

and labour productivity on the basis of competitiveness with international industries. Taking

into account the current FP&M SETA SSP and that of it cluster members, the literature review

was a collection of recent publication that shared relevant information that relates to the fibre

processing and manufacturing industries.

In addition to the above the literature review included a review of some on the main guiding

policy documents that speak to the new and changing role of the SETAs and the SSP, such

as the White Paper of Post-School Education and Training of 2013.

In order to ensure that the SSP Update is aligned with the country’s developmental plan, the

review of literature brought to the fore the National Development Plan (NDP), the New Growth

Plan (NGP), The Industrial Policy Action Plan (IPAP) and the National Skills Development

Strategy (NSDS III). The essence of these national guiding documents not only highlights the

key objectives and goals but provide direction on the national skills planning interventions

necessary to address the country’s developmental challenges.

c) Workplace Skills Plan (WSP) and Annual Training Report (ATR) Data

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The FP&M SETA has moved from a manual method of Workplace Skills Plan (WSP) and

Annual Training Report (ATR) data collection to an automated web-based system called

Indicium. The Indicium system is an online data capturing system accessible to all other FP&M

SETA stakeholders which allows for the companies to directly upload the WSP/ATR forms.

This allows for clear and accurate data to be received from the companies themselves. The

2014/2015 round of submissions (as per legislative requirement) for the WSP/ATR was in on

the 30th of April 2014. Although the WSP/ATR data has its limitations it is a valuable internal

data source. It provides the primary baseline data on skills planning and training information

in the 13 FP&M SETA subsectors.

d) Survey Questionnaire Another form of data collection employed is a survey questionnaire, initiated under the

Stakeholder engagement Framework for Sub-sectors to develop their Industrial Growth

Strategies Project. This project is aimed at strengthening relations between the FP&M SETA

and its 13 sub sectors. This project serves as a valuable platform for directly accessing

industry information regarding skills needs, training and skills development and additional

qualitative information surrounding these issues. A survey questionnaires was designed to

pose pertinent questions themed around skills planning and labour market information. The

questionnaire is semi-structured, and covers qualitative information.

The questionnaire has been administered to nine of our sub sectors, which indicated their

willingness to participate and share information. Ppositive feedback was received from the

subsectors and FP&M SETA is hoping this will be the foundation for strengthened relations

that will go beyond data collection and move towards meaningful and mutually beneficial

partnerships that facilitate successful interventions towards addressing skills challenges and

move towards skills development in the country.

e) Focus Groups FP&M SETA undertakes regional focus groups on an annual basis. These are used as

vehicles to inform stakeholders about the SETA’s work, update them on changes and

developments in legislation and provide stake holders with an opportunity to interact with

SETA staff members and make inputs to inform the SSP.

This process is being strengthened. A focus group questionnaire sheet will be administered to

the sub sectors at the different focus groups. This will be administered by the FP&M SETA’s

research division, and used to prompt discussion regarding skills needs, employment trends,

challenges and overall experiences regarding skills, development and productivity from each

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of the sub sectors. The purpose of this endeavour is to get access to the most current sub

sector employment, skills needs, and labour trends for most appropriate skills planning

interventions and credible update of SSP.

1.2 Preparation of the SSP Update Document The Fibre, Processing and Manufacturing (FP&M) SETA was established by the Minister of Higher Education and Training on 01 April 2011 and has a licence for the period to 31 March 2016. The SETA is the result of an amalgamation of the CTFL SETA, FIETA and the Printing, Packaging and Publishing sectors of the MAPPP SETA. The FP&M SETA facilitates skills development in the following sub-sectors: Clothing, Footwear, Forestry, Furniture, General Goods, Leather, Packaging, Print Media, Printing, Publishing, Pulp and Paper, Textile and Wood. This makes the preparation of this SSP a rather unique process. It brings together the different sub-sectors initially located in different SETAs into one cohesive document that addresses skills issues from one broad perspective, while still providing adequate attention to each of the 13 sub-sectors, now falling under FP&M SETA.

In preparation for this review, the SETA developed a project plan. The purpose of the project plan was to set out the agreed work required for the SSP update. The updating of the SSP included a number of iterations that enabled comment and input from sector stakeholders and from DHET, as well as engagement at the SETA board. Significant input was made requiring extensive revisions. This final SSP is a shorter and more concise document than the previous draft and reflects a determination by the board and management of the SETA to use the SPP as a strategic document that provides the vision and strategy that informs the Strategic Plan and gives direction to the SETA. The plan must therefore be read together with the Strategic Plan. In this way the mew operating and business model can be understood as part of a broader process to position the SETA to support the sector and achieve greater impact of the resources available in the sector for skills development.

1.7 Structure of the SSP The SSP update consists of seven chapters:

Chapter 1: Introduction and Background. This sets out the skills development background and Context. It sets out the context of skills development and the purpose of the SSP. It briefly introduces the FP&M SETA as an organisation and it provides a brief overview of the process followed, the methods and data used and limitations.

Chapter 2: Sector Profile. This chapter provides a profile of the FP&M sector. The sector represents a cluster of 13 industries, with significant value chain linkages within and between them. . Chapter 3: Sector Analysis. This chapter deals with the economic performance of the sector. The chapter considers the various factors that have an impact on the performance of the sector. It looks at the various possible scenarios for sector development and provides the context within which skills development is planned.

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Chapter 4: Demand for Skills, This chapter describes the demand for scarce and critical skills as reported by FP&M sector employers. It also describes the key strategic challenges facing labour and skills in the sector as a basis for possible priority skills interventions. Chapter 5: Supply of Skills: This chapter provides an analysis of skills supply in the FP&M Sector. The chapter begins with a description of the skills pipeline. Qualifications, providers, capacity, throughput rates and return on investment. The role of higher education (HEI) provision, FET provision, and FP&M SETA-accredited provision is set out. The aim is to understand the supply-side capacity and some of the challenges that will inform sector strategy.

Chapter 6: Fibre Processing and Manufacturing Sector Strategy

This chapter of the SSP sets out seven strategic objectives together with a number of outputs that if achieved will lead to the outcomes. The outcomes and outputs are not at the level of detail that includes targets, nor does it specify the precise mechanism that the SETA is putting in place to achieve the outputs and outcomes. These are set out in the Strategic Plan of the SETA. The aim of the strategy is to provide a common framework within which sector stakeholders (including the SETA) can work together to achieve maximum impact of skills development in the sector. -

Chapter 7: Monitoring and Evaluation

The purpose of this chapter of the SSP is to put in place a framework which will enable the SETA stakeholders to monitor the strategy and its implementation, and to take steps to either address gaps or adjust strategy in the event of weaknesses being identified. For each outcome the SETA as agreed an impact indicator and measure, and for each output appropriate indicators and measures are set out.

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Chapter 2 Sector Profile

This chapter provides a profile of the FP&M sector. The sector represents a cluster of 13 industries, with significant value chain linkages within and between them.

2.1 Definition of the FP&M Sector The Fibre Processing and Manufacturing (FP&M) sector is made up of 77 industries in terms of the standard industrial classification (SIC) framework as directed by the Minister of Higher Education and Training in Regulation 1056, 11 November 2010. The 77 SIC codes listed below and have been clustered into 13 logical sub-sectors which make up the FP&M sector.

Table 1: FP&M SETA Standard Industrial Classification (SIC) Codes

Sub-Sector SIC CODE Main Activity Description

Clothing

31111 Preparatory activities in respect of animal fibres, including washing, combing and carding of wool.

31120 Finishing of textiles. 31210 Manufacture of made-up textile articles, except apparel. 31214 Manufacture of made-up textiles articles and fibres except apparel. 31220 Manufacture of carpets, rugs and mats. 31291 Manufacture of textiles, clothing, leather goods and other textiles n.e.c. 31292 Fashion clothing, textiles and footwear manufacture and design. 31300 Manufacture of knitted and crocheted fabrics and articles. 31400 Manufacture of wearing apparel, except fur apparel. 31500 Dressing and dyeing of fur; manufacture of artificial fur; fur apparel and other art.

Dry Cleaning 99010 Washing And (Dry) Cleaning Of Textiles And Fur Products 99904 Washing And (Dry) Cleaning Of Textiles And Fur Products

Footwear 31700 Manufacture of footwear. 31701 Manufacture of footwear from material other than leather.

Forestry

12102 Re-establishment. 12104 Fire protection, fire suppression, fire prevention. 12105 Forest conservation. 12106 Forest protection. 12107 Forest management.

12108 Forestry and tree nurseries

12201 Harvesting. 12202 Road construction and maintenance. 12203 Transport (short haul and long haul). 12204 Fire protection, fire suppression and fire prevention in forest, bush and velds. 87144 Forest research.

Furniture

32291 Coffins (excluding the manufacture of coffins by funeral undertakers). 39103 Manufacture of furniture made of materials other than metal, plastic or concrete. 39105 Furnishing of ships. 39106 Cane furniture. 39107 Bedding. 39110 Caravan furniture. 39111 Curtaining where the core business of the enterprise is upholstery and furniture.

General Goods 12103 Maintenance. 35591 Manufacture of metal containers, e.g. cans and tins.

Leather 31610 Tanning and dressing of leather. 31620 Manufacture of luggage, handbags and the like, saddlery and harness.

Packaging 12101 Establishment. 32322 Manufacture of containers of paper and paperboard.

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Sub-Sector SIC CODE Main Activity Description 32323 Manufacture of packing material. 88950 Packaging activities.

Print media

32600 Reproduction of recorded media.

36504 Graphic design, manufacture and display of laminated signs and advertising displays and other graphic media outputs and products.

88993 Stenographic, duplicating, addressing, mailing list and similar activities. 8899B Stenographic, duplicating, addressing, mailing list and similar activities.

Printing

32391 Stationery. 32392 Books and stationery. 32393 Printing and embossing of stationery and labels. 32510 Printing. 32520 Service activities related to printing.

Publishing

32410 Publishing of books, brochures, musical books and other publications. 32420 Publishing of newspapers, journals and periodicals. 32430 Publishing of recorded media. 32490 Other publishing.

Pulp & Paper 32310 Manufacture of pulp, paper and paperboard. 32311 Manufacture of pulp, paper, paperboard, tissues and paper recycling.

32320 Manufacture of corrugated paper and paperboard and of containers of paper and paperboard.

Textiles

31230 Manufacture of cordage, rope, twine and netting. 31231 Curtaining excluding where the core business of an enterprise is upholstery or furniture. 31290 Manufacture of other textiles n.e.c. 39108 Curtaining.

Wood Products

32101 Saw-milling and preserving of timber. 32102 Saw doctoring. 32103 Wet milling. 32104 Lumber drying. 32105 Lumber grading. 32106 Dry milling. 32107 Finger jointing and laminating. 32108 Mill maintenance. 32110 Charcoal. 32111 Wattle extracts manufacturing.

32210 Manufacture of veneer sheets; manufacture of plywood, laminated board, and particle board and other panels and boards.

32211 Fibreboard and chipboard products. 32220 Manufacture of builders' carpentry and joinery. 32221 Truss manufacturing. 32293 Match manufacturing. 32294 Pallets and bulk bins.

32299 Other articles of wood, cork, straw and plaiting materials, including woodcarving and woodturning.

Source: Adaptation of Regulation 1056, 11 November 2010 FP&M key demographics The FP&M sector as defined is a subset of the secondary sector of the economy and is concerned mainly in turning raw materials into finished products. The activities of the sub-sectors - with the exception of forestry which is in the primary sector and dry cleaning which is a service - are mainly manufacturing in nature. Sub-sectors within the FP&M landscape are diverse in terms of industrial and occupational coverage, economic profile, employment trends, markets, economic growth and decline, company profile, technology, human resources, skills profile, business performance, competitiveness, industrial strategies, work organisation, strengths and weaknesses and demographics. The table below provides a definition of each of the 13 sub-sectors in the FP&M sector.

20

Table 2: Sub-sectors of the FP&M Sector

Sub-sector Description

Clothing

The clothing (also known as wearing apparel) manufacturing industry transforms fabrics produced by textile manufacturers into clothing and accessories that supply the retail stores. It is closely linked to footwear manufacturing, which focuses on a wide range of types and styles produced by different construction methods. Manufacture of products such as men’s, ladies and children’s wear, under wear, sportswear, outerwear and millinery items such as hats and caps

Footwear

Manufacture of footwear (from leather to other materials). The process of shoe manufacturing involves separate production of the top (upper) and bottom component parts of the shoe, which are then assembled into the final product in the lasting and finishing operation.

Forestry

Forestry subsector is focused on growing trees on a commercial basis. There are four major activities that dominate this sub-sector namely transport, forestry and tree nurseries, harvesting and maintenance. Forestry involves cultivation, development and management of forests and the processing of lumber into timber for use e.g. construction or as components in paper, wood products including sawmilling and furniture.

Furniture

The furniture sub-sector is made up of employers in the upholstery, bedding and curtaining industries in addition to the timber industry. It includes industries such as coffins (excluding the manufacture of coffins by funeral undertakers), furniture made predominantly of materials other than metal, plastic or concrete, furnishing of ships, cane furniture and caravan furniture. The manufacturing of furniture from wood or other materials such as steel, concrete, cane or plastic. It also includes upholstery, and furnishing of ships.

General Goods

Manufacture of general goods other than shoes (including handbags, luggage/travel goods, belts and saddlery items) from leather or other products

Leather

The leather sector is responsible for the manufacturing of general goods, luggage and handbags from leather or other products through the use of textile, leather and other products. The leather sector manufactures leather goods such as handbags, luggage and saddlery from hides and skins, a natural resource obtained from animals, reptiles and birds (ostrich).It includes tanning and dressing of leather (processing of a variety of hides and skins).

Packaging

Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging is the medium through which products are branded in order to be distinguished from other products. Manufacturing of paper and paperboard (also corrugated); containers of paper and paperboard, and manufacturing of metal containers such as cans and tins.

Print Media The Print Media sub-sector requires occupations such as editors, journalists and authors. It is the production of content for use in publications

21

Sub-sector Description

Publishing

Publishing sector deals with the production of printed works such as books, magazines and newspapers (print media). Publishing is the process of production and distribution of literature or information – the activity of making information available to the public. The publishing of newspapers, journals and periodicals. Publishing of books, company brochures, musical books, labels and other publications and publishing or recorded media and other publishing activities.

Pulp and Paper

The pulp and paper industry focus on producing newspapers, books and magazines, the tissue products and other paper products. Production of pulp for use in paper mills for the manufacturing of a diverse range of papers including paper board, business paper, tissue paper, and paper used in printing books, newspapers and magazines and the recycling of paper.

Textile

Textile manufacturing is the process of converting fibre (man-made or natural fibres such as cotton and wool) into yarn through a variety of processes, which typically involve a cleaning stage to remove any impurities, followed by spinning or twisting of the fibres. manufacture of textile products through various processes, for example, the spinning of yarn from natural or manmade fibres, the weaving of/knitting of fabrics from spun yarn, the dyeing and printing of fabrics, the manufacturing of textile floor coverings (carpets), the manufacture of flock and felt products and the manufacturing of industrial (performance) textiles.

Wood products

The wood sub-sector incorporates activities such as saw milling and preserving of timber, saw doctoring, wet milling, lumber drying, lumber grading, dry milling, finger jointing and laminating, mill maintenance, charcoal production, wattle extract manufacturing, manufacturing of veneer sheets, plywood, laminboard, particle board and other panels and boards, manufacturing of fibre board and chipboard products, and many other products. Wood products also involve the manufacturing of panel boards, builder’s carpentry and joinery, pallets and bulk bins, other articles of wood, cork, straw and plaiting materials including woodcarving and woodturning.

Printing

The Printing sub-sector is responsible for the printing of newspapers, books, magazines, packaging, labels and other related materials. Graphic design, manufacture and display of signs, advertising displays and other graphic media products.

•

2.2 Size and shape of the FP&M sector and its sub-sectors The FP&M sector consists of over 20,800 organisations spanning across 13 subsectors. Clothing is the largest sub-sector with 4308 employers or 21% of the sector followed closely by printing sub-sector with 4176 employers or 20% of the sector. Publishing and Wood Products have about 9% of the employers each whilst Furniture boasts 8% of employers in the sector. General goods is the smallest sub-sector with only 1% of the employers. The table below provides a breakdown of employers by sub-sector.

22

Table 3: Employer Profile in the FP&M Sector

Sub-sector Employers Clothing 4308 Dry Cleaning 641 Footwear 708 Forestry 1483 Furniture 1764 General Goods 200 Leather 494 Packaging 723 Print media 859 Printing 4176 Publishing 1930 Pulp & Paper 614 Textiles 1147 Wood Products 1806 Total 20853 Source: FP&M SETA MIS Database, SARS Download

It is important to understand the sizes of these organisation in order to have a contextual understanding of whether the sub-sector is made up of majority SMME type employers or whether there are large enterprises dominating.

2.3 Types of enterprises in the different sub-sectors Payment of levies can be viewed as one of the determinants of employer size. The Skills Development Levies Act requires that all employers with a payroll of at least R 500,000 per annum must pay skills levies and thus employers with a payroll below R 500,000 per annum could be considered small or not employing a large number of employees.

According to data from the South African Revenue Services (SARS) as depicted in the figure below, there are 3.340 organisations in the FP&M sector that are contributing skills levy to the FP&M SETA. The printing sub-sector recorded the highest number of levy payers (23%) followed by clothing (18%) and wood products 10%. Dry cleaning and general goods recorded the lowest number of levy payers at 0.7% and 1% respectively.

23

Figure 1: FP&M Levy Paying Employer per Sub-Sector

Source: FP&M SETA MIS system, SARS Download Out of over 20,800 employers in the FP&M sector, the FP&M SETA has recorded levy payments from only 16% of the employers. The table below demonstrates that the packaging is the sub-sector with the highest proportion of levy payers at 22.5% of employers in the sub-sector followed by wood products with a proportion of 19.4% and printing with 18.5%. Dry cleaning has the lowest proportion of levy payers with only 3.6% of the employers in this sub-sector contributing skills levies.

Table 4: Levy paying employers as a percentage on the employers per sub-sector

Sub-sector Total Employers Levy Paying Percentage Clothing 4308 590 13.7% Dry Cleaning 641 23 3.6% Footwear 708 95 13.4% Forestry 1483 230 15.5% Furniture 1764 261 14.8% General Goods 200 34 17.0% Leather 494 80 16.2% Packaging 723 163 22.5% Print media 859 148 17.2% Printing 4176 771 18.5% Publishing 1930 296 15.3% Pulp & Paper 614 100 16.3% Textiles 1147 199 17.3% Wood Products 1806 350 19.4% Total 20853 3340 16.0%

Source: FP&M SETA MIS system, SARS Download In the 2014/15 round of submissions of workplace skills plans (WSPs) and annual training reports (ATR) by employers in the FP&M sector, there were 676 submissions received by the

590

2395

230 261

34 80163 148

771

296

100199

350

0100200300400500600700800900

Levy Paying Employers per Sub-sector

24

FP&M SETA. This is an equivalent of 3% of all employers in the FP&M sector and 20% of the employers contributing levies to the FP&M SETA.

Figure 2: FP&M WSP Submission 2014-15 by Sub-Sector

Source: FP&M SETA MIS Database, April 2014 WSP Submissions The highest number of WSPs were received from the clothing sub-sector (24%) followed by printing (18%) and wood products (10%). The sub-sectors with the least number of WSP submissions are dry cleaning (0.3%), print media (0.6%) and general goods (0.9%).

Table 5: Summary of Employer Participation in the FP&M Sector

Sub-sector Total Employers Levy Paying Submitting WSP Clothing 4308 590 165 Dry Cleaning 641 23 2 Footwear 708 95 30 Forestry 1483 230 55 Furniture 1764 261 33 General Goods 200 34 9 Leather 494 80 21 Packaging 723 163 30 Print media 859 148 6 Printing 4176 771 119 Publishing 1930 296 45 Pulp & Paper 614 100 29 Textiles 1147 199 47 Wood Products 1806 350 65 Total 20853 3340 676

Source: FP&M SETA MIS Database, April 2014 WSP Submissions In summary, and as outlined in the table above, there is a very low participation in FP&M SETA activities by employers in the FP&M sector. Due to the fact that the submission of WSPs by

165

230

5533

9 21 306

119

4529

4765

020406080

100120140160180

WSP Submissions by Sub-sector

25

employers is not a mandatory requirement of the Skills Development Act or the Skills Development Levies Act, the participation of only 3% of employers in the sector is a challenge, as it means the data from WSPs cannot be analysed and safely used to generalise for the purpose of projecting skills demand.

2.4 Economics of the sector and its importance to the national economy The largest sub-sector in terms of output is the paper and paper products accounting for 27.6% of the sector output, followed by Printing, publishing and recorded media with 15.9%. The third largest sub-sector is Wood and wood products with 14.1% of output whilst the smallest sub-sector is Leather and leather products accounting for 3.2% of output.

Figure 3: FP&M sub-sector output

Source: Quantec, 2014

2.5 Levy Contributions The highest contributor to the skills levy is the printing sub-sector followed by the packaging sub-sector. The estimated expected levy contribution for FP&M SETA for 2015-2016 fiscal year is R 369,447,063.

- 5,000

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

Footwear Furniture Leatherand

leatherproducts

Paper andpaper

products

Printing,publishing

andrecorded

media

Textiles WearingApparel

Wood andwood

products

Forestry

Output per Sub-sectorRm 2005-prices

26

Figure 4: Levy Contributions per Sub-Sector

Source: FP&M SETA MIS Database, SARS data. As demonstrated in the figure above, most levy contributions to the FP&M SETA are from printing sub-sector with about 20.9% followed by wood products with 15%. The dry cleaning sub-sector is the smallest contributor of levies with 0.1% of total levies coming from the employers in this sub-sector. Levy contributions are a function of the payrolls of employers in the sector. The higher the payroll (i.e. employee salary X number of employees) the higher the skills levy. In other words, a higher levy amount signals either more workers or higher salaries within a particular sub-sector. Tracking of levy contributions over a number of years is thus an indicator of whether over time the payrolls of organisations are increasing.

2.6 Linkages with other sectors The FP&M sector links with other sectors of the economy as part of one value chain that is premise on the understanding that much of what is produced comes from primary production processes, then moves to secondary processes that convert raw materials into materials that can be used in production of goods. These goods are then made available in the tertiary component of the value chain to be sold. In primary, secondary and tertiary processes there are linkages with other industries, including other sectors and there are dependencies and risks that need to be managed. Some of the FP&M sub-sectors are feeders into other sectors of the economy as whilst they rely on the primary sector of the economy for raw materials. The value chain linkages include:

• The forestry sub-sector is the upstream feeder into the Milling and Wood Products industries, an upstream feeder into the Pulp, Wood Chips, Timber, Paper and Lumber (an upstream to the Construction sector). These are upstream to the wholesale and retailing of Wooden Products, Furniture, Footwear, General Goods as well as Print Media, Publishing and Printing, in the tertiary sector.

• Plastic sub-sector (which is not part of the FP&M industries) is the upstream to synthetic fibres. Synthetic and Natural fibres (agriculture is an upstream feeder into Natural Fibres) are an upstream feeder into Textiles, which is an upstream feeder into Printing, Furniture, Clothing, Footwear and General Goods.

8.5%

0.1%

3.5%6.1% 5.6%

0.8% 1.3%

13.3%

4.5%

20.9%

6.3%

2.4%

11.7%

15.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Skills Levy per Sub-Sector

27

• Agriculture (which is not part of the FP&M industries) upstream to natural fibres hides and skins. Hides and skins feed into Leather and this as an upstream feeder into Furniture, Clothing, Footwear and General Goods.

• Furniture, Footwear and General goods are an upstream feeder into Dry Cleaning and this is an upstream flow that occurs within the FP&M sectors.

• Lumber is a feeder into the Construction sector. Paper, Publishing, Printing, Furniture, etc. as a feeder into the Retail sector. General Goods also as feeder into the automotive sub-sector.

• The Design and Packaging streams feed into the complete value chain phase from the primary phase, through the secondary phased into the tertiary phase, as a side stream flow.

Figure 5: FP&M Sector Value Chain

Source: FP&M SETA Stakeholder Discussions

The value chain linkages as outlined in the figure above extends to other sectors of the economy. The FP&M sector provides inputs into other sectors of the economy whilst relying on certain sectors for inputs:

• Most of what gets produced within the FP&M sector end up in the wholesale and retail sector.

FP&M Seta Value Chain

FORE

STRY

(Rou

ndwo

od /

Bark

)

Pulp / Paper Mills Pulp

Printing

Publishing

Furniture

Cellulose / Tissue Packaging / Hygiene / Recycle

Natural Fibres

Hide and Skins

Textiles

Leather

Design

Footwear

Clothing

General goods

Sawmills

Packaging

Synthetic Fibres

Wooden Products

Link t

o Ag

ricul

ture

Pl

astic

in

dustr

y

Primary Secondary Tertiary

Dry C

leani

ng

NOTES: Items in red either feed into or from the FP&M SETA, they do not form part of the FP&M SETA value chain

Board Mills

Pole Plants

Mng Timber Mills

Waste Paper

Charcoal/Matches

Particle Board

Treated Poles

Tannin Plants

Paper

Lumber

Mining Timber

Charcoal/Matches

Tannin

Cons

truct

ion

Beneficiation of Waste Streams

Suga

r Can

e

Prin

t Med

ia

ITC Se

ctor

Se

rvice

s Sec

tor

Au

tom

otive

28

• Manufacturing, Engineering and Related Services Sector plays a support role in either the supply of machinery and equipment used in the production process of servicing and repair thereof

• There are some inputs from the chemicals sector that are utilised in the production process

• Some of the goods produced in the FP&M sector e.g. wood products, are used in the construction sector

• Products such as packaging which are produced in the FP&M sector are utilised extensively in the food and beverages sector

• Transport sector plays a pivotal role in moving the goods produced in the FP&M sector to where they are required

Other sectors of the economy that are services in nature also interlink with the FP&M sector. Organisations in the FP&M sector would typically require services like banking and financial services, insurance, media and information technology.

One of the important advantages of using a value chain approach is that the opportunities for sector development can be quickly identified and explained. For example it is evident where the major challenges are in relation to the processing of primary products into secondary products and the need for interventions to beneficiate and produce domestically what is currently being exported. Equally it is clear that there are opportunities to produce in more environmentally sustainable ways and to make use of waste produced at different points in the value chain – for example the huge amount of paper produced and discarded is a clear opportunity for recycling. There are also points in the value chain that overlap with other sectors, where collaboration could result in the expansion of jobs and a greater level of labour absorption than is currently taking place.

2.7 Distribution of FP&M sector across the country The organisations in the FP&M sector are across all provinces of the country, with those involved in manufacturing being mainly located closer to the major industrial centres of the country. Based on an analysis of WSP submissions in 2014 there 33% of the employers are in the Western Cape, 31% in KwaZulu-Natal and 20% in Gauteng. An analysis of SARS database of employers in the sector will provide a more comprehensive indication of employers in each of the provinces.

29

Figure 6: Provincial Breakdown

Looking at the graph above, an analysis of FP&M SETA WSP submissions shows that the highest concentration of employers is in the Western Cape, followed by the KZN and thereafter Gauteng. The Clothing, Footwear, Leather & General Goods and Textiles sub-sectors demonstrate a greater presence in the Eastern Cape. The Forest Sub-sectors are the only sub sector with significant employers in the North West. The SETA’s presence in Northern Cape is virtually non-existent.

2.8 Employment There are over 321,000 people employed across almost all the sub-sectors of the FP&M sector1. The sector experienced a 27.5% decline in employment between 2000 and 2013. In other words, between 2000 and 2013 over 121,000 jobs were lost in the sector. The figure below illustrates a declining trend in employment between these two periods.

1 Analysis based on Quantec data reflecting 2013 employment statistics. Figures exclude forestry and dry cleaning.

EasternCape

Freestate

Gauteng

KwaZulu-Natal

Limpopo

Mpumalanga

NorthWest

Northern Cape

WesternCape

Employers 32 21 132 208 5 35 6 1 222

0

50

100

150

200

250

Employers per Province

30

Figure 7: Employment Trends in the FP&M Sector

Source: Quantec, 2014 The figure below illustrates the employee strength per sub-sector. The sector with the highest employee count is the clothing (wearing apparel) sub-sector, followed by Printing, publishing and recorded media. Textiles sub-sector is the third largest in terms of employment. The high employee strength in clothing and textiles reflects the labour intensive nature of the manufacturing processes in these sub-sectors.

Figure 8: Number of employees per sub-sector


-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Employment Trends in the FP&M Sector

Footwear Furniture

Leatherand

leatherproducts

Paper andpaper

products

Printing,publishing

andrecorded

media

Textiles WearingApparel

Wood andwood

products

Series1 13,128 39,359 4,607 30,458 51,804 50,053 83,171 49,371

- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Employment per Sub-sector

31

2.9 Profile based on WSP Submissions The WSP/ATR submissions for 2014-2015 reflect 676 registered employers. Representing 160,300 employees. In terms of these submissions, the largest number of employees are in the clothing sub-sector with 26% followed by clothing and wood products with 12% each.

Figure 9: Employee Profile per Sub-sector

Source: FP&M SETA MIS Database, WSP submissions 2014

The analysis of WSP submissions further demonstrates that KwaZulu-Natal has the highest representivity of employees across the sector. At 34% representivity, KwaZulu-Natal is followed by Western Cape (26%) and Gauteng (19%). The Northern Cape which has the lowest population density in the country an employee representivity of 0.1% whilst Limpopo has 1% and Free State 1.2%.

Figure 10: Employee Profile per Sub-sector


05000

1000015000200002500030000350004000045000

Employment by Sub-sector

EasternCape Freestate Gauteng KwaZulu-

Natal Limpopo Mpumalanga

NorthWest

NorthernCape

WesternCape

Employees 7759 1871 30606 55220 1628 12096 3612 142 41180

0

10000

20000

30000

40000

50000

60000

Employees per Province

32

2.10 Employee Occupational Profile The occupational profile of the FP&M sector is informed by the nature of business that the sector is involved in and therefore the type of skills required in the production process. Based on an analysis of 2014 WSP submissions, the highest proportion of the workforce is employed in elementary occupations (31%) followed by Plant and Machine Operators and Assemblers (29%). The two occupation groups account for 60% of the work force. Service and Sales Workers has the lowest representivity, accounting for 2% of the workforce whilst managers (7%) and professionals (5%) together account for 12% of the workforce.

Figure 11: Employees Occupational Profile


Each of the sub-sectors of the FP&M sector appear to have a different occupational profile. Based on an analysis of WSPs in 2014:

• Clothing sub-sector has the highest proportion of Plant And Machine Operators and Assemblers (47%) followed by elementary occupations with 26%

• Dry cleaning sub-sector has the highest proportion of Plant And Machine Operators and Assemblers (62%) followed by Clerical Support Workers with a 27% representivity

• Footwear sub-sector has the highest proportion of Plant And Machine Operators and Assemblers (40%) followed by elementary occupations with a representivity of 38%

• Forestry sub-sector employs more people in elementary occupations (64%) followed by Plant And Machine Operators and Assemblers with a representivity of 14%

• Furniture sub-sector employs more people in elementary occupations (34%) followed by Plant and Machine Operators and Assemblers with a representivity of 21%. Skilled Agricultural, Forestry, Fishery, Craft and Related Trades Workers make up 20% of employees in the sub-sector

• General goods sub-sector employs more people in elementary occupations (75%) followed by Plant And Machine Operators and Assemblers with a representivity of 12%

• The leather sub-sector employs more Plant and Machine Operators and Assemblers (33%) followed by elementary occupations with a representivity of 24%. Skilled Agricultural, Forestry, Fishery, Craft and Related Trades Workers make up 14% of employees in the sub-sector

11684

50003

10624

47054

7877

3903

17137

12018

0 10000 20000 30000 40000 50000 60000

Clerical Support Workers

Elementary Occupations

Managers

Plant And Machine Operators and Assemblers

Professionals

Service and Sales Workers

Skilled Agricultural, Forestry, Fishery, Craft…

Technicians and Associate Professionals

Employees per Occupational Category

33

• The packaging sub-sector has a high proportion of Plant And Machine Operators and Assemblers (47%) followed by elementary occupations with a representivity of 22%

• In the print media sub-sector, there is a high representivity of Plant and Machine Operators and Assemblers (20%). Clerical Support Workers and professionals feature prominently at 18% and 17% respectively.

• Skilled Agricultural, Forestry, Fishery, Craft and Related Trades Workers has the highest representivity in the printing sub-sector at 31% followed by Plant And Machine Operators and Assemblers at 14%. Clerical Support Workers and Elementary Occupations each have a 13% representivity

• The publishing sub-sector tends to employ high level skills with professionals at 36%, Clerical Support Workers (20%), Technicians and Associate Professionals (13%) and managers at 12%

• The paper and pulp sub-sector has a high representivity of Plant And Machine Operators and Assemblers (34%) followed by elementary occupations with a representivity of 20%

• Textiles sub-sector employs more people in elementary occupations (37%) followed by Plant And Machine Operators and Assemblers with a representivity of 33%

• The wood products sub-sector employs more people in elementary occupations (46%) followed by Plant And Machine Operators and Assemblers with a representivity of 22%

The occupational profile of the sector implies a requirement for lower level skills to ensure competitiveness of the people employed.

2.11 Employee Age Profile The employee age profile is based on analysis of WSP data which gives broad indications of the profile in the sector. The figure bellow indicates employees by age distribution. As indicated below, the number of employees between the ages of 35-55 in the FP&M sector is higher than the rest of the other age categories listed below. This age group category represents 52.1% of total employment within the FP&M sector. This is followed by employees under the age of 35 who represent 39.1% of the workforce.

34

Figure 10: Employees Age Distribution


Although the sectors have a low percentage of the workforce that is aging, there are trends that reflect younger entrants into the FP&M sub-sectors. This can be ascribed to an increased impact of the SETAs intervention of addressing education and training initiatives for learners below 35 years of age. As can be observed from the table below, dry cleaning is the sub-sector with the highest proportion of people over the age of 55 at 21%. Printing is the second highest with 11% proportion whist publishing together with Pulp & Paper each have 10%. Across most sub-sectors with the exception of general goods (43%) and packaging (46%), the workforce is between the ages 35 and 55. The general goods sub-sector has the highest proportion of younger people below the age of 35 at 51%.

Table 6: Employee age per sub-sector

Sub-sector Age: < 35 Age: 35 - 55 Age: > 55 Clothing 15204 23447 3673 Dry Cleaning 20 38 15 Footwear 2598 4467 738 Forestry 7306 9204 1408 Furniture 2820 3422 547 General Goods 1290 1097 151 Leather 1140 1733 273 Packaging 2573 2542 455 Print media 413 500 44 Printing 7393 9646 2044 Publishing 3586 4367 892 Pulp & Paper 2814 3832 710 Textiles 4250 5401 801

39.1%

52.1%

8.8%

Age Distribution

Age<35 Between 35 & 55 Above 55

35

Sub-sector Age: < 35 Age: 35 - 55 Age: > 55 Wood Products 8949 9115 1421 #N/A 2526 4571 864 Total 62882 83382 14036


Amongst all provinces, four (Eastern Cape, Free State, Limpopo and North West) have more than 10% representivity of employees over the age of 55. With the exception of Limpopo (25%), Eastern Cape (32%) and Western Cape (36%), the rest of the provinces have more than 40% of employees below the age 35. In other words the sector tends to employ younger employees.

Figure 11: Employee Age Profile per Province


The sector does not seem to have a challenge of an ageing workforce with more than 50% below the age of 35 and over 90% below the age of 55.

2.12 Employee Race profile The employee race profile is based on analysis of WSP data, which gives broad indications of the profile in the sector. The figure below illustrates race distribution of employment per sub-sector (classified according the number of Africans, Coloureds, Indians and Whites employed in the FP&M sector). The majority of employees in the FP&M sector are Africans, who represent 59.9% of employees in the industry. This is followed by the Coloured population, with an employment percentage of 21.9%. White employees represents 10.7% of employee strength. 7.4% of the employees are Indians, who represent the lowest rate of employment in the FP&M manufacturing industry.

EasternCape Freestate Gauteng KwaZulu-

Natal Limpopo Mpumalanga

NorthWest

NorthernCape

WesternCape

Age: < 35 2519 767 12422 22639 406 4940 1604 83 14854Age: 35 - 55 4402 913 15141 28476 1047 6153 1634 54 22533Age: > 55 838 191 3043 4105 175 1003 374 5 3793

0

5000

10000

15000

20000

25000

30000

Employee Age per Province

36

Figure 12: Employee Race distribution


In terms of sub-sector, Dry cleaning has a very proportion of Africans (97%2) followed by

general goods (93%) and forestry (90%). The least proportion of Africans is employed in the

publishing sub-sector (26%).

Table 6: Employee race per sub-sector

Sub-sector African Coloured Indian White Clothing 22840 13434 3825 2225 Dry Cleaning 71 1 0 1 Footwear 3363 2960 1045 435 Forestry 16231 897 136 654 Furniture 4272 1405 555 557 General Goods 2369 55 46 68 Leather 1948 801 129 268 Packaging 3893 645 572 460 Print media 382 131 168 276 Printing 7613 5329 2255 3886 Publishing 2272 2259 722 3592 Pulp & Paper 3771 1520 657 1408 Textiles 6148 3001 590 713 Wood Products 16509 999 349 1628 #N/A 4685 1351 712 1213 Total 96367 34788 11761 17384


Amongst all the sub-sectors, the highest proportion of African males is employed in general

goods (59%), Coloured males in printing (17%), Indian males14% in Print media and White

2 This is based on very few WSP submissions and this could be an inaccurate reflection of the sub-sector in its totality

59.9%21.9%

7.4%

10.7%

Employees Race distribution

African Coloured Indian Whites

37

males 19% in print media. In terms of females, the highest proportion is that of African females

employed in the dry cleaning sub-sector (63%), Coloured females in the clothing sub-sector

(26%), Indian females 6% in clothing and white females 26% in publishing.

2.13 Employee Gender Profile The employee gender profile is based on analysis of WSP data, which gives broad indications

of the profile in the sector. The figure below depicts employment distribution in the FP&M

SETA sub-sector, on the basis of gender. It is important to note that there is a higher proportion

of female employees in the manufacturing sector than that of males. Females represent 53%

of employees within the sector, whilst males represent 47% of the sector’s employees.

This is important as it implements the objectives of the NDP which prioritizes gender

transformation and the empowerment of woman, working towards the achievement of

provision of equal opportunities for all woman in the country. The Clothing and Textiles sub-

sectors have an overwhelming concentration of women employees. The manufacturing

industry particularly textiles and clothing are largely concentrated with women The number of

female employees in the manufacturing sector equals 53.0% whereas the number of the male

employees in the manufacturing sector is 47.0%, see graph bellow:

Figure 10: Employees per Gender


In terms of sub-sectors, clothing has the highest proportion of females (72%) followed by dry

cleaning (66%) and footwear (60%). Pulp & paper (24%) together with packaging (25%) have

the least number of females as a proportion of total workforce for the sub-sector.

47.0%

53.0%

Employees Gender Distribution

Total female Total Males

38

Table 7: Employee gender per sub-sector

Sub-sector Male Female Clothing 11762 30562 Dry Cleaning 25 48 Footwear 3123 4680 Forestry 11730 6188 Furniture 4943 1846 General Goods

1618 920

Leather 1461 1685 Packaging 4194 1376 Print media 663 294 Printing 12192 6891 Publishing 3848 4997 Pulp & Paper 5603 1753 Textiles 4883 5569 Wood Products

13242 6243

#N/A 5954 2007 Total 85241 75059


2.14 Employee Disability Profile The manufacturing sector makes provision for equal opportunity of disabled people. The

employee disability profile is based on analysis of WSP data, which gives broad indications of

the profile in the sector. Based on analysis of WSP submissions by 676 employers in the

sector, there are 942 people living with disabilities employed in the sector, reflecting 0.6% of

total employment reported. 41% of the people with disabilities are African, 28% Coloured, 21%

white and 9% Indian.

Table 8: Employee disability per sub-sector

Sub-sector African Coloured Indian White Clothing 67 115 10 15 Dry Cleaning 0 0 0 0 Footwear 5 10 4 2 Forestry 26 3 0 5 Furniture 7 3 7 8 General Goods 1 3 0 0 Leather 16 8 8 3 Packaging 16 15 4 4

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Sub-sector African Coloured Indian White Print media 8 1 4 3 Printing 71 57 14 40 Publishing 21 7 7 62 Pulp & Paper 50 24 20 35 Textiles 11 10 4 3 Wood Products 84 5 4 8 #N/A 10 4 3 7 Total 393 265 89 195


The highest number of people with disabilities are employed in the clothing sub-sector (21%)

followed by Printing (19%) and Pulp & Paper (14%).

2.15 HIV/ AIDS prevalence According to the HSRC’s South African National HIV Survey of 2012, it is estimated that 12.2%

of the population (6.4 million persons) were HIV positive, which is 1.2 million more PLHIV than

in 2008 (10.6%, or 5.2 million). The results of the analysis of HIV-prevalence estimates by key

demographic variables suggest that the overall HIV prevalence differed substantially by

province.3

Figure 11: HIV prevalence by province, Source HSRC HIV Report (2012)

3 South African National HIV Survey, (2012)

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HIV/AIDS has negative effects on the country’s labour force and increased prevalence is a

threat to the economy’s growth and the continued productivity of the country’s labour force.

This is thus an issue that needs to be addressed in skills planning in order to ensure that the

workforce is educated and aware of the risks and these should jointly be mitigated through

collaboration with government departments and employers.

2.16 Stakeholders in the sector There are various stakeholders that play particular roles within the FP&M sector. These include government departments and components that provide policy direction or play a regulatory role. In addition the trade unions participating in the sector advance the rights of workers employed in the sector whilst employer’s bodies represent the interest of employers as well as advance issues of common interest including research, legislation and lobbying for various other reasons.

2.17 Industry / Employer Organisations The following industry bodies and employer organisations are key stakeholders in the FP&M sector. In addition, these organisations are represented within the FP&M SETA, as per the SETA’s constitution.4

Table 9: Employers organisations in the FP&M sector

Employer Organisation

Definition

Forestry South Africa (FSA)

FSA is the largest forestry organisation representing growers of timber in South Africa. The Association’s membership includes all 11 corporate forestry companies active in the Industry, approximately 1 300 commercial timber farmers and some 20 000 emergent small scale growers who between them own or control no less than 93% of the total plantation area in the country.

Printing Industries Federation of South Africa (PIFSA)

PIFSA is an industry body representing the interests of printing, paper/flexible packaging and newspaper industries to be globally competitive and socially responsible. Its mission is to protect the sector’s interests with government, sectoral bodies and any other relevant entity, in policy matters that affect the operations of its member organisations.

Paper Manufacturers of South Africa (PAMSA)

PAMSA promotes the interests and efforts of the South African pulp and paper industry and provides a forum for the development and presentation of common views on pre-competitive industry issues, and engages stakeholders on matters of legislation, skills upliftment, education, research, environment, sustainability, and recycling. The body boasts a membership of 90% of paper producers in South Africa

4 FP&M SETA Constitution (2011-2016)

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Employer Organisation

Definition

South African Cotton textiles Processing Employers’ Associations (SACTPEA)

SACTPEA is a registered employer organisation that represent the interests of employers in Cotton textiles Processing

South Africa Carpet Manufacturing Employers Association (SACMEA)

SACMEA is a registered employer organisation that represent the interests of Carpet Manufacturing Employers

National Association of Worsted Textile Manufacturers (NAWTM)

NAWTM is a registered employer organisation that represent the interests of Worsted Textile Manufacturers

Narrow Fabric Manufacturers Association (NFMA)

NFMA is a registered employer organisation that represent the interests of Woven, Crochet and Knitted Narrow Fabric Manufacturers

South African Wool and Mohair Processors Employers Organisation (SAWAMPEO)

SAWAMPEO is a registered employer organisation that represent the interests of Wool and Mohair Processors

South African Home textiles Manufacturers Employers Organisation (HOMTEX)

HOMTEX is a registered employer organisation that represent the interests of home textile manufacturers

South African Blankets Manufacturers Employers Organisation (SABMEO)

SABMEO is a registered employer organisation that represent the interests of blankets manufacturers

National Textile Manufacturers Association (NTMA)

NTMA is a registered employer organisation that represent the interests of textile manufacturers

2.18 Government Stakeholders There are various government departments and components that interfaces with the work of the FP&M sector:

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Table 10: Government stakeholders in the FP&M sector

Government Department

Definition

Department of Agriculture, Fisheries and Forestry

There is a strong linkage between agriculture and forestry with the FP&M sector. A lot of what gets manufactured in the FP&M sector would have been produced in the DAFF space. The DAFF provides policy direction in Agriculture, Forestry and is an interested party in the development of the FP&M sector

Department of Trade and Industry

The FP&M sector is at the epicentre of South Africa’s manufacturing activities and beneficiation of various fibre related raw materials. The Department as the custodian of the industrial policy action plan has an interest in the betterment and improvement of manufacturing output in the country and by extension the FP&M sector.

Department of Rural Development

The Department is tasked with ensuring the development of rural communities in South Africa and the FP&M sector has some rural presence in a number of areas.

Department of Small Business Development

The FP&M sector is dominated by small businesses. The Department can support the development of small businesses within the sector and is an interested party firstly as a policy development arm of government and secondly as an implementer of small business development programmes.

Department of Environmental Affairs

The Department as an interest in the preservation of the environment and ensuring that environmentally sustainable methods of manufacturing are applied across the economy.

Department of Water Affairs and Sanitation

The FP&M sector relies increasingly on water to effect its manufacturing processes. The Department is the custodian of the country’s water resources and provides policy direction in the preservation and use of fresh water resources.

Department of Science and Technology

Through providing policy direction and spearheading research and development (R&D) as well as innovation in the South African economy. The Department has agencies such as the Council for Scientific and Industrial Research (CSIR) and the National Research Foundation (NRF) whose purpose is to advance research in areas including those covered by the FP&M sector. The Department has a keen interest in commercialising R&D and bridging the chasm between national system of innovation and industry in South Africa

Department of Higher Education and Training

The Department is the custodian of the post school education and training system of the country and an important policy driver as far as provision of skills and advancing research and development through universities is concerned.

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2.19 Labour Organisations The following trade unions participate and represent workers interests in the FP&M sector:

Table 11: Trade unions in the FP&M sector

Labour Organisation Definition

Chemical, Energy, Paper, Printing, Wood and Allied Workers Union (CEPPWAWU)

The union has members in industries ranging from Oil refineries, Explosives, Chemical, Pulp, Paper, Printing, Furniture, Saw Milling etc. and is a majority union in all these industries. The union has a membership of over 68,000 workers across these industries.

South African Typographical Union (SATU)

The South African Typographical Union has traditionally organised workers in the Printing Newspaper and Packaging Industry but has extended its scope to include workers in Stationary Outlets, Book Shops, Publishing Houses, Advertising Agencies, Screen and Sign Display Sectors, Photocopy Shops, Printing Suppliers.

Southern African Clothing and textile workers Union (SACTWU)

SACTWU is the largest trade union in the clothing, textile, leather and footwear industry in South Africa and globally, with just more than 85 000 members. With a trade union density of 85% in these sectors, the trade union’s largest region is Kwazulu-Natal Province (43% of total membership), followed by Western Cape (32%), Gauteng (17%) and then Eastern Cape (8%).

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Chapter 3 Sector Analysis The purpose of this chapter is to analyse the key drivers of change in the sector. An analysis is made of the economic, political, social, technological, environmental and legal factors that impact the sector, and various scenarios are developed which will form the basis for the analyses of skills demand and supply. New developments beyond the planning horizon of the DHET are explored to determine the potential impact of these on future skills requirements. Drivers of change are normally classified as sub-sector-specific and non-sub-sector-specific. Where there are sub-sector specifics, the analysis will be done at the sub-sector level. The Fibre Processing and Manufacturing sector is diverse in terms of economic profile, economic performance, markets, technology, competitiveness, industrial strategies, strengths and weaknesses and demographics.

3.1 A Value Chain Approach to Sector Analysis The value chain concept speaks to an array of linked sub-sectors and other entities which include suppliers of specialised inputs such as components, machinery, and services as well as providers of specialised infrastructure, governmental and other institutions (e.g., universities, think tanks, vocational training providers, standards-setting agencies, trade associations), to facilitate specialised training, education, information, research, and technical support. Globally economic theory and labour market analysis is moving towards the understanding of value chains. It is particularly useful in understanding beneficiation and what is required to expand domestic production and reduce reliance on imported machinery. There are international examples of the successful establishment of clusters (or economic zones/hubs) linked to specific industries. Within the FP&M sector, there are a number of initiatives already in place, and more are planned.

At the heart of the overarching analysis of the sector using the value chain approach is an attempt to improve the competitiveness of the FP&M sub-sectors and industries through strengthening the value chain and its linkages. At the core of South Africa’s industrial strategy is the need to beneficiate more of the raw materials produced here. For example, it is the goal of the Industrial Policy Action Plan (IPAP) to beneficiate more South African leather domestically and this underpins the DTI strategy for growing the footwear sector. Similarly, the focus on building design skills for the furniture sub-sector arises the need to beneficiate more South African wood. The value chain approach enables for the improvement of the value chain linkages within the FP&M sector.

The analysis of factors that impact the sector is done across the value chain, and where applicable, strengths, weaknesses and opportunities within and across the value chain are identified. These are discussed at the end of this chapter. Further research and international benchmarking is planned through the establishment of partnerships with, example, the Textile and Clothing Centre of Excellence at the CSIR and a research partnership with the University of Witwatersrand REAL.

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3.2 Summary PESTEL Analysis POLITICAL TECHNOLOGICAL Applicable to all sub-sectors: • Economic development, increasing exports, job creation, rural development,

land reform, food security & environmental sustainability are strategic/policy goals;

• Various industrial strategies and charters are available and have the potential to drive positive change

• Improved infrastructure • Improved innovation • Small business support • Need for inter-departmental cooperation & planning and the forging of

strategic partnerships • Increased investment in new technologies • Increase in intra-regional trade in Southern Africa • Targeting more labour absorbing activities (especially clothing, textiles,

leather, footwear and furniture) • Improved labour market intelligence

All sub-sectors: • Increased mechanization; • Out-dated plant and equipment; • Bio technology on the rise; especially in the wood sub-sector, • Electronic media

ECONOMIC ENVIRONMENTAL All sub-sectors: • IPAP 2 signalling significant state support to identified growth areas,

including key agriculture sub-sectors; • Currency fluctuations affecting exports; • Low labour absorption in rural areas; • Rural economy stagnant despite targeted government programmes; • Rising input and transaction costs leading to increased prices, reduced

margins as well as pressure for take-overs and mergers in commercial agriculture.

• Support to sub-sectors that are experiencing contraction – focus on employee retention

• Growth in output, but slower that the economy - with the exception of Forestry, sub-sectors contracted or remained stable.

All sub-sectors: • Environmental sustainability and resilience • Pressure on traditional crops due to limited water supply; • Increased frequency and duration of “crises” linked to over use of

natural resources and changing weather patterns; • Increased concerns over eco-system preservation and bio-diversity; • Opportunities in sector from green technologies and their

applications commercially; • Increased consumer awareness leading to changes (e.g. demand

for organic produce).

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• Increase in imports, decrease in exports Clothing and Textiles: • Recapture bigger share of domestic market Leather: • Communal hides beneficiation • Innovation and technology • Establishment of an exotic hides cluster Wood and Wood Products: • Sustainable supply of raw material Furniture: • Furniture design programme • Furniture cluster development SOCIAL LEGISLATIVE All sub-sectors • Growing middle class, more emphasis on quality • Ageing population, different preferences from different age groups • Migration from rural to urban areas, particularly young people; • Social problems arising from high levels of unemployment and economic

exclusion; • HIV and AIDS remains at crisis proportions; • Social media: influence among other on advertising, influencing consumer

preferences

All sub-sectors: • Compliance requirements across a range of pieces of legislation

increasing • International safety and standards impact on exports; • The need to accelerate BBBEE Forestry: • Tenant and labour rights legislation an on-going factor in labour

absorption levels; • There is a very large amount of regulation of agricultural enterprises

- particularly small and emerging. Can have both positive and negative impacts;

• Uncertainty over bio-fuel legislation.

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3.3 Economic factors impacting on growth and development in the sector

3.4 The Macro-Economic Environment Globalisation in the 1990s was accelerated by the phasing out of tariffs in most industries, including those in the FP&M sector. This tariff phase-out culminated in the end of the Multi‐Fibre Agreement (MFA) in January 2005, removing quotas from World Trade Organisation (WTO) member countries. The FP&M sub-sectors were relatively unprepared for the moment when tariff barriers were lowered and open‐market, global competition began to dominate South Africa’s trade. The result was a need to rapidly build industrial and productive efficiencies which were generally accompanied by company restructuring and/or downsizing with workers at the lower skill levels being retrenched and small‐to‐medium sized companies shutting down. The global recession has further negatively impacted growth in the FP&M sector and projections suggest that this negative impact is likely to continue for some time. The labour unrest in South Africa that marked 2012 improved in 2013, proving to be less violent but more widespread, but it significantly affected output in certain sectors of the economy. The slow pace of international economic growth also continued to limit South Africa's development. A year of low investment and ongoing efforts to reduce household debt have held this back further, with growth reaching 1.9% in 2013 compared with 2.5% in 20125. Unemployment and labour relations continue to pose challenges for the country. Unemployment remains high at 24.1% overall, and 64.8% for young people between the ages of 15 and 24. 6The government's newly launched employment tax incentive aims to address this challenge by encouraging private sector absorption of youth by subsidising the salaries of newly recruited workers aged between 18 and 29. However, the overall labour market remains constrained and labour unrest continued to reduce South Africa's output in 2013, especially in mining and manufacturing. Furthermore, output potential is constrained by a skills shortage which is proving difficult to address without simultaneously resolving the deep seated problems in the public education system. The South African economy remained just within the Reserve Bank's (SARB) target inflation range of 3%-6% estimated at 5.7% in 2013 and now nudging the level where interest rates will need to increase. The South African rand (ZAR) remained under pressure in 2013, sliding 20% in value during the year. National government debt increased to 42.5% of gross domestic product (GDP) in 2012/13, up from 36.2% two years earlier. South Africa’s growth trajectory has been characterised by a consumption-led, credit-fuelled, import-intensive growth path, with a high and sustained negative balance on the current account – R189 billion in 20127. Internationally, there is a change in size of the economies of various countries projected, with a move from the West being dominant toward Eastern countries taking the lead, as per the table below:

5 Wolassa Lawisso Kumo, Jan Rieländer, Babatunde Omilola African Economic Outlook; afrcianeconomicoutlook.org.za 6 Ibid 7 IPAP 6; 2014/15 – 2015/16; DTI

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Table 12: Global Economic Outlook

Rank Country – 2010 GDP (U$ million)

Country – 2020 GDP (U$ million)

1 USA 14,802,081 USA 28,124,970

2 China 9,711,244 China 22,644,910

3 Japan 4,267,492 India 10,225,943

4 India 3,912,911 Japan 6,196,979

5 Germany 2,861,117 Russia 4,326,987

6 Russia 2,221,755 Germany 3,981,033

7 United Kingdom 2,183,277 Brazil 3,868,813

8 France 2,154,399 United Kingdom 3,360,442

9 Brazil 2,138,888 France 3,214,921

10 Italy 1,767,120 Mexico 2,838,722

Source: Financial Statistics and World Economic Outlook/UN/national statistics Source: Euromonitor International from IMF, International

Infrastructure development plays a critical role in the drive towards job creation and economic stimulus. Eighteen Strategic Integrated Projects (SIPs) have been developed and approved by Cabinet and the Presidential Infrastructure Coordinating Commission (PICC) to support economic development and to address service delivery on the overall objectives. The identified projects will provide new infrastructure, assist in terms of rehabilitating and upgrading existing infrastructure and will also play a crucial role in facilitating the regional integration for African co-operation and economic development on the African continent.

3.5 Economic Performance of the Sector The economic performance of the sector is discussed from two viewpoints; firstly the growth patterns between 2000 and 2013 and secondly the contribution of the sector towards national output over the same period. The sector output increased from R 127 billion in 2000 and peaked at R 173 billion in 2008, falling to R 159.8 billion in 2009 before ending at R 164 billion in 2013. Although there has been a general increase in output between 2000 and 2013, the world economic crisis hit the sector hard resulting in the fall to R 159.8 billion in 2009. The sector has been recovering but has not yet achieved its highest previous performance.

49

Figure 12: Sector output trends


Despite the recorded growth between 2000 and 2014, the FP&M sector’s contribution to the national output has been declining between 2000 and 2013.In other words, the sector has between 2000 and 2013 its significance in the South African economy. As can be observed from the figure above, in 2000 the sector contributed 5% towards national output and this percentage has come down to 4% in 2013. This reduction signals the sector’s loss of significance in the South African economy.

A detailed analysis of the economic performance of, and employment trends in, the sector is provided as an annexure to this SSP. Included in the Annexure is a discussion on reasons for contraction/growth, employment trends, and sub-sectoral constraints and opportunities. It is important to read this Annexure together with this chapter to get a more comprehensive understanding of sub-sector dynamics.

3.6 Output per sub-sector The figure below illustrates the sector’s contribution to GDP in real terms. As can be observed in, there have been a general increase in output across all the sub-sectors between 2000 and 2013. The sub-sector output appears to have peaked in 2008 before declining in 2009 and starting to stabilise from 2010.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

- 20,000 40,000 60,000 80,000

100,000 120,000 140,000 160,000 180,000 200,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

FP&M Sector GDPRm at 2005 prices

GDP % Contribution

50

Figure 13: Output per Sub-Sector

Source: Quantec 2014 Although all sub-sectors experienced some growth in output between 2000 and 2013, the clothing (wearing apparel), textiles and paper sub-sectors experienced the lowest weighted average annual growth rates of 0.98%, 1.11% and 1.89% respectively., All the sub-sectors8 grew slower than the South African economy of the country which achieved a weighted average annual growth rate of 3.95% between 2000 and 2013.

Figure 14: Annual growth 2000-2013

8 For forestry, the Agriculture Weighted average annual growth rate has been used

-

10,000

20,000

30,000

40,000

50,000

60,000

Output per SubsectorRm 2005-prices

Footwear

Furniture

Leather and leather products

Paper and paper products

Printing, publishing andrecorded media

Textiles

Wearing Apparel

Wood and wood products

3.07%

2.03%

3.10%

1.89%

3.12%

1.11% 0.98%

2.22%

3.32%3.95%

0.00%0.50%1.00%1.50%2.00%2.50%3.00%3.50%4.00%4.50%

Weighted average annual growth rate (%)2000 to 2013

51

.

3.7 Contribution to GDP per sub-sector The figure below illustrates the sub-sectoral contribution to GDP in real terms. The net contribution of the sector as a whole to total South African output declined from approximately 4,7% in 2001, to 3,4% in 2012.

Figure 15: FP&M sub-sector contribution to output

Source: Quantec data, 2014; Forestry South Africa The only sub-sector that experienced growth is the Forestry sub-sector, which doubled its contribution to output between 2001 and 2011. The figure above shows the contributions of each sector to total output among the FP&M sub-sectors. One striking point to note is that the contributions to total output did not fluctuate greatly within and between the sectors between 2001 and 2013. There has been a general decline of about 0.1% across all the sub-sectors towards their respective contributions to the national output. The highest contributor to total output was the Paper and Paper Products sub-sector despite the decline in contribution from 1.4% in 2000 to 1.1% in 2013. And 1.4%. The second highest contributor was the Printing sub-sector with approximately 0.6% in 2013. The smallest contributor was the Leather and Leather Products sub-sector whose contribution has remained at approximately 0.1%. The Furniture and Leather sub-sectors remained relatively stable, whilst the remaining sub-sectors have contracted.

3.8 How the FPM sector relates globally

3.9 Imports and Exports The figure below illustrates sector exports since 2000. If the year 2000 is used as a base point, all sectors experienced a decline in exports. The only sub-sector that had an “up-turn” over the past year (2012-2013) is Paper and Paper Products. This is also by far the largest contributor to exports in the sector.

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

Sub-sector Contribution to National Output

Footwear

Furniture




Textiles

Wearing Apparel


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Figure 16: Exports per Sub-Sector

Source: Quantec 2004 Although this can partly be attributed to the global economic downturn in 2008, part of this is probably related to a drastic increase in imports, as shown in the figure below, caused by structural challenges across the sector.

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Exports per Sub-sectorRm 2005-prices

Footwear

Furniture




Textiles

Wearing Apparel


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Figure 17: Imports per Sub-sector

Source: Quantec, 2014 With the exception of the Printing, Publishing and Recorded Media sub-sector, all sub-sectors experienced an increase in imports, some of them by vast measures. The biggest increases have been experienced by Wearing Apparel, Textiles, Footwear, Paper and Paper Products and Furniture. Wood and Wood products, and Leather and Leather Products were the only two sub-sectors that remained fairly stable over the period. They are however also two of the smallest importers of products in the sector. The output and domestic demand figures, provided per sub-sector in the Annexure to this SSP, provide interesting information. Firstly it reflects the percentage of domestic demand that is fulfilled through imports. Secondly it shows how much of domestic output is exported. The summary picture is that the sector, with the exception of Printing, Publishing and Recorded Media, is increasingly importing more and more and exporting less. In the footwear sub-sector, the import-domestic demand ratio increased by nearly 80%, whilst the export-output ratio showed a very marginal increase. In the furniture sub-sector, the import-domestic demand ratio more than doubled, with the export-output ratio being less than half of what it was in 2002. In the Leather and Leather Products as well as the Paper and Paper Products sub-sectors, these two ratios demonstrated some volatility. If “evened out”, the export-output ratio remained relatively constant, but there was an increase in the import-domestic demand ratio. Interestingly, the Printing, Publishing and Recorded Media sub-sector experienced a big decrease in their import-domestic demand ratio - nearly one-third of what it was in 2002. Their export-output ratio remained fairly constant. This is probably attributable to an increase in electronic media leading to less books and publications being imported. On the other side,

-

2,000

4,000

6,000

8,000

10,000

12,000

Imports per Sub-sectorRm 2005-prices

Footwear

Furniture




Textiles

Wearing Apparel


54

Wearing Apparel had a more than 400% increase in their import-domestic demand ratio, and their export-output ratio is only about 40% of what it was in 2002. The export-output ratio of Wood and Wood Products is approximately 50% lower than in 2002, with their export-output ratio being stable. The textiles sub-sector had an increase in the import-domestic demand ratio, and a stable export-output ratio.

3.10 Environmental Factors Impacting the Sector The growing importance of the green agenda should be carefully monitored from a Fibre-Processing and Manufacturing sectors perspective. Greater emphasis needs to be placed on sustainability and environmental protection and appropriate skills need to be developed. It is anticipated that ‘green agenda’ will have a major influence on the sector. This would put a need towards training initiatives being aligned to international standards of environmental awareness and impact. This would create new needs within the sub-sector and would impact on the training focus for certain positions. The environmental issues raise the need for ethical training and education as well as sustainability training and education. An example was given of the reduction of paper use and the need that this would create on the development of cellulose fibre and accompanying technology. South Africa's Green Economy Accord was launched in 2011 and will have a major impact on the skills required by the Fibre-Processing and Manufacturing sectors. “The Accord, one of the most comprehensive social pacts on green jobs in the world, builds a partnership to create 300 000 new jobs by 2020, in economic activities as diverse as energy generation, manufacturing of products that reduce carbon emissions, farming activities to provide feedstock for biofuels, soil and environmental management and eco-tourism.” (South African Government Information page) Water–efficiency improvements within the manufacturing operations are a priority focus in the Paper and Paper Products sub-sector. The re-use and recycling of water within processes is implemented where possible. Generally water availability has been decreasing and the situation may be exacerbated by climate change. Product quality deteriorates as a result. Poor management of municipal wastewater treatment plants also affects water fed back to rivers. Some mills use recycled municipal effluent. If the quality deteriorates, the costs go up. Mills are focusing on technologies e.g. membrane technologies to clean up and recycle the water. Ultimately unless paper mills are integrated to energy positive pulp mills – this element of the FP&M sub-sectors will die. Further energy price rises are inevitable and as a result the increased energy costs means a switch to recovered fibre for raw material as the process is less energy intensive than other pulp manufacturing processes. There are initiatives in the sub-sector to begin addressing exactly these concerns.

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3.11 The Political and Policy Environment

3.12 Sectoral Industrial Strategies In response to the challenges the sector has experienced, several of the sub-sectors in the FP&M cluster engaged with the government, and more specifically the national Department of Trade and Industry (DTI) to develop industrial strategies that would support the restructuring of the industries. These include:

• A series of initiatives for the Forestry, Timber, Pulp and Paper sub-sectors (see for example the Strategic Framework for the Forestry, Timber, Pulp and Paper Industries, as well as the relevant sub-sector charter)

• A series of initiatives in the Furniture Sub-sector, described in the 2011 DTI Strategy for the Development of the Furniture Sub-sector.

• Customised Sector Programs (CSPs) for the clothing and textiles sub-sector as well as the leather, footwear and general leather goods industries.

• The publishing sub-sector embarked on a publishing strategy initially under the Department of Arts and Culture, later formalizing this as an industrial strategy under DTI.

• There have been a series of engagements between the printing and packaging sub-sectors and the state. While there is no industrial strategy in place, there are ongoing efforts to develop such a strategy currently.

The above initiatives have resulted in increased dialogue between the state and industries, and often within the sub-sectors themselves. There are increased levels of investment, and associated skills development demands. The Customised Sector Programs (CSPs) for the clothing and textiles sub-sector as well as the leather, footwear and general leather goods industries broadly aims to:

• Growing the market share locally (unique product for less price sensitive consumers, high labour content)

• Re-entering the international market with unique products • Utilising skills development interventions to invest in the development of critical skills,

invest in, develop and apply current technology to grow sub-sector production processes to meet the need for fast flexible production processes. The development of strong conceptual and industrial design capability is a key ingredient to grow the uniquely SA product segment of the market.

• Strategic partnerships • The sub-sector needs an urgent response to the need for programme development

(new courses) and the structures required for skills transfer and training implementation.

The Forest sub-sector developed a sector charter in 2008 with the overarching aim of ensuring that opportunities and benefits of the forestry sector are extended to Black South Africans. The Charter has targets for ownership, management, employment equity, skills development, preferential procurement, enterprise development and socio-economic development. The Pulp and Paper sub-sector currently has an education strategy aimed at gearing the sub-sector for the major new investments and developments taking place. The five strategic drivers in the Education Strategy are to:

• Facilitate the leverage of Financial and Strategic partnership opportunities • Find effective solutions for managing work integrated learning. • Provide support to enable the sub-sector to meet the skills needs for a changing sector • Promote the sector by developing a value proposition for all stakeholders

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• Align qualification framework to meet sub-sector needs The Printing, Packaging and Print Media sub-sectors planned to embark on the development of an industrial strategy. The publishing sub-sector does however have a strategy under the aegis of DTI. The Cultural Sub-sectors Growth Strategies (as it relates to the publishing sub-sector) was formulated in 1998. A Publishing Sub-sectors Development Programme (PIDP) was then established which had long term strategic goals which included economic, cultural, developmental and institutional objectives. Key Action Programmes (KAPs) for the forestry sub-sector cluster include fast-tracking the issuing of water licenses, formalising community structures to improve participatory management, providing capacity in the water license application process, assisting with funding and business planning processes, as well as providing skill and technology upgrading. Other priorities include establishment of furniture clusters in KZN, WC and Gauteng as well as furniture centres of competence for high level skills and technology training. Support for establishing charcoal manufacturing enterprises in EC and KZN as well as Biomass sub-sector development for SMMEs are further priorities for the sector. The detail of each of the projects under the industrial strategies is available in Annexures to this SSP. It is critical that partnerships be established to ensure that skills development is facilitated through FP&M SETA to support each of these projects.

3.13 National Policies There are a number of national policies that have either a direct or indirect impact on skills development in the FP&M sector. The main policies are referred to below. These policies must ultimately contribute to the 12 outcomes of the DPME that were adopted at the Cabinet Lekgotla held in January of 2010 and will form the basis for driving delivery within government.

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Figure 18: National policies impacting on the sector

12 Delivery Outcomes

National Development Plan New Growth Path

Industrial Policy Action Plan (IPAP)Human Resource Development Strategy for SA

Medium Term Strategic Framework

DAFF Intergrated Growth and Development Plan

DHET White Paper on post-school education & training

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Table 14: National policy and skills development implications

Policy Type Policy Description Policy Objectives Possible Skills Implications

National Development Plan (NDP)

The over-arching, long-term plan for South Africa that aims to eliminate poverty and reduce inequality by 2030 through faster and more inclusive economic growth. A priority of the NDP is “improving the quality of education, skills development and innovation.”9

• Increasing exports, focusing on those areas where South Africa already has endowments and comparative advantage, such as mining, construction, mid-skill manufacturing, agriculture and agro-processing, higher education, tourism and business services.

• A more efficient and competitive infrastructure. Infrastructure to facilitate economic activity that is conducive to growth and job creation. An approach will be developed to strengthen key services such as commercial transport, energy, telecommunications and water, while ensuring their long-term affordability and sustainability.

• A larger, more effective innovation system, closely aligned with firms that operate in sectors consistent with the growth strategy.

• Support for small businesses through better coordination of relevant agencies, development finance institutions, and public and private incubators.

• Environmental sustainability and resilience

• An expanded skills base through better education and vocational training.

• A labour market that is more responsive to economic opportunity. This requires

A skills development platform that targets multiple areas of skills development across the value chain is required. Unless training is provided as a coordinated package tailored specifically to real needs identified locally and taking account of existing and future development, then it is unlikely to be effective. If training can be provided as part of a wider package (including small business development and funding, incubator etc.) then the potential for impact is much greater.

The Department of Higher Education and Training (DHET) through NSDSIII, SETA Grant Regulations and other measures, is promoting the provision of a coordinated approach to SETA training provision in rural areas. DHET is particularly encouraging linkages and partnership with local FET colleges and universities, including the location of SETA staff in the colleges.

A range of interventions can be made available. The precise ones will be selected and shaped locally from the following:

There must also be a focus on

9South African Presidency.2011. National Development Plan, p. 17.

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lifelong learning and career advancement; stabilising the labour environment;

• Increased investment in new agricultural technologies, research and development of adaptation strategies for the protection of rural livelihoods and expansion of commercial agriculture.

• Channel public investment into research, new agricultural technologies for commercial farming, as well as for the development of adaptation strategies and support services for small-scale and rural farmers.

• An additional 643 000 direct jobs and 326 000 indirect jobs in the agriculture, agro-processing and related sectors by 2030.

• Maintain a positive trade balance for agricultural products.

• Build a strong relationship between the college sector and industry. SETAs have a crucial role in building relationships between education institutions and the employers

• Intra-regional trade in Southern Africa should increase from 7 percent of trade to 25 percent of trade by 2030

• Reskilling to accommodate changes in technology • Building research and innovation skills • Higher level skills that can potentially address the net loss of

skills from the sector.

New Growth Path (NGP)

Is aimed at enhancing growth, employment creation and equity. It sets a target of 5 million jobs created by 2020 through a series of partnerships between the state and the private sector.

• Targeting more labour-absorbing activities across the main economic sectors – the agricultural and mining value chains, manufacturing and services.

• Taking advantage of new opportunities in the knowledge and green economies. Clean manufacturing and environmental

The Clothing, Textiles, Leather and Footwear Sub-sectors are potentially labour-absorbing. Sector/Government strategies for growth should be supported by relevant skills development initiatives. More research is required to establish potential partnerships in this area.

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services are projected to create 300 000 jobs over the next decade

• Fostering rural development and regional integration.

• Agriculture: jobs will be created by addressing the high input costs and upscaling processing and export marketing. Support for small holders will include access to key inputs. Government will explore ways to improve working and living conditions for the country’s 660 000 farm workers. The growth path also commits the Government to unblocking stalled land transfers, which constrain new investment.10

The provision of green economy-type skills that are more technical and environmentally conscious is necessary. This may be specifically important in the Paper and Paper Products environment. A growth area is recycling, with a range of skills requirements.

Employment growth in the sector will require the up-skilling of existing employees in contracting sectors to accommodate technological changes and changes in production methodologies.

Industrial Policy Action Plan (IPAP)

The 2013-2016 Industrial Policy Action Plan (IPAP) identifies a series of domestic constraints that continue to inhibit industrialisation and the economic growth of South Africa. Such challenges include an overall skills deficit and mismatch in the economy and labour volatility and a breakdown in labour relations within the agricultural sector.

In the Clothing and Textiles Industry, the key opportunity is to recapture a bigger share of the domestic market by improving competitiveness through a range of interventions. These include

• an enhanced focus on product, process and delivery efficiencies and

• the strategic harnessing of proximity to local retailers.

• Ongoing clampdowns on under-invoicing and other illegal activities are helping to level the playing field.

Examples of potential areas of collaboration:

The communal hides beneficiation programme will cover the training of communal farmers and rural households in caring for their animals to maximise hide quality. Included will be slaughtering techniques, hide tanning and marketing know-how.

Supporting rural communities owning land with potential for forestry development, where communities demonstrate an

10 Department of Economic Development. 2011. The New Growth Path (NGP).

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Programmes to be introduced in the leather industry:

• Communal hides beneficiation • Innovation and technology • Establishment of an exotic hides cluster Action plans for forestry include:

• Fast-tracking of the issuing of water licenses

Action plans for wood and wood products:

• Productivity improvement and sustainable supply of raw material

Action plans for furniture manufacturing:

• Furniture Design Programme • Furniture Cluster Development

interest in afforestation. This include:

Support will be in the form of:

• Providing capacity to put together applications for water-use licences;

• Assisting in crafting business plans to apply for investment capital;

• Providing skills and technology for forest development and business management; and

• Leveraging financial support for forestry development.

Regarding sawmilling: The intention is to assist small- and medium-scale sawmills to improve their productivity through technology upgrading, market access, transfer of skills and securing long-term supply contracts.

The furniture design programme seeks to support skills development in the sector, particularly high-level design skills, that will help address market failures, encourage specialisation and improve productivity.

Human Resources Development Strategy for SA

This is intended to be a coherent, national human resource development framework within which all other HRD-oriented policies operate. It outlines eight, key commitments and their associated strategic priorities and objectives and provides a list of indicators and outputs for each

Key strategic objectives that impact on the sector include:

• Increase the number of appropriately • qualified people to meet the HR

demands in • the agro-processing industry and

biofuels industry;

Skills development needs to target new skills areas such as agro-processing and biofuels. In order for skills programmes to meet real, employer and sector-based demand, there must be increased stakeholder (particularly employer) input into the types of programmes development, their content etc. A better understanding of real sector needs depends on capacity building within the SETA, particularly in areas of skills planning, labour market forecasting, analysis and, research.

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objective. It is framed around four main elements of HRD that play a direct role in the country achieving its economic development needs, including: educational attainment, skills development, science and innovation and, labour market/employment policies. There is a particular focus on addressing skills mismatch in the economy.

• Development of a credible, master skills list that of all key stakeholders and economic sectors;

• Implementation of demand-led skills programmes based on substantive employer input;

• Increase the coverage & scope of employers reporting on workplace training activities and spending;

• Expand access to skills development programmes targeted at unemployed adults, women and the youth.

• Improve levels of research; • Develop SSPs that are responsive to the

real needs of the sector and that of the developmental state.

• Establish capacity for conducting labour market demand and supply forecasting.11

DAFF Integrated Growth & Development Plan (IGDP)

The vision of the IGDP is to develop, “an equitable, productive, competitive, profitable and sustainable Agriculture, Forestry and Fisheries Sector growing to the benefit of all South Africans.”12To achieve this vision,

The IGDP has prioritised four, key sector goals which include:

• A transformed and equitable sector • Equitable growth and competitiveness • Improved sustainable natural resource

management • Effective and efficient governance

systems

The IGDP identifies a range of stakeholders that are expected to be involved in different capacities in meeting these goals. SETAS specifically, along with other role-players in the sector, are expected to play a role in skills development and training that will improve the viability of subsistence and small-scale production as well as in the development of a national food policy on national and household food safety and security. Other areas where FP&M can play a role relate to the integration of small-scale farmers into the mainstream market by “providing

11 Human Resource Development Council of South Africa. 2010. Human Resource Development Strategy for South Africa. 12Department of Agriculture Forestry and Fisheries. 2012. Integrated Growth and Development Plan, p. 59.

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improved access to information, training and capacity building, mentorship programmes and entrepreneurial development.”13 Such capacity building and skills development needs to occur across the value chain in agriculture, forestry and fisheries. For this to happen, the IGDP highlights the need for capacity building partnerships as well as the revival of agricultural schools and colleges. Reference is made to the development of a Research and Innovation Policy for the sector.14

DHET White Paper on post-school education & training

This provides a framework within which the different stakeholders of the post-school system operate. It brings together in a coherent and articulated manner three major components: education and training; skills development and the world of work.

Some of the key policy objectives that will impact on SETAs in general are as follows15:

• Larger focus on workplace learning and work-integrated learning;

• Funding more skills development capacity within public education and training providers;

• Expanding the public sector as a training space;

• Improving data supply; • Funding programmes that are relevant

to employer needs in the sector and that are aligned to national development priorities;

• The development of a skills planning function that is both relevant and credible;

• Increases focus on occupationally

SETAs need to work with TVET colleges, employers and industry experts in the development of occupationally directed programmes that address real skills needs. There must be an increased emphasis on skills development within government departments that cater for the agricultural sector needs such as DAFF, DEA, DTI and DRDLR. Inter-departmental skills programmes are ideal.

13Ibid. 65. 14Ibid. 15 Department of Higher Education and Training. November 2013. Building an expanded, effective and integrated post-school system: A White Paper for Post-School Education and Training.

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directed programmes. DAFF Draft Policy on Extension and Advisory Services

The draft policy advocates a pluralistic approach to extension and advisory services where multiple stakeholders including the state, the private sector and NGOs work together toward a common vision. The focus is on providing high quality extension and advisory services across the collective value chain targeting the needs of all scales of production and processing regardless of socio-economic background, whether or not they are dependent on this for their livelihood and if and how they are engage with the market.

• Update education & training curricular for extension and advisory services so that it is aligned to real needs and national priorities;

• Develop a cadre of good primary extension personal across the public, private & NGO sectors through the creation of linkages between various education institutions, including HEIs, FET colleges and Agricultural Colleges.16

The SETA needs to work with a range of education and training stakeholders particularly in the public and NGO sector in developing programmes that cater for training in extension services. These programmes should not be targeted at office-based officials but at learners and or employees that are in the science/agricultural field of study or work.

16 Department of Agriculture Forestry and Fisheries. 2013. Draft Policy on Extension and Advisory Services.

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3.14 Labour Market Trends The figure below shows the sectoral contributions to employment. When juxtaposed with the figure on economic contribution to GDP in Section 3.1, the results are interesting. Firstly, unlike the output contributions, there is slightly more variability in the employment contributions over the years. Secondly, the highest contributors to employment were not necessarily the highest contributors to output among FP&M SETA sectors. As a whole, total employment in the sector decreased over the period from a peak of approximately 4, 4% of total employment in the country, to 3, and 5% in 2012. The only sector that demonstrated growth in output, was the forestry sub-sector. This sub-sector is the highest contributor to employment, although there has been a steady decline in employment - from a 1.3% contribution in 2001 to a 0.9% contribution in 2012. This may be attributable to technological changes and implies a significant increase in labour productivity. The second highest contributors to employment in 2012 were the Wearing Apparel and Printing, Publishing and Recorded Media industries, but both these sub-sectors have shown a decline in output over the period. In line with this contraction, there was a gradual decrease in the sector’s share to total employment from 2001 to 2012. The highest contributor to output in the FP&M SETA sectors, Paper and Paper products only contributed between 0.2% and 0.3% to employment. Although there was a decrease in output, there has been an increase in this sector’s contribution to employment, which implies higher labour intensity. The lowest contributor to output, Leather and Leather Products was also the lowest contributor to employment. Although the outputs of the furniture and leather sub-sectors remained relatively stable, both experienced a decline in employment.

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Figure 19: Sectoral contributions to employment (within P&M Sector)

Source: Quantec data, Aug 2013; Forestry South Africa17 The figure below shows the percentage change in employment for all the FP&M SETA sectors. As can be seen, the total employment among the FP&M SETA sectors has been negative between 2008 and 2012. The largest contraction happened between 2008 and 2010 during the global economic crisis. However, between 2001 and 2012 the contraction in employment became smaller, driven by the contractions that took place in most sectors, indicating a reduction in jobs losses. Compared to the total economy the FP&M SETA sectors have been shedding jobs at a higher rate. The outcome for the years 2013 to 2015 is being projected to be more positive, though the location of the new jobs is not clear and requires further investigation. 17 The figures for employment in the Forest sub-sector were only available for the year 2011 from Forest South Africa. The figures for preceding and subsequent years were calculated based on the percentage change in employment in all the FP&M SETA sub-sectors as shown in Figure…. It is noted then that this method captures the fluctuations in all the other industries, especially the seasonal patterns in the agriculture and fishing sub-sectors of which the forest sub-sector is a part in SIC codes.

0.0%

0.5%

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Forestry 1.3% 1.3% 1.3% 1.2% 1.2% 1.1% 1.1% 1.0% 1.0% 1.0% 0.9% 0.9%Furniture 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.4%Printing, publishing & recorded media 0.5% 0.5% 0.5% 0.5% 0.5% 0.6% 0.6% 0.5% 0.6% 0.5% 0.5% 0.5%Paper & paper products 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3%Wood & wood products 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4%Footwear 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%Leather & leather products 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0%Wearing apparel 1.0% 1.0% 1.0% 1.0% 0.9% 0.8% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5%Textiles 0.5% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.3% 0.3%

% o

f tot

al e

cono

my

Formal employment

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Figure 20: Percentage change in total employment within the FP&M SETA

Source: Quantec data, Aug 2013 Given that the manufacturing sector has lost domestic market share to foreign producers and has failed to find new export markets, production volumes have decreased and hence the demand for labour has fallen. This causal chain is seen in the formal sector employment – especially in the clothing, footwear, leather/general goods and textiles sub-sectors where formal employment saw a significant and continuous drop in employment between 2000 and 2010. As seen in the sub-sector analyses provided in the Annexure to this SSP, some sub-sectors tend towards increased casualization. The extent, nature and reasons for this need to be further researched.

3.15 Labour Productivity From 2000 onwards, the labour productivity in the Footwear and Furniture sub-sectors showed marked improvements until around 2010 (it more than doubled in both sub-sectors), and then tapered off somewhat to 2012. In the Textiles and Wearing Apparel sub-sectors, labour productivity doubled over from 2000 onwards. In the Leather sub-sectors, labour productivity more than doubled between 2000 and 2004, then slumped somewhat until 2011, and restored to the 2004 level in 2012. In the Wood, and Printing, Publishing and Recorded Media sub-sectors, productivity showed a downward trend between 2000 and 2008, and then a small improvement on the 2000 figure. Paper and paper Products is the only subsector that experienced a negative trend and had a marginally lower labour productivity performance in 2013 than in 2000. Figures for each sub-sector are provided in the annexure to illustrate these trends.

0

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Aver

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3.16 Social Factors Impacting the Sector

3.17 Growing Middle Class The sector is driven by consumer demands for increased quality, variety and value for money. Various credible sources identified a growing middle class worldwide. In South Africa, this trend should be exploited from a Fibre-Processing and Manufacturing perspective, especially in view of the fact that the “middle class” can be considered the “consumer class” and therefore society’s economic driver. South Africa is witnessing a rapid rise of a black middle class who was held back by years of apartheid. A growing black middle class has seen increased participation of black people in the economy. According to Goyal (2010), the growing black middle class is a product of the South African government’s black economic empowerment (BEE) programme that kicked in post-1994 after the end of the apartheid era. They form around 10% of the 22 million over-18-year-old black South Africans and contribute up to 40% of the spending in this group. This segment is growing rapidly. The figures gathered at the end of 2008 show that this group’s numbers were growing at 15%. During focus group discussions the opinion was expressed that there is a bigger drive towards quality (changing demographics of consumers / buyers) yet the quality currently being delivered is slowly declining due to influences of importers being able to produce cheaper products elsewhere.

3.18 Declining Birth Rates and Ageing Population Kinsella and Ferreira (1997, updated in 2010) describe the ageing situation in South Africa as follows: “Concern about population in Africa traditionally has focused on relatively high rates of fertility and mortality, expansion of basic health programmes, and, more recently, on the devastation resulting from the HIV/AIDS pandemic. Overlooked in the face of these pressing issues is the fact that most African populations are ageing, albeit at slower rates than in much of the developing world.” Although the situation is not yet so severe in South Africa, the fibre-processing and manufacturing sub-sector should closely monitor the global trend. It was found that older customers should be approached in another way, since they have different tastes and preferences.

3.19 Unemployment An important driver that relates to South Africa’s skewed income distribution is the unemployed and the number of people surviving below the poverty line. An unemployment rate above 20% is deemed to pose excessive political risk for most economies, but especially for South Africa, where the populace have been conditioned into believing that things would get better with a new government. The African ethnic group is also the group that bears the burden of this income inequality.

3.20 Disposable Income Due to the economic climate in South Africa, many people have less disposable income than before the global economic downturn in 2008. This impacts spending on consumer products such as clothing, footwear, textiles, leather products, and furniture.

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3.21 Technology Rapid changes in technology have an impact the global economy and the fibre-processing and manufacturing sector is equally subject to this impact. Technological developments do not have a uniform effect on the demand for labour. On the one hand, the mechanisation and computerisation of processes may reduce the demand for labour. At the same time technological changes are the biggest drivers of skills demand in the sub-sector and all levels of workers have to continuously upgrade their skills if they are to keep up with technological changes. The use of electronic media is increasing at a rapid rate, and is expected to change the “face” of the printing and publishing sub-sectors locally and internationally. One of the challenges in some sub-sectors is that current equipment is old and out of date, at a time when competitors are using the most up to date equipment and therefore having an advantage. There is a need to co-ordinate training efforts and funding processes for upgrading factories and workshops so that South African producers have the best and most modern equipment and a workforce that is capable of making use of technology to achieve competitive advantage.

Social media is applied across the FP&M sectors worldwide. “Social media has emerged as one of the more important channels in the online discovery, research and purchase processes”. (Indvik, 2012). Social networks are a huge source of consumer data that can be used effectively, but these sources have been underutilised so far. Relative few sub-sectors (as demarcated by SETAs) have assessed the need for empowerment of people on social media. “Is social media commentary going to change the way fibre-processing and manufacturing companies around the world do business? Can sub-sector participating in a blog or forum discussions affect their bottom line or share pricing? These are just some of the questions today’s fibre-processing and manufacturing companies need to answer.” (Grouch 2013) According to Bockius (2010), the risks of ignoring the impact of social media are as follows: • Risk to the brand: Since good as well as negative messages are communicated via social

media, the brand of the provider could be tarnished by negative comments. • Compliance risks: Non-compliance with regulations, laws and other policies can be

communicated via social media, which imply risks for the provider. • Competitive risk: The social media compare quality, prices and service, which could lead

to competitive risk for the provider. It is therefore strongly recommended that proactive action be taken in terms of social media from a skills development perspective. Some publications recommend that a social media strategy should be an integral part of the company’s corporate strategy.

3.22 Legislation Other skills that would need to be developed are legislation handling and implementation. This could become a much needed skill due to legislative changes that are happening nationally and internationally. One key piece of legislation is the BBBEE Act. Acceleration of BBBEE is a key imperative of most government policies implemented after 1994 and is critical to address transformation in

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the industry. FP&M SETA will undertake research to accelerate the implementation of BBBEE within its sub-sectors and to determine trends in terms of ownership and equity. Other pieces of legislation include the Consumer Protection Act, the Skills Development Act and related legislation, the Labour Relations Act and related legislation. The National Environmental Management Waste Act, No 59 of 2008 came into effect on 1 July 2009. This has led to a promotion of a culture of recycling in the sub-sector and increased education and awareness about the recovery of paper. The Labelling Act, more specifically ‘country of origin’ labelling legislation impacts business practice in the clothing, leather, footwear and textiles sub-sectors. Legislation around intellectual property and copyright are important in the printing and publishing sub-sector. It needs to be acknowledged that there are a number of tensions that need to be managed. One area is the need to create jobs and achieve equity when technology is reducing reliance on labour and employment is reducing. There are sometimes discrepancies between the global landscape and the South African policy agenda. Attention should be paid to both to ensure the most suitable skills solutions. In understanding the challenges of the longer term future landscape, the following contradictions between global forces and the South African policy imperative have been identified:

Table 15: Contradictions between global forces and the South African policy imperatives

Global forces South African policy imperatives Reduced employment in various sub-sectors as a result of technological developments

Increased employment levels are required as guided by most government policies

Fewer people required due to technological advances

Job creation is required to meet various government policy objectives

Market forces dictate business Historically inequalities need to be addressed Labour market forces dictate Equity needs to be accelerated Political transformation does not always affect the sector

Imperative political transformation directly affects the sector

Legislation focuses largely on sub-sector regulations

Regulation focuses on sub-sector regulation as well as challenging political transformation

3.23 Broad Based BEE and how it is understood and being promoted in the sector

The Broad-Based Black Economic Empowerment (B-BBEE) protocol has an important influence on the FP&M sector. The B-BBEE Codes of Good Practice were launched in 2007 and provided a framework for measurement of Broad-Based Black Economic Empowerment (BBBEE) in terms of the BEE Act 53 of 2003. In October 2013 an amendment to the codes was published, ushering in a new phase of B-BBEE measurement, and significantly changing the face of transformation. The Department of Trade and Industry in March 2014 announced that the implementation of the amended B-BBEE Codes of Good Practice must take place in

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April 2015 and all sector charter councils have been advised that their respective sector codes must be aligned to the direction of the new codes by the end of April 2015. Although the 2007 codes encouraged voluntary compliance with BBBEE, the current codes appear to be punitive in nature. Major shifts include:

• Establishment of a B-BBEE Commission to play an oversight and advocacy role with regard to B-BBEE

• Fines up to 10% of annual turnover and/or up to 10 years’ imprisonment for contravention of B-BBEE Act / Codes, especially in relation to issues such as fronting or providing wrongful information

• Government and public entities can cancel contracts or “authorisations” awarded due to false information on B-BBEE status

• It is an absolute obligation on Government and public entities to take the Codes into account in their procurement policies and in issuing licenses and authorisations

• South African listed entities to provide a report to the B-BBEE Commission on their compliance with B-BBEE.

The release in 2007 of the government's scorecards for B-BBEE gave vendors a clearer idea about how they would receive credit for black equity or employment representation. In order to participate in public sector and corporate tenders, international vendors are keen to prove their credentials under these criteria. In the narrower context of employment equity, the promotion of and insistence that stakeholders adhere to legislative requirements in respect of e.g. the Employment Equity Act, assists in eliminating unfair discrimination in the workplace. To this end, projects which are approved based on this legislative requirement redresses past imbalances in respect of race, gender, disability and income.

The codes which will come into effect in 2015 provides some guidance in dealing with various elements. Skills Development has been classified as a priority element and thus the measurement principles cannot be deviated from, yet the measured organisation can adjust targets and weightings. As a priority element, a sub-minimum of 40% of the total weighing points must be achieved. This means employers will be obliged to score at least 8 out of a possible 20 points on the Skills Development Scorecard. Failure to achieve sub-minimum results in overall BEE score being automatically docked by one level. The targets for skills development is 6% of payroll which is an increase from 3% in the previous codes. The 6% however can be spent on both employed and unemployed persons although the training must mirror the economically active population of the province or region in which the business operates.

3.24 Strengths and Weaknesses across the Value Chain.

3.25 Constraints: Key constraints facing the clothing and textiles industry include currency volatility; the on-going surge of global imports that have been under way since the expiry of the Multi-fibre Agreement; illegal imports and fraudulent under-invoicing; inadequate compliance with ‘country of origin’

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labelling legislation; shortage of skilled personnel to take over from ageing industrial executives and senior management, who generally did not have succession plans in place; historical failure to develop and implement skills development plans, particularly for critical areas of operations and in production; out-dated capital equipment and technology resulting from inadequate capital investment and technology upgrading; and an historical deficit with respect to innovation, research and development. The Wood and Wood Products subsector experiences the following constraints: • Timber shortages and log quality: Small- and medium-scale sawmills obtain the bulk of

their saw log supplies from either Safcol or DAFF. Most of the timber is provided in terms of ad hoc or short-term (one-year contracts), which makes it impossible for these enterprises to plan effectively. Most of the sawmills have the capacity to process 5,000m3 of saw-logs per annum, but they are currently running at a processing capacity of less than 4,000 m3 per annum owing to the shortage of timber.

• Research and development is needed in the industry to shorten rotations without compromising the quality and yields of timber.

• There are few opportunities for value-addition: The bulk of the timber produced by small-scale sawmills is ‘wet-off-saw’ and mostly ungraded. It includes building materials such as purlins, rafters, roof truss materials and other construction materials. The other main output from small-scale sawmills is industrial (ungraded) timber, which is supplied to downstream manufacturers such as pallet producers, manufacturers of doors and doorframes and laminated products.

• Productivity levels are poor. • Old equipment and technology impacts negatively on production. • Importation of structural and industrial lumber: The industry faces a serious threat from

large-scale importation of structural and industrial sawn lumber. The importation of this lumber has the potential to damage and restrict the long-term development of the local sawmilling sector.

Key economic constraints that are holding back development in the forestry and processing sectors are as follows: • Water licences: The issuing of water licences has become a serious obstacle for forestry

development. Communities are sometimes unable to afford the cost of undertaking the mandatory EIA to apply for water-use licences. There are also often delays in the processing of licence requests as a result of lack of capacity in regional offices of the Department of Water Affairs. Lack of business skills in rural communities also result in incomplete applications being submitted, which further delays the process.

• Skills development and technology transfer: The new forest growers and beneficiaries of land reform do not necessarily have the skills and relevant technology to grow the trees optimally.

• Investment finance: Tree-planting cannot take place without securing investment finance. Long rotations in forestry require long-term capital for forest establishment, maintenance and harvesting operations; income streams only appear a relatively long time after the investment has been made. As a result, there is quite widespread reluctance to invest in the forestry business.

• Land tenure: Most of the land that has been identified as suitable for new afforestation is tribal land or land belonging to communities where land-claims settlement issues still need to be resolved before tree planting can take place. There is often a lack of proper consultation and mobilisation within communities in line with forestry development protocols. Demand for raw material exceeds supply: The demand for raw material far exceeds supply and this has resulted in the closure of some downstream processing industries. Timber volumes declined to 15.2 million tons in 2010, as compared to 19 million tons in 2008. The small players in the industry are most affected by this because of the

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vertically integrated nature of the industry, where big companies own plantations and small businesses rely on supply from DAFF plantations.

The furniture sector faces a set of constraints that are holding back its development and negatively affecting its competitiveness: • Shortage of skills, especially in technical and high-level skills like design; • Wood raw material supply problems, particularly for small enterprises; • The influx of cheap imports and the challenge of getting retailers to buy locally produced

products. The survival of the industry will largely depend on interventions to deal with the escalation of imports, while at the same time increasing procurement of locally manufactured products.

• Lack of research and development to support industry growth. • Difficulties with respect to the enforcement of quality and standards measures to

differentiate local products from cheap low-quality imports. Although some quality standards exist, they are currently not enforceable.

Risks, challenges and opportunities in the print media and publishing sub-sector include: • The shedding of large numbers of jobs and a skills loss – not meeting or staying abreast

of new technological developments is having an economic impact on the sub-sector. • Downsizing within the sub-sector because of global recession still poses a risk to the sub-

sector. • Growing number of freelance journalists or journalists who are working permanently but

have to supplement their income with freelance (proving to be a HR headache) – this can also be viewed in a positive light as people are multi-tasking/skilling.

• Technology – insufficient bandwidth poses a severe challenge to the sub-sector – devices and platform – as well as cost.

• Literacy – impact on every form of media from a local perspective – impact of state acquisition of learner materials in the form of what is appropriate and the significance of selection/choice of materials and volume.

• Resources and cost of developing the sub-sector to address shortages, skills gaps and technological changes at the speed to which these changes occur and the ability to respond to these changes.

• Crucial skills that are about to leave the sub-sector – retirement, occupational transfer, obsolete, downsizing-recession impact. (This is not linked to occupational specific jobs), mortality, inter-occupational mobility and migration. Replacement figures due to concerns around issues for example, HIV/AIDS.

• Innovation, entrepreneurial skills are being developed based on needs such as new technologies – to be addressed through identified training programmes.

• State Publishing is hampering growth because the state can print in volume and has restrictions in terms of format and styles.

• Development of policy and policy changes – staying abreast of local and international policy developments.

3.26 Opportunities The key opportunity that the clothing, footwear, leather and textiles sub-sectors are focussing on is to recapture a bigger share of the domestic market by improving competitiveness through a range of interventions. These include an enhanced focus on product, process and delivery efficiencies and the strategic harnessing of proximity to local retailers. Ongoing clampdowns on under-invoicing and other illegal activities are helping to level the playing field. The industry has seized the opportunity of a coherent and comprehensive set of support instruments to

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fundamentally transform its competitiveness. Key strategic partnerships will be required from FP&M to facilitate skills developments across the value chains. The key opportunities that have been identified in the Wood and Wood Products sub-sector include: • Forward integration into the production of value-added products such as furniture

components, low-cost housing components, doors, windows, window frames and similar building products.

• The possibility of entering into the export market. This, however, will only be successful if small-scale sawmills co-operate with the conscious aim of penetrating these markets.

• Small-scale sawmills have the opportunity of organising themselves into an association. This would increase their bargaining power with respect to securing log supplies, improve their marketing, and make a move into export markets a realistic prospect.

• A better-organised sawmilling sector would have the potential to create significant numbers of new jobs in rural communities.

• Beneficiating more SA leather domestically to grow the footwear sector. • Footwear opportunities: small batch production, design-driven, quality, lead time to

market

Key opportunities that have been identified for the Forestry sub-sector through the strategic Environmental Assessments (SEAs) and provincial basic assessments (conducted by DAFF) estimated that there is more than 100,000ha of potential land available for afforestation. In the Eastern Cape, an estimated 100,000ha has been identified; 6,000ha in Limpopo; and 39,000ha in KwaZulu-Natal. Afforestation has the potential to create 14,500 jobs countrywide, particularly for the rural unskilled, where the identified land is mostly located. There is also potential to improve the yields of existing plantations and convert existing wattle jungles into commercial plantations. Most of the forests exist on communal land where a number of value-added opportunities can be explored for small growers who are currently supplying their timber to big companies for pulp and paper mills. Opportunities exist to expand the small scale saw-milling industry, since most of the saw-millers are located close to forests in rural areas, have also been identified. Forestry has a regional footprint in Southern Africa and can play a leading role in the development of a Southern African forest system. The sub-sector experiences relative short growth cycles when compared with Northern hemisphere. Growth in forestry provides platform for downstream beneficiation in pulp and paper industries There are a number of opportunities in the furniture sector. It has the potential to create employment, particularly in rural areas where there is minimal economic activity. There is also a real opportunity to improve sector productivity and competitiveness by improving skills and enhancing innovation. This could best be done through the adoption of a cluster-development approach, which would reduce input costs, allow for better information and infrastructure sharing and reap significant economies of scale. There is also an opportunity to align furniture industry standards with public procurement and designations. Another opportunity is the building of design skills for the furniture sub-sector to increase the beneficiation of wood.

The potential for growth in the packaging sub-sector relies on improved value chain linkages. The packaging sub-sector is perhaps the single most important driver of growth in sales across all other industries. The growth of the packaging sub-sector thus relies on improving the value chain linkages between packaging and the sub-sectors in which it plays a packaging role (as part of their value chains). Identifying the priority areas for improving value chain linkages will require extensive work, but will result in significant growth in both sub-sector output and employment. This is the industrial strategy development plan envisaged by the SETA as a core strategic element. Opportunities in the publishing sector lie in the increase publication in African languages, including economic, academic, scientific and cultural spheres.

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The various industrial strategies under DTI (or sub-sector-specific charters) envisage growth in both industrial output as well as employment. They propose structural adjustments within and between the industries; investments in new technology; and business strategies both to improve competitiveness and to promote transformation. The current reality appears to be that these strategies are for the most part yielding mixed results, in the current economic climate. Most sub-sectors are indeed struggling to survive, let alone achieve the growth potential that exists. The key skills development challenge is about how to support the sub-sectors in a turn-around strategy, to equip them to achieve the growth and transformation envisaged. The actual work of industrial cluster analysis and planning is the responsibility of DTI, as part of the Industrial Policy Action Plan. However, the industrial strategy ultimately agreed will have skills development implications.

3.13 Scenarios to Facilitate Skills Planning It is useful when looking at possible scenarios to identify the key variables or uncertainties and to project how variations one way or the other will have an impact on the development and growth of the sector. From the sector analysis and factors that are contributing to change in the sector there are some key factors that seem to emerge. First appears to be the global and local economy (and related issues such as aspects of the local labour market and the challenges of labour absorption, import – export ratios). These factors determine whether there will be growth and development and whether this will result in improved employment opportunities and the creation of a cycle of growth and development. Second is the role of the state and the various government departments whose plans and work impact on the FP&M sector. Related to this are the various industrial policies that are driven by the state, and not the owners of businesses or emerging businesses. For the various strategies to be instrumental in achieving a “turn-around” or improvement across the sub-sectors, a number of factors need to be in place. The most prominent role-player is the Department of Trade and Industry. But is also involve access to land in the case of Forestry and up and downstream industries (Department of Rural Development and Land Reform), agricultural support within a supportive agricultural framework (Department of Agriculture, Forestry and Fisheries), access to consistent water supply, especially in forestry and wood (Department of Water Affairs), access to finance (Department of Trade and Industry, various state agencies), conducive labour market regulation (Department of Labour), economic planning and macro policy (Department of Economic Development, National Treasury), and appropriate education, training and skills development (Department of Higher Education and Training, the Human Resources Development Council, NSA and the SETA). There are other government departments as well as provincial and municipal structures that also play a role. The following analyses show how the following four variables impact positively or negatively on the growth of the sector and the demand for skills: § Economic growth and development; § Role of the government; § Changes in human capital; and § Import – export ratios

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Table 16: Growth scenarios

HIGH GROWTH SCENARIO The economy Role of government

The economy in SA and globally continues to revive, albeit slowly for the next few years

Improved and accelerated performance across all the Industrial Policies applicable to the FP&M sector

International trade agreements are still weighted in favour of US and EU but progress is being made and specific blockages are addressed in bilateral talks

Roles and integration of national government departments are clarified. Specific functions are agreed, processes put in place and personnel appointed with the required skills

The rural economy gradually improves with the buying power of the poor increasing and more stable markets created for local produce; disposable income improves

The roles of Departments (DWA, DAFF, DRDLR, DoL, DTI, DED, DHET) are clarified with appropriate joint plans and coordinating structures

Growth in output and improved local supply. For each of the functions agreed in each of the related departments appropriate structures and systems are put in place and staff trained

Beneficiation increases, exports increase in key areas identified in IPAP, and the Rand exchange rate stabilises at a level not too much different than it is today

Capacity is enhanced at local level to support implementation of all the industrial strategies applicable to the FP&M sector

There is a growing understanding of the concept of dualism and the need to intervene with labour absorption and development mechanisms Demand for FP&M products increases across the global economy.

Sub-sectors that have been identified as potentially labour-absorbing (clothing, textiles, footwear, leather, furniture, forestry) experience grow in employment

Local beneficiation of raw material increases incrementally in sub-sectors that lends themselves to beneficiation.

Skills needs appropriate identified through proper research and skills development interventions address these needs over time (including research and innovation)

Measures to curb illegal imports and “dumping” are consistently applied.

Some relaxation of labour market regulations are agreed that maintain some minimum standard of employment but assist absorption

Innovation leads to the establishment and growth of niche products and markets

Mechanisms are found to address skills needs in the context of casual and seasonal work patterns

A gradual decrease in the demand-import ratio, and an improvement in the output-export

Changes in human capital Import – export ratios LOW GROWTH SCENARIO

The economy Role of government The economy in SA and globally stagnates at current levels and the economy struggles to pick up after the temporary 2010 World Cup boost Industrial policies lag behind in implementation

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International trade agreements are still weighted in favour of US and EU and protectionism increases as a result of the global recession

A lack of purpose at government level means limited progress for another five years. Land reform remains a commitment without a plan

SA’s Gini coefficient continues to worsen, with rural poverty increasing and local economies declining

The roles of Departments (DWA, DAFF, DRDLR, DoL, DTI, DED, DHET) are unclear and there is no proper co-ordination

Output declines further and local supply deteriorates There is a lack of effective structures, systems and processes to implement policy across departments

Rand volatility causes problems for importers and exporters. Well established markets are maintained but exports decrease and little beneficiation happens.

At local level the three are inadequate support structures to support functions such as SMME establishment and mentoring, niche beneficiation projects, etc.

Understanding of the rural economy is so diverse that stakeholders cannot agree the problem, let alone the solution to low absorption levels Demand for FP&M sector products remains at a low level or decreases further

Labour absorption remain low, even in sectors that have been identified as having high labour-absorption capacity

Beneficiation of raw material remains limited, and the export large percentages of raw material produced continues.

Skills development intervention are not addressing real needs in the sector and do not support skills for innovation and technology

“Dumping” of imported products (cheap products) continue and increases over time.

Labour market regulation continues to be a contributing factor to reducing levels of employment

Little or no innovation happens to support the development and establishment of niche products and markets

Unstable employment patterns in the sector make skills interventions difficult to manage and largely ineffective Further deterioration of the demand-import and output-export ratios.

Changes in human capital Import – export ratios These analyses can be translated into four potential growth and development scenarios for the agricultural sector which are based on the requirements for a strong, development state:

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Table 17: Growth Scenario Summaries

Scenario 3: Weak government support and sound economy

Econ

omic

fact

ors

glob

ally

, nat

iona

lly a

nd lo

cally

Scenario 1: Integrated government support and sound economy

The gradual economic upturn that has started globally continues and things improve, enabling an expansion of exports and the curtailing of imports. Output improves across the sector and employment increases marginally. The government, because of a lack of integrated policy planning and implementation, provides limited support for sector development. The gains go to the well-established enterprise owners, with few gains for emerging niche manufacturers, small scale millers and local communities.

Government departments coordinate their efforts to achieve maximum impact. There are favourable economic conditions that create opportunities for advance. Within this positive environment the role of the FP&M becomes a central part of a comprehensive strategy for growth and skills interventions are targeted to achieve maximum effect. This results in growth in sustainable enterprises, the emerging of new sustainable enterprises, market expansion and expanded employment opportunities.

Government policy and support Government policy and support

Combination of disjointed government policy, planning and a weak and increasingly marginalised rural economy. Economic conditions result in unsustainable forestry and manufacturing conditions and employment declines along with productivity. A lack of development in rural areas leads to increasing social tensions. A vicious cycle develops with the sector going into long term decline, with a further decrease in output, decline in formal employment and a further increase in imports.

Government departments coordinate their efforts to achieve maximum impact. However economic conditions hamper progress. Efforts by FP&M are undermined by poor domestic demand, limited opportunities for beneficiation and export, poor labour absorption and job insecurity. Some significant successes are however recorded in the establishment of certain niche products and producers and expanded forestry activities that result in sustainable enterprises. A platform is laid for future improvements when the economic conditions improve.

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Scenario 4: Weak state and economy Scenario 2: Strong state but weak economy

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Chapter 4 Demand of Skills This chapter of the SSP describes the demand for scarce and critical skills as reported by FP&M sector employers. It also describes the key strategic challenges facing labour and skills in the sector as a basis for possible priority skills interventions.

4.1 Approach to the demand analysis The approach to the demand analysis involved the following steps:

• Firstly, a literature study was carried out to analyse the industries. This literature study entailed the analysis of both industrial policies and strategies formulated for the different sectors.

• Secondly, interviews were conducted with stakeholder and experts in each sub-sector. The outcomes of these interviews are presented after the demand analysis for each cluster.

• Third, labour market forecasts of both growth demand and replacement demand were undertaken. (“Growth demand” refers to the number of new jobs anticipated as a result of industrial growth; “replacement demand” refers to the number of people currently employed in the sector who are likely to leave for reasons such as retirement, migration, mortality and morbidity, etc.). The labour market forecasts made use of a number of data sources. The analysis was conducted using both Stats SA’s Quarterly Labour Force Survey (QLFS) and the Quantec data. For the Forest sector, lack of reliable data meant that a number of data had to be extrapolated. This extrapolation is explained in the relevant sections of the forest sub-sector analysis.

• Finally, the findings of the literature survey, interviews and forecasts were presented to sub-sector representatives in workshops across four regions. Feedback was incorporated into the SSP. Please note that this is regarded as the “narrow” consultation required for the draft, and that “wide” consultation is scheduled for September – November, when the final version of the SSP is due for submission.

This enabled for skills demand analysis to be conducted for the sector.

4.2 Methodology The employment forecasting was based on the following steps:

• Firstly, growth demand based on three different growth scenarios: -1%, 2% and 5% growth – was calculated. These scenarios were adopted because average growth among the FP&M SETAs was between 0 and 3.5% on average between 2001 and 2011. Thus the growth scenarios reflect negative and positive, albeit conservative, projections of future growth in the sectors.

For the growth demand, the following the factors were taken into account: capital intensity, productivity, labour elasticity and capacity under-utilisation.

• After projecting growth demand, the next step was calculating occupational employment forecasts. This was done by defining each occupation group as a proportion of total employment and then using that proportion to predict the number of jobs that would be lost in that particular occupation in each growth scenario. While this

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is a very crude estimate, it still gives an indication of what could happen in each situation.

• Finally, replacement demand was estimated. There are a number of elements of replacement namely retirement, mortality from HIV/AIDS-related illnesses and other causes such as migration. The age profile is used for both the retirement and the HIV/AIDS-related replacement calculations. For the retirement replacement, it was assumed that people who were 60 years old would retire in the next 5 years and those who were 55 and above would retire in the next 10 years.

The age profile was also used for the calculation of HIV/AIDS-related replacement demand. In the first step the HIV prevalence rates by age and gender as presented in Shisana et. al (2009) were used to calculate approximate HIV prevalence in the leather sector. In the second step the percentage of people who had died from HIV-related causes as shown in a Stats SA survey from 2009 was used to calculate, by age and gender, the number of people who were likely to die within the next 5 years from HIV-related causes within the leather sub-sector. The percentages used were 2.9% for males and 3.3% for females. To calculate the replacement demand due to other deaths the number of people who had died from causes other than HIV-related illnesses who worked in the manufacturing sub-sector was calculated. The percentage of the aforementioned people out of all who had died from causes other than HIV-related illnesses was calculated and is found in the table below. This was then used to calculate the replacement demand due to death from causes other than HIV-related illnesses.

4.3 Issues and limitations A number of issues have to be noted. Firstly, the growth demand and consequently the occupational modelling results for clothing and furniture sectors are not presented. In these sectors, the labour elasticity coefficients were so high that even the negative growth demand led to positive employment growth. Because this is not likely, especially in the current economic climate, these results have been left out. Secondly, the minor occupation groups for the footwear sector have not been presented. This is due to what seems to be a coding error in the Stats SA’s QLFS dataset that has recorded the highest minor occupational group in the footwear sub-sector as being “millers and bakers”. (Statistics South Africa confirmed that there is indeed an error).

4.4 Scarce and Critical Skills in the FP&M Sector The sector analysis chapter pointed to possible employment loss in most FP&M sub-sectors. In such cases, scarce skills shortages are only likely to arise because of replacement demand. However, many of the key professional and artisan skills in the sector are in short supply both nationally and internationally, and this is a cause of labour mobility and emigration. Also, the aging workforce reported for many sub-sectors is concentrated particularly on these artisan and professional occupations. Despite forecast employment loss, there is therefore still a compelling argument for FP&MSETA to continue investing in a sustainable supply of these scarce skills. Also, new occupations are emerging as scarce skills due to the changing nature of the industries. For example, design is emerging as a key driver of industrial growth in furniture,

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printing and packaging, clothing, textiles, footwear and leather. Design is therefore a key scarce skill for the sector. These “new” scarce skills are therefore also an important focus of FP&M SETA efforts. Before a discussion on the scarce and critical skills can be undertaken, it is of paramount importance that a thorough understanding of the definitions has been grasped. It is often that companies mistake the two concepts for each other, thus creating a skewed impression of what the actual needs are for each sub-sector. The FP&M SETA have defined the terms as follows:

• Scarce Skill: An absolute or relative demand (current or future); for skilled/qualified and experienced people to fill particular roles/professions, occupations/specialisations in the labour market and is measured in terms of an occupation or specific qualification.

• Critical Skill: particular capabilities needed within an occupation, e.g. general management skills, communication and customer handling skills, team-work skills, communication technology skills, etc.

Further to the above definitions, a differentiation should be made between the terms of absolute and relative scarcity of skills. The Department of Higher Education and Training (DHET) defines the terms as follows:

• Absolute scarcity - suitably skilled persons not available in the labour market.

o Examples where absolute scarcities may arise include: § A new or emerging occupation; § Firms / Government / national economy are unable to implement

planned growth strategies; and § Replacement demand reflect an absolute scarcity

• Relative scarcity - suitably skilled people are available in the labour market but do not meet other employment criteria, i.e.:

o High-level work experience, e.g. project management of large manufacturing sites etc.;

o Geographical location, e.g. people unwilling to work outside of urban areas; and o Equity considerations, e.g. Few/if any candidates with the requisite skills from

specific groups available to meet the skills requirements of firms and enterprises (Department of Labour - DoL, 2006c).

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4.5 OCCUPATIONS IN THE FP&M SECTOR A mapping of occupations in the FP&M sector was conducted in order to develop some level of understanding about the key occupations that exists across the sector. The mapping enables for better tracking of scarce skills as well as for identification of critical skills gaps within these occupations. The table below provides a list of occupations prevalent in the sector, including the skills required, minor and major occupational groups applicable.

Table 18: Occupations in the sector

Major Occupational Groups

Sub Major Occupational Groups

Minor Unit Skills Skills level

MANAGERS

MANAGERS

CHIEF EXECUTIVES/ GENERAL MANAGERS

Chief Executives, General Managers

Managing Directors, General-, Advertising- Marketing-, Services Managers, Corporate (Administrative, Business); Finance, Human Resource, Policy and Planning,

Planning, Leading, People Management, Financial 6 and up

Health, Safety & Environmental Management

General manager, policy and planning manager, research and development, contract, program, project

Ability to determine, formulate and review the general policy programs and the overall direction of organisations within the framework established by boards of directors and similar governing bodies.

5

Production Supervisors / Production management

Distribution and Production / Operations Managers

Production scheduling, improving production systems, managing productivity, continuous improvement of production system, defining production processes, style change-over times, reduce manufacturing runs, increase manufacturing output, World Class Manufacturing (WCM), lean manufacturing reliable production, machine maintenance management.

5

General management General manager People management skills, co-ordination of internal value, integration production, design & merchandising, customer requirements. Product costing, Health, Safety & Environmental Management, Negotiating skills, Customer relationships

5

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Distribution and Production / Operations Managers

Supply and Distribution Managers

Understand value chain reliability: managing productivity and appropriate use of technology, delivery reliability to customers, delivery reliability from suppliers, Market knowledge, research skills, analysis skills

5

Designers, Planners Engineering Managers New product development, new product design: designing, planning, costing 5 and up

Miscellaneous Specialist Managers

Quality assurance management

Understanding quality, operating a quality system, improving quality, reduce reject rates, integrated quality systems with customers

5 and up

Chief Executive Officers and Managing Directors

Chief Executives and Managing Directors (Enterprises / Organisations)

Director (Enterprise / Organisation) /Corporate general manager

Strategic planning, leadership and planning

5 and up Plan, organise, direct, control and review the day-to-day operations and major functions of commercial and industrial organisations through departmental managers and subordinate executives.

Financial management Financial Services Managers

Financial management: age of capital equipment, cash flow analysis. Financial management, profitability, cash flow management, costing management

5 and up

Human resource management

Human Resource Professionals

Understanding HR legislation, improving productivity in people and teams, managing performance, managing industrial relations, ensuring highly motivated, high performance people

5

PROFESSIONALS

Professionals

Business, Human Resource, Marketing and Communication Management Professionals

Human Resource and Training Professionals

Human Resource Professionals

Create visual two- and three-dimensional concepts and forms through painting, drawing, carving, sculpting, modelling, printmaking, video, multimedia, found objects, ephemera, soundscapes and other media to communicate concepts and ideas.

5

Sales, Marketing and Communication Management Professionals

Advertising and Marketing Professionals

Develop and coordinate advertising strategies and campaigns, determine the market for new goods and services, and identify and develop market opportunities for new and existing goods and services.

5

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Sales, Marketing and Communication Management Professionals


Develop and coordinate advertising strategies and campaigns, determine the market for new goods and services, and identify and develop market opportunities for new and existing goods and services.

5

Public Relations / Communication Management Professionals

Plan, develop, implement and evaluate information and communication strategies which create an understanding and a favourable view of organisations, their goods and services, and their role in the community.

5

Arts and Media Professionals

Arts Professionals Visual Arts and Crafts Professionals

Create visual two- and three-dimensional concepts and forms through painting, drawing, carving, sculpting, modelling, printmaking, video, multimedia, found objects, ephemera, soundscapes and other media to communicate concepts and ideas.

5

Design, Engineering, Science and Transport Professionals

Engineers and Engineering Technologists

Industrial and Mechanical Engineers and Technologists

Design, organise and oversee the construction, operation and maintenance of mechanical and process plant and installations, establish programs for the coordination of manufacturing activities, analyses and modify new and existing industrial, mechanical and production engineering technologies and ensure usage of resources is cost effective.

5

Education

Miscellaneous Education and Training Professionals

Miscellaneous Information and Organisation Professionals (Skill Level 5)

Promotes economic growth and renewal in their local area. May be involved in all aspects of economic development work, or may specialise in one area such as attracting inward investment, setting up training schemes, tourism development or bidding for funding.

05-Jun

TECHNICIANS & TRADE WORKERS

Technicians & trade workers

Other Technicians and Trades Workers

Printing Trades Workers

Printing Trades Workers Compose and set type prior to printing, set up and operate printing presses, bind and finish printed products, and prepare stencils and operate screen printing equipment

5


Binders and finishers Bind books and other publications, finish printed products by hand and machine.

5

MACHINE OPERATORS & DRIVERS

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Machine operators &

drivers

Machine and Stationary Plant

Operators


Production operator supervisor

Interpreting engineering production drawings. Setting up, operating and adjusting production plant to shape metal stock and castings, and cut sheet metal, Managing production improvement; maintenance

4

Machine Setters and Minders / Printers / Operational Process Controllers / Other Miscellaneous Technicians and Trades Workers

Adjusting the machinery and settings during the manufacturing operation / Quality assurance, systems & testing

3

Printing Assistants and Table Workers (Skill Level 2)

Perform routine printing tasks, operate bindery machines and perform manual binding and finishing of books and printed products.

2

Advertising, Marketing and Sales Managers


Marketing and communication: understanding the market concept, Pricing, distribution and promotion, Segmenting and targeting markets

5 and up

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4.6 Scarce Skills per Sub-sector Scarce skills refer to areas within occupations in which there is a shortage of qualified and experienced people due to unavailability of such people or because these people do not meet given employment criteria. Scarcity may arise due to absolute scarcity in which few people hold the necessary skills or qualifications (such as those required in a new or emerging occupation). These skills are either impossible to replace or extremely difficult to replace should they exit the sector. Absolute scarcity results in low growth and productivity of companies in the sector and the sector itself. Relative scarcity of skills pertains to skills that are difficult to attain due to geographic location, equity requirements or the lead time on attaining the necessary skills. The tables below outline the scarce skills occupations across the sector. The sector has conducted an in-depth forecasting exercise taking into account replacement demand and other factors influencing skills demand. This is provided in the annexure and the next step would be to align these identified scarce skills per sub-sector with the forecasts so that estimated demand data per occupation is fine-tuned. The Clothing sub-sector has the highest proportion of Plant and Machine Operators and Assemblers (47%) followed by elementary occupations with 26%. The following are identified scarce skills:

Table 13: Scarce Skills Clothing Sub-sector OFO Code Scarce Skills

• 652204 • Patternmaker

• 715302 • Clothing, Textile and Leather Goods Production Operator / Machinist

• 214908 • Materials Engineering Technologist (not referring to quality advisors)

The Footwear sub-sector has the highest proportion of Plant and Machine Operators and Assemblers (40%) followed by elementary occupations with a representivity of 38%. The table below outlines the identified scarce skills occupations.

Table 14: Scarce Skills Footwear Sub-sector OFO Code Scarce Skills

• 311904 • Manufacturing Technician / Footwear technician


• 653301 • Industrial Machinery Mechanic / Machine mechanic

The leather sub-sector employs more Plant and Machine Operators and Assemblers (33%) followed by elementary occupations with a representivity of 24%. Skilled Agricultural, Forestry, Fishery, Craft and Related Trades Workers make up 14% of employees in the sub-sector. These are scarce skills identified in this sub-sector:

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Table 15: Scarce Skills Leather Sub-sector OFO Code Scarce Skills

• 652204 • Patternmaker

• 715302 • • Clothing, Textile and Leather Goods Production Operator / Production overseer

• 214104 • Production Engineering Technologist / Leather technologist

• 684901 • Clothing, Footwear and Leather Processing Machine Mechanic / Sewing machinist

• 653301 • Industrial Machinery Mechanic / Machine mechanic

Textiles sub-sector employs more people in elementary occupations (37%) followed by Plant and Machine Operators and Assemblers with a representivity of 33%. These are the scare skills that are applicable in this sub-sector:

Table 16: Scarce Skills Textiles Sub-sector OFO Code Scarce Skills


Furniture sub-sector employs more people in elementary occupations (34%) followed by Plant and Machine Operators and Assemblers with a representivity of 21%. Skilled Agricultural, Forestry, Fishery, Craft and Related Trades Workers make up 20% of employees in the sub-sector. The following are the scarce skills unverified in the sub-sector:

Table 17: Scarce Skills Furniture Sub-sector OFO Code Scarce Skills

• 682303 • Wood machinist

• 721901 • Product Assembler / Wood finisher

The publishing sub-sector tends to employ high level skills with professionals at 36%, Clerical Support Workers (20%), Technicians and Associate Professionals (13%) and managers at 12%. The table below outlines the scarce skills in the sub-sector:

Table 18: Scarce Skills Publishing Sub-sector OFO Code Scarce Skills

• 264102 • Book or Script Editor / African languages editor

• 264201 • Copywriter / Copy editor

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OFO Code Scarce Skills

• 264302 • Translator

• 134917 • Publisher / Commissioning editor

• 216602 • Illustrator / Book designer

Skilled Agricultural, Forestry, Fishery, Craft and Related Trades Workers has the highest representivity in the printing sub-sector at 31% followed by Plant And Machine Operators and Assemblers at 14%. Clerical Support Workers and Elementary Occupations each have a 13% representivity. The scarce skills within this sub-sector are:

Table 19: Scarce Skills Printing Sub-sector OFO Code Scarce Skills

• 333903 • Sales Representative (Business Services) / Estimator

• 241102 • Management accountant

• 662303 • Mechanized book binder

• 662101 • Electronic Pre-press Technical Worker / Pre-press operators / technicians

• 432201 • Production Coordinator / Production planner

• 671202 • Millwright / Printers mechanic

• 662208 • Roll Label Machine Technician / Flexographic machine minder

In the print media sub-sector, there is a high representivity of Plant and Machine Operators and Assemblers (20%). Clerical Support Workers and professionals feature prominently at 18% and 17% respectively. Areas of scarcity of skills are in the following occupations:

Table 20: Scarce Skills Print Media Sub-sector OFO Code Scarce Skills

• 264202 • Newspaper or Periodical Editor / Editor

• 134915 • Operations Manager (Non-Manufacturing) / Operations Manager

• 216603 • Multimedia designer

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The packaging sub-sector has a high proportion of Plant and Machine Operators and Assemblers (47%) followed by elementary occupations with a representivity of 22%. The table below identifies the scarce skills in the sub-sector:

Table 21: Scarce Skills Packaging Sub-sector OFO Code Scarce Skills

• 216302 • Industrial Designer / Structural designer

• 122301 • Research and Development Manager / New product developer

• 121908 • Quality Systems Manager / Quality controller

The paper and pulp sub-sector has a high representivity of Plant and Machine Operators and Assemblers (34%) followed by elementary occupations with a representivity of 20%. The scarce skills identified include:

Table 22: Scarce Skills Pulp and Paper Sub-sector OFO Code Scarce Skills

• 313913 • Bio-refinery specialist

• 131102 • Production / operations manager

• 313102 • Fossil Power Plant Process Technician

• 325701 • Environmental and Occupational Health Inspector / Environmental Practices Inspector

• 216302 • Industrial Designer / Design and Manufacturing Draftsperson

• 651202 • Coded welders

• 213203 • Wood scientists

• 313301 • Chemical Plant Controller / Plant controller

• 717102 • Paper and Pulp Mill Operator / Mill operator

• 214501 • Chemical engineer

• 214101 • Industrial Engineer / Process engineer

The wood products sub-sector employs more people in elementary occupations (46%) followed by Plant and Machine Operators and Assemblers with a representivity of 22%. The following are the scarce skills unverified in the sub-sector:

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Table 23: Scarce Skills Wood Products Sub-sector OFO Code Scarce Skills

• 652403 • Saw Maker and Repairer / Saw doctor

• 214103 • Production Engineer / Wood products engineer

• 717201 • Wood Processing Machine Operator / Grader / analyser

Forestry sub-sector employs more people in elementary occupations (64%) followed by Plant and Machine Operators and Assemblers with a representivity of 14%. These are the scarce skills applicable in the sub-sector:

Table 24: Scarce Skills Forestry Sub-sector OFO Code Scarce Skills

• 213203 • Forest scientist / Geneticist (foresters)

General goods sub-sector employs more people in elementary occupations (75%) followed by Plant and Machine Operators and Assemblers with a representivity of 12%. There was not enough participation input to validate information about scarce skills in this sub-sector.

4.7 Critical Skills

Critical skills refer to “top-up” skills within an occupation. These can include cognitive skills, such as problem solving, language and literacy skills. These “top-up” skills can be specific to a particular occupation resulting in skills gaps which might arise because of phenomena such as improved technologies or new forms of work organisation. All FP&MSETA sub-sectors report investments in new technology, and training new staff to use such technology is therefore a key critical skills driver for the sector. Similarly, managers are required to lead the sub-sector in new business directions, to achieve the industrial restructuring required. Managers are therefore also an important focus for critical skills development. Many sub-sectors are competing in a global arena currently, and improved labour productivity is becoming an increasing priority. This too is a major critical skills driver. With regards to the critical skills, the following list was identified:

Table 25: Critical Skill

Sub-Sectors Critical Skills

Relevant to all sectors • Coaching

• Mentoring

• Problem solving

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• Literacy and numeracy skills

• Sales and marketing

• SMME management skills

• Information technology expertise

• Supervisory / team leadership / junior management skills

• Technicians – outcomes aligned to specific industries

• Technologists – outcomes aligned to specific industries

• Production planning – outcomes aligned to specific industries

• Lean manufacturing

• Operations management

Clothing • Patternmaking

• Supervisory / team leader investigate TRACE

Forestry • Saw doctors – artisan skills

• Truck drivers – specialized driving (terrain difficulty)

Furniture • Upholstery skills

• Production management

• Furniture design

• CNC machinery operation

Leather • Leather cutting

Packaging • Trades – outcomes aligned to specific need

• Technical machine operator – various outcomes

Printing • Estimating

• Supervisory, business process, - 20 keys as background

Print Media • Graphic design– software specific

Publishing • Project management specific to publishing

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Textiles • Finishing – but this is different in the future with the changes and the legislation that is changing – future skills

• Design and innovation

General Goods Not enough participation input to validate information

It has been noted that the larger firms have greater demand in the replacement of management skills. The rationale behind this critical skills demand is that there is a greater structure to populate than in the SMME environment, where it is mostly owner managed. The management skills should also be aligned to world-class manufacturing (WCM) standards, which make the skill sets even more unobtainable. Skills shortages are typically addressed through the internal promotion and development structures in the larger organisations, which is a great difficulty within the smaller organisations. It is seen as a priority within companies to establish more accurate career-patching to address critical skills shortages within their structure. The career-pathing strategy is again implemented more easily within bigger structures and manager-owned structures struggle to find development paths within their smaller structures. There is also the issue that the larger companies offer better opportunities for career development and remuneration. This is a concern that is faced by most sub-sectors in South Africa and it is felt that there should be a focus on addressing critical skills for SMME companies. This is however a ‘quid pro quo’ relationship, with SMMEs also needed to participate in the WSP submission and sub-sector strategies. It has further been raised by industry stakeholders that Health and Safety compliance is an area of concern, with specific reference being made to the SHEQ officer position. This does however fall outside the scope of the FP&M SETA and is a legislative requirement that needs to be adhered to by each organisation. The grant system does not cover this aspect of training and development. The trades within each sub-sector were mentioned continuously and it seems that this could be an area of focus for the sector. The focus on trades has been discussed under various SETA’s and it is known that this aspect is a concerning factor for multiple industries. It is felt by the sub-sector role-players that if there was a focus on the intake to trades there would be better career-pathing opportunities and skills exchange. Artisans of various trades should be an area where sub-sector and the FP&M SETA focus their efforts in a collaborative approach to skills development and retention in the sub-sector.

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Chapter 5 Supply of Skills

5.1 Introduction This chapter provides an analysis of skills supply in the FP&M Sector. The chapter begins with a description of the skills pipeline. Qualifications, providers, capacity, throughput rates and return on investment is then reported for higher education (HEI) provision; FET provision; and FP&M SETA-accredited provision. This chapter will focus on four sets of data that together provide a full picture of the supply side platforms, capacity, throughput rates and return on investment in skills within the FP&M sector. The section begins with tracing what pathways are available to access occupations. This is followed by an overview of current provision. Information for this section is based on statistical data from HEMIS, FETMIS, SAQA as well as the FP&M SETA database. The concluding section raises some strategic issues the SETA needs to consider in improving supply.

5.2 Supply Pipeline The supply of skills into the FP&M sector is via a pipeline that consists of various channels or pathways. Employers in the sector require employees at various occupational levels and these channels enable for a supply of these skills. The channels are general education and training (GET), technical vocational education and training (TVET), higher education and training (HET) as well as private provision of occupational education and training. In addition, on the job training or workplace learning plays an important role in ensuring the development of workers. The skills pipeline depicted in the figure below which was developed in collaboration with all sub-sectors demonstrates the linkages between all the stakeholders in the skills pipeline in South Africa, GET, FET and HET, right through to the workplace, making the need to map career paths to qualifications a critical factor. The skills supply pipeline demonstrates the beneficiaries of this skills pipeline to be:

• GET band consists of school-goers and school drop-outs. • FET band consists of school drop-outs, unemployed graduates, chronic unemployed,

existing employees/mobile workers and qualified/experienced retrenched workers. • HET band consist of unemployed graduates, chronic unemployed/professional

learners/students, existing employees (mobile workers) and qualified/experienced retrenched workers.

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Figure 21: FP&M Sector Skills Pipeline

In ensuring a sufficient supply of skills in the sector, the FP&M SETA plays a facilitative role of ensuring that learners are able to access learning opportunities and education and training

School Goers

School Drop-outs

Unemployed graduates

Chronic unemployed

Existing employees

(mobile workers) Qual./Exp./ Retrenched

workers

Adjust /Improve existing

Learnerships, Skills Programmes & Qualifications

TVE

T HE

T

Wor

kpla

ce L

earn

ing

GET

Develop new Learnerships, Skills

Programmes & Qualifications Ensure learner select meets stakeholder

requirements for equity redress

Assist providers & employers to offer

programmes & support

transformation Assess, moderate

& certificate learners

Source: FP&M SSP TASKTEAM, 2011

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providers are developing the skills required by the economy. Against the background of the high unemployment, skills mismatch and the economic associated with the phenomenon of globalisation, it is vital that there are supply side programmes that are aimed at:

• Improving the qualification levels of both employees and new entrants as outlined in order to meet the skills requirements of the sector going forward;

• Increasing the number of people skilled with scarce skills in the sector • Facilitating partnerships with public and private education and education providers to

foster the development of relevant programmes • Facilitating the development of quality occupational programmes and improvement of

existing programmes that address real skills needs of the sector; • Development of critical skills in the sector and continually pushing towards a stronger

focus on increasing competitiveness, diffusion of technology and improving the quality of the workforce;

• Developing a strong emphasis on research and development that promotes product development, innovation and entrepreneurship to move all the sub-sectors of the FP&M sectors towards global competitiveness; and

• Developing e-learning capabilities to ensure flexible methods of education and training provision

• Transforming the sector in terms of representivity (in terms of race, gender and disability) and ensuring equitable access

The SETA activities covers the full range from qualification development review and adjustment, learner selection, support services to the provider community and employers to bring about workplace transformation and assistance to develop the workplace as a place of lifelong learning and activities to ensure quality learning takes place by means of assessment, moderation and certification of learners.

5.3 Higher Education Institutions At a macro-level, national policy efforts have resulted in incremental shifts in the categories of learners graduating from the higher education system. The table below, drawn from the Higher Education Management Information System (HEMIS), shows progressively increasing numbers of Science, Engineering and Technology (SET) graduates, as well as Business, Commerce and Management (BCM) graduates. There is a proportional decline in Human and Social Science (HSS) graduates, who ten years ago made up more than half of all graduates. This is a positive shift in the right direction, given that sub-sector reports critical shortages of Science, Engineering and Technology graduates. (The shift is indeed partly a product of partnerships between sub-sector and the HEIs). However, problems remain in the mismatch (graduates are seldom as “workplace-ready” as required); in large numbers of graduates “disappearing” (possibly emigrating); and in strong competition for the SET graduates that are produced. HEI throughput in SET is still well below the levels required. The current status of the HET sector has important implications for the FP&M sector – key challenges and opportunities facing institutes of technology involved with the SETA include too few HEIs which have relevant programmes on offer. For example, only five HEIs are producing post-graduates in the clothing, textile, footwear and leather fields. What is required are:

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• Learning programmes with a strong experiential learning component that will focus on the relevance of knowledge and the applicability of skills in the workplace – inclusion of practical exposure to support the theoretical aspects of the curriculum;

• Curricula designed in conjunction with sub-sector to promote seamless employability of graduates to sub-sector;

• Ongoing engagement with sub-sector in the redesign of curricula to meet sub-sector requirements. There is evidence of a lack of appetite in existing HE technologist programmes and few universities of technology are involved in some way or other in producing technologist graduates. It will be necessary to conduct an in-depth audit and review the subject matter in Higher Education Technologist Programmes so that they reflect an integration of knowledge themes in a range of different disciplines.

• Curriculum changes in South Africa’s Higher Education system are needed to establish the full scope of, and potential of supplying skills in a sustainable manner for future demand in the light of current skills demands across the sector. Skills currently taught at tertiary level need to be constantly upgraded if they are to be used in workplaces

5.4 TVET Colleges TVET Colleges are an important feeder into the FP&M skills pipeline. The colleges are situated across the length and breadth of SA and are found in all the non-metro areas with high-density clothing and textile firms. They offer affordable programmes and have the potential to reach a larger number of workers than higher education institutions. The different components of the sector are dealt with separately below: The TVET college system is failing to provide clothing, footwear, leather and general goods and textiles skills. Although most TVET colleges offer some kind of programme in basic garment-making (NATED programmes in clothing production N4-N6), such programmes tend not to be related to garment-making in a manufacturing environment, and are thus of little value to the economic sector. There are no occupationally-directed programmes offered in textiles, footwear, leather and general goods at these colleges. Hence, there has been very little interaction between the CTFL sector and the TVET colleges over the past five years. Although some public TVET Colleges have retained their capacity to offer the NATED programmes for garment making and patternmaking, the vast majority of public TVET colleges lost capacity and infrastructure when the National Department of Education announced the phasing-out of all NATED courses. The current national Minister of Education and Training is reviewing the phasing out of these programmes.

The SETA is of the view that TVET Colleges can provide a good support-base for companies in respect of learnerships and has initiated a project to offer TVET Colleges the opportunity to provide training and development to the sector.

5.5 .Private Training Providers For FP&M SETA accredited provision, there has been substantial work completed on building the supply-side platforms required (establishing OFOs and developing qualifications). Clear gaps are reported however between the scarce and critical needs of the sub-sector and the

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supply-side platforms. In addition, many of the supply-side interventions required are informal or non-formal in nature, while the quality assurance regime is concentrated on formalized provision. Finally, there are key gaps in areas where supply-side capacity is urgently needed to support the industrial “turnaround” strategies for growth and development. Provider capacity exists against all qualifications, but is unevenly distributed across provinces. Throughput rates are acceptable, given the low levels of growth demand in the industries. However, return on investment is at unacceptably low levels. Only 25% of FP&M-enrolled learners have achieved their qualifications, on whole-qualification based programs.

5.6 Current provision of Education and Training

5.7 Provision at Higher Education and Training Institutions HEI provision is beginning to move in the right direction, producing higher numbers of Science, Engineering and Technology graduates required by the sub-sector. However, output remains inadequate given the demands; there is a frequent mismatch between the needs of sub-sector and the quality of graduates; and high numbers of the required graduates “disappear” from the system. There have been some partnerships with HEI institutions, but a clear need to expand these. International partnerships may be required, as well as innovative forms of “collaborative clustering” of providers with other role-players. Notwithstanding the existing challenges, the SETA has been working with HEIs to try and address the shortage of graduates in the sector. This work has concentrated on the provision of bursaries, establishment of Centres of Excellence, working across the board on curriculum re-design and alignment with sub-sector needs, and establishing a relationship with the Technical University of Liberec in the Czech Republic to enable South Africans to enrol in a Master of Science: Textile Engineering Science. Project interventions have led to the establishment of two Centres of Excellence (CoEs) which offer courses and training programmes designed to benefit this sector as ISOEs. The CoEs have evolved over time and are accredited with the FP&M SETA with the mandate to facilitate the building of relationships with sub-sector stakeholders as well as introducing training and education initiatives between the sub-sectors and institutions of higher learning. These CoEs provide both short courses and degree programmes (see below).

Table 26: Recent FP&M HET Institutional partnerships

Centre of Excellence Programmes Offered Durban University of Technology, (Department of Clothing Technology)

National Certificate: Clothing Management; National Diploma: Clothing Management; Bachelors of Technology: Clothing Management; National Diploma: Textile Technology (Dry and Wet Processing Options); National Certificate for Sewing Machine Mechanics Further Education and Training Certificate for Sewing Machine Mechanics

Cape Peninsula University of Technology

National Certificate: Clothing Management; National Diploma: Clothing Management; Bachelors of Technology: Clothing Management; National Diploma: Textile Technology; Bachelors of Technology: Textile Technology; National Certificate for Sewing Machine Mechanics

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Centre of Excellence Programmes Offered Further Education and Training Certificate for Sewing Machine Mechanics Sewing Sub-sector Technical Training: National Certificate for Sewing Machine Mechanics Further Education and Training Certificate for Sewing Machine Mechanics

The SETA supports the CoEs in terms of offering financial support for: machinery and equipment, marketing, bursaries, administration support, curriculum and materials development and learner support. Research has shown that most countries with a prosperous and competitive clothing and textiles sub-sector have at their disposal Centres of Excellence dedicated to these sub-sectors for their training and development needs. In addition to the CoEs, the SETA has partnered with a number of HEIs to enhance their service offerings and better align curricula with sub-sector needs. The partnerships for 2012 are detailed in the table immediately below.

5.8 Provision at Public TVET Colleges The FP&M SETA has entered into partnerships TVET colleges to facilitate access to programmes that are directed at occupations in the sector. Aligned with the objectives of the National Skills Development Strategy, these partnerships are aimed to:

• Increase access to intermediate/middle level skills • Increase capacity for quality learning provisioning for technical scarce and critical skills • National strategy in place to provide work experience and internship opportunities for

NCV graduates to improve employability. Every year the FP&M SETA commits funds to put learners through learning programmes at these TVET colleges.

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Table 27: Learning interventions through TVET Colleges NO NAME OF PUBLIC

FET COLLEGE SUB-SECTOR

PROGRAMME INTERVENTION NATURE OF AGREEMENT IN PLACE

NO. OF PROJECTS/BURSARIES AWARDED

NO. OF LEARNERS

1. WESTCOL FET COLLEGE

Textiles Textile Trades -Artisan development

FET MoA – Partnership with FP&M SETA

Textile Apprenticeships 100

2. UMFOLOZI FET COLLEGE

Pulp & Paper NCV: Plant and Process Operations; Accredited – NQF level 1 – clothing manufacturing – garment construction

i. Partnership with PAMSA ii. Accredited with ETQA

45 grants. Total Project Value: R 225 000

45

4. UMGUNGUNDLOVU FET COLLEGE

Clothing i. Accredited – NQF level 1 – clothing manufacturing – garment construction ii. Learnerships-Upholstery

i.2 Project MoAs ii. Accredited with ETQA


9

6. ESAYIDI FET COLLEGE

Furniture i. Accredited -Skills programmes: Furniture & Cabinet Making

i. Project MoA – Skills programmes


15

7. EKURHULENI-EAST FET COLLEGE

Pulp & Paper NCV: Plant and Process Operations

i. Partnership with PAMSA ii. Accredited with ETQA

45 bursaries. Total Project Value: R 225 000

45

8. SEKHUKHUNE FET COLLEGE

Furniture i. Learnerships -Furniture Making 2 Project MoAs 88 Learners. Total Project Value: R 2 200 000

88

9. WEST COAST FET COLLEGE

Textiles & Printing & Packaging

i. Internships for Apprentices - ii. To provide for workplace experience for NCV level 4 graduates of 2011 that are unemployed in the West Coast. These learners to be placed in relevant workplaces within the sub-sector or within the college structure.

Project MoAs 15 bursaries. Total Project Value: R 225 000

15

10. CAPE TOWN FET COLLEGE

Furniture Learnerships: Furniture Making DG Project MoA. 6 grants. Total Project Value: R 210 000

6

FP&M SETA Sector Skills Plan for 2015-2020

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5.9 The FP&M SETA Accredited Programmes There are existing SAQA-registered unit standard-based qualifications registered on the NQF as well as the qualifications frameworks in place to cater for the manufacturing operations of all sub sectors. From a qualifications perspective, significant strides have been made in the conversion of informal training programmes into NQF-aligned, credit bearing qualifications, more especially in the clothing sector. A first for the clothing sub-sector cluster was the registration of national qualifications for sewing machine mechanics at NQF levels 3 and 4, which will further facilitate career pathing opportunities for learners in the clothing sector. The Clothing, footwear, leather & general goods and textiles sectors have adopted a very proactive approach to the development of occupationally directed qualifications in the sector, which resulted in a series of meetings with GTZ consultants, sub-sector stakeholders and SETA management to discuss conversion of SAQA registered Clothing, Textiles, Footwear and Leather Manufacturing Processes qualifications to the new QCTO structure and format. The outcome of the process resulted in the development of occupational profiles and job tasks for 5 occupational groups in the CTFL sector. The clothing sub-sector cluster had submitted the second highest number of applications to the QCTO/GTZ occupational qualifications support team. The printing and packaging sub-sectors have also done substantial work toward qualification design and curriculum development required under the QCTO. FP&M SETA proposes to continue this process to ensure that the qualifications and curricula adequately describe the competencies required in the sub-sector; are standardised where appropriate across the sub-sector; and can be used to build FET college capacity to begin training people for the sub-sector. The qualifications design and curriculum development for one of the 27 trades in the sub-sector has been completed. In addition, the sub-sector has now piloted the methodology and tools, and built the capacity to undertake the design and circulation for the remaining trades. Once this work is complete the sub-sector may explore building capacity in FET College to deliver the programmes.

5.10 Utilisation of Qualifications Utilisation of qualifications are a good measure of the relevance of the qualification and perceived quality of training by the employers. Learner enrolment and achievement are an important measure of effectiveness and quality of the programmes being offered. In conducting these measurements, it is important to underline the fact that data the quality of the analysis if a function of a productive ETQA division within a SETA. If the ETQA function experiences backlogs in capturing some learning data, or if the training providers are not quick to input the achievement data, this affects overall outcome and performance of qualifications and defeats the purpose of this measurement. It is further vital to note that the enrolment by learners could be relating to workers outside of the FP&M Sector but who require the qualifications to perform in their roles. An analysis of the FP&M SETA ETQA MIS database shows that there are 64 qualifications that are registered with the FP&M ETQA division and have at least one training provider accredited. Amongst these qualifications 57 had learners enrolled although 13 of them had less than 10 learners enrolled. It must


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Table 28: Number of learners per qualification

Qualification Title Learners

Further Education and Training Certificate: Chemical Pulp Manufacturing 5 Further Education and Training Certificate: Clothing, Textiles, Footwear and Leather (CTFL) Mechanician Processes 2

Further Education and Training Certificate: Contact Centre Operations 13 Further Education and Training Certificate: Paper, Board or Tissue Manufacturing 13

Further Education and Training Certificate: Pulp and Paper Chemical Recovery 2 GETC: Wood Products Processing 792 General Education and Training Certificate: Business Practice 6 General Education and Training Certificate: Clothing Manufacturing Processes 45 General Education and Training Certificate: General Forestry 256 General Education and Training Certificate: Lumber Milling 20 Knitting Machine Mechanician (Weft) 1 Lithography ( Metal Decorating)Dry Litho Monoblock 12 National Certificate: Clothing Manufacturing 4415 National Certificate: Clothing, Textile, Footwear and Leather Manufacturing Processes 3203

National Certificate: Dry Lumber Processing 20 National Certificate: Footwear Processes 1062 National Certificate: Footwear Technology 112 National Certificate: Forestry: Silviculture 105 National Certificate: Forestry: Timber Harvesting 68 National Certificate: Furniture Making: Wood 1167 National Certificate: General Textiles 3932 National Certificate: Lumber Drying 1716 National Certificate: Lumber Milling 52 National Certificate: Pulp and Paper Technology 127 National Certificate: Pulp and paper Manufacturing 2 National Certificate: Saw Doctoring 106 National Certificate: Textile Processes 7 National Certificate: Wood Products Processing 121 National Craft Certificate: Bookbinding Craft/Cutting 12 National Craft Certificate: Corrugated Board Manufacturing Machine Minding 96 National Craft Certificate: Corrugated Board Printing and Finishing Machine Minding 152

National Craft Certificate: End Making 52 National Craft Certificate: Paper Sack Making 33 National Craft Certificate: Printers' Electrician 53 National Craft Certificate: Printers' Mechanic 94


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Qualification Title Learners

National Craft Certificate: Rotary Printing and Re-Reeling - Gravure 49 National Craft Certificate: Rotary Printing and re-reeling - Flexography 201 National Craft Certificate: Screen Printing 5 National Craft Certificate: Stationery and Envelope Machine Adjuster 36 National Craft Diploma: Bag Making 45 National Craft Diploma: Bookbinding Mechanised/Cutting 146 National Craft Diploma: Can Making 90 National Craft Diploma: Carton Making 103 National Craft Diploma: Continuous Stationery Machine Minding 85 National Craft Diploma: Electronic Composition 4 National Craft Diploma: Electronic Origination 291 National Craft Diploma: Gravure Machine Minding 84 National Craft Diploma: Laminating 18 National Craft Diploma: Lithography (Metal Decorating) 67 National Craft Diploma: Lithography (Paper Section) 519 National Craft Diploma: Photo-Lithography 6 National Craft Diploma: Photo-gravure Cylinder Processing 36 National Craft Diploma: Roll Label Machine Minding 118 National Craft Diploma: Rotary Offset Machine Minding 435 National Craft Diploma: Ruling/Cutting 9 Technical Dyer-Finisher 1 Upholsterer 3

Source: ETQA MIS data, 2013 The analysis of learner performance is aimed at establishing the aggregate baseline effectiveness of FP&M-accredited provision. The figure below demonstrates that only 24% of the learners enrolled on FP&M SETA-accredited programs have completed their programmes during 2012. It is not possible to establish at this point whether the learners who have not yet completed their programmes have dropped out, have not yet completed their studies; or have failed. It is, however, worth reporting that the pattern of low levels of learner retention, completion and achievement are a common problem facing the sector, and points to low levels of return on investment in skills at this point. This challenge is at the heart of improving the supply-side efficiency. In addition to the utilisation of qualifications, over 138,500 enrolments were registered against FP&M unit standards. Unit standards that can be combined into skills programmes or full qualifications are important with regard to filling the skills gaps that exist amongst employed workers. The high utilisation of unit standards indicates that the employers in the sector find value in utilising these programmes.


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Figure 22: Aggregate Pass Rates on FP&M-SETA Accredited Programmes

Source: ETQA MIS data, 2013 FP&M SETA has therefore disaggregated the analysis across provinces, providers and qualifications, as the starting point for further investigations. The figure below demonstrates the enrolment vs. achievement rates per qualification. The table immediately below lists the FP&M SETA registered qualifications, with the number of 2012 enrolments against each qualification.

Figure 23: Accredited Training Providers per Province

Source: ETQA MIS data, 2014 The figure immediately below then describes the achievement rates per province. This demonstrates that KZN has achieved significantly higher pass rates than the Western Cape or Gauteng at this point. Please note that these analyses are provided as preliminary baselines, until further investigation has clarified certain data concerns.

ACHIEVED24%

ENROLLED76%

Achievement Status

0100200300400500

Training providers per Province


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Figure 24: Pass Rates on FP&M-SETA Accredited Programme per Province

Source: ETQA MIS data 2012 According to the data on the SETA MIS database, there are 8165 learners registered on 8227 learnerships. A small number of learners have undertaken multiple learnerships. The highest learner numbers are for previously unemployed individuals (56.5%), followed by individuals who were already employed by their companies prior to commencing the learnership (43%). In general terms, the registration on learnerships according to a broad study area, shows that Clothing Manufacturing accounts for 47%, General Textiles for 38%, Footwear Processes for 13% and Leather Processes for 2% of the overall learnership registrations.

Figure 25: FETC Learnership Graduation-Clothing, Footwear, Leather &General Good

and Textiles

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

EC FS GP KZN LP MP NW NC NOT SA WC

Pass rates per Province


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Source ETQA MIS data 2012. A total of 5369 learnership certificates have been recorded with the SETA since inception. As seen in the diagram below, award of learnership certificates closely matches registration numbers, per broad learning area:

Figure 26: Learnership Retention Rates-Clothing, Footwear, Leather& General Good and Textiles

Source ETQA MIS data 2012.


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Chapter 6 Fibre Processing and Manufacturing Sector Strategy

Overarching strategic framework: skills development along value chains

The FPM SETA has adopted this overarching strategic vision for a number of reasons. Firstly it provides a sound theoretical framework that is becoming a global one, whereby success in an economy is based on interventions along value chains. The sector aims to draw on international experience to strengthen the FPM value chains. Secondly research in the sector and its sub-sectors has indicated the importance of up-stream and down-stream activities to individual businesses. No business can succeed unless inputs are available on time, and at a good quality and price. Equally no business can thrive without customers buying the products and services – which means the goods and services being transported in an appropriate manner, and to a quality and appearance that enables the sale to be concluded. Thirdly the value chain approach enables those elements of the chain that are currently produced outside of the country to be identified and opportunities for beneficiation and reducing import dependency to be highlighted and targeted. This helps the sector to align its work to one of government’s key objectives, namely expansion of local production from primary produce. Fourthly the value chain enables all stakeholders including SETA members and SETA management and staff to share a common framework for their work. By developing a shared vision and framework, it is hoped that the resources available for human development in the sector can be mobilised to achieve maximum impact. Finally the supply chain is a sound way of viewing career paths – individuals and employers can engage with career paths and both upward and sideways movement within the sector occupations can be encouraged.

This chapter of the SSP sets out seven strategic objectives together with a number of outputs that if achieved will lead to the outcomes. The outcomes and outputs are not at the level of detail that includes targets, nor does it specify the precise mechanism that the SETA is putting in place to achieve the outputs and outcomes. Also it does not include the allocation of funds. The intention is that the Strategic Plan of the SETA and the Annual Performance Plan will set out that detail in the programmes that include specific objectives and targets which are fully costed and budgeted. It is important that the SSP sets out what the sector is planning to achieve and that the Strategic Plan sets out what the SETA will do specifically in order to help the sector achieve its objectives.


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6.1 Strategic Objective 1: Improved supply and demand information

6.1.1 Skills research:

There is a need for comprehensive research into each sub-sector so as to fully understand the conditions that exist within the sub-sector and its trading environment. This will include benchmarking in each sub-sector - with other countries that have demonstrated strength or resilience in particular sub-sectors, so as to learn lessons and draw on good practice. There is a need for sound labour market intelligence so as to inform education and training interventions, the allocation of available resources and to build the necessary human capacity to enable firms to withstand economic down turns and be ready to grow and expand when conditions allow.

Output 1.1: A high quality, well researched Sector Skills Plan

6.1.2 Institutional mechanism for the sector.

There is a need for the sector to contribute to the national plan for an institutional mechanism for skills planning. In the FP&M sector this means establishing research and data gathering processes and establishing our own mechanism that is aligned and fully compliant with the reporting requirements of DHET, but which is primarily aimed at informing decision-making and resource allocation within the FP&M sector. It will be important to ensure that information sources with regard to the demand and supply of skills are co-ordinated and integrated, as well as being effectively communicated and explained.

Output 1.2: An effective model developed that draws on quality data to forecast demand and project supply

6.1.3 Research partnerships.

The FP&M SETA is planning to partner with a number of higher education and research institutions. The looming March 2016 licencing date for the SETA is going to make the task of building partnerships difficult, and so discussions will need to be held with the Department on how long terms funding commitments can be entered into. However progress is being made. Examples of the partnerships the sector is seeking to establish are: the Textile and Clothing Centre of Excellence at the CSIR in Port Elizabeth; the research chair partnership with Wits REAL. It is also important to ensure that existing research capacity in employer or producer bodies is strengthened and included in the partnerships. These partnerships provide the potential for developing sector and in particular sub-sector knowledge, enabling industry to innovate and develop world class products.


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Output 1.3: Long term partnerships are entered into, delivering continuous research products that are contributing to improved impact of skills development in the sector

6.2 Strengthening value chain linkages. 6.2.1 Supporting key processes.

It is critical to identify the strong elements of the value chains and support them, as well as those parts of the value chain that are weak and where production is taking place outside of South Africa and where potential exists for expansion. This again points to the need for sound research and business intelligence, so that industrial growth plans are well informed and based on real evidence of market demand. Skills development must be seen as supporting industry in its efforts to win greater market share and survive through tough times.

New opportunities are emerging in the regional (SADC) markets and it will be important for the sector’s industries to be supported to take advantage of these. For example there is potential for growth in the packaging sub-sector which relies heavily on improved value chain linkages. The packaging sub-sector is a major contributor to planned growth in sales across all other industries. The growth of the packaging sub-sector thus relies on improving the value chain linkages between packaging and the sub-sectors in which it plays a packaging role (as part of their value chains). Identifying the priority areas for improving value chain linkages will require extensive work, but will result in significant growth in both sub-sector output and employment. Training in support of the packaging industry will therefore have benefits for the entire sector and beyond. This is just one example of how the focus on the value chain and its linkages can provide direction to the sector and SETA’s efforts.

It is anticipated that if each of the outputs listed below are achieved the overall impact will be that the economic performance of the sector as a whole will be improved and the sector will gradually move from negative to positive growth.

Output 2.1: Innovation projects are identified and agreed in the sector and supported with skills development

6.2.2 Sub-sector focus:

It is important for the FP&M SETA to be seen as close to the sub-sectors and to be communicating well. The SETA must be viewed as an important partner in industrial growth and as a service oriented organization. Most stakeholders are in need of support when it comes to the implementation of training programmes and initiatives aimed at building and sustaining human capacity. This applied to all companies but in particular small or micro enterprises. Some sub-sectors will need support in developing strategies and partnerships, in thinking through how skills development can be used


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to further industry goals and in the implementation of programmes that are relevant to their needs.

Output 2.2: Sound sub-sector strategies are agreed and supported with skills development

6.2.3 Increasing manufactured exports and reducing reliance on imports.

The need to beneficiate primary produce is a key imperative for the sector. There is a window of opportunity opened up as a result of the weakness of the Rand. Imports will cost more and exporting could become more profitable. However creating new production capacity is not a simple matter as it implies planning beyond the traditional scope of current industries, and projecting skills needs not on the basis of current production but future potential production processes. If South African based companies are to compete globally (particularly in markets dominated by Chinese or other Asian countries) success will only be achieved through a significant improvement in labour productivity. Skills development for productivity improvement is thus an area that the FP&M SETA must give urgent attention to, including training in the use of future technologies and production methods.

Equally there is a need to reduce the reliance on imported machinery: The printing and packaging sub-sectors are rapidly evolving, with major changes ranging from electronic origination and digital printing through to environmentally friendly packaging. However it will rely on imported machinery unless a strategy is put in place to develop local production of equipment. This challenge will require discussions between FP&M sector stakeholders and stakeholders in the metal industry manufacturing sector, as well as the Department of Science and Technology and DTI.

Output 2.3: Beneficiation projects are identified and agreed and supported with skills development

6.2.4 Facing economic reality:

The current reality is that many of the sub-sectors are struggling in the context of the global recession (although this is impacting differentially on the different industries) and where these industries are struggling with the structural adjustments required to survive and position themselves for future growth. The core strategic challenge facing skills development in the sector is where to concentrate resources in ways that will best support the sub-sector to achieve the inclusive growth paths envisaged under the various industrial strategies. If (in some industries) it is necessary to focus less on new entrants on more on retraining of existing employees, and this is based on a sound


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analysis of need, then the sector must be prepared to invest in such training.

Output 2.4: Skills programmes are designed and delivered for existing employees that improve mobility and productivity

6.2.5 Taking a long view:

The skills planning period should look beyond the prescribed 5-year planning period. It should therefore be considered to take 2020 as a broad longer term planning horizon for continuous SSP updates. It is acknowledged that the SETA landscape may change and that skills development strategy may be adjusted every five years. However sector stakeholders, including the SETA, need to have a long term understanding of the development needs of the various sub-sectors and be willing to plan ahead on the basis of these understandings.

Output 2.5: The Sector Skills Plan projects skills demand to 2020 and identifies strategies for meeting the demand

6.2.6 Tensions that the sector is trying to manage:

There is a need to acknowledge that there are real tensions and that these have to be managed. Within the sector stakeholders are: trying to create jobs at a time when technology is reducing reliance on labour - particularly in the case of unskilled and semi-skilled jobs; trying to achieve transformation within the constraints of tough market conditions; striving for equity at a time when employment is reducing – normal replacement (where retiring white employees can be replaced by black new entrants) may not work, and so new strategies will be needed. If skills development is to be effective it has to be targeted in a manner that works with the realities on the ground. Stakeholders, including bargaining councils will need to assist the SETA to understand and work with some of these unavoidable tensions.

Output 2.6: Bargaining councils produce position papers on skills strategy that inform the SSP

6.2.7 Focus on engaging with government development strategy in the sector:

There is an understanding in the sector of the importance of working within government policy and striving to achieve strategy outcomes. This applies to NSDSIII (the main framework for skills delivery in the sector), but also the Skills Accord, New Growth Path, Medium Term Strategic Framework, NDP, IPAP, rural development and land reform and others. The important thing is to understand is how these can be achieved within the specific conditions in the FP&M sector, and how the sector can benefit from


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these strategies. The SETA has an important role to play in assisting stakeholders to combine and align their interests and achieve synergies between different strategies and programmes.

Output 2.7: Strategic alignment of sector and national strategies achieved and communicated in the sector

6.2.8 Facing a tough economic environment:

Consumer confidence is currently at a low level. The decline in consumer confidence foreshadows a slowdown in the growth in household consumption expenditure. This is already impacting on the sector and is likely to be a feature of sector development for some time. It will be necessary for the SETA and its stakeholders to be prepared to adjust targets and focus if the environment requires that.

Output 2.8: Economic conditions are monitored per sub-sector and strategy adjusted to meet changing needs.

6.2.9 Managing technological change:

The technological drivers of change are very challenging in most FPM sub-sectors. It will be important to develop skills development solutions to address emerging technologies, particularly where globally such production methods are resulting in increased productivity. Computerization has changed the FP&M sub-sector considerably in recent years and further innovations can be expected. Again this points to the need for research so that technological change can be planned and not take the sector by surprise. Those employees whose jobs will change due to application of modern production methods must be provided with the opportunity to learn these new production methods, and thereby not just retain their jobs but to go on to occupy more highly skilled and better paid jobs. Technology should be seen as an advantage but can only be seen as such if the people affected are able to be trained in its use.

The rapid growth of social media has potential for assisting the sector. It will be important to leverage advantage for the FP&M sector and its sub-sectors, and also on the way that the SETA conducts its work. There is also potential for expanding eLearning within the sector.

Output 2.9: Programmes to address skills needs associated with changing technologies delivered

6.2.10 Addressing HIV in the sector:

HIV/AIDS should receive continuous attention and intervention to proactively manage this pandemic. There are many initiatives both within companies and within value


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chains and these should be supported with appropriate training. There are many organisations doing valuable training work in this area who could be partnered to offer services to sector companies.

Output 2.10: Partnerships in place for that enable companies to access training to contain the virus and manage its impact.

6.2.11 Rural focus:

Investment and entrepreneurial as well as ‘after-market’ business opportunities very often by-pass rural areas and deepen the urban-rural divide. Initiatives are needed to leverage on these opportunities, particularly where government or public funds are supporting such initiatives. In identifying opportunities in rural areas and supporting them with skills training, a contribution can be made to rural transformation. This will also create career awareness pertaining to the sub-sector amongst the next generation and help attract young people to FP&M occupations.

It will be important for the sector to engage in the issues that confront sub-sectors working in rural environments. These include issues of food security, increasing production of primary products, support to smallholders and emerging farmers, opening up internal markets as well as export possibilities globally for their produce, reducing import dependencies, reducing input and transaction costs and generally creating an enabling environment for the creation and strengthening of viable and sustainable agricultural enterprises. Partnerships will be required between the public and private sectors, between large successful commercial farms and emerging farms, and the SETA can play an important role in supporting the strengthening of such partnerships. Output 2.11: Projects agreed focussing on the rural economy value chain agreed and supported with skills development

6.2.12 Establishing and supporting industrial clusters.

Globally there have been success stories linked to the establishment of clusters (or economic zones/hubs) linked to specific industries. These are generally initiated by industry and supported by government. There are a number of initiatives already in place and more that are planned. There is some discussion in the sector on the establishment of furniture clusters in KZN, WC and Gauteng as well as furniture centres of competence for high level skills and technology training. There is support for establishing charcoal manufacturing enterprises in EC and KZN and other ideas. It is not the role of the SETA to initiate or manage the establishment of such clusters, but the SETA has an important role in supporting stakeholders and ensuring that such initiatives include a strong focus on skills development. In countries such as Finland where clusters have been developed structures similar to SETAs have a presence within the clusters as do public tertiary and higher education institutions. Similar models can be explored for FP&M sector clusters.


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Output 2.12: Sector industrial clusters supported with skills development

6.2.13 Environmental sustainability.

There is a need for a concerted approach to natural resource management including protection of scarce resources such as water, soil and marine life and the management of ecosystems, and generally improved risk management. Climate change will need to be monitored and managed and early warning systems developed. Research and the promotion of alternative production methods is envisaged as well as improved regulations and enforcement. There are significant opportunities for green production and other contributions to environmental sustainability. These need to be researched, explained, developed as projects and provided with skills development support. The sector can make a contribution in relation to the control of carbon emissions. There is potential for carbon sequestration in plantations to be recognised, as this can then be used to off-set carbon emissions in the sector and at the same time will assist in promotion of planting trees in community land. This will empower communities and lead to further economic development. There are opportunities for recycling and the emergence of small business to take on some of this work. The SETA will support training of such enterprises as they emerge.

A framework for renewable energy projects is being considered. This will be supported by sector stakeholders and can be included in training.

Output 2.13: Green production processes agreed and supported with skills development

6.2.14 Strategic Integrated projects.

Whilst there is no specific infrastructure project that the sector is naturally aligned to, there are components in a number of the SIPs projects that provide opportunities in the sector, and which also will have an impact on supply and demand for skills. The sector will contribute to the supply of artisans within SIPs, mindful also of the need to replace skills that are absorbed by the SIPs.

Output 2.14: The impact and potential impact of SIPs is documented and monitored so as to adjust strategy as required.

6.3 Building capacity in small and emergent enterprises

6.3.1 Small business training:


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There should be more support to the development of skills within SMMEs, including micro and emerging enterprises. This is not just a concern expressed by small businesses. Many of the larger organisations are of the opinion that there are excellent SMMEs that could provide them with products but that the development of skills within those SMMEs are not at a standard that makes them competitively marketable. There are many causes of small enterprises not benefiting from opportunities and skills are needed to address many of them. However it is difficult for small businesses to engage in training, and to develop capacity to do many things with few people. Training opportunities need to be structured in a manner that enables them to participate and take their organisations to new levels. One of the main complaints of small businesses is the complexity of engaging in them. Mechanisms must be found to enable greater participation.

Output 3.1: Small and micro enterprises supported with both technical and business skills training

6.3.2 Informal sector:

There are large elements of informal economic activity within most of the sub-sectors, and along much of the various value chains. These informal enterprises contribute to the output of each sub-sector, yet the governing and support structures to the informal sectors are not evident. A focus will be on better understanding the informal sector and devising strategies for “formalising the informal”. This will not be an easy task for the FP&M SETA and partnership models will need to be devised that enable training to be linked to other types of support by other entities - for example funding of a co-operative by the DTI could be a trigger for SETA support in the form of technical and business training. Given the difficulties that many such entities have in meeting basic financial due diligence requirements some mechanism is needed to enable accountability to be achieved whilst enabling access to training. A concerted effort must be made by all sector stakeholders to bring unregistered employers within the regulatory framework (of National Treasury, the DTI, SARS) and the relevant Bargaining Councils.

Output 3.2: Informal sector projects developed and supported and a model developed for replication by other funding partners

6.3.3 Broad-Based Black Economic Empowerment:

Acceleration of BBBEE is critical to address transformation in the industry. FP&M SETA will undertake research and put in place programmes to accelerate the implementation of BBBEE within its sub-sectors. BBBEE is not only important for the majority of people seeking to earn a living and who are unemployed or in low paid jobs. It is now increasingly important in relation to a company’s profile and credibility both in


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terms of government contracts, domestic sales and entry into international markets. Programmes to support broad based empowerment will be needed for both owners and managers and workers at all levels in companies. BBBEE is currently concerned with: equity ownership; management control; employment equity; skills development; preferential procurement; enterprise development and socio-economic development. Training is needed in each of these areas so that incrementally change is achieved and equity improved.

Output 3.3: Models of structuring and implementing training to support empowerment are developed, implemented and used by member companies to earn BEE points

6.4 Supporting workplace education and training

6.4.1 Work-based training:

There are gaps in learner or new entrant readiness after qualifying in occupational qualifications. Some training can only take place in the workplace. There has been the need identified for the addition of soft-skills to supplement the technical aspects of a qualification (often not addressed in formal programmes). Many sector stakeholders feel that there is a lack of basic life skills when an individual leaves an education institution, including communication skills and how to ‘sell yourself’ in the work environment. Many of the sub-sector role-players believe that in-house training adds more value at times than enrolling an individual employee with an education and training provider. There is also the concern that people applying for a position might have the theoretical knowledge, but may not have the required practical experience needed. The SETA therefore needs a particular focus on expanding workplace located training. This implies paying attention to the capacity of employers to plan and supervise effective on the job training and for improved partnerships between employers and providers to integrate workplace and institution-based training. Strategies such as mentor training and incubators need to be explored. In some sub-sectors there is a need for an expansion of internships, and the SETA will need to assist in the structuring of such programmes and supporting employers and interns to obtain maximum benefit.

Output 4.1: Workplaces are supported to develop structured internships and effective workplace implementation of learnerships and skills programmes

6.4.2 Aging workforce:

Many scarce skills occupations have an aging workforce. This represents a threat not only because it may not be possible to replace the employees easily, but also because the older employees hold institutional memory regarding the development of the sub-sector which should not be lost.


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FP&M SETA will need to identify the scarce skill occupations where the skills may be lost due to retirement, and design interventions to address the challenges. This could include encouraging succession planning linked to internships, supported by quality coaching and mentoring. Incentives could be provided and recognition given to those who are prepared to share their knowledge and experience with others, through an awards scheme. Various strategies are being used to retain experienced people in different capacities linked to skills transfer and these should be supported and encouraged.

Output 4.2: A process is agreed to attract skilled personnel to act as mentors after retirement

6.5 Improving supply

6.5.1 Skills Outputs from Institutions of Education:

There is a perceived gap or divide between the standards that sub-sectors are looking for in relation to new employees and what the education and training institutions are delivering. Some of this perception may be based on an unrealistic expectation of the role of education and training providers and the SETA can play a role in managing these expectations. However there is a real challenge that needs to be addressed. There is a need for the SETA to assist in developing stronger collaboration between sub-sector employers and stakeholders, and education and training institutions. The SETA must help bring providers and employer organisations together to address supply side concerns and issues. The greater degree of understanding that is developed between employers and providers, and the greater the number of partnership projects and programmes, the closer the sector will get to achieve the quality of performance from employees that is being sought.

Output 5.1: Career paths and learning pathways are developed in relation to scarce skills occupations that identify the blockages and weaknesses. Stakeholder processes are put in place to discuss the challenges and agree solutions

6.5.2 Provider location:

The geographical distances of providers from workplaces has been raised as an issue by employers. This is a general problem, although specific reference has been made to the publishing sub-sector where providers are mostly situated in the Gauteng region and thus there is need for organisations in the Western Cape and other regions to send personnel to another province for training. This also makes employment in the regions difficult and so sourcing skilled personnel must extend past the regional borders. Efforts must be made to build or encourage the building of provider capacity in all areas where it is needed.


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Output 5.2: Mechanisms are developed that encourage providers to develop capacity in areas of need.

6.5.3 Creating education and training structures:

The option of creating technical colleges / universities for specific sub-sectors and the concept of centres of excellence has been raised including the possibility of regionally located institutions. This may not be an ideal solution but should not be ruled out if other forms of partnership or institutional capacity building (say in an existing TVET college or university) cannot achieve what is required. This points to the need that providers have for the involvement of sub-sector stakeholders. The SETA will need to help facilitate dialogue and joint working on curriculum and programme design and delivery.

Output 5.3: Where the need is identified a feasibility study is put in place to determine the viability of developing new institutions

6.5.4 Support along learning and career pathways.

Pathways need to be identified and explained with linkages from foundational education or ABET, use of RPL to enable entry to occupational programmes and qualifications, improved portability and articulation, including entry to university level degrees. The SETA has a usable and accessible career guide, which will need to be updated and supplemented by other materials and media so as to improve the communication of learning pathways and attract more capable young people to take up careers in the sector.

Output 5.4: Learning interventions to address learning pathway blockages are developed and implemented

6.5.5 Bridging programmes:

Many sub-sector stakeholders feel that there should be bridging courses between leaving school and entering a tertiary education system, this emphasises the importance of the SETAs career guidance role and in marketing of career paths within the sector and sub-sectors. The SETA needs to support learners along the education pathway leading to key occupations, working with employers and providers to improve both the competence of new entrants to work as well as throughput rates.

Output 5.5: Bridging programmes are developed and supported

6.5.6 Relevance of curriculum:


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The curriculum and materials used by education and training providers is not always aligned to industry needs or of an acceptable standard. The SETA can play a role in ensuring that providers become more involved with sub-sector employers and employer structures and use the expertise that is at their disposal to inform curriculum and programme review. It is acknowledged that ETQA processes are in place, and that these address some of the quality concerns. However ETQA processes can be lengthy, and are not addressing all the skills supply challenges in the sector. There is a challenge for employers engaging in these processes as it involves expertise being deployed in QA processes instead of such people having value-add to their businesses. The SETA needs to understand the concerns and to take the lead in brokering solutions. Mechanisms must be found to bring employers and providers together to ensure programmes address sector and sub-sector needs, particularly in relation to scarce skills occupational learning pathways. One of the key activities over the coming years must be the completion of processes leading to revised occupational qualifications linked to all the sector’s scarce skills occupations. This is a particular priority in relation to textile industry artisan qualifications, but is also a sector-wide challenge. People seeking entry to occupations in the sector must have clarity on the required qualifications and the qualifications must be aligned to the needs of industry.

Output 5.6: New or updated occupational qualifications are developed that meet the needs of all priority scarce skills occupations.

6.5.7 Timing of training:

Companies find it difficult to release staff for training when business is busy, and employees feel reluctant to take time off for training when they are most needed. Concern is being expressed that training initiatives must be aligned more to the seasonal timeframes of the industries, e.g. training should take place earlier in the year due to the demand for products increasing towards the end of the year. The SETA will need to explore the practicality of this with providers.

Output 5.7: The feasibility of adjusting programme times to suit industry needs is explored with providers

6.5.8 Basic or foundational learning.

This is a need that has been identified in the Clothing and Textile sector but is also a valid concern in most of the primary and secondary processes in the FP&M SETA value chain. There is a need to review artisan and FET level occupational programmes and ensure articulation with workplace components the occupational programmes. All newly developed qualifications have an assumption of, or inclusion of, some basic or foundational education. Foundational education is mainly concerned with the communication, language and mathematical competency required in order to engage


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with the demands of an occupational learning programme. Thus, in order to promote occupational programmes in the sector the FP&M SETA has set a 5 year target of 5000 workers to have accessed and completed an assessment in foundational learning. Given that the purpose is that workers in the sector are given access to occupational programmes it will be important to monitor the impact of these programmes, and to consider how foundational educational opportunities can be designed and made available in a manner that helps sector employees gain access to higher skilled occupations.

Output 5.8: A programme is put in place that enables workers to access programmes of foundational education that enable them to access occupational qualification.

6.5.9 Higher level qualifications and expertise.

Some of the technological changes taking place in the sector and growth areas such as those associated with beneficiation and green industries, require the development of high level expertise including at Masters and PhD level. There is also a need for strategic leadership and management to steer industry through the current difficult times and position companies to take advantage of new opportunities and growth as it occurs. Although the numbers may not be large it is important that in each sub-sector there is a focus on higher end skills and that appropriate university and international partnerships are put in place that are accessible to industry and which are attuned to industry needs and challenges. There is also a need to build academic and research capacity in relevant university faculties that are educating people for work in the sector, with a particular emphasis on black academics. In this way the sector can contribute to transformation right through to the knowledge creators and innovators of the future.

Output 5.9: A programme is put in place to encourage the achievement of high level qualifications that address sector and sub-sector needs.

6.5.10 Recognition of prior learning (RPL):

One of the challenges in relation to RPL has been to develop systems that enable individual employees who want to develop themselves in scarce skills occupational qualifications to have their current skills and experience measured and assessed, and for top up training to be made available to them. It is difficult for an individual worker or employer to access RPL, even though it is a requirement for accredited providers to have the capability. It is easier to offer full programmes. It will be important to develop, test and adopt RPL strategies and processes (including funding models) for scarce skills occupations and other occupations in the sector where it is cost-effective to do so. Guidance on RPL is also required that can be included in career advice to employees whose jobs are being affected by technological change or downsizing, so as to enable such affected staff to have their existing capabilities recognised in the


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form of credits that can be carried into qualifications that are more relevant to their future employment prospects.

Output 5.10: A programme is put in place to enable employees in the sector to access programmes that assess their existing competencies and provides them with additional education and training to enable them to obtain occupational qualification

6.5.11: Improving sector capacity. It needs to be recognised that the sector itself makes a contribution to supply of skills, through in-house training units or strong traditions of on the job training. Where this is in place there is a need to continually monitor qualifications, training programme quality requirements and to maintain and strengthen capacity. There will be a need to develop the capacity of trainers and mentors, including capacity to conduct assessments and moderate assessment outcomes.

Output 5.11: internal sector training capacity is built and strengthened

6.6 Partnerships

There are a number of challenges that have emerged that require that the sector put in place partnerships.

6.6.1 Education and training partnerships.

One challenge is on the supply side. There is the need for sub-sector stakeholders and employers to get involved with the training providers and FP&M SETA in order to bring the level of education to the standards that are required in the various sub-sectors. Some of the required relationships need to be taken to the level of formal partnerships. There is a need for a specific focus on incubation and the creation of incubator environments that are supported by a number of stakeholders to create a conducive environment for small business growth. FP&M SETA will need to work with Bargaining Councils and other stakeholder structures to establish sustainable and productive partnerships focussing on the delivery of skills to the sector.

Output 6.1: Effective and sustainable partnerships are put in place to strengthen the supply of skills to the sector

6.6.2 Stakeholder strategic partnerships.

In certain sub-sectors such as Forestry and printing specifically, but also in other parts of the sector value chain, success is dependent on a number of public policy interventions and initiatives. For example in some sub-sectors there is a challenge of water availability, and in others procurement process where time frames and


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requirements impact on production plans. It will be important for the SETA to work with relevant government departments and public entities to put in place stakeholder structures that address some of the identified challenges. It will not be the role of the SETA to resolve operational problems facing industry, but to ensure that training is put in place, including where needed in relevant government departments, that enable the problems to be addressed.

Output 6.2: Stakeholders meet to discuss strategic challenges in the sector and develop mechanisms to address them

6.6.3 Supporting enablers.

Given the importance of new and emergent industries in the sector, and also on the linkages within the sector value chain there will be a need focus on putting in place - or supporting stakeholders to put in place - a range of enablers. For example in some industries there is a need for the fast-tracking of water licenses, the formalising of community structures to improve participatory management, providing capacity in the water license application process, assisting with funding and business planning processes, as well as providing skill and technology upgrading. Skills development is an important aspect of enterprise development, but trainers working with small and emerging businesses are often confronted with a range of problems that such entities generally face. Whilst trainers cannot solve the problems they can be aware of them and the help build an understanding of other processes that are in place to address them. Where possible training should be timed to coincide with and support other interventions.

Output 6.3: Value chain partners are identified, meet and commit to support entities. The agreed support, and mechanisms for accessing it is communicated in the sector.

6.6.4 Inter-SETA partnerships.

In primary production industries the provision of extension services is an important enabler and the SETA can play a role in supporting such services. Competence in this area is in DAFF, and both FP&M and AgriSETA have an interest in strengthening such services. There will be a need for a partnership with AgriSETA to achieve this important enabler. Looking at the totality of the value chain there are many examples of skills challenges that cannot be addressed by the FP&M SETA alone and which require partnership agreements with other SETAs. The location of a SETA presence in public TVET colleges is another important area for inter-SETA collaboration. Whatever the SETA landscape post-2016 there will be a need for such partnerships and the FP&M SETA will need to establish arrangements that are sustainable into the future.

Output 6.4: Inter-SETA partnerships - and jointly agreed delivery and funding mechanisms - are put in place to address common skills needs


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6.6.5 Governance.

In rural areas there are many initiatives being taken, and efforts being made, to develop the local economy, work along value chains and contribute to improved equity in land ownership. There is a need to develop accountability mechanisms that hold the various stakeholders to account and enables follow through of decisions. DAFF and other departments have committed to the establishment of governance arrangements, with a specific focus on clarifying responsibilities and achieving improved accountability. Inter-departmental and cross departmental processes are envisaged, including state owned enterprises and entities together with a comprehensive monitoring and evaluation system. Knowledge and information management is viewed as important to support effective governance. The SETA will be playing its role in developing such systems in relation to the contribution of skills development and will be positioned to be an effective partner in governance structures as they emerge.

Output 6.5: Governance arrangements are put in place to enable monitoring and accountability for the implementation of the FP&M SETA SSP

6.7 Flexibility and accessibility of systems: There is a perception amongst stakeholders that the systems for accessing education and training being implemented in the sector are too rigid and not easily accessible to all in the various sub-sectors. This is not entirely a SETA challenge, as it also includes providers, the QCTO, SAQA and others involved in funding and managing education and training. Efforts need to be made by all stakeholders to simplify processes and make it easier for diverse industries and companies to participate. The systems should also make more allowance for people with special needs, small and micro enterprises and cooperatives. Support in accessing the system also needs to improve.

Output 7.1: The systems and processes for accessing programmes are reviewed and access is made simpler


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Chapter 7 Monitoring and Evaluation The purpose of this chapter of the SSP is to put in place a framework which will enable the SETA stakeholders to monitor the strategy and its implementation, and to take steps to either address gaps or adjust strategy in the event of weaknesses being identified. For each outcome the SETA as agreed an impact indicator and measure, and for each output appropriate indicators and measures are set out.

7.1 Strategic Objective 1: Improved supply and demand information

Outcome Indicator Measure

Reliable and credible supply and demand data

Quality of research reports

Research reports and supporting documentation

Output Indicator Measure

Output 1.1: A high quality, well researched Sector Skills Plan

Quality of SSP Feedback from: DHET; Peer SETAs; Board; Sub-sector stakeholders

Output 1.2: An effective model developed that draws on quality data to forecast demand and project supply

A model that is producing reliable supply and demand forecasts

Assumptions; quality of data used; feedback on forecasts

Output 1.3: Long term partnerships are entered into, delivering continuous research products that are contributing to improved impact of skills development in the sector

Number of partnerships producing quality research

Feedback from: DHET; Peer SETAs; Board; Sub-sector stakeholders


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7.2 Strategic Objective 2: Strengthening value chain linkages Outcome Indicator Measure

Value chain functioning well and achieving growth

Improved output and productivity

Quantec data on output, employment, imports and exports


Output 2.1: Innovation projects are identified and agreed in the sector and supported with skills development

Number and quality of Innovation projects established and supported

Project plans and reports

Output 2.2: Sound sub-sector strategies are agreed and supported with skills development

Number of quality sub-sector or industry strategies

Feedback from sub-sector stakeholders

Output 2.3: Beneficiation projects are identified and agreed and supported with skills development

Beneficiation projects established and supported


Output 2.4: Skills programmes are designed and delivered for existing employees that improve mobility and productivity

Number of employees benefiting from skills programmes

Training reports; learner records; feedback from employees and trade unions

Output 2.5: The Sector Skills Plan projects skills demand to 2020 and identifies strategies for meeting the demand

Quality and buy in for long terms targets and plans


Output 2.6: Bargaining councils produce position papers on skills strategy that inform the SSP

Number of position papers produced by bargaining councils

Feedback from bargaining council stakeholders

Output 2.7: Strategic alignment of sector and national strategies achieved and

Number and quality of strategic projects

Feedback from government departments; feedback from sector stakeholders


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communicated in the sector

Output 2.8: Economic conditions are monitored per sub-sector and strategy adjusted to meet changing needs.

Number of adjustments made to strategy based on sound analysis of conditions


Output 2.9: Programmes to address skills needs associated with changing technologies delivered

Number of programmes designed and delivered to address technology change

Programmes; feedback from participating learners, providers and employers

Output 2.10: Partnerships in place for that enable companies to access training to contain the virus and manage its impact.

Number and quality of partnerships

Feedback from participating learners, providers and employers

Output 2.11: Projects agreed focussing on the rural economy value chain agreed and supported with skills development

Number of projects delivering skills to rural areas


Output 2.12: Sector industrial clusters supported with skills development

Number of industrial clusters supported


Output 2.13: Green production processes agreed and supported with skills development

Number of green production processes supported


Output 2.14: The impact and potential impact of SIPs is documented and monitored so as to adjust strategy as required.

Number of SIPs supported


7.3 Strategic Objective 3: Building capacity in small and emergent enterprises



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Output from small and emergent enterprises increases

Percentage contribution of small and emergent entities to sector

Data on output, employment and productivity from a number of sources


Output 3.1: Small and micro enterprises supported with both technical and business skills training

Number of small businesses supported with training

MIS reports; feedback from participating entities

Output 3.2: 10 informal sector projects developed and supported and a model developed for replication by other funding partners

Number of projects and the adoption of a viable model

Project plans and reports; feedback from informal sector stakeholders

Output 3.3: Models of structuring and implementing training to support empowerment are developed, implemented and used by member companies to earn BEE points

Number and effectiveness of interventions to support employment

Project plans and reports; data on black ownership, management and employment equity in supported enterprises

7.4 Strategic Objective 4: Supporting workplace education and training


The performance of existing employees and new entrants is enhanced through quality workplace learning

Number of people qualifying and assessed as competent after engaging in workplace training

MIS reports; feedback from participating learners, providers, mentors and employers


Output 4.1: Workplaces are supported to develop structured internships and

Number of workplaces participating by sub-

MIS reports; feedback from participating learners,


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effective workplace implementation of learnerships and skills programmes

sector in structured workplace training

providers, mentors and employers

Output 4.2: A process is agreed to attract skilled personnel to act as mentors after retirement

Number of skilled people acting as mentors

MIS reports; feedback from learners/employees, mentors and employers

7.5 Strategic Objective 5: Improving supply Outcome Indicator Measure

The supply of skilled people to the sector is improved

The extent to which Education and Training is contributing to improved sector performance

Quantitative data from MIS; Impact evaluations


Output 5.1: Career paths and learning pathways are developed in relation to scarce skills occupations that identify the blockages and weaknesses. Stakeholder processes are put in place to discuss the challenges and agree solutions

Quality and usefulness of career guidance information; effectiveness of structures to address learning pathway challenges

Feedback from sub-sector stakeholders; evaluation reports

Output 5.2: Mechanisms are developed that encourage providers to develop capacity in areas of need.

Proportion of training provider capacity located where it is needed

Study of current and planned provision in relation to need;

Output 5.3: Where the need is identified a feasibility study is put in place to determine the viability of developing new institutions

Number of feasibility studies

Feasibility studies


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Output 5.4: Learning interventions to address learning pathway blockages are developed and implemented

Number of programmes developed to address blockages

MIS reports; reports on programme development; feedback from stakeholders

Output 5.5: Bridging programmes are developed and supported

Number of bridging programmes developed and supported

MIS reports; reports on programme development; feedback from stakeholders

Output 5.6: New or updated occupational qualifications are developed that meet the needs of all priority scarce skills occupations.

Number and percentage of scarce skills occupations for which occupational qualifications have been registered and made available

Reports on qualification development processes; SAQA NLRD reports

Output 5.7: The feasibility of adjusting programme times to suit industry needs is explored with providers

Number of adjustments made to delivery schedules

MIS reports; sub-sector stakeholder feedback on meetings with providers

Output 5.8: A programme is put in place that enables workers to access programmes of foundational education that enable them to access occupational qualification.

Number of learners entering foundation programmes; numbers of these entering occupational programmes

MIS and ETQA reports; evaluation of foundational programmes; tracer studies.

Output 5.9: A programme is put in place to encourage the achievement of high level qualifications that address sector and sub-sector needs.

Number of Masters and PhD students entering and completing programmes

MIS data reports; project plans and reports

Output 5.10: A programme is put in place to enable employees in the sector to access programmes that assess their existing

Number of workers entering RPL programmes; number exiting such programmes

MIS reports; feedback from participating learners, providers and employers


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competencies and provides them with additional education and training to enable them to obtain occupational qualification

with an occupational qualification

Output 5.11: internal sector training capacity is built and strengthened

Number of employers with in-house capacity participating in sector training

Research reports; ETQA data on accredited providers;

7.6 Strategic Objective 6: Partnerships Outcome Indicator Measure

Partnerships are contributing to improved training quality, access and impact

Effectiveness of partnerships

Measures to be based on those agreed for the partnerships; key will be stakeholder feedback


Output 6.1: Effective and sustainable partnerships are put in place to strengthen the supply of skills to the sector

Number and effectiveness of partnerships

Feedback from stakeholders; partnership reports

Output 6.2: Stakeholders meet to discuss strategic challenges in the sector and develop mechanisms to address them

Number and effectiveness of meetings; number of agreed solutions implemented

Feedback from stakeholders; minutes of meetings

Output 6.3: Value chain partners are identified, meet and commit to support entities. The agreed support, and mechanisms for accessing it is communicated in the sector.

Number of value chain partner meetings; number of plans communicated to stakeholders

Reports of meetings; plans setting out roles and how to access services


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Output 6.4: Inter-SETA partnerships - and jointly agreed delivery and funding mechanisms - are put in place to address common skills needs

Number of agreements entered into with relevant SETAs; number of learners participating in jointly sponsored programmes

MIS reports; partnership reports; stakeholder feedback

Output 6.5: Governance arrangements are put in place to enable monitoring and accountability for the implementation of the FP&M SETA SSP

The proportion of agreed outputs that are achieved

Monitoring reports

7.7 Strategic Objective 7: Flexibility and accessibility of systems Outcome Indicator Measure

Systems and processes for accessing education and training are put in place that enable access to be expanded

Number of enterprises participating in education and training by sub-sector and size of enterprise

MIS reports; feedback from learners and employers


Output 7.1: The systems and processes for accessing programmes are reviewed and access is made simpler.

Percentage of participating employers and learners approving the systems and processes

Monitoring reports; feedback from learners and employers; call centre reports on queries and complaints


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