Each LMIP Briefing is an evidence-based contribution to informing the development of a skills planning mechanism for South Africa. Briefings showcase our cutting edge research and aim to highlight key trends and potential implications from LMIP research projects.

LMIP Briefing 1

Contours of the Skills Planning Mechanism: Strategic issues

South Africa does not have an institutional structure to track changes in the labour market and thus lacks a credible mechanism for skills development. From an analytical study which reviewed (i) past planning practices in South Africa; (ii) how other countries approach skills planning and the production of labour market intelligence and (iii) the White Paper for Post School Education and Training the LMIP proposed a model to guide the development of a new framework for skills planning and labour market intelligence in South Africa. For labour market intelligence, the study investigated how data was collected and analysed and the type of labour market intelligence produced. In building the skills planning mechanism the study investigated how labour market intelligence was utilised to inform the decision making process.

To build the credible skills planning mechanism LMIP recommends:

1. Emphasis be given to a demand driven approach to planning in which the strategies for skills development are linked with those for economic development. Industrial priorities must play a more significant role in driving the skills agenda in South Africa.

2. DHET must be able to produce valid and recent information regarding supply (using data from HETIS, EMIS, Unemployed, Work permits), current demand (using data from StatsSA, job vacancies, scarce skills list) and future demand of skills (using data from new business and government growth initiatives). LMIP supports the White Paper on PSET proposed Central Skills Planning Intelligence Unit.

3. The skills planning mechanism emphasises the relationship amongst government departments and social partners and the mediation of the integrated plan for national development with institutional, enterprise and sectoral plans. We recommend that the successor to the National Skills Authority play an important quality assurance role in validating sector skills and enrolment plans and its alignment to national plans and priorities.

The forthcoming paper, Pro-Poor Growth Dynamics and the Skills Intensity of Growth examines the role and impact of human capital accumulation on the pro-poor growth trajectory since 1994. It finds that in the period 1995-2012, employment for university degree holders outstripped that for FET certificate holders and school leavers. Degree holders enjoyed higher returns to education in the form of higher earnings, followed by certificate holders and then by those with only school-level certification. With regard to poverty and welfare effects, there was a pro-poor impact for degree holders that was not matched by certificate holders at lower income percentiles. Perhaps the most important, and arguably novel result from the study, was that of all the educational levels accumulated, it was only the possession of a higher education degree, which had a positive and signficant impact on economic growth. Put another way:  the possession of an FET certificate had no significant impact on economic growth for the period under review.

On the basis of these findings, of labour market absorption rates skewed towards university degree holders, it becomes important to focus the skills debate on the quality of FET and schooling provision and the nature and relevance of the curricula offered within the FET sector in particular. If expectations for massification of TVET are to be achieved, it is thus essential that the DHET ensures that there is a more optimal fiscal return on their massive investment in this part of the higher educational system.