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Compiled by the Research Programme on Human Resources Development,
Human Sciences Research Council
Published by HSRC Press
Private Bag X9182, Cape Town, 8000, South Africa
www.hsrcpress.ac.za
© 2005 Human Sciences Research Council
First published 2005
All rights reserved. No part of this book may be reprinted or reproduced or utilised in
any form or by any electronic, mechanical, or other means, including photocopying
and recording, or in any information storage or retrieval system, without permission
in writing from the publishers.
ISBN 0-7969-2098-2
Cover by Elsabe Gelderblom
Copy edited by David Merrington
Typeset by Jenny Wheeldon
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CONTENTS
List of tables vii
Acknowledgements ix
Abbreviations xi
1 The existing state of knowledge about very
small and micro enterprises in South Africa 1
Introduction 1
The history of VSMEs in South Africa and current evidence 2
Strategies for VSME skills development in South Africa 6
Conclusion 14
2 Experiences from the rest of Africa 15
Pre-employment programmes 15
In-employment programmes 17
The relevance of debates on skills development for enterprise development
elsewhere in Africa, for South Africa 19
Beyond skills 19
Conclusion 24
3 Two methodological approaches to
researching the VSME sector 25
Introduction 25
The National Skills Survey component 25
The National Skills Fund component 28
Conclusion 30
4 The VSME component of the
National Skills Survey 31
Introduction 31
The nature of the sampled VSMEs 31
The scale of training in the sampled enterprises 34
The nature of training 41
Attitudes to training and perceptions of skills needs 44
Engagement with the National Skills Development system 46
Future training planning 50
Conclusion 52
5 Skills acquisition patterns among
very small and micro enterprises
(the NSF study) 55
Introduction 55
The nature of the VSMEs surveyed 55
Business context and development needs 57
Owners’/managers’ own skills and learning 60
Training and learning in the business 63
Relationship with the National Skills Development Strategy 64
Conclusion 69
6 Lessons for policy and practice 71
References 76
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Table 3.1: Number of interviewees by geographical area 26
Table 4.1: Number of respondents by SETA and type of establishment 32
Table 4.2: Number of employees by type of establishment 33
Table 4.3: Permanent employees by occupational and population group 33
Table 4.4: Percentages of employees trained by type of establishment and
employee type 35
Table 4.5: Establishments with employees participating in training 36
Table 4.6: Number of permanent employees who participated in training during 2002/3
by occupational group and by population group 37
Table 4.7: Participation rates in training per occupational group 38
Table 4.8: Training expenditure 39
Table 4.9: Annual turnover, payroll and spending on training 40
Table 4.10: Ratios of payroll to turnover and spending on training to payroll 41
Table 4.11: Extent to which permanent employees participated in types of training 41
Table 4.12: Number of permanent employees who received training in terms of the ISO
9000 series, other international standards and NQF standards 42
Table 4.13: Training providers by establishment 43
Table 4.14: External training providers compared with the baseline survey 43
Table 4.15: Impact of training 44
Table 4.16: Extent to which skills were underdeveloped or lacking during 2002/3 45
Table 4.17: Extent to which occupational skills needed upgrading during 2002/3 46
Table 4.18: Claiming grants from the levy system 46
Table 4.19: Reasons for not claiming grants against levy payments 47
Table 4.20: Satisfaction with the services of SETAs rendered during 2002/3 48
Table 4.21: Support from the DoL, NSF and/or SETA received by non-registered
establishments 49
Table 4.22: Planned initiation of learnership by establishments 50
Table 4.23: Plans to train in 2003/4 51
Table 4.24: Extent to which particular factors will cause establishments to increase
training during 2003/4 (percentage) 51
Table 5.1: Distribution of owners of sampled enterprises by population group 55
Table 5.2: Employment by occupational level and employment status 57
vii
©HSRC 2005
LIST OF TABLES
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This volume represents the collective endeavours of a number of people. I would like to
thank the funders and their representatives – the National Skills Fund, the European
Union and the Department of Labour. In particular, thanks must go to colleagues from
these organisations who played a role in research design and in commenting on findings.
These include Ian Macun, Botshabelo Maja, Marcus Powell, Pat Telela, Frans Strydom and
Bongani Mkhize. My appreciation also goes to Human Sciences Research Council (HSRC)
colleagues who also commented on design and analysis, especially Andre Kraak, Azeem
Badroodien and Andrew Paterson. My administrative colleagues, Cilna de Kock and
Zubeyda Ahmed, provided support for the research activities.
This volume would not have been possible without the work done by Bees Development
Organisation and the University of South Africa’s Bureau of Market Research. My thanks
go to all members of their teams, but especially to Professor Johan Martins and Jocelyn
Smith, the respective project managers.
My thanks go also to the Sector Education and Training Authority (SETA) Strategic Project
managers, consultants and service providers, who assisted us in getting access to the
appropriate enterprises and who participated in our final seminar.
This research could not have taken place without the assistance of a large number of very
small and micro enterprise (VSME) owners and managers who gave their time to the
researchers in order to enrich our understandings of the systems in which they are
working. They are too many to name individually, but we hope that their investment of
time in our research will be compensated for by this report and its intended impacts on
policy and practice.
Dr Simon McGrath
Pretoria
December 2004
ix
©HSRC 2005
ACKNOWLEDGEMENTS
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[...]... Department of Trade and Industry ESETA Energy Sector Education and Training Authority ETDP SETA Education and Training and Development Practices Sector Education and Training Authority FASSET Financial and Accounting Services Sector Education and Training Authority FET Further Education and Training FIETA Forest Industries Education and Training Authority FOODBEV Food and Beverages Manufacturing Industry Sector... Technologies ISO International Standards Organisation IT Information Technology LGWSETA Local Government, Water and Related Services Sector Education and Training Authority MAPPP Media, Advertising, Publishing, Printing and Packaging (SETA) MERSETA Manufacturing, Engineering and Related Services Education and Training Authority MQA Mining Qualifications Authority (SETA) MSE Micro and small enterprise... need for skills upgrading 5 ©HSRC 2005 Skills Development in Very Small and Micro Enterprises Strategies for VSME skills development in South Africa Skills development for VSMEs can be seen as falling across the remits of three national departments: Trade and Industry, Labour and Education I will draw on two earlier accounts in addressing each in turn (McGrath 2004a, 2005) Department of Trade and Industry... VTIs into enterprise development institutes, as in the case of the Malawi Entrepreneurship Development Institute (Grierson and Mackenzie 1996) Other programmes sought to add a package of interventions onto the traditional 15 ©HSRC 2005 Skills Development in Very Small and Micro Enterprises VTI curriculum These typically included skills in market analysis, general business skills and credit, as in the International... Banking Sector Education and Training Authority BDS Business Development Services CETA Construction Education and Training Authority CHIETA Chemical Industries Education and Training Authority COSATU Congress of South African Trade Unions CTLF SETA Clothing, Textile, Leather and Footwear Sector Education and Training Authority DIDTETA Diplomacy, Intelligence, Defence, and Trade Education and Training... when read in conjunction 1 ©HSRC 2005 Skills Development in Very Small and Micro Enterprises Before turning to the empirical studies, however, it is important to locate them both nationally and internationally within the broader debates about VSME skills development and, in the national case, in the context of existing policies and interventions Chapter 1 will look at South African research and policy... evidence points to the series of challenges inherent in developing skills development programmes for smaller enterprises and in using formal providers in these interventions Moreover, the broader evidence on enterprise development also serves to highlight the need to locate skills interventions within a broader range of understandings of and approaches to the micro and small enterprise sector 24 ©HSRC 2005... Notwithstanding its length (over 300 pages), the Investigation is frustratingly thin on detail about the skills acquisition pathways of those in the sector, spending far more time canvassing others’ opinions about the functioning of micro enterprises and suggesting ways of improving this functioning What does emerge is that only a small proportion of owners had learned their sector-specific and business skills. .. effect radical change in the training system by the nature of the post-apartheid organisation of government portfolios In spite of the best efforts of the Congress of South African Trade Unions (COSATU) training lobby, a major responsibility for the supply side of training 9 ©HSRC 2005 Skills Development in Very Small and Micro Enterprises remains with a separate DoE (and nine provincial departments),... Education and Training Authority SADC Southern African Development Community SAQA South African Qualifications Authority SETA Sector Education and Training Authority SETASA Sector Education and Training Authority for Secondary Agriculture SETO (later to become SETA) Sector Education and Training Organisation SME Small and medium enterprise SMLE Small, medium and large enterprise SMME Small, medium and micro . and Training Authority
ETDP SETA Education and Training and Development Practices Sector Education and
Training Authority
FASSET Financial and Accounting. existing state of knowledge
about very small and micro
enterprises in South Africa
Simon McGrath
Introduction
The development of very small and micro enterprises
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