PRESENTATION TO THE PORTFOLIO COMMITTEE ON LABOUR

Delivered by Frank R Groenewald (Chief Executive Officer)

BANKSETA

Honourable Chairperson and members of the Portfolio Committee on Labour, guests, chairpersons and deputy chairpersons of SETAs, fellow CEOs, colleagues. Mr Ben Venter from SASBO representing organised Labour, Mr Sipho Ngidi representing employers Mr Sibusisu molefi from the BANKSETA.

I thank you for this opportunity to report to you on the status of the Banking Sector Education and Training Authority and to highlight successes and challenges facing the BANKSETA.

The introduction of the Skills Development Act, 97 of 1998 heralded a new era in the development of skills in the South African economy. It signalled strongly that important interventions intended to make the economy more globally competitive while simultaneously tackling social transformation were about to be implemented as a joint effort of government, business and organized labour. This was followed by the launch of the Sector Education and Training Authorities in April 2000, which were mandated to execute the Skills Development Act. The BANKSETA supports the development of the broader banking sector.

(Slide 2)

The mission of the BANKSETA is to support and give effect to legislation by establishing an education, training and development framework to enable stakeholders to advance the national and global position of the broader banking sector. It should be noted that in the BANKSETA and amongst its stakeholders, the word "enable" in this mission statement is deemed to be the most important as its sets the scene for the culture in the BANKSETA, for the way it wishes to effect change, and for the type of people that it continues to recruit into the organization.

(Slide 3)

The BANKSETA has identified a number of success factors that we believe are crucially important for the current and future of any value adding organization.

  1. A committed and informed sector. The banking sector has always been committed to the development of its staff and has traditionally spent a significant amount of money on training, skills development and education. The sector is professional and therefore ensures that it is well informed about the letter and intent of initiatives that can impact on strategies.
  2. A competent Council / Board providing strategic direction is seen as crucial to the success of the SETA. Senior individuals from stakeholders in the sector participate in the Council of the BANKSETA and have ensured that the BANKSETA staff has a well-defined strategy to implement.
  3. A strong culture of corporate governance, ownership and ethics is fundamental to the success of the BANKSETA. Corporate governance is stressed on a continuous basis and is supported by development initiatives, not only for BANKSETA staff, but also for BANKSETA Council members. It is also very clear that the sector believes that it owns the BANKSETA and therefore has a very strong sense of responsibility towards it.
  4. A clear vision and objectives. A stakeholder organization with clear vision and objectives knows where it needs to go and what it needs to achieve.
  5. Knowledgeable, competent and committed staff is deemed to be the basis for a culture of delivery. The BANKSETA staff is developed in such a way that they know exactly what is expected of them and have the capacity to deliver to that expectation.
  6. A strong culture of needs driven delivery is associated with the above five success factors. The BANKSETA is well known for its ability to determine the needs of the sector and to deliver to those needs in a structured manner. It is also important to note here that the BANKSETA and the sector understand the limitations of the SETA, and therefore the expectations are realistic.
  7. A strong focus on evaluation and feedback. The BANKSETA conducts an annual customer satisfaction survey and the feedback received in this way forms part of new strategies to ensure continued improvements in delivery.

(Slide 4)

In order to ensure that we create strategies for the sector that are relevant, a specific strategy creation process is followed that starts with the collection and interpretation of information and ends with evaluation.

(Slide 5)

Current issues that have been identified that will impact on the BANKSETA and the banking sector at large, come from President Thabo Mbeki’s "State of the Nation" address, with a very specific focus on the issues of unemployment, poverty alleviation, Employment Equity and Broad Based Black Economic Empowerment. Other issues that are also identified as of importance include HIV/AIDS, the lack of available skilled resources and the lack of suitably qualified learners coming out of the education system.

A variation from the national to the sectoral transformation agenda is the implementation of the finance sector charter and the opportunities that are created by this charter for the BANKSETA to ensure alignment and additional skills development. It is seen to be a transformation charter and sets principles for broad-based black economic empowerment implementation. It also establishes very specific targets linked to implementation timeframes over the next 10 years.

The BANKSETA is very proud of the fact that it was invited to be part of the charter process. Although it was never explicitly stated, the BANKSETA Council, management and staff interpreted this inclusion as an expression of acceptance of the SETA and what it can contribute to the sector.

During the past four years the BANKSETA has conducted research in a number of areas and with the data collected from its workplace skills plans and other sources we have been placed in a position to identify a number of sector trends.

(Slide 6)

The first trend relates to the fact that the sector is contracting. Current employment is approximately 136 000. It is however, encouraging to note that the small and foreign banks have seen significant increases.

(Slide 7)

It is important to note that, when comparing employment by race with the 2001 data, we can see a significant 9% increase in the number of African, Coloured and Indians employed within the banking sector. This is broken down into an increase of 3% in the Indian population, 1% in the Coloured population and 5% increase in the number of Africans employed. Thus leaving us with a total employment breakdown of exactly 50% between designated and non-designated staff. A more specific breakdown shows that 24% of those employed are African, 15% are Coloured and 11% are Indian.

(Slide 8)

A second trend that was identified related to the sectors skills profile. Increasingly we find that the staff that are employed are highly skilled as opposed to merely being skilled. Although this trend started in the 1970’s and continued throughout the 80’s and 90’s, the latest data show a significant change over the last two years in these areas.

(Slide 9)

Comparing the 2001 and 2003 workplace skills planning and reporting data shows that the number of senior officials and managers employed during 2001 was 10 494, where as the total employed at the end of 2003 was only 7 703. However, the professional and associate professional categories have increased dramatically. Professionals increased from 11 650 to 16 581, and associate professionals increased from 23 865 to a massive 32 964. It is thus very clear that when the banking sector looks for skilled people to employ, graduates and people who have studied passed matric are on the increase.

(Slide 10)

The employment profile of the banking sector shows that 47% of all workers are employed in clerical or administrative positions with technical and professional staff at 38% and only 9% of staff in management functions.

(Slide 11)

The industry continues to be dominated by a small number of very large companies. 1 304 organizations in the broader banking sector contribute levies. 86 organisations are large, contributing to the employment of 129 000 people, whereas 974 micro organizations employ only 1 380 people.

(Slide 12)

Significant in terms of research findings, is the changing demand for skills in the broader banking sector. Given the trend to move away from skilled to highly skilled employees, it is then not a surprise to find that senior officials, professionals, associate professionals and technicians are in high demand. This is especially true for people with those skills that come from a historically disadvantaged background. It is expected that the demand for African, Coloured and Indian employees with these skills will remain high for the foreseeable future.

Governance

(Slide 13)

As stated in the success factors, governance is seen as a very important component of the BANKSETA and how it operates. The BANKSETA has a fully constituted Council who operate in terms of a constitution and a code of conduct. The BANKSETA Council received training on the interpretation of the Public Finance Management Act and understand its responsibilities towards the SETA as a governing Council. An Audit Committee, a Finance Committee and a Remuneration Committee support the BANKSETA Council.

The Audit Committee consists of the council members, internal auditors, outsourced to Gobodo and external audit experts. It is important to note that 4 unqualified audit reports have been received since the inception of the BANKSETA.

The Finance Committee was created to support the need for structured governance in the SETA and is adequately staffed with the necessary expertise. Council; members as well as a Chief Financial Officer from FirstRand and from Nedcor currently support the Committee.

The BANKSETA Remuneration Committee operates within a formally agreed process. On an annual basis it obtains external expertise and research data to ensure that remuneration decisions are based on the latest information available in the market. Business and labour are represented on the Remuneration Committee, and both stakeholders are fully aware of the fact that all remuneration decisions will have an impact on how public funds are used.

Operating Principles

(Slide 14)

In accepting certain principles for operations the BANKSETA has set the scene for operational efficiency that has supported the implementation of value-adding strategies.

The BANKSETA is committed to leveraging the levy funds for the strategic benefit of the sector and the National Skills Development Strategy, to being cost effective, placing high value on swift delivery of services at the lowest cost through the employment of leading edge technology and best management practices and the co-sourcing of non-core delivery mechanisms. The BANKSETA supports the principle of complying intelligently and pro-actively with legislation, and the BANKSETA continues to conduct research and benchmarking in order to improve the sector’s competitiveness through skills development.

(Slide 15)

As part of all of the previous processes and trends, the BANKSETA and the banking sector have identified 5 critical priority skills development areas. These relate to:

The principles as well as the skills development priority areas are always taken into account whenever new projects are initiated or whenever funding decisions are made.

(Slide 16)

With this in mind, the current strategic focus areas of the BANKSETA therefore relate to:

Learnerships

(Slide 17)

Learnerships is and will remain a focus area for the BANKSETA as this is seen as one way to address a range of strategic objectives. Learnerships in general, address learning and development, scarce skills, employment equity, entrepreneurship development and in some cases black economic empowerment. It is therefore important for the BANKSETA to continue to contribute significant amounts of money to learnership initiatives. For the 2004/2005 financial year, the BANKSETA has earmarked R47.4 million for learnership initiatives of which the major portion, R45 million, will be made available for the Letsema learnership project. We are very proud of the fact that we not only met but also exceeded the Growth and Development Summit targets for May 2004 and should we be in a position to obtain additional funding we will also exceed the March 2005 target of 3000 learners on learnerships.

The range of learnerships that have been registered are in general banking related and all address scare skills within the broader banking sector.

(Slide 18)

The large majority of learners on learnerships are unemployed with only 314 employed learners as compared to 1155, 18.2 or unemployed learners.

When it comes to the race and gender breakdown, it is quite clear, that although we have met or exceeded the Black target for learners on learnerships, we have not been able to meet the female target and the current status is as follows:

We are, however, encouraged by how close we came to the target percentages and will continue to strive to meet or exceed these targets.

SMME

Small, medium and micro enterprises have over a number of years been identified as of crucial importance for future job creation in the country. The BANKSETA shares this view and has made available a number of initiatives and products to support SMMEs.

(Slide 19)

This support ranges from provincial support where sessions are arranged to share information and knowledge with SMMEs, to site or workplace visits where BANKSETA staff or contracted persons visit workplaces to identify needs and offer possible solutions.

The BANKSETA has also created a simplified workplace skills plan and implementation report that allows for Internet, telephone, and call centre submissions. The simplified workplace skills plan allows for a simplified mandatory grant claims process. In addition we have also created a training vouchers scheme with R1 million in funding. The micro finance skills project developed material and delivered training to SMMEs. This training was delivered free of charge.

Quality assurance

(Slide 20)

The BANKSETA, through its education and training quality assurance body or ETQA, has fully accredited 28 providers. The 28 providers deliver training to more than 85% of employees in the sector. The BANKSETA ETQA has also registered 3800 workplace assessors and has implemented a number of memoranda of understanding with other SETAS to enable the smooth transition of learning between different sectors.

The National Skills Development Strategy

The BANKSETA and the broader banking sector is committed to supporting the objectives of the national skills development strategy.

(Slide 21)

It is however important that one should realise that not all targets apply equally to all sectors and this is the case for the broader banking sector. Less than 2% of staff in our sector do not have a NQF level 1 qualification and therefore the success indicator as it stands now was achieved without any effort from the sector. This, however, did not stop the BANKSETA from supporting initiatives to develop workers who do not have this type of qualification. 1284 workers have received training towards a NQF level 1 qualification during the last financial year.

Success indicator 1.2 states that a minimum of 50% of workers must have embarked on structured learning programmes. Again, the banking sector with its long tradition of developing its own people exceeded this target by far, with almost 85% of workers in the sector receiving training. This amounts to approximately 115 000 workers. Over the past four years the BANKSETA has supported the development of well in excess of 450 000 workers in specific scarce skills areas.

Indicator 1.3 states that an average of 20 enterprises – large, medium or small should commit to or have achieved the Investors in People standard. The BANKSETA exceeded this target and currently 66 sites from 4 large banks and 18 medium and small banks, including micro finance organizations have committed to or have achieved the Investors in People standard.

(Slide 22)

Indicator 2.1 states that at least 75% of enterprises with more than 150 workers should receive skills development grants. The BANKSETA exceeded this target and 98% of enterprises in this category received grants – 84 of 86 companies. Indicator 2.2 relates to organizations between 50 and 150 employees that receive skills grants, and again the BANSKETA exceeded the target of 40%. The BANKSETA paid grants to 74% or 26 out of 35 organizations.

Indicator 2.3 states that learnerships should be available to the sector. As learnerships are developed over time, cumulative totals apply. The BANKSETA has developed 13 learnerships.

(Slide 23)

Indicator 3.1 talks to the number of small and medium enterprises that receive support from the SETA and a target of 20% was set. Initially this target appeared impossible to achieve and in the first couple of years we struggled. We have however made great strides in supporting SMMEs resulting in the SETA delivering skills development initiatives to 39% or 466 out of 1183 SMMEs.

(Slide 24)

Indicator 5.1 states that by March 2005 80 000 people under the age of 30 should have entered learnerships. The BANKSETA five-year target is 3000 pending the availability of funds. We have made great advances with learnerships and moved from 153 18.2 learners by the end of the 2002/2003 year, to 1115 learners by the end of the 2003/2004 year. We currently have the capacity available to place another 1700 learners.

Indicator 5.2 states that 50% of those who completed learnerships should be employed. At this stage, although very small numbers, 90% of those who have completed learnerships are actually employed. We will continue to track this as more and more learners get onto learnership programmes.

It is therefore, chairperson, with great pride that we can state that the BANKSETA has exceeded all the national skills development strategy targets and all indications are that we will continue to do so.

Structure

(Slide 25)

The BANKSETA staff consists of 16 people of whom 7 are White, 6 are Black, 2 are Coloured and 1 Indian. We also have 1 disabled employee. 3 of the 5 people or 60% on the management level are black, with 40% female representation. BANKSETA staff is very committed and the majority of staff are in the process of improving their qualifications and developing themselves for the future.

Finances

(Slide 26)

The majority of levy contributions come from large organizations with 107 organizations contributing more than R100 000 per year. The large majority of companies, 707 contribute less than R1000 per year.

(Slide 27)

The financial overview clearly shows that the SETA is increasing the amount of money that it is paying out on projects. Moving from R3.8 million during the 2002 year to R35 million during the 2004 financial year. We have seen a 4% increase in the BANKSETA income during the 2003/2004 financial year. However, the increase of 4% was significantly less than in previous years and this can mainly be ascribed to the fact that lower salary increases were approved. The impact of restructuring and consolidation in the industry also contributed to less money being spent on remuneration. The BANKSETA administration costs increased year on year by about R1 million. This is, however, still 21% below the amount available for administration costs, and as such a saving of almost R3.5million accrued to the strategic project account. Although slightly lower than the previous year, this is seen as proof that the BANKSETA is very cost conscious.

(Slide 28)

The BANKSETA has thus far paid an amount of R345, 8 million to organizations in the form of mandatory grants. We have maintained a grant payout rate in excess of 93% and as we progress into this financial year the current figure of 86% for the 2003/2004 financial year is expected to increase to above 93%.

(Slide 29)

All unspent operational savings as well as unclaimed mandatory grants are allocated to the strategic project grant account. An amount of R126 million was allocated to this account during the past four years. R56.5 million or 45% have been spent thus far. Of the remaining R69.5 million, less than R3 million is unallocated or not committed to projects.

Flagship Projects

The BANKSETA has a number of flagship projects such as the Letsema learnership project, the Investors in People project, and the Micro Finance Skills project. In the interest of time only the Letsema learnership project will be presented.

(Slide 30)

The Letsema learnership project aims to place 5000 unemployed individuals on learnerships over a three-year period. It intended to place 800 learners during year one, 1700 learners during year two and 2500 learners during year three. The banks have committed to making learning opportunities available for these learners. Learners will be placed on two different learnerships, a financial service advice learnership that is aimed at unemployed matriculants, and a management development learnership that is aimed at unemployed graduates. The objective of both learnership qualifications is to ensure that the learners get the most appropriate learning and the banks have the best chance of employing these learners at the end of the process.

(Slide 31)

Although a target of 800 learners was set, the BANKSETA utilised savings from another project and increased the number to 825 learners in 8 organizations. In terms of the national skills development strategy equity targets, we are proud to announce that we have met or exceeded all the targets, with 98.5% of the learners being Black, and 56.1% of the learners being female. We also met the 4% disabled learner target and experienced a low 1% dropout rate.

(Slide 32)

The Minister of Labour launched the Project during March 2004 at a gala event attended by 2300 learners, parents and other stakeholders from the banking sector and organised labour.

 

Evaluation

(Slide 33)

As said earlier, we believe that one of the principles of a strong SETA is the fact that it evaluates itself. During 2003 we conducted our third annual customer satisfaction survey. In terms of service, in excess of 90% of those that responded stated that the BANKSETA exceeds, or exceeds to a high level, their expectations. In terms of effectiveness 100% of respondents indicated that the BANKSETA exceeds, or exceeds in all cases, their expectations. This trend was followed for industry knowledge, reliability, regular updates and helpfulness. The BANKSETA will continue to conduct these surveys so as to ensure that service delivery does not drop below an acceptable level.

(Slide 34)

Another way that is used in the BANKSETA to identify potential gaps is to look at the products and services that we deliver, and to place them in a matrix against the strategic initiatives that we believe are required. We then identify where a project adds value on a project-by-project basis. The green areas show where we believe our projects address the sector’s strategic needs. The grey areas show where there shouldn’t be projects or where there is no urgent need for projects, while the red area shows areas where we believe the BANKSETA should in future create projects or learning initiatives. At this stage it would appear that a learnership for SMME skills development and compliance training could be possible gaps in our delivery model. We also believe that research into youth development is another gap, as well as NQF SAQA unit standards for small enterprise promotion.

Achievements

(Slide 35)

It is clear from all the statements that I have made thus far, chairperson, that we believe that in the BANKSETA we have achieved a number of very important milestones and we are ideally placed to deliver to the needs of the sector and the country. Some of the additional achievements are found in the fact that the BANKSETA has created very strong relationships with the organisations and stakeholders in the sector and that we have been accepted by the sector as a valuable contributor to its strategic development. We have created an efficient operational infrastructure. Our human resources, although small, are highly competent and well respected in the industry. We have a very strong relationship with all our service providers and we believe that our business model is part of the reason for our success. We are currently working on our fourth sector skills plan. This document will serve to provide strategic direction to the BANKSETA and to the sector.

(Slide 36)

One of our biggest successes was the achievement of the Investors in People standard. The BANKSETA was the first SETA to be accredited as an Investor in People, and the only South African organization successful in being reviewed for re-recognition.

We do, however, face a number of challenges, as one would expect from any organization. These challenges relate to funding, infrastructure and the negative perception about SETAS.

We are sure that if we are able to access additional funding, we will be able to increase the numbers of learners on learnerships significantly. We are currently in discussion with the Department of Labour on this issue.

A very serious concern is the fact that retroactive adjustments have been made by the South African Revenue Services as far back as the 2000 levy year. It is suggested that SARS agree to a cut-off date after which it will not be allowed to retroactively adjust SETA levies.

The lack of understanding from different stakeholders about the difference between cash and accrual accounting is creating confusion. It is suggested that the Department of Labour and any other entity that make information available on SETA finances be required to state in all instances whether cash or accrual information is used.

(Slide 37)

In conclusion, I would like to stress that the BANKSETA is very positive about the future, irrespective of how the operational landscape might or might not merge. We will continue to strive for operational efficiency, and strategically we will focus on transformation, on supporting the implementation of the finance sector charter, on SMME development, on youth development, on consumer education and the implementation of the objectives of the National Skills Development Strategy.

(Slide 38)

Honourable chairperson and committee members, ladies and gentlemen, I thank you for your time and the opportunity to report to you on the status of the BANKSETA.