SA has the highest Gini Coefficient in the world.

By Charlton Piliso

South Africa has the highest Gini Coefficient in the world.
The Gini Coefficient measures the deviation of the distribution of income (or consumption) among individuals or households within a country from a perfectly equal distribution.
Not surprisingly, given the legacy of apartheid, this inequality in South Africa is clearly visible along racial lines. It is felt along racial lines right across from the workers (skilled and unskilled) all the way to the unemployed. The reasons often given for this inequality include a lack of opportunities and a lack of or poor education and training.
Having said that, skills development is essentially a voluntary exercise. The government has for a number of years engaged with the private sector to try and turn the workplace into training places. A lot of incentives were put in place to encourage employers to train the unemployed and improve the workforce.
These initiatives would be done through the Sector Education and Training Authority (SETAs) 21 in total.
The SETAs were established with a clear mandate to address the skills shortages in the country. This they do by facilitating skills development in the 21 identified sectors. It includes research on what skills shortages exist, developing programmes to respond to those shortages and making funding available for various interventions including learnerships, bursaries, internships etc.
For purposes of this article, the focus will be on the Food & Beverages Manufacturing Sector Education and Training Authority’s (FoodBev SETA). This SETA facilitates skills development in the Food and Beverage Manufacturing sector.
Its scope of coverage includes Beverage Manufacturing, Dairy Manufacturing, Manufacture of Food Preparation Products, Processed and Preserved Meat, Fish, Fruit and Vegetables, and Baking, Cereals, Confectionery & Snacks (BCCS). Typical member companies to this SETA include breweries, meat processors, snack manufacturers etc.
With all the challenges of high unemployment and the low skills base in the country, SETAs have become the go-to structures that are expected to respond to the challenges listed herein. The employers and the unemployed have over the years seen the important role that SETAs play in advancing skills development.
The FoodBev SETA is one of the SETAs that is primed to respond to such challenges. The end product from their member companies is consumed throughout the country and in all seasons. It can develop entrepreneurs and prepare the youth to enter in the economy. The sector they service hardly experiences a decline in demand of their products.
In the last financial year alone, despite the challenges placed by Covid 19, the Foodbev SETA achieved 80,49% performance against the targets. The SETA registered a total of 7,406 pupils (employed and unemployed) on various learning programmes, of which 6, 752 were SETA funded. In addition, 3, 897 pupils completed their learning programmes of which 3, 366 were SETA-funded. A total of 654 pupils were registered into learning programme funded by the sector of which 531 pupils have completed.
Even though we shouldn’t praise a fish for swimming, this performance is commendable given the challenges brought about by the Covid-19 pandemic. Indeed, some similar institutions do not reach such achievements on any normal financial year.
It is important to note that these achievements were reached with a downward revised budget. The FoodBev SETA’s total budgeted revenue decreased from the approved amount of R432 million to R305 million. This was due to the four-month skill development levy holiday and other Covid-19-related financial impacts. This resulted in a R118 million downward budget adjustment.
This performance alone is certainly not going to improve the country’s Gini Coefficient discussed earlier.
However, this and the performance of various other SETAs can go a long way in addressing the skills gaps and ensuring that South Africa has a capable workforce and a pool of employable youth.
What is encouraging, however, is the report from the Auditor-General of South Africa. In the report to Parliament the auditor expressed a favourable opinion which shows that the SETA has strong governance in place. SETAs get easily swayed from the main objective by having to deal with governance gaps that always result in bad publicity. It is refreshing to note that the FoodBev SETA has not had such issues and continues in a right trajectory in facilitation of skills development.
Skills development of the workforce cannot be left to chance. The SETAs must now pay attention to future skills. South Africa is a global player and, as such, skills from other countries may impact our industries. Cross sectoral programmes with other SETAs is crucial in ensuring that this Gini coefficient score is reduced.

In my next article I will be looking at the governance problem within the SETAs.

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