Services SETA Frnt 34382 by sdsdfqw21

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Vision and mission                      1
Overview                                2
Chairperson’s report                    4
CEO’s report                            7
Reporting structure                    14
Executive management                   15
Leadership                             16
National skills development strategy   18
Industry chambers                      21
Industry chamber board members         22
Industry profile                       26
National skills fund                   32
Small and micro enterprises            33
Disability report                      34
ETQA and learnerships                  36
Compliance report                      48
Human resources                        50
Corporate governance                   55
Materiality framework                  56
Audit committee report                 57
Auditor-General report                 58
Annual financial statements            59
Acronyms                               93
Contact details                        94
The Services SETA will instil in South Africa’s working communities a tangible, trainable,
certifiable and accountable measure of service excellence, which it will be proud to benchmark
against comparable international standards of service.

The stakeholders in the services sector are committed to ensuring that:
• National standards and qualifications in the sector and sub-sectors are created.
• National standards and qualifications are registered onto the national qualifications
• National standards and qualifications are used to curriculate, assess, certify and manage
 performance in the sector to develop targeted skills and generic service skills.
• Quality learning provision is maintained throughout the sector.
• Information is gathered and a database is created and maintained to target generic and
 specific skills development; engage in ongoing skills audits inside the labour market,
 including the unemployed and in labour pools from learnerships and skills programme
• Implementation of the sector skills plan, taking the specific needs of diverse sub-sectors into
 account in terms of practice and law.

                                                                    Services SETA
                                                                           Annual report 2006
Overview                              Membership
                                      • Over 120 000 member companies registered with an
                                        estimated 12 000 companies paying levies. Of the
                                        companies paying levies, 3% are large companies, 1,4%
                                        medium companies and 95,6% small and micro enterprises
                                        who do not contribute to skills levies
                                      • We have 25 standard industry classification codes
                                        representing industries traditionally ignored by government
                                        and the mainstream of our economy
                                      • We comprise 23 equally representative industry chamber

                                      WSPs and ATRs
                                      •   62% of large firms submitted WSPs
                                      •   18% of medium firms submitted WSPs
We have 25 standard industry          •   972 small firms submitted WSPs and SME claim forms
                                      •   3 022 firms supported in skills development initiatives
                                      •   47% of small firms supported in skills development initiatives
classification codes representing
                                      • 57 learnerships registered with the Department of Labour
industries traditionally ignored by   • 5 918 unemployed learners entered into learnerships or
                                        skills programmes
                                      • 7 930 learners in learnerships
government and the mainstream         • 26 learners enrolled in a middle management bursary
                                        programme at HET level
                                      • 30 blind and partially sighted learners in the call centre
of our economy                          learnership
                                      • We have facilitated the development of and fund standards
                                        generating bodies, composed of 260 industry experts,
                                        primarily from business and labour
                                      • Nine RPL tools registered

                                      Training providers
                                      • 616 recorded providers with ETQA
                                      • New online provider accreditation established
                                      • 6 489 training providers accredited with 486 provisional
                                        accreditation certificates issued
                                      • 5 472 training providers assisted with accreditation
                                      • 16 providers accredited on the new venture creation

Services SETA
       Annual report 2006
Assessors, moderators and various tools                         Certification
registered                                                      • Four certification partners appointed for marketing, postal,
• 1 261 registered assessors with 590 assessor certificates       labour recruitment, property and project management
  issued                                                          qualifications
• 233 registered moderators with 97 moderator certificates      • 3 612 learners approved for certification
  issued                                                        • 8 130 learner certificates issued
• 18 integrated final assessment tools registered
• 12 recognition of prior learning (RPL) tools registered
• 1 030 learners completed mentoring and coaching training
                                                                School pre-learnership project
                                                                • 52 schools in nine provinces participated in the school
                                                                  pre-learnership project to prepare learners for the world
Levies, grants and discretionary funds                            of work
• There are in excess of 300 nationally distributed             • A total of 4 800 learners took park in the programme
  stakeholders from business and labour who govern the          • 102 teachers trained as moderators
  administration; checks and disbursements worth over           • 52 teachers trained as project managers
  R120 million from levies collected annually
• Four tiers of financial auditing culminating in an external
  audit committee, and the Auditor-General assure all           Institutes of Sectional and Occupational
  concerned that the money is properly managed and spent        Excellence (ISOEs)
• 75% large and 42% medium member companies employing           • Four provincial ISOEs are in various stages of establishment
  over 50 people have submitted workplace skills plans
• 100% of levy grants paid back and reserved for companies
  submitting workplace skills plans totalling in excess of      NGO and CBO support
  R180 million                                                  • 494 non-paying and NGOs supported in skills development
• 17 funding windows have been created to ensure efficient      • 95 school teachers underwent moderator training linked to
  and proper allocation of all discretionary funds                FET school project

Skills development facilitators                                 Customer service
• 2 400 registered skills development facilitators with         • 88 944 calls handled since the customer contact centre was
  1 450 trained on a one-year programme                           established

Qualifications and standards                                    Research
• 65 qualifications have been registered together with their
                                                                • We have commissioned 33 areas of research for our sector
  unit standards
                                                                  designed to benefit each constituent industry and our members
• 61 qualifications were granted quality assurance status by
• 20 qualifications are up for review                           Regional networks
                                                                • Six regional offices servicing nine provinces
Memorandums of understanding
• 32 MoU agreements with various ETQAs

                                                                                            Services SETA
                                                                                                   Annual report 2006
Don Johnston

“The wonderful thing about the

Skills Development Act, is the

impact it has had in so many areas

other than simply skills


Services SETA
       Annual report 2006
The makeup and character of your                                      meaningful representation by elected individuals capable of
decision makers                                                       taking a mandate and communicating back to a constituency
As chairperson of the Services SETA, I am proud to observe            which is also our own constituency. We firmly believe that to
that since its inception, this organisation has helped over           be accountable to our members for our policy decisions and
25 different industries to mature (sometimes in spite of              fiduciary actions, we must come from those industries and be
themselves and their individual activities) to the point where        part of the daily activities within those industries.
we can now say that in the majority of industries within our
scope we have a healthy relationship of engagement between            The shrinking pot of levies
“organised” business and labour representatives on many               As governors of the Services SETA, a perennial concern is that
issues across the broad spectrum of skills and skills                 levy payments are coming from fewer and fewer companies.
development. This engagement is characterised by a vigorous           Estimates show that of the 1,5 million registered companies in
network of provincial and national chamber board activities           this country, fewer than 80 000 actually pay skills levies. Yet,
and interventions.                                                    the entire National Skills Fund (NSF) depends on 20% of this
Interestingly in many of those industries, the Services SETA is
the only forum for formal engagement between the parties. No          The country is totally dependent on funds received from the
bargaining councils exist for the majority of the sector.             NSF for priority projects. SETAs are becoming increasingly
Interaction in the Services SETA is often the first and only time     dependent on access to the NSF as well, because of a
that official representatives from the two constituencies come        shrinking levy-paying group of companies. None of the
together to engage, sometimes heatedly, on issues which               Department of Labour’s fiscal allocation is used to
border on negotiations but invariably are settled by consensus        complement the NSF and government and the public sector,
rather than vote.                                                     particularly provincial government, appear to have the major
                                                                      entitlement to these funds, even though they are exclusively
While this is my first report as chairperson of this                  derived from skills levies paid by business. The amounts from
organisation, I have been associated with the Services SETA           our skills levies which go towards the NSF are therefore seen
since its inception, for the last three years as vice-chairperson.    purely as another tax to the business sector.

In our original constitution, we stated our intention to rotate the   One could reasonably have thought that National Treasury
positions of chair and vice-chairperson between the business          would have recognised the positive contribution many SETAs
and labour constituencies on each occasion of reconstituting          are making in our country and allocated additional fiscal
the national Services SETA council and various chamber                reserves in support. The only allowances which appear to have
boards. It must be noted, however, that it is at provincial           been made, however, are some tax deduction incentives. We
industry chamber levels where representatives from properly-          do not view this as a positive contribution. The major
constituted “organised” business and labour structures are            responsibility for the skills “revolution” in this country still lies
voted into the Services SETA’s structures of governance and,          on the shoulders of business, even though the social partners
hence, where many of our problems have arisen during this             – government and labour – are still taking credit for the
phase of reconstituting our governance structures.                    contribution of business and continue to lambaste the private
                                                                      sector for not doing enough.
In industries not characterised by a culture of engagement, it
is often difficult to find business/employer associations or          The School Feeder Project
trade union/staff associations capable of evidencing paid-up          In 2003, our chief executive proposed to council that we needed
members who are also our levy-paying members or                       to see into the future and anticipate a time when we could draw
employees of our levy-paying companies. This is a                     learners into the world of work who were prepared for that
requirement for serving on our governance structures and              world. The problem, he suggested then, was that the people
council. This challenge has delayed the process of                    leaving schools and universities were patently ill-prepared for
reconstituting our boards and council for the next term               this world. They had no life skills or literacy or numeracy skills
of office.                                                            to draw on, and in that state required the SETA to devote an
                                                                      undue portion of our grants on education activities designed to
The irony is that there are many “professional” bureaucrats           remediate and redress. We were not spending nearly enough of
and even representatives who actually pay their skills levies to      our resources on skilling interventions for the working
other SETAs but have applied to represent our members on              environment. Ironically, with all the interventions for
our structures. We have had to sift this quality of                   remediation in the world, not enough of those learners could be
representation out of our structures in pursuit of proper and         declared competent on finishing their learnership.

                                                                                                     Services SETA
                                                                                                            Annual report 2006
Our chief executive officer devised a rolling three-year plan to   We have exceeded our target for employing disabled people
engage with willing schools around the country to work with        but acknowledge that we have a long way to go in making a
learners and, particularly, teachers from grades 10 to 12. This    meaningful penetration into this sector. In this regard, we are
plan envisaged 3 000 learners matriculating in 2007 capable of     finalising an exciting and encouraging project, in association
entering our learnerships and thus being contracted into these     with Professor Reuven Feuerstein, who is a well known
programmes by our member companies. The roll out and               behaviour psychologist and scientist who is a pioneer in
management of this project later became the responsibility of      cognitive development of learners, that will make a tangible
Dr Alti Kriel whose sterling work must be commended.               difference in the working lives of disabled people, particularly
                                                                   those with mental disabilities, and be implemented across our
I am pleased to report that this project has been a resounding     many learnership programmes. We expect to launch this
success and is well on track to produce better-qualified school    programme in the new year.
leavers who will be given preferential access to our
learnerships from 2008. We are now at least in a position to       In summary, it has been a year of consolidation and quality
say to member companies wanting learners that we know              improvement which we see reflected in improved service
these candidates. We have walked with them for the last three      levels throughout the Services SETA but particularly from
years and can confidently recommend them in the workplace          regional offices. Equally commendable, our ETQA division has
under our guidance and that of the employers. They already         huge volume challenges but is coping well despite such
have 50% of the programme requirement in place before              obstacles.
entering the learnership because of the work we have done
with them. Our focus has been predominantly public and three       I look forward to serving our members for the next term of
special-needs schools and teachers.                                office and assure you that we have a team of exceptionally
                                                                   strong, motivated and properly capacitated stakeholder
We will now expand this programme to other schools and             governors to ensure that policy and strategy leadership is well
regions in the country. It has certainly paid dividends.           managed in our SETA. We are also fortunate to have a
                                                                   motivated and well-skilled group of staff members under the
Social responsibility                                              leadership of Ivor Blumenthal, our CEO, and Treaty
The Services SETA has a very well-developed social                 Moshoeshoe, our deputy CEO. I thank every one of you for
conscience. We have the largest number of previously               your contribution.
unemployed people enrolled in learnerships in the country. We
have formal outreach training initiatives with the NGO
community. We developed and implemented the new venture
creation learnership and enrolled close to 1 000 people on this
programme to date.

Services SETA
       Annual report 2006
Ivor Blumenthal

A total of 3 612 learners approved

for certification with 8 130 learner

certificates issued

                                       Services SETA
                                              Annual report 2006
The financial year 2005 to 2006 was in many ways a year of            making resource decisions for our true levy-paying members
consolidation, rationalisation and re-grouping. After five            with no mandate or mechanism or capacity to communicate
strenuous years of chasing targets for the first national skills      back to their own constituencies let alone the larger industry
development strategy, it was time to re-examine structure,            membership of the Services SETA.
both in terms of how the Services SETA is governed, and how
our operational divisions are placed to best service the needs        The second challenge is that the larger contributors have
of our members.                                                       expressed the wish that after five years of cross-subsidisation
                                                                      of smaller, often non-viable industries to the extent that severe
Stakeholder activities                                                restrictions have been placed on access to discretionary
SETAs are true engagement forums for organised business               funding across the board. They now wish to have greater and
and labour where consultations, negotiations and disputes             unfettered access to their contributions and to the
take place daily on policy matters stretching often beyond            discretionary funds available within the Services SETA on an
skills development, involving the most valuable of resources in       industry ring-fenced basis. They believe this will be the
the economy, namely the human resource.                               growing perception that the skills levy has become a medium-
                                                                      to-large size company tax in favour of the SME sector, which
The Services SETA collectively represents the interests of            is now largely exempt from paying the levy, but still entitled to
more employers and employees than any trade union or                  benefits from the Services SETA.
employer association in the country when it comes to matters
of skills and skilling. We do so within two distinct chambers as      As a body, the Services SETA have not rejected the notion of
constituencies, namely organised business and labour.                 cross-subsidisation but instead want more control over the
                                                                      activities of cross-subsidisation relating to its resource base
Re-structuring stakeholder involvement                                as industries instead of the sectoral collective.
in governance and other activities
It is difficult to reinvent oneself, particularly where the current   Consequently, the model of governance finally agreed upon by
formula is comfortable and serving a purpose. The need has            all stakeholders is one in which every single SIC code within
however arisen for the Services SETA to reinvent its                  the Services SETA scope will have semi-autonomous industry
governance structures and our stakeholders have been hard at          chamber structures at both provincial and national level. In
work in this pursuit for the past year.                               this way, we hope to give expression to each of our industries’
                                                                      aspirations and strategies in all provinces in which we actively
The challenge has been simply stated. Since inception, we have        operate, and also via a consolidated approach nationally.
adopted a cluster model to governance where we have grouped           Nominations of suitable representatives are made at provincial
our 37 SIC (standard industrial classification) codes assigned        instead of national level.
to the scope of the Services SETA into chambers. Initially we
had ten such chambers. The problem was that while our initial
purpose was served, namely to pool resources for the good of
                                                                      Measurement criteria of performance
                                                                      The Services SETA council has resolved that we would need to
our entire scope, and in the process we have established a
                                                                      introduce some form of minimal measurement criteria against
SETA machine to service all industries under our scope
                                                                      which to confirm to DoL in our annual NSDS review, that we
irrespective of size, two issues have arisen requiring redress.
                                                                      are managing the performance of stakeholders.
The first is that there are dominant industries and submissive
                                                                      Accordingly we have arrived at the following
ones. The submissive ones, not necessarily the smallest or
                                                                      two criteria
most resource-starved ones, have been swamped by more
assertive representatives from more established and
                                                                      A. Every stakeholder must write a minimum of two articles a
formalised industries, creating a climate of resentment and
                                                                         year, one being a generic Services SETA review article and the
antagonism at stages which is unhealthy in a complicated
                                                                         other being a SIC-code specific article. The articles can be in
SETA such as ours. Industries have not had resource-directing
                                                                         any official language. The articles are submitted to the
autonomy within our structure and hence while the basic
                                                                         respective chamber manager who will assist the stakeholders
common denominator of standards, qualifications and
                                                                         to have the articles published in trade specific publications.
services have been well fulfilled, many industries believe that
they have been denied individual recognition for growth and
                                                                      B. Every stakeholder must conduct a minimum of two
self-governed development.
                                                                         constituency communication sessions annually, during
                                                                         which occasion chamber staff will be present to support
A complicating factor is that the engagement model of
                                                                         the stakeholder in such endeavours. They will be graded by
governance defined in the Skills Development Act has
                                                                         the chamber staff on such presentations and the Services
sometimes meant that professional organisers and
                                                                         SETA will arrange for training on presentation skills if and
bureaucrats and representatives who often are not even levy-
                                                                         when required.
paying Services SETA members, are often directing policy and

Services SETA
       Annual report 2006
Association and trade union capacitation                              been formed formally with officially registered constitutions
A perennial weakness in our governance structures is finding          and office bearers in order for us to take an enabling and
suitable, qualified subject-matter experts around the country         capacitating stance with them in the same way that we intend
capable of understanding skills development sufficiently to take      to do with our institutions of occupational excellence.
effective mandates from their constituencies, negotiate for
appropriate policy decisions on the back of these mandates and        Education Training and Quality Assurer (ETQA)
thereafter effectively communicate results to their constituencies.   Institutes of sectoral and occupational excellence
                                                                      The National Skills Development Strategy 2 stipulates that SETAs
We have budgeted for and have implemented interventions for           must by 2010 have established a number of institutions of
the training and capacitation of organised business and labour        sectoral and occupational excellence in each province. The
structures within our ranks to ensure the ongoing                     Services SETA has been hard at work in fulfilling this obligation.
improvement of mandating and engagement skills and the                However, we have to deal with over 8 000 providers as individuals
internal development of sufficient resource and capacity to           in this pursuit and hence our model has been collective.
ensure sustainability.
                                                                      Our ISOE model therefore has focused on the formalisation of
Added to this is the Department of Labour's intervention in the       our provider networking activities which we have very
development of a programme in association with Unisa to map           successfully run around the country each month for the past
current competency levels amongst stakeholders and to offer           three years.
a training programme designed for board and council
members in public institutions. We look forward to the results        The intention of our ISOE project is to ensure that in each
of this packet of interventions.                                      province we have a Services SETA-autonomous association of
                                                                      accredited and would be accredited providers capable of
Procurement                                                           governing its own activities, funded by the Services SETA, and
Tender ombudsman                                                      established to add value to the basic benchmarks of good practice
We are very aware of the amount of public scrutiny which              and provision. We want entire levels of provision to be enhanced
public organisations such as SETAs are subjected to and the           and maintained among the entire group and have rejected the
fact that accusation is normally accepted as truth in the public      individualistic models adopted in some other quarters. The
eye, and often even in the eye of politicians and government          principles of this project are upliftment, economies of scale, best
departments. It is for this reason that the Services SETA             practice and continuous professional development.
council has authorised the appointment of an external “tender
ombudsman” intended to be responsible for the neutral review          To date we have ISOEs centrally facilitated by a well-qualified
of all tenders adjudged and awarded prior to contracting.             project manager, constitutions have been established,
                                                                      provincial steering committees are in place and we are working
In this way we are hoping to counter accusations of nepotism          on priority projects and interventions for the years ahead.
or fraud within our system.
                                                                      Online application system
Black suppliers’ association                                          Our ETQA accreditation process has now been fully
Being concerned that not enough of our outsourced work is             automated with all current applications having been received
going to black or truly empowered organisations we have               over the web. We believe this will not only speed up
structured associations in every region of these individuals          submissions but mean faster processing times. This is
designed from 2007 onwards to become the source of our                already proving the case with fewer complaints being
contractors for many of our projects. These associations have         received about our new system.

                                                                                                    Services SETA
                                                                                                           Annual report 2006
Full automation does present a challenge when it comes to            corporate sector who is responsible for the performance
accreditation. We have received a number of complaints from          appraisal of subordinates must be a competent standards-
small, mostly previously disadvantaged providers, often              based assessor and our aim is to ensure that the opportunity
operating in very rural areas who simply are not computer            is made available to them, free of charge for that to happen.
literate and who do not have access to computer facilities. We
are investigating possible innovative solutions. However, the        This is a national training programme which is now offered to
problem does not only arise when it comes to accreditation. A        our members. In the year under report 1 000 such assessors
bigger problem relates to the national learner records               have been trained. Those line managers, team leaders and
database managed by SAQA. It is an absolute SAQA                     supervisors who are nominated for training have an
requirement that all learner information from initial                opportunity to prepare a number of assessment profiles on
registration to eventual certification takes place electronically.   their subordinates (or would be subordinates for those who
A compounding factor is that every qualification we have             are being developed into managerial positions). These profiles
registered has information technology as a core competency.          are then assessed by ETDP accredited assessment training
                                                                     institutions and if found competent the manager is then
The question, however, is whether a provider, who does not           certified as a trained and registered assessor of competency.
use a computer and has no access to one, can or should be
                                                                     The hiring chambers simulation and recognition
National learner records database (NLRD)                             of prior learning project
problems                                                             The greatest challenge for the hiring industry in South Africa
The NLRD presents a problem due to the scale of applications         is the very large number of non-licensed plant operators on
which the Services SETA ETQA deals with compared to                  each building and factory site.
numbers dealt with by other SETAs.
                                                                     Compounding the problem is the fact that new legislation
At any point we deal with over 7 000 providers in some form          requires certificates of competency to be issued or for facilities
or another. The existing system of loading data into the NLRD        to face the threat and the reality of being closed down.
is a huge challenge for the Services SETA, particularly where
much of the information is legacy data from former industry          With the industry committee, we have tried to address both of
training boards and other prior sources. The consequent              these problems.
problem is that the SAQA database does not allow for error. In
a submission of 1 000 learner records, if 20 are incorrect in        Firstly, to ensure that our members are not disadvantaged
any form all 1 000 are consequently rejected. This is one of the     because neither the building industry nor the transport sector
reasons for a slow and often poor performance rating on              have established any form of certification process for
                                                                     operators, we will be implementing a short-term manually
NLRD information for the services sector by SAQA. It is
                                                                     oriented certification system in 2006 to ensure that certificates
extremely difficult to quality control for the actions of
                                                                     are issued to those operators who are in a minimum state of
providers in satisfying NLRD requirements. We are working
                                                                     engagement for either training or certification with any SETA-
closely with SAQA in solving this challenge.
                                                                     accredited provider.

Innovations                                                          Secondly, our medium-term solution for this challenge is to
Linking performance management to assessor training                  implement a national programme for the recognition of prior
During each of the three phases of performance management,           learning of competencies. We have contracted for two
namely those of management, counselling and finally                  simulators capable of assessing operators to be built by
discipline, it is expected that the job description would form       October 2006. The industry chamber for hiring and plant
the basis for setting expectations and measuring performance         operation have agreed to forgo all of its 2006 discretionary
against those expectations. Counselling against those                funding entitlement for the purchase of the simulators which
                                                                     will belong to hiring stakeholders in the Services SETA and be
expectations poor performance finally leads to discipline,
                                                                     managed under the governance of the stakeholder association.
remediation and possibly dismissal. NQF unit standards
should always form the foundation of those job descriptions
                                                                     In addition the committee has agreed that all income from the
as a common language of application in each industry.
                                                                     RPL activities will revert back to the Services SETA for
                                                                     purposes of learnership funding for the industry.
This is the reason for the Services SETA to have launched a
programme for our levy-paying companies, whereby we have             A challenge in this project is to convince plant equipment
invited our members to enroll their team leaders, supervisors        manufacturers and importers to fund their own cab
and first-line managers to be trained as assessors of                development to ensure that we can recognise prior learning
competency via a range of assessment and performance                 for appropriate vehicles. While we have agreed to fund the
management techniques. We believe that every person in the           initial two cabs most in demand, our expectation is that it will

Services SETA
       Annual report 2006
become commonplace for suppliers and distributors to sell          Learnerships
their product into the country. They will also be required to      In the period 2005 to 2006 while being more quality conscious
ensure that the requisite simulators are funded so that            of our learnership policy, we still exceeded our learnership
effecting RPL can take place.                                      target by 150%. In addition to the new intake of learners we
                                                                   have ordinarily contracted for two additional sets of
Eventually both our short and medium-term solutions will
                                                                   learnerships have been implemented, namely our NSF funded
come together into a single streamlined certification model for
                                                                   project and our discretionary-funded learnerships.
the industry.

We intend that once the bulk of the industry have been             NSF learnership allocations
through the RPL process for the simulators to be deployed for      We are currently managing two sets of NSF allocations for
training purposes.                                                 which we have received R25 million in October 2005:

Internal research facility                                         A. 200 property learners in conjunction with the South
Depending on priorities, we currently spend between                   African Property Owners Association
R3 million and R5 million a year on research for the Services      B. 800 call centre learners
SETA. All this is outsourced to an expensive research industry
and the results are often too academic to be translated for        The property learners are virtually finished with the formal
consumption by our members.                                        training and workplace components and will soon be
                                                                   processed through our certification model.
We do not believe that this expenditure can be justified given
its limited value historically. We have tried other models         The call centre learners are progressing well but there have
including partnering with academic institutions such as the        been some delays caused mainly by the delay in NSF approval
Durban Institute of Technology in KwaZulu-Natal, where we          of the funding. Although the initial work was done in February
certainly reduced costs, but results were equally questionable.    2005, on a DoL deadline, due to the fact that approval was only
                                                                   received in September and funding released in October, the
                                                                   delay caused a number of call centre companies to withdraw
We now believe that the majority of this research can be done
                                                                   their support for the project. The nature of the call centre
more effectively internally. The new NSDS allows for research
                                                                   industry does not allow for delays of this magnitude.
to be a discretionary funded activity and with this in mind, we
will establish an internal research division under a
                                                                   A complicating factor about the NSF grant is our inability to
professional research practitioner. We intend for the
                                                                   offer these grants in Gauteng or the Western Cape because of
groundwork to be done by market research learners and              the NSF strategy to get learnerships into rural areas. Such a
envisage that the entire exercise will cost the Services SETA      pre-condition is limiting given the majority of call centre jobs
R800 000 per year for ten projects, compared to the                and work opportunities vest within Gauteng and the Western
R3,5 million spent last year on the same number of projects.       Cape. While it is true that the Services SETA has been
                                                                   successful in placing learners throughout the country we
We also intend to use our research-qualified stakeholders          believe it is shortsighted for the NSA to assume that as a SETA
directly to quality control the actual groundwork as well as       we can influence the siting of a call centre simply because we
results. We firmly believe we will be able to present a superior   are offering a restricted number of R20 000 grants for training
set of quantitative and qualitative results than we have           and development. Ultimately, this restricts our ability to
received to date.                                                  pursue sustainable long-term employment creation
                                                                   opportunities in Gauteng and the Western Cape.

                                                                                                Services SETA
                                                                                                       Annual report 2006
Services SETA learnership allocations                                  The Services SETA, together with NIMA from Holland, have
Given our ability to identify discretionary funds available for        been accepted as the two pilot sites for the launch of a Global
learnerships we have released an additional new 1 300 critical skill   Marketing Certification project designed to institute true
grants into our membership and an additional 200 new venture           international reciprocity between South Africa and Europe. This
creation grants. Packaged with this release is a scaled-down           means that from 2006 we will be able to jointly certificate any
disability grant and also a reduced gainful employment grant.          learner obtaining any one of these eight qualifications as
                                                                       Services SETA – EMC certified learners and they will be entered
Importantly, the grant quantum has been significantly reduced          into the European database of qualified marketing professionals.
for our critical scarce skills learnerships, namely down from
R40 000 to R20 000. The reason for this is simply that to be able      Hairdressing
to meet the numbers prescribed by the Department of Labour             I am pleased to say that in 2006 the first 1 000 hairdressing
within the available budget we have had to trim our cloth.             graduates will also have been recognised and certificated
                                                                       within the European Union and placed on the European Union
Outstanding learnership commitments                                    database of hairdressing professionals.
Compounding the challenge is the fact that we have had to
accommodate a couple of previous chamber commitments                   Call centres
which could not be serviced in the first term of the Services          Our call centre standards have again been benchmarked
SETA, such as 100 learnerships to the hiring industry. These           against the European standards and been found to be on a par.
had been set aside for that chamber since 2004, because their          In 2006 we expect to see the first 500 European Union co-
implementation was delayed by developmental problems within            branded call centre operators being certified.
the chamber caused principally by the overlapping interest with
other SETAs and the moderation activities of SAQA.
                                                                       Project management
                                                                       After three difficult years we are finally seeing dividends on
An additional example of a contingent commitment that had
                                                                       our support for the GAPPS Global Project Management
been made is to the marketing research industry, which had
                                                                       standards and the application of a global certification
originally been granted 500 learnerships.
                                                                       instrument for project managers.
In agreement with the then chamber manager, the industry
kindly agreed to stagger implementation of the full 500                Africa
because of financial constraints the Services SETA was facing          Our experience is that Nepad is a failure.
at that time due to income shortfalls from that particular
chamber. Hence we are now obligated to release the balance             It has failed to offer any guidance leadership or assistance to
of the learnerships into that industry.                                SETAs in their efforts to establish an African Qualifications
                                                                       Framework. The education division within Nepad has proven
I am pleased to say that we are now able to honour                     inaccessible and absolutely parochial in our efforts to use
commitments to both of those chambers.                                 Nepad as a catalyst for expansion of our good work into Africa.

International activities                                               The reality is that without such a catalyst an African agenda is
As is reported every year, the Services SETA is firmly of the          nonsensical and all of our efforts to reach out within the
opinion that if we cut ourselves off from the rest of the world        continent taking just the marketing and hairdressing industries
and become insular we will not ensure that our professionals           as an example, have proven fruitless. This continent is
are accepted in the global world of practice. We therefore             characterised by a culture of apathy and disinterest and
spend a great deal of time and resources in ensuring that as
                                                                       possibly an aversion to anything South African, to the extent
many of the industries as we can are accepted internationally
                                                                       that the Services SETA has taken a strategic decision to align
and that the standards and qualifications characterising jobs
                                                                       our activities within the Australasian and European context
within those industries are matrixed and benchmarked on that
                                                                       rather than within an African one. Until there is leadership and
international stage.
                                                                       cohesion within Africa for an African agenda for skills
Finally now this work is paying dividends and in 2005 – 2006           development we will immediately cease spending huge
we have achieved true international parity for a number of             resources of time, energy and funding on activities which have
industries falling within the scope of the Services SETA.              not shown any dividend whatsoever.

The Services SETA has finally been admitted as the first non-
European full board member of the European marketing
confederation formally representing the interests of the
marketing cluster of industries within South Africa.

Services SETA
       Annual report 2006
Operational reorganisation                                          I am proud of my staff and their managers and together I think
In many ways 2005 – 2006 has been a year of reconstruction          that we are achieving small miracles on a daily basis.
for the Services SETA. Due to the change in the number of
levy-paying members, where we have 140 000 registered               For those claiming that SETAs are not working effectively we
companies but those which actually pay levies has shrunk            say ask the 100 000 people who have benefited from our
since August 2005 from 40 000 to 12 000, we have had to re-         various interventions thus far. Ask the business associations
structure our staff complement and rationalise the number of        and trade unions who govern our activities whether the quality
our regional offices.                                               of their engagement is better or worse with the introduction of
                                                                    SETAs. Ask the more than 27 000 previously unemployed
In this regard we have had to be pretty ruthless in the             people now on funded learnerships in the workplace if they
application of the principle adopted in 2000 where we               think that SETAs should exist or not?
accepted that we would only place a regional office in a region
representing more than 15% of our members. We have                  For those politicians and economic commentators and
therefore closed our offices in Polokwane, Richards Bay,            especially those ill-informed JIPSA participants claiming that
Pietermaritzburg and Kimberley. We still have three regional        business does not play an active role in the affairs and
offices in regions representing less than the required 15% but      activities of SETAs, ask our 250 officially mandated
we are endeavouring to grow membership in those regions             stakeholders from business whether they would agree?
and therefore keep those offices open.
                                                                    Whatever the detractions and criticisms, and there are very
Within the Services SETA our reorganisation has proceeded           many deserved ones, the reality is that we have created a
well and there is generally a positive and structured approach      miracle for transformation in South Africa with the
among staff members.                                                introduction of SETAs and we deserve Parliament’s and
                                                                    society’s support, not derision for this accomplishment.
We have appointed a Deputy CEO with the intention of
separating out from the CEO function many administrative and        I am very proud to be the CEO of a well-performing public
staff responsibilities, including responsibility for the            entity such as the Services SETA.
operational areas of our regional activities. In this way the CEO
is released to focus on strategic stakeholder and macro

In conclusion
We believe that with the relicensing of the Services SETA for
the next five years, the Services SETA is now firmly
entrenched as a force within the services sector for
transformation and change. The effects of the work we do
stretch beyond skills development and the catalytic impact of
our interventions are often felt in the workplace and at
strategic industry levels.

                                                                                                Services SETA
                                                                                                       Annual report 2006

 Don Johnston                                                                                                    Andy
                                                                                                            Andy Mathibe
 Chairperson                                                                                                Vice-chairperson
 (Business                                      MMS Mdladlana                                               (Labour
 Representative)                                Minister of Labour                                          Representative)

    Ivor Blumenthal                                                                                         Treaty Moshoeshoe
Chief executive officer                                                                                           Deputy
                                                                                                          chief executive officer

                              Governance structures
                                                Executive committee
                                   • Comprises members nominated by the national council

                                                    National council
                • Comprises chairs and vice chairs of the provincial council and the national industry structure

                                                  Provincial council
                      • Comprises chairs and vice chairs of national industry chamber boards in a regions

                                       National industry chamber boards
                                         Represented by members of all the SIC codes

Services SETA
       Annual report 2006

Johan Delport                                             Ivor Blumenthal
Compliance manager                                  Chief executive officer

Vernon Naidoo                                         Treaty Moshoeshoe
Chief financial manager                                      Deputy CEO

Prelini Bennideen                                            Merle Clark
Company secretary                                Senior chamber manager

Isobel Byleveld                                              Devan Naicker
Levies and grants manager      Sector skills planning and research manager

Marie-Therese Portolan                                TJ van der Merwe
ETQA and learnership manager                   Human resources manager

                                      Services SETA
                                             Annual report 2006

Ivor Blumenthal                   Treaty Moshoeshoe        Vernon Naidoo             Merle Clark
Chief executive officer           Deputy chief             Chief financial officer   Senior chamber
                                  executive officer                                  manager

Meike Wetsch                      TJ van der Merwe         Charmayne Kok             Dr Sazi Kunene
Strategic projects manager        Human resources          Financial manager         Chamber manager

Prelini Bennideen                 Nteseng Lekubu           Raam Govender             Karthiga Padayatchi
Company secretary                 Public relations         Procurement manager       Chamber manager

                                  Yvette Grieb             Ebrahim Dhaler            Leanne Charles
                                  Information technology   Logistics manager         Chamber manager

Priscilla Davids                  Rajan Naidoo                                       Senisha Moonsamy
Regional manager                  Regional manager                                   Chamber manager
Western Cape                      KwaZulu-Natal

Services SETA
       Annual report 2006
Devan Naicker            Isobel Byleveld     Johan Delport                     Marie-Therese Portolan
Sector skills planning   Levies and grants   Compliance manager                ETQA and learnership
and research manager     manager                                               manager

Nerissa Haripershad      Paul Dhlamini                                         Dr Alti Kriel
Sector skills            Learnership funds                                     Learnerships manager
planning officer         manager

Sydney Moonsamy          Ayanda Ntlabati                                       Thandi Mkhize
Business process         Mandatory grants                                      Learnership implementation
outsourcing manager      manager                                               and monitoring manager

Peta Broomberg                                                                 Lerato Bogoshi
SME manager                                                                    Quality promotions

Devilliers Rolihlahla                        Nonhlanhla Ntshalintshali         Nozipho Zondo
Disability advisor                           Accreditation manager             Registrar

                                                                         Services SETA
                                                                                Annual report 2006
National Skills
Development Strategy
                                                     SETA MoU      achievements
                                                     target for    for the year   Qualitative achievements
No    Success indicator                              2005/06       (accumulative) and comments
1.1   Skills development supports national and       Qualitative   Qualitative    • Draft SSP submitted to DoL
      sectoral growth, development and                                            • MoU with DTI signed
      equity priorities.                                                          • One national and three provincial
                                                                                  • International reciprocity conference
1.2   Information on critical skills is widely       325           235            • NSDS II and scarce skills workshops
      available to learners. Impact of information                                  conducted to over 500 employers in
      dissemination researched, measured and                                        seven provinces
      communicated in terms of rising entry,                                      • 235 SDFs trained
      completion and placement of learners.                                       • Preliminary scarce and critical skills
                                                                                    audits conducted and submitted to DoL
2.1   By March 2010 at least 80% of large firms’     260 (Large)  198             • 62% of large firms submitted WSPs
      and at least 60% of medium firms’              330 (Medium) 123             • 18% of medium firms submitted WSPs
      employment equity targets are supported by
      skills development. Impact on overall equity
      profile assessed.
2.2   By March 2010 skills development will be       2 300         3 994          • 972 small firms submitted WSPs and
      implemented in at least 40% of small levy                                     SME claim forms
      paying firms supported and the impact of                                    • 3 022 firms supported in skills
      the support measured.                                                         development initiatives
                                                                                  • Overall 47% of small firms supported
2.3   Government budgetary process used to           N/A           N/A            • N/A
      ensure that national and provincial
      departments spend at least 1% of
      personnel budget on training.
2.4   By March 2010, at least 500 enterprises        N/A           N/A            • In absence of national standard, EAP and
      achieve a national standard of good practice                                  3 star initiatives implemented in sector,
      in skills development approved by the                                         including awards ceremony
      Minister of Labour.
2.5   SETA discretionary BEE grants.                 N/A           N/A            • Inaugural BEE charter workshop
                                                                                    conducted for 23 subsectors with DTI
                                                                                  • Marketing charter roadshow conducted
                                                                                    in six provinces
2.6   From April 2005 to March 2010 there is an      N/A           N/A            • SSETA support for establishment of
      annually increasing number of people who                                      SACCOM
      benefit from incentivised training for                                      • NSF strategic project for 200 property
      employment or re-employment in new                                            and 800 call centre learnerships
      investments and expansion initiatives.
      Training equity targets achieved. Of the number
      trained, 100% to be South African citizens.

Services SETA
       Annual report 2006
                                                     SETA MoU     achievements
                                                     target for   for the year   Qualitative achievements
No    Success indicator                              2005/06      (accumulative) and comments
2.7   By March 2010 at least 700 000 workers         0            581            • Learners supported in ABET, primarily in
      have achieved at least ABET level 4.                                         the cleaning subsector
2.8   By March 2010, at least 125 000 workers         1 450       1 708          • 26 learners enrolled in middle
      assisted to enter and at least 50% successfully                              management bursary programme at
      complete programmes, including learnerships                                  HET level
      and apprenticeships, leading to basic entry,                               • 117% target achievement
      intermediate and high level scarce skills.
      Impact of assistance measured.
3.1   By March 2010, at least 450 000               N/A           N/A            • Target linked to Expanded Public Works
      unemployed people are trained. This training                                 Programme and NSF related funding.
      should incrementally be quality assured and                                • SSETA is involved in consultation with
      by March 2010 no less than 25% of the people                                 Department of Public Works regarding
      trained undergo accredited training. Of those                                sector participation
      70% should be placed at least placed in
      employment, self-employment or social
      development programmes including (EPWP),
      or should be engaged in further studies.
      Placement categories each to be defined,
      measured,reported and sustainability assessed.
3.2   By March 2010, at least 2 000 non-levy        25            494            • 494 non-levy paying and NGOs
      paying enterprises, non-governmental                                         supported in skills development
      organisations (NGOs), community-based                       95             • 95 school teachers underwent moderator
      organisations (CBOs), and community-based                                    training linked to FET school project
      cooperatives supported by skills development.
      Impact of support on sustainability measured
      with a targeted 75% success rate.
3.3   By March 2010, at least 100 000 unemployed N/A              N/A            • Target linked to DoE and NSF related
      people have participated in ABET level                                       funding
      programmes of which at least 70% have
      achieved ABET level 4.
4.1   By March 2010 at least 125 000 unemployed 4 000             5 918          • 147% target achievement
      people assisted to enter and at least 50%
      successfully complete programmes, including
      learnerships and apprenticeships, leading to
      basic entry, intermediate and high level scarce
      skills. Impact of assistance measured.
4.2   100% of learners in critical skills programmes 0            0              • New internship joint venture to be
      covered by sector agreements from Further                                    implemented for 1 500 learners with
      Education and Training (FET) and Higher                                      HET and FET institutions in year two of
      Education and Training (HET) institutions                                    new NSDS
      assisted to gain work experience locally or
      abroad, of whom at least 70% find placement
      in employment or self-employment.
4.3   By March 2010, at least 10 000 young people 250             154            • SSETA exploring new models regarding
      trained and mentored to form sustainable                                     NVC and partnerships with Small
      new ventures and at least 70% of new                                         Enterprise Development Agency (SEDA)
      ventures in operation 12 months after                                        and to pilot mentorship programme
      completion of programme.

                                                                                          Services SETA
                                                                                                 Annual report 2006
                                                        SETA MoU     achievements
                                                        target for   for the year   Qualitative achievements
No    Success indicator                                 2005/06      (accumulative) and comments
5.1   By March 2010 each SETA recognises and             1           4              • SSETA policy doc on collective approach
      supports at least five Institutes of Sectoral or                                communicated to DoL and stakeholders
      Occupational Excellence (ISOE) within public                                  • Four provincial ISOEs in various stages
      or private institutions and through Public                                      of establishment
      Private Partnerships (PPPs) where                                             • DoL also finalising guidelines and policy
      appropriate, spread as widely as possible                                       documents regarding ISOEs
      geographically for the development of people
      to attain identified critical occupational skills,
      whose excellence is measured in the number
      of learners successfully placed in the sector
      and employer satisfaction ratings of their
5.2   By March 2010, each province has at               2            16             • 16 providers accredited to provide NVC
      least two provider institutions accredited                                    • SSETA as primary ETQA for NVC to
      to manage the delivery of the new venture                                       establish working forum with DoL
      creation qualification. 70% of new ventures                                   • SETAs generally unhappy to accept
      still operating after 12 months will be used                                    accountability for NVC sustainability after
      as a after measure of the institutions’                                         12 months as not all market forces and
      success.                                                                        regulation is within SETAs control
5.3   By March 2010 there are measurable            Qualitative                     • 80 000 calls handled since customer
      improvements in the quality of the services                                     contact centre established
      delivered by skills development institutions                                  • 1 261 assessors registered
      and those institutions responsible for the                                    • 1 030 learners completed mentoring and
      implementation of the National Qualifications                                   coaching training
      Framework (NQF) in support of the NSDS.                                       • 233 stakeholders underwent moderator
                                                                                    • Nine RPL tools registered
                                                                                    • 616 recorded providers with ETQA
                                                                                    • New online provider accreditation
5.4   By March 2010, there is an NSA constituency- Qualitative                      • DoL facilitated evaluation of board
      based assessment of an improvement in                                           members concluded
      stakeholder capacity and commitment to the                                    • All stakeholders appointed to various
      National Skills Development Strategy.                                           committees, boards, forums and council
                                                                                      advised to attend corporate governance
                                                                                      programme which will be funded SSETA
                                                                                      committees, boards, forums and council
                                                                                      advised to attend corporate governance
                                                                                      programme, which will be funded SSETA
                                                                                    • Capacity building sessions conducted
                                                                                      with new stakeholder appointments

Services SETA
       Annual report 2006
 1.   Call centre management of people
 2.   Direct marketing
 3.   Event and conference management excluding the operation of convention centres
 4.   Labour recruitment
 5.   Marketing research and public opinion polling
 6.   Marketing services
 7.   Estate agencies (residential)
 8.   Valuers (including auctioneers)

 9.   General consulting (including management consulting)
10.   Marketing communications (including public relations)
11.   Other business activities (including administrative and secretarial)
12.   Business services N.E.C.
13.   Generic project management
14.   Property management
15.   Associations, federations and umbrella bodies, (including professional bodies)
16.   Quality management and related services

17.   Mail handling and courier services
18.   National postal activities
19.   General cleaning
20.   Miscellaneous item hire (including video and car hire)
21.   Truck and plant hire

22.   Beauty treatment (including nail, skin and health)
23.   Other service activities (including commercial services)
24.   Funeral and related activities
25.   Men and ladies hairdressing

                                                                                       Services SETA
                                                                                              Annual report 2006
Industry chamber
board members
Chairperson:           Don Johnston
Vice-chairperson:      Andy Mathibe
Voting members:        Michelle Billington, Willie Pietersen, Clive Wicks, Dolly Mlotshwa
Non-voting members:    Ivor Blumenthal, Treaty Moshoeshoe, Clive Kneale

     BUSINESS CHAMBER                                Chairperson              Vice-chairperson Board representative
 1. Call centre management of people                 Vanessa Buchannan        Sonja Lawson      Keryn House
                                                                                                Diane Capazorio
                                                                                                Victor Schoeman
                                                                                                Traci Freeman
                                                                                                Nkuli Mxenge-Mayende
                                                                                                William Goldstone
                                                                                                Luke Mills
                                                                                                Gugu Mji
                                                                                                Sharon Haigh
                                                                                                Victor Schoeman
                                                                                                Anthony Wittels
                                                                                                Papama Jonas
 2. Direct marketing                                 Not yet appointed

 3. Event and conference management                  Andrew Binning           Not yet appointed Clive Ishmael Molokwane
    excluding the operation of convention                                                       Anita Mathias
    centres                                                                                     Geoffrey Hands
                                                                                                Charles Lorem
 4. Labour recruitment                               Michelle Billington      Nomsa Mazibuko    Pieter Aucamp
                                                                                                Salome Engelbrecht
                                                                                                Pauline King
                                                                                                Louis Breckenridge
                                                                                                Francois Jordaan
                                                                                                Skilpad Thomas Sehloho
                                                                                                Theodora Ngidi
                                                                                                Zandile Shangase
                                                                                                Denise Fulton
                                                                                                Lesley Africa
                                                                                                Sandra Goosen
                                                                                                Bev Jack
 5. Marketing research and public opinion            Graham Sabela            Theo Phaswana     Jude James
    polling                                                                                     Shannon Davidoff
 6. Marketing services                               Not yet appointed        Eira Sands        Not yet appointed
 7. Estate agencies (residential)                    TC Chetty                Not yet appointed Arnold Nel
                                                                                                Petro Botha
                                                                                                Martin Ferguson
                                                                                                Brian Kirshman
 8. Valuers (including auctioneers)                  Not yet appointed        Deon Botha        Ian Wyles

Services SETA
       Annual report 2006
    MANAGEMENT CHAMBER                         Chairperson            Vice-chairperson Board representative
 9. General consulting (including management   Not yet appointed
10. Marketing communications (including        Anthea Johnson         Xandre Probyn       Kim Polley
    public relations)                                                                     Johanna Mcdowell
                                                                                          Peter Mann
                                                                                          Karen Ballard
                                                                                          Margaret Moscardi
                                                                                          Seugent van Niekerk
                                                                                          Chris Skinner
                                                                                          Monwabisi Grootboom
                                                                                          Rick Robertson
                                                                                          Deon Erasmus
                                                                                          Terence February
11. Other business activities (including       Valerie Forest         Not yet appointed Lizanda Lana Joshua
    administrative and secretarial)                                                     Janet Anne Musto
                                                                                        Wilhelm van der Merwe
                                                                                        Arthur Richard Grant
12. Business Services N.E.C.                   Not yet appointed      Johan Zietsman      Bheki Zulu
13. Generic project management                 Graham Campbell        Not yet appointed Ed Lunnon
                                                                                        Davie Goulrrah
                                                                                        Johnnie Fourie
                                                                                        Lynne Millard
                                                                                        Sandro Quattrochi
14. Property Management                        Martin Ferguson        Not yet appointed Neil Gopal
                                                                                        Jaco van Wyk
15. Associations, federations and umbrella     Wynand Stapelberg      Lilane Ntoagae      GJP Blignaut
                                               (Acting)                                   Henry John Strydom
16. Quality management and related services    Not yet appointed
    CHAMBER                                    Chairperson            Vice-chairperson Board representative
17. Mail handling and courier services         Maryke van der Horst   Mathaphelo Mphuti Wayne Prins
                                                                                        Gary Garcez
                                                                                        Pat Nkosi
                                                                                        Ashville Samuels
                                                                                        Marius Louw
18. National postal activities                 Andy Mathibe           Mboya Simango       Not yet appointed

                                                                                       Services SETA
                                                                                              Annual report 2006
     CHAMBER (continued)                              Chairperson     Vice-chairperson Board representative
 19. General cleaning                                 Don Johnston    Dolly Mlotshwa      Cynthia Ndika
                                                                                          Honest Sinama
                                                                                          Vernon Richard Findlay
                                                                                          Joey Steyn
                                                                                          Corne Basson
                                                                                          Dave Reynolds
                                                                                          Doreen Ross
                                                                                          Gilded Mahane
                                                                                          Leon Steyn
                                                                                          Patrick Mahubela
                                                                                          Paul Roux
                                                                                          Sam Ndou
                                                                                          Shiiko Ramaselele
                                                                                          Allan Gibb
                                                                                          Leslie Albert March
                                                                                          Princess Mpamayi
                                                                                          Sipho Ntshakala
                                                                                          Vincent Mhlongo
                                                                                          Gerald Potgieter
                                                                                          Lingisile Makeleni
                                                                                          Michael David Clark
 20. Miscellaneous item hire (including video         Janet Landley   Michael Xashimba Glen Nosilela
     and car hire)                                                                     Denise Arendse
 21. Truck and plant hire                             Clive Wicks     Nomsa Margaret      Brian Padday
                                                                      Phakati             Riel Leonard
                                                                                          Chris Pienaar
                                                                                          Mathews Mashego
                                                                                          Fritz Ackerman
                                                                                          Tony Bent
                                                                                          John Begent
     CLIENT CARE CHAMBER                              Chairperson     Vice-chairperson Board representative
 22. Beauty treatment (including nail,                Feroza Fakir    Adele Lourens       Elfina Kunene
     skin and health)                                                                     Agnes Williams
                                                                                          Soraya Ismail
                                                                                          Patience Zuze
                                                                                          Louren Choudree
                                                                                          Confidence Nkosi
                                                                                          Chantal Rademan
                                                                                          Doreen Maduane
                                                                                          Ronel Breytenback
                                                                                          Karlien Horn
                                                                                          Brenda Tshepiso Mogane
                                                                                          Lynn Kisser
                                                                                          Freda Motshabi
                                                                                          Jill Reed
                                                                                          Rabia Ceder
                                                                                          Sandra Rath
 23. Other service activities (including commercial                   Not yet appointed

Services SETA
       Annual report 2006
24. Funeral and related activities   Kersie Pillay      David Mafrika        H van der Merwe
                                                                             Basil Mngadi
                                                                             D Fuller
                                                                             Alexander Headbush
                                                                             Vincent Ngoma
                                                                             Yongama Quma
                                                                             Cameron Titi
                                                                             Cecil Gelderblom
                                                                             Shadrack Ningiza
                                                                             Mtavuna Mtsi
                                                                             Dumisani Vantyi
                                                                             Kumbusa Gwiliza
                                                                             Bethwel Jezile
                                                                             Flip Dejager
                                                                             Rey von Ronge
                                                                             Bruce Riley
                                                                             P Mapisa
                                                                             Sipho Sibeko
                                                                             Godfrey Diale
                                                                             Sammy Leshabane
                                                                             Lionel Majosi
                                                                             Moeti Erasmus Mabule
                                                                             Kersie Pillay
                                                                             Philip Zulu
                                                                             Philani Gama
                                                                             Anand Singh
                                                                             Musa Dumisa
                                                                             Collin Peters
                                                                             Patiswa Ndoko
                                                                             Xoliswa Sopapaza
                                                                             Yanga Makhabane
                                                                             Mvuyisi Mente
                                                                             Theo Rix
                                                                             Alwyn Visser
                                                                             Wener van der Merwe
25. Men and ladies hairdressing      Willie Pietersen   Cynthia Mabitle      Cedric George
                                                                             Clive Trezires
                                                                             Derek Wright
                                                                             Hannes Mostert
                                                                             Isaac Philander
                                                                             Lesley Anne Bezuidenhout
                                                                             Lesley Kahn
                                                                             Michelle Goldman
                                                                             Nomaswazi Hlubi
                                                                             Ouma Lentsoana
                                                                             Pamela Galwas
                                                                             Pule Morwe
                                                                             Rev-ann Captieux
                                                                             Sonto Khoba
                                                                             Stephen Delport
                                                                             Ursula Africa
                                                                             Victor Msomi

                                                                          Services SETA
                                                                                 Annual report 2006
Industry profile
      Industry                                                                                                        registered
      Chamber                    Scope            Paying membership companies         Skills required               and NQF level
 Call centre              Caters for the call     11                            Numeracy, literacy,             Contact centre
 management               centre industry                                       computer literacy,              support level 2
 of people                                                                      customer service,               Contact centre
 Direct marketing                                                               team work, marketing            operations level 4
                                                                                strategy, communication         Contact centre
                                                                                and language, problem           management
                                                                                solving, administration,
                                                                                finance, report writing
                                                                                critical thinking

 Direct marketing         Caters for direct        3      7      63      21                                     None
                          (including telesales)
 Event and conference Caters for all event        27                            Numeracy, literacy,             Trade exhibition
 management           management activities                                     computer literacy,              support level 3
 (excluding the       across sectors                                            customer service,               Trade exhibition level 4
 operation of                                                                   team work, marketing
 convention centres)                                                            strategy, communication
                                                                                and language, relation-
                                                                                ship building, project
                                                                                management, health
                                                                                and safety

 Marketing services       Encompasses all         12     26      367     47     Marketing strategy, numeracy,   Marketing and Sales
                          marketing services,                                   literacy, computer literacy     level 4Customer
                          consultants, sales,                                   customer service, team work,    Customer
                          branding, strategy,                                   communication and language,     management level 5
                          direct marketing,                                     relationship building, report
                          among others                                          writing, people management,
                                                                                business ethics,
                                                                                presentation skills
 Labour recruitment       Caters for permanent,   143    120     425     115    Numeracy, literacy, computer    Labour recruitment
 and provision of staff   temporary and private                                 literacy customer service,      consultancy level 4
                          employment services                                   team work, marketing
                                                                                strategy, communication and
                                                                                language, relationship
                                                                                building, report writing,
                                                                                project management,
                                                                                business etiquette
 Marketing research       Caters for the          12      5      57       7     Numeracy, literacy, computer Field marketing
 and public opinion       marketing research                                    literacy, customer service,  research level 4
 polling                  and public opinion                                    team work, marketing
                          polling industries                                    strategy, communication and
                                                                                language, relationship
                                                                                building, report writing,
                                                                                project management, business
                                                                                etiquette, analytical skills
 Estate agencies          Caters for the           6     41      558     146    Numeracy, literacy, computer    Property Technician level 4
 (residential)            residential property                                  literacy customer service,      Property Practitioner
                          industry                                              team work, communication        level 4
                                                                                and language, relationship      Real estate
                                                                                building, business etiquette    practitioner level 5
                                                                                presentation skills,
                                                                                administration and finance
                                                                                work ethic

Services SETA
       Annual report 2006
                                           fully completed
                          No of learners

                                            No of learners
                                            who success-






    Scarce skills
     identified                                                                                                                                   Constraints/
   and NQF level                                                                                                     Highlights                 areas of concern
Call centre operators                      4 726                134          68           18         yes         Qualifications have been             The need for a work
team leader and                                              including                                           internationally bench-               programme has been
supervisory                                                   20 with                                            marked against UK                    identified, which
management and                                                  dis-                                             standards National SiC               would complement
leadership skills                                             abilities                                          code committee has                   the learnership.
                                                                                                                 been formed, with                    A request for more
                                                                                                                 regional association                 structured, specific and
                                                                                                                 representatives                      shorter training
                                                                                                                                                      interventions are required.

Event management           None              N/A               None         None         No                      1 271 marketing learners             A lack of representation of
skills                                                                                                           have been through                    certain sectors on the
                                                                                                                 certification according              governance structure
                                                                                                                 to reports from the                  makes it challenging for
                                                                                                                 certification partner                the Services SETA to
                                                                                                                 since October 2005                   address the needs of these
                                                                                                                 The marketing sector,                sectors
                                                                                                                 through the Services
                                                                                                                 SETA is now an active
                                                                                                                 member of the European
                                                                                                                 Marketing Confederation
                                                                                                                 (EMC) 8 marketing
                                                                                                                 qualifications have been
                                                                                                                 benchmarked in Europe
                                                                                                                 through the EMC
Marketing skills and        356               62                             17           no                     Services SETA instrumental in        Amended labour
business related skills                                                                                          the labour recruitment industry      recruitment consultancy
                                                                                                                 becoming a member of BUSA            learnership not registered
                                                                                                                 Temporary employment                 impacting on learnership
                                                                                                                 services (TES) project               roll-out
                                                                                                                 participation in learnerships
                                                                                                                 offered by other SETAs)
                                                                                                                 in progress
Marketing skills            702             none                             19            2         Yes         1 271 marketing learners have        A lack of representation of
(including brand and                                                                                             been through certification           certain sectors on the
research management                                                                                              according to reports from the        governance structure
                                                                                                                 certification partner since          makes it challenging for
                                                                                                                 October 2005                         the SETA to address the
                                                                                                                                                      needs of these sectors

Marketing skills          2 581              113                 75          10                      Yes         The marketing sector, through the
(including brand and                       learners                                                              Services SETA is now an active
research management                         com-                                                                 member of the European
                                           petent                                                                Marketing confederation (EMC)
                                                                                                                 8 marketing qualifications have
                                                                                                                 been benchmarked in Europe
                                                                                                                 through the EMC

Property related skills                                                                                          Summative assessment tools           Fragmentation of industry
(including commercial                                                                                            have been developed for the          no umbrella body
and residential                                                                                                  level 4 and level 5 qualifications   Lack of PDI training
                                                                                                                 A certification partner has been     providers
                                                                                                                 appointed 200 learners
                                                                                                                 participated in a level 4 property
                                                                                                                 learnership funded by the
                                                                                                                 National Skills Fund
                                                                                                                 The Services SETA is partnering
                                                                                                                 with the EAAB to ensure more
                                                                                                                 effective interventions

                                                                                                                                            Services SETA
                                                                                                                                                   Annual report 2006
       Industry                                                                                                           registered
       Chamber                  Scope              Paying membership companies            Skills required               and NQF level
 Valuers (including      Caters for the            1               41      10      Numeracy, literacy, computer     Auctioneering Support
 auctioneers)            valuations and                                            literacy customer service,       NQF level 2
                         auctioneering industry                                    team work, relationship          Auctioneering Practices
                                                                                   building, business etiquette,    NQF level 3
                                                                                   personal presentation, service
                                                                                   delivery, negotiation skills

 General consulting        Caters for the                 Large   Medium   Small Unknown Team work, people           Team leader, supervisor,
 (including                general                          8       17      421    113 management                    first line manager,
 management                consulting                                                                                small business advising,
 consulting)               industry                                                                                  enterprise resource
                                                                                                                     planning NQF level 5

 Public relations and      Caters for the public            1       1       22       2      Communication and        Public relations
 communication             relations,                                                       and language,            NQF level 4
 management                communication                                                    relationship building
                           management                                                       and people
                           industry                                                         management
 Generic project           Caters for the                  20       25     230       30                              Generic multisector
 management                project management                                                                        project management
 across sectors            industry                                                                                  NQF level 4
 Property                  Caters for the                  20       30     327       84     As estate agency         Property technician,
 management                commercial property                                                                       property practitioner,
                           industry                                                                                  real estate practitioner
                                                                                                                     NQF level 4
 Other business            Caters for business             10       26     422       59     Business etiquette,      Secretarial and admini-
 activities (including     activities (including                                            communication and        stration NQF level 2, 3,4;
 administrative and        administrative and                                               language, computer       payroll administration
 secretarial)              secretarial)                                                     literacy, customer       NQF level 4, 5, fundraiser
                                                                                            service                  NQF level 4, corporate
                                                                                                                     governance NQF level 4
 Business services         Caters for the                  34       81     2 110    260     Business etiquette,      Customer management
 NEC                       business services                                                communication and        NQF level 5
                           industry which is not                                            language, computer
                           classified in                                                    literacy, customer
                           other chambers                                                   service

 Associations,             Caters for,                      7       10      55       16                              Labour relations
 federations and           associations                                                                              administration,
 umbrella bodies,          federations,umbrella                                                                      NQF level 5
 (including                bodies and
 professional bodies)      professional bodies
 Quality management        Caters for quality               6       5       77       21                              None
 and related services      management

 Mail handling and       Caters for postal         75      5       24      12      Mail handling and                Mail handling NQF
 courier services        services, mail handling                                   sorting; customer                level 3; mail handling
                         and distribution and                                      service                          NQF level 4
                         courier services
 National postal         Caters for postal         1       2       9        6      Teller skills; post              Frontline services NQF
 activities              business (including                                       banking skills;                  level 4; frontline service
                         retail; services and                                      customer service’s               management NQF
                         post banking)                                             frontline skills                 level 5

Services SETA
       Annual report 2006
                                           fully completed
                          No of learners

                                            No of learners
                                            who success-






       Scarce skills
        identified                                                                                                                                      Constraints/
      and NQF level                                                                                                        Highlights                 areas of concern
Marketing skills           None               n/a              n/a        n/a                      no          Been through certification       A lack of representation
(including commercial                                                                                          according to reports from the    of certain sectors on the
and residential)                                                                                               certification partner since      governance structure
                                                                                                               October 2005                     makes it challenging for
                                                                                                               The marketing sector, through    the SETA to address the
                                                                                                               the Services SETA is now an      needs of these sectors
                                                                                                               active member of the European
                                                                                                               Marketing confederation (EMC)
                                                                                                               8 marketing qualifications
                                                                                                               have been benchmarket in
                                                                                                               Europe through the EMC
Team leader                 560               48              222          68                                  Learners have                    The certification partner is
NQF level 4, supervisor                                                                                        completed the                    not yet up and running.
NQF level 4, first line                                                                                        learnerships                     Provider non-compliance
manager NQF level 5                                                                                                                             issues are also delaying FSA
                                                                                                                                                and certification of the
                                                                4           1                        1         Learners were not                Provider compliance issues
                                                                                                               exposed to sufficient            are delaying the process of
                                                                                                               theoretical training and         certification of learners. The
                                                                                                               assessment                       certification partner is also
                                                                                                                                                not yet in place
                                               2             None         None                     859         Learners have                    Provider compliance issues
                                                                                                               completed the                    are delaying the process of
                                                                                                               learnership                      certification of learners
Generic multisector         998              105               75          11                      28          Learners have                    Provider compliance issues
project management                                                                                             completed the                    delaying and holding up the
                                                                                                               learnership                      process of certification

NSF 200 property                                             None         None                                 Learners have completed          The certification partner is
learner project                                                                                                the learnership                  not yet in place

Secretarial and             153               73              131          46                      18          Learners have completed          Provider compliance issues
administration                                                                                                 the learnership                  are delaying and holding up
NQF level 2, 3, 4,                                                                                                                              the process of certification
payroll administration
NQF level 4, 5

                                               3                0         None           1                     The qualification was            Inadequacy of accredited
                                                                                                               registered well in time          providers as well non-
                                                                                                               before commencement              compliance by education and
                                                                                                               with implementation              training providers partici-
                                                                                                                                                pating in the learnership
                                                                          None                                 Learners have completed          The certification partner is
                                                                                                               the learnership within           not yet in place and still in
                                                                                                               the stipulated time frame        the process of developing
                                                                                                                                                and putting into place the
                                                                                                                                                required infrastructure
Mail handling skills       None             None               21          10          50            5         RPL pilot programme              Abet need. Insufficient
at NQF level 3, mail                                                                                                                            organised business
handling skills at NQF                                                                                                                          representation nationally
level 4
Frontline services at      None              110               35          20          50            5         RPL pilot programme in           Insufficient organised
NQF level 4; frontline                                                                                         industry distance learning       business representation.
service management                                                                                             training                         Initiating and
at NQF level 5                                                                                                                                  implementing appropriate
                                                                                                                                                international reciprocity

                                                                                                                                          Services SETA
                                                                                                                                                 Annual report 2006
           Industry                                                                                                        registered
           Chamber                        Scope              Paying membership companies       Skills required           and NQF level
 General cleaning                Caters for contract         85      82     185      33    Abet skills basic and     Hygiene and cleaning
                                 cleaning, carpet and                                      advanced cleaning         NQF level 1; laundry
                                 upholstery, dry clean-                                    skills; supervisory and   and dry cleaning NQF
                                 ing and laundry, supply                                   operational skills        level 1; hygiene and
                                 of cleaning equipment                                                               cleaning NQF level 2;
                                 and chemicals, car                                                                  hygiene and cleaning
                                 wash and valet,                                                                     NQF level 3
                                 window cleaning and
                                 other specialised
                                 cleaning methods

 Miscellaneous item              Caters for hiring           10      12     128      35    Adult basic education     Hiring support services
 hire (including video           services (including                                       and training, plant and   NQF level 3; hiring
 and car hire)                   video and car hire)                                       equipment operators,      support services NQF
                                                                                           hiring sales              level 4
                                                                                           administrators and
                                                                                           hiring support staff

 Truck and plant hire            Caters for hiring           10      21     124      23    Adult basic education
                                 services (including                                       and training, plant and
                                 truck and plant hire)                                     equipment operators,
                                                                                           crane operators, hiring
                                                                                           sales administrators
                                                                                           and hiring support
 Beauty treatment                Caters for all nail, skin    3       9      65      17    Cosmetology, health    1. National certificate in
 (including nail, skin           and health related                                        and skincare therapy,     beauty technology
 and health)                     industries                                                sound communication       NQF level 3
                                                                                           numeracy and literacy, 2. Further education and
                                                                                           good retailing skills     training certificate in
                                                                                                                     beauty technology
                                                                                                                     NQF level 4
                                                                                                                  3. Further education and
                                                                                                                     training certificate
                                                                                                                     in nail technology
                                                                                                                     NQF level 4
 Other service activities        Caters for commercial       25      47     1 344   191
 (including commercial           services and other
 services)                       services not elsewhere
 Funeral and related             Caters for all funeral       3       5      43      11    Funeral practitioner      National certificate in
 activities                      related services                                          skills, confidentiality   funeral service practice
                                 (including funeral                                        counselling               NQF level 3, national
                                 directors, embalming                                                                funeral service practice
                                 and other funeral                                                                   NQF level 4, National
                                 services)                                                                           diploma in funeral
                                                                                                                     directing NQF level 5
 Men and ladies                  Caters for all               2       6     121      23    Communication,            National certificate in
 hairdressing                    hairdressing related                                      hairdressing,             hairdressing NQF level 2,
                                 services for Afro and                                     retailing                 national certificate in
                                 Caucasian hair                                                                      hairdressing NQF level 3,
                                                                                                                     national certificate in
                                                                                                                     hairdressing NQF level 4

Services SETA
       Annual report 2006
                                               fully completed
                              No of learners

                                                No of learners
                                                who success-






       Scarce skills
        identified                                                                                                                                      Constraints/
      and NQF level                                                                                                         Highlights                areas of concern
Hygiene and cleaning skills   Generic             500              50           30          100          15        Successful ABET pilot         3 209 learners of hygiene
at NQF level 1, 2 and 3         team                                                                                                             and cleaning learnership
                               leader                                                                                                            NQF level 1. 334 employed
                                com-                                                                                                             learners, and 2 873 un-
                               pleted                                                                                                            employed learners in
                              hygiene                                                                                                            hygiene and cleaning
                                 and                                                                                                             learnership. 150 cleaners
                              cleaning                                                                                                           successfully completed
                              learner-                                                                                                           adult basic education
                                 ship                                                                                                            training certification. 40% of
                                 NQF                                                                                                             250 delegates successfully
                               level 1                                                                                                           completed evidence collec-
                                                                                                                                                 tion facilitation training.
                                                                                                                                                 891 learners have been
                                                                                                                                                 deemed competent on
                                                                                                                                                 hygiene and cleaning NQF
                                                                                                                                                 level 1
Hiring support services;         150             None              40           20           40           5        Pilot learnership in hiring   Insufficient industry
hiring operation              learners                                                                             support to roll out           representation for
                                  on                                                                                                             miscellaneous item hire.
                                hiring                                                                                                           An overall professional body
                              support                                                                                                            needs to be formed. SME
                              services                                                                                                           exclusion from skills levy
                               level 3
Plant and crane operators        110             None              40           20           40           5        Pilot of 100 learners in      Abet essential. Limited
                              learners                             40           20           40                    plant operations NQF 2.       interest from training
                              on plant                                                                             Simulators developed ADT      providers
                               opera-                                                                              and TLB
                               level 2
Retailing                      Huge              None              17                                              International reciprocity     Industry fragmented in
                              potential                                                                            acknowledgement               terms of CHE learners and
                                                                                                                                                 vocational students

Embalming                      Huge              None              13            1                                                               Lack of accredited training
                              potential                                                                                                          providers

Multiskilling                  1 001              731                           45           28                    International reciprocity     Industry’s resistance to
                                                                                                                   agreement signed              fundamental incorporated in

                                                                                                                                           Services SETA
                                                                                                                                                  Annual report 2006
National skills
National Skills Fund
One thousand learnership project
Scarce skills   NQF
identified      Level             Size           Target           Duration    Highlights                 Constraints
Call centre     2                 800 learners   Rural learners   1 year      Indenturing the full       Delays in the arrival
                                                                              intake of 800 learners.    of NSF funds for
                                                                              Exposed rural learners     the commencement
                                                                              to high tech               of the project.
                                                                              sophisticated call         Sourcing workplaces
                                                                              centres in South Africa.   in rural areas.
Property        4                 200 learners   Rural learners   1 year      Indenturing the full       Shortage of black
                                                                              intake of 200 learners.    recruitment agencies.
Learner allocation

No    Lead employer                                                          Allocation
      Property learnership
 1    Institute of training excellence/SAPOA                                       200
      Call centre learnership
 1    Rand International Management and Training Consultants                        50
 2    I-Fundi                                                                       70
 3    Association for the disabled: Free State                                      30
 4    South African Association for the Blind                                       15
 5    Capital outsourcing                                                           45
 6    M & M Consulting CC                                                          100
 7    Adcorp Holdings (Pty) Limited                                                100
 8    Calling the Cape                                                             100
 9    Kelly, a division of logical option staffing                                  50
10    Boston City Campus and Business College                                       50
11    Ulwazi Research                                                               70
12    Institute of Training Excellence                                             120
      Total                                                                        800

Services SETA
       Annual report 2006
SMEs                                Size
                                    The SME sector covers over 90% of the non-paying members
                                    of the Services SETA.

                                    Registration of SME qualification
                                    The new venture creation learnership at NQF level 4 has been
                                    re-registered. Providers are required to re-align to the new

                                    New venture creation learnership grant
                                    The SME Chamber has increased the new venture creation
                                    learnership grant to R20 000.

                                    SME training report claim
                                    A total of 1 096 levy paying SMEs have submitted SME
A total of 1 096 levy paying SMEs   training report claims form.

                                    Training providers
have submitted the SME training     There are 30 providers provisionally accredited on the new
                                    venture creation learnership at NQF level 4. There is also a list
                                    of FET colleges that have MoUs with the SETQAA in terms of
report claim form                   NVC.

                                    106 new venture creation assessors are registered.

                                    SME Advisory Board
                                    The SME Advisory Board has been established to guide the
                                    sector on SME initiatives.

                                                                 Services SETA
                                                                        Annual report 2006
Disability report
                            Number of learners
Lead employer                  Learnership                                 NQF Level   with disabilities            Region
Boston                               Secretarial and Administration               4                  30            Gauteng
                                                                                                     10                WC
                                                                                                     10               KZN
Boston                               Project management                           4                   5            Gauteng
Boston                               Supervisor                                   4                   5            Gauteng
Boston                               Team leader                                  3                   3            Gauteng
Workforce                            Team leader                                  4                  20            Gauteng
Workforce                            Supervisor                                   4                  15            Gauteng
Phaphama                             Team leader                                  4                   6               KZN
Phaphama                             Supervisor                                   4                   5               KZN
Ezra Coiffure                        Ladies hairdressing                          4                   1                WC
Ezra Coiffure                        Ladies hairdressing                          2                   1                WC
Ezra Learnsys                        New venture creation                         4                  20            Gauteng
SESTO                                Secretarial and administration               4                   2            Gauteng
DESTO                                New venture creation                         4                  50            Gauteng

Allocations and learnerships have been made in the following skills programmes:

a)   New venture creation
b)   Call centre
c)   Secretarial and administration
d)   Project management
e)   Labour recruitment
f)   Afro and hair dressing
g)   Postal services
h)   Hygiene cleaning
i)   Team leader
j)   Supervisor

Gainful employment and learners who have started their own businesses (employment grant details)

                            Number of learners
Learnership                 gainfully employed                 Period         Industry/Company             Fully employed
NVC QASA CT                 2                                  12 months      Hair salon
                                                                              (Own business)
NVC QASA CT                 3                                  12 months      Computer company
                                                                              (Own business)
NVC QASA CT                 3                                  12 months      Brick making
                                                                              (Own business)
NVC QASA Jhb                12                                 7 months       Start-up capital
                                                                              funded by QASA
Project management          35                                 8 months       Eskom                        20
Project management          11                                 6 months       City of Joburg
Project management          1                                  Full-time      MQA

Services SETA
       Annual report 2006
Partnerships                                                          Stakeholder Interaction
• The department has made good progress in establishing               A very successful conference was held at Sandton Convention
  relationships with disability federations and has                   Centre on 28 October 2005. The attendance was 550 the
  successfully placed learners to some of the organisations           majority being people with disabilities. Another successful
  for example Quadriplegics Association of South Africa,              workshop was held in Polokwane with 200 delegates from
  South African National Council for the Blind and the
                                                                      the disability sector, government and private sector on
  Association for People with Disabilities to name just a few.
                                                                      22 November 2005.
• We have created an awareness and held forums with
  organisations and government departments such as Eskom,
  Rand Water, MT and Alexander Forbes, DoL, Social                    The following activities were held to further enhance the
  Development, Joburg City Council, DoE, Social Services,             activities of the disability sector:
  Education and Health in Gauteng
• We have established a disability family within SETAs by             Date                 Workshop                Number of
  forming the inter-seta disability forum whose aims include                                                       delegates
  addressing synergies and imparting knowledge on lessons                                                          attending
                                                                      18/05/06             Inter-Sectoral
NSF Funded Activities                                                                      Disability Forum        20
M&M           Call centre        40    Gauteng         Total          24/05/06             Disability Charter      25
                                 30    N West           100           25/05/06             PESTEL Workshop         25
                                 30    E Cape
NCBSA         Call centre        15    Gauteng           15
APD           Call centre        30    Free State        30

The total number of learners in funded learnerships for the
2005/6 financial year is 328.

Relationship Building
The Services SETA has established a Disability Advisory Board where the following members contribute towards the skills
development needs identified by the sector for people with disabilities.

Disability Advisory Board Representatives
                            Province                    Chamber                                                 Organisation
Repre-                      repre-                      repre-                          Type of                 repre-
sentative                   sented                      sented                          disability              sented
Ari Seirlis                 KZN                         New
                                                        creation                        Quadriplegic            QASA
Tshabalala                  Gauteng                     Management                      Paraplegic              Thabo Mbeki Trust

Mabunda                     Gauteng                     Management                      Paraplegic              APD

Molala                      Gauteng                     Business                        Visual
                                                                                        impairment              SANCB
Ariefdiem                   WC                          Management                      Paraplegic              Altitude

Philander                   WC                          Client Care                     Quadriplegic            QASA

Nkwashu                     Gauteng                     Business                        Physical                NCPPDSA

                                                                                                   Services SETA
                                                                                                          Annual report 2006
ETQA and                           SETQAA and Learnerships Monitoring and
                                   Implementation division
                                   The ETQA and Learnerships division comprises six discrete

Learnerships                       and focused units:
                                   • Accreditation National
                                   • ETQA regional operations
                                   • The registrar’s directorate
                                   • The quality promotions directorate
                                   • The learnerships monitoring and implementation directorate
                                   • Learnerships and skills programmes development division

                                   This ensures a holistic approach is implemented across all
                                   learning that takes place in the services sector – from full-time
                                   students to part-time students and those on learnerships.

                                   These directorates are steadily growing, with new
A total of 8% training providers   methodologies continually being developed and implemented
                                   as one would expect in the new and emerging SETA universe.

were re-accredited and 92% were
                                   1. Accreditation National and Regional
                                      Operations directorates:
awarded recorded status            (a) Accreditation National
                                   The accreditation division again surpassed its targets. In
                                   January 2005, it embarked on a major provider re-
                                   accreditation initiative. This was conducted internally; regional
                                   ETQA officers and accreditation officers evaluated each
                                   provider’s application and issued evaluation reports to
                                   providers. The activity was carried out over and above the
                                   officers’ daily functions.

                                   • A total of 1 030 self-evaluation questionnaires (SEQs) were
                                     sent out to providers.
                                   • 866 providers submitted completed questionnaires.
                                   • 866 SEQs were evaluated and reports issued.

                                   Of the total applications, 8% of providers received re-
                                   accreditation and 92% were awarded recorded status. With
                                   the involvement of the officers in assisting providers, the
                                   number of accredited providers increased drastically. As a
                                   result, between 1 May and December 2005, 532 were awarded

Services SETA
       Annual report 2006
End of March 2005                                                  Accreditation division statistics

                                                                      Statistics ETQA – 2005
    Recorded versus re-accredited – National

                                                                                                                                    3 834


                                                                                                          1 966
                                                                                  1 868

                                                                         Total submissions       Total submissions        Total submissions
                                                                             processed               processed                processed
A total of 470 training providers have been monitored.                  January – June 2005     July – October 2005    January – October 2005

The availability of registered constituent assessors and
moderators is pivotal to enable learners to achieve the desired
outcomes on our learnerships and qualification courses. To           Statistics ETQA – March 2006
ensure that the numbers of registered constituent assessors
and moderators increase, the accreditation division has
assumed responsibility for the evaluation of the registration of

assessors and moderators’ applications. This has decreased
the evaluation process from eight to four weeks.

                                                                              Total submissions                     Total number of
                                                                                  processed                       accredited providers
                                                                            January – March 2006                   as at March 2006

                                                                   (b) ETQA Regional Operations
                                                                   The implementation of a regional ETQA strategy in 2003 – in
                                                                   which the Services SETA ETQA placed ETQA officers in each of
                                                                   our regional offices – has contributed to the success of the
                                                                   this division and the strategy is continually refined. Currently,
                                                                   the ETQA regional operations division has 12 staff in six
                                                                   regional offices serving nine regions. Regional ETQA officers

                                                                                                      Services SETA
                                                                                                             Annual report 2006
are based in Cape Town, Port Elizabeth, East London,                 Currently, we have 625 providers who have been awarded
Bloemfontein, Durban and Johannesburg.                               recorded status nationally.

The primary role of the regional ETQA staff is to assist             The number of providers assisted in our pre-accreditation
providers with accreditation, and assessors and moderators           workshops has also grown from 38 at inception in 2003 to
with registration. Other major activities include the baseline       2 679 by March 2006.
assessment project which was carried out on learners
participating in NQF Level 4 learnerships with the Services
                                                                        Providers assisted via pre-accredited workshops
SETA, the re-accreditation of training providers within
SETQAA, the introduction of an online internet-based
application for accreditation, coordination of accredited

                                                                                                                                2 679
provider forums, the coordination of a national hairdressing

                                                                                                              2 423
road show, the implementation of the ISO standard,
distribution of accreditation certificates for providers and
registration certificates for assessors and moderators.

                                                                                            1 453
The major administration function of regional ETQA staff is the
implementation of recording procedures for providers,
facilitating their accreditation and the registration of assessors

and moderators in the services sector.                                      2003          2004              2005        2006

Recorded providers status
Recorded status is attained after the SETQAA evaluation team
has found that a provider of education and training has the          The number of providers benefiting from our accredited
potential and capability to deliver quality education and            provider forum has also increased from 142 in 2004 to 1 179
training in line with the minimum criteria specified by SAQA.        by March 2006.

The facility has been instituted by the Services SETA ETQA to           Providers benefiting from accredited
accommodate providers offering short courses that are not               provider forum
aligned to SAQA-registered unit standards and/or

                                                                                                                        1 179

The number of providers falling within SETQAA’s primary
focus has increased steadily over the last four years from
3 278 in 2003 to 6 489 by March 2006.

   SETQAA primary focus provider statistics
                                                                               2004                 2005              2006
                                                      6 489
                                        6 184

                                                                     The number of providers that use our face-to-face
                                                                     consultation facility has risen from 531 in 2003 to 1 614 by
                         4 925

                                                                     March 2006.
           3 278

        2003          2004            2005          2006

Services SETA
       Annual report 2006
                                                                  3. Quality Promotions directorate
   Providers that use face-to-face consultations                  The Quality Promotions Unit of SETQAA focuses on two main
                                                                  • Memorandum of understanding intervention

                                                    1 614
                                                                  • Quality assurance of learner achievements (tracking learner
                                                                    achievements, quality assurance of internal moderation
                                                                    reports, external moderation, final summative assessment

                                      1 067
                        824                                         and verification activities)

                                                                  3.1 (a) The memorandum of understanding

                                                                  ETQA bodies are accredited with SAQA and assigned functions
                                                                  under section 5(1)(b)(i) of the SAQA Act as bodies responsible
        2003          2004          2005         2006
                                                                  for accreditation, monitoring and auditing achievements in
                                                                  terms of national standards and qualifications. Each
                                                                  accredited ETQA is assigned to perform these functions for
This brings the total number of providers assisted with           specific qualifications, thus fulfilling the role of custodian for
accreditation to 5 472.                                           the qualifications for which they are accredited.

2. Learnerships Monitoring and Implemen-                          ETQA regulations also state that a provider may only be
                                                                  accredited with one ETQA. However, since education and
   tation directorate:
                                                                  training providers usually offer training for various sectors,
1. Learnership performance against targets
Our performance in relation to targets has been successful as     their learning programmes tend to cut across the scope of
we achieved our mandatory and operational learnership             various ETQAs, making it impossible for them to be adhere to
targets set for ourselves by March 2004.                          this requirement. To address this problem, ETQAs enter into
                                                                  agreement by signing a memorandum of understanding,
2. Implementation and monitoring challenges                       which outlines an agreed framework of cooperation and
We are now entering the maintenance phase of existing             collaboration. This enables providers and levy-paying member
learnerships and our main objective is to add quality to these    companies to achieve the following:
learnerships. Accordingly, the ETQA division has appointed        • Education and training providers can obtain approval for
learnership monitoring bodies to assist in monitoring                those learning programmes that fall outside the scope of the
programmes nationally to:                                            SETA with which they are accredited (primary focus ETQA).
• Oversee the management of the implementation of                 • Levy-paying member companies that wish to participate in
  learnerships by coordinating, monitoring and tracking the          learnerships (playing the role of employer) can do so,
  responsibilities of the employer/lead employer, providers          regardless of which SETA ETQA the learnership is registered
  and learners.                                                      with.
• Comprehensively report on all aspects of the
  implementation.                                                 To date, SETQAA has signed 32 memorandum of
• Create, update and keep records on learner applications,        understanding agreements with various ETQAs, and has
  learnership agreements, learner employment contracts,           successfully implemented the memorandum intervention with
  learner allowances and learner achievements record/             all parties. Eighty of Services SETA’s primary focus providers
  database.                                                       have participated in programme approval through this
                                                                  intervention, and 361 providers that have primary focus
The monitoring bodies are also responsible for facilitating any   accreditation with other ETQAs have engaged with SETQAA for
dispute resolution on site between learners and employers         programme approval.
regionally and reporting back to the Services SETA.
Appropriate training has been scheduled to equip the Services
SETA regional boards in dispute resolution.

                                                                                                Services SETA
                                                                                                       Annual report 2006
3.1 (b) Signed memorandum of understanding agreements – April 2006
Type of
organisation   Name of ETQA body                                                                        Date
SETA ETQA      Banking Sector Education and Training Authority (BANKSETA)                               25 October 2001
SETA ETQA      Construction Education and Training Authority (CETA)                                     3 December 2003
GENFETQA       Council for Quality Assurance in General and Further Education and Training (UMALUSI)    10 October 2005
SETA ETQA      Chemical Industries Education and Training Authority (CHIETA)                            25 April 2003
SETA ETQA      Clothing, Textiles, Footwear and Leather Sector Education and Training Authorities (CTFL) 24 April 2003
SETA ETQA      Diplomacy, Intelligence, Defence and Trade Education and Training Authority (DIDTETA)    13 November 2003
of education   Eastern Cape Department of Education                                                     20 April 2004
SETA ETQA      Education, Training and Development Practices Sector Education and Training Authority
               (ETDP SETA)                                                                              30 March 2006
SETA ETQA      Energy Sector Education and Training Authority (ESETA)                                   25 March 2004
SETA ETQA      Financial and Accounting Services Sector (FASSET)                                        28 October 2003
SETA ETQA      Forest Industries Education and Training Authority (FIETA)                               29 June 2004
SETA ETQA      Food and Beverages Manufacturing Industry Sector Education and Training Authority
               (FOODBEV SETA)                                                                           14 July 2003
of education   Free State Department of Education                                                       4 August 2003
of education   Gauteng Department of Education                                                          4 May 2004
SETA ETQA      Health and Welfare Sector Education and Training Authority (HWSETA)                      17 November 2003
SETA ETQA      Insurance Sector Education and Training Authority (INSETA)                               18 June 2004
SETA ETQA      Information Systems Electronic Telecommunication Technologies (ISETT)                    24 June 2003
department     KwaZulu-Natal Provincial Department of Education                                         8 March 2004
SETQA ETQA     Local Government and Water-Related Services Sector Education and Training Authority
               (LG SETA)                                                                                2 June 2005
SETA ETQA      Media, Advertising, Publishing, Printing and Packaging Sector Education and Training
               Authority (MAPPP SETA)                                                                   30 January 2004
SETA ETQA      Manufacturing, Engineering and Related Services SETA (MERSETA)                           30 April 2003

Services SETA
       Annual report 2006
Type of
organisation   Name of ETQA body                                                                    Date
department     Mpumalanga Department of Education                                                   31 May 2004
SETA ETQA      The Mining Qualification Authority (MQA)                                             18 January 2005
department     Northern Cape Department of Education                                                15 August 2003
department     North West Education Department                                                      20 June 2004
body           Professional Accreditation Body (PAB)                                                29 June 2003
SETA ETQA      Primary Agriculture Education and Training Authority (PAETA)                         21 June 2004
SETA ETQA      Police, Private Security, Legal and Correctional Services (POSLEC SETA)              25 April 2003
SETA ETQA      Public Service SETA (PSETA)                                                          18 June 2004
body           South African Board for Personnel Practices (SABPP)                                  12 July 2005
SETA ETQA      Transport Education and Training Authority (TETA)                                    24 June 2003
SETA ETQA      Tourism, Hospitality and Sport Education and Training Authority (THETA)              1 December 2003
department     Western Cape Education Department                                                    8 August 2003
SETA ETQA      Wholesale and Retail SETA (W&R)                                                      15 January 2003

                                                                                         Services SETA
                                                                                                Annual report 2006
3.1 (c) Agreements In the process of finalisation –           3.2 Quality assurance of learner achievements
        April 2006                                            3.2 (a) Certification partners appointed
                                                              • BDTCC             = Marketing qualifications
Type of
                                                              • African Blue Sky = Postal qualifications
organisation    Name of ETQA body
                                                              • Prodigy           = Labour recruitment and property
Provincial                                                                          qualifications
education                                                     • Izihambi          = Project management
department      Northern Province Education Department
Educational and                                               3.2 (b) External Moderation of Providers
training sub-                                                 QALA activity                                         Total at
system sector Council on Higher Education (CHE)                                                                   April 2006
Professional                                                  • Number of training providers externally
body                                                            moderated                                                36
(statutory)     South African Pharmacy Council (SAPC)
                                                              • Number of training providers being
SETA ETQA       (Accommodating SETASA in the MoU                externally moderated                                     22
                agreement signed with PAETA as these          • Number of training providers verified                    14
                parties went through a merger and became
                Agri SETA)                                    • Number of training providers being verified              11

SETA ETQA      (Signing a new agreement with SASSETA
               since DIDTETA and POSLEC SETA merged           Number of learners approved for certification
               and became SASSETA)                                                                         NQF         Total
                                                              Qualification/Learnership                   level     learners
3.1 (d) Programme approval through memorandums of             Business Services Chamber
                                                              Business administration                         4           54
At the end of February 2006, SETQAA had received 185
learning programmes from training providers accredited with   Business administration                         3           39
ETQAs with which SETQAA has entered into agreement;           Generic business management                     4           17
SETQAA evaluated 176 of the 185 learning programmes and
awarded ‘provisional accreditation’ status to 116             Secretarial and administration                  3           61
programmes.                                                   Payroll administration                          4           25
                                                              Cleaning Services Chamber
However, implementation of the intervention becomes more
challenging where SETQAA forwards learning programmes on      Commercial cleaning                             1          985
behalf of its primary focus providers to other ETQAs for      Domestic Services Chamber
approval. At the end of February 2006, SETQAA had forwarded
                                                              Domestic services                               1        1 226
1 053 learning programmes for approval through this
intervention to various ETQAs that entered into agreement     Labour Recruitment Chamber
with SETQAA, but disappointingly only 80 were evaluated by    Labour recruitment consultancy                  4           62
these ETQAs. SETQAA primary focus providers are therefore
currently being disadvantaged due to the lack of proper       Labour relations                                5            1
implementation by other ETQAs.                                Marketing Services
                                                              Contact centre                                  2          158
3.1 (e) Learnership implementation through memo-
         randums of understanding                             Contact centre management                       4            5
The procedures and mechanisms in place for learnership        Customer management                             4            2
implementation through the memorandum intervention have
been tested and proven successful. However, there have been   Sales and marketing                             4          294
numerous problems as parties implementing the learnerships    New Venture Creation
failed to adhere to due process.
                                                              PEC pilot project                               4          506
                                                              Project Management
                                                              Project management                              4          177
                                                              TOTAL                                                    3 612

Services SETA
       Annual report 2006
4. Registrar                                                    9. Payroll                                                    5
The purpose of this report is to outline developments in the   10. Contact centre                                             2
financial year 2005/2006.                                      11. Contact centre                                             4
                                                               12. Contact centre                                             5
Scope                                                          13. Customer management                                        5
a. Qualifications and unit standards                           14. Customer management                                        4
b. Learnership registration                                    15. Marketing communication                                    5
c. Assessor registration                                       16. Marketing communication                                    4
d. Moderator registration                                      17. Marketing management                                       4
e. Verifier registration                                       18. New venture creation                                       4
f. Registration of final summative assessment tools            19. Laundry and dry cleaning                                   1
g. Registration of RPL tools
h. Registration of service providers                           (b) Learnership registration
i. Certificates issued                                         57 learnerships are registered by the Department of Labour

(a) Qualifications and standards                                                                                     NQF level
65 qualifications and their unit standards have been           The following learnerships will be de-registered because of the
registered                                                     registration end date of their associated qualifications:
To date, 13 qualifications have expired:                       • Afro hairdressing                                           4
                                            NQF level          • Ladies hairdressing                                         4
• Field marketing research                          4          • Field marketing research                                    4
• Labour recruitment consultancy                    4          • Hygiene and cleaning                                        1
• Generic multi-sector project management           4          • Field marketing research                                    4
• Contact centre support                            2          • Labour recruitment consultancy                              4
• Contact centre operations                         4          • Contact centre support                                      2
• Contact centre management                         5          • Contact centre operations                                   4
• Customer management                               5          • Contact centre management                                   5
• Customer management                               4          • Customer management                                         5
• Brand leadership                                  5          • Customer management                                         4
• Marketing communications                          4          • Brand leadership                                            5
• Laundry and dry cleaning                          1          • Marketing communications                                    4
• New venture creation                              4          • Laundry and dry cleaning                                    1
• Hygiene and cleaning                              1          • New venture creation                                        4
• Funeral service practice                          3          • Administration                                              2
• Funeral service practice                          4          • Administration                                              3
• Diploma: funeral directing                        5
• Management                                        3          (c) Registered assessors
• Management                                        4          Total of registered assessors – 1 261
• Business administration                           2
• Business administration                           3          Business Management Chamber
                                                               • Labour recruitment                            72 registered
61 qualifications were granted quality assurance status        • Marketing Chamber                            290 registered
by SAQA                                                        • Property                                      41 registered

20 qualifications are pending for review                       Management Services Chamber
                                                 NQF level     • Project management                         118 registered
 1. Marketing research                                   4     • Public relations, secretarial, management: 438 registered
 2. Cleaning                                             1
 3. Labour recruitment consultancy                       4     Client Care Chamber
 4. Management                                           3     • Personal care                                 85 registered
 5. Management                                           4
 6. Administration                                       2     Commercial Service Chamber
 7. Administration                                       3     • Cleaning and hiring                           29 registered
 8. Payroll                                              4     • Postal                                        15 registered

                                                                                           Services SETA
                                                                                                  Annual report 2006
Domestic Chamber                                                                                                 NQF level
• Domestic services                           141 registered   •   Diploma: marketing communications                     5
                                                               •   Customer management                                   5
(d) Registered moderators                                      •   Real estate                                           4
Total of registered moderators – 233                           •   Contact centre support                                2
                                                               •   Small business advising                               4
Management Services Chamber                                    •   New venture creation                                  4
• Labour recruitment:                          13 registered   •   Ladies hairdressing                                   4
• Property                                      7 registered   •   Business systems operations                           4
• Marketing                                    58 registered   •   Afro hairdressing                                     4

Domestic Chamber                                               (f) RPL (recognition of prior learning) tools registration
• Domestic                                     24 registered   12 RPL tools have been registered

Commercial and Industrial Services Chamber                     •   New venture creation                                 2
• Cleaning and hiring                      29 registered       •   Business administration                              3
• Postal                                   15 registered       •   Labour relations practice                            5
                                                               •   Project management                                   4
Management Services Chamber                                    •   Small business advisor                               4
• Project management                           24 registered   •   Business administration                              2
• Public relations, secretarial, management    84 registered   •   Management (team leader)                             3
                                                               •   Contact centre support                               2
Client Care Services Chamber                                   •   Customer management                                  4
• Personal care                                 4 registered   •   Business administration service                      4
                                                               •   Management                                           5
Verifier Registration                                          •   Project management                                   4
• Verifiers                                     0 registered
                                                               (g) Certification
(e) IFSA tools registration (integrated final assessment)      • Learner certificates issued                        8 130
18 IFSA tools registered                                       • Assessor certificates issued                         590
                                                 NQF level     • Moderator certificates issued                         97
• Business administration                                4     • Provisional accreditation certificates issued        486
• Management                                             4
• Labour recruitment                                     4
• Project management                                     4
• Payroll administration                                 4
• Business consulting                                    4
• National certificate operations                        4
• Customer management                                    4
• Marketing communications                               4

Services SETA
       Annual report 2006
5. Special projects                                                        qualification after school. The learning programme includes
The following pilot projects are currently being managed by                facilitator guides, learner notes and assessment instruments
SETQAA:                                                                    and materials such as learner logbooks.

5.1. School Pre-Learnership Project (SPLP)                                 The material was developed to be presented in two-hour
Many learners currently entering learnerships are not                      sessions.
successfully completing the programme due to poor
preparation for the world of work. As a result, employers are              The programme consists of 39 sessions and focuses on
not seeing the benefits and may withdraw their support from                aspects such as:
the programme, despite its potential.                                      • Contracting: terms and conditions
                                                                           • Life skills
Services SETA has identified specific gaps in learners’ basic              • Personal responsibility and accountability
knowledge that heighten the likelihood of failure when entering            • How do I learn
into learnerships. The Services SETA’s School Pre-Learnership              • How does a business work (business environment and
Project (SPLP) was initiated to create a pathway between the                 structure)
world of schooling and the world of work. The pilot project has            • Communication (introduction, oral, reading, written,
been introduced as an extra-mural or after-school activity to                telephone techniques)
combine the fundamental and core components of SSETA                       • Customer service (introduction, customer needs, improving
learnerships with corresponding sections of the FET national                 customer service, dealing with customers)
curriculum statements.                                                     • Personal marketing and effectiveness
                                                                           • Developing your CV and interviewing skills
The key objective of the project is:                                       • Business administration (policies and procedures, arranging
                                                                             meetings, minor events and travel arrangements, document
To determine if a pre-learnership programme within the school context        management)
will better prepare learners to enter the world of work after completing   • Mathematical literacy
their formal schooling.                                                    • Finance (basic budgeting and interpreting financial
This pre-learnership programme started in October 2004 at                  • Quality and performance standards
52 schools in all nine provinces in South Africa. To date, it has          • Productivity and time management
offered a foundational training programme that familiarises                • Knowledge, skills, attributes and habits (KASH) needed in
4 800 learners with generic workplace functions and                          the workplace
processes: it is thus addressing the fundamental and core                  • Ethics (in the workplace, school environment, personal life,
skills that are included in industry qualifications as the                   communities)
foundations for occupational skills.                                       • Workplace behaviour and etiquette
                                                                           • HIV/AIDS
The learning was developed around the generic fundamental
and core unit standards of business-related qualifications in
the services sector. The outcomes of these unit standards, all
set at NQF 4, will prepare a learner to enter any vocational

                                                                                                       Services SETA
                                                                                                              Annual report 2006
The development of teachers is another benefit for                    “By March 2010, each SETA recognises and supports
participating schools. Through the programme, teachers have           at least five institutes of sectoral or occupational
been:                                                                 excellence within public institutions and through
• extended professionally through assessor and moderator              public-private partnerships (PPPs) where appropriate,
  training (to date, 265 teachers have been trained as                spread as widely as possible geographically, for the
  assessors and 102 teachers as moderators)                           development of people to attain identified critical
• trained in project management (52 teachers trained as               occupational skills, whose excellence is measured in
  project managers)                                                   the number of learners successfully placed in the
• familiarised with generic workplace processes as set out in         sector and employer satisfaction ratings of their
  the SPLP curriculum                                                 training.”
• given supplementary insight into career opportunities
  provided by the services sector, thereby enriching career        The SSETA decided to pursue a collective model as opposed
  guidance                                                         to appointing individual training providers. Based on this
• able to forge links with the Services SETA and local             mandate, the following has taken place:
  businesses in the community                                      • Training providers were sensitised to the concept of ISOEs
                                                                     at national provider roadshows in February 2006, and a
The school pre-learnership project is an exciting opportunity        steering committee sourced at each region.
to use the existing infrastructure of schools and proposed FET     • Subsequently, meetings were held with each steering
institutions to advance the national skills development              committee in March and a basis for the terms of reference
strategy.                                                            compiled.
                                                                   • Consolidated inputs from these meetings were distributed
The introduction of a workplace focus into the schooling             to training providers at bi-monthly forums in April.
context is particularly relevant in view of the serious youth      • A national forum will be hosted in Gauteng where delegates
unemployment and lack of career guidance facing our country.         from regional steering committees will finalise the terms of
Another challenging area is the inadequately prepared level of       reference/constitution for the ISOEs.
learners entering learnerships and thus ‘failing’ at the end of    • A proposed time frame has been developed for the
the learning process.                                                establishment of ISOEs.
                                                                   • The constitution and terms of reference of the national ISOE
Learners exiting this programme are better prepared when             plus the proposed activities identified for the balance of
entering learnerships and the cost benefit translates to a solid     2006 will be presented to the SSETA council for comment.
return on investment in the long-term provision strategy of the
Services SETA. This relates directly to the successful
                                                                   6. International benchmarking and
completion ratio and significant long-term cost benefits of
learnership implementation.                                           mapping activities
                                                                   In striving for greater global competitiveness, South Africa
This pilot project has proved a compelling model for               needs to benchmark against international best practice.
significantly increasing the extent to which schooling/FET
institutions and the workplace are complementary in creating       The Services SETA has worked hard in recent years to build
work-ready young South Africans who can have an immediate          relationships with peer bodies internationally to compare
impact on the economy.                                             standards and qualifications, obtain reciprocal recognition for
                                                                   our qualifications, and to effect a seamless transfer of
Additionally, this project directly supports government’s          competent learners from one country to another.
strategy for collaboration between SETAs and public training       Activities during this year include:
FET institutions.                                                  • Reciprocal recognition conference – Johannesburg, South
5.2 Institutes of sectoral or occupational                         • EU social dialogue – Helsinki, Finland
      excellence and the Services SETA                             • African hairdressing qualification mapping workshop –
The establishment of institutes of sectoral or occupational          Copenhagen, Denmark
excellence (ISOEs) has been specified in the new national          • WorldSkills Australia general assembly – Melbourne,
skills development strategy.                                         Australia
                                                                   • International cosmetology licensing organisation – Busan,
Supporting these institutions complies with objective 5 of           Korea
the national skills development strategy (2005 to 2010)            • Accreditation by European Marketing Federation for South
(NSDS 2): “Improving the quality and relevance of provision”.        African marketing qualifications
Indicator 5.1 reads as follows:

Services SETA
       Annual report 2006
The inter-relationships between the ISOE, the NQF and the Services SETA

                              Services SETA
       Levy payers


         SMMEs               Employers

E    Non-levy payers

A                                                                     Labour centres

R   SSETA accredited
                                              SECTOR ISOE            Service centres
N   SSETA learnership
E                            O                                       BEE forums and
                                                                     providers to the

                             V                                            sector

R   SSETA accredited
       E and T
S    Public FETs and
     Private FETs and

                                                              Services SETA
                                                                     Annual report 2006
                                 The Compliance department has now been in existence since
                                 February 2002. During this period various new interventions
                                 were implemented and the following departments/functions
                                 now form part of the division:

report                           • A Customer Service Centre (Call Centre)
                                 • Customer Service division (Customer Complaints)
                                 • ISO 9001:2000 certification
                                 • WSP/ATR auditing process
                                 • 3 star member certification
                                 • Moderator/Verifier training

                                 Customer Service Centre (0861 10 11 48)
                                 The Customer Service Centre was established on 4 July 2005.
                                 Up to date, 30 April 2006, the agents have dealt with 88 944
                                 calls at an average of 587 calls over an average of 151 working
                                 days, per day.

                                 The breakdown of the areas of enquiry were:
                                 (a) Accreditation 26,0%
                                 (b) Quality Promotions                                 0,1%
The new call centre handled      (c) Learnerships and Skills programs                  33,9%
                                 (d) Memoranda of Understanding (MOU)                   0,7%
                                 (e) Certification                                      1,3%
88 944 telephone calls in the    (f) Learnership Implementation
                                 (f) and monitoring                                      0,2%
                                 (g) Learnership and skills
past year                        (g) programs quality development                        0,3%
                                 (h) Learnership Contract Administration                 6,8%
                                 (i) Trade Test Administration                           8,5%
                                 Levies and Grants
                                 (a) WSP/ATR                                             3,6%
                                 (b) Inter-SETA Transfer                                 0,6%
                                 (c) Learner Payroll                                     0,1%
                                 (d) Discretionary Grants                                0,1%

                                 General enquiries                                    17,8%

                                 Customer Service division (Customer
                                 The Services SETA has a working agreement with DoL
                                 (Department of Labour), to address complaints received via
                                 the office of the Minister.

Services SETA
       Annual report 2006
Further elements in our arsenal to address the needs              machine. During 2005 and up to March 2006, the SETA has
of our customers include a dedicated e-mail address               funded the training of 308 moderators.
(, for specific complaints,
also a dedicated e-mail address to receive feedback from          In 2006 we will once again be offering the service to our
our customers at ( We have           members, with an added element by adding verifier training
also utilised a bulk e-mail and SMS service as vehicle to         into the programs available to our members.
communicate with our stakeholders. However, not all our
stakeholders are very keen to receive SETA information and        Summary
therefore we have implemented an unsubscribe function on          It has been a busy but effective time period. Very few SETAs                                   have a dedicated Quality assurance division and the feedback
                                                                  that we receive is showing that we are making a difference and
ISO 9001:2000 certification                                       that we have managed to address the needs and complaints of
The SETA has once again retained our ISO 9001:2000 listing,       our stakeholders. The division is still not perfect, but all we
for the second year running.                                      can aspire to is to ensure that we move forward and never
Stakeholders interacting with the SETA sometimes feel that it
is just another beaurocratic system, but we have over 1 200
policies, procedures, forms and guidelines governing our
operation, specifically to ensure that there is consistency in
our application and also to ensure that operations are
conducted within the scope and guidelines of the Skills
Development Act.

WSP/ATR auditing process
Of the almost 9 000 SETA members there are 589 companies we
are busy engaging with by conducting WSP/ATR
audits to ensure they meet the requirements of the Skills
Development Act.

Companies successfully meeting the requirements are
awarded the Services SETA Star 1 certificate.

3 star member certification
This element is covered on pages 50 and 51 in the annual

Moderator/Verifier training
The SETA has once again offered moderator training to our
member companies, free of charge. This implies that the SETA
is re-investing levy income back in the industries, in order to
further enhance the effectiveness of the skills development

                                                                                              Services SETA
                                                                                                     Annual report 2006
Services SETA
Grading System                   The Services SETA 3-Star Grading System has been
                                 operational for approximately three years. The grading system
                                 seeks to create a culture of continuous learning as well as
                                 improved work performance, business systems, processes
                                 and customer service.

                                 The 3-Star Grading System is uniquely designed to recognise
                                 companies for the following:

                                 Star 1
                                 Is awarded to companies which comply with the Employment
                                 Equity Act, the Skills Development Act, and any other
                                 legislation that directs their relationship with their staff.

                                 Star 2
                                 Is awarded to companies that have systems in place that are
                                 designed to manage all resources effectively and can show
                                 that these systems are achieving their purpose.

                                 These systems include, among others, the International
                                 Standards Organisation (ISO) compliance and effective
                                 human resources management systems and are compliant
                                 with or carry the status of a standards of good practice, eg
                                 Investors in people.

                                 Star 3
                                 Is awarded to companies that focus on customer service. The
                                 company culture indicates that the staff are competent to be
                                 client-centric. The company is driven by the clients’ changing
                                 needs and perceptions of service excellence.

                                 The Services SETA will subsidise 3-star companies to:
                                 • Become members of the Proudly South African Campaign
                                   (MOU renewed in May 2006).
                                 • Establish a national marketing campaign to encourage
                                   consumer awareness of the value of doing business with a
                                   3-star company.
                                 • Enter in memoranda of understanding with local,
                                   provincial, and national government organisations to
                                   ensure that these organisations endorse the 3-star

Services Seta
       Annual report 2006
Incentives and advantages                                        Participation
The 3-Star Grading System holds numerous advantages. The         The Services SETA member companies can participate by
most obvious of which is that it will send out important         invitation or application. Depending on the star award that the
messages about your business. It recognises that good            company has chosen to participate in, a candidate from each
governance is the culture of the organisation.                   company will attend an implementation workshop, ie Star 2 –
                                                                 Total quality management and/or Star 3 – An internationally
The outcomes of becoming a 3-star company will be evident        benchmarked customer service standard. The participating
in the improved work performance of its employees, an            candidate will be briefed extensively on the way forward once
improved return on investment stemming from the                  they are back in the workplace. An initial audit date will be set
implementation of world-class standards in business systems      with each company with the understanding that if they were
and processes and a calibre of excellence in customer services   not successful on the first audit, a second audit would be
that is highly competitive locally and globally.                 arranged free of charge. Each certification/award carries a
                                                                 24-month validity.

Number of companies that have been successful in achieving awards

           Certificated                   Certificated                   Certificated                       Certificated
               19                            518                             37                                  6
    (As at September 2006)                                                                           (As at September 2006)

                                  In the process of completion

         Identified for                   Identified for                 Identified for
         auditing 2006                    participation                  participation
                                          2006 – 2009                    2006 – 2009

              370                             300                            100

        (Auditing will be               (Implementation                (Implementation
          complete by                     commenced                      commenced
          March 2007)                      June 2006)                     May 2006)

For more information on the 3-Star Grading System, please contact the 3-Star Grading System Manager, Yolanda Srp, on:
Tel: +27 11 276 9600, Fax: +27 11 276 9711 or email:

Closer co-operation between Services                             All members of Proudly SA are entitled to use the Proudly SA
                                                                 logo to endorse their products and services. Proudly SA also
SETA and Proudly SA to everyone’s benefit                        offers a number of other benefits that contribute to enhancing
On Monday, 7 August 2006, the Services SETA and Proudly SA
                                                                 companies’ competitiveness in the marketplace and help them
adopted a Memorandum of Understanding (MOU) that is set
                                                                 to grow their businesses.
to benefit both Proudly SA and members of the Services SETA.
In terms of the MOU – which is a framework for closer
                                                                 PSA fees for Services SETA 3-Star Grading System members
co-operation and collaboration between the two organisations
                                                                 Annual membership fees are calculated on 0,1% of annual
– members of the Services SETA that comply with the SETA’s
                                                                 turnover. If a member company joins for two years, they will
3-Star Grading System will be afforded an opportunity to
                                                                 receive a 5% discount on their membership fee and if they join
acquire Proudly SA membership at a discounted membership
                                                                 for three years, they will receive an 8% discount on their
                                                                 membership fee.
For Proudly SA this agreement provides an opportunity to gain
                                                                 For more information on registering as a SETA 3-Star Grading
quality members whose credentials have, to a large extent,
                                                                 Proudly South African member, please contact Anne Sengadi
already been endorsed through their compliance with the
                                                                 on: 011 327 7778 or
requirements of the SETA’s 3-Star Grading System.

                                                                                              Services Seta
                                                                                                     Annual report 2006
Human                               Restructuring
                                    • Process
                                    The guidelines as set out in the Labour Relations Act (section

resources                           189) were followed. The SSETA decides on a more cautious
                                    approach and therefore consulted with staff extensively and
                                    exceeded the prescribed 60-day consultation period.

                                    A staff meeting was called and the CEO explained the reason
                                    for the exercise to all staff. This was followed up with separate
                                    meetings of the affected managers and staff. A follow up
                                    meeting was held and the section 189 letter was issued
                                    explaining the process in full.

                                    A top to bottom approach was followed meaning the
                                    managerial positions were advertised first followed by all other
                                    positions. All affected staff were requested to reapply for their
                                    positions as well as any other positions advertised. All staff
                                    could apply for the advertised positions but preference was
                                    given to the affected staff members. Interview panels
The Services SETA has               consisting of stakeholders for all managerial positions were

successfully decreased its salary   Before all interviews, meetings were held with all affected staff
                                    and the process explained. Within twenty-four hours after the
                                    interviews were conducted all candidates were informed in
bill by 4,5% despite an increase    person followed up with a written confirmation of the results.
                                    The affected unsuccessful candidates were also informed of
                                    other positions still available.
in salaries by 6,6%
                                    Staff that was not placed was referred to the section 189 letter
                                    issued during the one-on-one consultations and all alternatives
                                    were discussed. Staff that still could not be placed in positions
                                    were retrenched as per section 189 of the Labour Relations Act.

                                    • Obstacles
                                      • Staff not believing that the process would come to fruition
                                      • Uncertainty and low morale from affected staff members
                                        due to the lengthy process
                                      • Staff not applying for all positions but restricting
                                        themselves to one favourite position

Services SETA
       Annual report 2006
  • Rumour mongering                                               Employment equity
  • Interference at managerial level                               All employment equity activities were placed on hold during
                                                                   2005 due to the restructuring activities, however, the existing
• Successes                                                        employment equity targets were kept in mind when
  • Open communication                                             conducting all interviews during this year.
  • Structured and consistent process
  • Honesty                                                        A newly selected employment equity forum will be established
  • Consistency                                                    in 2006 and we hope to finalise the SSETA five-year plan
  • All meetings and consultation sessions recorded                during the year ahead. It is noted that although our actual
  • A comprehensive transaction log of the entire process          targets are not yet cast in stone, we are getting closer to the
  • Only six staff members were retrenched resulting in the        national economically active population figures as published
    retention of in excess of 95% of our staff, although it must   by the state.
    be noted that the staff lost during the restructuring
    process was due to insecurity and resulting resignations       Our 2005 equity report was submitted well in advance and has
                                                                   to date invited no queries from the Department of Labour.
• Cost cutting and staff turnover
On completion of the restructuring exercise of the SSETA, a
comparison was drawn between the November 2004 staff               Recruitment
listing and cost in relation to November 2005. It has been         In the preceding twelve-month period, an applicant for an
found that while in November 2004 the payroll cost was well        advertised position within the SSETA challenged the SSETA
in excess of R 2,5 million per month, the current payroll has      recruitment policy at the CCMA. The crux of the case brought
reflected a significant decrease of 9,56% overall, thus bringing   before the CCMA was that the applicant felt he was the best-
the payroll cost to well below the R2,5 million mark.              suited candidate for the position. This matter was successfully
                                                                   defended and the success was due to the extensive paper trail
Although this decrease in cost is a result of the restructuring,   that is kept by HR in all matters. We thus hold fast that the
it is to be borne in mind that July 2005 witnessed the annual      current policy in practice is fair and transparent.
salary increases of the SSETA staff which was capped by the
remuneration committee at 7%, the reality saw an average           Audits
increase of a mere 6,62% increase. In effect the total             At the start of 2005, it was indicated by management that HR
percentage saving was thus in the region of 15%.                   was not keeping accurate records of personnel as well as
                                                                   other projects in the HR stable. It was recommended that our
The staff complement has reflected these changes by showing        quality assurance department conduct an in-depth
a 21% decrease in staff growth over the preceding twelve-          investigation into this matter. An exhaustive investigation
month period. The SSETA staff complement currently stands          revealed that the records were not up to scratch and the staff
at 173 incorporating both permanent and non-permanent              in HR were presented with a thirty-day window period within
staff.                                                             which to correct all highlighted issues. Quality assurance
                                                                   conducted a follow up audit after the thirty-day period had
                                                                   expired and found that all outstanding matters and records
                                                                   had been rectified. The Department of Labour as well as KPMG
                                                                   have since conducted their own audits on the HR department
                                                                   and have assessed all records as in order. The annual ISO

                                                                                               Services SETA
                                                                                                      Annual report 2006
audit was also carried out on the HR department in August           procedures and policies to the letter and failed to deviate from
2005 and HR is proud to report that once again the findings         these despite interference from many quarters. Less than
reflected no findings and no recommendations. To date the           eight staff members were retrenched in this exercise and this
human resources department has had no written complaints            outcome has reinforced the staff trust in human resources.
or queries from any quarter regarding the records kept.
                                                                    In light of the above process the Services SETA has
                                                                    experienced a lower than expected staff turnover with the staff
Disciplinary issues
                                                                    complement declining from 206 in April 2006 to 175 in March
The last twelve-month period saw one collective grievance and
                                                                    2006 reflecting a 15,05% average turnover over the twelve-
two internal disciplinary hearings. HR is proud to state that the
                                                                    month period.
company was well represented in all matters and has once
again proven that HR has definitely matured.
                                                                    This period has proven the commitment of the human
                                                                    resource staff to obtaining their objectives whilst ensuring the
HR has also represented the SSETA at the CCMA on three
                                                                    best possible methods are utilised and always maintaining
separate occasions involving two separate employees. HR has
                                                                    open, honest and consistent communication to all parties.
been able to retain its current 100% success rate at the CCMA
for the second year running.
                                                                    The salary bill has remained fairly stable over this period
                                                                    despite experiencing a decline in staff and an annual increase
The SSETA currently has one case pending at the Labour Court
                                                                    in July 2005. Overall the salary bill has in fact decreased by
and is awaiting a trail date on this matter. We are, however,
                                                                    approximately 4,5% in total gross earnings despite an average
highly confident that this matter will be ruled in favour of the
                                                                    6,6% increase to basic salaries in July 2005.This has once
SSETA with costs, as all involved have done extensive
                                                                    again reflects the conservative approach adopted by the
groundwork and have managed to close all loops where
                                                                    human resources division in regulating spending and this also
possible. It is expected that the trial will be set for hearing
                                                                    confirms the assumption that the human resource policies and
early in 2006.
                                                                    procedures are beginning to take effect and are starting to be
                                                                    utilised effectively by all staff.
Overall the HR department feels that it has exceeded its
current high standard of performance as well as exceeding all
                                                                    Our performance management system has been effectively
expectations which can be seen by the outcomes explained
                                                                    utilised during this period and we are proud to state that our
                                                                    staff are beginning to see the positive effects of a correctly
                                                                    implemented performance management system.
2006 forecast
• Limited staff movement
• Exceptionally low staff growth
                                                                    As previously reported, our policy has been effectively utilised
                                                                    and we are quite pleased to state that this policy as well as the
2006 planned activities                                             related procedure has been tested at the CCMA by an applicant
• Review and resubmission of current policies and                   to an advertised position. This case was dismissed as the
  procedures                                                        procedures outlined were extremely fair and transparent.
• Employment equity five-year plan
• Succession Planning                                               Recruitment during this period has been fairly limited with
• Training of staff in identified interventions                     most of our prospective employees being recruited internally
                                                                    for all positions including that of the Deputy CEO.
Staff growth
2005 has been a turbulent, unsettling and yet very challenging      Once again we have ensured that all interviews are conducted
year for the human resources division of the Services SETA.         with the respective departmental manager, a representative
                                                                    from the employment equity committee and a representative
Amidst battling financial constraints we embarked on a              from human resources. All selections have been done in line
rationalisation exercise which initially affected in excess of      with our equity plan based on the national economically active
50% of current staff. The human resources department was            population figures and are structured interviews with set
called upon to provide reassurance in this unsettling time          questions posed to each individual in the same manner.
while at the same time had to be the bearer of bad news. The
exercise went extremely well as we followed current                 This system has been very effective as it allows all candidates
                                                                    to be measured equally.

Services SETA
       Annual report 2006
Distribution of staff                                         Employment equity
Tabled below is the distribution of staff throughout all      The last period has seen the drawing up and verifying of all
divisions and regions within the SETA as at March 2006.       equity plans, processes and policies and an in-depth audit was
                                                              conducted by all committee members during a three-day
                                                              verification workshop.
Total staff complement
Division                                       Active staff   We are almost at completion of the implementation phase of
Office of the Chief Executive Officer                    7    this project and we should be fully functional by the middle
Special projects office                                  5    of 2006.
SSP and research                                         3
                                                              The employment equity committee will be undergoing a
Office of the Deputy Chief Executive Officer             3    re-election process in the near future as several members
Information technology                                   3    have resigned from their committee positions and also with
Human resources                                          3    the next phase drawing near, it is important to have the right
Public relations                                         4    people making the right decisions in the committee.
EAP department                                           1
Office of the Senior Chamber Manager                     2    The Services SETA has successfully completed and submitted
Business services chamber                                4    our 2005 equity report and hope to submit our finalised plan
Client care services chamber                             4    by July 2006. The SETA has enjoyed the scrutineering from the
Commercial and industrial services chamber               3    Labour Inspectors from Department of Labour on several
Management services chamber                              3    occasions during 2005, all of which have been positive and as
Chamber support office                                   6    a result have built up excellent working relationships with
SME department                                           2    Department of Labour.
National office                                         11
Bloemfontein regional office                             5
East London regional office                              4
Gauteng regional office                                  8
KwaZulu-Natal regional office                            7
Mpumalanga regional office                               5
Port Elizabeth regional office                           5
Western Cape regional office                             6
Disability department                                    1
Office of the Chief Financial Officer                    2
Finance                                                  4
Logistics                                                6
Procurement                                              5
ETQA                                                     2
Accreditation                                            9
Quality promotions                                       5
Regional operations                                     13
Learnerships and implementation
monitoring                                               4
Learnerships and skills                                  2
Learnerships and skills programmes                       4
Levies and grants                                        2
Learnership and allocation funding
management                                               3
Mandatory grants                                         8
Quality assurance                                        9
3-star grading                                           1
Customer service and database management                 1

                                                                                          Services SETA
                                                                                                 Annual report 2006
Staff profile                                                          packages may vary slightly due to qualifications and relevant
Our current staff profile is as follows:                               experience.

                                                                       It is standard practice at the SETA to endeavour to bridge gaps
    Staff profile
                                                                       between bands especially at the lower levels.

                                                                       Detailed below is the guideline in use by the Services SETA.
                          16%               Top management
                                            Senior management                   Services SETA occupational level grading
                                            Skilled occupations                                                  Salary scale
                                            Semi-skilled occupations
                                                                       Level                            Band Minimum Midpoint
                                            Elementary occupations
                                                                       Senior executive management          F    811 850    966 500
                                                                       Executive management                 E    419 650    695 000
                                                                       Management                           D    198 450    359 200
                                                                       Professionals and
                                                                       skilled occupations                CU     155 500    187 350
                                                                       Semi-skilled occupations           CL     112 850    135 950
    Staff profile – Gender
                                                                       Elementary occupations              B      61 150     98 900
                                                                       Unskilled occupations               A      49 500     59 600

                                            African male
            25%                             Coloured male
                                 4%         Indian male
                                            White male
                                            African female
          15%                     3%        Coloured female
                                            Indian female
                10%                         White female

Occupational level and remuneration
The remuneration structuring of the Services SETA is based on
a total cost to company package determined by the Patterson
Grading system. The SETA uses this system as a guide and

Services SETA
       Annual report 2006

             Materiality framework      56

             Audit committee report     57

             Auditor-General report     58

                                      Services SETA
                                             Annual report 2006
Treasury regulation 28.1.5
“For purposes of ‘material’ [sections 50(1), 55(2) and 61(1) (c) of the Act] and ‘significant’ [section 54(2) of the Act], the
accounting authority must develop and agree a framework of acceptable levels of materiality and significance with the relevant
executive authority in consultation with the external auditors.”

Section 55(2)         The annual report and financial statements must –      Quantitative – 1% of total revenue
                      (a) include particulars of:
                          (i) any material losses through criminal           Qualitative – events as contained in the Materiality
                               conduct and any irregular expenditure         and Significance Framework Policy
                               and fruitless and wasteful expenditure that
                               occurred during the financial year;
Section 54(2)         Before a public entity concludes any of the following All events/transactions will require disclosure –
                      transactions, the accounting authority for the public 100% compliance
                      entity must promptly and in writing inform the
                      relevant treasury of the transaction and submit
                      relevant particulars of the transaction to its executive
                      authority for approval of the transaction
                (a)   establishment or participation in the establishment
                      of a company;
                (b)   participation in a significant partnership, trust,
                      unincorporated joint venture or similar arrangement
                (c)   acquisition of disposal of a significant shareholding
                      in a company
                (d)   acquisition or disposal of a significant asset
                (e)   commencement or cessation of a significant
                      business activity; and
                (f)   a significant change in the nature or extent of its
                      interest in a significant partnership, trust,
                      unincorporated joint venture or similar arrangement.

Services SETA
       Annual report 2006
Audit committee
Report of the Audit Committee required by Treasury Regulations 27.1.7 and 27.1.10(b) and (9c) issued in
terms of the Public Finance Management Act 1 of 1999, as amended by Act 29 of 1999.

We are pleased to present our report for the financial year ended 31 March 2006.

Audit Committee members and attendance
Mr CD Kneale and Mr I Tayob were members of the Audit Committee for the entire financial year under review.
Ms M Williams resigned during the financial year under review, with Mr L Thaele being appointed to fill the consequential vacancy.
Subsequent to the end of the financial year Mr L Thaele resigned as a member of the Audit Committee.

Audit Committee responsibility
Terms of reference set by the Board, were the basis of the Audit Committee’s deliberations.

An annual review of the terms of reference was completed, with the amended terms of reference subsequently being authorised
and implemented.

The responsibilities which flowed from the terms of reference were fully satisfied.

The effectiveness of internal control
The system of controls is designed to provide cost effective assurance that assets are safeguarded and that liabilities and working
capital are efficiently managed and are in line with the requirements of the Public Finance and Management Act and the King II
Report on Corporate Governance.

Internal Audit provides the Audit Committee and management with assurance that the internal controls are appropriate and
effective, in the functions reviewed.

This is achieved by means of the risk management process, as well as the identification of corrective actions and suggested
enhancements to the controls and processes.

The reports of the internal auditors, the audit report on the annual financial statements and the management letter of the Auditor-
General have not identified any significant or material non-compliance with legislation, accounting standards, prescribed policies
and procedures.

Based on the information provided by the internal and external audit functions, the audit committee considers that effective internal
controls are in place and that the financial statements are an accurate reflection of the financial position of the Services SETA.

Evaluation of financial statements
The Audit Committee has:
• Reviewed and discussed the audited annual financial statements, which are included in the annual report with the Auditor-
  General/other external auditor and the accounting officer;
• Reviewed the Auditor-General’s management letter and management’s response thereto;
• Reviewed changes in accounting policies and practices; and
• Reviewed significant adjustments resulting from the audit.

The Audit Committee concurs and accepts the Auditor-General’s conclusions on the annual financial statements and recommends
that the audited annual financial statements as read with the report of the Auditor-General, be accepted.

Clive D Kneale
Chairperson: Audit Committee
28 July 2006

                                                                                                  Services SETA
                                                                                                         Annual report 2006

Audit assignment
The financial statements as set out on pages 59 to 92, for the year ended 31 March 2006, have been audited in terms of section
188 of the Constitution of the Republic of South Africa, 1996 (Act No 108 of 1996), read with sections 4 and 20 of the Public Audit
Act, 2004 (Act No 25 of 2004) and section 14(6)(a) of the Skills Development Act, 1998 (Act No 97 of 1998). These financial
statements, the maintenance of effective control measures and compliance with relevant laws and regulations are the responsibility
of the accounting authority. My responsibility is to express an opinion on these financial statements, based on the audit.

The audit was conducted in accordance with International Statement on Auditing read with General Notice 544 of 2006, issued in
Government Gazette No 28723 of 10 April 2006 and General Notice 808 of 2006, issued in Government Gazette No 28954 of
23 June 2006. Those standards require that I plan and perform the audit to obtain reasonable assurance that the financial
statements are free of material misstatement.

An audit includes:
• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
• assessing the accounting principles used and significant estimates made by management, and
• evaluating the overall financial statement presentation.

I believe that the audit provides a reasonable basis for my opinion.

Audit opinion
The entity’s policy is to prepare financial statements on the basis of accounting determined by the National Treasury, as described
in note 1 to the financial statements.

Audit opinion
In my opinion, the financial statements fairly present, in all material respects, the financial position of the Services Sector Education
Training Authority at 31 March 2006 and the results of its operations and its cash flows for the year then ended, in accordance
with the basis of accounting determined by the National Treasury of South African, as described in note 1 to the financial
statements, and in the manner required by the Public Finance Management Act (Act No 1 of 1999).

The assistance rendered by the staff of the Services SETA during the audit is sincerely appreciated.

N Manik for Auditor-General
23 July 2006

Services SETA
       Annual report 2006
The Services SETA financials
Accounting Authority report                                                            60
Income statement                                                                       62
Balance sheet                                                                          63
Statement of changes in funds                                                          64
Cash flow statement                                                                    65
Accounting policies                                                                    66
Notes to the annual financial statements                                               74

                                  FINANCIAL PIC MONEY!

The annual financial statements for the year ended 31 March 2006, set out in pages 59 to 92, have been approved
by the Accounting Authority in terms of section 51 (1)(f) of the Public Finance Management Act, No 1 of 1999, as
amended, on 31 May 2006, and are signed on their behalf by:

IA Blumenthal                                                 DA Johnston
Chief executive officer                                       Chairperson of council

                                                                                   Services SETA
                                                                                          Annual report 2006
The Services SETA report by the Accounting Authority for the year ended
31 March 2006
Report by the Accounting Authority to the Executive Authority and Parliament of the Republic of South Africa:
The Accounting Authority comprised of the members listed below. The amounts earned are inclusive of meeting
attendance for sub-committees, chamber board attendance, etc. The rate claimed by members and member
companies currently range from R1 000 to R3 700 per meeting per day per member. Members attending represent
themselves or their organisations. Members are required to submit a monthly receipt to claim for meeting
attendance. Where companies are involved, an invoice will be generated by the company and reimbursed to the
company. Other members provide their services on a voluntary basis without any remuneration hence the nil balance
reflected on some council members. Remuneration is inclusive of travel expenses:

Name                                 Membership status             Travel        Allowance               Total
DA Johnston (chairperson)            currently elected             1 817             77   133           78 950
MA Mathibe (vice chairperson)        currently elected             1 109             13   000           14 109
CE Wicks                             currently elected             3 906             38   000           41 906
PD Mlotshwa                          currently elected             2 126             14   100           16 226
CN Mabitle                           currently elected                 0                    0                0
F Roos                               currently elected             1 433             22   500           23 933
NT Mazibuko                          currently elected               332              6   000            6 332
S Hluluman                           currently elected                 0                    0                0
F Fakir                              currently elected             1 371              5   000            6 371
A Johnston                           currently elected                 0                    0                0
WJ Pietersen                         currently elected             2 833             12   500           15 333
V Buchanan                           currently elected                 0              9   000            9 000
M Billington                         currently elected                 0              2   500            2 500
G Campbell                           currently elected               295              8   000            8 295
XD Probyn                            currently elected               713              4   000            4 713
S Raubenheimer                       currently elected               674              4   000            4 674
V Tshabalala                         currently elected                 0                    0                0
K Pillay                             currently elected                 0                    0                0
JBD Tanner                           not re-elected                1 333             23   000           24 333
LY van Schalkwyk                     not re-elected                  503             24   000           24 503
ST Ndou                              not re-elected                  574              7   000            7 574
AC Boshoff                           not re-elected                2 464             19   000           21 464
AT Mabuza                            not re-elected                  119             95   087           95 206
BF Kirchmann                         not re-elected                  667             16   000           16 667
BM Paddey                            not re-elected                  426             14   000           14 426
N Juries                             not re-elected                2 215             10   000           12 215
W Machanik                           not re-elected                    0              1   000            1 000
PT Lesala                            not re-elected                    0              1   000            1 000
L Africa                             not re-elected                    0             12   000           12 000
P Naransamy                          not re-elected                  138              1   000            1 138
NM Phakati                           not re-elected                3 695             16   000           19 695
PA Crichton                          not re-elected                  555              7   000            7 555
F Stretch                            not re-elected                    0             16   000           16 000
L Mkangelwa                          not re-elected                  230             10   000           10 230
NJS van Wyk                          not re-elected                  452             10   000           10 452
TJ Malan                             not re-elected                1 811              6   000            7 811
MRD Witbooi                          not re-elected                1 754             11   000           12 754
Bill Rawson                          not re-elected                    0              2   000            2 000
GW Hands                             not re-elected                1 030             12   000           13 030
MM Xashimba                          not re-elected                2 417             11   000           13 417
A Bester                             not re-elected                    0                    0                0
L Breckenridge                       not re-elected                  589              7   000            7 589
SJ Molefe                            not re-elected                    0             12   344           12 344
M Moscardi                           not re-elected                    0                    0                0
L Khan                               not re-elected                    0                    0                0
B Riley                              not re-elected                    0                    0                0
J Schekiera                          not re-elected                    0                    0                0
J Wesson                             not re-elected                    0                    0                0
                                                                  37 581            559 164            596 745

Services SETA
       Annual report 2006
The senior management of the entity consisted of the following members who were compensated as outlined below:

                                                                  Travel        Bonus      Leave
Name                      Position                   Salary     and sub        awards encashment                 Total
IA Blumenthal             CEO                       632 989     332 628       115 674                –      1 081 291
MT Moshoeshoe             Deputy CEO                404 065     165 430        52 000                –        621 495
M Clark                   Senior chamber
                          manager                   394 573      92 689         43 333              –         530 595
V Naidoo                  CFO                       458 443     195 291         52 914         67 739         774 387
                                               1 890 070        786 038       263 921          67 739       3 007 768

Included in the salary costs are medical costs of staff members who have opted to belong to the medical aid scheme
administered by the Services SETA.

State of affairs
Skills development levy income increased by 7% as a result of salary and wage increases in the sector. This co-
incides with the rate of inflation in the economy. As a result of accounting standards, the surplus at year-end is
R54 million. Expenditure of R392 million was incurred for the financial year with R343 million relating to
employer grant and project expenditure and R49 million relating to administrative expenditure. The
achievements from the R343 million expended on employer grants and project expenditure are reflected in the
performance report of the Services SETA.

Cash retention strategy
Cash and cash equivalents at year-end were retained at approximately 4 months of levy income as per the Cash
Flow Management Policy of the organisation and in terms of the “rule of thumb” maintained by the Department of
Labour. The liquidity ratio of assets to liabilities were maintained at 3 to 1. All expenditure was contained within
legislated percentages resulting in surpluses for each fund account.

The accumulated distributable funds at year is R172 million as per the balance sheet of which all funds are allocated
to contractual commitments.

Accumulated distributable funds                                                                           R172 million
Less:   Non-current assets (note 20)                                                                      (R17 million)
        Contractual commitments (note 19)                                                                (R142 million)
Uncommitted funds                                                                                          R12 million
Capacity constraints
The combination of the accounting standards ie, Generally Accepted Accounting Practice and Generally Recognised
Accounting Practice made reporting of the state of affairs particularly unique and challenging in this financial year.
The indecisiveness from National Treasury and the Accounting Standards Board placed time constraints on
compiling the financial statements.

Utilisation of donor funds
The Domestic Worker Project that was funded by the National Skills Authority ceased on 30 September 2005 with
all deliverables being achieved as per the service level agreement.

Subsequently the National Skills Authority provided further funding on learnerships. The proposed project of 1 000
learners amounting to R41 million of which R25 million was approved by the National Skills Authority and the
remainder co-funded by the Services SETA. This project commenced November 2005.

Performance management
The performance of the Services SETA is based on a scorecard as per the service level agreement with the
Department of Labour. The Department of Labour monitors performance against the scorecard on a quarterly basis.
Within the Services SETA structure, policies and procedures are in place to govern the execution of deliverables, the
results of which are accumulated onto the “Oracle Database”.

Business address
The business address of the entity is as follows:
Ristone Office Park
15 Sherborne Road

The Accounting Authority is of the opinion that the internal controls maintained within the Services SETA are
appropriate and effective. The Services SETA is further deemed to be a going concern in the foreseeable future

                                                                                         Services SETA
                                                                                                Annual report 2006
The Services SETA income statement
for the year ended 31 March 2006

                                                  Year ended   Year ended
                                                   31 Mar 06    31 Mar 05
                                            Notes      R’000        R’000

Skills development levy income                 2    425 537     396   542
Skills development penalties and interest             6 783       5   990
NSF – project income                          15      4 696      75   012
Investment income                              3      5 911       5   260
Other income                                   4      2 307       3   004
Total revenue                                       445 234     485 808
Employer grants and project expenses           5   (337 975)   (465 316)
Administration expenses                        6    (48 865)    (41 170)
NSF – project expenses                        15     (4 696)    (75 012)
Total expenditure                                  (391 536)   (581 498)
Net surplus/(deficit) for the year                   53 698      (95 690)

Services SETA
       Annual report 2006
The Services SETA balance sheet
at 31 March 2006

                                                                                      Year ended     Year ended
                                                                                       31 Mar 06      31 Mar 05
                                                                                Notes      R’000          R’000

Non-current assets
     Property, plant and equipment                                                 20     16 814       18 520
Current assets
     Prepayments and advances                                                       7      1 085        2 135
     Accounts receivable                                                            8     79 012       83 642
     VAT receivable                                                                13        134            –
     Cash and cash equivalents                                                      9    136 560       90 730
                                                                                         216 791      176 507
Total assets                                                                             233 605      195 027
Funds and liabilities
Funds and reserves
Employer grant reserve                                                                     3   818     54   238
Administration reserve                                                                     9   875     15   577
Discretionary reserve                                                                    158   285     48   465
Revaluation reserve                                                                        1   397      1   397
                                                                                         173 375      119 677
Non-current liabilities
     Finance lease                                                                 11          365          116
Current liabilities
     Accounts payable – non-exchange transactions                                  12     27 627       20   623
     Accounts payable – exchange transactions                                      12     20 938       45   823
     VAT payable                                                                   13          –        1   466
     Provisions                                                                    14      1 992        1   896
     NSF – received in advance                                                     15      9 308        5   426
                                                                                          59 865       75 234
Total funds and liabilities                                                              233 605      195 027

All current payables and receivables above are non-exchange transactions with the exception of accounts payable
which is split accordingly.

                                                                                  Services SETA
                                                                                         Annual report 2006
        Services 2006
The year ended 31 MarchSETA statement of changes in funds
for the

                                         Employer     Admini-     Discre-     Revalu-    Capitali-   Unappro-
                                             grant    stration     tionary       ation     sation       priated
                                          reserves   reserves    reserves    reserves    reserves     reserves       Total
                                 Notes       R’000      R’000        R’000      R’000       R’000        R’000      R’000

Balance at 1 April 2004                  110 374       8 406      89 362       4 032       1 202             –    213 376
Prior year adjustment              22                  1 328         663                                            1 991
Restated balance                         110 374       9 734      90 025       4 032       1 202             –    215 367
Net deficit per the
income statement                                                                                     (95 690)     (95 690)
Allocation of unappropriated
surplus/(deficit)                   1    223 864       3 375 (322 929)              –           –     95 690            –
Reallocation of revaluation
surpluses                                              2 635                  (2 635)
Reallocation of capitalisation
surpluses                                                          1 202                  (1 202)
Excess funds transferred
to discretionary                         (280 000)      (167) 280 167                                                   –
Balance at 31 March 2005                  54 238     15 577       48 465       1 397            –                 119 677
Net deficit per the income
statement                           1                                                                 53 698       53 698
Allocation of unappropriated
surplus                                  114 017       4 719      65 038                             (53 698)           –
Reallocation of revaluation
Reallocation of capitalisation
Excess funds transferred
to discretionary                         (164 437)   (10 421) 174 858                                                   –
Balance at 31 March 2006                    3 818      9 875     158 285       1 397            –                 173 375

Services SETA
       Annual report 2006
The Services SETA cash flow statement
for the year ended 31 March 2006

                                                                Year ended    Year ended
                                                                 31 Mar 06     31 Mar 05
                                                          Notes      R’000         R’000

Cash flows from operating activities
Cash receipts from stakeholders
Levies, interest and penalties received                           439 346      397 824
Other cash inflows                                                   (123)       5 604
VAT received                                                            –           24
Cash payments to stakeholders, suppliers and employees:
Grants and project payments                                      (341 064)    (412   788)
Administrative payments                                            (23 711)    (22   380)
Compensation of employees                                         (35 984)     (28   329)
NSF – Domestic worker project payments                              (4 622)    (74   931)
VAT paid                                                            (1 600)            –
Cash generated from/(utilised in) operations                17     32 242     (134 976)
Investment income                                            3      5 911        5 260
Net cash inflow/(outflow) from operating activities                38 153     (129 716)
Cash flows from investing activities
Purchase of property, plant and equipment                   20      (1 270)      (2 835)
Proceeds on disposal of property, plant and equipment                  123           42
Net cash outflow from investing activities                          (1 147)      (2 793)
Cash flows from financing activities
Grants, transfers and funds received                                 8 575      65 605
Finance lease                                                          249           –
Net cash inflow from financing activities                            8 824      65 605
Net increase/(decrease) in cash and cash equivalents               45 830      (66 904)
Cash and cash equivalents at beginning of year                     90 730      157 634
Cash and cash equivalents at end of year                     9    136 560       90 730

                                                           Services SETA
                                                                  Annual report 2006
The Services SETA accounting policies to the
annual financial statements
for the year ended 31 March 2006

1     Basis of preparation
      The financial statements have been prepared in accordance with South African statements of Generally
      Accepted Accounting Practice (GAAP) including any interpretations of such statements issued by the
      Accounting Practices Board, with the prescribed standards of Generally Recognised Accounting Practices
      (GRAP) issued by the Accounting Standards Board replacing the equivalent GAAP statement as follows:

      Standard of GRAP                                   Replacement statement of GAAP
      GRAP 1: Presentation of financial statements;      AC 101: Presentation of financial statements;
      GRAP 2: Cash flow statement;                       AC 118: Cash flow statements;
      GRAP 3: Accounting policies, changes in            AC 103: Accounting policies, changes in accounting
      GRAP 3: accounting estimates and errors.           AC 103: estimates and errors.

      The recognition and measurement principles in the above GRAP and GAAP statements do not differ or result
      in material differences in items presented and disclosed in the financial statements. The implementation of
      GRAP 1, 2 and 3 has resulted in the following significant changes in the presentation of the financial

1.1   Terminology differences
      Standard of GRAP                                                Replacement standard of GAAP
      Statement of financial performance                              Income statement
      Statement of financial position                                 Balance sheet
      Statement of changes in net assets                              Statement of changes in equity
      Net assets                                                      Equity
      Surplus/(deficit) for the period                                Profit/(loss) for the period
      Accumulated surplus/(deficit)                                   Retained earnings
      Contributions from owners                                       Share capital
      Distributions to owners                                         Dividends
      Reporting date                                                  Balance sheet date
      (In terms of GRAP Standards the use of the above terminology    from GAAP is acceptable however the
      reverse is not applicable)

1.2   The cash flow statement can only be prepared in accordance with the direct method.
1.3   Specific information such as:
      (a) receivables from non-exchange transactions, including taxes and transfers;
      (b) taxes and transfers payable;
      (c) trade and other payables from non-exchange transactions must be presented separately on the
          statement of financial position.

1.4   The amount and nature of any restrictions on cash balances is required to be disclosed.

      Paragraph 11-15 of GRAP 1 has not been implemented as the budget reporting standard is in the process of
      being developed by the international and local standard setters. Although the inclusion of budget information
      would enhance the usefulness of the financial statements, non-disclosure will not affect fair presentation.

      The principal accounting policies adopted in the preparation of these financial statements are set out below
      and are, in all material respects, consistent with those of the previous year, except as otherwise indicated.

Services SETA
       Annual report 2006
      The financial statements have been prepared on the historical cost basis, except as modified for the
      revaluation of land and buildings.

2     Currency
      These financial statements are presented in South African rands as this is the currency in which the majority
      of the entity’s transactions are denominated.

3     Revenue recognition
      Revenue is recognised when it is probable that future economic benefits will flow to the enterprise and these
      benefits can be measured reliably.

3.1   Levy income
      In terms of section 3(1) and 3(4) of the Skills Development Levies Act, 1999 (Act No 9 of 1999), registered
      member companies of the SETA pay a skills development levy of 1% of the total payroll cost to the South
      African Revenue Services (SARS).

      80% of skills development levies are paid over to the SETA (net of the 20% contribution to the National Skills Fund).

      Levy income is recognised on the accrual basis.

      A net receivable/payable is recognised for levies accrued as well as estimated SARS adjustments. An
      estimate due to retrospective adjustments by SARS and outstanding levies due at year-end are based on the
      actual levy payment received subsequent to year-end. Changes to prior year estimates are accounted for in
      revenue in the current period.

      The Services SETA refunds amounts to employers in the form of grants, based on information from SARS.
      Where SARS retrospectively amends the information on levies collected, it may result in grants that have been
      paid to certain employers that are in excess of the amount the Services SETA is permitted to have granted to
      employers. A receivable relating to the overpayment to the employer in earlier periods is raised at the amount
      of such grant over payment, net of bad debts and provision for irrecoverable amounts.

      Revenue is adjusted for inter-SETA transfers due to employers changing SETAs. Such adjustments are
      disclosed separately as inter-SETA transfers. The amount of the inter-SETA adjustment is calculated
      according to the standard operating procedures issued by the Department of Labour in June 2001.

      When a new employer is transferred to the Services SETA, the levies transferred by the former SETA are
      recognised as revenue and allocated to the respective category to maintain its original identity.

3.2   Interest and penalties
      Interest and penalties on the skills development levy is recognised on the accrual basis.

3.3   Funds allocated by the National Skills Authority for special projects
      Funds transferred by the National Skills Authority are accounted for in the financial statements of the Services
      SETA as a liability until the related eligible special project expense are incurred, at which time the liability is
      extinguished and revenue recognised.

      Property, plant and equipment acquired for the special project are capitalised in the financial statements as
      the Services SETA controls such assets for the duration of the special project. Such assets could however
      only be disposed of in terms of agreement and specific written instructions by the National Skills Authority.

                                                                                          Services SETA
                                                                                                 Annual report 2006
The Services SETA accounting policies to the
annual financial statements (continued)
for the year ended 31 March 2006

3.4   Government grants and other donor income
      Conditional government grants and other conditional donor funding received are recorded as deferred income
      when it becomes receivable and are then recognised as income on a systematic basis over the period
      necessary to match the grants with the related costs which it was intended to compensate. Unconditional
      grants received are recognised when the amounts have been received.

3.5   Investment income
      Interest income is accrued on a time-proportion basis, taking into account the principal amount outstanding
      and the effective interest rate over the period to maturity. Dividend income from investments is recognised
      when the right to receive payment has been established.

4     Grants and project expenditure
      A registered company may recover a maximum of 70% of its total levy payment by complying with the grant
      criteria in accordance with the Skills Development Regulations issued in terms of the Skills Development Act
      (Act No 9 of 1999).

      Mandatory grants
      The grant payable and the related expenditure are recognised when the employer has submitted an
      application for a grant in the prescribed form within the agreed upon cut-off period. The grant is equivalent to
      50% of the total levies paid by the employer during the corresponding financial period for the skills planning

      Discretionary grants and project expenditure
      The funding for discretionary grants and projects stems from the 20% of the total levies paid by the employers,
      levy grants that are not claimed by employers, the surplus of administration levies not utilised, investment
      income, and other income generated by the Services SETA.

      A SETA may out of any surplus monies determine and allocate discretionary grants to employers, education
      and training providers and workers of the employers who have submitted an application for a discretionary
      grant in the prescribed form within the agreed upon cut-off period.

      Project expenditure comprise:
      • costs that relate directly to the specific contract;
      • costs that are attributable to contract activity in general and can be allocated to the project; and
      • such other costs as are specifically chargeable to the Services SETA under the terms of the contract.

      Such costs are allocated using methods that are systematic and rational and are applied consistently to all
      costs having similar characteristics.

      Project costs are recognised as expenses in the period in which they are incurred. A receivable is recognised
      net of a provision for irrecoverable amounts for incentive and other payments made to the extent of expenses
      not yet incurred in terms of the contract.

Services SETA
       Annual report 2006
5   Irregular and fruitless and wasteful expenditure
    The definitions contained in the Public Finance Management Act are:

    Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement
    of any applicable legislation.

    Fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided
    had reasonable care been exercised.

    All irregular and fruitless and wasteful expenditure is charged against income in the period in which they are
    incurred. The materiality and disclosure of such items are determined in terms of the materiality and
    significance framework of the organisation.

6   Property, plant and equipment
    Property is stated at fair value and is not depreciated as it is deemed to have an indefinite life. Expenditure
    on additions and improvements to property is capitalised on the basis of measured work completed.

    Property is revalued in terms of the asset management policy of the Services SETA. This policy provides for
    the revaluation to be conducted once in a three-year cycle. Surpluses arising from the professional valuations
    of the property are taken direct to the revaluation reserve. Valuation surpluses realised on sale are transferred
    from the revaluation reserve to the income statement. Any deficit arising from the professional valuation of the
    property is taken direct to the revaluation reserve to the extent that such deficit is regarded as temporary.
    Where a permanent diminution in value of the property is identified, the deficit is eliminated against the
    revaluation reserve in respect of the property with any excess being charged to the income statement.

    Non-current assets, excluding land and buildings are stated at historical cost less accumulated depreciation
    and accumulated impairment. Depreciation is calculated on the straight-line method to write off the cost of
    each asset over its estimated useful life. The expected useful life of assets within each class differs, since all
    of the assets are expected to be in use over the life of the Services SETA.

    The following are therefore approximate useful lives:
    Motor vehicles                                4 – 5 years
    Office furniture                                   5 years
    Office equipment                                   5 years
    Computer equipment                            4 – 5 years
    Computer software                             3 – 5 years
    Computer network                              3 – 5 years

    The depreciation charge is to depreciate the book value over the useful life of the asset to its assessed
    residual value. Depreciation is calculated and provided for on an annual basis. If the residual value of an asset
    is at least equal to its carrying amount, depreciation will cease.

    The residual value of technological assets such as computers are set at zero, as these items are expected to
    have a negligible sales value at the end of its useful life.

    The residual values of assets with a cost of less than R5 000 are estimated at 10% of the cost as this is
    approximately the maximum amount expected to be recovered on those items if they were disposed of.

                                                                                      Services SETA
                                                                                             Annual report 2006
The Services SETA accounting policies to the
annual financial statements (continued)
for the year ended 31 March 2006

      Residual values of other assets are determined by considering the second-hand values of similar items which
      are already at the age when the asset is expected to be at the end of its useful life. This would be applicable
      especially to vehicles.

      The depreciation of assets commences on the date that the asset is available for use, even if it is not yet in use.

      The following factors were considered to determine the useful life of the asset:
      • Expected usage of the asset;
      • Expected physical wear and tear of the asset;
      • Technical obsolescence; and
      • Legal or other limits on the use of the asset.

      Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
      immediately to its recoverable amount (ie impairment losses are recognised).

      Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying
      amount and are taken into account in determining operating profit.

7     Borrowings and borrowing costs
      In terms of section 66(3)(c) of the Public Finance Management Act, 1999 a public entity may only through the
      Minister of Finance borrow money or, in the case of the issue of a guarantee, indemnity or security, only
      through the Minister of Labour, acting with the concurrence of the Minister of Finance.

      In terms of section 32.1.1 of the Treasury Regulations, a public entity may borrow money for bridging purposes
      with the approval of the Minister of Finance, subject to certain conditions.

      Borrowing costs are recognised as an expense in the period that it has been incurred.

8     Finance and operating lease agreements
      Leases of property, plant and equipment and where the Services SETA assumes substantially all the benefits
      and risks of ownership are classified as finance leases. Finance leases are capitalised at the estimated
      present value of the underlying lease payments. Each lease payment is allocated between the liability and
      finance charges to achieve a constant rate on the finance balance outstanding. The corresponding rental
      obligations, net of finance charges, are included in other non-current liabilities. The interest element of the
      finance charge is expensed to the income statement over the lease period. The property, plant and equipment
      acquired under finance leasing contracts are depreciated over the useful life of the assets.

      Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are
      classified as operating leases. Payments made under operating leases are charged to the income statement
      based on actual and accrued payments. When an operating lease is terminated before the lease period has
      expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the
      period in which termination take place.

9     Retirement benefit costs
      The Services SETA provides for retirement benefits for all its permanent employees through a defined
      contribution scheme that is subject to the Pension Funds Act, 1956 as amended. In terms of the Pension

Services SETA
       Annual report 2006
      Funds Act, the fund is not required to be actuarially valued. Contributions are at a rate of 15% of pensionable
      emoluments of which members contribute 7,5%.

      The Services SETA’s contribution to the defined contribution plans is charged to the income statement in the
      year to which they relate, and there is no further liability for the Services SETA beyond this.

10    Provisions
      Provisions are recognised when the Services SETA has a present legal or constructive obligation as a result
      of past events, and it is probable that this will result in an outflow of economic benefits that can be estimated
      reliably. Long-term provisions are discounted to net present value.

10.1 Provision for employee entitlements
     The cost of other employee benefits is recognised during the period in which the employee renders the related
     service. Employee entitlements are recognised when they accrue to employees. A provision is made for the
     estimated liability as a result of services rendered by employees up to the balance sheet date. Provisions
     included in the balance sheet are provisions for leave (based on the current salary rates), bonuses and
     termination benefits.

10.2 Provision for grants
     A provision is recognised for grant payments once the specific criteria set out in the Regulations to the Skills
     Development Act, 97 of 1998 has been complied with by member companies and it is probable that the
     Services SETA will approve the payment. The measurement of the obligation involves an estimate, based on
     the established pattern of past practice of approval for each type of grant.

      No provision is made for projects approved at year-end, unless the service in terms of the contract has been
      delivered or the contract is of an onerous nature. Where a project has been approved, but has not been
      accrued for or provided for, it is disclosed as commitments in the notes to the financial statements.

10.3 Other provisions
     Audit fees are recognised on the financial statements to the extent of audit services rendered at year-end and
     for which invoicing has been received subsequent to year-end.

11    Financial instruments
      Financial assets and financial liabilities are recognised on the Services SETA’s balance sheet when the
      Services SETA becomes a party to the contractual provisions of the instrument.

      All “regular way” purchases and sales of financial assets are initially recognised using trade date accounting.

      Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial
      recognition these instruments are measured as set out below.

11.1 Financial assets
     The Services SETA’s principal financial assets are accounts and other receivable and cash and cash

                                                                                        Services SETA
                                                                                               Annual report 2006
The Services SETA accounting policies to the
annual financial statements (continued)
for the year ended 31 March 2006

      Investments and loans
      The following categories of investments are measured at subsequent reporting dates at amortised cost by
      using the effective interest rate method if they have a fixed maturity, or at cost if there is no fixed maturity:
      • Loans and receivables originated by the group;
      • Held-to-maturity investments;
      • An investment that does not have a quoted market price in an active market and whose fair value cannot
        be measured reliably.

      Cost and amortised cost are inclusive of any impairment loss recognised to reflect irrecoverable amounts. The
      financial assets are subject to review for impairment at each balance sheet date.

      Investments other than those listed above are classified as available-for-sale investments or investments held-
      for-trading and are measured at subsequent reporting dates at fair value without any deduction for transaction
      costs that may be incurred on sale or other disposal.

      Accounts and other receivables
      Accounts and other receivables are stated at their nominal value as reduced by appropriate allowances for
      estimated irrecoverable amounts.

      Cash and cash equivalents
      Cash and cash equivalents are measured at fair value.

11.2 Financial liabilities
     The Services SETA’s principal financial liabilities are interest-bearing borrowings, accounts and other
     payables and bank overdraft.

      All financial liabilities are measured at amortised cost, comprising original debts less principal payments and
      amortisations, except for financial liabilities held-for-trading and derivative liabilities, which are subsequently
      measured at fair value.

      Gains and losses arising from a change in the fair value of financial instruments, other than available-for-sale
      financial assets, are included in net profit or loss in the period in which it arises. Gains and losses arising from
      a change in the fair value of available-for-sale financial assets are recognised in equity, until the investment
      is disposed of or is determined to be impaired, at which time the net profit or loss is included in the net profit
      or loss for the period.

      A financial asset or a portion thereof is derecognised when the Services SETA realises the contractual rights to
      the benefits specified in the contract, the rights expire, the Services SETA surrenders those rights or otherwise
      loses control of the contractual rights that comprise the financial asset. On derecognition, the difference between
      the carrying amount of the financial asset and the sum of the proceeds receivable and any prior adjustment to
      reflect the fair value of the asset that had been reported in equity is included in net profit or loss for the period.

      A financial liability or a part thereof is derecognised when the obligation specified in the contract is discharged,
      cancelled, or expires. On derecognition, the difference between the carrying amount of the financial liability,
      including related unamortised costs, and the amount paid for it is included in net profit or loss for the period.

      The fair values at which financial instruments are carried at the balance sheet date have been determined
      using available market values. Where market values are not available, fair values have been calculated by
      discounting expected future cash flows at prevailing interest rates. The fair values have been estimated using
      available market information and appropriate valuation methodologies, but are not necessarily indicative of the
      amounts that the Services SETA could realise in the normal course of business. The carrying amounts of
      financial assets and financial liabilities with a maturity of less than one year are assumed to approximate their
      fair value due to the short-term trading cycle of these items.

Services SETA
       Annual report 2006
     Financial assets and financial liabilities are offset if there is any intention to realise the asset and settle the
     liability simultaneously and a legally enforceable right to offset exists.

12   Reserves
     Equity is sub-classified in the balance sheet between the following funds and reserves:
     • Administration reserve
     • Employer grant reserve
     • Discretionary reserve
     • Capitalisation reserve
     • Revaluation reserve
     • Unappropriated surplus

     This sub-classification is made based on the restrictions placed on the distribution of monies received in
     accordance with the Regulations issued in terms of the Skills Development Act, 1998 (Act No 97 of 1998).

     Member employer company levy payments are set aside in terms of the Skills Development Act and the
     Regulations issued in terms of the act, for the purpose of:

                                                                                                 2005/06      2004/05
                                                                                                      %            %

     Administration costs of the Services SETA                                                        10            10
     Employer grant fund levy                                                                         50            60
     Mandatory workplace skills planning grant                                                        50            15
     Mandatory workplace skills implementation grant                                                   –            45
     Discretionary grants and projects                                                                20            10
                                                                                                      80            80

     In addition, contributions received from public service employers in the national or provincial spheres of
     government may be used to pay for its administration costs.

     Interest and penalties received from SARS as well as interest received on investments are utilised for
     discretionary grants and projects. Other income received are utilised in accordance with the original source of
     the income.

     The net surplus/deficit is allocated to the administration reserve, the mandatory grant reserve and the
     discretionary fund reserve based on the above.

     Surplus funds is moved to the discretionary fund reserve from the administration reserve based on unspent
     funds at year-end and from the mandatory grant based on unclaimed grants after the prescribed time frames
     have elapsed.

13   Comparative figures
     Where necessary, comparative figures have been adjusted to conform to changes in presentation in the
     current year.

                                                                                        Services SETA
                                                                                               Annual report 2006
The Services SETA notes to the
annual financial statements
for the year ended 31 March 2006

                                                                          Employer grant reserve
                                        Total per                                      Mandatory skills
                                          income    Administration   Mandatory skills   implementation
                                       statement          reserve     planning grant             grant
                                            R’000           R’000             R’000              R’000

1     Allocation of net surplus for
      the year to reserves – 2006
      Total revenue                    440 538            53 584           266 773
      Skills development levy income
         >Admin levy income             53 550            53 550
         >Grant levy income            371 987                             266 773
      Penalties and interest             6 783
      Investment income                  5 911
      Other income                       2 307                 34
      Total expenses                   (386 840)         (48 865)         (130 989)            (21 767)
      Administration expenses           (48 865)         (48 865)
      Employer grants and
      project expenses                 (337 975)                          (130 989)            (21 767)

      Net surplus/(deficit) per
      income statement allocated         53 698            4 719           135 784             (21 767)
      Allocation of net surplus for
      the year to reserves – 2005
      Total revenue                    410 796            44 545            75 439            226 318
      Skills development levy income
         >Admin levy income             44   509          44 509
         >Grant levy income            352   033                            75 439            226 318
      Penalties and interest             5   990
      Investment income                  5   260
      Other income                       3   004               36
      Total expenses                   (506 486)         (41 170)           (24 545)           (53 348)
      Administration expenses           (41 170)         (41 170)
      Employer grants and
      project expenses                 (465 316)                           (24 545)            (53 348)

      Net (deficit)/surplus per
      income statement allocated        (95 690)           3 375            50 894            172 970

Services SETA
       Annual report 2006
                         Discretionary reserve
    Total           grant             Projects       Total
   R’000            R’000               R’000       R’000

266 773         111 997                8 184     120 181

266 773        105 214                           105 214
                 6 783                             6 783
                                       5 911       5 911
                                       2 273       2 273
(152 756)      (102 282)            (82 937)     (185 219)

(152 756)      (102 282)            (82 937)     (185 219)

114 017           9 715             (74 753)      (65 038)

301 757          56 266                8 228      64 494

301 757          50 276                           50   276
                  5 990                            5   990
                                       5 260       5   260
                                       2 968       2   968
 (77 893)      (134 533)           (252 890)     (387 423)

 (77 893)      (134 533)           (252 890)     (387 423)

223 864         (78 267)           (244 662)     (322 929)

                                                             Services SETA
                                                                    Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

                                                                      Year ended   Year ended
                                                                       31 Mar 06    31 Mar 05
                                                                           R’000        R’000

2     Skills development levy income
      The total levy income per the income statement is as follows:
      Levy income: Administration (10%)                                  53 550      44 509
        Levies received                                                  44 897      46 803
        Inter-SETA transfers                                               (773)        (73)
        Levies accrued                                                    9 426      (2 221)
      Levy income: Employer grants (50%)                                266 773     301 757
        Levies received                                                 223 445     315 465
        Inter-SETA transfers                                             (3 865)       (440)
        Levies accrued                                                   47 193     (13 268)
      Levy income: Discretionary grants (20%)                           105 214      50 276
        Levies received                                                  87 939      52 557
        Inter-SETA transfers                                             (1 546)        (73)
        Levies accrued                                                   18 821      (2 208)

                                                                        425 537     396 542

3     Investment income
      Interest                                                            5 911        5 260

4     Other income
      Other income – administration:
      Profit on disposal of asset                                            34           36
      Other income – discretionary:
      Trade test income                                                     421          404
      Conference and other seminar income                                 1 852        2 564
                                                                          2 307        3 004

Services SETA
       Annual report 2006
                                             Year ended         Year ended
                                              31 Mar 06          31 Mar 05
                                                  R’000              R’000

5     Employer grants and project expenses
      Employer grants
      Mandatory grants
        Disbursed                             (125 129)           (73 987)
        Provisions and accruals                (27 627)            (3 906)
      Discretionary grants
        Disbursed                             (102 282)          (134 533)
      Project expenditure
        Disbursed                             (123 526)          (213 769)
        Provisions and accruals                 40 589            (39 121)
                                              (337 975)          (465 316)

5.1   Project expenditure consist of:
      Direct project costs                     (61   814)        (213   475)
      Direct salaries and wages                (14   203)          (9   634)
      Direct administration expenses            (2   456)          (2   519)
      Sundry expenses:                          (4   464)         (27   262)
       Conference expenditure                   (3 489)              (273)
       Stakeholder participation                  (975)              (960)
       Output VAT expense                            –            (26 029)

                                               (82 937)          (252 890)

                                              Services SETA
                                                     Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

                                                                                 Year ended         Year ended
                                                                                  31 Mar 06          31 Mar 05
                                                                                      R’000              R’000

6     Administration expenses
      The following items have been included
      in administration expenses:
      Advertising and promotion                                                      (3 178)            (4 429)
      Stakeholder participation                                                      (3 729)            (2 984)
      Audit committee expenditure                                                       (48)               (67)
      Communication costs                                                            (4 981)            (4 096)
      Computer and IT expenses                                                       (2 377)            (1 765)
      Office expenses                                                                (2 057)            (2 480)
      Finance charges                                                                  (100)              (111)
      Operating lease costs                                                          (2 019)            (2 019)
      Staff costs (note 6.1)                                                        (35 984)           (28 329)
      Travel and subsistence                                                         (1 083)            (2 070)
      External audit fees                                                              (555)               (20)
      Professional and consulting fees                                               (4 606)            (1 845)
      Depreciation                                                                   (2 816)            (2 599)
      Other costs                                                                      (124)              (509)
      Less: Costs allocated to project expenditure                                   14 792             12 153
                                                                                    (48 865)           (41 170)

6.1   Staff costs
      Salaries and wages                                                            (28 725)           (16 336)
      Performance awards                                                                  –             (2 249)
      UIF, PAYE and Workman’s Compensation                                           (4 126)            (5 737)
      Medical aid contributions                                                        (721)              (707)
      Pension contributions: Defined contribution plan                               (2 412)            (3 300)
                                                                                    (35 984)           (28 329)
      Allocation of cost of employment:
      – Administration expenses                                                     (21 781)           (18 695)
      – Project expenses                                                            (14 203)            (9 634)
                                                                                    (35 984)           (28 329)
      Average number of employees                                                       185               209

      Refer to the report by the Accounting Authority for disclosure concerning the emoluments of members of the
      accounting authority, the Chief Executive Officer; the Chief Financial Officer and senior managers.

Services SETA
       Annual report 2006
                                                                                    Year ended          Year ended
                                                                                     31 Mar 06           31 Mar 05
                                                                                         R’000               R’000

7     Prepayments and advances
      Accrued advances                                                                   1 085               2135

8     Accounts receivable
      Skills development levy debtor                                                    76 370             83 396
       Administration income                                                             9 426             10 331
       Mandatory grant income                                                           47 193             66 479
       Discretionary income                                                             18 821              6 041
       Penalties and interest                                                              930                545
      Deposits                                                                             126                 126
      Prepaid expenses                                                                   2 454                  50
      NSF – project claims                                                                   –                  44
      Staff loans/debtors                                                                   62                  26
                                                                                        79 012             83 642

      An amount of R15 835 738 in respect of levies received from exempt
      companies has been included in Accounts Payable (note 12). This
      has not been offset against the skills development levy debtor.

8.1   Retrospective amendments by SARS
      Included in skills development levy debtor is:
      SARS receivable
        Opening amount                                                                  21 037                  –
        Estimated adjustments included in levies received                                2 411             30 052
        Net effect of SARS adjustments in the current year                              (1 761)            (9 015)
       Closing carrying amount                                                          21 687             21 037

9     Cash and cash equivalents
      Cash at bank and in hand                                                          58 560             39 730
       Cash in bank                                                                     58 552             39 720
       Cash in hand                                                                          8                 10
      Short-term investments                                                            78 000             51 000
                                                                                       136 560             90 730

      As required in Treasury Regulations 31.2 National Treasury approved the financial institution where the bank
      accounts are held.

      Cash includes cash on hand and cash with banks. Cash equivalents are short term, highly liquid investments
      that are held with registered banking institutions with maturities of three months or less and that are subject
      to an insignificant risk of change in value. Short-term investments comprise of short-term fixed deposits held
      in banking institutions.

                                                                                      Services SETA
                                                                                             Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

                                                                               Year ended        Year ended
                                                                                31 Mar 06         31 Mar 05
                                                                                    R’000             R’000

10    Borrowings/loans
      Borrowing powers
      In terms of PFMA section 66 (3)(c), public entities
      may only through the Minister of Finance borrow
      money or, in the case of the issue of a guarantee,
      indemnity or security, only through the Minister of Finance.

      In terms of Treasury 32.1.1, SETA’s as schedule 3A public
      entities may borrow money for bridging purposes with the
      approval of the Minister of Finance, subject to certain conditions.

      No such borrowings were entered into during the year.

11    Finance lease
      Summary of finance lease commitments
      Not later than one year                                                        562               573
      Later than one year but not later than five years                              365               116
      Later than five years                                                            –                 –
                                                                                     927               690
      Lease obligation                                                               935               696
      Finance charges                                                                 (8)               (6)
      Less: Current portion of finance lease                                        (562)             (573)
                                                                                     365               116

      The finance lease obligation relates to the lease of 27 office
      equipment such as copiers and fax machines. The lease term
      ranges between three to five years with the last year ending on
      31 March 2009. The lease liability is recognised at fair value
      as required in terms of AC105.

12    Accounts payable
      Mandatory grants payable – non-exchange transaction                         27 627            20 623
      Trade payables – exchange transaction                                        3 653            44 242
      Current portion of finance lease – exchange transaction                        562               573
      Other accrued expenses – exchange transaction                               16 723             1 008
                                                                                  48 565            66 446

      Other accrued expenses includes employers who continued paying skills development levies after becoming
      exempt. This amounted to R15 835 738.

Services SETA
       Annual report 2006
                                                                      Year ended         Year ended
                                                                       31 Mar 06          31 Mar 05
                                                                           R’000              R’000

13   Value added tax (receivable)/payable
     Open carrying amount                                                 1 466              1 442
     Change in estimate related to the previous year                       (134)                 –
     Amounts utilised                                                    (1 466)                 –
     Additional provisions for VAT on:                                        –                 24
     Administration                                                           –                    24
     Closing carrying amount                                               (134)             1 466

14   Provisions
                                            Employee   Consultancy
                                               leave           fees
     Opening carrying amount                   1 496          400         1 896              1 531
     Amounts utilised                              –          (35)          (35)            (1 531)
     Change in estimate                          131            –           131              1 896
     Closing carrying amount                   1 627          365         1 992              1 896
     Current                                   1 627          365         1 992              1 896

                                                                       Services SETA
                                                                              Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

                                                                                    Year ended          Year ended
                                                                                     31 Mar 06           31 Mar 05
                                                                                         R’000               R’000

15    NSF – funds received in advance
      Opening balance                                                                    5 426              14 832
      Received during the year                                                           8 450              65 542
      Investment income                                                                    128                  63
      Utilised and recognised as income – conditions met:                               (4 696)            (75 012)
        Advertising and promotion                                                         (435)             (1 402)
        Stakeholder participation                                                         (122)             (1 175)
        Communication costs                                                               (544)               (246)
        Computer and IT expenses                                                           (64)               (171)
        Office expenses                                                                   (239)             (1 438)
        Staff costs                                                                     (1 322)             (2 800)
        Travel and subsistence                                                            (260)               (659)
        Other expenses                                                                  (1 299)             (1 815)
        Direct project costs                                                              (337)            (65 225)
        Depreciation                                                                       (74)                (81)

      Closing balance                                                                    9 308               5 426

      During the year conditional funds of R8 450 000 was received from the National Skills Authority for the
      purposes of the 1 000 learnership project. This amount was recognised as a liability until the conditions have
      been met. During the year, R4 695 779 project expenditure was incurred for both the 1 000 learnerships
      and the domestic worker projects and a corresponding amount was recognised as revenue. At year-end,
      R9 308 154 continues to be accounted for as a liability until the remaining conditions have been met.

      The previous year’s closing balance has been restated due to a change in estimate of the useful life of the
      non-current assets. This resulted in depreciation of the non-current assets being recalculated for the duration
      of its useful life.

16    Taxation
      No provision has been made for taxation, as the Services SETA is exempt from income tax in terms of section
      10 of the Income Tax Act.

Services SETA
       Annual report 2006
                                                                                     Year ended          Year ended
                                                                                      31 Mar 06           31 Mar 05
                                                                                          R’000               R’000

17    Net cash generated from/(utilised in) operating activities
      Net surplus/(deficit) as per income statement                                      53 698             (95 690)
      Adjusted for non-cash items
       Depreciation                                                                       2 890               3 891
      Adjusted for items separately disclosed
       Investment income                                                                 (5 911)             (5 260)
       Profit on disposal of assets                                                         (34)                (36)
       NSF – Domestic worker project income                                              (4 696)            (75 043)
      Working capital changes:
       Increase/(decrease) in accounts payable                                          (17 881)            40 083
       Increase in provisions                                                                96                365
       Increase in prepayments and advances                                               1 050             (1 238)
       Decrease/(increase) in accounts receivable                                         4 630             (2 072)
       Increase in value added tax                                                       (1 600)                24
      Net cash flow utilised in operating activities                                     32 242           (134 976)

18    Contingencies
      In terms of the PFMA, all surplus funds as at year-end may be forfeited to National Treasury. As at year-end,
      this amount could not be quantified as National Treasury has not defined surplus funds. No formal approval
      has been obtained from National Treasury to retain surplus funds.

19   Commitments
19.1 Discretionary reserve
     Discretionary grants are not accrued until a contractual obligation exists, even if applications have been
     approved at year-end.

      Of the balance available in the discretionary grant reserve at the end of March 2006 and the projected
      unclaimed grants, R141 701 000 has been approved and allocated for future projects (multi-year plan) and
      skills priorities as set out below. A request for the accumulation of these funds has been submitted to National
      Treasury. At the time of compiling the financial statements, no reply had been received.

                                                                                       Services SETA
                                                                                              Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

19.1 Discretionary reserve (continued)
                             Opening Approved by                  Opening Approved by                 Closing
                              balance accounting                   balance accounting                 balance
                             2004/05    authority      Utilised   2005/06    authority    Utilised   2005/06
     Project                   R'000       R'000        R'000       R'000       R'000      R'000       R'000

      FET sector agreement         4 147     7 023    (11 104)        66        3 232     (3 298)          –
      Provider and
      accreditation networking     2 472     6 268     (8 740)          –       9 506     (9 476)         30
      Constituency capacity
      building                         –    19 800    (19 067)       733      13 281     (14 014)          –
      Partnership and
      skills promotion             7 664      756      (3 961)      4 459      (2 876)    (1 232)       351
      NVC provincial
      provider support                 –      366        (366)          –       1 117         (27)     1 090
      ISOE discretionary
      funding                          –       194       (194)          –           –                      –
      ETQA support grant           9 890     4 592    (12 231)      2 251       5 497     (2 886)      4 862
      Research                         –     3 897     (3 790)        107       2 705     (2 404)        408
      Three star programme             –     4 930     (3 228)      1 702       1 598     (3 300)          –
      ABET and learner
      bridging programme               –      868        (868)          –       1 679     (1 679)          –
      Scarce skills
      bursary support              3 324     1 840     (5 164)          –       1 230     (1 230)          –
      Small, medium, micro
      enterprises co-ordination 1 740        9 247     (8 824)      2 163      (2 163)                     –
      Scarce and critical skills       –     4 653     (4 615)         38         153       (191)          –
      Non-levy paying
      enterprises                      –      759        (759)          –       2 786     (2 786)          –
      Skills development
      facilitators                     –     3 763     (3 594)       169          564       (733)          –
      implementation             146 089   100 880    (92 615)    154 354      (5 879)   (18 488)    129 987
      Non-levy paying
      enterprises                      –     2 239     (2 239)         –            –                     –
      Learner recruitment              –    39 087    (38 823)       264          761     (1 025)         –
      Learning programmes          1 828     2 390     (4 012)       206        4 158     (3 924)       440
      Audit reporting funding          –       779       (779)         –        1 673     (1 673)         –
      discretionary grant              –      964        (964)          –         975       (975)          –
      Sector specialist
      capacity building                –         –          –          –      15 897     (11 363)      4 534
      Gainful employment               –         –          –          –       1 464      (1 464)          –
      Other expenses                   –     1 393       (924)       469         300        (769)          –
                                 177 154   216 688   (226 861)    166 981     57 657     (82 937)    141 701

Services SETA
       Annual report 2006
                                                                                  Year ended          Year ended
                                                                                   31 Mar 06           31 Mar 05
                                                                                       R’000               R’000

19.2 Operating leases
     Summary of operating lease commitments
     Not later than one year                                                           2 019              1 738
     Later than one year but not later than five years                                 2 956                760
     Later than five years                                                                 –                  –
                                                                                       4 975              2 498

      Operating leases comprise of office rentals.

      There are currently 12 office rental agreements in place with the last agreement ending in September 2009.
      The average rental cost per office per month is R14 351.

19.3 Legal costs
     It is anticipated that the SETA will incur legal costs of approximately R235 000 in respect of labour related
     claims. It is probable that the claims would be unsuccessful in their action according to the attorney.

                                                                         Year ended 31 March 2006
                                                                                Accumulated             Net book
                                                                     Cost        depreciation              value
                                                                    R’000              R’000              R’000

20    Property, plant and equipment
      Buildings and improvements                                    5 750                  –              5 750
      Vehicles                                                        449               (136)               313
      Office furniture                                              2 846             (1 133)             1 713
      Office equipment                                              3 981             (1 933)             2 048
      Computer equipment                                            5 223             (2 373)             2 850
      Computer software                                             4 037             (1 753)             2 284
      Computer network                                              3 417             (1 561)             1 856
      Balance at end of period                                     25 703             (8 889)            16 814
      Made up as follows:
       Owned assets                                                23 566             (7 582)            15 984
       Leased assets                                                2 137             (1 307)               830
                                                                   25 703             (8 889)            16 814

                                                                                    Services SETA
                                                                                           Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

                                                                           Year ended 31 March 2005
                                                                                   Accumulated               Net book
                                                                       Cost         depreciation                 value
                                                                      R’000               R’000                 R’000

20    Property, plant and equipment (continued)
      Buildings and improvements                                      5 750                    –                5 750
      Vehicles                                                          449                  (76)                 373
      Office furniture                                                2 793                 (776)               2 017
      Office equipment                                                3 009               (1 240)               1 769
      Computer equipment                                              5 149               (1 695)               3 454
      Computer software                                               4 015               (1 174)               2 841
      Computer network                                                3 405               (1 088)               2 317
      Balance at end of period                                       24 570               (6 050)             18 520
      Made up as follows:
       Owned assets                                                  23 145               (5 199)             17 946
       Leased assets                                                  1 425                 (851)                574
                                                                     24 570               (6 050)             18 520

                              Net book Revaluations/                           Depreciation   Accum dep       Net book
                            value 2005    additions    Disposals Adjustments        charge    on disposal   value 2006
                                 R’000        R’000       R’000        R’000         R’000          R’000        R’000

      Movement summary
      Buildings and
      improvements                5 750          –            –           –              –             –        5 750
      Vehicles                      373          –            –           –            (60)            –          313
      Office furniture            2 017         89          (36)          –           (363)            6        1 713
      Office equipment            1 769        972            –           –           (693)            –        2 048
      Computer equipment          3 454        168          (94)          –           (720)           42        2 850
      Computer software           2 841         29           (7)          –           (582)            3        2 284
      Computer network            2 317         12            –           –           (473)            –        1 856
                                 18 520      1 270         (137)          –         (2 890)           51      16 814

                              Net book Revaluations/                           Depreciation   Accum dep       Net book
                            value 2004    additions    Disposals Adjustments        charge    on disposal   value 2005
                                 R’000        R’000       R’000        R’000         R’000          R’000        R’000

      Movement summary
      Buildings and
      improvements                5 750          –            –           –              –             –        5 750
      Vehicles                       71        324          (41)         83           (104)           40          373
      Office furniture            1 775        572            –         (52)          (278)            –        2 017
      Office equipment              780      1 125            –           –           (163)            –        1 742
      Computer equipment          2 596        672           (7)      1 499         (1 281)            2        3 481
      Computer software           2 315        236            –       1 470         (1 180)            –        2 841
      Computer network            1 361        480            –       1 361           (885)            –        2 317
                                 14 648      3 409          (48)      4 360         (3 891)           42      18 520

Services SETA
       Annual report 2006
21   Material losses through criminal conduct, irregular, fruitless and wasteful expenditure
     To the best of our knowledge, no material losses through criminal conduct, or irregular, fruitless or wasteful
     expenditure were incurred during the year ended 31 March 2006.

                                                                                    Year ended          Year ended
                                                                                     31 Mar 05           31 Mar 04
                                                                                         R’000               R’000

22   Prior year adjustment
     The net effect of the transactions are as follow:
     Income statement:
     Net surplus/(deficit) as previously stated                                        (97 851)             (41 537)
     Depreciation adjustment                                                             1 183                2 327
     Finance charges*                                                                     (111)                (243)
     Rental on equipment*                                                                1 089
     Restated net (deficit)/surplus                                                    (95 690)             (39 453)
     Balance sheet:
     Non-current assets
     Property, plant and equipment as previously stated                                13 586               14 648
     Depreciation adjustment*                                                           3 509                2 327
     Leased assets*                                                                     1 425                    –
     Restated non-current assets balance                                               18 520               16 975
     Non-current liabilities
     Finance lease*                                                                        116                    –
     Statement of changes in funds
     Balance at 31 March 2004 as previously stated                                       8 406              89 362
     Depreciation adjustment                                                             1 570                 663
     Finance charges and lease expenditure*                                               (242)                  –
     Restated balance                                                                    9 734             90 025
     Allocation of unappropriated surplus/(deficit)                                      3 375           (322 929)
     Reallocation of revaluation surpluses                                               2 635                  –
     Reallocation of capitalisation surpluses                                                –              1 202
     Excess funds transferred to discretionary                                            (167)           280 167
     Restated balance                                                                  15 577               48 465

     *The prior year adjustment relates to a change in estimate on the useful life of non-current assets.

                                                                                      Services SETA
                                                                                             Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

22    Prior year adjustment (continued)
      Non-current assets were previously depreciated on a straight-line basis as follows:
      Motor vehicles                          25%
      Office furniture                        10%
      Office equipment                        10%
      Computer equipment                      25%
      Computer software                    33,33%
      Computer network                     33,33%

      Non-current assets are now accounted for in terms of policy notes 1 and 6.

      In addition to the above adjustment, lease agreements have also been re-assessed to be finance leases.
      These lease agreements relate to the lease of office equipment such as copiers and fax machines. This
      resulted in the capitalisation of finance lease assets and the recognition of an equivalent non-current liability.

23    Financial instruments
      In the course of the Services SETA’s operations it is exposed to interest rate, credit, liquidity and market risk.
      The Services SETA has developed a comprehensive risk strategy in terms of TR 28.1 in order to monitor and
      control these risks. The risk management process relating to each of these risks is discussed under the
      headings below.

      Interest rate risk
      The Services SETA manages its interest rate risk in terms of its “Investment Policy” and “Cash Flow
      Management Policy”. Amongst other controls, the following controls are exercised to ensure minimum
      exposure and maximum returns:
      • Surpluses are invested with more than one financial institution with a credit “A” rating and as per approval
        from National Treasury;
      • The capital invested is guaranteed with no risk of loss; and
      • Funds held in current account are limited ensuring maximum returns are generated by funds maintained in
        call deposits.

Services SETA
       Annual report 2006
23   Financial instruments (continued)
     The Services SETA’s exposure to interest rate risk and the effective interest rates on financial instruments at
     balance sheet date are as follows:

                                             Effective              Effective          Non-interest-   Weighted
                             Floating rate    interest Fixed rate    interest               bearing     average
                                  amount          rate   amount          rate     Period    amount        period      Total
                                    R’000           %      R’000           %    in years      R’000     in years     R’000

     Year ended
     31 March 2006
     Financial assets
     Cash and cash
     equivalents                 58 552            5     78 000          7,4                      8                136 560
     and advances                  1 085           5                                                                 1 085
     Accounts receivable             126           5                                        78 886                  79 012
     Vat receivable                  134           5                                                                   134
                                 59 897                  78 000                             78 894                 216 791
     Financial liabilities
     Accounts payable                                                                       48 565                  48 565
     VAT payable                                                                                 –                       –
     Provisions                                                                              1 992                   1 992
     NSF received in
     advance                                                                                 9 308                   9 308
                                                                                            59 865                  59 865
     Year ended
     31 March 2005
     Financial assets
     Cash and cash
     equivalents                 39 720            5     51 000          7,4                     10                 90 730
     and advances                  2 135           5                                                                 2 135
     Accounts receivable             126           5                                        83 516                  83 642
                                 41 981                  51 000                             83 526                 176 507
     Financial liabilities
     Accounts payable                                                                       66 446                  66 446
     VAT payable                                                                             1 466                   1 466
     Provisions                                                                              1 896                   1 896
     NSF received
     in advance                                                                              5 426                   5 426
                                                                                            75 234                  75 234

                                                                                             Services SETA
                                                                                                    Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

23    Financial instruments (continued)
      Credit risk
      Financial assets, which potentially subject the Services SETA to the risk of non-performance by counterparties
      and thereby subject to credit concentrations of credit risk, consist mainly of cash and cash equivalents,
      investments and accounts receivable.

      The Services SETA manages to limit its treasury counterparty exposure by only dealing with well established
      financial institutions approved by National Treasury through the approval of their investment policy in terms of
      Treasury Regulation. The group’s exposure is continuously monitored by the Executive Committee and Audit
      Committee of the entity.

      Credit risk with respect to levy-paying employers is limited due to the nature of the income received. The Services
      SETA does not have any material exposure to any individual or counterparty. The Services SETA’s concentration
      of credit risk is limited to the services industry in which the Services SETA operates. No events occurred in the
      services industry during the financial year that may have an impact on the accounts receivable that has not been
      adequately provided for. Accounts receivable are presented net of allowance for doubtful debt.

      Liquidity risk
      The Services SETA manages liquidity risk through proper management of working capital, capital expenditure
      and actual versus. forecasted cash flows and its cash management policy. Adequate reserves and liquid
      resources are also maintained.

      Market risk
      The Services SETA is exposed to fluctuations in the employment market, for example, sudden increases in
      unemployment and changes in the wage rates. No significant events occurred during the year that the
      Services SETA is aware of.

      Fair values
      The Services SETA’s financial instruments consist mainly of cash and cash equivalents, account and other
      receivables, and account and other payables. No financial instruments were carried at an amount in excess
      of its fair value.

      No financial asset was carried at an amount in excess of its fair value and fair values could be reliably
      measured for all financial instruments.

      The following methods and assumptions are used to determine the fair value of each class of financial

      Cash and cash equivalents
      The carrying amount of cash and cash equivalents approximates fair value due to the relatively short-term
      maturity of these financial assets.

      Accounts receivable
      The carrying amount of accounts receivable, net of allowance for bad debt, approximates fair value due to the
      relatively short-term maturity of these financial assets.

Services SETA
       Annual report 2006
     Accounts payable
     The carrying amount of account and other payables approximates fair value due to the relatively short-term
     maturity of these financial liabilities.

24   Related party transactions
     Transactions with other SETAs
     Inter-SETA transactions and balances arise due to the movement of employers from one SETA to another.
     No other transactions occurred during the year with other SETAs.

     The balances at year-end included in receivables and payables are:

                                                      2005/06                             2004/05
                                                        R’000                               R’000
                                                  Transfers in/    Amount             Transfers in/    Amount
                                                  (out) during. receivable/           (out) during. receivable/
                                                      the year    (payable)               the year     payable

     Received/receivables                               3 141       2 325                   6 881             –
     AgriSETA                                              43           –                       –             –
     MERSETA                                            2 325       2 325                       –             –
     BankSETA                                               –           –                       –             –
     CETA                                                   –           –                   4 525             –
     CHIETA                                                 –           –                     188             –
     CTFL                                                   –           –                       –             –
     ETDPSETA                                             111           –                      15             –
     Fasset                                                53           –                     506             –
     Fieta                                                  –           –                      17             –
     HWSETA                                                 –           –                       –             –
     INSETA                                                 –           –                     143             –
     MQA                                                    –           –                       –             –
     PAETA                                                  –           –                     814             –
     PoslecSETA                                             –           –                       –             –
     SETASA                                                 –           –                       8             –
     TETA                                                 609           –                       –             –
     W&RSETA                                                –           –                     665             –

                                                                                  Services SETA
                                                                                         Annual report 2006
The Services SETA notes to the
annual financial statements (continued)
for the year ended 31 March 2006

24    Related party transactions (continued)
                                                          2005/06                              2004/05
                                                             R’000       Amount                   R’000       Amount
                                                 Transfers in/(out)   receivable/     Transfers in/(out)   receivable/
                                                   during the year      (payable)       during the year       payable

      Paid/payables                                        (9 325)        1 080                 (6 863)         (604)
      AgriSETA                                                (27)            –                       –            –
      BankSETA                                               (188)            –                    (153)           –
      CETA                                                   (886)            –                       –            –
      CHIETA                                               (1 388)        1 080                    (129)        (299)
      CTFL                                                   (600)            –                    (624)           –
      ETDPSETA                                                (92)            –                                    –
      Fasset                                                  (10)            –                 (2 339)            –
      Fieta                                                     –             –                   (155)            –
      Foodbev                                                (172)            –                   (508)           (5)
      HWSETA                                                  (12)            –                   (147)            –
      INSETA                                                    –             –                   (476)            –
      Isett                                                  (325)            –                   (605)          (88)
      LGWSETA                                                   –             –                    (28)            –
      Mapp                                                   (305)            –                                    –
      MERSETA                                              (3 479)            –                 (1 203)         (191)
      MQA                                                       –             –                   (111)            –
      PAETA                                                     –             –                                    –
      PoslecSETA                                             (879)            –                    (262)           –
      SETASA                                                    –             –                                    –
      TETA                                                   (760)            –                                    –
      THETA                                                    (8)            –                     (53)           –
      W&RSETA                                                (194)            –                     (70)         (21)
      Total                                                (6 184)        1 245                      18         (604)

      Transactions with other related parties
      During the financial year members of the Accounting Authority and employees were required to disclose their
      interest in any contracts that the Services SETA is entering into with an outside party. To the best of our
      knowledge no known transaction have occurred during the course of the financial year.

      During the year the following discretionary funds were paid to the accounting authority. All transactions were
      at arms length.

                                                                                        2005/06              *2004/5
      Name                                                    Company                     R’000                R’000

      Mathibe Andy                                    SA Post Office                       6 203                    –
      Billington Michelle                        Capital Outsourcing                       1 961                    –
      Campbell Graham                      BRP Project Management                            189                    –
      Tshabalala and Vusisizwe             Black Management Forum                            502                    –
      * No comparative figures are shown due to the change in the membership of the Accounting Authority.

Services SETA
       Annual report 2006

ABET     Adult Basic Education and Training                NQF      National Qualifications Framework
AMC      African Marketing Confederation                   NSA      National Skills Authority
ASGISA   Accelerated Shared and Growth Initiative          NSDS     National Skills Development Strategy
         of South Africa                                   NSF      National Skills Fund
ATR      Annual Training Report                            NTB      National Training Board
BCEA     Basic Conditions of Employment Act                NVC      New Venture Creation
BEE      Black Economic Empowerment                        PBCS     Performance-Based Competency
BPO      Business Plan Objectives                                   Standards
BUSA     Business Unity South Africa                       PESTEL   Political, Economic, Social, Technological,
CBO      Community-Based Organisation                               Environmental, Legislative
CHE      Council of Higher Education                       PDI      Previously Disadvantaged Individuals
COSATU   Congress of South African Trade Unions            PFMA     Public Finance Management Act
CPD      Continuous Professional Development               PPP      Public Private Partnership
DoL      Department of Labour                              QASA     Quadriplegic Association of South Africa
DTI      Department of Trade and Industry                  QMS      Quality Management System
DWP      Domestic Workers Project                          RPL      Recognition of Prior Learning
EAP      Employee Assistance Programme                     SACCOM   South Africa Chamber of Commerce
EMC      European Marketing Confederation                  SADAC    Southern African
EOHCB    Employers Organisation for Hairdressing                    Development Community
         Cosmetology and Beauty                            SANCB    South African National Council for
EPQC     European Professional Qualifications                       the Blind
         Committee                                         SAQA     South African Qualifications Authority
ETQA     Education and Training Qualifications             SARS     South African Revenue Services
         Authority                                         SBSQ     Small Business Services Qualification
EXCO     Executive Committee                               SDA      Skills Development Act
FEDUSA   Federation of Unions of South Africa              SEDA     Small Enterprise Development Agency
FET      Further Education and Training                    SEQ      Self Evaluation Committee
GTZ      German Technical Co-operation                     SETA     Sector Education and Training Authority
HET      Higher Education and Training                     SETQAA   Sector Education and Training Quality
HSRC     Human Sciences Research Council                            Assurance Authority
ISO      International Standards Organisation              SFP      School Feeder Project
ISOE     Institute of Sectoral and Occupational            SGB      Standard Generating Body
         Excellence                                        SIC      Standard Industrial Classification
JIPSA    Joint Initiative on Priority Skills Acquisition   SME      Small Medium Enterprises
LOI      Letter of Intent                                  SMME     Small Medium Macro Enterprises
LSP      Learnership Service Provider                      SPLP     School Pre-Learnership Project
MOU      Memorandum of Understanding                       UIF      Unemployment Insurance Fund
NEC      Not elsewhere classified                          WSP      Workplace Skills Plan
NEDLAC   National Economic Development and                 SDF      Skills Development Facilitator
         Labour Council                                    TES      Temporary Employment Services
NGO      Non-Governmental Organisation
NLRD     National Learner Records Database
NPI      National Productivity Institute

                                                                                Services SETA
                                                                                       Annual report 2006
Contact details

14 and 15 Sherborne Road
Tel: 011 276 9600                Fax: 011 276 9623

49 President Steyn Street
Tel: 051 430 6223                Fax: 051 430 8771

Picbel Parkade
11th Floor
58 Strand Street
Cape Town
Tel: 021 425 0417                Fax: 021 425 1575

Commercial City Building
12th Floor
40 Commercial Road
Tel: 031 304 0367                Fax: 031 301 4732

15 St James Road
East London
Tel: 043 743 5410                Fax: 043 722 0587

Services SETA
       Annual report 2006
Ristone Office Park
15 Sherborne Road
Tel: 011 276 9600          Fax: 011 276 9623

37 Brown Street
Midcity Building
4th Floor,
Tel: 013 752 2207          Fax: 013 752 6434

Ground Floor
Kalinga Linga House
3 Edward Street,
Central Port Elizabeth
Tel: 041 582 2033          Fax: 041 582 2040


                                                  Services SETA
                                                         Annual report 2006

Publisher                              Services Sector Education and Training Authority
                                       PO Box 3322, Houghton 2041

Compiled and edited by                 Merle Clark

Layout and design                      Graphicor

Printer                                Neon Printers, Johannesburg

RP                                     85/2006

ISBN                                   0 621 365912


Services SETA
       Annual report 2006

        Services Seta
               Annual report 2006

Services Seta
       Annual report 2006
G R A P H I C O R   3 4 3 8 2

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