"Working together for a skilled tomorrow"
PRESENTATION
PORTFOLIO COMMITTEE ON LABOUR
18 March 2003
INTRODUCTION TO INSETA Our vision is to provide quality skills development for sustainable business growth. Our mission is: To develop an integrated and aligned strategy for skills development. To contribute to the achievement of national skills development. To encourage a competent and productive workforce in the industry. To communicate, represent and involve all stakeholders. The INSETA represents the following constituents within the insurance sector: Short-term insurance Life insurance Insurance and Pension Funding Risk management Health care benefits administration Unit trusts Funeral Insurance Reinsurance Pension Funding and Activities auxiliary to Financial Intermediation Insurance Sector – A Brief Overview The insurance sector is a rapidly evolving, growing and developing major player in the South African economy. Approximately 6 000 industry employers, with an estimated number of 95 000 employees are registered with the South African Revenue Services, of which just more than 3 000 pay the Skills Development Levy. INSETA represents an industry with a very wide range of employers, many of whom are very small (about 10 employees) and very large employers (in excess of 13000 employees). The majority of the workforce represents skilled and highly skilled employees. A snapshot of the Insurance Industry employment profile, skills needs/gaps and the factors influencing change in the industry reveals the following – information as per INSETA Sector Skills Plan dated December 2002: EMPLOYMENT PROFILE (SECTOR WIDE) BY GENDER Male 42% Female 58% EMPLOYMENT PROFILE (LARGE EMPLOYERS) BY GENDER Male 43% Female 57% EMPLOYMENT PROFILE (SMALL/VERY SMALL EMPLOYERS) BY GENDER Male 34% Female 66% EMPLOYMENT PROFILE (SECTOR WIDE) BY RACE AND GENDER African (Male) (Female) 25% (13%) (12%) Coloured (Male) (Female) 14% (5%) (9%) Indian (Male) (Female) 8% (4%) (4%) White (Male) (Female) 53% (20%) (33%) EMPLOYMENT PROFILE (LARGE EMPLOYERS) BY RACE AND GENDER African (Male) (Female) 25% (13%) (12%) Coloured (Male) (Female) 16% (6%) (10%) Indian (Male) (Female) 8% (4%) (4%) White (Male) (Female) 51% (20%) (31%) EMPLOYMENT PROFILE (SMALL/VERY SMALL EMPLOYERS) BY RACE AND GENDER African (Male) (Female) 22% (9%) (13%) Coloured (Male) (Female) 2% (1%) (1%) Indian (Male) (Female) 5% (3%) (2%) White (Male) (Female) 71% (21%) (50%) OCCUPATIONAL GROUPS (SECTOR WIDE) BY RACE AND GENDER MALE Occupational Group African Coloured Indian White Senior Officials and Managers/Owner Managers Professionals Technicians Clerical/Administrative Service Workers Labourers 1% 1% 6% 8% 10% 3% 1% 1% 4% 7% 2% 0% 1% 1% 2% 3% 3% 0% 13% 5% 12% 6% 11% 0% FEMALE Occupational Group African Coloured Indian White Senior Officials and Managers/Owner Managers Professionals Technicians Clerical/Administrative Service Workers Labourers 0% 0% 3% 9% 6% 2% 0% 0% 3% 9% 2% 0% 0% 0% 1% 5% 1% 0% 6% 5% 12% 26% 0% 0% EDUCATIONAL PROFILE The majority of employees hold at least a Matric Certificate and many hold post-Matric (tertiary) qualifications. Thus the majority of the workforce represents skilled and highly skills levels. There are very few unskilled employees in the Sector. FACTORS INFLUENCING THE SECTOR PROFILE Employment Equity High Level Skills Management & Ownership Female Dominance Organisational Size Distribution Disability Restructuring and Outsourcing FACTORS INFLUENCING CHANGE Policy and Legislative Factors FAIS, Long-Term Insurance Act, Corporate Governance, National Skills Development Strategy and Employment Equity, Economic Factors Incentives and Trial Commission, Financial Security Emanating from Corporate Governance, Market Volatility/Low Investor Confidence/Higher Interest Rates, Financial Disintermediation, Mergers & Acquisitions, Black Economic Empowerment/Affirmative Procurement/Employment Equity Social Factors HIV/Aids, Changing Customer Needs, Using Market Segments to Integrate Marketing with Social Upliftment, Customer Churn, Unemployment/Poverty/Crime Technological Factors e-Technology and e-Commerce, Software Programmes Targeted at Customised Packages, Telecentres, Computerised Administration, Using Information Communication Technology as a Distribution Model Environmental Factors Impact on Payouts and Impact of Liability KEY TRENDS IN THE INSURANCE INDUSTRY Corporate Governance and Regulation, Risk Management in the Short-Term Insurance Industry, Loss Adjustors, Reinsurance Industry Developments, 11 September 2001, Standardisation, Market Volatility, Short-Term Insurance Market Consolidation and Contraction, Globalisation, Terrorism TOP SECTOR SKILLS PRIORITIES Large Employers (1) Leadership and Management Skills – 40% (2) PC Literacy – 24% and Selling Skills – 24% (3) Product Knowledge - 13% (4) Customer Care – 11% (5) Company Procedures – 10% and Finance – 10% Small Employers PC Skills, Technical Skills, Client Services, Communication Skills, Compliance Training, Marketing, Corporate Governance, SMME Management SECTOR DEMANDS IN TERMS OF SKILLS, EDUCATION AND COMPETENCIES FOR EMPLOYEES 1. High-level and Specific Skills 2. Tertiary Education in order to enter the Industry 3. Operational Skills 4. Technical Development Skills 5. Individuals able evolve to meet new market forces and new customer demands & expectations 6. A new breed of Financial Intermediary who are able to build responsible and prosperous relations with clients in all market categories Corporate Governance A Council, which comprises of organized business, organized labour and the State, govern the affairs of the INSETA. SETAs are registered as public entities and as such comply with the provisions of the Public Finance Management Act and other applicable legislation. From its day of inception, INSETA’s governing Council and the INSETA Management identified good corporate governance as one of the critical success factors and agreed that INSETA will at all times set itself only the highest standards that comply with best practice in this regard. As such, INSETA has implemented the following governance structures/elements: A governing Council with an approved Constitution (which is currently under review) Council Committees with Terms of Reference – chaired by an INSETA stakeholder Audit Committee with an Audit Charter – chaired by an INSETA stakeholder Executive Management Committee and with various Sub-Committees, with Terms of Reference – Sub-Committees are chaired by an INSETA stakeholder Regional Forums with Terms of Reference – chaired by an INSETA stakeholder Code of Conduct for all Council-, Council Committee-, EXCO-, EXCO Sub Committee members, and INSETA personnel Voluntary Code of Conduct for all Service Providers Internal Audit Function, including risk management with Internal Auditors (Gobodo) External Auditors (Auditor-General) Fraud Prevention Plan Full compliance with the Public Finance Management Act Policies and Procedures Financial Policy, including Operational Procurement Project Procurement Code IT Policy Employment Policy Manual Grievance and Disciplinary Manual Internal Administration Procedures Manual Project Governance Framework Contracts and Service Level Agreements with main service providers Business Plan and Budget, with Annual Sector Skills Plan Targets Sector Skills Plan Annual Report, with Audited Financial Statements submitted to the Minister of Labour and tabled in Parliament Memorandum of Understanding with the Department of Labour Quarterly Reports – measuring the performance of INSETA on certain indicators - submitted to the Department of Labour Member of the SETA Forum and NSDS Forum, chaired by the Department of Labour Steering Committees with main service providers, Deloitte&Touche (Financial and IT Management) and PricewaterhouseCoopers (Project Management) Project Finance Steering Committee with PricewaterhouseCoopers and Deloitte&Touche Performance Management System for all INSETA personnel, including the Chief Executive Officer INSETA is also currently investigating the implementation of a Reputation Management Framework and a holistic Performance Measurement Framework It should be emphasized that at the heart of INSETA’s corporate governance lies an integrity-based approach, which manifests itself in the organizational and individual culture, principles and values. It is also important to mention INSETA’s approach to the implementation of the Skills Development Act and the National Qualifications Framework in the Insurance and Related Financial Services Sector. This includes the following characteristics: Consultation and inclusivity, which leads to buy-in and co-ownership Partnership with Industry stakeholders Business model Professional business practices vs. Bureaucracy Transparency and good Corporate Governance Innovation and creativity Leadership and guidance Practical support, assistance and service Projects as a means to implement the INSETA Sector Learning Strategy and to address major skills needs – also through deliberate interventions, build capacity and add value. INSETA’s particular business model was approved by the INSETA Council At the heart of this model is Council’s decision to outsource certain functions (Financial & IT Management, and Project Management) to expert private sector service providers, namely Deloitte&Touche and PricewaterhouseCoopers. A proper and thorough public tender procedure was followed prior to their appointment. The fundamental reasons for this decision were: INSETA personnel can concentrate on its top three core functions, namely Skills Development, Quality Assurance and Learnerships It follows international best practice It represented and contributed to good corporate governance, including limiting risk Cost efficiency Specialist expertise, especially in PFMA-compliance and project management IT-system, including Skills Management System was too costly for INSETA to develop or buy as an individual SETA. The system is shared with several other SETAs serviced by Deloitte&Touche, and represents coordination/cooperation and knowledge sharing with these SETAs. It includes components for SD Levy information, Skills Development Facilitators, Workplace Skills Plans, Annual Training Reports, Quality Assurance and Learnerships – all of which is aligned with the SAQA National Learner Record Database. Effective, speedy delivery and implementation imperatives Infra-structural capacity Access to global resources of main service providers It also led to a skills transfer to both INSETA personnel and people in the Insurance Sector, especially with reference to project management skills and financial management skills INSETA’s approved organizational organogram is attached as Annexure 1. |
Staff Composition
Position |
Name |
Race and Gender |
Chief Executive Officer |
Nelius Volschenk |
White Male |
Note
:The following Learning Strategy Programmes have been implemented or are about to be implemented:
Board Capacity Programme, aimed at Board Directors and Executive Managers – from May/June 2003
Executive Leadership Development Programme (ELDP), aimed at executives and emerging executives will commence from 24 March 2003
Leadership Advancement Programme (LAP), aimed at middle and junior managers has commenced from 24 February 2003
The ELDP and LAP Programmes are groundbreaking and innovative programmes implemented in partnership with the Graduate School of Business of the University of Cape Town. They represent a first in the history of management development programmes in South Africa, as this is the first time that customised programmes of this nature have been designed and developed for an entire economic sector. This has been achieved through a process of consultation between INSETA, UCT GSB and the Insurance Industry.
Taking into account that only 12, 5% of all management positions in the Industry is held by PDIs (as reported in the first Employment Equity Commission Report), the composition of both programmes’ delegate groups represents a major breakthrough for the Industry. The figures are as follows:
ELDP
RACE |
GENDER |
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Male |
Female |
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LAP
RACE |
GENDER |
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Male |
Female |
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INSPREP (Advanced) – a bridging programme for graduates has a target date for implementation during late 2003 or early 2004.
INSPREP (Basic) – a bridging course for school-leavers was implemented in Cape Town during 2002, with the Gauteng Programme to follow later in 2003.
Insurance Career Awareness Programme aimed at Grade 12 scholars also has a target date for implementation during late 2003 or early 2004.
Although the official target for workers to have at least NQF 1 Qualification by March 2005, is set at 70% INSETA’s target (60%) for 2002/3 has been achieved. It should be noted that the average qualification in the sector is Matric and higher, with very few (±1 000 employees) at a lower level.
By March 2005, a minimum of 15 per cent of workers must have embarked on a structured learning programme, of which at least 50 per cent must have completed their programme satisfactorily.
The total number of workers benefiting through structured learning programmes in the Insurance Sector as reported in the Annual Training Reports (ATRs) stands at almost 65% (±62 000 out of an estimated total of 95 000 employees) and the successful completion rate of the training is being assessed through the careful assessment of the ATRs.
In addition to the structured workplace training as reported in the Workplace Skills Plans and Annual Training Reports of employers, special training programmes/projects are also taking place in the Sector and funded by INSETA from its available Discretionary Funds. These stakeholder projects are all aligned to INSETA’s Sector Skills Plan (SSP) and must address identified skills gaps/needs and/or business issues as identified in the SSP. It also had to comply with INSETA’s Discretionary Grant Policy and had to benefit the wider Insurance Industry. The vast majority of beneficiaries of these projects are Previously Disadvantaged Individuals (PDIs) In 2002/3 special attention was paid to SMME projects and 12 out of 16 approved projects were awarded to smaller employers in the industry this in addition to the significant number awarded in 2001/2.
INSETA had several aims/objectives in mind with the concept of stakeholder projects, amongst others were:
Creating awareness and marketing of INSETA, both amongst industry stakeholders and the wider South African society
Proving to industry and Government that levy funds were returned to the industry.
Addressing industry skills needs/gaps and business issues as identified in the Sector Skills Plan, such as HIV/Aids, life/career skills, Insurance technical and related knowledge, e-learning/IT-skills, entrepreneurial skills, Mathematics and Science upskilling, SMME upskilling, and management/leadership
Projects benefiting not only the individual employer, but also the wider industry or a specific sub-sector
The concept of stakeholder projects proved to be very popular amongst employers and service providers. A total of 106 project applications with a total value of R64m were received during the past two years – INSETA had ±R22m available and awarded the funds to 51 successful projects with a projected number of more than 680 000 beneficiaries! To date some 20 stakeholder projects have been completed to the value of R5, 351m with more than 48 000 beneficiaries at an average per capita cost of just R111, 16 per beneficiary! This is truly phenomenal statistics and clearly indicates the almost unlimited power and scope of the Discretionary Funds available to SETAs, provided that it is utilised in a responsible, properly controlled manner and that a SETA has the capacity to manage projects.
Please see Annexure 2 for a full list of INSETA sponsored stakeholder projects for the period 2001-3.
By March 2005, an average of 20 enterprises (to include small, medium and large enterprises) and at least five national government departments, must be committed to, or have achieved the Investors in People Standard (IiP).
INSETA’s target for the period 2002/3 was three large employers to be participating in Investors in People and that target was achieved with the participation of Old Mutual, Sanlam and Metropolitan as IiP-sites.
OBJECTIVE 2:
FOSTERING SKILLS DEVELOPMENT IN THE FORMAL ECONOMY FOR PRODUCTIVITY AND EMPLOYMENT GROWTH
INSETA’s payout ratio for 2000/1 (Y1) and 2001/2 (Y2) of Mandatory Grants (for the registration of a Skills Development Facilitator (SDF) and the submission of Workplace Skills Plans and Annual Training Reports) amounts to approximately 82% of available funds in this category. An amount of R72, 33m were returned to compliant employers during this period. The figure for Y3 is not yet available, as the final Grant payments will be instituted in August 2003. Trends so far indicate similar payout ratios. Any unclaimed Mandatory Grant funds are transferred to INSETA’s Discretionary Fund and committed/allocated to identified projects.
A number of 136 out of 2 696 Skills Development Levy-paying employers claimed back Grants in 2000/1 and 150 out of 2 991 in 2001/2. This represents 5% of SD Levy-paying employers, but in turn they contributed 82% of the total SD Levy income of INSETA. The projection for the current year (2002/3) is more or less the same. It is thus patently clear that the vast majority of employers not claiming back grants are SMMEs. INSETA has implemented an on-going campaign to persuade these non-claiming employers to participate in the activities of INSETA and to realise the benefits available to them – especially the access to Discretionary Grants.
By March 2005, at least 75 per cent of enterprises with more than 150 workers must be receiving skills development grants and the contributions towards productivity and employer and employee benefits are measured.
For the period 2001/2 (Y2) 91% of the total number of SD Levy-paying enterprises within the Insurance Sector employing more than 150 workers received Mandatory Grants. INSETA’s target for the period 2002/3 (Y3) is 80% - figure for Y3 is not yet available as the final Grant payments will be instituted in August 2003. Trends so far indicate similar payout ratios.
By March 2005, at least 40 per cent of enterprise employing between 50 and 150 workers must be receiving skills development grants and the contributions towards productivity and employer and employee benefits are measured.
For the period 2001/2 (Y2) 74% of the total number of SD Levy-paying enterprises within the Insurance Sector employing between 50-150 workers received Mandatory Grants. INSETA target for the period 2002/3 is 75% - - figure for Y3 is not yet available as the final Grant payments will be instituted in August 2003. Trends so far indicate similar payout ratios.
By March 2005, Learnerships are available in every sector.
The Insurance Sector does not have a history of pre-employment education and training like the sectors that had Industry Training Boards and apprenticeship systems in place. INSETA had to start the identification, design, development and implementation of Learnerships from scratch.
Achievements:
15 Learnerships across all sub-sectors have been registered by the Department of Labour. We are also identifying Learnerships at all levels on an on-going basis and new Learnerships are in the process of being designed and developed in consultation with our industry stakeholders
14 are brand new Unit Standard based Learnerships.
INSETA has requested SAQA to register our Financial Literacy Unit Standards, as a Fundamental in addition to the other SAQA required Fundamental Unit Standards.
The reasoning for this is that if our people are going to manage other people’s money then they need to be able to manage their own money first.
One is a Whole (existing) qualification based Learnership.
We have one at entry level into the Sector, which is at NQF level 2.
We have one at a NQF level 3, which is the natural learning pathway from NQF level 2.
The two Learnerships referred to above, will make it possible for school leavers to enter into a learning pathway in the Insurance Sector, which has been predominantly a matric (grade 12) plus Sector.
We have 12 Learnerships at NQF level 4. These Learnerships are specific to job roles in the Insurance Sector.
We have one Learnership at NQF level 5 that leads to an existing qualification.
The table below illustrates the various Learnerships that we are responsible for Quality Assuring:
LIST OF REGISTERED LEARNERSHIPS
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Junior Administrator |
National Certificate: Insurance Administration |
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Insurance Administrator |
National Certificate: Insurance |
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Healthcare Benefits Administration Claims Assessor |
National Certificate in Healthcare Benefits Administration: Claims Assessing |
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Unit Trust Investment |
National Certificate in Unit Trust Investment |
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Retirement Fund Administrator |
National Certificate: Long Term Insurance |
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Long Term Insurance/Investment Product Developer |
National Certificate: Long Term Insurance |
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Long Term Insurance/Investment Call Centre Operator |
National Certificate: Long Term Insurance |
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Long Term Insurance/Investment Administrator |
National Certificate: Long Term Insurance |
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Long Term Underwriter |
National Certificate in Insurance: Long Term: Risk Assessment |
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Long Term Claims Assessor |
National Certificate in Insurance: Long Term: Risk Assessment |
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Short Term Insurance: Personal / Domestic Claims Negotiator |
National Certificate: Short Term Insurance |
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Short Term Insurance: Personal / Domestic |
National Certificate: Short Term Insurance |
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Short Term Insurance: Personal / Domestic |
National Certificate: Short Term Insurance |
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Short Term Insurance: Commercial / Industrial |
National Certificate: Short Term Insurance |
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Group Retirement Benefit: Fund Administrator |
Certificate: Insurance Studies |
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By March 2005, all government departments must assess and report on budgeted expenditure for skills development relevant to Public Service, Sector and Departmental priorities.
Total Unemployed Learners |
109 |
Total Employed Learners |
46 |
Total Number of Learners |
155 |
Further broken down by:
Employment Status and Disability
Unemployed Learners |
106 |
Employed Learners |
43 |
Unemployed Disabled Learners |
3 |
Employed Disabled Learners |
3 |
Race
African |
86 |
Coloured |
20 |
Indian |
17 |
White |
32 |
Gender
Male |
69 |
Female |
86 |
Race and Gender
African Male |
41 |
African Female |
45 |
Coloured Male |
7 |
Coloured Female |
13 |
Indian Male |
8 |
Indian Female |
9 |
White Male |
13 |
White Female |
19 |
INSETA’s budget for the implementation of Learnership for the period 2002/3 is
R6 000 000-00 and the Learners target for the corresponding period is 400. INSETA’s Learnership target for 2005 is 2 000 learners – mostly at NQF Level 4.
The following table illustrates INSETA’s Learnership Grant structure:
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The indicated Grants are not only for Insurance specific Learnerships, but also for Cross-sector Learnerships like Accounting, IT, Management, etc.
The above grants are in addition to the generous tax allowances made available by SARS.
Challenges:
Learnerships are a brand-new concept in the Insurance Sector and considerable marketing efforts have been made to educate stakeholders on the benefits of Learnerships – creating a national awareness of Learnerships is one of INSETA’s top priorities.
Increasing participation from SMMEs – it is heartening that the majority of employers participating so far in Learnerships are from the SMME environment.
Setting up of Learnership infrastructure that would be suitable for SMMEs
Having sufficient qualified assessors in the Sector, since most of our Learnerships are based on Unit Standard-based qualifications. To date INSETA has trained 650 assessors with an ultimate target of 1 000 before the end of this year.
Development of learning materials against brand new Unit Standards.
Increasing the existing levels of Learner competence against Learnership entry requirements.
Gaining the support and commitment of employers for Learnerships in spite of mergers and acquisitions.
Reduction in bureaucratic Learnership processes. In this regard INSETA has tried to simplify the process as much as possible within the regulatory framework.
By March 2005, a minimum of 50 per cent of those who have completed Learnerships are, within six months of completion, employed, in full-time study or further training or are in a social development programme.
Since the first Learnerships were only implemented five months ago it is too early to report achievements on this indicator.
3. CONCLUSION
Ladies and Gentlemen, this brings INSETA’s presentation to an end. There is so much more that I could tell you about the work at INSETA, but time has caught up with us.
From our presentation you can see that INSETA has fully embraced the challenge assigned to us during the short period of three years since our establishment. As a very young and small organisation, which was started from scratch we have many achievements that we are rightfully proud of, but we are under no illusion that a daunting task still awaits us.
Every one of us involved in the work of INSETA (Council members, INSETA personnel and service providers) regard ourselves as extremely privileged to be involved as pioneers in this national initiative to improve the lives of our workforce so that South Africa can proudly take up its rightful place amongst the best performing economies in the world. This task puts an awesome responsibility on our shoulders – a challenge that we have taken up without question, because we have a total belief in the end result of our collective efforts. We have learned and will learn as we continue on our journey, but we will strive to continuously improve our performance and service levels to all our stakeholders, to truly become their indispensable strategic partner and service agent in the delivery of skills development in the Insurance sector. This we will do at all times with unquestionable integrity!
I am looking forward engaging with the Committee on INSETA specific questions and issues.
I thank you.
GLOSSARY
ATR |
Annual Training Report |
CEO |
Chief Executive Officer |
D&T |
Deloitte&Touche |
DoE |
Department of Education |
DoL |
Department of Labour |
EE |
Employment Equity |
ELDP |
INSETA Executive Leadership Development Programme |
EXCO |
INSETA Executive Management Committee |
FAIS |
Financial Advisors and Intermediaries Services Act |
FS SGB |
Financial Services Standards Generating Body |
IiP |
Investors in People |
INSETA |
Insurance Sector Education and Training Authority |
INSPREP |
Insurance Employment Preparedness Programme |
INSQA |
Insurance Sector Quality Authority |
ITB |
Industry Training Board |
LAP |
INSETA Leadership Advancement Programme |
NLRD |
National Learners Record Database |
NSDS |
National Skills Development Strategy |
NSF |
National Skills Fund |
NQF |
National Qualifications Framework |
OBE |
Outcomes Based Education |
PDI |
Previously Disadvantaged Individual |
PwC |
PricewaterhouseCoopers |
RPL |
Recognition of Prior Learning |
SAQA |
South African Qualifications Authority |
SDL |
Skills Development Levy |
SMME |
Small, Medium and Micro Enterprise |
SSP |
Sector Skills Plan |
UCT GSB |
University of Cape Town Graduate School of Business |
WSP |
Workplace Skills Plan |