Chapter 1. The urgency of lifelong learning in South Africa

This chapter provides some key background information on the South African labour market, as well as the skills and education outcomes of adults. It focusses specifically on participation in post-school education and training and training opportunities provided by employers. This information contributes to a better understanding of the training needs among South African adults, and the role that a community education and training system could potentially play.

1.1. Many South Africans do not have access to the labour market

In recent decades, the South African labour market has experienced persistently high unemployment rates (Figure 1.1). In the final quarter of 2018, 6.139 million South Africans were unemployed, representing 27.1% of the labour force. A further 2.841 million people were willing to work but not actively looking for a job (i.e. discouraged job seekers). With an unemployment rate fluctuating around 50% during the last years, the labour market situation for youth in South Africa is particularly problematic. When adding the discouraged job seekers to the group of unemployed, the youth unemployment rate rises to 66%. Labour market outcomes differ strongly between population groups, with the black African population having an unemployment rate that is almost 4.5 times as high as the unemployment rate of the White population. In addition, differences between provinces are substantial (StatsSA, 2019[1]). Poor and unequal labour market opportunities have contributed to high poverty rates and a level of income inequality that is much higher than in OECD countries.

Investment in skills has a clear positive impact on labour market outcomes in South Africa. The unemployment rate of individuals who completed upper-secondary education (i.e. Matric holders) is 4 percentage points lower than that of individuals without a Matric degree, who have an unemployment rate as high as 32% (in the final quarter of 2017). However, the biggest impact on unemployment comes from obtaining a higher education degree: Only 6.7% of adults with a higher education degree were unemployed in the final quarter of 2018, compared to 28% of matric holders. Graduating from a TVET college also reduces the probability of being unemployed (to 16%), albeit to a lesser extent than for university graduates.1 (StatsSA, 2019[1])

1.2. Educational attainment is on the rise, but dropout remains high

Despite the large benefits of educational investment, many South Africans have low education levels. According to Aitchison (2016[2]), South Africa counts around 5 million people who are functionally illiterate. Educational attainment statistics show that over 19 million adults, i.e. 57% of the South African adult population, do not have an upper secondary degree (i.e. a National Senior Certificate or Matric degree).2 However, more and more South Africans are obtaining their Matric degree: among the population aged 25-34 there are only 51% that did not obtain the Matric degree (Figure 1.2). While the higher completion rates of upper secondary education are a positive evolution, progress remains slow in comparison to OECD countries and other emerging economies like Brazil, India and Indonesia.3 Progression in terms of lower secondary education completion has been much faster: only 12.1% of youth (18-25 years old) did not finish Grade 9, while this is 21.8% among all adults (aged 18 to 64).4

While there is almost universal enrolment in the compulsory education phase (Grade 1 to 9) in South Africa, dropout rates are substantial after Grade 9. Many students do not reach Grade 12. Estimates from Simkins (2013[4]) show that only around 70% of students who do not progress into TVET education after Grade 9 make it to Grade 12.

Even for those who finish Grade 12 further options are often limited and they find themselves at a dead-end. In 2017, 75.1% of students who enrolled for the Matric exam obtained the pass mark, among which three out of four were eligible to register for studies at higher education institutions. A recent analysis of the 2008 matric cohort showed that 31.5% of students with a bachelor pass did not enrol in undergraduate studies in the years following their matric graduation, and that among those who did enrol 30% dropped out (Van Broekhuizen, Van Der Berg and Hofmeyr, 2017[5]). The combination of high dropout rates and low pass-through to university imply that only 4% of school starters eventually obtain a university degree (within six years of obtaining their Matric degree).

Education quality is an issue too in South Africa. International student assessment exercises show that South African students in basic education perform poorly in mathematics and science. According to the results from the 2015 Trends in International Mathematics and Science Study (TIMSS) assessment, South African Grade 4 learners ranked 48^th out of 49 countries in mathematics, while Grade 8 learners ranked 38^th out of 39 in mathematics and last in science.5 The 2016 Progress in International Reading Literacy Study (PIRLS) results show that South African Grade 4 students have lower reading abilities than students in any of the 50 participating countries. Similarly, South African Grade 6 students scored below the cross-country average in mathematics and reading in the 2000 and 2007 tests of the Southern and Eastern Africa Consortium for Monitoring Educational Quality (SACMEQ), which assess student skills in Southern and Eastern African countries. Looking at the evolution of skill levels over time, the 2012 and 2015 waves of the TIMSS assessment show a significant improvement in student skills compared to previous years, but South Africa’s performance remains low compared to countries at a similar stage of development (Reddy et al., 2015[6]; Gustafsson, 2017[7]).

1.3. Few adults participate in training activities after leaving initial education

After leaving initial education, adults can participate in a range of lifelong learning activities to improve their skills further. In South Africa, adults who want to obtain high-school equivalent training can enrol in Adult Education and Training (AET) centres, which have recently been rebranded as Community Education and Training Centres (see Chapter 2). In 2016 around 27 000 adults were enrolled in 2 778 centres, 8% less than in 2011 (Figure 1.3). The most popular AET programme is Level 4 training (i.e. equivalent to Grade 9), followed by Grade 12 training. Information about the characteristics of adults participating in these programmes is very scant, but according to evidence from a sample of AET centres shows that the majority of participants are between 19 and 24 years old (Lolwana, Rabe and Morakane, 2018[8]).

Participation of adults in lifelong learning often takes the form of job-related training to develop or enhance job- or occupation-specific skills. The only data available on participation in this type of training activities in South Africa relates to training supported by Sector Education and Training Authorities (SETA), which includes learnerships, internships and skills programmes. SETAs play an important role in skills development in South Africa (see Box 1.1 for details on the role of SETAs). In 2016/17, 250 000 adults participated in SETA-supported training programmes, of which over half were unemployed. Participation in SETA-supported training increased by 85% in the period 2011/12 to 2016/17 (Figure 1.3). Nonetheless, the total number of participants represents only a very small share of the total labour force (around 1.1%), suggesting that access to this type of training is low. However, employers could be providing training outside of the SETA-support system, and the World Bank Enterprise Survey suggests that in 2007 37% of South African employers were providing training.6 The main public incentives for South African employers to provide training are described in Box 1.2.

Box 1.1. Sector Education and Training Authorities in South Africa

Following the 1998 Skills Development Act, 23 SETAs were created in 2000, each with their own clearly defined sectors. The members of SETAs represent organised labour and employers, and relevant government departments. After the responsibility for SETAs was transferred from the Department of Labour to the Department for Higher Education and Training, the number of SETAs was reduced to 21 in 2011.

According to the (amended) Skills Development Act, the main functions of SETAs include:

Analysing skill needs in the sectors through Sector Skills Plans
Implementing the Sector Skills Plan by establishing learning programmes, approving employers’ workplace skills plans and annual training reports, allocating grants to employers, education and training providers and workers, monitoring education and training
Promoting learning programmes (including identifying workplaces for practical work experience and supporting the development of learning) and registering agreements for learning programmes
Collecting and disbursing the skills development levy
Liaising with the National Skills Authority, the public employment service, education bodies, provincial skills development forums, and the Quality Council for Trades and Occupations

Lifelong learning for adults can also take the form of participation in formal education at the post-secondary and tertiary level. Unfortunately, available enrolment data in TVET and higher education institutions does not allow distinguishing between students who continue straight from lower- or upper-secondary education and adults who had already left initial education and entered the labour market. To complicate measurement further, some of the participants in SETA supported training from Figure 1.3 will be taking their training in TVET or higher education institutions. In 2016, 1.143 million students were enrolled in higher education institutions, i.e. 16% more than in 2010 (Figure 1.4). The number of students in public TVET colleges almost doubled during the same period, reaching 705 000 in 2016.7 Seven out of ten TVET students are enrolled in N1-N6 (Nated) programmes (see details on the different vocational programmes in Chapter 3), the majority of whom at the post-secondary level (N4-N6).

Figure 1.4 shows that both TVET and higher education institutions are mainly attended by youth: 70% of TVET students and 55% of university students are younger than 25, while 26% and 28%, respectively, are aged 25-34 (Department of Higher Education and Training, 2016[9]).8 These data, however, also suggest that many students do not directly advance from secondary education into TVET or higher education, but first spend some time in the labour market or in inactivity. The age profile of students also shows that not many TVET students are younger than 20 years old. This suggests that TVET does not provide an alternative to the academic route (i.e. the grade 10-12 route towards Matric) after Grade 9. Field, Musset and Álvarez-Galván (2014[10]) already noted that too many Matric graduates wanting to enter vocational programmes at the post-school level were expected to start at the vocational training upper-secondary level.

Box 1.2. Incentives for South African employers to provide training opportunities

Skills Development Levy

All firms in South Africa with a wage bill of at least ZAR 500 000 pay a levy equal to 1% of their total annual wage bill. The collected levies are distributed to the National Skills Fund (NSF) (20%) and the SETAs (80%). SETAs redistribute the funds to employers under the form of mandatory and discretionary grants. Employers who submit their annual training report and workplace skills plan receive the mandatory grant, equal to 20% of the levy. Discretionary grants are given to employers for specific training requests, and are only available for employers who are eligible for the mandatory grants (i.e. employers who submitted the required documents). Since 2012, 80% of the discretionary grants is earmarked for formal training in scarce and critical skills, as identified by the SETAs. In 2015/16 the SETAs received just over ZAR 12 billion through the levy system. Generally, SETAs have not been spending all their funds, and have therefore been accumulating reserves.

Broad-based black economic empowerment (B-BBEE)

Firms in South Africa have to comply with B-BBEE, based on a B-BBEE scorecard. The objective of B-BBEE is to transform the economy and enhance the economic participation of the black African population. The B-BBEE score of firms is based on i) equity ownership, ii) management control, iii) skills development, iv) enterprise development, and v) socio-economic development. The benefit of having a high B-BBEE score is that government entities have to consider B-BBEE scores when using services of private sector firms. Private sector firms may also adopt their own B-BBEE requirements when working with other firms. In the area of skills development, firms need to spend 6% of their total annual wage bill on training of black African workers or job seekers to get the highest B-BBEE score. Additional points are awarded for learnerships and internships, training of unemployed individuals, and the absorption of unemployed learners at the end of the learnership programme.

Learnership tax incentive

A learnership tax incentive was introduced in 2006, giving employers a tax refund on commencement of a learnership, and a second one on completion. The tax incentive was renewed for five more years in 2016. Since 2016, higher tax credits apply for learnerships on levels 1 to 6 of the National Qualifications Framework (NQF), targeting the incentive more towards technical skills development.

Source: OECD (2017[11]); B-BBEE Commission (2016[12]); DNA Economics (2016[13])

1.4. Government funding priorities lie with higher education

Government expenditure on post-school education and training increased steadily over the last few years, and this trend is expected to continue in the medium-term (Table 1.1). In the financial year 2017/2018, expenditure on universities accounted for 81% of total expenditure, and TVET for 14.4%. Only ZAR 2.198 billion, or 4.2% of total expenditure, was allocated to Community Education and Training (i.e. the former AET system). Because of the decision to provide free higher and TVET education to students from low-income households, expenditure on university and TVET education is expected to increase drastically in the next few years. Expenditure on higher education and TVET is planned to almost double in the period 2017/18 to 2020/21. The budget allocated to Community Education and Training will also see an increase (+23.5%), reflecting the government’s plan to significantly expand the opportunities for adults without a degree to participate in education and training, but its share will remain very small in the overall budget (2.8%). Expenditure on skills development represents an insignificant part of the budget, which reflects the fact that skills development programmes are mainly financed by SETAs and the National Skills Fund (NSF) (and hence not included in the government budget numbers). According to the National Treasury (2018[15]), the number of workers and unemployed completing a SETA-sponsored skills programme or learnership is expected to increase by 21% in the period 2016/17 to 2020/21, while the number of persons benefiting from NSF funding is expected to increase by 61% in the same period9.

To put these numbers in perspective, the 2017/18 expenditure on basic education amounts to ZAR 231.6 billion, which is equivalent to 16.5% of total government expenditure. Total government expenditure on post-school education and training only accounts for 6.8% of total expenditure. In contrast, the projected medium-term growth rate of expenditure on post-school education and training is the largest among all budget items, largely exceeding growth of basic education expenditure. (National Treasury, 2018[15])

Table 1.1. National government expenditure on post-school education and training is on the rise
Audited and estimated expenditure (in million ZAR)
	Audited expenditure		Medium-term expenditure estimate	Growth (2017/18-2020/21)
	2013/14	2017/18	2020/21
University education	28 303. 3	41 931.7	80 666.2	92.4%
TVET	5 879.3	7 460.2	14 585.1	95.5%
Community Education and Training	1 776.8	2 197.7	2 714.7	23.5%
Skills Development	123.0	249.4	297.0	19.1%
Total	36 082.4	51 830.9	98 263	89.6%
Note: The budget for higher education and training also includes the categories Administration and Planning, Policy and Strategy, which are not included in this table. In the financial year 2017/18 these two categories accounted jointly for ZAR 468.7 million or 0.9% of the total budget.
Source: National Treasury (2017[16]; 2018[15])

1.5. Skills imbalances need to be addressed

The combination of low educational attainment, poor education quality and limited participation in lifelong learning activities increases the probability of substantial skills imbalances. As documented by OECD (2017[11]; 2017[17]), South Africa faces shortages of skills in certain areas and many South Africans work in jobs that do not match their level or field of qualification. Shortages are mainly found for cognitive skills and abilities, such as verbal abilities, reasoning abilities and complex problem-solving skills, and for knowledge in the field of education and training (Figure 1.5).

At the occupational level, almost all management jobs and more than 50% of jobs in the categories of professionals, technicians and associate professionals, and clerical support workers are in shortage in the South African labour market (Figure 1.6). The fewest jobs in shortage are found among elementary occupations. When looking only at occupations in shortage, Figure 1.6 shows that the intensity of these shortages is strongest for occupations in the professionals category, followed by occupations in the categories of plant and machine operators and assemblers, and skilled agricultural, forestry, fishery, craft and related trades workers.

The problem of skills shortages has been recognised by the South African government in several strategic documents, and a labour market intelligence system has been set up to analyse skill needs. Multiple policies have been put into place to reduce skills imbalances, including a skills development levy for employers, a subsidy and loan programme for TVET and higher education students and a career guidance system that communicates on labour market needs.10 The introduction of a Community Education and Training system is another response to the challenge of skills shortages in South Africa. At the same time, by targeting vulnerable adults, the Community Education and Training system has the potential to contribute to lower poverty and inequality.

References

[2] Aitchison, J. (2016), “Proxies and perplexities: What is the current state of adult (il)literacy in South Africa?”, Journal of Education, http://joe.ukzn.ac.za.

[12] B-BBEE Commission (2016), Broad-Based Black Economic Empowerment Act 53 of 2003 as amended by Act 46 of 2013, http://bbbeecommission.co.za/wp-content/uploads/2016/09/Consolidated-B-BBEE-Act-2013.pdf (accessed on 25 April 2018).

[14] Council on Higher Education (2016), 2013 Higher Education Data: Participation, http://www.che.ac.za/focus_areas/higher_education_data/2013/participation (accessed on 20 March 2018).

[9] Department of Higher Education and Training (2016), Statistics on Post-School Education and Training in South Africa Statistics on Post-School Education and Training in South Africaa, Department for Higher Education and Training.

[13] DNA Economics (2016), An analysis of existing post-school education and training expenditure and revenue, DNA Economics, https://www.gtac.gov.za/perdetail/Vol%202.%20Revenue%20and%20Expenditure%20Review.pdf (accessed on 25 April 2018).

[10] Field, S., P. Musset and J. Álvarez-Galván (2014), A Skills beyond School Review of South Africa, OECD Reviews of Vocational Education and Training, OECD Publishing, Paris, https://doi.org/10.1787/9789264223776-en.

[7] Gustafsson, M. (2017), “An update on improvements in schooling outcomes in South Africa”, Department for Basic Education.

[8] Lolwana, P., E. Rabe and M. Morakane (2018), “Who accesses adult education and where do they progress to? An exploratory tracer study in community education and training”, LMIP reports, No. 37, Labour Market Intelligence Parternship, http://www.lmip.org.za/document/who-accesses-adult-education-and-where-do-they-progress-exploratory-tracer-study-community (accessed on 7 November 2018).

[15] National Treasury (2018), Budget 2018: Estimates of National Expenditure.

[16] National Treasury (2017), Budget 2017: Estimates of National Expenditure.

[3] OECD (2017), Education at a Glance 2017: OECD Indicators, OECD Publishing, Paris, https://dx.doi.org/10.1787/eag-2017-en.

[17] OECD (2017), Getting Skills Right: Skills for Jobs Indicators, Getting Skills Right, OECD Publishing, Paris, https://doi.org/10.1787/9789264277878-en.

[11] OECD (2017), Getting Skills Right: South Africa, Getting Skills Right, OECD Publishing, Paris, https://doi.org/10.1787/9789264278745-en.

[6] Reddy, V. et al. (2015), Beyond Benchmarks: What twenty years of TIMSS data tell us about South African education, HSRC, http://www.ipgbook.com.

[4] Simkins, C. (2013), Performance in the South African Educational System: What do we know?, Centre for Development & Enterprise.

[18] Statistics South Africa (2015), “Mid-year population estimates”, Statistical release, No. P0302, https://www.statssa.gov.za/publications/P0302/P03022015.pdf (accessed on 3 July 2018).

[1] StatsSA (2019), Quarterly Labour Force Survey - Quarter 4: 2018.

[5] Van Broekhuizen, H., S. Van Der Berg and H. Hofmeyr (2017), “Higher Education Access and Outcomes for the 2008 National Matric Cohort”, LMIP report, http://www.lmip.org.za/sites/default/files/documentfiles//HSRC%20LMIP%20Report%2030%2024JUL%20WEB.pdf (accessed on 20 March 2018).

Notes

← 1. Statistics South Africa (StatsSA) breaks down the labour market data into “less than Matric”, “Matric”, “Graduates” and “Other tertiary”. Graduates are individuals who attended a university or college and obtained a post-higher diploma, a bachelor’s degree, a post-graduate diploma or an honours, master’s or doctoral degree. The group “Other tertiary” comprises people who have attended a Technical Vocational Education and Training (TVET) college or another tertiary institution and obtained a certificate, diploma (with or without matric) or a higher diploma.

← 2. Using 2015 population estimates from Statistics South Africa (Statistics South Africa, 2015[18]).

← 3. In Brazil, the difference between the share of adults (25-64) and the share of 25-34 year olds with below upper secondary education amounts to 14.6 percentage points. In India and Indonesia, this difference equals 7.3 and 11.2 percentage points, respectively. (OECD, 2017[3])

← 4. Data on the share of adults with below lower secondary education are derived from the 2016 South African Labour Force Survey.

← 5. In South Africa, Grade 9 students rather than Grade 8 students participate in TIMSS. Their average age is 16.

← 6. The World Bank Enterprise Survey limits its definition of training to programmes that have a structured and defined curriculum. This can include classroom work, seminars, lectures, workshops, and audio-visual presentations and demonstrations.

← 7. In 2016, around 160 000 students were enrolled in private colleges, including private TVET colleges, private AET centres and private skills development providers. The majority of students in private colleges participate in Nated programmes and Senior Certificate (Amended) programmes.

← 8. Data on the age profile of higher education students refers to 2013 and only include public higher education institutions. (Council on Higher Education, 2016[14])

← 9. The number of SMEs and cooperatives that receive support from the NSF is projected to decline from 2158 in 2016/17 to 300 in 2020/21.

← 10. See OECD (2017[11]) for an extensive review of policies put in place in South Africa to address skills imbalances.

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