PROPOSED MERGER OF INSETA, BANKSETA AND FASSET INSETA STAKEHOLDER INFORMATION SESSIONS 4 -7 OCTOBER 2004
CONTENTS ____________________ • Background • Process followed by NSA/Do. L • NSA proposals re SETA landscape 2005 -9 • NSA/Do. L criteria in determining SETA landscape • Latest developments • INSETA, BANKSETA & FASSET stakeholders’ views on proposed merger • INSETA’s view on proposed merger • Way Forward • Questions
BACKGROUND __________________________ • Establishment of 25 SETAs ito Skills Development Act on 20 March 2000 • 5 -year phase until 19 March 2005 • 19 March 2004 – SETA applications for re establishment to Minister of Labour • Achievement of Business Plan 2003/4 • Achievements against NSDS Objectives • Financial performance • Governance of SETA
PROCESS FOLLOWED BY NSA/Do. L ____________________________________________ • NSA proposals re SETA landscape 2005 -9 • Re-establishment applications by SETAs • SETA Performance assessment report by Do. L • Do. L recommended the re-establishment of INSETA, BANKSETA & FASSET • Economic Sector Research Report • Convergence in the financial services environment • Recommended the establishment of the “FBISETA” • Recommendations from NSA Legal & Governance Sub Committee
NSA/Do. L CRITERIA IN DETERMINING PROPOSED SETA LANDSCAPE ____________________________________________ 1. SETA progress towards achievements of its NSDS 2001 -2005 targets 2. SETA assessment against their 2003/4 Business Plans 3. Institutional development of SETA, dependency on external consultancies and levels of outsourcing 4. SETA levels of over and under-expenditure, cash flow and income projections in the next five years, including source of income 5. Core focus on strategic functions of SETAs as defined in the Act
NSA/Do. L CRITERIA IN DETERMINING PROPOSED SETA LANDSCAPE ____________________________________________ 6. Demarcation of sectors should remain economic sector based and promote economic growth and social development 7. No special or single interest SETAs 8. Provincial and National departments’ views regarding the renewal certificate of related SETAs, how SETAs can be made more effective to benefit their departments and how SSPs could be aligned to their growth and development/ service delivery programmes 9. Proof of sector representation and sector stakeholder support and accountability
NSA/Do. L CRITERIA IN DETERMINING PROPOSED SETA LANDSCAPE ___________________________________________________ 10. International and local economic sector shifts and emphasis including relevancy of the sector in the next five years 11. Trends with regard to industrial or employment levels growth and decline in the last five years 12. International Industrial / economic sector education and training organisations scope of coverage in developing and developed countries 13. Size and coherence in the sector especially in the fast growing sectors such as Services
NSA PROPOSALS RE SETA LANDSCAPE 2005 -9 __________________________________________________ • 20 SETAs (from current 25) • SETAs to be confirmed with minor or no adjustments to their scope of coverage 1. CHIETA 2. HWSETA 3. FOODBEV 4. MQA 5. CTLFSETA 6. ISETT 7. Services SETA 8. CETA 9. W&R SETA 10. EDTPSETA 11. TETA
NSA PROPOSALS RE SETA LANDSCAPE 2005 -9 ________________________________________________ • Proposed predominantly private sector SETAs wherein further discussion is required • Two manufacturing activity SETAs 12. MERSETA (Steel based manufacturing) 13. MANSETA (All non-steel based manufacturing – Parts of MAPPP & FIETA) • Two leisure activity SETAs 14. THETA 15. SCARETA (+ Parts of MAPPP & THETA) • Single, consolidated agricultural resource SETA 16. AFFSETA (PAETA, SETASA & FIETA) • Single, consolidated financial investment services activity SETA 17. FBISETA (INSETA, BANKSETA & FASSET)
NSA PROPOSALS RE SETA LANDSCAPE 2005 -9 _______________________________________________ • Proposed predominantly public sector related SETAs wherein further discussion is required 18. POSLECSETA • POSLEC • Parts of DIDTETA (Defense, Nat. Intelligence & Secret Serv. ) 19. PSETA • Parts of DIDTETA (Diplomacy, Foreign Affairs, Trade & Ind. ) • LGWSETA, excluding Water Industries 20. EWSETA • ESETA • Water Industries from LGWSETA
LATEST DEVELOPMENTS ____________________________________________ • Public hearings of 21 -23/09/2004 postponed • Too little time for sector stakeholder consultation • Legal process to be followed/adhered to • New process • Public comments/input – End October 2004 • NSA study public comments/input – End Oct/Begin Nov 2004 • Public hearings – early November 2004 • NSA recommendations to Minister of Labour – 12 Nov 2004 • Minister’s consultation process – Nov & Dec 2004 • Final announcement – Before end 2004
FBI SETAs’ STAKEHOLDER VIEWS ON PROPOSED MERGER _________________________________________________________ INSETA FASSET • LOA • SAIA • IIEA • IBSA • SASBO • FPI • BIPSA • Not supportive of merger • SAICA • Employers • ABASA • Not supportive of merger BANKSETA • Banking Council • SASBO • IBSA • Micro lenders • Not supportive of merger
INSETA VIEW ON PROPOSED “FBISETA” MERGER ___________________________________________________ • Advantages ü One-stop shop for all financial sector stakeholders • Employees • Regulators (FSB, Reserve Bank, JSE) • Professional Bodies • Trade Associations • Learning Providers • Etc ü Most powerful SETA in terms of SD Levy income • Approx. R 400 m/year • Operational budget of R 40 m
INSETA VIEW ON PROPOSED “FBISETA” MERGER ___________________________________________________ • Advantages (2) ü Integrated approach to the implementation of skills development, NQF and projects across all three sectors ü Economies of scale in appointment of service providers, implementation of projects ü Synergies in terms of operations, projects • Chamber model + centralised operations
INSETA VIEW ON PROPOSED “FBISETA” MERGER ___________________________________________________ • Advantages (3) ü Standardised approach in supporting stakeholders in the implementation of the human resource development issues of the Financial Sector Charter & FAIS Act ü Should the same level of good corporate governance, management performance, operational excellence and implementation of innovative projects be achieved as is the case in all three separate SETAs, the new SETA will be well-positioned to establish itself as the benchmark for all other SETAs
INSETA VIEW ON PROPOSED “FBISETA” MERGER ___________________________________________________ • Disadvantages × Cost associated with a merger • Retrenchments • Establishment, e. g. new offices, corporate identity, etc (±R 8 m) • Higher running cost of new SETA (±R 3, 5 m/year) × Insurance sector will loose its dedicated SETA to serve its unique needs – non-compatibility with banking and accounting professional/educational requirements × Negative impact on the implementation of skills development and the NQF in the sector – delivery would probably be SEVERELY disrupted
INSETA VIEW ON PROPOSED “FBISETA” MERGER ___________________________________________________ • Disadvantages (2) × Implementation of projects and initiatives for 2004/5 – spending negatively impacted upon as delivery slows down • FAIS Support • Financial Sector Charter Support • Pension Fund Trustee Training • FSC Learnerships – NSF funds for 2005/6 will be in jeopardy × Immediate effect on INSETA staff (“SMME”: Permanent staff = 14) • Uncertainty/insecurity • Possible job-seeking • Capacity of INSETA will be affected by resignations • Inward focus • Service levels could be affected
INSETA VIEW ON PROPOSED “FBISETA” MERGER ___________________________________________________ • Disadvantages (3) × Approach to implement skills development, NQF and projects of the three SETAs differ significantly, as well as its organisational cultures × Politics of a merger – protection of sectoral and organisational turf, jockeying for positions, negotiations between interim structures × New Constitution and governance & organisational structures, including representation, will have to be negotiated × Establishment of new governance & organisational structures - nominations, selection of members, etc × Revision, integration and standardisation of all existing policies/procedures & projects
INSETA VIEW ON PROPOSED “FBISETA” MERGER _________________________________________________________ • Disadvantages (4) × Physical establishment of new organisation • Location of new offices & move to offices • Integration of IT systems × Appointment of new personnel, e. g. CEO – impact on existing staff, impact on culture of the organisation × Time factor associated with the establishment of a new SETA – Between 12 to 18 months before new structure has settled and becomes fully operational and delivery reaches the levels of the pre-merger era × No guarantee that FBISETA will be a better performing SETA than the three separate entities – “if it works, don’t fix it” × Too early in the system too change
INSETA VIEW ON PROPOSED “FBISETA” MERGER ___________________________________________________ • Conclusion • All three Financial Services SETAs are financially viable, well governed, managed and performing • No compelling business case for merger • Negative impact on delivery • Core operations • Projects, especially those in support of FAIS & FS Charter • High costs of re-establishment and higher running costs of new SETA, depending on structures • ±R 8 m – establishment • ±R 3. 5 m/year more in operational costs • = ±R 25 m over 5 -year period (2005 -2010) on operations • No guarantee that new merged SETA will be an improvement on the three separate SETAs
WAY FORWARD ____________________________ • Business as usual for INSETA and all stakeholders • Industry stakeholders’ views to be canvassed • Stakeholders encouraged to submit comments to NSA/Do. L: Government Gazette No. 26859, dated 01/10/2004 (30 day period) • INSETA will participate in public hearings if given the opportunity – IIEA (Employers) & IBSA (Labour) • Preferable that finality is reached as soon as possible • INSETA, BANKSETA & FASSET in continuous consultation
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