Africa-Press – Namibia. ONLY 80 out of 2 895 employers have used money in the national training fund for the training of existing employees and vocational training of students.
ONLY 80 out of 2 895 employers have used money in the national training fund for the training of existing employees and vocational training of students.
The underused fund at the end of March 2019 had a levy surplus of N$940 million, while it accumulated N$380 million between 2018 and 2019 alone.
The money is meant to finance technical vocational education and training for workers and students in the country.
This was revealed in a recently published country brief on Namibia’s National Training Fund by the United Nations Educational, Scientific and Cultural Organisation (Unesco).
The fund, which was set up in 2014, is meant to mobilise additional resources for skills development and to allocate funds so generated to training in priority skills areas.
According to the Vocational Education and Training Act, the training fund can be used to finance a very broad range of areas.
“Anything and everything to do with vocational education and training,” the brief paper reads.
The underused fund, at the end of March 2019, had a levy surplus of N$940 million while it accumulated N$380 million between 2018 and 2019 alone.
Employers whose annual payroll is more than N$1 million contribute 1% towards the fund for training and it is handled by the Namibia Training Authority (NTA).
Meanwhile, 2 895 employers are paying towards this fund through the NTA levy, but private companies with a projected annual payroll of less than N$1 million are exempted from paying it.
“Most of the levy funds (almost 80%) meant for employer training grants end up being reallocated to the key priority grant allocation or reserve within the National Training Fund,” they stated.
As a result of the underutilisation, the money is diverted to develop community skills, especially to marginalised populations who are mainly out-of-school youths but also low-skilled adults, as well as upgrading and expansion of existing public vocational training centres.
“As a result of the annual reallocation of the grant, key priority grant allocation makes up more than 75% of levy expenditure, when it is only meant to account for up to 35%,” Unesco stated.
According to Unesco, over the period 2014 to 2018, only 14% of the fund, which represents N$164 million, was disbursed to employers as training grants.
“The intention was that up to 50% of levies received in a given financial year would be allocated to employers for training,” the brief paper reads.
The proportion of the levy disbursed to employers for training has been declining every year since the levy was launched in 2014, from 22% (in 2014 to 2015) to 9% (in 2017 to 2018).
The employers federation told Unesco that the fact that so little has been “given back to the employers … [is a] reflection that something is not working”.
Labour expert Sydwill Scholtz believes the major contributors to the levy payments are from those companies who employ white collar staff or those who have to keep a specific number of training hours per year to retain their accreditation.
“The Unesco report shows clearly that training relating to small and medium enterprises and the informal economy is also not funded by the grant, which is where the need lies for the development and proper education of these economic players,” he said.
Furthermore, Unesco stated that another challenge is that it is difficult to establish how many and which companies should be paying the levy.
“There is no unified database of Namibian employers. The NTA estimates that the number of registered levy payers may only represent about 15% of eligible levy payers,” Unesco stated.
Scholtz pointed out to the level of expenditure of the fund which is administration fees of about 15% of the levy, saying it is a high margin.
“It would become harder and harder to maintain at the end of the day as salaries of employees increase,” he added.
Scholtz said there should also be clearer guidelines and regulations employed around the investments of these funds to ensure that prudent management is applied throughout.
“The broadening of the scope of allowable courses and educational purposes would surely increase the use of the fund for the purposes it was intended for,” he added.
Labour researcher at the Economic and Social Justice Trust in Namibia Herbert Jauch labelled the report as a “very disturbing finding”.
“For many years, employers complained about a lack of skills, and the training levy was meant to make it easier and cheaper for companies to provide further education and training for staff members,” he said.
Jauch said this should be an ongoing process to fill skills gaps, but it seems most employers have no interest in providing further education and training.
“Just complaining about missing skills without taking steps to improve skills and education levels is counter-productive. Namibia needs to move beyond the low-skill-low wage model, which is still widespread,” he argued.
Economist Salomo Hei said this fund is essential, because training should serve as the bridge between jobs and the participants.
“New innovation requires constant upgrades and the fund is facilitating that process. The fund is important but the measure is perhaps what is lacking and should be explored for evidence or lack thereof,” he added.
‘NO IMPACT’
“While there is output evidence on the number of persons trained through employer training grants, there is no outcome or impact evidence that this has improved enterprise performance.
“There is no evidence that the National Training Fund has incentivised employers to train more than they would have done without the levy,” Unesco stated in an analysis of the fund.
Unesco further stated that while there is output evidence on the number of persons trained through the levy-funded National Training Fund, there is no evidence to prove that this has led to “improved individual employability”.
The deputy executive director of the higher education ministry, Raimo Naanda, said only 80 employers are participating in this programme.
He said despite companies who are paying this levy having an incentive, it still remains less utilised.
“If you train, you can claim up to 50% of your training cost. Why are we [not] taking advantage of that? Why are we not taking any more trainees?” he questioned.
Naanda said employers would have access to a reimbursement of the actual cost of training up to 50% of the employer’s contribution for the financial year.
The training grant funding allocation would include training interventions needed to be either vocational education and training courses accredited by the Namibia Qualifications Authority, or training courses not accredited.
Naanda further highlighted how this speaks to the mismatch between skills delivered and skills needed on the job.
The Ministry of Higher Education, Technology and Innovation stated that there are more than 67 000 unemployed graduates in the country.
In the apprenticeship programme, there are more than 500 trainees taking part in this programme, while there are 34 000 trainees at vocational training centres in the country.
The underused fund at the end of March 2019 had a levy surplus of N$940 million, while it accumulated N$380 million between 2018 and 2019 alone.
The money is meant to finance technical vocational education and training for workers and students in the country.
This was revealed in a recently published country brief on Namibia’s National Training Fund by the United Nations Educational, Scientific and Cultural Organisation (Unesco).
The fund, which was set up in 2014, is meant to mobilise additional resources for skills development and to allocate funds so generated to training in priority skills areas.
According to the Vocational Education and Training Act, the training fund can be used to finance a very broad range of areas.
“Anything and everything to do with vocational education and training,” the brief paper reads.
The underused fund, at the end of March 2019, had a levy surplus of N$940 million while it accumulated N$380 million between 2018 and 2019 alone.
Employers whose annual payroll is more than N$1 million contribute 1% towards the fund for training and it is handled by the Namibia Training Authority (NTA).
Meanwhile, 2 895 employers are paying towards this fund through the NTA levy, but private companies with a projected annual payroll of less than N$1 million are exempted from paying it.
“Most of the levy funds (almost 80%) meant for employer training grants end up being reallocated to the key priority grant allocation or reserve within the National Training Fund,” they stated.
As a result of the underutilisation, the money is diverted to develop community skills, especially to marginalised populations who are mainly out-of-school youths but also low-skilled adults, as well as upgrading and expansion of existing public vocational training centres.
“As a result of the annual reallocation of the grant, key priority grant allocation makes up more than 75% of levy expenditure, when it is only meant to account for up to 35%,” Unesco stated.
According to Unesco, over the period 2014 to 2018, only 14% of the fund, which represents N$164 million, was disbursed to employers as training grants.
“The intention was that up to 50% of levies received in a given financial year would be allocated to employers for training,” the brief paper reads.
The proportion of the levy disbursed to employers for training has been declining every year since the levy was launched in 2014, from 22% (in 2014 to 2015) to 9% (in 2017 to 2018).
The employers federation told Unesco that the fact that so little has been “given back to the employers … [is a] reflection that something is not working”.
Labour expert Sydwill Scholtz believes the major contributors to the levy payments are from those companies who employ white collar staff or those who have to keep a specific number of training hours per year to retain their accreditation.
“The Unesco report shows clearly that training relating to small and medium enterprises and the informal economy is also not funded by the grant, which is where the need lies for the development and proper education of these economic players,” he said.
Furthermore, Unesco stated that another challenge is that it is difficult to establish how many and which companies should be paying the levy.
“There is no unified database of Namibian employers. The NTA estimates that the number of registered levy payers may only represent about 15% of eligible levy payers,” Unesco stated.
Scholtz pointed out to the level of expenditure of the fund which is administration fees of about 15% of the levy, saying it is a high margin.
“It would become harder and harder to maintain at the end of the day as salaries of employees increase,” he added.
Scholtz said there should also be clearer guidelines and regulations employed around the investments of these funds to ensure that prudent management is applied throughout.
“The broadening of the scope of allowable courses and educational purposes would surely increase the use of the fund for the purposes it was intended for,” he added.
Labour researcher at the Economic and Social Justice Trust in Namibia Herbert Jauch labelled the report as a “very disturbing finding”.
“For many years, employers complained about a lack of skills, and the training levy was meant to make it easier and cheaper for companies to provide further education and training for staff members,” he said.
Jauch said this should be an ongoing process to fill skills gaps, but it seems most employers have no interest in providing further education and training.
“Just complaining about missing skills without taking steps to improve skills and education levels is counter-productive. Namibia needs to move beyond the low-skill-low wage model, which is still widespread,” he argued.
Economist Salomo Hei said this fund is essential, because training should serve as the bridge between jobs and the participants.
“New innovation requires constant upgrades and the fund is facilitating that process. The fund is important but the measure is perhaps what is lacking and should be explored for evidence or lack thereof,” he added.
‘NO IMPACT’
“While there is output evidence on the number of persons trained through employer training grants, there is no outcome or impact evidence that this has improved enterprise performance.
“There is no evidence that the National Training Fund has incentivised employers to train more than they would have done without the levy,” Unesco stated in an analysis of the fund.
Unesco further stated that while there is output evidence on the number of persons trained through the levy-funded National Training Fund, there is no evidence to prove that this has led to “improved individual employability”.
The deputy executive director of the higher education ministry, Raimo Naanda, said only 80 employers are participating in this programme.
He said despite companies who are paying this levy having an incentive, it still remains less utilised.
“If you train, you can claim up to 50% of your training cost. Why are we [not] taking advantage of that? Why are we not taking any more trainees?” he questioned.
Naanda said employers would have access to a reimbursement of the actual cost of training up to 50% of the employer’s contribution for the financial year.
The training grant funding allocation would include training interventions needed to be either vocational education and training courses accredited by the Namibia Qualifications Authority, or training courses not accredited.
Naanda further highlighted how this speaks to the mismatch between skills delivered and skills needed on the job.
The Ministry of Higher Education, Technology and Innovation stated that there are more than 67 000 unemployed graduates in the country.
In the apprenticeship programme, there are more than 500 trainees taking part in this programme, while there are 34 000 trainees at vocational training centres in the country.
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