sector skills plan 2012-13 update

November 2012 _______________________________________________________________

SECTOR SKILLS PLAN

2012-13 Update

S e c t o r S k i l l s P l a n 2 0 1 2 / 1 3 U p d a t e

Page i

Foreword

This is the 2012 updated version of the Sector Skills Plan prepared by the Wholesale and Retail

Sector Education and Training Authority (W&RSETA) (2011 – 2016). The Sector Skills Plan has

been prepared in accordance with the guidelines of the National Skills Development Strategy

(NSDS III), as well as the DHET Guide to the Process and Timeframes.

The principal aim of this Sector Skills Plan is to guide and inform skills development initiatives in

the sector. It is the outcome of, not only a thorough research process, but also of extensive

stakeholder consultation and engagement. This Sector Skills Plan will be reviewed and updated

on an annual basis and will be aligned to government policies.

The Sector Skills Plan is submitted to the Minister of Higher Education and Training in partial

compliance with the requirement of the Skills Development Act 1998 as amended and the

National Skills Development Strategy (NSDS III). The Sector Skills Plan is hereby endorsed by

duly authorized representatives.

APPROVED BY:

CHAIRPERSON: W&RSETA BOARD

_____________________________

Dr. Thami Mazwai

CHIEF EXECUTIVE OFFICER:

_____________________________

Mr. Joel Dikgole

Date: 28 November 2012


Page ii

Abbreviations And Acronyms ABET Adult Basic Education and Training

AET Adult Education and Training

AGRISETA Agricultural Sector Education and Training Authority

ASSA Actuarial Society of South Africa

ATR Annual Training Report

B-BBEE Broad-Based Black Economic Empowerment

BEE Black Economic Empowerment

CATHSSETA Cultural Activities, Tourism, Hospitality and Sport Sector Education and

Training Authority

CEP Community of Expert Practitioners

CHE Council for Higher Education

CJI Career Junction Index

COFESA Confederation of Employers of South Africa

CSIR Council for Scientific and Industrial Research

DHET Department of Higher Education and Training

EEA European Economic Area

EPWP Expanded Public Works Programme

ESETA Energy Sector Education and Training Authority

ETDP Education, Training and Development Practices

ETQA Education and Training Quality Assurance

FAIS (ACT) Financial Advisory and Intermediary Services

FDI Foreign Direct Investment

FET Further Education and Training

FMCG Fast-Moving Consumer Goods

GAIN Global Agricultural Information Network

GCSE General Certificate of Secondary Education

HEI Higher Education Institution

HRDSA Human Resource Development Strategy for South Africa

HSRC Human Sciences Research Council

ICTSETA Information and Communication Technology Sector Education and

Training Authority

IDC Industrial Development Corporation

ILDP International Leadership Development Programme

ILO International Labour Organisation

IPAP Industrial Policy Action Plan

ISDF Independent Skills Development Facilitator

LSM Living Standards Measure

MERSETA Manufacturing, Engineering And Related Services Sector Education


Page iii

and Training Authority

MOU Memorandum of Understanding

MQA Mining Qualifications Authority

MPC Monetary Policy Committee

MTSF Medium-Term Strategic Framework

NCA National Credit Act

NEDLAC National Economic And Development Labour Council

NGO Non-Governmental Organisation

NGP New Growth Path

NQF National Qualifications Framework

NVC National Certificate Vocational

NSDS National Skills Development Strategy

OECD Organisation for Economic Cooperation and Development

OFO Organising Framework for Occupations

PESTEL Political, Economic, Social, Technological, Environmental and Legal

PFMA Public Finance Management Act

PIVOTAL Professional, Vocational, Technical and Academic Learning

PSET Post-School Education and Training

PWC PriceWaterhouseCoopers

QCTO Quality Council for Trades and Occupations

QES Quarterly Employment Survey

QLFS Quarterly Labour Force Survey

RAF Road Accident Fund

RFID Radio Frequency Identification

RPL Recognition of Prior Learning

SAQA South African Qualifications Framework

SARS South African Revenue Service

SETA Sector Education and Training Authority

SGB Standards Generating Body

SMME Small, Medium and Micro Enterprises

SDF Skills Development Facilitator

SSP Sector Skills Plan

USDA United States Department of Agriculture

WSP Workplace Skills Plan


Page iv

SECTOR SKILLS PLAN

2012-13 Update ©

November 2012


Page v

Executive Summary

Wholesale and retail in South Africa is regarded as a growth sector of the economy and a

major employer. Skills development in the sector is therefore of critical importance.

Statistically, it is a sector that is more volatile with respect to cyclical changes and global

economic conditions than many other sectors. The 2012 updated Sector Skills Plan (SSP)

is presented in five chapters and can be summarised as follows:

Chapter 1: Sector Profile

It should be noted that no significant changes to the sector profile were recorded since

completion of the 2011-2012 SSP. Information on the informal sector was added.

Wholesale and retail is the fourth largest contributor to gross domestic product (GDP) with

a contribution of around 13.3%. It employs around 19% of the total active workforce of the

country. Please note that the latest figures for 2012 have been obtained from Euromonitor

2012 and incorporated.

The highest densities of enterprises are found in Gauteng, KwaZulu-Natal and the Western

Cape. Collectively, these provinces make up more than 70% of the workforce of the sector.

About 86% of the sector is made up of small enterprises; 9.5% medium and 4.5% large

enterprises.

South Africa has moved increasingly towards mall-based retailing. The number of retail

space in malls has grown faster than the number of retail stores, to a point that malls can

no longer guarantee that they will attract major anchor tenants.

Unlike the trend in the USA or Europe, online shopping is an ever decreasing component of

retailing. Franchising is also a growing industry in South Africa. Most major food retailers

boast significant holdings in franchise divisions. In marked contrast to this trend,

Woolworths is currently in the process of repurchasing its franchised stores, ostensibly to

cut costs and enhance efficiencies.

Traditionally, wholesalers in South Africa acted as intermediaries between manufacturers

and retailers. Today retailers source goods directly from manufacturers, thus reducing the

function of wholesalers in the value chain. Wholesalers are now mainly transacting with

small businesses and informal traders, who buy directly from them.


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Chapter 2: Drivers Of Change

Considerable efforts were made to update the drivers of change in this updated 2011–2016

SSP. Based on extensive desktop research, draft drivers of change were developed,

discussed and further refined with stakeholders at focus group sessions in the various

provinces. Additional desktop research was done based on drivers of change inputs by the

W&R regions.

The 2020 landscape was used as a point of reference since the 2011-–2016 SSP should

start delivering skills over a longer term. As far as could be established, the W&RSETA was

the first SETA to broaden the 2011-2016 planning horizon to 2020. Based on a careful

study of various credible sources, it is clear that by 2020 the retail landscape will really be

challenging. Key questions that arise and should be addressed from a future planning point

of view are the following:

What would the wholesale and retail landscape be like in 2020?

What challenges will the changes imply?

What skills will be required?

At the focus group sessions, consultation with stakeholders resulted in the formulation of an

additional priority, focusing on the 2020 landscape that will be addressed in Chapter 5. In

understanding the challenges of the 2020 landscape, the following contradictions between

global forces and the South African policy imperative have been detected:

GLOBAL FORCES SOUTH AFRICAN POLICY IMPERATIVES

Reduced employment in various industries as a result of technological developments.

Increased employment levels are required.

Fewer people required due to technological advances.

Job creation is required.

Market forces. Historical inequalities need to be addressed.

Labour market forces dictate. Equity needs to be accelerated.

Political transformation does not always affect the sector.

Imperative political transformation directly affects the sector.

Legislation focuses largely on industry regulations.

Regulation focuses on industry regulation as well as challenging political transformation.


Page vii

All policies that have an impact on the SSP, such as the New Growth Path, the Skills

Accord and the National Skills Development Strategy (NSDS), are discussed in detail to

further contextualize future challenges and opportunities. Drivers of change that were

significantly updated include the following:

Industry convergence will have a major impact on technology, especially information

technology.

The growing middleclass, with sufficient income, should be viewed as an opportunity for

the wholesale and retail market.

An ageing population will also have an impact on the wholesale and retail industry.

Social media has never been included in previous SSP’s, but ample evidence exists to

indicate the growing importance of these media on the wholesale and retail industry.

Social networks are a huge source of consumer data that can be used effectively, but

these sources have been under-utilized so far.

The growing importance of the green agenda should be carefully monitored from a

wholesale and retail perspective. Greater emphasis will be placed on sustainability and

environmental protection.

There are numerous other drivers of change in the wholesale and retail sector that

impact on skills development. The most significant are the following:

a) TECHNOLOGICAL

Changing technology: Technological changes are introduced primarily to enhance

the experience of customers and to increase efficiency. With all retailers striving to

increase margins, the introduction of technology often results in more efficient

operations with reduced staff. This will require increased training for a workforce that

requires a completely different skill set.

Internet-based retailing: Although internet-based shopping is in its infancy in South

Africa; crime levels, the increase in the number of dual-income families and

convenience, together with increasing economies of scale make internet-based retail

more viable. International experience shows that there is enormous growth potential in

this area of retail.

b) LEGISLATIVE

National Credit Act: The act has tightened lending regulations, ensuring that

consumers pass the “affordability test”. The act aims to improve and increase access

to credit, offer debt counselling, improve consumer understanding and protect


Page viii

consumers from reckless lending. This has had a major impact, especially on motor

vehicles, homes, and furniture and semi-durable goods sold on credit.

Consumer Protection Act: The act introduces a bill of rights granting consumers

wide-ranging powers to cancel contracts within “cooling-off” periods, to refuse to

purchase “bundled” products or services, to cancel fixed-term agreements if they are

not satisfied with their terms and to block approaches by direct marketers, among other

things. The act will have a significant impact on the way business is conducted in

South Africa. Given the extent of liability, extensive training will need to be

implemented.

Employment equity: The sector is also faced with specific employment equity

challenges that need more focused attention. As far as gender is concerned, more

focus should be on the development of women for senior positions. Due to the fact that

57% of senior and top management positions are still filled with white people, the

empowerment of historically disadvantaged South Africans should also be accelerated.

c) SOCIAL

Unemployment: An unemployment rate above 20% is deemed to pose excessive

political and social risks for most economies, but especially for South Africa with an

unemployment rate close to 25% and an expectant populace waiting for the situation to

improve.

Decent work for all: Government has placed the creation of decent work at the centre

of economic and social policies. Its actualization depends on the restructuring of the

economy. The skills development initiatives required to effect improvement in the

unemployment rate and the actualization of the concept of “decent work for all” is

substantial and Government has targeted these areas as future priority areas for skills

development.

The extent of the small, medium and micro sectors: The very high concentration of

small enterprises in the wholesale and retail sector points to the need to support

entrepreneurship and management training for small enterprises on a far greater scale

than is presently the case. Governments elsewhere have tried to encourage the

formalization of enterprises by lowering the cost of compliance and bureaucracy. The

non-compliance, low participation rate and exempt status of many of its members in

this sector present skills development challenges for the W&RSETA.


Page ix

Casualisation: The most serious practical implication of casualisation with regard to

skills development is the fact that casual workers receive little if any skills

development. In many instances, where permanent positions are replaced by casual

ones, the concept has a very obvious and serious negative influence on the working

environment as a whole. In an effort to increase margins and circumvent labour union

demands and the costs of formal employment, casualisation – as a worldwide

phenomenon – is increasing with dire consequences for skills development.

CHAPTER 3: SKILLS DEMAND AND SUPPLY

Given that supply and demand for skills is well integrated, the supply and demand for skills

has been jointly investigated in this chapter. Extensive use has been made of research by

Career Junction into the supply and demand for skills in the wholesale and retail sector.

The services of a labour economist have been secured. Current activity in this new field

includes the development of a labour model, which will be applied in the final SSP update

in three to five months’ time.

The following conclusions can be drawn from the chapter:

The impact of the Quality Council for Trades and Occupations (QCTO) on skills demand

and supply should also be carefully researched and appropriate action taken.

The fact that entrants to the industry that are supplied by institutions are not practically

ready for the work environment required further proactive work by the W&RSETA and

the industry.

The occupational structure of the W&R sector is consistent with the historical legacies of

the apartheid era, with a high concentration of Africans at the bottom end of occupations

and, conversely, a high proportion of whites in the higher wage earning occupational

levels.

The SETA has made significant gains in encouraging companies to apply for mandatory

grants, with the majority of large, medium and small companies doing so.

Employee uptake for mandatory grants has dropped below 300 000 from above 500 000

in the previous year. This might suggest that companies are focusing more on their core

business, as well as implementing cost-cutting measures in order to survive the

recession.

There are real challenges facing the SETA’s in areas such as qualification and

curriculum development, employee retention and opportunities, research capacity and

business compliance. The SETA’s should hopefully engage stakeholders in future skills

planning exercises.


Page x

Stakeholder consultation, as prescribed by the NSDS and followed with the compilation

of this updated SSP, adds further value and should be used more regularly to update

the quantitative database.

Unless the sector invests in infrastructure for research, decision-making will be

speculative if it is not supported by appropriate statistics.

There are no prerequisite entry requirements in the sector and this might contribute to

low job status and consequently low wages.

The Western Cape regions work directly with the FET Colleges, as well as the University

of Technology in providing funded work placement for graduates. Colleges were also

contracted to facilitate the work-readiness component. Such collaborations greatly

improve the SETA’s capacity to deliver on its mandate.

Various key issues pertaining to skills supply from institutions have been identified

during consultation with key stakeholders in all W&R regions. Various DHET

requirements in terms of qualifications were added.

CHAPTER 4: SCARCE AND CRITICAL SKILLS

The top 15 scarce skills are summarised in the table below:

Summary: Scarce Skills List and its Priority

Scarce Skills Occupation OFO codes Priority

Retail Manager 142103 1

Retail Supervisor 5222 2

Program and Project Administrators /General Admin and Finance

441903 3

Bakers 6812 4

Supply and Distribution Manager 1324 5

Sales and Marketing Manager 1221 6

Butchers 6811 7

Accountants / Financial Managers 2411 8

Chefs 3434 9

Industrial Designer 216302 10

Retail Buyer 332301 11

Merchandise Planner 332301 12

Credit Clerk /Debt Clerk 331201 13

Education and Training Reviewer (Moderator) 235102 14

Training and Development Professional 242401 15


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Summary: Critical Skills List

Key critical skills Generic critical skills

1 Customer service skills

Key c

riti

cal s

kills

ve

rsu

s g

en

eri

c c

riti

cal

skil

ls

Customer service skills

2 Negotiation skills Negotiation skills

3 Communication skills Communication skills

4 ICT basic skills ICT basic skills

5 Morals/ethics skills Health (i.e. Personal hygiene, food safety, first aid, care of HIV/AIDS patients, & care of disability)

6 Financial skills Interpersonal relations skills

7 Telephone etiquette Life skills (i.e. Personal finances, budgeting, employee rights & Banking system)

8 HIV Awareness Anger management skills

9 Time management skills Listening Skills

10 Report-writing skills

11 Analytical skills

12 Project management skills

13 How to use social networking information

14 Business and general skills training for Shop stewards

15 Conflict resolution skills

A provincial breakdown in respect of both scarce and critical skills is also given in chapter

four. The reasoning was to enable the provinces to focus on their own skills needs.

CHAPTER 5: SKILLS DEVELOPMENT STRATEGY

Chapter five presents a strategic plan that sets out skills development priorities for the

W&R sector. These priorities are drawn from the research findings of preceding chapters

and take cognizance of a number of government policy initiatives. Due to the significant

contributions by regional stakeholders, new priorities and objectives were added to the

skills development strategy.

The proposed targets contained in the strategic plan are informed and underpinned by

this strategic framework, which was developed by the Board. At the Board’s strategic

session, the following key issues were identified as critical to the implementation of the

NSDS III in the wholesale and retail sector:

Increase access to programmes leading to intermediate and high-level learning in terms

of the W&RSETA intervention at NQF Level 1 to Level 4.


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Education training at NQF Level 1 is to be delivered with a focus on the W&R sector

requirements.

School engagement: career guidance.

Capacitate FET Colleges to deliver W&R sector programmes.

Increase access to occupationally directed programmes through W&RSETA’s

interventions in needed areas at NQF Level 5 to Levels 7/8.

Address the present demand from business for qualifications at this level.

Construct the needed occupationally-directed qualifications.

Establish retail business schools with HEI’s.

Increase access to high-level occupationally directed programmes in needed areas

through W&RSETA’s interventions at NQF Level 8 to Level 10.

The role of research in the emerging W&RSETA landscape.

Serving the interests of the sector as a whole by W&RSETA activity at this level.

The role of the W&R sector business schools at this level of the NQF.

Expand on the success of the International Leadership Development Programme

(ILDP).

Develop a comprehensive e-learning system supported by the W&RSETA.

Deepen the absorptive capacity of the W&R sector.

The following challenges are outlined in Chapter five:

High cash reserves, high learner dropout rate and implementation of RPL.

Rural development, retail business school and implementation of current Government

initiatives.

Difficulty in establishing the credibility of the SSP and development strategy for small

and micro enterprises (informal).

The absence of a W&R professional body to recognize retail as a career.

Sufficient proactive action to manage these challenges has been incorporated into the

strategy, with the following deliverables over the planning period 2011–2016:

The SSP is professionally researched.

W&RSETA is to research and identify middle-level skills in its sectors and to put in

place strategies to address them.

W&RSETA is to establish projects and partnerships to enable the relevant number of

artisans for the sector to be trained to qualify and become work ready.

SSP’s are to identify the supply challenges in relation to high-level scarce skills gaps

and are to set out strategies for addressing them.


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Agreements are to be entered into between W&RSETA, university faculties and other

stakeholders on appropriate interventions to support improved entry into priority

programmes.

Sector plans are to identify the focal areas for research, innovation and development.

W&RSETA is to identify FET colleges with relevant programmes to put in place

partnerships to offer vocational courses and work experience for college learners.

A national database must be put in place to track training and work opportunities and

to report on implementation.

W&RSETA stakeholders are to agree on the provision of substantial quality

programmes for employed workers and to report on the impact of training.

Sector projects are to be put in place to address specific sector skills gaps.

Cross-sectoral projects are to be established to address skills needs along local

supply chains that are aimed at supporting local economic development.

In their skills planning research, SETA’s are to identify established and emergent co-

operatives and their skills needs.

Sector projects are to be developed that are piloted by W&RSETA and expanded

through partnership funding.

SMME learning material must be improved / streamlined in accordance with future

requirements.

An SMME toolkit is to be developed.

The SMME model that was developed based on a W&R research project is to be

implemented.

W&RSETA is to engage with trade unions, NGO’s and community-based

organisations in its sectors and to identify skills needs and strategies to address

these needs.

W&RSETA is to establish quality pilot projects.

Career guides are to be developed with labour market information, addressing sub-

sectors within the sector.

Sector stakeholders are to be engaged and programmes are to be adjusted to meet

the skills and qualification needs to promote comprehensive career development.

Alignment with the 2020 landscape.

Based on a detailed strategic analysis, the following priorities or focus areas have been

identified:

To address institutional goals and outcomes.

To contribute to rural development by empowering people for employment in the W&R

sector in the rural areas.


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To introduce incentives to secure increased employment, as well as employee and

instructor workplace exposure.

To conduct SSP support research in areas identified.

To introduce an employee wellness programme.

To establish E-learning as a significant contributor to skills development.

To align qualifications with QCTO requirements.

Challenging objectives have been set per priority. It can be said that the W&RSETA is well

positioned and prepared for the challenges and opportunities during the planning period.


Page xv

TABLE OF CONTENTS

Foreword ...................................................................................................................................... i Abbreviations And Acronyms ....................................................................................................... ii Executive Summary ..................................................................................................................... v Chapter 1: Sector Profile .......................................................................................................... 116

1.1 Introduction ............................................................................................................................ 116

1.2 Key Planning Priorities ............................................................................................................ 118

1.3 Methodology ........................................................................................................................... 126 1.4 Background to the sector ........................................................................................................ 127

1.5 Industrial Coverage ................................................................................................................. 129

1.6 Profile of the Wholesale and Retail Landscape ...................................................................... 132 1.7 Profile of occupational fields ................................................................................................... 149

1.8 Economic performance and outlook ....................................................................................... 153

1.9 Labour market context ............................................................................................................ 173

1.10 Employer coverage ............................................................................................................... 183

1.12 Conclusion ............................................................................................................................ 190

Chapter 2: Drivers of Change .................................................................................................. 193 2.1 Introduction ............................................................................................................................. 193

2.2 The 2020 retail landscape ...................................................................................................... 193

2.3 The national policy agenda vs global forces .......................................................................... 194 2.4 Drivers of change with reference to 2020 operating environment ......................................... 199

2.5 Assumptions and solutions to guide a win-win solution ......................................................... 210

2.6 Conclusion .............................................................................................................................. 214

Chapter 3: Supply and demand of skills ................................................................................... 216 3.1 Introduction ............................................................................................................................. 216

3.2 Limitations of labour market analysis ..................................................................................... 216

3.3 Analysing the labour supply vsdemand dynamics.................................................................. 217

3.4 Education levels in the sector ................................................................................................. 218

3.5 Education and training provision ............................................................................................ 219

3.6 Employees to be trained in the sector .................................................................................... 224 3.7 Fuel Retailers .......................................................................................................................... 227

3.8 Recruitment conditions ........................................................................................................... 232

3.9 Recruitment activity ................................................................................................................. 234 3.10 Sector Comparisons ............................................................................................................. 236

3.11 Nett employment outlook ...................................................................................................... 237

3.12 Supply-demand equilibrium for specific occupational fields ................................................. 237 3.13 Lack of skilled labour ............................................................................................................ 239

3.14 Qualitative skills demand forecast: Skills demand towards the 2020 operating environment239

3.15 Constraints to skills development to be addressed in the strategy ...................................... 242

3.16 Conclusion ............................................................................................................................ 249

Chapter 4: Scarce and critical skills ......................................................................................... 251 4.1 Demand for skills .................................................................................................................... 253 4.2 Supply of skills ........................................................................................................................ 133

4.3 Scarce skills list ....................................................................................................................... 136

4.4 Priority occupations list ........................................................................................................... 141

4.5 Critical skills ............................................................................................................................ 142 4.6 Stakeholder consultation ........................................................................................................ 144

4.7 Scarce skills update ................................................................................................................ 145

4.8 Critical skills update ................................................................................................................ 146 4.9 Anticipated critical skills required with refernce to the 2020 operating landscape ................. 147

4.10 Job Indexes ........................................................................................................................... 151

4.11 Additional research ............................................................................................................... 156


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4.12 Consultative summary as basis for the skills development interventions ............................ 158

4.13 Conclusion ............................................................................................................................ 172

Chapter 5: Skills Development Strategy ................................................................................... 174 5.1 Introduction ............................................................................................................................. 174 5.2 Vision, Mission And Values .................................................................................................... 174

5.3 Guiding principles ................................................................................................................... 175

5.4 Situational Analysis ................................................................................................................. 176 5.5 Drivers of Change ................................................................................................................... 179

5.6 Supply and demand of skills ................................................................................................... 179

5.9 Institutional strategic goals ..................................................................................................... 183

5.10 Strategic challenges ............................................................................................................. 183 5.11 Institutional strategic risks ..................................................................................................... 183

5.12 Strategic Analysis ................................................................................................................. 184

5.13 SWOT Analysis ..................................................................................................................... 186

5.14 Priorities ................................................................................................................................ 189

5.15 Qualifications development strategy ..................................................................................... 189

5.16 Skill Development Strategies ................................................................................................ 192 5.17. Resource allocation to achieve institutional goals and outcomes: ...................................... 198

5.18 Personnel trends ................................................................................................................... 201

5.19 Income and expenditure trends ............................................................................................ 201

5.20 Conclusion ............................................................................................................................ 204

References .............................................................................................................................. 208 Annexures ............................................................................................................................... 213

A: Critical skills .............................................................................................................................. 215

B: W&RSETA Career Guide ......................................................................................................... 216


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LIST OF FIGURES

Figure 1-1: Retail decomposition 132 Figure 1-2: Retail market share 132 Figure 1-3: Retail market share 134 Figure 1-4: Recruitment and occupational groups 153 Figure 1-5: Robust GDP growth expected in 2011/12 155 Figure 1-6: Percentage change seasonally adjusted annualized rate 156 Figure 1-7: Job losses/gains from Quarter 3 of 2011 to Quarter 3 of 2012 158 Figure 1-8: Exchange rate of the euro vs. rand: 2009–2012 160 Figure 1-9: Fuel production, consumption and reserves 166 Figure 1-10: Fuel taxes 166 Figure 1-11: CPI Percentage change 2006 – 2011 167 Figure 1-12: W&R earnings 168 Figure 1-13: Monthly earnings in various sectors 169 Figure 1-14: Shoplifting and commercial crime 170 Figure 1-15: HIV prevalence among the 15 - 49 age group (2008) 171 Figure 1-16: AIDS research per sector 172 Figure 1-17: Impact of AIDS 172 Figure 1-18: Provincial distribution of employees (excluding SMME’s) 174 Figure 1-19: Provincial distribution by race 175 Figure 1-20: Retail as a proportion of the total employment 176 Figure 1-21: Formal and informal employment employees (’000) 177 Figure 1-22: Percentage employee distribution by population group 178 Figure 1-23: Distribution of occupations across race 179 Figure 1-24: Comparison of racial occupational levels in retail versus government 180 Figure 1-25: W&R educational levels 181 Figure 1-26: Disabled 182 Figure 1-27: Trade union membership in 2012 182 Figure 1-28: Size distribution in the W&R sector (excluding SMME’s) 183 Figure 1-29: Wholesale and retail market share 185 Figure 1-30: Location of workers in enterprises 186 Figure 3 -1: Education levels Quarter 2, 2012 219 Figure 3-2: Enrolments in public HEI’s by major field of study, 2010 222 Figure 3-3: Distribution of employees in SMME’s 224 Figure 3-4: Total employees to be trained in the sector 225 Figure 3-5: Employees to be trained according to race and occupational class 225 Figure 3-6: Employees to be trained according to age 226 Figure 3-7: Training programmes in fuel retail 228 Figure 3.8: Distribution of providers, assessors and moderators by region 232 Figure 3-9: Adcorp Employment Index 233 Figure 3-10: Recruitment activity 234 Figure 3-11: Recruitment activity – temporary workers 235 Figure 3-12: Nett employment outlook 237 Figure 3-13: Difficulty of recruitment 238 Figure 3-15: Categories employed 243 Figure 3-16: Motivation for employing casual employees 244 Figure 3-17: Training provided 245 Figure 4-1: Critical skills according to percentage demand 144 Figure 5-1: Education levels within the sector 178 Figure 5-2: Corporate governance structure 199 Figure 5-3: Management structure 200


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LIST OF TABLES

Table 1-1: Focus groups in the various provinces 127 Table 1-2: Businesses in the W&R sector 130 Table 1-3: Activities not in the W&R sector 131 Table 1-4: Hypermarket Sales data 133 Table 1-5: Supermarket sales data 134 Table 1.6: Number of people trained according to region 150 Table 1-7: South Africa: economic activity 2010- 2017 154 Table 1-8: Government nett debt as percentage of GDP 161 Table 1-9: Employment by industry 2012(’000) 175 Table 1-10: Racial profile at senior level 179 Table 1-11: Percentage employee distribution by gender 180 Table 1-12: Small businesses by size in the SMME category in the W&R sector 184 Table 2-1: Global forces vs. South African policy imperatives 194 Table 2-2: Impact of the MTSF on skills development in the wholesale and retail sector 195 Table 2-3: W&RSETA mandatory grant inputs 197 Table 4.1 Scarce skills 137 Table 4-2: Educational levels per scarce skills identified in the WSP 139 Table 4-3: Scarce skills identified at workshops 140 Table 4-4: Priority occupations list 141 Table 4-5: Critical skills 142 Table 4-6: Skills list per occupation 143 Table 4-7: Soft, technical and other skills 143 Table 4-8: Anticipated critical skills required for 2020 landscape 147 Table 4-9: Proposed research projects 157


Page116

Chapter 1: Sector Profile

1.1 Introduction

The purpose of this chapter is to profile the wholesale and retail sector (hereunder referred

to as the W&R sector) within the context of the South African economy. It outlines the

scope of industrial and occupational coverage and discusses sector and non-sector drivers

of change that impact on the sector. Revised and updated drivers of change based on

extensive desktop research and consultation with W&RSETA stakeholders are presented in

Chapter two. This is an extensively updated version following the following feedback from

DHET and extensive consultation with W&R officials.

OFO codes were not correctly used for the scarce skills list. All OFO codes were

revised.

Identification of the 15 top scarce and critical skills list. Completed and provincial

breakdown also included.

Old statistics were completely reworked. The Euromonitor 2012 was purchased and

where possible all old statistics were replaced.

No clear link with other government policies & priorities. This section was completely

rewritten and new policy documents added.

It is clear that no major changes that could substantially influence skills required have taken

place pertaining to the sector profile since the publication of the initial 2011-2016 SSP. The

W&RSETA plays a critical role in the development of skills in the wholesale and retail

sector. In accordance with the requirements of NSDS lll, the services of an external advisor

specializing in Higher Education and advisory services (Business Enterprises at the

University of Pretoria) were procured following a procurement process. The scope and

terms of reference of the appointment can be summarised as follows:

A professional relationship to continuously update the SSP and render support services

where required.

Conducting quantitative and qualitative research on all aspects of the SSP as required

by the Department of Higher Education and Training (DHET).

To add further value to the skills planning imperative, it was agreed that the

assumptions up to 2020 be made and taken into account to identify longer term

interventions that should commence during the SSP planning period 2011–2016.

To ensure an understanding of the entire Sector Skills Plan (SSP), it was decided to give a

bird’s eye view of the content in Chapter one, as basis for the remaining chapters. This SSP

is based on a reasoning logic that is set out in this section. This SSP is an updated one,


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based on the requirements of the DHET. Since the first SSP for 2011 to 2016, published in

January 2011, the following additional actions were taken to ensure that the updated

document is as complete and accurate as possible:

Through a process of data analysis from workplace skills plans, existing figures and

graphs on the industry profile, skills demand and supply and other industry parameters

were updated.

It was agreed that the focus of the SSP should be beyond 2016, since actions to

address future skills requirements will have to be taken before 2016. It was agreed that

2020 would be a much better time horizon to guide the planning process. The year

2020 is also very popular from a publication perspective and quality research material

is therefore available.

Other quantitative resources were extensively optimized to update the required

information in Chapter one to Chapter four.

Through desktop research, the drivers of change were extensively updated. Various

new themes not completely covered in the previous SSP were introduced, such as the

green agenda, the ageing of the population and the impact of social networks on the

wholesale and retail industry.

To add further value to a substantial quantitative database, qualitative research

methods were used. Various focus groups were held in the provinces, where

stakeholders were consulted. The drivers of change were shared with the focus group

participants and they added further value. A number of new skills requirements, based

on the future landscape, have been identified. Participants also provided various

solutions to address the development of skills needs.

Due to shortcomings in the previous and earlier SSP’s, the focus of this SSP was also on

the following key issues:

Alignment of global drivers of change with the specific South African business

environment – key economic drivers, challenges and emerging trends emerged from

this analysis in consultation with stakeholders. Contradictions between the global

environment and the South African policy landscape also highlighted the need for a

win-win South African solution. Consideration, therefore, is required within the W&R

strategy to develop a uniquely South African solution dealing with the aforementioned.

Formulation of strategies to deal with the legal and regulatory requirements.

Linking SETA management decisions with operational dynamics of the sector.

Focusing more on the big picture based on real challenges facing the wholesale and

retail sector.


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Prioritizing, strategizing and positioning for the future.

Examining existing and future skills profiles within occupations (the drivers of change

and consultation with stakeholders resulted in the identification of emerging future skills

clusters in key areas such as legal requirements and technology).

The adequacy of current skill levels and output from education and training institutions.

Occupation skills absorption rates.

Existing and future skills shortages for occupations.

Prioritization of critical and scarce skills.

Sector-specific objectives and goals for the planning period.

Strategies and tactics to address the goals, objectives, needs and activities to support

these strategies.

Developing scenarios pertaining to skills demand for the next five years.

Proposing a high-level strategic approach to meet the sector’s skills needs.

Incorporating the Workplace Skills Plan (WSP) and Annual Training Report (ATR) data

of fuel retailers.

Focusing on National Skills Development Strategy III (NSDS III) priorities, especially in

terms of race, gender, class, HIV/AIDS and rural areas.

The impact of especially social media and the green agenda highlighted the need to

update learning material and curricula.

This SSP is the result of an integration of quantitative and qualitative data. Quantitative data

was generated through an analysis of latest WSP and related information and incorporation

of additional sector data from purchased publications. Qualitative information was

generated through additional desktop research on drivers of change and extensive

stakeholder consultation through focus groups and questionnaires. Further refinement will

be done in the 2013 update. Stakeholder consultation was conducted at the regional focus

areas. Further areas for refinement have been identified by the W&RSETA Board and key

stakeholders at a SSP review meeting held on 27 September 2011.

1.2 Key Planning Priorities

These are important policy frameworks that are relevant to the Sector Skills Plan:

The Medium-term Strategic Framework (MTSF) – 2009 -2014.

Human Resource Development Strategy for South Africa (2009).

The National Skills Development Strategy III (NSDS III).

Policies and strategies of relevant government departments


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Provincial and local government growth and development strategies

Environmental strategies

The Industrial Policy Action Plan II (IPAP II)

The New Growth Path

The Skills Accords

The SSP also needs to consider provincial and local growth, development strategies and

policies and strategies from other relevant government departments. All policy requirements

and provincial requirements have been incorporated into this SSP. These policy documents

are briefly discussed below. In Chapter two they are further contextualized in terms of the

drivers of change. In the sections below the alignment of government policy with the SSP

imperatives will be set out.

a) The Medium-Term Strategic Framework (MTSF) - 2009-2014

The Medium-Term Strategic Framework (MTSF) (2009-2014) is a policy imperative that

should be clearly aligned with skills development priorities. The MTSF is a statement of

intent identifying the development challenges facing South Africa and outlining the medium-

term strategies for improvements in the living conditions of South Africans and for our

enhanced contribution to the cause of building a better world. The MTSF has identified the

following key imperatives that need to be considered for government delivery:

Speeding up growth and transforming the economy to create decent work and

sustainable livelihoods.

Undertaking massive programmes to build economic and social infrastructure.

Establishing a comprehensive rural development strategy linked to land and agrarian

reform and food security.

Strengthening the skills and human resource base.

Improving the health profile of all South Africans.

Intensifying the fight against crime and corruption.

Building cohesive, caring and sustainable communities.

Pursuing African advancement and enhanced international co-operation.

Ensuring sustainable resource management and use.

Building a developmental state, including the improvement of public services and the

strengthening of democratic institutions.


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These MTSF priorities should be the priorities around which skill planning takes place. The

extent to which these priorities are met is an indicator of the success of the skills planning

exercise. The key issues are addressed in the strategy in chapter 5 to align government

policy with this SSP.

The Human Resource Development Strategy for South Africa (HRDSA)

The HRDSA includes the following set of important goals:

Universal access to quality early childhood development, commencing from birth up to

the age of four.

Eradicating adult illiteracy in the population.

Ensuring that all people remain in education and training up to the age of 18.

Ensuring that all new entrants to the labour market have access to employment-

focused education and training opportunities.

Levels of investment that are above global averages for all areas of education and

training.

Ensuring that inequality in education and training outcomes is significantly less than the

prevailing income inequality.

Equitable education and training outcomes in terms of race, gender, disability and

geographic location.

Ensuring that the balance between emigration and immigration reflects a net positive

inflow of people with priority skills for economic development.

Access to education and training opportunities for all adults in the labour market to

enable them to achieve a minimum of NQF Level 4 qualifications.

Progressive improvements in the external efficiency and effectiveness of higher

education, further education and the occupational learning system.

Although the above are national government imperatives, they have implications for the

SSP. The strategy requires an integrated and coherent whole, yet differentiated and diverse

approach. It must be far-sighted and focused on skills for a sustainable future for all,

expanding comprehensive strategies for a knowledge society and rooted in research and

knowledge production for inclusive development. By addressing the listed priorities, the

strategy promotes a more equitable and socially inclusive society. This goal is seen as

consistent with social justice. The strategy seeks to create an environment within which the

occupational learning and the further and higher education systems can focus on

continuous improvement in the quality of educational inputs and outputs and increase the

level of throughput. This is necessary to develop a skilled and capable workforce to support

our inclusive growth path and will require the support of a diverse set of higher education


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and training institutions and programmes. It is clear that the entire SSP is aligned with the

Human Resource Development strategy.

National Skills Development Strategy III (NSDS III)

The goals of the NSDS III are as follows:

Establishing a credible institutional mechanism for skills planning.

Increasing access to occupationally directed programmes.

Promoting the growth of the public Further Education and Training (FET) college system

that is responsive to sector, local, regional and national skills needs and priorities.

Addressing the low level of youth and adult language and numeracy skills to enable

additional training.

Encouraging better use of workplace-based skills development.

Encouraging and supporting co-operatives, small enterprises, worker-initiated non-

governmental organisations (NGO’s) and community training initiatives.

Increasing public sector capacity for improved service delivery and supporting the

building of a developmental state.

Building career and vocational guidance.

The NSDS III should be read as a companion to the Human Resource Development

Strategy of South Africa (HRDSA), together with the Medium-Term Strategic Framework.

The SSP, as required by the NSDS III, analyses the sector and its associated skills

requirements. The analysis of economic development and employment trends includes a

consideration of national and sector growth and development strategies, particularly those

related to the national economic and development strategy, the HRDSA and those related

to the Industrial Policy Framework, innovation and technology and rural development.

Policies and Strategies for Relevant Government Departments

The national Department for Higher Education and Training requires SSP’s to be signed off

by the directors-general of relevant government departments, including: the Department of

Trade and Industry. And, this implies that the W&RSETA would have to align the SSP with

the of the Industrial Policy Action Plan II. Department of Environmental Affairs: This will

include the need to ensure alignment with imperatives associated with the “green” agenda

in terms of the extent to which the plan enables the country to meet its obligations to

international climate change agreements.


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Provincial , Local Government Growth and Development Strategies

There is a need to integrate sector skills planning with provincial skills planning. It has been

found that skills requirements vary from province to province, mainly because of

demographic considerations. There are numerous training agencies that feed into all

sectors, including government. There is therefore a need for streamlining and simplification

so that the skills requirements can be addressed at minimum cost.

Environmental Strategies

The emphasis on environmental protection also influences the type of skills needed in the

sector. This influence takes different forms: As consumer awareness of and pressures

regarding environmental conservation grow internationally, there will be a greater emphasis

on green branding. The development of an understanding of and the skills to utilize green

branding potential will be important to organisations in the sector.

Sustainable management practices will become increasingly important, as companies will

take environmental sustainability into consideration more earnestly. The importance of the

green agenda and its impact on the W&R industry was also discussed at length during

regional consultations. The green agenda as a driver of change has a specific impact on

the W&R sector and hence this imperative was clearly set out in this SSP as well as

environmental strategies.

Industrial Policy Action Plan II

The Industrial Policy Action Plan II (IPAP II) 2010/11–2012/13 was launched in March 2010.

Government viewed it as a quantum leap forward in efforts to help build South Africa’s

industrial base in critical sectors of production and value-added manufacturing and to

contribute to the reduction of chronic unemployment. IPAP II is a three-year rolling industrial

development road map that is the product of the Economic Cluster (of ministers and

departments). Both in terms of the breadth of the interventions outlined and the requirement

of intergovernmental coordination and multi stakeholder involvement, IPAP II is a first of its

kind in South Africa (the dti, 2011). As a major industry, wholesale and retail is fully

committed to the opportunities and challenges of IPAP II. From a skills development

perspective in the W&R sector, the following section is very important: “Long term

development needs to be underpinned by higher growth in the production sectors, led by

manufacturing. This is due to the fact that the economy is not made up of a set of discrete

and isolated activities, but rather sectors that are fundamentally interlinked.”(dti, 2011). The

drivers of change up to 2020 such as social media and the green agenda therefore become


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more important from a skills development perspective. The W&R sector receives its goods

from sectors that are indeed interlinked.

National Development Plan 2030 vision for the country

All information on this new development plan was sourced from the document: National

Planning Commission on National Development Plan Vision for 2030.It is clear that the

commission identified the following key challenges as a starting point in formulating the

plan:

Too few people work.

The standard of education for most black learners is of poor quality.

Infrastructure is poorly located, under-maintained and insufficient to foster higher

growth.

Special patterns exclude the poor from the fruits of development.

The economy is overly and unsustainably resource intensive.

A widespread diseased burden is compounded by a failing public health system.

Public services are uneven and often of poor quality.

Corruption is widespread.

South Africa remains a divided society.

From the wholesale and retail perspective, most challenges relevant to the sector have

been addressed in the SSP. The following section on agriculture is viewed as particularly

relevant to the W&R sector: “We estimate that agriculture has the potential to create close

to 1 million new jobs by 2030. To achieve this we need to consider the following:

Firstly, expand the irrigated agriculture by substantially investing in water resource and

irrigation infrastructure. Secondly, create security of tenure for communal farmers. This is

vital if we are to secure incomes for existing farmers and for new entrants. We must

investigate flexible systems of land use for different kinds of farming on communal lands.

Thirdly, invest substantially in providing innovative market linkages for small-scale farmers

in the communal and land reform areas, with provision to link these farmers to markets in

South Africa and further afield in the sub-continent.

Fourthly, put in place preferential procurement mechanisms to ensure that new entrants

into agriculture can access the “food away from home” market, including school feeding

schemes and other forms of institutionalized catering such as food services in hospitals and

correctional facilities. Lastly, give greater support to public-private partnerships to develop


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under-exploited opportunities. Examples of regions with untapped potential include the

Makatini Flats and the Eastern Cape”

The W&RSETA has included a research project on rural development in chapter five and it

is essential that the above agricultural implications be clearly taken into account. The NPC

concluded that there were things that the country needed doing. Comments on implications

for the W&R sector are made in bold text:

Create jobs to grow the economy and make it more labour absorbing

economies. Job creation remains high on the planning agenda. Empowerment of

SMMEs is already a high W&R priority.

Expand infrastructure. Various provincial strategies address the issue of infrastructure.

Transition to a low carbon economy. As major producer of waste, the green agenda

forms an integral part of skills development solutions in the W&R sector.

Transform urban and rural spaces. This is to be included in the rural strategy.

Improve education and training. This objective forms an integral part of solutions

proposed in chapter five of the SSP.

Provide quality healthcare. Already included in solutions.

As far as the final objectives are concerned the W&R sector should consider developing

further solutions in the following areas:

Build a capable state.

Fight corruption.

Transformation and unity.

The New Growth Path

There is growing consensus that creating decent work, reducing inequality and defeating

poverty can only happen through a new growth path founded on a restructuring of the

South African economy to improve its performance in terms of labour absorption, as well as

the composition and rate of growth. To achieve that step, change in growth and

transformation of economic conditions requires hard choices and a shared determination as

South Africans to see it through. Government is committed to forging such a consensus and

leading the way by doing the following:

Identifying areas where employment creation is possible on a large scale as a result of

substantial changes in conditions in South Africa and globally.

Developing a policy package to facilitate employment creation in these areas, above all

through the following:


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A comprehensive drive to enhance both social equity and competitiveness.

Systemic changes to mobilize domestic investment around activities that can create

sustainable employment.

Strong social dialogue to focus all stakeholders on encouraging growth in

employment creation activities.

The New Growth Path must provide bold, imaginative and effective strategies to create the

millions of new jobs South Africa needs and the W&R sector is committed to contribute

where possible. The implications for skills development are clear. New jobs would require a

considerable amount of focused people empowerment. Solutions in chapter five such as

SMME empowerment are viewed as key enablers of the New Growth Path. This SSP fully

supports the scope of the New Growth Path and other policy imperatives. In this regard

refer to page 206/7.

Green Paper for Post-School Education and Training

The following comments by the Council on Higher Education (CHE) are viewed as very

relative based on the SSP skills development research done by the W&RSETA: The Green

Paper seek to “developing a vision for a single, coherent, differentiated and highly

articulated PSET covers a range of issues that are beyond the remit and mandate of the

CHE. In the light of this, the Council’s response will be limited to the proposed vision for the

PSET and two key policy issues addressed in the Green Paper, namely:

a) The quantity, quality and diversity of provision, with a particular focus on the proposals

relating the Further Education and Training (FET) Colleges and the Universities.

b) The streamlining of the regulatory system, specifically, the National Qualifications

Framework (NQF) and the role of the Quality Councils (QCs).” (CHE, 2012)

The following viewpoint from the CHE also outlines further positive effects of the Green

Paper: “The skills supply from institutions as outlined in chapter 3 will definitely benefit from

the above policy issues addressed in the Green Paper. The release of the Green Paper on

Post-School Education and Training (PSET) signals a key shift in the evolution and

development of the post-apartheid transformation of the education and training system. The

integration of the education and training system and its institutional manifestation through

the creation of the Department of Higher Education and Training (DHET) provides an

opportunity to enhance and strengthen the role of the education and training system in

contributing to the development of the knowledge and skills that are essential elements in

giving effect to and overcoming the construction and development challenges that face

South African society (CHE, 2012). If all the policy guidelines are implemented, it is


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expected that the various issues outlined in the W&R SSP will be proactively addressed

such as the training of casual labour and the acceleration of the development of historically

disadvantaged South Africans.

Alignment of all Policy Requirements with the NSDS III Objectives

It is clear that all policies should be adhered to and solutions to develop skills should be

fully aligned with the following NSDS lll objectives discussed above:


Increasing access to occupationally-directed programmes.

Promoting the growth of a public FET college system that is responsive to sector, local,

regional and national skills needs and priorities.

Addressing the low level of youth and adult language and numeracy skills to enable

additional training.

Encouraging better use of workplace-based skills development.

Encouraging and supporting cooperatives, small enterprises, worker-initiated, NGO

and community training initiatives.




SMME development and job creation

The need for SMME development and job creation were discussed at length during regional

consultations. Rural development, agricultural development, as well as women

development was also high on the agenda. It was agreed that the W&R sector can play a

significant role in these development areas that are key in most government policies.

Solutions to address these skills areas will be addressed in more detail in chapter five. The

methodology followed in chapter five is to outline skills development solutions in

accordance with the policy requirements discussed in this section of the SSP with NSDS III

as major guiding source.

1.3 Methodology

The methodology should be read in conjunction with paragraph 1.1.2 (Introduction to the

updated SSP). Stakeholder participation is integral to the compilation of the SSP (refer to

the section on stakeholder participation under References). Exceptional value was added

through the incorporation of focus group and questionnaire data from stakeholders. A total

of 239 stakeholders participated in focus groups in the following provinces:


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Table 1-1: Focus groups in the various provinces

Region Number

Gauteng 18

Mpumalanga 26

Eastern Cape 24

KwaZulu-Natal 52

Free State 29

Western Cape 24

Total 177

Source: W&R Secretariat 2012

In addition to the above information, 60 key stakeholders who can be regarded as

champions of industry completed a questionnaire. These stakeholders were part of the

W&R executive development programme and their inputs are viewed as vital. The major

steps in the research process that were followed are:

Review existing data and information sources.

Incorporation of the input by a professional labour economist.

A literature study of the W&R sector nationally and internationally.

A review of workplace skills plans and annual training reports.

A scarce and critical skills survey of active levy-paying firms.

1.4 Background to the sector

Wholesaling and retailing in South Africa is generally regarded as a growth sector of the

economy. It is the fourth largest contributor to gross domestic product (GDP), with a

contribution in the region of 13.3% (Statistics SA, 2011). Total wholesale and retail trade

sales for the first quarter of 2011 is R389 051 million, of which R138 227 million is retail

sales and R250 824 million is wholesale sales (Statistics SA, March 2011).

Recently, the W&R sector fared better than other economic sectors aided by growing

domestic demand, buoyant consumer confidence, steady economic growth and an

emerging black middle class. The current economic downturn, together with rising inflation

and commodity prices, dampened sales volumes in the sector. Expansion into foreign

markets is a popular strategy to increase earnings, gain access to rand-hedged earnings,

mitigate saturated markets and leverage local expertise in new locations. The sector has

expanded beyond South Africa’s borders into sub-Saharan Africa, the Middle East and

Australia. A number of leading companies (Metro Cash & Carry; Pick n Pay; Spar; Edcon;


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Woolworths; Nandos; Shoprite Checkers and so forth) have operations in foreign countries

and are thus able to increase earnings through foreign revenue.

South Africa has moved increasingly towards mall-based retailing. The number of retail

spaces in malls has grown faster than the number of retail stores to a point that malls can

no longer guarantee that they will attract the major anchor tenants. Franchising is a growing

industry in South Africa. All major food retailers boast significant holdings in franchise

divisions. This model is popular because it affords companies a low risk and a faster store

rollout.

The large retail chains are franchising smaller formats in residential areas. The

convenience store format continues to register the highest growth in comparison to other

retail formats, as the markets for other formats have already reached saturation. Consumer

confidence in this market is increasing, with people willing to pay premium prices for shorter

travelling distances and easier shopping experiences. Franchising will necessarily entail

training and improved standards.

Traditionally, wholesalers in South Africa acted as intermediaries between manufacturers

and retailers. Today, large and medium retailers source goods directly from manufacturers

and thus reduce the function of wholesalers in the value chain. Wholesalers are now mainly

transacting with small businesses and informal traders who buy directly from them. The

South African market is brand conscious. In food retailing, where the market is highly

concentrated, there is a balance of power within the supply chain. However, in the more

fragmented apparel market, it has become more difficult for retailers to push price increases

without having an effect on trade volumes.

A number of mid- to high-income retailers have been purchasing store networks that target

the lower end of the market. These networks provide them with an established base and

brand, as well as expertise in a far more basic retail environment, targeting consumers with

different shopping expectations in malls being developed in previously disadvantaged

areas. The W&R sector is also a major source of formal employment. It employs in the

region of 1 950 000 people, which constitutes 19.93% of the total active workforce in the

formal employment sector of the country (Quarterly Labour Force Survey (QLFS), 2nd

Quarter, Statistics SA).

In the current tough economic climate, costs are rising faster than revenues; particularly

costs associated with goods, wages and transport and lease agreements. Retailers are


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thus looking to improve margins through greater efficiencies and reductions in operating

costs. The result is an investment in state-of-the-art technology at both the back

(supplier/warehousing) and front (point of sale) of the value chain. About 81% of employees

work in the formal sector. As primary and secondary sectors shed jobs, the W&R sector has

compensated for these losses by creating jobs. However, the expansion of employment in

the sector is problematic because of the increased casualisation of permanent employment.

The W&R sector is characterized by high levels of informalisation (casualisation,

outsourcing, labour-broking and sub-contracting) aimed at reducing operating costs with

negative consequences in the form of poor work conditions, exploitation and low wages,

discouragement of unionization and removal of social benefits such as medical aid, pension

and UIF. Although informalisation is seen in some quarters as having the potential to create

jobs, the nature of informal work is survivalist and not conducive to job creation (Rasool,

2007). The trade union movement in South Africa argues that informalisation perpetuates

inequalities that exist in society. A major problem with non-permanent employment is that it

discourages investment in skills development and training infrastructure.

The major challenges affecting the growth of the sector at this juncture are inflationary

pressures, high levels of household debt, rising fuel prices, increasing casualisation and

unemployment. Other challenges include skills shortages, regulatory burdens, HIV/AIDS, a

lack of capacity in the manufacturing industry and pressure on exports from a strong

currency.

1.5 Industrial Coverage

The W&RSETA is associated with Economic Sector 27: Wholesale and Retail. The fifth

edition of the Standard Industrial Classification of All Economic Activities (SIC), published

by the Statistical Office of the United Nations, is used for classifying the activities of the

various wholesale and retail business types. The businesses included in the W&R sector

are as follows:


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Table 1-2: Businesses in the W&R sector SIC

Code Description

Number of Levy

paying Firms

Wholesale

61000 Wholesale and commission trade; except of motor vehicles and

motor cycles 155

61100 Wholesale trade on a fee or contract basis 55

61210 Wholesale trade in agricultural raw materials and livestock 8

61220 Wholesale trade in food; beverages and tobacco 483

61310 Wholesale trade in textiles; clothing and footwear 349

61391 Wholesale trade in household furniture requisites and

appliances 132

61392 Wholesale trade in books and stationery 84

61393 Wholesale trade in precious stones; jewellery and silverware 45

61394 Wholesale trade in pharmaceuticals; toiletries and medical

equipment 261

61420 Wholesale trade in metal and metal ores 118

61430 Wholesale trade in construction materials; hardware; plumbing

and heating equipment 570

61501 Office machinery and equipment including computers 237

61509 Other machinery 267

61901 General wholesale trade 1665

61909 Other wholesale trade N.E.C. 1302

Retail

62000 Retail trade; except of motor vehicles and motor cycles; repair of

personal and household goods 404

62110 Retail trade in non-specialised stores with food; beverages and

tobacco predominating 552

62190 Other retail trade in non-specialised stores 594

62201 Retail trade in fresh fruit and vegetables 184

62202 Retail trade in meat and meat products 345

62203 Retail trade in bakery products 51

62204 Retail trade in beverages (bottle stores) 205

62209 Other retail trade in food; beverages and tobacco N.E.C. 386

62311 Retail of non-prescribed medicines and pharmaceutical products

other than by pharmacists 75

62321 Retail trade in men's and boys' clothing 79

62322 Retail trade in ladies' and girls' clothing 75

62323 Retail trade by general outfitters and by dealers in piece goods;

textiles; leather and travel accessories 224

62324 Retail trade in shoes 73

62330 Retail trade in household furniture appliances; articles and

equipment 341

62340 Retail trade in hardware; paints and glass 611

62391 Retail trade in reading materials and stationery 75

62392 Retail trade in jewellery; watches and clocks 92


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62393 Retail trade in sports goods and entertainment requisites 119

62399 Retail trade by other specialized stores 726

62400 Retail trade in second-hand goods in stores 78

63122 Retail sale of used motor vehicles 351

63310 Sale of new parts and accessories 399

63311 Sales of tyres 182

63500 Retail Sale of Automotive Fuel 1204

Grand Total 13307

Source: SARS Database of Levy paying enterprises (2012)

The following activities, included under wholesale and retail in the Standard Classification of

All Economic Activities, do not form part of the W&R sector:

Table 1-3: Activities not in the W&R sector

SIC

code Trade category

61210 Wholesale trade in agricultural raw materials and livestock

61410 Wholesale trade in solid, liquid and gaseous fuels and related products

62310 Specialized retail trade in prescribed pharmaceutical, medical and orthopaedic goods

62510 Retail trade via mail-order houses

62520 Retail trade via stalls and markets

62590 Other retail trade not in stores

62600 Repair of personal and household goods

63100 Sale of motor vehicles other than used motor vehicles

63200 Maintenance and repair of motor vehicles

63300 Sale of motor vehicle parts and accessories other than tyres

63400 Sale, maintenance and repair of motorcycles and related parts and accessories

64100 Hotels, camping sites and other provision of short-stay accommodation

64200 Restaurants, bars and canteens

Source: SARS Database of Levy paying enterprises (2012)


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1.6 Profile of the Wholesale and Retail Landscape

Figure 1-1: Retail decomposition

Source: StatsSA (2012) Figure 1-1 shows the retail breakdown by total sales. Fuel sales (forecourt sales) are added

to the W&R sector. Given the total turnover of fuel retail of around R100 billion, total

turnover in the W&R sector is now around R1.1 trillion. The increase in motor trade (of new

vehicles) is noticeable.

Figure 1-2: Retail market share

Source: Statistics SA (2012)

Figure 1-2 shows the decomposition of the wholesale sector. The total turnover for 2011 is

over R1.1 trillion, which is up from just over R1 trillion in the preceding year. The figure

shows the growing recovery of the global recession on retail. The increase in fuel sales is

0 100 200 300

General dealers

Textiles, clothing, footwear and leathergoods

All other retailers

Food, beverages and tobacco in specialisedstores

Hardware, paint and glass

Pharmaceutical and medical goods,cosmetics and toiletries

Household furniture, appliances andequipment

R billion at current prices

260.238

176.024

174.745

119.457

93.951

69.842

60.143

58.328

48.422

40.984

32.219

8.09

0 50 100 150 200 250 300

Solid, liquid and gaseous fuels and related…

Food, beverages and tobacco

Machinery, equipment and supplies

Other household goods except precious…

Other goods

Fee or contract basis

Agricultural

Construction and building materials

Other intermediate products, waste and…

Metals and metal ores

Textiles, clothing and footwear

Precious stones, jewellery and silverware

R billion at current prices


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noticeable and correlates with the increase in motor trade outlined in Figure 1-1.The

document now examines the profile of retail in greater detail.

Hypermarkets

Hypermarkets grew by 9% in terms of value in 2011 and the leading retailer was Pick 'n

Pay Stores Ltd with a 57% share of the market value, and the remainder was left to

Shoprite as it is the only other hypermarket in South Africa. The main reason why Pick ‘n

Pay dominates in terms of value share is because it is slightly higher priced as compared to

Shoprite and this greatly influences the sales value as well as service provided to

customers. In terms of outlets, the total number of hypermarkets increased by only one

store through the Shoprite Checkers hypermarket which was opened during the beginning

of the 2009/2010 financial year. The estimated value of groceries sold through

hypermarkets amounted to 51% of the total sales for the year and this was mainly attributed

to the fact that consumers were now resorting to buying groceries in bulk in a bid to

minimise the amount they spend since the country is still recovering from the recession.

Hypermarkets are expected to grow at a slow rate in terms of outlets to an average of at

least two stores every two years and as such the growth in value terms is expected to be

constant. (Euromonitor 2012).

Table 1-4: Hypermarket Sales data

2006 2007 2008 2009 2010 2011

Sales (R billion) 8.5 11.1 12.8 14.6 15.1 16.5

Percentage growth 30.6% 15.3% 14.1% 3.4% 9.3%

Source: Euromonitor 2012

Supermarkets

The most popular channel for grocery shopping is supermarkets, which is slightly above

hypermarkets in sales value share terms, and this has been mainly influenced by the fact

that supermarkets provide convenience as they are closely located to most residential

areas and consumers can easily access the stores. Supermarkets tend to provide quick

service as compared to hypermarkets in terms of shorter waiting times at till points and

have been preferred by most consumers, resulting in higher value growth in supermarkets.


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In 2011, supermarkets grew by almost 7% in current value terms and this growth was

mainly as a result of the rise in prices due to inflation as well as an increase in the volumes

of groceries purchased. A total of 90 supermarkets were also opened during the year 2011

and this also contributed towards the increase in the sales value for the year. Almost 70%

of sales through supermarkets in 2011 were grocery items, which was similar to the year

2010. Supermarkets are expected to remain the biggest channel in terms of sales, although

some of the revenue may be lost to convenience stores as this channel is expected to grow

over the forecast period. (Euromonitor 2012)

Table 1-5: Supermarket sales data

2006 2007 2008 2009 2010 2011

Sales (R

billion) 87.2 104.3 110.4 120.8 129.5 138.5

Percentage growth 19.6% 5.8% 9.4% 7.2% 6.9%

Source: Euromonitor 2012

Discounters

U- Save, the only discounter in South Africa enjoyed a big increase in its sales value of

almost 14% in 2011. This was mainly because of the 21 new stores which were opened

during the year by U- Save. Since the stores are mainly located near townships where the

low LSM people stay, a lot of consumers took advantage of the discounts offered on

products in a bid to flee the rising food costs, and in return, U-Save enjoyed an increase in

its sales value which contributed to the overall sales growth for Shoprite, its parent

company. (Euromonitor 2012)

Figure 1-3: Retail market share

Source: Euromonitor (2012)

0

20

40

60

80

100

120

140

160

ConvenienceStores

Discounters ForecourtRetailers

Hypermarkets Supermarkets

Sale

s V

alu

e (R

bill

ion

)

2007

2009

2011


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As can be seen from Figure 1-3, supermarkets dominate the retail landscape with sales

increasing by a larger margin over the period 2007–2011 than any of the other players in

the sector.

Convenience Stores

As more and more retailers continue to open outlets in South Africa, it is expected that

consumers will be seeking more than just lower prices. The need for convenience is

increasingly growing as consumer lifestyles change. Leading retailers are expected to

resort to also opening some convenience stores which provide quicker and more personal

service which cannot be experienced in large supermarkets and hypermarkets.

(Euromonitor 2012).

Forecourt Retailers

Most consumers now prefer smaller shopping retail formats where they get quick service

and more personal attention. To address this matter, retailers such as Pick ‘n Pay have

engaged with forecourt operator British Petroleum to provide a smaller shopping format

called Pick ‘n Pay Express which provides a quick and efficient 24-hour service. This is

proving to be effective while on the other hand, Woolworths, another retailer, has engaged

in a partnership with Engen to provide a 24-hour service shop just like Pick ‘’ Pay and it is

mostly likely that other retailers will follow the concept if it succeeds. (Euromonitor 2012)

Forecourt retailers grew by 7.6% in 2011 to reach R8.1 billion. Extended opening hours and

convenient locations have resulted in greater consumer support and increased sales.

Leading supermarket retailers are aligning themselves with petroleum brands in order to

increase brand reach. Woolworths has been affiliated with Engen Petroleum for

approximately six years and the success of its stores has resulted in ongoing expansion.

According to the SA Petroleum Retailers Association (SAPRA), the current market size is

about 22 billion litres per year. Retail stations sell about 11-billion litres of petrol and 3.5-

billion litres of diesel, and this equates to 14.5-billion litres a year on the retail market. Sasol

Ltd opened 50 new Sasol forecourt retailers over the last fiscal year, followed by Engen

with 41 new Quickshop outlets and Shell with 20 new Select outlets.

Mixed Retailers

The entry of Walmart into South Africa through acquiring Massmart Holdings has been the

major talking point within the mixed retail channel. Massmart is expected to expand its

operations through its various retail store formats, including its variety store format Game

and expand its mass warehouse format Makro. The acquisition of Massmart by Walmart


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has brought hope to consumers of getting products at the cheapest possible prices.

However, such developments were not well received by local retailers who feel they may be

driven out of business since they are now competing with a world class retailer with a top

class supply chain which allows Massmart to sell products at cheaper prices.

Mixed retailers recorded very significant value growth of 7% in 2011, which contrasted with

the previous year. This big growth was attributed to the fact that some consumers have

resorted to buying goods in bulk with an aim to save on costs of buying in smaller

quantities. This bulk buying was mainly done through retailers such as Makro which sell

their products at relatively cheaper prices than any ordinary retailer.

The mixed retail channel has become an important part of the middle- to high-income group

within the economy as the shopping environment is pleasant in terms of quietness when

shopping and consumers also get more personal service since the number of people who

enter these shops is a bit low as compared to other store channels such as hypermarkets.

Most retailers within this channel have taken advantage of this need by selling their

products at relatively high prices and this has helped boost sales value in 2011.

Variety stores recorded the highest growth in terms of sales value in 2011 amongst all the

mixed retailers. However, department stores remained the biggest channel in terms of

value despite lower growth than variety stores. The reduced growth in sales value for

department stores was attributed to the fact that the number of customers who defaulted in

paying their credit accounts had gone up. Retailers such as Edgars and Woolworths were

the worst hit by the reduction in sales due to bad debts. (Euromonitor 2012).

Health and beauty specialists

Clicks Group (Ltd.) continued to dominate health and beauty specialist retailers with a value

share of almost 32% and it is mostly likely going to remain like that over the forecast period

as the company generates the bulk of its retail sales through health and beauty product

sales and has vowed to maintain its position as a leader. Dis-Chem Pharmacies is the main

rival for Clicks although it only has a 2% share of value sales in 2011.

The value of health and beauty specialist retailers grew at a faster rate in 2011. This was

attributed to an improvement in business conditions at the beginning of the year when the

rate of employment slightly improved, resulting in an improvement in consumer confidence.

The health and beauty channel is very important to the South African economy, especially

the pharmacy channel, as consumers are able to easily buy over-the-counter drugs and


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medicines which do not require a prescription which has proved to help a lot of consumers,

especially those people who cannot afford to get medication from private doctor visits. Such

customers have been able to save money by avoiding paying the consultation fees they

would incur if they were to go to private doctors.

Health and beauty specialist retailers are becoming increasingly important in South Africa.

While the middle to upper LSM groups purchase a number of premium products from

beauty specialist retailers, an increasing number of consumers are frequenting “budget”

parapharmacies/drugstores such as Clicks and Dis-Chem, as one-stop shopping solutions

for health and beauty items. As Clicks products become more expensive due to the

company increasing its prices in line with other retailers, many South Africans are switching

to the more affordable Dis-Chem outlets.

Due to the nature of the pharmaceutical industry where prices are regulated by the

government to some extent, some partnerships in the health and beauty channel have

failed. The most recent one was the partnership between Woolworths and Netcare whereby

the two companies decided to stop their pharmacy project in Woolworths due to low

profitability contrary to what was expected by Woolworths when the project was incepted.

The Netcare pharmacies located in Woolworth’s stores closed down in June 2010. At the

same time, another retailer, Spar, recently launched its first ever branded pharmacy in Spar

Shelly beach in KwaZulu-Natal and expects to open more pharmacies in other stores if the

first one succeeds.

Outlets increased by 7% in 2011. The growth was almost proportional to the increase in

sales value for the year 2011. Health and beauty retailers have been continually working on

improving their geographical spread in South Africa to ensure that they improve their

market share. This initiative seems to be yielding results as can be seen by an increase in

the sales value.

The growth of in-store pharmacies has also helped boost the sales value of health and

beauty retailers in 2011. The growth of this type of retail format is, however, being restricted

by the high costs of hiring pharmacists, especially for grocery retailers such as Shoprite and

Spar which operate at very low margins in their normal business. Other retailers are

reluctant to adopt the in-store pharmacy concept due to high operational costs, especially

for retailers that lack funding or financial backing. (Euromonitor 2012).


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Clothing and footwear specialists

Business conditions improved in the year 2011 resulting in steady value sales for apparel

retailers. The growth in value sales was stimulated by an improvement in employment

levels at the beginning of the year. Consumer confidence however took a knock during the

second half of the year as the cost of living went up and quite a number of consumers

defaulted on paying their apparel credit accounts and a lot of retailers lost out on growth in

their sales volumes. The outlet numbers grew by 3% in 2011; a growth which was a

percentage point higher than in 2010. This is due to the fact that most retailers, including

Pep, opened more new stores in 2011 with an aim to expand their geographical coverage

countrywide.

The majority of South African branded stores sell both clothing and footwear for children as

well as adults. However, Luella stocks no clothing and focuses on adult footwear and

accessories such as handbags and belts. Temptations, Donna Claire and Milady’s all cater

to adult females only, offering no children’s clothing. Children’s clothing is mainly found in

Ackermans stores where it is relatively low priced, as are the clothes for adults.

In terms of competition the retailers within this channel are divided in terms of their target

clientele. Stores such as Truworths, Foschini, Markham and Woolworths target the high

income groups of society and they tend to be high priced compared to stores such as Pep

Stores, Ackermans and Mr Price which target the low income consumer groups across all

age ranges. As a result of the above trends, Pep Stores leads this category as it appeals to

the low income groups of society which are the majority of the South African population,

and it has become a household name which requires minimum marketing to lure

customers.

Leading supermarket retailer Pick ‘n Pay is increasing its clothing offering, and while it

previously designated a small area of the supermarket to clothing, it is increasingly focusing

on opening separate clothing stores. These outlets present a threat to apparel retailers

such as Woolworths and Edgars. (Euromonitor 2012).

Furniture and furnishing stores

Furniture and furnishings stores continued to experience difficult business conditions in

2011 due to a serious rise in the consumer default rate for credit purchases and hence,

slow growth due to reduced income as a result of bad debts. Retailers like JD Group

operate with over 60% of their sales being on credit and serious debtor management is

essential for continued survival in the furniture industry where business tends to be slower.


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JD Group continues to lead in the furniture and furnishings industry with a value share of

over 26%. This dominance was stimulated by the fact that JD Group has wider coverage in

terms of outlets countrywide which allows it to reach a wider market through its various

retail store formats.

JD Group’s target consumer segment relies heavily on credit and the National Credit Act is

a major factor contributing to the decline in sales growth. The stores are larger, located in

poorer suburbs and small towns. Boardmans and @ Home stores are located in shopping

centres in affluent urban areas. As such, the sales value growth is stunted, but is expected

to be revived after JD Group repositions one of its brands, Hifi Corporation, and according

to JD management the strategy is beginning to yield results.

With the revision of the Consumer Protection Act, furniture retailers are expected to see a

setback in the growth of their sales volumes due to consumers’ ability to return items to the

stores without penalty within a period of six months if they feel they are not satisfied with

the product. This is expected to reduce the sales volumes but at the same time, product

quality is expected to improve as retailers have an obligation to sell products which would

perform to customer expectations to avoid a lot of customer returns (Euromonitor 2012).

DIY, Home improvement and garden centres

The entry of Walmart into South Africa through the acquisition of Massmart in June 2011 is

expected to help boost value sales for the overall DIY channel going into the forecast

period. This is expected to be achieved through the expansion of Massmart’s Massbuild

division which includes retail brands such as Builders Warehouse, Builders Express and

Builders Trade Depot. This expansion is expected to be supported by Massmart’s improved

funding levels from the acquisition which has improved its operating economies of scale

and hence clear cut ability to grow.

Massmart Holdings is one of the leading DIY, home improvement and garden centres in

2011. Its goods performance was driven by the sale of some of Supergroup’s Mica outlets

to the Builders Express retail format which belongs to Massmart in 2010, when all Mica

outlets were disposed of. With the way things stand, it is highly probable that Massmart will

continue to dominate through its Builders Warehouse as well as the Builders Trade Depot

unit and Builders Express.

In 2008, Massmart’s Builders Express was incorporated into Builders Warehouse. Builders

Warehouse is becoming increasingly popular, and it is thought that it may prove an


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increasing threat to the other two brands. The large warehouses are located on the

outskirts of suburban areas and stock everything from hardware and homeware products to

plants. Coffee shops are also being opened within the warehouse premises.

Spar Group ranked first with a 39% share of value sales. Through its Build It stores, the

company enjoyed an increase in sales value in 2011 resulting in it taking the second place

in terms of market share and it also opened three more stores during the year which have

helped boost its revenues. The Build It sales value was also boosted by the fact that Spar

engaged in an aggressive marketing strategy through various media, such as television and

catalogues.

Serious price competition is expected over the forecast period with Spar Group and

Massmart dictating the pace as the market leaders. If that happens, sales are expected to

take a slight dip as retailers would use low prices as a tool to retain customers. This is

expected to overall reduce the growth in value sales over the forecast period although they

will still grow at a stable rate. The sales growth in value terms is expected to become faster

beyond the forecast period, due to factors such as inflation and rising production costs and

profitability for most retailers may be limited (Euromonitor 2012).

Electronics and appliance specialist retailers

The growth of electronics and appliance specialist retailers in 2011 took a knock as the

level of defaulting credit purchase customers continued to go up. Retailers like JD Group

generate at least 60% of their sales from credit sales and this trend of bad debts had a

negative impact on the value sales growth of the group. JD Group’s Hifi Corporation

however managed to record the highest growth in sales despite the rising bad debts.

The demand for electrical appliances continues to go up, but the market for these products

is highly competitive with price being the main driver to sales volume. The low LSM group

within South Africa is cost cautious when it comes to buying electrical appliances due to

their limited spending ability and most of them resort to buying appliances from Chinese-

owned stores where the prices are relatively low but the products are usually not durable

and do not come with a warranty as compared to the modern electrical appliance stores.

The growth of the electrical appliance channel is now dependant on the pricing strategies of

retailers, as it has become very clear that most consumers are only willing to buy on credit

and this is straining businesses due to a high level of bad debts by customers. If this

category is to grow, some retailers would have to consider offering the appliances at lower

prices to encourage cash sales in contrast to credit sales where a customer will receive the


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goods and may not even pay back the outstanding amount. Some retailers, such as

Morkels, are now encouraging consumers to do “lay bys” where consumers pay for goods

over a period of three months and they then come to collect them once the final payment is

made (Euromonitor 2012).

Leisure and personal goods specialist retailers

The general cost of living for the consumer went up at a remarkable level in 2011. This

discouraged the growth in sales value for the whole category; instead constant growth was

maintained in contrast with the previous year. Consumers were closely watching their

spending and mainly focused on their basic needs when it came to shopping. Leisure and

personal goods retailers suffered as a result of this, except for individual channels which

recorded remarkably high growth despite an increase in the cost of living. Such channels

include jewellers and sports goods stores, among others.

Jewellers recorded the highest value growth of 15% in 2011. This growth was stimulated by

the rising prices of common minerals such as gold and diamonds on commodity markets.

Foschini was the leader in terms of both value and selling space for the year 2011. The

jewellery market in South Africa mainly consists of consumers with a higher income who

mainly consider quality before price and because of this; jewellers are expected to grow at

a stable rate over the forecast period and beyond.

Media products stores increased by almost 7% in current value terms in the year 2011. The

leading retailer was Edcon Holdings Pty Ltd’s CNA outlet which had a share of almost 15%

in terms of value amongst all media product stores. The main reason why CNA continues to

perform well is because of its positioning throughout the country. CNA stores are mainly

located in busy shopping centres where a large number of people come to do their

shopping and this has helped it lure some customers as they do their shopping.

Most CNA outlets offer digital camera self-service printing, which attracts customers to buy

further items in the store while waiting for the prints to be processed. The key to the

success of media products stores is continued advertising to create consumer awareness

and the most effective media has been catalogues followed by the internet where

customers can easily see all the products in store. Sports goods stores grew by 10% in

value for the year 2011. The leader in sales value was Foschini’s Total Sports retail brand

which had a value share of 32%. Total Sports’ sales were boosted by the sale of rugby

jerseys for the South African national rugby team, as there was excitement amongst


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consumers about the rugby World Cup held in New Zealand. Sports goods stores are also

expected to record stable growth over the forecast period. (Euromonitor 2012)

Vending

Since the end of the FIFA world cup in 2010, vending sales took a bit of a knock which

resulted in a slowdown in sales growth at the beginning of the year 2011. However, sales

improved towards the end of the winter period when sales for hot beverages went up as the

cold weather conditions persisted and hence growth of 9% was enjoyed across the whole

category.

Packaged foods vending recorded the highest growth in value sales in contrast to all other

categories. This growth was stimulated by an increase in the number of vending machines

across the country which allowed a greater reach to consumers countrywide. Vending

machine operating companies embarked on campaigns to encourage businesses and

retailers to rent their machines; such campaigns included 24-hour technician support on

faulty machines.

Generally the machines are located in areas that take advantage of impulse purchases.

Consumers seeking a quick snack potentially purchase both a food and a drink item. Many

operators are purchasing combination machines as they can take the place of a small

canteen, and their convenience and access allows continual sales.

While some consumers may be under the impression that products in vending machines

are more expensive than those available from stores, prices are at least 15-20% cheaper

than offerings sold through forecourts in South Africa. However consumers tend to have

worries about the product quality for items in vending machines, especially packaged food

which may sit for longer periods in vending machines and many still prefer to buy from

stores rather than machines.

The other challenge in vending has been the jamming of machines before consumers

receive their purchases. Most consumers are now reluctant to use vending machines due to

the risk of losing their money in the buying process and they would want to avoid a lengthy

process of getting a refund which may not be worth the effort (Euromonitor 2012).

Home shopping

Sales volumes increased significantly in early 2011 as home shopping retailers continued to

aggressively market products on offer. Growth of 6% in value terms was recorded for the


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whole category in 2011 with Verimark the leading company. This has been mainly

influenced by its constant advertising through TV infomercials which would normally last up

to 30 minutes and as such the results have been seen through an increase in the sales

value even though it comes at a cost. Another player in home shopping, Glomail has also

benefited from the TV infomercials as they appeal to a wide audience with great detail and

this has helped Glomail maintain its third position in terms of market share.

Certain companies, such as Verimark, have both store and non-retail channels. They follow

a policy of having their goods priced the same regardless of sales channel. However, some

companies may offer a discount for home shopping products in order to encourage

consumers to purchase products by phone.

The huge growth in internet retailing has led to an improvement in terms of marketing tools

which helped in stimulating sales growth for home shopping. Retailers in home shopping

were using social sites such as Facebook and Twitter to create awareness of products on

offer. Other retailers were buying customer email databases where they would send

random potential customer’s emails informing them of their products on offer as well as how

they can be obtained, and hence a sharp growth in sales was enjoyed.

Beauty and personal care products recorded the highest growth in home shopping for the

year 2011. Products that sold well under this category were common beauty products which

customers already know about and would not need to go to the shop to sample or analyse

before buying. Products such as consumer electronics also performed well, although

growing from a low base (Euromonitor 2012).

Internet retailing

Over the last two years of the review period, the rate of growth in internet access levels in

South Africa has significantly grown. This has helped boost the sales value of internet

retailing for the whole country. The leading internet service providers have engaged in

serious price competition which has forced them to provide such service at affordable rates

and in turn retailers have benefited through increased sales online.

Internet retailers however still face a challenge in terms of consumers willing to do business

online; very few people are willing to divulge their banking information online due to high

credit card fraud risk worldwide. Instead consumers prefer to check product availability

online and then go to complete the purchase in-store and this has really boosted the

revenue for store-based retailers which have very informative websites.


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Most retailers which provide online shopping prefer taking payments through credit cards

and this has limited their market to mostly the high income earning groups who can afford

to get credit cards. Credit cards in South Africa are only issued to people who are employed

with a stable income and those not employed or informally employed can only afford to get

debit cards from their financial institution. Such a practice has restricted the further growth

in online retail sales since most retailers are reluctant to accept debit cards as there is risk

of returned payments when a debit card is used.

Kalahari.Net remained the leader in sales value for the year 2011. The main reason why

Kalahari.Net has succeeded is because it is easily accessible on the web as it appears on

different online shopping centres as well as informative websites for the country. This has

helped Kalahari.Net create more awareness of its products among customers and the

resultant benefit is seen through market dominance.

Beauty and personal care products significantly contributed to overall internet sales and the

other well performing category was consumer electronics. The growth in sales value for

consumer electronics online is however restricted by the fact that most consumers still

prefer buying goods in store where they get them on credit; first they undergo a credit check

and there is no risk of incorrect transactions taking place unlike online where an incorrect

order can be taken and the refund process would be complicated. Consumers also still

avoid buying online due to shipping fees which may be involved in shipping the products to

the consumers’ house.

A lot of South African consumers still prefer to do their shopping in store where they can

speak to someone as they do their shopping, and it is less likely that internet retailing would

significantly reduce in store sales volumes. This is mainly due to the fact that the level of

internet access is still limited and the majority of the population is reluctant to do their

shopping online due to a lack of awareness as well as not being able to afford the costs that

come along with internet access (Euromonitor, 2012).

While large retailers such as Pick ‘n Pay and Woolworths have tapped into the Internet

retailing environment in South Africa, their market shares remain low in comparison with the

more established players. However, in a recent survey commissioned by a number of the

prominent retailers as to the utilization and value of online shopping/retailing, it was

discovered that some of the key reasons why there is such a slow take-up can be

summarised as follows:


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Customers like to touch and feel products before purchasing.

A general lack of proper product knowledge (quality and value for money).

Availability of Internet connectivity at general household level.

Direct selling

Direct selling has significantly grown over the past two years of the review period; the post-

recession period. This growth in channel size was stimulated by the increase in internet

access levels in South Africa over the review period. The increased internet user base in

South Africa has allowed direct sellers to have close direct contact with customers on a

regular basis and the marketing process has been simplified through various forms of

communication that include emails, social site marketing and individual direct seller

websites.

Sales grew by 10% in 2011. Consumer spending power went down slightly but direct sellers

still managed to post a respectable growth with middle and higher income level consumers

contributing greatly to the growth in sales value.

Many of the larger direct selling companies in South Africa are following a multi-level

marketing compensation scheme. Team leaders manage a group of sales consultants, who

in turn sell directly to consumers. Team leaders motivate sales consultants, offering support

and incentives. Smaller players follow the single level compensation scheme, by which

distributors sell products directly to consumers. This has greatly boosted the sales volumes

for the category.

Direct sellers are coming up with schemes that encourage consumers to buy from direct

sellers at the expense of other selling channels. One way has been the lowering of the unit

price of products sold through direct selling when compared to the price of products sold

through stores. Certain products may only be available through direct selling channels, in

order to encourage consumers to utilise the direct sales channel. In the same way, certain

products may be sold at a discount, at the distributors’ discretion.

Avon Products Inc. led sales in 2011. This was mainly attributed to its wide selling network

through its agents who have got remuneration incentives based on the amount of products

sold. This helped increase the levels of sales volumes and value for Avon. In second place

was Tupperware Brands Corp which uses a similar concept to Avon.


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Household goods contributed over 33% of the total sales in South Africa for the year 2011.

Health and Wellness products also significantly contributed towards the sales value of

direct sellers, due to the fact that most South Africans are working towards improving their

lifestyles, with weight and body shape being the major challenge. Most direct sellers have

managed to put this trend to good use through the aggressive marketing of health

improvement products, specifically weight loss products. Beauty and personal care

products also made a significant contribution to the sales growth in 2011 with Avon being

the leading company due to its established brand name as well as a large network of sales

agents. (Euromonitor 2012).

Fuel retailers1

Fuel retailers have been included in the W&RSETA landscape. According to Statistics SA

(2012), retail fuel sales are about R123 billion for the country as a whole in 2011 and

around R90 billion so far this year (as of the end of August). This is primarily in the form of

forecourt fuel sales. In South Africa, fuel prices and margins, with the exception of diesel,

are regulated. This setup has resulted in employment being regulated and standardized

across the industry. Most outlets are open 24 hours a day, requiring two or three shifts.

Most forecourt employees work around 60 hours a week.

The industry employs predominantly male workers, especially during the night shifts, but

there is a tendency towards employing more female forecourt staff members. The WSP

(2010) data reveals that there are a total of 79 151 females and 400 720 males employed in

the sector. Surprisingly, the data also indicates that there are no Indian females employed

in any of the occupational categories. Training is mandated by the oil companies and

outlets are required to send certain key personnel for training. South Africa is one of the few

countries with such stringent regulation of its fuel retailing industry. The major risk for fuel

retailers is the eventual deregulation. When this happens, there will be major retrenchments

in the industry. The convenience shop outlets at most garages add significantly to the total

retail output. No data related to the value of the contribution is available.

The Fuel Retailers Association (FRA) plays a key role in the fuel industry. According to the

FRA website the FRA is an independent, fully autonomous organisation that is party to the

Motor Industries Bargaining Council. The FRA is constituted to promote the interests of its

1 Please note that although WSP data forms the basis of statistical data it should be noted that there is a huge mismatch between the SARS database with those

submitting WSPs. Nevertheless, the quoted data could not be confirmed in Euromonitor 2012 as they do not report on such.


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members in particular and of all Fuel Retailers in South Africa on any issue that affects any

nature of the business. Stakeholder interaction includes but is not limited to: The

Department of Energy, Oil Companies, Banks and Trade Unions.

From a skills perspective the following role and achievements of the FRA is significant to

note: The Association started from very humble beginnings in 1998 with about 10 members

to now a membership of over 1 700 Members. The Association has played a vital role since

its inception in bringing to the public and stakeholders the challenges facing the South

African Fuel Retailers.

The Association has without fail proved to be the voice of the fuel retailing industry when it

comes to issues like fuel shortages due to strikes or refinery and logistical constraints. The

Association in conjunction with other industry players recently successfully concluded a

new retail margin determination model commissioned by the Department of Energy. We are

very proud that for the first time there is a model which is scientific on which future retail

margins will be based on. The Association also played a crucial role in the concluding of the

2010 Wage Negotiations under the Motor Industry Bargaining Council.

In 2009 when the new card payment regulation was promulgated, the Association played a

role in educating the public on the interpretation of the regulation especially with regards to

the use of credit cards.

The Association has been invited in key and strategic industry forums to table the views

and perspective of retailers. These forums include but are not limited to AMEF (African

Minerals & Energy Forums) and the 2010 Oil and Gas Indaba which was hosted by the

Minster in Bloemfontein. The Association has been instrumental in opposing new service

station proliferations by using the framework within the Petroleum Products Acts in order to

ensure the survival of existing retailers.

The Association is experiencing phenomenal growth and has in excess of 1600 members. It

is clear that the FRA is a key enabler to improve the skills levels required in the industry.

South African Petroleum Industry Association (SAPIA) is also a key player. SAPIA

represents the collective interests of the South African petroleum industry. The association

plays a strategic role in addressing a range of common issues relating to the refining,

distribution and marketing of petroleum products, as well as promoting the industry’s

environmental and socio-economic progress. SAPIA fulfils this role by proactively engaging

with key stakeholders, providing research information, expert advice and communicating


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the industry’s views to government, members of the public and media. (SAPIA annual

report 2011).

According to Matsho (2010) “The petroleum industry has attracted a lot of attention in

recent years. The industry is one of the major contributors to the South African GDP. In

recent years, increases in petrol price created a huge challenge for the service station

retailers to run sustainable, profitable and viable businesses, as the price increases

impacted negatively on sales volumes. The new entrants in the market and new

competition from other retail businesses necessitated changes in the industry. The

petroleum industry introduced new business centres at the service stations to generate

revenue for the business to ensure profitability and viability. The proliferation of service

stations, regulated retailer margins on petrol and volume performance have all created

concerns about the survival of individual service stations. The effects of crude oil price

fluctuations on the economy ultimately affect the motorists and retailers. The South African

petrol price largely depends on international market conditions. The industry faces change

and challenges.

The future uncertainty of the supply of exhaustible resources like crude oil impacts on the

crude price experienced by the global market. The energy demand thus exerts another

pressure on price as the world economy grows rapidly. The uncertainty about whether to

deregulate the liquid fuel industry adds a new dimension to the industry’s future. The study

focus area highlights findings which can be extrapolated to other similar cities in South

Africa. At the end of the day, a retail operator should know the businesses very well as the

profit margins are fixed.”

From the skills development perspective, the following perspectives are viewed as

important: The new entrants in the market and new competition from other retail businesses

necessitated changes in the industry. The petroleum industry introduced new business

centres at the service stations to generate revenue for the business to ensure profitability

and viability. The proliferation of service stations, regulated retailer margins on petrol and

volume performance have all created concerns about the survival of individual service

stations. (Matsho, 2010: iii)

The majority of the retailers, which account for 53%, are between 41 – 50 years old, 21%

are between 31 – 40 years old, 18% are over 50 years old and 9% are below 30 years old.

There is a good chance of sustaining the same retailers in the next decade as the 41 – 50


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years old group moves to above 50 years. This will help the industry for continuity and skills

retention within the petroleum industry. (Matsho, 2010:117).

Informal trading

Due to the fact that small vendors are normally not paying skills levies, information on the

sector is not readily available. However, the following references are viewed as significant:

There are at least 100 000 Spaza shops in South Africa with an estimated 40 000 located in

Gauteng with a collective turnover of well over R7 billion per annum.

However, many of the Spaza shop owners do not hold formal business management

qualifications and indeed, a significant number of them run Spaza’s only as a means of

survival. Often they do not communicate with each other and receive very little relevant

information about their sector.

There is, therefore, a huge need to provide as much information as possible and further

empower these (mostly) township-based entrepreneurs. However, there is no single

publication providing news and information to this sector. Spaza News aims to plug this gap

by providing information that is useful and practical to Spaza shop owners. It also serves as

an empowerment tool to help Spaza shop owners improve their businesses (Spaza News,

2012). There are an estimated 750 000 hawkers, spaza shops, shebeens and other

informal traders across South Africa who, cumulatively, are responsible for R30 billion a

year of retail sales - an astonishing R 17 billion of that on food alone (Wythawk, 2012)

75% of informal market consumers use Spaza shops every day.

The average amount spent is R 175 per month.

Items most regularly purchased are milk, bread and paraffin, but the complete range

of products sells (from fresh produce, to cigarettes, to newspapers, cold drinks and

alcohol).

57% of the customers are women.

Spaza's make up 10% of the South African retail spend (Whythawk, 2012). Further

research should focus more specifically on the informal sector. One of the 10 research

themes identified focuses on rural development that will focus on the informal sector.

1.7 Profile of occupational fields

The fast-moving consumer goods (FMCG) retail and wholesale sector is one of South

Africa’s largest and most diverse industries. It is also an important contributor to

employment, especially among the less skilled. The years 2008 and 2009 have seen


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recruitment in this sector negatively affected by the economic downturn. Signs of

employment stability in the first half of 2012 are now evident. The increased economic

activity and its consequent increase in employment reveal the threat posed by a lack of

skills.

Various skills development programmes have been put in place as long and short term

strategies in an attempt to improve the current skills crisis. As quoted in W&RSETA’s

annual report for 2010 to 2011, the total training activity can be summarised as follows:

Table 1.6: Number of people trained according to region

Province Number of people trained

Eastern Cape 7 478

Free State 3 348

Gauteng 133 844

KwaZulu-Natal 42 664

Limpopo 5 480

Mpumalanga 8 201

North West 4 307

Northern Cape 2 186

Western Cape 154 314

#N/A 37 004

Grand Total 398 826

Source: W&R WSP data 2012

The number of people trained decreased from 390 044 in 2009/10 to 323 347 in 2010/11.

This subsequently increased again to 398 826. Of this number, 181 434 completed training,

while 141 913 were still in the process of training. The training ranged from short courses to

technical qualifications. Recruitment remains moderate in the FMCG retail and wholesale

sector, but is difficult in certain occupational fields, as there is a high demand for labour, but

there are a limited number of qualified professionals on the job market. A steady increase in

online labour demand is evident for the previous three months, while the workforce remains

unchanged.

Based on the latest updated information, the following conclusion can be drawn: The

Career Junction Index (CJI) for the FMCG retail and wholesale sector is currently

positioned at 113 index points, signalling a slow market recovery. However, recruitment

remains moderate in the FMCG retail and wholesale sector, but it is difficult to find suitable

candidates in certain occupational fields, as there is a high demand for such labour due to a

limited number of qualified professionals on the job market. A steady increase in online


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labour demand is evident for the previous three months, whilst the enterprises’ total

workforce remains fairly unchanged.

The limited workforce of available labour in certain retail and wholesale occupational fields

is a cause for concern, particularly during the time of market recovery. Further growth in

labour demand will have a negative impact on recruitment in this sector and could possibly

leave recruiters with severe skills shortages across a large part of the retail and wholesale

sectors. Therefore, it is vital for businesses to invest in strategic long term planning in order

to combat a possible skills crisis and ensure the profitability of businesses. Whilst analysing

jobs/occupations in the retail and wholesale profession, it is valuable to distinguish between

the various occupational fields. Career Junction classifies scarcity according to the following

occupational fields:

Production and manufacturing

Production and manufacturing is the process of transforming raw materials into finished

products. Such finished products are sold on a large scale to wholesalers, who in turn sell

them to retailers, who then sell them to consumers. Manufactured products can also be

sold to other manufacturers who use them to make more complex products. A large number

of people or cross-functional teams are involved in the various stages of production or

manufacturing. Today, a lot of these processes are automated or computer aided.

Operations (Control and planning)

Operations management is the process of optimizing manufacturing processes by reducing

the lead time of product launching and work in progress inventories to allow for rapid

response to product changes. Process and operations specialists use a collection of

technologies and methods to define how products are manufactured. A professional

working in this field is responsible for defining production processes, overseeing quality and

compliance of products, ordering materials, compiling cost data, setting manufacturing

schedules and managing industrial and process control machinery.

Procurement, supply chain and logistics

Procurement and logistics form part of the supply chain, which is described as the

movement of products from supplier to consumer through multifaceted procedures. The

supply chain process involves purchasing materials and products, transforming raw

materials into finished products, storing materials and products and finally delivering

material or products to consumers. A large number of persons or cross-functional teams


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are involved in the various stages of the supply chain. A well-developed supply chain can

greatly improve product quality, reduce spending and time and optimize manufacturing flow.

Warehousing and stock control

Warehousing and stock control involves the ordering, putting away and picking of products,

as well as inventory management and stock rotation. Today, many warehousing processes

are automated by computerized systems and machinery. With a proper slotting plan, a

warehouse can improve its inventory rotation requirements. This is particularly important

when dealing with fast-moving consumer goods.

Sales

Sales personnel are responsible for the selling of consumer goods. Retailing differs from

wholesaling due to the dissimilar quantities of products sold, as well as the point of sale.

Retail products are generally sold in small quantities from a fixed location that is accessible

by the public. Wholesalers, on the other hand, sell products in large quantities and, in most

cases, lengthy distances are travelled from warehouses to retail stores, therefore,

wholesaling requires thorough planning. Furthermore, as opposed to selling products to

individuals, wholesalers generally possess a large and loyal client base with whom they

partner on a long-term basis by way of contractual agreements.

Branch and store management

Branch and store managers are responsible for running and overseeing a division of a large

organization. A branch or store manager generally manages other employees who work in

the same division. His or her duties generally include structuring working hours, as well as

overseeing payment processes, leave requests and the general safety and satisfaction of

employees.

Client services

Client service professionals’ deal directly with clients before, during and after a purchase to

ensure that they are satisfied with the product or service at all times. In the retail field,

stores will have a desk or counter devoted to dealing with customer dissatisfaction. In the

wholesale field, customer service professionals stay in constant contact with loyal clients

and are always available to them in order to resolve product or service complaints. In

wholesaling, client service professionals are also responsible for informing clients of special

offers that might be taking place in the organization.


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General management

General management includes all management level professionals across all occupational

fields in the retail and wholesale profession. Set out below are recruitment conditions

experienced by each retail and wholesale occupational field by measuring the number of

potential career seekers available for every job advertisement posted:

Figure 1-4: Recruitment and occupational groups

Source: Euromonitor (2010)

1.8 Economic performance and outlook

This section reviews the economic performance and outlook of the wholesale and retail sector

within the context of national economic activities and international developments.

Overview - global economic growth moderated to 2.8% in the second quarter of 2012 after

having surprised on the upside in the first quarter of the year. The slowdown in growth was

relatively broad-based, with moderations recorded in many advanced and emerging-market

economies. In some countries economic activity is even contracted during the period. The

International Monetary Fund (IMF) lowered its global growth projections in the July 2012

World Economic Outlook Update to 3.5% for 2012 and 3.9% for 2013. The downward

revisions reflected less favourable growth in many major emerging-market economies as a

result of spill over effects from the euro area debt crisis and the delayed impact of earlier

policy tightening. Weaker-than-expected activity in the euro area, particularly in the

peripheral countries, primarily gave rise to the downward adjustments of earlier growth

projections.

Economic activity in South Africa expanded at a firmer pace in the second quarter of 2012

with real gross domestic product rising at an annualised rate of 3.2%, a half percentage


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point higher than in the first quarter of the year. The acceleration was mostly due to a brisk

recovery in mining output as conditions normalised, following the substantial decline in the

preceding quarter that had been brought about mainly by a protracted labour unrest-related

shutdown of operations at a major platinum mine (BER, 2012).

Gross Domestic Product

Table 1-7shows that South Africa was expected to achieve real GDP growth of 2.6% in

2012, with the projected increases up to 2016. The latest GDP figures in Table 1-7 also

predict that real GDP is expected to hover in the 3%–4.2% range up to 2017. Per capita,

GDP is expected to reach US$8 054 (R58 972) in 2014 from a base of US$8 078 (R59 148)

in 2011 and unemployment for the same period would increase from 24 % to 24.5%.

Table 1-7: South Africa: economic activity 2010- 2017 Indicators

2010 2011 2012 2013 2014 2015 2016 2017

Nominal GDP

(R billion) 2,661.4 2,964.2 3,205.5 3,477.4 3,796.0 4,145.7 4,522.1 4,930.93

Nominal GDP

(US$ billion) 363.475 408.689 390.919 402.152 422.271 444.869 469.375 495.783

Real GDP growth(%

year-on-year) 2.89 3.12 2.59 3.03 3.86 4.15 4.15 4.15

Nominal GDP per

capita (US$) 7,270.8 8,078.4 7,635.5 7,761.8 8,053.5 8,383.8 8,740.8 9,123.13

Population (million) 49.991 50.59 51.197 51.811 52.433 53.062 53.699 54.344

Unemployment

(% of labour force) 23.96 23.92 24.38 24.73 24.54 24.13 23.72 23.31

Source: IMF World Economic Outlook, October 2012


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Figure 1-5: Robust GDP growth expected in 2011/12

Source: SARB Quarterly Bulletin, September 2012

The domestic economy appears to be slowing further, following the 2.7% annualized growth

rate recorded in the first quarter of 2012. The Bank’s forecast of gross domestic product

(GDP) growth for 2012 has been revised down from 2.9% to 2.7% and to 3.8% in 2013. The

forecast for 2014 remains unchanged at 4.1%. However, given the possibility of a more

widespread global downturn, the risks to this forecast are seen to be on the downside, with

the external impact coming through trade links and commodity prices. (Quarterly Bulletin,

2012 Q3, SARB).


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Figure 1-6: Percentage change (quarter-on-quarter) seasonally adjusted at an

annualized rate

Source: Stats SA (2012) Figure 1-6 illustrates the growth rates for the various sectors in the economy. It is evident

from the graph that only the Mining and Quarrying Sector showed a decline over the last

reporting quarter.

Environmental

Oil price volatility is a significant risk for the sector, but soaring oil prices are unlikely to be

the primary driver for fundamental change. A major energy turnaround will not be achieved

before 2030. New regulations and ambitious targets being set in a growing number of

countries around the globe may provide the foundation necessary to drive significant

technological change in this area, although there is substantial controversy around the

direction that developments will take and how rapidly advances can be achieved.

Reducing emissions is a greater challenge to transport companies over the next 20 years

than obtaining a sufficient supply of energy. Our panel anticipates that, by 2030, systems

will be in place to ensure that the cost of carbon emission is allocated to the source.

Whether or not they see it as a business opportunity, logistics providers will in future most

likely need to track, document and disclose the CO2 emissions for which they are

responsible. However, tracking carbon emissions may only be the first step.

-20

-15

-10

-5

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2011 Q3 2011 Q4 2012 Q1


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In the more distant future, logistics service providers will need to document all types of

emissions (such as noise and nitrogen oxide) in order to measure the full environmental

impact of their activities over the long term. The need for a sustainable supply chain, which

tracks and documents emissions, has numerous ramifications. On the company level,

introducing mobility accounts may provide one way to reduce the carbon footprint of

employees. Companies may also be able to monitor total emissions and eventually manage

these so as to reduce the carbon footprint of the organization and, by extension, that of its

customers. They may also be able to offer customers “green credits” for more sustainable

transportation options, or share their own expertise as eco-consultants. This would have a

major impact on all sectors of the economy.

Unemployment

Government’s target to create 4.5 million work opportunities by 2014 appears ambitious in

the context of the sluggish economic recovery that South Africa is likely to see over coming

years. Although the Ministry of Public Works stated that nearly 224 000 “job opportunities”

were created since April 2009, it is unlikely that targets will be met. Data from Statistics

SA’s QLFS indicates that the official unemployment level increased to 25.5% in Quarter 3 of

2012, up from 25 % in Quarter 3 of 2011, with the total number of unemployed people at

4.667 million in the quarter ending September 2012 (Stats SA, QLFS, 3nd Quarter 2012).

The 2011 Census results puts South Africa’s employment rate on 29.8%. This includes only

people who have actively sought work in the week prior to the survey. When those who

have given up looking for work are included, the census says 40% are unemployed.

According to the census, South Africa therefore has between 5.5-million unemployed

people on the "narrow definition" and 8.7-million on the broad definition, which includes

discouraged work seekers.

The labour force survey for the 3rd Quarter of 2012 reflected a continuing negative trend in

manufacturing employment, as a further 10 000 jobs were shed relative to the 3rd quarter of

2011 (Stats SA 2012). The other broad sectors reporting employment losses in the 3rd

quarter of 2012 were: the trade sector (-50 000) and the construction sector (-40 000).

Overall employment in South Africa increased by 198 000 relative to the preceding quarter,

and 327 000 additional jobs were created on a year-on-year basis.


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Figure 1-7: Job losses/gains from Quarter 3 of 2011 to Quarter 3 of 2012

Author’s own calculations, compiled from Stats SA data available as at Sep 2012

Implications for skills development

The W&RSETA should incentivize the training of unemployed youth. Government has

championed entrepreneurship among the unemployed, which may not be the most effective

method to grow small businesses. International experience shows that there would be more

money invested if older and experienced people, who are laid off, work to achieve a more

desired impact on small business and employment growth.

The rand and current account

After having increased by 4.4% in the first quarter of 2012, the nominal effective exchange

rate of the rand lost some momentum and decreased by 4.8% in the second quarter. The

depreciation in the exchange value of the rand was mainly due to heightened risk aversion,

following an array of economic data that seemed to suggest that the global economic

recovery might be slower than anticipated. Domestically, the currency was weighed down

by the wider than-expected current-account deficit and the moderation in economic activity

in the opening months of 2012.

During April and May 2012, the nominal effective exchange rate of the rand decreased by

0.8% and 5.8% respectively. Pronounced declines were registered against the US dollar

and the Japanese yen. The rand, however, gained some ground in June, mainly due to

progress made in addressing the euro area debt crisis and confirmation by Citigroup that it

would include South African government bonds in its World Government Bond Index

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(WGBI) from October 2012. In addition, the successful issuance of an international bond by

a public corporation also contributed positively towards the strength of the rand.

The exchange rate of the rand appreciated by 1.9% in June and 1.7% in July 2012,

supported by the resolution of the European Union (EU) summit to create a European

Banking Union. The modest rebound of economic activity in China and monetary easing by

major central banks assisted the currencies of most emerging-market economies over the

period. During August 2012, however, the domestic currency retracted somewhat alongside

challenges faced by the domestic platinum industry and declining prices of South African

export commodities.

In the second quarter of 2012 economic activity in many countries continued to be

adversely affected by the relatively unbalanced global economic recovery and a moderation

in global demand, especially from Europe. Weaker growth prospects for the euro area not

only negatively impacted external trade balances of export-led economies with significant

direct trade linkages with Europe, but through spill over effects also had a negative bearing

on export growth of other trading-partner countries indirectly exposed to the euro area. In

South Africa the moderation in export earnings coincided with a further increase in the

value of merchandise imports, resulting in the deficit on the trade account of the balance of

payments increasing significantly from R42.0 billion in the first quarter of 2012 to R75.7

billion in the second quarter.

Simultaneously, the shortfall on the service, income and current transfer account widened

notably, aggravated by higher dividend payments to the rest of the world. As a result, the

deficit on the current account of the balance of payments rose from 4.9% of gross domestic

product in the first quarter of 2012 to 6.4% in the second quarter. The larger imbalance

reflected the simultaneous deterioration in the trade and services accounts over the period.

(SARB)


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Figure 1-8: Exchange rate of the euro vs. rand: 2009–2012

Source: South African Reserve Bank Accessed 9th August 2012

The current Rand/Euro exchange rate is 1 South African Rand/Euro = 0.0891465677.

According to Stanlib (20120 the current situation can be summarised follows: In Q1 2012,

“South Africa recorded a current account deficit equivalent to a substantial 4.9% of GDP.

The market was expecting a deficit of 4.5% of GDP. This compares to a deficit of 3.6% of

GDP in Q4 2011. In value terms, the current-account deficit widened to –R152.6 billion from

–R110.2 billion in Q4 2011 (these are annualised numbers). For 2011 as a whole, the

current-account deficit was recorded at R98.8bn (3.3% of GDP).”

Inflation targeting

The South African Reserve Bank (SARB) has taken an “inflation targeting” approach to

monetary policy for some time. Its main objective is to keep inflation within an agreed band

– 3.0 - 6.0% in South Africa’s case – with concerns such as economic growth and job

creation not explicitly factored into monetary policy decisions. This approach has drawn

criticism, especially during the economic downturn, with COSATU calling for the benchmark

repo rate to be slashed from 7.0% to 3.0%, which would lower borrowing costs and thereby

boost growth, albeit fuelling inflation. The authorities have managed to silence some of the

more radical calls, while still maintaining a market-friendly policy.

After remaining within the inflation target range for 21 consecutive months up to October

2011, year-on-year headline consumer price inflation breached the upper limit of the

inflation target range for six consecutive months, peaking at a rate of 6.3% in January 2012.

This twelve month rate of increase subsequently moderated to 4.9% in July 2012. The


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slackening in headline consumer price inflation resulted mainly from slower consumer

goods price inflation, with the prices of food and non-alcoholic beverages, and to a lesser

extent, petrol decreasing notably. The July 2012 headline inflation outcome marked the

sixth consecutive month in which consumer price inflation outcomes were below consensus

forecasts. (SARB 2012).

W&R sector economic outlook

The South African economy has protected itself from becoming embroiled in the global

financial turmoil. The country's banking sector is strictly regulated by Government and has

therefore resisted the rising credit crisis that has affected most emerging economies.

Although portfolio investments are volatile, unlike foreign direct investment (FDI), the

country’s ability to maintain positive inflows in the midst of a global economic slowdown is a

creditable achievement. South African authorities have been very prudent in addressing the

country’s monetary challenges. Conservative measures in the past have resulted in the

economy not being as harshly impacted on as that of most developed countries.

Table 1-8: Government nett debt as percentage of GDP

Country 2010 2011 2012e 2013e 2014e 2015e 2016e 2017e

Germany 56.8 56.1 54.1 53.4 52.4 52.4 52.4 52.4

Greece* 142.8 163.3 161.2 165.3 158.8 151.3 143.6 135.8

Japan* 112.8 126.6 135.2 142.7 149.1 155.0 160.6 165.5

South Africa* 31.3 35.1 36.2 37.6 38.8 38.3 36.6 34.5

Spain 49.7 56.9 67.0 71.8 75.1 76.9 78.3 79.8

Turkey* 36.1 33.2 29.7 28.2 27.2 26.4 25.5 24.6

United Kingdom* 71.1 78.3 84.2 87.2 88.6 88.1 86.0 82.6

United States* 73.1 80.3 83.7 86.7 88.0 88.3 88.4 88.4

Source: International Monetary Fund, World Economic Outlook Database, Oct 2012

Notes: * Estimates for 2011

Table 1-8 shows the healthy South African debt to GDP ratio. A debt ratio of 60% is

regarded as normal. With such a low debt ratio, South Africa is able to raise funding at very

attractive international rates, as is evident from the recent Eskom bond offering. The low

debt ratio also engenders confidence among investors – we have seen the portfolio inflows

into our bond and equity markets over the past few months and the resulting strengthening

of the South African rand. Published results from major retailers indicate that there has

been strong sales growth for the 2009/2010 financial year, brought about by increased unit


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prices and to a lesser extent increased volumes. This augurs well for retailer margins. The

causes are manifold, but include the following:

The five successive interest rate cuts.

The strengthening rand, which is especially good for retail.

Lowered inflationary expectations and the consequent lowering of interest rates.

Lessening of the impact of the credit crunch of 2008 and 2009.

Upbeat world economic markets.

Secondary effects of the World Cup.

There are threats, however, which would mitigate the positive enthusiasm. They include the

following: (i) high consumer debt levels, (ii) increased crime, especially commercial crime

and crime committed on business premises (elaborated on later), (iii) consumer Protection

Act, which came into effect in October 2010. The act touches on many aspects of supply

relationships, including warranties, pricing, standards of service and quality, advertising,

labelling, marketing and others, (v) union militancy and increased wage demands, and (vi)

expectations of higher fuel prices.

The major challenge facing the W&R sector is to see through the tightening economic

cycle. The lagged effect of interest rate hikes in 2007/2008, a crunch on consumer credit,

high consumer debt and rising oil and food prices are more pronounced during 2008,

resulting in a definite slowdown in consumer demand. This optimism in the South African

economy has spilled over into the impending acquisition of Massmart by WalMart of the

USA.

WalMart, which focuses on high volume, low margin, low cost distribution of mainly branded

consumer goods for cash, is the largest retailer in the world and a prominent leader in

innovation. Its entry into the South African retail sector will undoubtedly have significant

ramifications in the industry as other retailers respond to the threat of diminishing market

share and profit margins.

It is believed that Walmart’s presence in South Africa will increase online shopping from its

current almost 0%. In addition, Walmart’s operating structure will have huge implications for

labour. Labour unions have already staked their positions against the takeover, as they

believe it would diminish worker rights. Compared with the rest of Africa, South Africa’s

retail market is already a juggernaut. In 2011, retail sales surpassed a trillion rand for the

first time in history. By 2016, this is expected to swell to R1.46tr. Much of this market is

dominated by about a dozen large holding companies, which collectively own the majority


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of the country’s biggest brands. The biggest of these –Shoprite, Pick ‘n Pay, Spar and

Massmart – account for about 80% of local retail sales, with various sub-brands targeting

different consumer segments of the market. Until the entry of Walmart, all of these

companies were locally owned.

But following a major growth spurt in 2010 – predominantly through sales of higher-value

goods, rather than a major rise in volume – the retail outlook has dimmed. Volume growth

for 2012 is expected to be just 0.7%, down from 3.9% in 2011. And as pressures on

consumers’ wallets rise, retail sales by value are expected to slow this year, after growth of

over 9% in 2011. ‘The economic outlook going forward is expected to be in line with the

previous year, moderate to unspectacular growth, let’s call it that,’ explains Justin

Crowhurst, head of strategy, planning and performance at Woolworths, an upmarket food

and fashion retailer. ‘We’re expecting a low 3% GDP growth.’

Growth drivers - any new growth will be largely driven by the number of black consumers

rising into middle- and upper-income groups, with a consequent expansion in their

disposable income. By 2016, some 11 million households are expected to have an annual

income above R89 500 (or US$10 000). At the upper end of the income scale, some

forecasters believe the country is already home to about 71 000 dollar millionaires. Their

spending power is further bolstered by widely available consumer credit, both from retail

banks and retail chains – although some fear this is now slowing.

However, there has been a massive boost in unsecured lending, which also facilitated more

spending at the bottom end, but that is coming to an end,’ argues Renier Swanepoel, an

analyst with UBS, an investment bank. Nevertheless, striking income disparities have

prompted local retailers to focus closely on how they position their brands against specific

income bands. These are typically defined locally by the Living Standards Measure market

segmentation model, or LSM. The LSM divides the population into 10 LSM groups – 10

(highest) to 1 (lowest) – according to their living standards using criteria such as degree of

urbanisation and ownership of cars and other major appliances. For those on the upper end

of the scale, there is a clear aspirational drive to increase spending, especially for status

purchases such as of high-end motorcars and premium alcohols.

For example, South Africa was the world’s fifth largest export market for Scotch whisky in

2011/12. And there is continued migration from lower LSM scores through to higher ones,

with immediate knock-on benefits for retailers. ‘The food retailers benefit first, because as

you go through LSM migration, consumers tend to move from an informal retail


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environment to a formal one,’ says Ms Coetzee. For the large, lower-end pool of

consumers, two key government initiatives – large-scale infrastructure investments across

the country and wide-ranging social grants – are in turn helping to prop up demand. Both of

these initiatives are significant. Social grant pay-outs reached nearly R100bn in 2011, much

of which is dispensed via retail outlets across the country, especially in rural areas, which

acts as a boost to local retailers.

Meanwhile, the Government is looking for ways to fund up to R3.2tr in infrastructure

investments over a nine-year period, as announced by the President in February 2012/14.

‘If all these things come to fruition and there are no nasty shocks in the system, this should

translate into very substantial growth in consumer spending,’ notes Mr. Vianello.

Downside pressures - the executives are quick to note, all growth forecasts for the country

face considerable downside risks. These largely relate to the significant uncertainties within

the Eurozone, which may also affect the country’s ability to raise financing for its

infrastructure investment plans. There are also more recent doubts about economic growth

in Asia and its consequent impact on the world economy. Any such uncertainty typically

dampens local demand, with consumers curtailing unnecessary expenditure.

There are also local risks, such as policy uncertainties over labour broking and temporary

workers, which are considered crucial to flexibly adapting staffing levels in line with demand

peaks. The Government is under pressure from trade unions to clamp down labour broking,

which could have clear consequences on the cost base of many retailers.

This issue is one of a number of cost pressures facing retailers at the moment. Electricity

prices are increasing materially, along with ongoing wage increases; fuel costs remain

persistently high; and retail occupancy costs are being pushed upwards. To keep pace,

retailers have relied on increasing top-line sales, but this strategy has now come unstuck

for some, as both volume and value growth has stalled.

This raises tough decisions: ‘Margins are too dependent on how retailers keep sales

growing, and if that means you’ve got to be more promotional then you’ve got a clear risk to

the gross margin. This is the big conundrum in retail at the moment,’ explains RMB Morgan

Stanley’s Ms Coetzee. A further pressure is a persistent skills shortage, especially among

middle management. There is a shortage of strong graduates emerging from local tertiary

education, while most retailers have had to develop significant in-house training capacity in


Page165

order to continue developing skills. (South African retail and consumer products outlook

2012-2016, PwC 2012).

Implications for skills development

Given the expected growth in GDP in the coming years subsequent to the recent

contraction, it is expected that skills development needs will be more urgent. There have

been significant retrenchments in the sector, together with some loss in skills. This, together

with the expected increased employment, will require increased skills training.

Risks To Economic Growth: Fuel Price

Fuel has a direct impact on the wholesale and retail sector, from increasing the cost of

goods sold to limiting the disposable income available for retail. Figure 1-9 illustrates the

impending threat the sector faces from the low fuel reserves and the impact that it would

undoubtedly have on future prices.

From January 2010 to November 2012, the price of petrol increased by around 54% and

the price of diesel by around 66%. This year alone the price of petrol and diesel increase by

14% and 11% respectively.

Petrol and diesel prices from January 2010 – Nov 2012

Source: Automobile Association of South Africa, 2012

Note: All prices are inland fuel prices

0

200

400

600

800

1000

1200

1400

Cen

ts p

er

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e

95 Unleaded Diesel 0.05%


Page166

Figure 1-9: Fuel production, consumption and reserves

Source: BP Statistical Review of World Energy (June 2012)

Figure 1-9 illustrates the expected tight demand for crude oil in the coming years. It is

expected that oil usage will increase by an estimated 17% per year from 2010 to 2015 with

production only increasing by 2.2% (BP Energy Outlook 2030, 2012). With the oil from the

Mexican Gulf, which produces over seven million barrels per day, expected to dry up in

around 11 years and Russia, which produces 10 million barrels of oil per day, expected to

dry up in 20 years’ time, it is expected that the oil price will dramatically escalate in the

coming years. This will obviously have a negative impact on the South African economy,

which imports a large proportion of its oil.

Figure 1-10: Fuel taxes

Source: Organization for Economic Cooperation and Development (OECD)/European Economic Area (EEA) database on instruments for environmental policy

0

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-0.20

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0.20

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Fin

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Germ

any

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$U

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Gasoline Diesel


Page167

Figure 1-10 illustrates the relatively low taxes South African consumers are paying for fuel.

Given the financial difficulties faced by the Road Accident Fund (RAF) and the increased

cost of building and maintaining road infrastructure, we may see an increase in taxes on

fuel, with its resultant negative impact on consumer spending and retail.

Inflation

Inflation has been subdued over the past three years and has been on a decreasing trend

ever since.

Figure 1-11: CPI Percentage change 2006 – 2011

Source: SARB- Quarterly Bulletin, (June 2012)

Figure 1-11 shows the trend in inflation and inflationary pressures. All indications are that

inflation will fall well within the target range. This augurs well for further decreases in

interest rates, which in turn has a positive effect on retail.

Excessive wage demands

Given the wage increases in certain sections of the public sector, South Africa is facing the

possibility of an increase in strikes as unions are demanding above-inflation increases in

wages due to the global economic slowdown. Given the trend in the W&R sector over the

past three years and the fact that the wage rates in the retail sector is lower than that of


Page168

other sectors, larger than normal increases are expected over the coming few years.

Strikes by workers in crucial sectors, including retail, are likely to be a major risk in the near

term.

Figure 1-12: W&R earnings

Source: Quarterly Employment Statistics, March 2012, Statistics SA

Figure 1-12 shows the relationship between earnings and total employment in the W&R

sector. It is evident that, while employment decreased drastically from the beginning of

2008 to the beginning of 2010 (with a gradual recovery since then), total monthly earnings

increased steadily during the same period. This would imply that earnings per worker

increased over the period.

0

10000

20000

30000

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50000

60000

1580

1600

1620

1640

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Earn

ing

s R

000

Em

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00)

Employment Earnings


Page169

Figure 1-13: Monthly earnings in various sectors

Average monthly earnings, including bonuses and overtime, 2012

Source: Quarterly Employment Statistics, June 2012, Statistics SA

Figure 1-13 shows that the retail sector wages lag behind all other sectors, with utilities

being the best paid sector. It must be borne in mind that many workers are employed in low

level (entry level) jobs such as cashiers and packers. Very often these workers are

employed on less than 40 hours per week. There is also a tendency for employers to

employ casual workers at lower rates than permanent workers.

Crime

Since 2004 there has been a 63% increase in commercial crime. Commercial crime has

increased at more than twice the rate of house or business robberies. It has to be noted

that the modern trend in dealing with commercial crime is to handle it internally. It is only

reported to police for prosecution purposes. It is therefore the most under-reported crime

statistic.

R 26 337

R 17 271

R 16 056

R 15 220

R 14 752

R 13 647

R 12 344

R 10 143

R 8 705

Electricity, gas and water supply industry

Transport, storage and communication industry

Community, social and personal servicesindustry

Financial intermediation, insurance, real estateand business services industry

Mining and quarrying industry

Total (all formal non-agricultural industries)

Manufacturing industry

Construction industry

Wholesale and retail trade


Page170

Figure 1-14: Shoplifting and commercial crime

Source: South African Police Service (2012).

Figure 1-14 illustrates that, despite the trend that commercial crime is increasingly being

under-reported; it is still on an upward trend. This does not augur well for the industry or for

South Africa as a whole. Increasing resources will have to be allocated to protect the sector

from crime directed at business.

HIV/AIDS pandemic

The HIV/AIDS crisis continues to threaten South Africa’s economic and social progress.

The estimated overall HIV prevalence rate is approximately 10.6%. The number of people

living with HIV/AIDS is estimated at 5.38 million. Statistics also estimated that for 2011,

about 1.1 million people aged 15 and older and nearly 377 000 children would be in need of

antiretrovirals. The number of new infections for 2011 was estimated at 316 900 (2011 mid-

year population estimates, Statistics SA).

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

% I

ncre

ase/d

ecre

ase y

-o-y

Nu

mb

er

of

rep

ort

ed

cases

Commercial Crime Shoplifting

Commercial Crime (% Increase y-o-y) Shoplifting (% inrease y-o-y)


Page171

HIV Prevalence estimates and the number of people living with HIV/AIDS

Source: Mid-year population estimates, 2011 (StatsSA)

Figure 1-15: HIV prevalence among the 15 - 49 age group (2008)

Source: SA National HIV Survey, Human Sciences Research Council (HSRC) (2010)

Figure 1-15 illustrates the prevalence among the vulnerable 15 - 49 age group with the

figure above 25% in KwaZulu-Natal. This is also the most productive section of the

population. Statistics show that 281 404 people died from HIV/AIDS in 2010; that is 11 297

more than in 2009. It is also calculated that there are 2.01 million AIDS orphans in the

country (2011 mid-year population estimates, Statistics SA).

In 2010, the average life expectancy was recorded at 56.5 years. It was expected to

increase to 57.1 in 2011. The number of people dying of AIDS each year continues to

0

5

10

15

20

25

30

KZN MP FS NW GP EC LP NC WC

Perc

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Page172

increase and is only expected to plateau after 2015. Rough estimates indicate that the

cumulative total number of people who have succumbed to the disease reached a

staggering 2.53 million by the end of 2008. The 2003 survey of the Actuarial Society of

South Africa (ASSA) predicted that if necessary measures were not implemented, the

cumulative HIV/AIDS deaths in South Africa might reach 5.35 million by 2015.

Figure 1-16: AIDS research per sector

Source: Bureau of Economic Research (2011)

A few major retail companies, such as Woolworths, have initiated credible and often quoted

AIDS programmes. The sector as a whole has not done sufficient research in this area as is

shown in Figure 1-16.

Figure 1-17: Impact of AIDS

Source: Bureau of Economic Research (2011).

0 10 20 30 40 50 60 70

Financial Services

Mining

Transport

Manufacturing

Wholesale

Retail

Construction

Motor

Percent of companies that have done a risk assessment of HIV/AIDS per sector

0

20

40

60

80

100

120

Construction Finance Manufacturing Mining Transport W & Retail

Weig

hte

d Im

pact

Impact of Aids HigherTrainingCostsLoss ofExperience

High StaffTurnover


Page173

Figure 1-17 gives the weighted impact of AIDS on various economic sectors. For the

wholesale and retail sectors, it contributes a small part of the high staff turnover, but it adds

significantly to the higher training costs and the loss of experience. It must be noted,

however, that the reported impact on the wholesale and retail sector is amongst the lowest

of the sectors investigated.

1.9 Labour market context

This section analyses the particular labour market context for the sector. It provides vital

employer and employee information on the sector. It is important to note that data on the

size and shape of the labour market in the retail sector is notoriously scarce for several

reasons. Firstly, a significant number of employers are operating in the informal sector.

Secondly, a large number of employees are working in the formal sector in atypical forms of

employment and go unrecorded. Thirdly, a number of employers are not registered with the

South African Revenue Service (SARS) or the national bargaining councils.

Fourthly, a number of employees are not registered to pay skills levies because they are

exempted or simply do not pay levies. Finally, in some sub-sectors, employers may be

operating illegally. In addition, employer bodies and trade unions are not compiling reliable

employment and employee data in the form of reports. The W&RSETA database is also

problematic as a result of poor participation rates in the levy grant system by employers and

incorrect information on the SARS database. The WSP and ATR data is supplemented by

the data that is contained in the QLFS and Quarterly Employment Survey (QES) published

by Statistics SA.

The data for this section is extracted mainly from the South African QLFS, Quarter 2, 2011;

Labour Force Survey, Historical Revision, March, Series 2001 to 2010 and Statistics SA’s

Labour Market Dynamics in South Africa. The QLFS frame has been developed as a

general purpose household survey frame that can be used by all other household surveys,

irrespective of the sample size requirement of the survey. The sample size for the QLFS is

roughly 30 000 dwellings per quarter.

The sample is designed to be representative at provincial level and in provinces at

metro/non-metro level. In the metros, the sample is further distributed by geographical type.

The four geographical types are urban formal, urban informal, farms and tribal. This implies,

for example, that in a metropolitan area the sample is representative of the different

geographical types that may exist in that metro.


Page174

Provincial employment patterns

Gauteng, the Western Cape and KwaZulu-Natal dominate the sector. Together, they

account for more than 70% of the total workforce employed in the W&R sector.

Figure 1-18: Provincial distribution of employees (excluding SMME’s)

Source: WSP 2012

Figure 1-18 shows the number of employees (brown - left axis) employed in the various

provinces as indicated on the submitted WSP forms. Gauteng has over 220 000 employees

spread over around 8,600 branches, with the Western Cape having around 115 000

employees spread over 3,900 branches. The Northern Cape has the lowest number of

employees (whose data is captured in submitted WSP forms) at around 10412 spread over

609 branches. It must be noted that many enterprises do not submit WSPs. The WSP and

ATR data presented in this report is size-biased and will differ from the data derived from

statutory bodies.

Provincial employment by population group

The Western Cape and Northern Cape have a starkly different racial composition to the

other provinces. Coloured workers comprise less than 10% of the total workforce, but they

form 38% of the workforce in the Western Cape and 35% of that in the Northern Cape.

Africans account for over 74% of the workforce in all provinces except the Western Cape,

Eastern Cape and Northern Cape.

010002000300040005000600070008000900010000

0

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Page175

Figure 1-19: Provincial distribution by race

Source: W&R SETA WSP (2012)

It is clear from Figure 1-19, that the racial profile in the W&R sector mimics the population

trend.

Employee coverage

The W&R sector is a major generator of employment in the economy. As the primary and

secondary sectors shed jobs, the W&R sector has compensated for these losses by

absorbing job seekers.

Table 1-9: Employment by industry 2012(’000)

Industry Formal

sector

Informal

sector Total Percent

Agriculture, hunting, forestry and fishing 561 86 647 4.8%

Mining and quarrying 357 0 357 2.6%

Manufacturing 1,531 176 1,706 12.6%

Electricity, gas and water supply 98 2 99 0.7%

Construction 724 295 1,018 7.5%

Wholesale and retail trade 1,977 1,012 2,989 22.0%

Transport, storage and communication 612 189 802 5.9%

Financial intermediation, insurance, real estate

and business services 1,618 134 1,753 12.9%

Community, social and personal services 2,733 309 3,042 22.4%

Private households - - 1,164 8.6%

Other 5 - 5 0.0%

Total 10,216 2,203 13,583 100.0%

Source: Statistics SA Quarterly Labour Force Survey, Quarter 2, 2012

71%

80%

70%

68%

92%

86%

82%

60%

60%

16%

5%

12%

9%

0%

2%

4%

28%

27%

1%

0%

5%

15%

2%

1%

1%

1%

3%

12%

15%

13%

7%

6%

11%

13%

11%

9%

0% 20% 40% 60% 80% 100%

Eastern Cape

Freestate

Gauteng

KwaZulu-Natal

Limpopo

Mpumalanga

North West

Northern Cape

Western Cape

African Coloured Indian White


Page176

Table 1-9 indicates that there are 13.583 million people employed in South Africa: The

wholesale and retail trade sector employs 2.989 million people, comprising 22% of the total

labour force. It is about 66.1% of people in the sector are in formal employment, while

33.9% are in informal employment. The first version of the 2011 - 2016 Sector Skills Plan,

statistics remain basically the same. However, the overall proportion hides a subtle and

growing trend of informalisation. In 1970, the proportion of formal employees was 88%. The

number of people in informal employment in the retail sector presents the W&RSETA with

the following challenges: finding ways to promote skills development for those in informal

employment and encouraging formalization in the sector by supporting the Decent Work

Agenda.

Figure 1-20: Retail as a proportion of the total employment

Source: Author’s own calculations, compiled from quarter QLFS 2008–2012, Statistics SA

Figure 1-20 shows how the retail has decreased as a percentage of overall employment,

but is still a large 22% of the total employment. It must be borne in mind that a number of

people are employed in Spaza shops and other informal trade such as hawking, for which

no data exists.

21.7%

21.8%

21.9%

22.0%

22.1%

22.2%

22.3%

22.4%

22.5%

22.6%

22.7%

0

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2008 2009 2010 2011 2012

W&

R s

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W & R industry Total Percentage share


Page177

Figure 1-21: Formal and informal employment employees (’000)

Source: Statistics SA, QLFS, Quarter 2, 2012

The W&R sector contributes 22% of total employment, 19% of formal employment and 46%

of informal sector employment to the economy. The critical importance of this sector in

augmenting economic growth and employment creation should thus be recognized.

Compared with the previous version of the SSP 2011 - 2016, basically no changes

occurred. A large percentage of people employed in the W&R sector are employed in the

informal sector. The high proportion of informal sector workers presents the W&R sector

with significant challenges to support informal sector workers through skills development

initiatives.

-

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

Formal sector Informal sector Total

Nu

mb

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Em

plo

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(th

ou

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W&R sector

All sectors


Page178

Employee distribution by population group

The percentage breakdown of the workforce in terms of population groups is as follows:

Figure 1-22: Percentage employee distribution by population group

Source: Statistics SA, QLFS, Quarter 2, 2012

Figure 1-22 gives the breakdown of the W&R sector along racial lines. Africans make up

71%, Coloureds 10%, Indians 5% and whites 14% of the W&R sector workforce. These

percentages appear to be in line with the population group trends in the total workforce for

all sectors of the country. Given the high proportion of Africans in the sector, there is a need

to ensure that programmes, particularly management development programmes, are

provided for Africans. The low percentage of African workers in the higher occupational

groupings of the sector makes transformation a key imperative for the sector – this will be

dealt with below.

72.8 70.7

9.8 10.9

4.7 3.6

12.7 14.8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

W&R Sector All Sectors

White

Indian/Asian

Coloured

Black African


Page179

Employee distribution by occupation and population groups

Figure 1-23: Distribution of occupations across race

Source: WSP 2012

Figure 1-23 reveals the racial profile of each occupational group. It can be seen that senior

management levels (managers and professionals) are dominated by white persons, while

the lower levels are dominated by Africans. This is emphasized when one compares

elementary occupations against professionals, where Africans occupy 81% of posts in the

former and only 24% of posts in the latter. It must be noted that the data for the above

graph is derived from information supplied on the WSP forms for Medium and Large

companies only.

Table 1-10: Racial profile at senior level

Male Female

Black

African Coloured

Indian/

Asian White

Black

African Coloured

Indian/

Asian White

All 14.5% 4.6% 6.8% 43.9% 7.3% 2.4% 2.8% 15.2%

Retail and Motor

Trade/Repair

Service

8.0% 6.4% 7.6% 46.5% 3.6% 4.4% 3.2% 19.1%

Wholesale trade/

Commercial

agents/Repair

Service

9.7% 4.2% 11.5% 45.0% 4.2% 2.6% 3.1% 18.1%

Government 38.4% 5.6% 4.6% 15.4% 22.5% 2.5% 2.4% 7.7%

Source: CEE annual report 2011/2012

36%

24%

58%

58%

74%

77%

80%

81%

14%

14%

15%

20%

17%

14%

12%

15%

11%

13%

7%

9%

4%

2%

3%

2%

39%

49%

19%

13%

5%

6%

4%

2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

MANAGERS

PROFESSIONALS

TECHNICIANS AND ASSOCIATE PROFESSIONALS

CLERICAL SUPPORT WORKERS

SERVICE AND SALES WORKERS

SKILLED AGRICULTURAL, FORESTRY, FISHERY, CRAFTAND RELATED TRADES WORKERS

PLANT AND MACHINE OPERATORS AND ASSEMBLERS

ELEMENTARY OCCUPATIONS



Page180

Figure 1-24: Comparison of racial occupational levels in retail versus government

Source: CEE annual report (20101/2012)

The data in Figure 1-23 and Figure 1-24 seems contradictory for the manager and

professional levels. It must be noted, however, that the WSP data on which Figure 1-23 is

based, is a much smaller sample of larger businesses and only represents those

businesses that have submitted WSPs. Figure 1-24 shows how much catching up there is

to do in the retail sector.

Employee distribution by gender

The percentage breakdown of the workforce in terms of gender groups is as follows:

Table 1-11: Percentage employee distribution by gender

Gender Percentage

Male 53.2%

Female 46.8%

Source: Statistics SA QLFS, Quarter 2, 2012

Males constitute 53% and females 47% of the W&R sector. This ratio has remained roughly

constant over the past few years. The high population of females working in the sector

necessitates the provision of gender-sensitive programmes, as well as initiatives to fast

track the upward movement of women into management positions.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

Bla

ck A

fric

an

Co

lou

red

India

n/A

sia

n

White

Bla

ck A

fric

an

Co

lou

red

India

n/A

sia

n

White

Male Female

All

Retail and Motor Trade/RepairService

Wholesale trade/Commercialagents/Repair Service

Governemnt


Page181

Educational levels

Given the low barriers to entry, the relatively low capital required to set up a business and

the seeming ease of conducting a retail business, it is expected that the educational levels

in the sector are not high.

Figure 1-25: W&R educational levels

Source: Author’s own calculations, compiled from QLFS, Second quarter 2012 Statistics SA

Figure 1-25 reveals that a very small percentage of employees in the sector have a degree

or higher. This has important skills development implications for W&RSETA. The fact that

21% of workers have an educational level below ABET Level 2 will become increasingly

important. Only 10.7% of the workforce has a degree or higher.

Disability

The NSDS III addresses the need to enhance the workplace to accommodate the disabled

and to enable them to fulfil a meaningful role in society.

0.7%

10.0%

28.9%

46.1%

12.1%

0.6%

5.9%

28.3%

38.5%

22.5%

2.8%

0.1%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

No Schooling

Below Grade 9

Below matric

Grade 12/Matric

Bachelors degree/diploma

Higher degree

Informal Sector

Formal Sector


Page182

Figure 1-26: Disabled

Source: W&RSETA (2012)

Figure 1-26 illustrates the low rate of employment in the W&R sector. Among managers,

professionals, technicians, trades and sales workers, the percentage of the disabled in

relation to the workforce is less than 0.2%. The percentage of disabled persons in the

sector is very low despite it often being a low risk environment. The retail sector in the USA

has shown more willingness to employ disabled people on the shop floor.

Trade union membership

Trade union membership is an important indicator of adherence to the Basic Conditions of

Employment and sound industrial relations.

Figure 1-27: Trade union membership in 2012

Source: QLFS, Quarter 2, 2012, Statistics SA

- 100 200 300 400 500 600 700 800 900 1 000

MANAGERS

PROFESSIONALS







17.1%

80.9%

29.7%

68.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Yes No

W&R Sector

All Sectors


Page183

Figure 1-27 reveals that 76% of the W&R workforce is non-unionized, while the comparable

figure for all sectors is 68%. Industrial relations training is particularly important for workers

and managers in the sector. The W&RSETA should allocate funds to improve industrial

relations training in the workplace. The need to organize workers in this sector is an

imperative to ensure decent jobs and the protection of worker rights. Awareness

programmes to support unionization should be promoted.

1.10 Employer coverage

Company size

The industry is very diverse: small companies with less than 10 employees share the

landscape with companies with more than 10 000 employees.

Figure 1-28: Size distribution in the W&R sector (excluding SMME’s)

Source: SARS database of levy paying organisations 2012

Figure 1-28 shows that 11 852 small businesses employ between 1 and 99 workers each

and that 56 large businesses employ 1 000 and more workers. Figure 1-28 reveals that

86% of the sector is made up of small enterprises2, 10% medium and 4% large enterprises.

The SMME Sector

The very high concentration of small enterprises points to the need to support

entrepreneurship and management training for small enterprises on a far greater scale than

is presently the case. Consultation with key stakeholders confirmed the need for increased

SMME empowerment, which will be addressed in Chapter five. Low participation by

SMME’s is widespread. Very often, participation is seen as cumbersome and time

2Large employers are categorised as companies with 150+ employees, small employers are categorised as companies with 1–49

employees, and medium employers are those with 50–149 employees.

11852

560 258 56 0

2000

4000

6000

8000

10000

12000

14000

0-99 100-199 200-999 1000+


Page184

intensive. Furthermore, small businesses don’t have capacity for participation. The SMME

typically has a key person, who takes control of all activities and SETA participation is seen

as secondary and something for which there is minimal benefit. In addition, there is a

widespread perception that once staff is trained, they are poached. The total employees

recorded on the W&RSETA WSP database is 616 875. The W&RSETA faces the following

challenges:

The need for enterprise development for SMME’s.

The need for innovative programmes, including mentorships and learnerships, to

empower entrepreneurs.

The need for considerable research in the SMME sector, particularly as it relates to the

informal sector.

An increase in the participation rate by SMME’s.

Development of a better marketing strategy to access the SMME’s.

A need to obtain accurate data related to SMME’s (there has always been a problem

related to data submitted by this category. Many businesses remain unregistered and

thus no data on them is available.)

Table 1-12: Small businesses by size in the SMME category in the W&R sector

Educational level Number

Below Grade 9/Std 7/Form 2/Abet 4 1 119

Grade 9/Std 7/Form 2/Abet 4 889

Grade 10/Std 8/Form 3/NTC I 2 806

Grade 11/Std 9/Form 4/NTC II 2 038

Grade 12/Std 10/NTC III/Matric 16 494

Certificate/diploma/NTC IV, V, VI 2 374

First degree/higher diploma 1 191

Honours/Master’s degree 278

Doctoral degree 9

Grand total 27 198

Source: W&RSETA WSP (2012)

The provincial distribution of the SMME category follows the provincial distribution of the

larger companies in the W&R sector. It must be mentioned that these are the smaller

companies that have submitted WSP’s. There are many who are exempted from having to

complete WSP’s and there are many who do not comply with completing the

documentation.


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Educational levels among the SMME category in W&R sector

There is no significant difference between the educational spread in the SMME category

and larger companies. However, it is clear that there is a need for targeted training in this

area. Anecdotal evidence indicates that the need for training in the SMME sector where

businesses are unregistered, exempt or non-compliant is even greater.

The number and types of enterprise in the wholesale and retail economic sector - this

section provides information on the size and shape of the W&R sector in South Africa

according to DTI (2010/11).

Figure 1-29: Wholesale and retail market share

Source: DTI (2010/11)

As can be seen from Figure 1-29, the number of wholesale businesses is much lower than

those of retail. Since the beginning of the 1990’s there is very little to distinguish wholesale

from retail outlets, as most of the large retailer’s source products directly from the

manufacturers or suppliers. Wholesalers, on the other hand, have been selling their

products directly to customers.

Figure 1-29 also shows the concentration of wholesale and retail in the three major

provinces. This section provides information about employers in the sector. The W&R

sector displays two-tier characteristics with distinct formal and informal sectors. There are

80 353 retailers and 33 427 economically active wholesalers in South Africa, of which

56 680 are registered with the W&RSETA. The total economically active population is 113

780. Retailers make up 70% and wholesalers 30% of economically active enterprises. The

76%

0

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15000

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25000

30000

35000

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highest densities of enterprises are found in Gauteng, KwaZulu-Natal and the Western

Cape. Collectively, these provinces make up 76% of the population of the sector.

Figure 1-30: Location of workers in enterprises

Source: Statistics SA 2011

Figure 1-30 indicates that 94% of workers in the formal sector are employed at formal

business premises such as factories, offices or service outlets such as shops, compared to

8% in the informal sector. About 5% of workers in the formal sector work from home,

compared to 61% in the informal sector. About 1% of the formal sector has no fixed

location, compared to 31% of the informal sector.

The high number of survivalist informal sector workers located in homes, footpaths, streets,

street corners and open spaces points to the need to pay serious attention to skills

development, particularly with a view to improving their economic prospects.

Only 65% of businesses in the W&R sector are registered. High levels of non-compliance in

the sector are a cause for concern. Awareness and skills development interventions in this

area are needed. Training programmes and SMME toolkits to support enterprises in

complying with legal requirements for conducting business would help unregistered

enterprises in the sector.

The changing landscape - forces businesses to adapt to ever-changing skills demands.

The W&RSETA needs to develop programmes to prevent these changes from being

inhibited by a shortage of skills.


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Convenience stores - there is a significant, though gradual shift, in the retailing landscape

in South Africa. There is a growing demand for convenience. Leading South African

retailers are addressing these needs by introducing new outlet formats. Some retailers have

partnered with oil companies to introduce branded forecourt outlets. The success of this

rollout since its implementation in 2001 has exceeded expectations. The initiative has been

adopted by many retailers. Convenience stores tend to offer their products at higher

margins than supermarkets. This should boost value sales considerably for this format and

for retailing as a whole.

Informal sector market - the informal sector continues to play a role in the economy in terms

of contribution to GDP and employment creation. It is estimated to contribute about 11% to

GDP. It absorbs around 22% of the employed labour force of 12 million and is the fastest

growing sector in South Africa (Department of Labour, 2009).

The informal sector market has an estimated value of R20 to R30 billion a year. This is an

important contribution to the modern grocery distribution sector. The Global Agricultural

Information Network (GAIN) of the United States Department of Agriculture (USDA)

estimated that there are over 100 000 “Spaza” shops (tuck shops operating from home) in

South Africa. This sector of the national economy could be providing between 230 000 to

300 000 jobs and supporting more than a million people. However, it should be noted that

SA breweries deliver 2 million litres of beer by precision order quantities to shebeens in

rural townships on a daily basis. This example compliments the noted job creation in supply

chain to Spaza’s and rural retailing outlets.

This sector is recognized by many people as a safety net due to shrinking formal job

opportunities, lack of skills, demographic pressures and retrenchments. The informal sector

also serves as an incubator for entrepreneurship, poverty alleviation and job creation. The

W&RSETA should intensify efforts to support people working in this sector.

Store-based retailing - due to the dropping of internet costs and the increased penetration

of personal computers, internet shopping has taken off in a meaningful way. Growth rates

of non-store-based retailing, however, still lag behind that of store-based retailing. The

majority of South Africans prefer to purchase items from traditional brick-and-mortar stores.

Mistrust of the postal system and the possibility of lost payments must also be overcome if

non-store retailing is to experience significant growth in coming years.


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Expansion of services - leading retailers are ever expanding their offerings to capture

market share. A case in point is the pharmacy concept first introduced in 2002. All major

food retailers are engaged in this market. This trend, although still in its infancy, has great

room for growth. The success of these pharmacies in terms of attracting consumers into

stores will result in the further introduction of in-store pharmacies in coming years.

The lower LSM consumers will be able to obtain pharmaceutical services at lower prices as

supermarkets increase their penetration into rural areas. The introduction of these in-store

pharmacies will have a detrimental impact on private chemists/ pharmacies. However, the

expansion of in-store pharmacies will provide employment opportunities for pharmacists in

South Africa.

Shifting supply chain power - in any supply chain, there is a point where the most power

resides. Over time, that point can shift as concentration or fragmentation takes place and as

the value of different processes shifts. In the past, power resided with manufacturers. In the

1990’s, power shifted to the retailers as the industry became more concentrated and as

players became far more efficient and ultimately branded. Currently, power is shifting

towards the ultimate consumer. This reflects the high value of information, which has

become far cheaper and more readily available to consumers.

Through the internet and through more fragmented shopping behaviour, consumers are

utilizing information on products and prices to force both retailers and suppliers to respond

more quickly to their changing needs. Due to their increased price sensitivity, consumers

are forcing retailers and suppliers to relentlessly push down costs. Competing effectively on

the basis of things other than price enables a retailer or supplier to engender consumer

loyalty and, therefore, shift power back up the supply chain.

Price and quality - consumers are more price-sensitive than in the past. There are several

reasons for this. First, low inflation has made consumers more aware of price differences.

Second, global sourcing of merchandise has enabled retailers to offer items at much lower

prices than in the past. Finally, price consciousness is due, in part, to the demonstration

effect of discount retailing. Discounters have demonstrated to consumers that they can

obtain good quality merchandise for lower prices. At the same time, consumers all over the

world are seeking better quality and, more, consumers are concerned about the quality of

merchandise. For retailers and suppliers, the implication is clear: success mandates price

competitiveness without sacrificing quality.


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The Consumer Protection Act, discussed in the section below, places responsibility on

wholesale and retail businesses. Retailers, wholesalers and manufacturers would need to

take steps to minimize potential losses and lawsuits for poor service and defective

products. Management would need to take a more active role in addressing these issues.

Information management - consumer businesses collect vast quantities of information

about products and inventory flow and about consumer behaviour. This information must be

processed in order to drive an efficient supply chain, as well as to quickly respond to

changes in consumer behaviour. Thus, managing information has become one of the core

competencies of retailers, along with the traditional competencies of selecting merchandise

and selecting store locations. For suppliers, managing information that is exchanged with

retailers is critical. In the future, the best and most successful consumer companies will be

those that are highly skilled at using information to drive change in the business.

Retail innovation - the need to innovate in the wholesale and retail industry was confirmed

during stakeholder consultations in all provinces. Retailers must innovate in order to stay

ahead of competitors. Innovation entails not only technology, but also merchandising, store

design, customer interaction, supplier relations, product specifications and branding. The

most successful consumer businesses have been those that have been most innovative.

Not only must consumer businesses be innovative, they must do so in a way that focuses

on a better notion of value.

The growth and development of the wholesale and retail sector - is also shaped by

technological developments. For instance, the introduction of a bar-coding system has

contributed enormously to centralized stock control and management. It has also provided

opportunities for big retailers and suppliers to enter into collaborative projects that enable

them to monitor the movement of goods using a bar-coding system. Thus, information

concerning consumer preferences is collected at the point of sale and transmitted to the

supplier. In this way, stock is replaced on a just-in-time basis.

Another technological advancement relates to the introduction of e-commerce, which allows

for the electronic procurement of goods. Among the advantages offered by this internet-

based programme (e-commerce) is the potential to bypass the middleman. In this way, the

cost of bringing goods to the consumer market is markedly reduced.

Revenue enhancement - consumer businesses often face slow growth, market saturation

and declining prices. Obtaining more revenue is a difficult challenge. Thus, retailers and


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suppliers must look for opportunities to reach new consumers, as well as to obtain more

revenue from existing consumers. Reaching new customers can entail going to new

locations, selling different products or brands and operating new formats. The world’s

largest retailers are doing this by expanding globally, especially in emerging markets. They

are also developing multiple formats to reach a wider range of consumers.

Consumer and lifestyle influences - working women today have tremendous financial

power. They make more household spending decisions. This also means that retailers

selling traditionally male products (automobiles, electronics and home improvements) will

have to learn to market these products to a female audience. At the same time, people are

living longer. Demographic trends could offer opportunities. For example, older consumers

tend to be more loyal to particular brands, stores and retail formats, whilst younger

consumers tend to be more fickle and disloyal. Thus, older consumers could represent an

annuity for retailers willing to invest in their loyalty.

Consumers are more neoliberal hence, they focused on price, quality, speed and

convenience. In their search for these attributes, they are willing to experiment with new

concepts and are willing to switch venues if there is a better value proposition. The result is

a disloyal consumer and a highly fragmented shopping experience. For both retailers and

suppliers, the solution to this conundrum lies in clear differentiation and successful

branding.

1.12 Conclusion

From this chapter the following conclusions can be drawn, with direct implications to skills

development for the W&RSETA. Since the previous SSP was published in early 2011, no

substantial differences were detected in terms of the industry profile. However, a higher

proportion of small businesses have been included and recorded. South Africa has a

sophisticated wholesale and retail sector with very high levels of concentration and

unsophisticated retail sector dominating the small and informal sectors. At least a quarter of

employees in the sector are in informal employment. These employees are employed as

casual, temporary and fixed-term employees without social benefits or the full protection of

the law.

There is a growing trend towards informalisation in the sector, with negative consequences

for labor peace, worker morale and productivity and investments in skills development.

There is a need for the W&RSETA to actively support the concept of decent work and


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implement a sector programme to improve conditions of employment. Major retail chains

have ventured beyond the borders, but there is room for further growth in various parts of

the world. National retail chains are not established in lucrative high-growth markets such

as China and India because they appear to lack the competitive appetite to compete with

global giants such as WalMart, Carrefour and Tesco. Businesses with cross-border

operations require a significantly larger pool of highly skilled and capable managers from

South Africa to work in foreign markets.

Growing prosperity among the majority of the black population provides tremendous

opportunities for local businesses to meet growing consumer demand. Businesses require

a good understanding of changing retail markets, which has implications for skills

development at firm level. The Achilles heel of the domestic W&R sector is high levels of

non-compliance with sectoral agreements, growing casualisation of the workforce and

exploitation of workers. Income inequalities in the sector are high, which exposes it to

labour relations problems.

There is potential to improve the skills base of the sector, particularly at the lower end of the

occupational structure. A large number of retail companies are either exempted from paying

skills levies or operate informally. There is a need to find alternative sources of funding to

widen participation in the levy grant system. The sector is particularly sensitive to economic

instability in the wider economy.

The economic outlook for the sector between 2010 and 2014 is positive. The sector is

expected to grow, thus increasing the demand for skilled labor. Therefore W&RSETA

should make training investments in scarce and critical skills areas to meet the demands of

the sector.

The sector contributes around 22% of national employment. The job creation opportunities

in the sector, ranging from low level to advanced skills, are enormous. The sector requires

workers who have the skills to create value through their work. It also requires high levels of

training and skills to succeed in an increasingly competitive global market. W&RSETA

should play a more active role in supporting job creation and skills development efforts.

The challenge for businesses in tough economic times is to enhance revenue streams

through greater efficiencies. Skills development in areas such as the National Credit Act,

Consumer Protection Act, labour compliance, labour relations, shop floor stewards’ training,


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supply chain management, market research, total quality management, information

management and consumer behavior appear to be important to improve competitiveness. It

is clear that the policy landscape of South Africa requires more focus on SMME and rural

development. These key issues were debated at length during regional consultations in the

various provinces. Appropriate solutions to address these issues are listed in chapter five.


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Chapter 2: Drivers of Change

2.1 Introduction

This chapter provides an overview of the drivers of change in the business environment that

will have an impact on the sector from a skills development perspective. It is firmly believed

that the industry should be fully understood from all perspectives to sensibly address skills

needs and to create solutions. The drivers of change will add considerable value to

understanding the complexities and challenges of the wholesale and retail industry. During

the regional consultations in the provinces, key stakeholders also contributed significantly to

the driving forces, especially from a skills requirement perspective

Sector Skills Plan research is broadly categorized in five-year periods with annual updates.

However, the W&RSETA firmly believes that continuous ongoing research between periods

is necessary. Therefore, ten research themes that directly contribute to SSP objectives

have been identified. Drivers of change should also be assessed beyond the five-year

planning period to understand the future skills that will be required. Due to factors such as

technology innovations and changes, jobs and skills might be required that do not exist

today. It was therefore decided to focus on developments up to 2020, since mechanisms

need to be in place during the existing planning period to deliver skills over a longer period.

In a globalized world with fading boundaries, it is essential to focus on international trends

and not just on South Africa. However, the impact of changes in South Africa should be a

major focus point.

2.2 The 2020 retail landscape

In the process of looking ahead, it is necessary to look beyond the planning period of 2011-

2016. The driving forces up to 2020 that will have an effect on the industry should be taken

as a broad framework for long-term planning. A big picture focusing on 2020 is included in

this chapter for the following reasons.

The big picture should inform the section on the demand for skills. The demand for skills

beyond the planning period (2011 - 2016) should be addressed during the planning period.

The big picture should inform the supply of skills and efforts that should be made to

determine whether syllabi include the critical skills that will be required. Some of the skills

required might not exist today, especially in an innovative industry such as wholesale and

retail. The big picture should inform the final chapter on strategy to outline objectives

required to realize the required results. The retail landscape will be really challenging by

2020. Key questions that arise from a future planning point of view are as follows:


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What will the wholesale and retail landscape look like in 2020?

What challenges will the changes imply?

What skills will be required?

These key issues are addressed in the remainder of this chapter. The drivers of change,

both from a national and global perspective, will provide a solid basis to design a skills

development strategy that will be set out in Chapter five.

2.3 The national policy agenda vs global forces

In a rapidly changing industry such as the wholesale and retail sector, global forces have a

major impact on the way in which business is done. Through globalization, factors such as

technological developments and competition become more important. Amid the global

forces, the wholesale and retail industry in South Africa is also subject to the

implementation of the South African policy agenda. The following contradictions between

global forces and the South African policy imperatives have been identified:

Table 2-1: Global forces vs. South African policy imperatives

Global forces South African policy imperatives

Reduced employment in various industries as a

result of technological developments. Increased employment levels are required.

Fewer people required due to technological

advances. Job creation is required.

Market forces. Historic inequalities need to be addressed.

Labour market forces dictate. The empowerment of historically disadvantaged

South Africans is mandatory.

Political transformation is not always affecting

the sector.

Imperative political transformation directly

affects the sector.

Legislation focuses largely on industry

regulation.

Regulation focuses on industry regulation as

well as challenging political transformation.

It is therefore essential that a solution should be customized for South Africa and included

as a strategy in Chapter five. It is clear that the realities of South Africa and the policy

agenda should not be overlooked. The Medium Term Strategic Framework (MTSF) sets the

scene for major transformation in South Africa, with specific effects on skills development.

Against the forces of the global landscape, it will be very challenging to meet the objectives

of the MTSF as set out below. The impact of the strategic priorities on skills development in

the wholesale and retail sector is summarised in Table 2-2:


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Table 2-2: Impact of the MTSF on skills development in the wholesale and retail sector

Priority Impact on skills development

a) Speed up growth and

transform the economy to

create decent work and

sustainable livelihoods.

This priority will be challenging in the current economic climate after the

recession, but it should be pursued in the best interest of all stakeholders.

Innovative solutions will be required to position the industry to meet this

objective. Casualisation trends in the sector should be taken into account

and effectively managed, since it has an impact on decent work due to the

fact that casual labour does not receive much, if any, training.

b) Implement a massive

programme to build

economic and social

infrastructure.

This priority is also very challenging in the wholesale and retail environment,

but forms part of the skills development plan. Economic and social

infrastructure is technically not part of the wholesale and retail industry’s

agenda, but it cannot be ignored.

c) Implement a comprehensive

rural development strategy

linked to land and agrarian

reform and food security.

The wholesale and retail sectors’ volume of activity is clearly in the urban

areas and expansion of rural activity will be challenging. However, the

industry has no option but to pursue the rural agenda of government.

d) Strengthen the skills and

human resource base.

The primary focus of this SSP is aligned to achieving this priority in the

sector in accordance with the changing landscape outlined in this chapter.

This priority is, in fact, the basic responsibility of all SETA’s to provide

quality SSP’s to guide the skills development process.

e) Improve the health profile of

all South Africans.

Most empowerment efforts should be aligned with focused health initiatives,

especially pertaining to pandemics such as HIV/AIDS.

f) Intensify the fight against

crime and corruption.

The wholesale and retail industry is sensitive to crime and corruption. The

industry also operates in an electronically driven environment where the

utmost care should be taken in terms of corruption.

g) Build cohesive, caring and

sustainable communities.

The industry should also focus on community development through the

services it renders. Further contributions can be made through co-operation

with NGO’s.

h) Pursue African

advancement and enhanced

international co-operation.

Managing the contradictions between the South African environment and

global forces forms an integral focus point of this SSP. More focus on key

drivers such as increased equity should be reflected in the SSP. Since the

sector has made insufficient progress with the empowerment of historically

disadvantaged South Africans in the senior job categories, the existing effort

should be accelerated.

i) Manage and use resources

sustainably.

Resource optimization is of critical importance in the industry, especially

from a technological application perspective.

j) Build a developmental state,

including the improvement

of public services and

strengthening of democratic

institutions.

The successful implementation of the entire SSP should support the

realization of this priority.

The New Growth Path - a press release, dated 13 July 2011, stated the following:

“Government coordinated a process of social dialogue on the New Growth Path (NGP) at

the National Economic and Development Labour Council (NEDLAC) to promote


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implementation of the policy framework. This process brings together government

departments, organized labour, organized business and community groups to engage on

key areas identified in the NGP. All constituencies have committed to the NGP goal of five

million new jobs by 2020.” For the W&RSETA initiatives, refer to chapter five page 206/7-

WEEG programme and Artisan development programme.

The National Skills Accords - accords 1 and 2 state that the “Representatives of

business, organized labour, the community constituency and government have agreed to

partnerships to achieving the New Growth Path of five million new jobs by 2020.” The

creation of five million new jobs is indeed challenging, especially in the wholesale and retail

industry. Global forces result in more work to be done by fewer people and this is viewed as

a real challenge within the realities of a job creation policy. Innovation is high on the

industry’s agenda internationally and also in South Africa. Innovative solutions to create new

jobs, such as SMME development and new venture creation, will be required.

National Skills Development Strategy - the third version of the National Skills

Development Strategy (NSDS III) has changed the focus from top-down to interactive skills

planning. The W&R, therefore, follows a more consultative approach to plan future skills. A

new performance orientation is viewed as a more practical approach and the strategy

presented in Chapter five contains clear deliverables and time frames based on the

principles of goal setting and success indicators.

Specific attention is also paid to funding levers such as professional, vocational, technical

and academic learning (PIVOTAL) grants (i.e. please refer to Chapter five page 206/7).

Considerable effort was therefore made to align this SSP with the specifications and

requirements of the NSDS III. The W&RSETA took proactive action and submitted the

following inputs based on research:


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Table 2-3: W&RSETA mandatory grant inputs

Regulation W&RSETA inputs

Must be equivalent to 40% of the total levies

paid by the employer in terms of section

3(1), read in conjunction with section 6 of

the Skills Development Levies Act during

each financial year.

The reduction in mandatory grants from 50%

to 40% and the implementation of PIVOTAL

grants need to be phased in, as the proposed

changes have a potential impact on

businesses’ infrastructure, resources, funding,

etc. Many levy-paying companies are still

refusing to submit mandatory grants.

In addition to the 40% contemplated above,

10% of the total levies paid by the employer

must also be included, should the employer

utilise 10% of the total levies paid to fund

unemployed learners on PIVOTAL

programmes.

While the PIVOTAL grants are aimed at

unemployed learners, there seemed to be

consensus that it should be an initiative for

employed learners in order to accelerate

transformation and ensure that learners

progress to obtaining full qualifications.

The NDSD III states that the courses are

especially for workers and would in some

cases start in the workplace and then move to

a college or university.

There are many employed workers who want

to improve their academic qualifications.

Employed staff members are excluded from

support with the existing formulation.

Employers need to be incentivized to improve

the training and development of their staff

through formal occupational PIVOTAL

programmes.

Many students who are taking PIVOTAL

programmes at universities and FET colleges

are working on a full or part-time basis. Their

employers should also be incentivized to

support their studies.

It was suggested that a PIVOTAL funding

window be made available under the

discretionary grant specifically for funding

initiatives for unemployed learners.

Another view was that PIVOTAL programmes

should be available to all learners –

unemployed and employed.

A suggestion was made that small

organisations should be exempted from having

to fund learners on PIVOTAL programmes in

order to qualify for the 10% PIVOTAL grant

and that they should automatically qualify for


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the full 50% mandatory grant, as many small

organisations cannot afford to register learners

for full qualifications.

Guidelines should be provided on the costs

that should be included in the calculation to

determine spend on PIVOTAL programmes,

such as travel and accommodation costs.

It was felt that tax rebates should apply to all

PIVOTAL programmes.

Must be paid to the employer monthly before

the seventh calendar day of each month.

In view of a number of challenges, it was

agreed that the existing quarterly payment

method should be proposed, as opposed to

monthly payments.

The implications of having to pay employers

monthly would need to be discussed, as it

would possibly require the W&RSETA to

employ more staff to handle the workload.

The payment of employers on a monthly basis

would depend on the receipt of levies from

SARS and would also require the SETA

financial system to be adapted to

accommodate monthly payments.

The EMP201 does not indicate SETA numbers

any more - the amendment is quiet on this.

More administrative problems are anticipated,

especially for large companies, should this

amendment be approved.

Other Related Policies - it is clear that the South African policy landscape makes sufficient

provision for long-term skills planning to improve the quality of life of people, as well as to

improve economic and social development. A document that is also of great significance is

the Department of Higher Education’s Strategic Plan 2010–2015, which contains the

following clear deliverables and objectives based on its long term vision and the MTSF:

Understand skills needs: An agreement between the public and private sector

(receivers and providers) on skills classification and needs are urban-biased and do not

consider skills needs for sustainable livelihoods.

Communicate skills needs: The Master Skills List information will be easily accessible

to various users, so as to steer the system and guide choices.


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Raise the base: Provide second chance opportunities for those who do not qualify for

other forms of post school learning, in order to “raise the base”.

Expand access to education and training for the youth.

PIVOTAL: Increased numbers and the relevance of academic, professional and

vocational learning.

Workplace: Increased numbers, as well as improved quality and relevance of workplace

learning.

Promote employability and sustainable livelihoods through skills development.

Research: Expand research, development and innovation capacity for economic growth

and social development.

Improve institutional efficiency.

Optimize both institutional and system shape and capacity.

There is clear alignment between this SSP and the Department of Higher Education’s

Strategic Plan 2010–2015. In general, concerted efforts were made to fully align this SSP

with all relevant policies and legislation.

2.4 Drivers of change with reference to 2020 operating environment

Drivers of change are normally classified as industry-specific and non-industry-specific. For

example, policy imperatives are normally non-industry-specific, since all sectors are

implied. The policies set out in paragraph 2.3 can be viewed as non-industry specific, yet

efforts were made to discuss their implications for the wholesale and retail industry. The

drivers of change that will be discussed, whether industry- or non-industry-specific, have a

major impact on the wholesale and retail industry and such impacts will be clearly indicated

and contextualized in terms of the big picture. An analysis that is often used to capture

future challenges is the PESTEL analysis referring to the Political, Economic, Social,

Technological, Environmental and Legal parameters that have an impact on the future.

All drivers of change will be expressed and summarised as a PESTEL analysis in chapter

five, but to fully understand the impact of 2020 operating environment, the ten change

drivers of change will be used in this chapter. Industry convergence as a result of the

convergence of technologies is well documented in various credible sources. The

wholesale and retail industry is converging with the banking industry (PWC, 2008). The

trend of convergence with the banking industry commenced with businesses closely aligned

to banking, such as insurance. However, the convergence has moved to businesses that

have nothing to do with banking, such as the following examples:


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Supermarkets (Loblaws in Canada and Tesco in the UK). In South Africa, supermarkets

already provide services that were previously rendered only by banks.

Retailers (WalMart, Azteca in Mexico).

Mobile network operators (KDDI, Globe Telecom in Philippines).

Transit operators (Japan Rail, London Transit, and Hong Kong Transit).

These trends need to be carefully monitored by the wholesale and retail industry, since new

opportunities and risks could emerge. For example, sets of new regulations will have to be

complied with. The Financial Advisory and Intermediary Services Act (FAIS Act) will have a

major impact on the industry. The purpose of the act is to regulate the activities of all

financial service providers who give advice or provide intermediary services to clients

regarding certain financial products.

The act requires that such providers be licensed and that professional conduct be

controlled through a code of conduct and specific enforcement measures. Key stakeholders

at regional consultative sessions agreed that industry convergence requires new skills to

survive and grow in a competitive environment continuously affected by global economic

volatilities. Consultation with stakeholders identified needs in terms the FAIS Act and other

legislation that will be addressed in the strategy in Chapter 5.The impact of globalization

and international developments should not be underestimated. The spread of technology

occurs very rapidly. What is viewed as global or international today could be a South

African reality tomorrow.

Technology - rapid changes in technology have an impact on most sectors and the

wholesale and retail sector in particular. For example, the introduction of the second

barcode over 30 years ago technically revolutionized the industry. From a skills

development perspective, the industry should be prepared to effectively deal with

technological changes and innovations. Regienczuk (2012) describes the following 14

transformations that have an impact on business today and in future:

“Internet use” exploded across the world.

Big Box retail continued to dominate much of the shopping growth. A retail store that

occupies an enormous amount of physical space and offers a variety of products to its

customers.

Online shopping became viable business.

Social websites (Facebook, LinkedIn, MySpace) came into being.

http://www.myspace.com/


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Thousands of new businesses were born based on the Internet, mobile and other digital

platforms.

Targeted digital advertising became mainstream.

Laptops replaced desktops.

Mobile phone use exploded.

Texting was introduced and embraced.

Online privacy concerns have taken a backseat where services, social community and

convenience are provided.

It is clear that a long and challenging technological road has been travelled since the two

dimensional barcode revolutionized industry over three decades ago. The introduction of

technological changes are introduced primarily to enhance the experience of customers

and to increase efficiency. With all retailers striving to increase margins, the introduction of

technology often results in more efficient operations with reduced staff.

Although the wholesale and retail sectors are largely influenced by international trends, as

evidenced by the sector adopting world-class technology, the impending takeover of

Massmart by WalMart, the largest retailer in the world, augurs well for technological

competition in the sector.

The recent introduction of customer operated hand-held scanners in the USA (which

WalMart may be introducing in South Africa) obviates the need for cashiers and packers. In

addition, WalMart also makes use of self-checkout counters, again obviating the need for

cashiers and packers. It is doubtful, though, whether these customer-related technological

changes will be introduced in the near future. While internet-based shopping is in its infancy

in South Africa, crime levels, the increase in the number of dual-income families and

convenience, together with economies of scale, make internet-based retail more viable.

Judging from international experience, there is enormous growth potential in the area of

retail.

The technological changes that will be introduced by international retailers such as WalMart

will require workers to have a completely different skills set. The provision of the requisite

training to address these skills must be prioritized by the W&RSETA. Internet retail by its

nature is “skill-biased,” meaning there is an increasing demand for highly skilled workers.

Internet retail opens a completely new arena for retail and this will contribute to the growing

gap between skilled and unskilled workers. The W&RSETA should identify the changing

nature of occupations, as well as new occupations and occupations in decline. Learning


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programmes and assessments should make provision for the changing nature of work and

the new skills requirements for occupations in the sector. The sector needs to upgrade its

skills base with an increasing bias towards knowledge intensive skills. The proportion of

highly skilled workers is likely to grow sharply in comparison to unskilled workers in order to

satisfy sophisticated consumer preferences, meet delivery targets, offset unit labour costs

and ultimately meet price points in the marketplace. One area in which considerable work is

required is the impact of online retailing on the industry in terms of skills needs. A major

study conducted for Skillsmart Retail in the United Kingdom identified the following

important skills needs from a retail web perspective:

“Web analytics tracking to track how customers interact with the website, which enables

web design and email marketing to be optimized to drive customers to make purchases.

The potential it offers to target users with relevant and personalized offers mean that

web analytics can provide a direct, measurable financial advantage for online retailers

using it effectively.

Social media, including blogs, customer communities, Facebook and Twitter are taking

brands from their home websites into the consumer’s wider online social environment.

‘M-commerce ’i.e. online retail for web-enabled smartphones, using either a mobile

optimized website or a brand specific shopping application.” (IFF Research, 2010.). It is

clear that the 2020 technological landscape will be very challenging from a skills

development perspective.

Growing middle class - various credible sources identified a growing middle class world-

wide. In South Africa, this trend should be exploited from a wholesale and retail

perspective, especially in view of the fact that the “middle class” can be considered the

“consumer class” and therefore society’s economic driver. The sector should target the

aged, which is a significant client base, since they will be the consumers with the spending

money. South Africa is witnessing a rapid rise of a black middle class who was held back by

years of apartheid. A growing black middle class has seen increased participation of black

people in the economy.

According to Goyal (2010), the growing black middle class is a product of the South African

government’s black economic empowerment (BEE) programme that kicked in post 1994

after the end of the apartheid era. They form around 10% of the 22 million over 18 year old

black South Africans and contribute up to 40% of the spending in this group. This segment

is growing rapidly. Figures in 2008, are showing that the group numbers were growing by

15% “We have found them fairly resilient consumers amid recession,” says John Simpson,


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co-founder and the director of the UCT Unilever Institute of Strategic Marketing. This trend

should definitely be viewed as a lucrative opportunity for the wholesale and retail sector.

Declining birth rates and ageing population - according to The Voice of America (2011),

the declining birth rates in the world have the following impact:

The global population has experienced an unprecedented reduction in birth rates over

the past few decades.

People in rich and poor countries alike are having fewer babies, which demographers

warn will lead to a worsening problem of global ageing.

By 2047, more people will be older than 60 than those younger than 60.

There will be more retired and less economically active people.

There will be an increased dependency ratio.

A greater tax burden will be placed on economically active people.

Changes in demand for labour will occur.

Kinsella and Ferreira (1997, updated in 2010) describe the ageing situation in South Africa

as follows: “Concern about population in Africa traditionally has focused on relatively high

rates of fertility and mortality, expansion of basic health programmes and, more recently, on

the devastation resulting from the HIV/AIDS pandemic. Overlooked in the face of these

pressing issues is the fact that most African populations are ageing, albeit at slower rates

than in much of the developing world.” Although the situation is not yet so severe in South

Africa, the wholesale and retail industry should closely monitor the global trend. It was

found that older customers should be approached in another way, since they have different

tastes and preferences.

The growing importance of the green agenda - according to Deloitte (2010), the following

arguments can be put forward to illustrate the growing importance of the green agenda and

asks specific questions that need to be addressed:

In the last 12 to 18 months there has been a significant shift from viewing the green

agenda as a compliance issue to viewing it as a strategic cost management – and even

profit – opportunity. What are the causes and potential implications of this shift?

There is a consensus that a new kind of partnership between government and the

private sector will be needed to advance the green growth agenda. How is that

partnership likely to play out in different parts of the world and what are the expected

effects?


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Open innovation will be a key driver of green business and technology. Businesses

looking to maintain their competitive edge will need to rethink their basic business

structures. What should business leaders be thinking about now to better prepare for the

changes in the business landscape?

The green agenda is further characterized by the following: (i) The need for increased

recycling, (ii) Packaging challenges. (The wholesale and retail industry is by nature of its

products a large creator of material that needs to be disposed of and/or recycled. The green

agenda therefore poses severe challenges to the industry. New sets of skills will be

required), (iii) Greater awareness of environmental protection among retailers, (v) A

massive responsibility to effectively implement the green agenda and (vi) Solutions to solve

the depletion of water resources.

WalMart has been very successful in implementing the green agenda and it is expected

that its innovative solutions will also be implemented in South Africa. Various South African

laws, such as the Environment Conservation Act, 1989 (Act No 73 of 1989), the National

Environmental Management Act, 1998 (Act No 107 of 1998) and the National

Environmental Management: Waste Act, 2008 (Act No 59 of 2008), have an impact on the

wholesale and retail industry and it is critically important that a skills base be in place to

deal with existing and future challenges.

It is clear that the wholesale and retail industry sells a major portion of goods that turn out to

become waste. The industry, therefore, has a major role to play in the proactive

management of waste, which requires distinct sets of skills.

Social Media - according to various credible sources such as Deloitte, Gartner and PWC,

social networks will grow in importance as marketing opportunity for retailers. Gartner, the

world's leading information technology research and advisory company, created a list of the

top ten things retailers should know about social networks and what action to take. The

following statements from the document are viewed as points to consider from a South

African perspective:

Analysts believe that the social network market has not yet settled, so retailers should

be cautious with their investments in any one social network.

Social networks are rich in word-of-mouth discussions about retailers and their

products.

Retailers should view social networks as a lead-generation channel just as they would

search engines, review sites and price comparison sites.


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Word of mouth is effectively amplified by making social graphs usable by friends and

business entities on a social network.

Communication between friends about something as simple as a pricing or promotion

mistake on a website can propagate very quickly in social networks. Similarly, a strong

criticism of a product or retailer can quickly attract a large critical mass.

Social networks are a huge source of consumer data that can be used effectively.

Gartner advises retailers to build their social network presence on content produced by

members and create applications that engage members in providing feedback in areas

such as product design. The aim is to create a forum or application that will create

value for other members while promoting the organization’s brand.

Social networks are merging into the real time world. Coming to a mobile phone,

Facebook can give brand information that advertising agencies can only dream about.

Facebook knows where people live, who their friends are, what their interests are,

where they go on holiday and which groups they belong to. From gathering this very

transparent information, brands can target customers in a way that the world has never

seen before (Gartner 2010).

According to Bockius (2010), the risks of ignoring the impact of social media are as follows:

Risk to the brand: Since good as well as negative messages are communicated via

social media, the brand of the provider could be tarnished by negative comments.

Compliance risks: Non-compliance with regulations, laws and other policies can be

communicated via social media, which imply risks for the provider.

Competitive risk: The social media compare quality, prices and service, which could lead

to competitive risk for the provider.

It is therefore strongly recommended that proactive action be taken in terms of social media

from a skills development perspective. Some publications recommend that a social media

strategy should be an integral part of the company’s corporate strategy. The impact of

social media was also discussed at length during the regional consultative sessions. It was

agreed that social media skills are important to manage the fast changing wholesale and

retail environment. Unfortunately, appropriate learning material is not yet available. This

skill need will be addressed in chapter five.

Legislative drivers of change - the following acts are viewed as significant drivers of

change: The National Credit Act Since the passing of the National Credit Act (NCA) in June

2007, the volume of motor vehicles, homes, furniture and semi-durable goods sold on credit

has plummeted. Since last year, car sales have dropped by more than 20%, mortgages


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slowed from 30% to just over 20% and credit-driven furniture and apparel sales are almost

flat (Financial Mail, July 2009).

As growth in unsecured lending rises by more than 20% year on year with the expectation

that it will reach 30% by year end, there is concern about a bubble forming. With the

memory of the 2009 financial meltdown still fresh in our minds; one would be forgiven for

seeing the significant growth in unsecured lending as collective amnesia, or pure stupidity.

Credit providers argue, however, that this is just a normalisation of a peculiar credit

industry.

Andre du Plessis, chief financial officer at Capitec, said the growth in unsecured lending

had to be understood in the context of South Africa, which for many years did not cater to

lower-income borrowers. “Normally, a developing economy starts with unsecured loans and

over time this becomes more formalised. In our country, it is the other way round and the

secured lending went to a very small portion of the population,” said Du Plessis.

Even in the light of the rapid growth in unsecured lending, it still makes up only about 20%

of total lending. Ironically, it was the National Credit Act that allowed banks to enter into

micro lending by setting rules, such as how much could be charged for interest and

administration. This effectively legitimized micro lending and allowed banks to move into

this highly lucrative industry.

Having been burnt by the home-loan war in the 2000s that left the banks with unprofitable

mortgage books, the big four are changing their mix of lending away from low-margin home

loans into the high-margin unsecured credit market. At the end of December, the value of

home loans was R816-billion and they had a growth rate of only 1.2% year on year. Vehicle

and asset-finance credit, which is worth R260-billion, was up 8%. Unsecured credit, which

includes personal loans, overdrafts and credit cards, increased 23% to R202-billion.

Overall, credit increased only 7%—it is the divisions from which the banks are lending that

have changed and they are driven by profitability.

The liquidity requirements under Basel III will further drive up the cost of funding, especially

longer-term home loans, making them less profitable. A bank that wants to deliver profit to

shareholders needs to focus on the high-margin unsecured credit industry. (Mail and

Guardian Mar 2012). The act has tightened lending regulations, ensuring that consumers

pass the “affordability test”. It has also consolidated different pockets of the credit market

into a single regulated entity. The act aims to improve and increase access to credit, offer

debt counselling, improve consumer understanding and prevent consumers from reckless


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lending. This, together with the world-wide credit crunch, dramatically constrained the

wholesale and retail sector. W&RSETA should initiate projects to help enterprises

understand and implement the NCA.

The Consumer Protection Act - has major implications for the wholesale and retail

industry. It will affect business in a myriad of ways. Most South African businesses seem to

be unaware that the most restrictive of the provisions of the new Consumer Protection Act

will soon be coming into effect.

Section 61 of the act requires that a producer, importer, distributor or retailer of goods

supplied on or after the “early effective date”, which is one year after the act was signed,

namely 24 April 2010, is liable to a consumer on a no-fault basis for harm, including death,

injury, physical damage or associated economic loss, which was caused by unsafe or

defective goods.

Section 47 of the act; state that the practice of overselling will be illegal. Airlines will no

longer be able to overbook flights. If a consumer misses a flight because it was

overbooked, the airline will be required to refund the consumer’s ticket with interest and not

just hand out vouchers for the missed booking. They will also have to pay consequential

damages for any economic loss resulting from the breach of contract. This will also apply to

car hire companies and hotels.

The implications are that the retailer could be responsible for errors made by the producer,

importer or distributor and companies will need to do their own quality control. The act

introduces a bill of rights granting consumers wide-ranging powers to cancel contracts

within “cooling-off” periods, refuse to purchase “bundled” products or services, cancel fixed

term agreements if not satisfied with their terms and block approaches by direct marketers,

amongst many others. The act will have a significant impact on the way business is

conducted in South Africa, especially from a wholesale and retail perspective. Given the

requirements faced by businesses and the consequent extent of liability, the industry will

have to invest in extensive training, so that its staff members do not fall foul of the law.

Black empowerment and affirmative action The most important political driver is the

changing political landscape in South Africa and the risks attached to it. The retail sector

has been identified as one of the least transformed sectors in the economy, which calls for

significant empowerment actions and acceleration of skills development. There are political

imperatives that would seek to address this imbalance. Black economic and state


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administrative empowerment has become an important aspect of political terrain and is a

major driving force in South African society. This creates numerous perceptions of political

risks, such as affirmative action in the allocation of state tenders and contracts to black

small and medium enterprises.

In general, from a political risk point of view, government interference in prescribing the

race and gender of staff in private businesses is regarded as a risk, since it interferes with

the freedom of management to appoint the most suitable person to a particular post.

Attaining targets set by government in businesses detracts from the primary purpose of

management, which is to maximize shareholder wealth.

It is imperative that skills development includes measures to address the representation of

black people in senior management positions. Measures must therefore be put in place to

equip black people to perform at this level. The W&RSETA needs to incentivize the skills

enlargement of black middle and senior management.

SMME development - accelerated development of small, medium and micro enterprises

(SMME’s) is high on the agenda of all sectors of the economy. The wholesale and retail

sector will have to increase effective SMME development. From a financial point of view,

barriers to enter the industry are not exceptionally high. However, from an empowerment

and skills development perspective, various steep challenges lie ahead that will be further

addressed in chapter 5. It should be noted that a number of the leading banks have created

initiatives by which training on SMME development is linked to new business financing.

Through SMME expansion to the rural areas, if viable, the sector will also address another

government priority, namely rural development. SMME development and accelerated equity

go hand in hand. If small businesses should grow to medium and large businesses,

substantial progress will be made on the B-BBEE agenda. A comprehensive W&RSETA

SMME impact analysis study outlined various areas in which SMME development can be

improved, such as recruitment and selection, learners’ availability for training while running

their businesses, insufficient partnerships with the private sector, FET colleges, programme

management and other areas.

One area that needs further research and attention is the combination of learnerships and

skills programmes. Consultation after completion of the study indicated a need to

commence with skills programmes to give learners the capacity and interest to study further


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the opportunity to obtain a qualification in new venture creation. During a special focus

group with SMME’s, the following training needs were identified:

Numeracy and visual skills

Legislative knowledge

Technology skills

IT skills

Skills on basic business management principles

Customer care skills

Basic communication skills

Safety skills

The establishment of cooperatives to further empower SMMEs

A focused SMME development strategy will be included in Chapter 5. Since completion of

the wholesale and retail sector study, desktop research also identified the following areas

that should be further researched for implementation:

Currently available new venture creation programmes should be revised to be more

orientated towards wholesale and retail.

Existing initiatives should be refined, based on extensive research work done by the

University of Pretoria on the practical application of an entrepreneurial performance

training model in South Africa. A major project, the SMME Capacity-building and Co-

operative Development Project done from July 2009 to September 2010, resulted in

major conclusions and learning experiences that will be included in the revised SMME

strategy.

At the regional consultative sessions, considerable support was given to the W&R initiative

in the current SSP to develop a toolkit to accelerate SMME development. Small business

owners find it extremely difficult, if not impossible, to attend classroom training due to their

business responsibilities. It was suggested that the training be brought to the learner and

not the learner to the classroom. The toolkit based on the “how to” principle will enable the

business owner to acquire the skills without the need to attend large numbers of classes.

Social drivers of change - the major social drivers are unemployment and the requirement

to create decent work, as well as HIV/ AIDS and crime. An important driver that relates to

South Africa’s skewed income distribution is the unemployed and the number of people

surviving below the poverty line. An unemployment rate above 20% is deemed to pose

excessive political risk for most economies, but especially for South Africa where the


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populace has been conditioned into believing that things would get better with a new

government. The African ethnic group is also the group that bears the burden of this income

inequality.

Government has placed the creation of decent work at the centre of economic and social

policies. Its actualization depends on the restructuring of the economy. Part of the problem

is that South Africa possesses a top-heavy education system that places a lot of capital on

theoretical learning at the expense of skills acquisition and experiential training. In other

words, our education system needs to be re-oriented from formal degree qualifications to

more practical skills and vocational training. From the social perspective, W&RSETA should

strive to implement the following:

Incentives for training the unemployed youth.

Training programmes to promote decent work outcomes.

Awareness campaigns and capacity-building initiatives with social partners, with an aim

to strengthen involvement in the International Labour Organization (ILO) country

programme on decent work.

Toolbox for enterprises.

Monitoring, measuring and evaluating decent work.

2.5 Assumptions and solutions to guide a win-win solution

From the above paragraphs outlining the emerging big picture, a number of key

assumptions were made. Furthermore, the impact on skills development was clearly

defined and solutions were proposed as a basis for the remaining chapters. Well

researched narrative text is used as a basis to make well-informed assumptions about the

changing environment. Please note that the essence of the future analysis will be

expressed in a summarised PESTEL analysis in chapter 5 to guide the skills development

strategy. The drivers of change from a global, as well as South African, perspective were

interpreted and the assumptions, impact on skills development and possible solutions can

be summarised as follows:


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1 The client

Assumption Impact on skills development Possible solutions

Clients will become more

demanding in terms of quality

and service.

More customer skills will be

required at most levels in the

sector.

Update existing learning

material and accelerate

training delivery.

More mobile-orientated clients

will be required to realize

growth objectives.

More clients need to be

empowered on the usage of

mobile technology.

Appropriate programmes

should be introduced.

Client relationships will

increase in importance as

competitive advantage does.

All staff will require more focused

customer relations skills.

Conduct skills audits,

special programmes and

individual development

programmes

2 Political


All post-democratic transformation

policies will be implemented, which

will be challenging.

More emphasis should be placed

on the training and development of

historically disadvantaged South

Africans.

Increase the number of

new recruits and

competent existing staff

members and accelerate

the empowerment of

historically disadvantaged

South Africans in the

wholesale and retail

sector.

The contradictions between the

South African policy environment

and the global landscape will

become increasingly challenging.

Both environments are

exceptionally challenging from a

people empowerment perspective.

New solutions that meet the

challenges of the global pressures

and the South African policy

imperatives are required.

Secure more labour

support for the challenges

and act accordingly. It is

essential that a “what-

works-best-for South

Africa” solution be

created to reconcile

opposing demands.

3. Economic


Fluctuations in economic cycles

will have an impact on the

industry.

Pressure to further reduce staff

structures could be placed on the

sector.

Empower decision makers

on the impact of the longer

term external landscape in

which the wholesale and

retail sectors operate.


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4. New venture creation


All sectors of the economy will

have to accelerate the creation of

new ventures to sustain

economic growth and meet

political objectives.

People, especially formerly

disadvantaged South Africans,

need to be empowered with

regard to entrepreneurial skills.

Introduce an accelerated new

venture creation programme for

the wholesale and retail

industry. Implement

programmes to grow small

businesses into medium and

large businesses.

5. Technology


Technological innovation will

become increasingly important in

the wholesale and retail industry to

ensure effective service delivery.

Skills development should focus

on creative ICT solutions that

extend beyond current needs.

Empower more people

with regard to computer

literacy. Stimulate

innovation in the industry.

Global forces could result in

reduced jobs in the industry due to

technological innovations.

People will have to be multi-

skilled. However, reduced job

creation is completely against

South African policy and

innovative solutions will be

required.

Create a truly South

African solution by

complying with both

landscapes through

collaboration with the key

stakeholders.

The mobile phone will play a much

greater role in the financial and

retail industries.

Different skills will be required,

especially from a technological

perspective.

Translate the impact of the

mobile telephone into skills

required and update

existing learning material,

where required.

Internet access will improve in

rural areas. More people in rural areas will

need to be empowered.

Introduce more client-

focused training

programmes in rural areas.

Technological advances will

continue throughout and most

probably increase during the

planning period.

Related staff and especially

decision makers will require new

skills.

All learning material needs

to be adapted where

required.

Changes to jobs will be

unavoidable during the period up

to 2020. For example, certain jobs

will require green (environmental),

social media and specialised

technology components.

New sets of skills that will differ

from the status quo will be

required. People will in general be

required to do more work that was

not part of their past or present

jobs.

The creation of a future

awareness is required,

especially at decision

maker level. A multi-skilling

approach is required to

cater for new critical skills

that will emerge as a result

of the drivers of change.


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6. Gender imperatives


Emphasis will remain high on

gender equality.

More focus should be placed on

gender equality.

Will be determined in

collaboration with stakeholders.

Company employment equity

plans will have to comply with

charters and will have a

significant impact on company

compliance challenges.

More focus should be placed on

the training and development of

women, disabled people and

other groups that were

discriminated against.

Since current figures for groups

like the disabled are below

requirements, more focus

should be placed on recruiting

affected people.

7. Empowerment of historically disadvantaged individuals (HDI)


HDI empowerment will have to

accelerate during the SSP

planning period and beyond.

People without the required

skills due to historically driven

realities should be empowered.

Introduce a new HDI

empowerment strategy

based on current and future

skills requirements.

Set specific targets for

middle and top

management positions.

Consider individual

programmes for people with

managerial abilities.

Large numbers of people are

qualified for jobs but do not have

qualifications.

The need for recognition of

prior learning (RPL) will

increase.

Identify RPL needs

throughout the wholesale

and retail sector.

8. Social imperatives


The need to address social

inequalities will remain high.

More focus will need to be

placed on the non-sector

empowerment issues.

Identify and implement

programmes aimed at

addressing social needs.

HIV/AIDS will remain high in all

sectors of the economy.

Productivity will be threatened

throughout the planning period.

HIV/AIDS training should be an

integral part of all training

offerings.

Social media will become

increasingly important in the

wholesale and retail industry.

More people who can optimize

the usage of social media

technology will be required.

Include social media in all

relevant future training

curricula.

Include social media

strategies in strategic plans.


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9. Future mindset


The wholesale and retail

industry will need to continue

to innovate to be competitive.

Decision makers need to have a

future orientated mindset.

Introduce programmes to

orientate decision makers on

the impact of the

convergence of technologies

and industries.

10. SMME’s


The pressure to create new

ventures will pose various

challenges to the wholesale

and retail sector, especially in

rural areas.

Existing training and development

actions focusing on SMME’s should

be increased and the focus should

be placed on limitations identified

during research.

Customize existing learning

material for the wholesale

and retail environment and

challenges. Develop an

SMME toolkit and make it

available to all existing and

prospective SMME’s.

It is clear that much more focus should be placed on the training and development needs of

smaller players (SMMEs) in the wholesale and retail sector. Although some attended the

provincial focus groups, further consultation is required and will be done on an ongoing

basis.

2.6 Conclusion

A big picture has been drawn to inform the remaining chapters of this SSP. It is clear that

the wholesale and retail industry faces various challenges during the SSP planning period

2011 to 2016. Two new drivers of change that were not addressed in previous versions of

the SSP are the green agenda and social networks. The impact of these drivers of change

is enormous and new skills need to be defined and actions implemented to develop them.

Various forces in the external environment compel the industry to innovate, especially

from a skills development perspective. These forces include the social media, an ageing

population and the green agenda.

Based on various assumptions about the external environment that have an impact on

skills development, proactive solutions are required such as updating learning material to

cater for future requirements.

The biggest challenge would be to create a South African solution to successfully manage

the contradictions between the South African policy and the global forces that impact on the


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industry. From a skills development perspective, the challenge would be to address existing

skills needs as well as to prepare for the challenges of the future landscape. Due to rapid

changes in the business environment, skills that do not exist today could be required five to

ten years from now. This chapter provides a solid base for the remaining chapters to build

on. Notice should also be taken of the 14 new drivers of technological change as set out in

paragraph 2.4.3. These drivers require new sets of skills that will be addressed in chapter

five. A major conclusion of this chapter is that considerable support for the future direction

of the W&RSETA in terms of the anticipated 2020 landscape was obtained from key

stakeholders during the regional consultative sessions.


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Chapter 3: Supply and demand of skills

3.1 Introduction

This chapter presents an analysis of the supply and demand of skills in the W&R sector. It

draws on research undertaken in earlier sections and attempts to gauge the skills gap for scarce

and critical skills. Since no coherent occupational modelling is conducted in South Africa, online

job analysis to determine occupational supply and demand trends is used to give an indication

of skills shortages or surpluses.

The summary and analysis of this information, which form the concluding section of this chapter,

highlight scarce and critical skills in the sector that would be the focus of sector education and

training authority (SETA) initiatives going forward and set out in Chapter five, together with

information from all the chapters.

During regional consultative sessions, key stakeholders were consulted on supply and demand

and very interesting and valuable contributions were obtained that will be reported on later in

this chapter

3.2 Limitations of labour market analysis

The major problem facing users of labour market information in South Africa is the lack of a

national labour market information system. As a result, skills planners and policy makers are

severely restricted by the lack of information when making public investment decisions around

skills development. To compensate for possible shortcomings, the services of a labour

economist have been secured. The labour economist (consultant) is busy developing a model to

more accurately determine skills supply and demand from the sources available.

The quality of labour force statistics in South Africa is generally poor and occupational statistics

are of an even poorer quality. In many instances, these statistics are only available in highly

aggregated forms, such as senior officials, managers, professionals, technicians, labourers,

elementary workers and so on. These occupational levels are too broad to convert labour

market data into intelligence. Much more focused data in terms of specific occupations,

especially in the specialised categories, is required, which will be discussed with possible

solutions in the recommendations.

Another problem is that research agencies and relevant government departments do not

undertake econometric occupational modelling or forecasting to give an indication of current

and future labour supply and demand needs. This method of research, although widely

criticized in some quarters as being prone to large predictive errors, provides a very general


Page217

idea of the scale of occupational supply and demand with certain parameters. The lack of

research in South Africa makes it incredibly difficult to make predictions about skills supply and

demand.

As a consequence of these limitations, researchers are compelled to identify skills shortages

using other methods such as labour market information analysis, which is very widely used by

the International Labour Organization (ILO). Irrespective of the abovementioned limitations, it is

firmly believed that a substantial database has been established to address existing and future

skills requirements. It was necessary to respond to future skills needs identified through

consultation at the focus groups after a critical assessment of the drivers of change.

The existing SSP contains a detailed number of graphs based on Career-Junction data and

benchmarking undertaken by Up DHRM, that portrays recent & projected skills demand and

supply trends. It is clear that longer term perspectives are required from a skills and demand

supply perspective. The scarce and critical skills information generated at focus groups and with

the executive questionnaire is at this stage viewed as stronger indicators of skills demand and

chapter five interventions are aligned accordingly. It is recommended that the next SSP

resurrects a full updated Career-Junction data review and assessment to monitor longer term

skills requirements and trends.

3.3 Analysing the labour supply vsdemand dynamics

There are three organisations that currently conduct supply-demand analyses on a

quarterly and monthly basis in the South African labour market (Manpower SA, Career

Junction and Adcorp Group Holdings). This limitation contributes to the lack of labour

market intelligence among users of labour market information. It is thus difficult for SETA’s

to determine the quantum of skills shortages or surpluses in their respective sectors.

Career Junction’s website includes job vacancies advertised in the careers section of the

Sunday Times (the nationwide advertising medium for jobs that is the most widely used in

South Africa). Adcorp (the largest recruitment firm in South Africa) releases a monthly

employment index, which also gives a good indication of supply-demand dynamics.

Manpower SA conducts a quarterly employment outlook survey, which gives an idea of

employment demand over a three-month period.

Career Junction Index - is a web service through which recruiters and career seekers

interact in a secure and completely confidential environment. Over 1 000 of the country’s

top recruiters (both agencies and corporate companies) advertise their vacant positions to

more than a million career seekers on Career Junction and make use of the variety of


Page218

services that are offered over and above the normal job board service. The Career Junction

Index (CJI) was established due to a lack of updated and accurate online labour market

information in South Africa. The CJI is the first index of its kind that directly monitors the

online labour market in South Africa by examining supply and demand trends across all

industries. It provides the human resources professionals and recruitment agencies with

valuable insights into online labour trends in South Africa.

Adcorp Employment Index - releases a monthly employment index that serves as a useful

indicator in measuring labour demand across a range of industries, including transport.

Manpower Employment Outlook Survey - for the third quarter of 2012 was conducted by

interviewing a representative sample of 750 employers in South Africa. All survey

participants were asked the following question: “How do you anticipate total employment at

your location to change in the three months to the end of September 2012?”

Throughout this report, the term “nett employment outlook” is used. This figure is derived by

taking the percentage of employers who anticipate total employment to increase and

subtracting from this the percentage who expect to see a decrease in employment at their

location in the next quarter. The result of this calculation is the nett employment outlook.

3.4 Education levels in the sector

The wholesale and retail sector has a unique set of skills required for occupations within the

sector. Figure 3-1 compares the educational level breakdown of the wholesale and retail

sector workforce (in percentage terms) with the economically active population of South

Africa on generic qualifications as provided by Statistics SA.

The wholesale and retail sector currently contributes 22% to South Africa’s workforce, with

9.4% of this workforce holding a tertiary qualification, 38.1% holding a matriculation

certificate 50.7% having an education level below Grade 12 (Quarterly Labour Force

Survey, Quarter 2, 2012, Statistics SA).


Page219

Figure 3 -1: Education levels Quarter 2, 2012

Source: Quarterly Labour Force Survey (2012)

W&RSETA could locate these employees, as they are already employed in the sector, and

channel them towards learnerships and professional, vocational, technical and academic

learning (PIVOTAL) occupational programmes. This could be achieved by doubling existing

efforts in training interventions and drawing clearer career paths that are specifically

targeting employees already in the sector. This will not only improve the quality of skills in

the sector, but will help facilitate access, success and progression and assist companies to

improve their empowerment numbers.

3.5 Education and training provision

Supply of skills from schools - workforce entry into the wholesale and retail sector is

currently not controlled, as there are no longer any prerequisite educational or skills

requirements, especially at the lower occupational levels. Based on the above numbers, the

single most visible entry into the sector is matric. In 2011, 496 090 learners sat for the

National Senior Certificate examination. Of these learners, 120 767 (24.3%) qualified for

bachelor’s programmes, 141 584(28.5%) qualified for diploma programmes, 85 296

(17.2%) qualified for higher certificate programmes and 470 did not receive admission to

higher education (Department of Education, 2012).

It is most likely that learners who entered the sector with only a matric qualification did not

receive university entry. This translates to a sector that has a large, unskilled workforce with

2.5%

6.3%

4.2%

37.7%

38.1%

9.4%

1.7%

2.7%

7.7%

4.4%

32.8%

31.1%

20.0%

1.3%

No schooling

Less than primary completed

Primary completed

Secondary not completed

Secondary completed

Tertiary

Other

All Sectors W&R Sector


Page220

low salaries. These workers need to be targeted with learnerships and PIVOTAL

occupational programmes that offer discretionary grants and other incentives to the

companies that employ them.

Supply of skills from FET Colleges - a further education and training (FET) institution is

one that provides further education in all learning and training programmes that lead to

qualifications from Level 2 to Level 4 of the National Qualifications Framework (NQF)

contemplated in the National Qualifications Framework Act. These levels are higher than

general education levels, but below those required for higher education.

According to the report of the Further Education and Training Round Table, published April

2011, FET colleges remain central to the skills development agenda and SETA’s must

therefore be aligned to the colleges and universities of technology to support their mandate.

This was reinforced by the document entitled Towards Finding Resolutions in Partnership

with Stakeholders: FET Round Table, published April 2011, which states that Government

seeks to promote the colleges as “institutions of choice” to address specific work-based

skills needs.

FET colleges were created as recently as 2002 in terms of the Further Education and

Training Act, Act No 98 of 1998, which declared that the former technical colleges, colleges

of education and training centres should be merged into 50 FET colleges. The reason for

the reform was to combine smaller and weaker colleges with stronger institutions to develop

economies of scale and create capacity within colleges to reach more students and offer a

wider range of programmes, ultimately positioning them to better meet social and economic

demands. Each of the 50 colleges has a minimum of three sites, making them accessible to

communities of students.

FET colleges offer mainly National Certificate Vocational (NCV) programmes up to NQF

Level 4. NCV programmes comprise four subjects spread across 11 programmes or

vocational fields of study. These include the following: Engineering and Related Design,

Marketing, Management, Office Administration, Primary Agriculture, Tourism, Civil

Engineering and Building Construction, Finance Economics and Accounting, Information

Technology, Computer Science and Hospitality. The NCV programmes respond to scarce

skills and those that are in high demand, but also heed calls from employers to create

“thinking” employees.


Page221

Public FET institutions accounted for 3% of the public education system in 2008, where

418 058 learners registered for FET qualifications through 50 FET institutions. Based on the

current offerings of FET colleges, W&RSETA can work with willing FET colleges to

repackage some of their programmes, such as the following: Marketing, Management,

Office Administration, Finance Economics and Accounting, Information Technology and

Computer Science and Hospitality. In that way, it can accommodate scarce skills demands

in the sector.

TOTAL HEADCOUNT Enrolled as on 10 February 2012

Per

Province NC(V)Engineering

NC(V)Business

and General

Studies

N1 - N3

Engineering

N4 - N6

Engineering

N4 - N6

Business

Studies

Total

Headcount

Actual

students

Enrolled

Total

Headcount students

in Other

programmes

Eastern

Cape 5,049 12,671 2,832 1,559 7,306 29,417 2,512

Free State 1,596 3,664 4,271 2,091 8,843 20,465 337

Limpopo 8,019 12,080 2,507 4,108 6,115 32,829 653

Gauteng 10,123 16,797 10,853 8,947 17,574 64,294 5,240

KwaZulu

Natal 8,737 18,386 6,393 6,284 17,716 57,516 2,624

Mpumalanga 3,796 4,917 4,818 2,196 2,585 18,312 361

Northern

Cape 1,116 1,253 722 121 2,557 5,769 902

North West 2,859 5,540 2,288 647 2,224 13,558 2,311

Western

Cape 4,977 9,928 3,432 1,335 8,356 28,028 3,641

National 46,272 85,236 38,116 27,288 73,276 270,188 18,581

Source: Parliamentary Monitoring Group, 2011

http://www.pmg.org.za/report/20120215-department-higher-education-and-training-registration-and-enrolments-

Colleges are currently of the opinion that their offerings are not aligned to W&RSETA’s

scarce skills needs, but some have existing partnerships with private providers and, through

these partnerships, are able to provide training in the scarce skills areas in the sector. The

W&RSETA needs to reach out to colleges to ensure that FET institutions play a pivotal role

in addressing National Skills Development Strategy III (NSDS III) priorities.

Public FET institutions view W&RSETA as being one of the most difficult SETA’s with which

to initiate accreditation processes. According to the W&RSETA’s Education and Training

Quality Assurance (ETQA) information, only six public FET institutions have provisional

accreditation with the SETA and none have full accreditation. To increase its capacity,

http://www.pmg.org.za/report/20120215-department-higher-education-and-training-registration-and-enrolments-


Page222

W&RSETA needs to accredit a minimum of two FET institutions per province. This issue

will be addressed as a solution to increase the supply of skills through FET colleges. After

the FET WEEG placement project in the Western Cape, the employers commented that

they were pleasantly surprised by the calibre and competencies of the FET learners. Most

participating employers (31) will source learners form the FET College sector again.

Managers and owners of SMME‘s often overlook or do not recognize their own training

needs and concentrate on the training needs of lower levels of employees. This oversight is

encouraged by BBBEE legislation where greater scores are awarded for training of lower

level employees.

Supply of skills from Higher Education Institutions - public higher education institutions

(HEI’s) represented 7% of the public education system in South Africa in 2010, where 837

779 students were registered in public HEI’s. The HEI’s mainly supply higher qualifications

such as diplomas and undergraduate and postgraduate qualifications. HEI’s cluster learning

into three major fields of study: education, humanities and social sciences, business and

management and science, engineering and technology (SET). Most of the qualifications in

the wholesale and retail sector can be located within business and management studies in

the formal education system.

Figure 3-2: Enrolments in public HEI’s by major field of study, 2010

Source: 2011 Higher Education Information Management System (HEMIS) database

Business and management students are potential candidate managers and professionals

that can be attracted into the higher occupational categories of the wholesale and retail

sector. According to Figure 3-2, there is an adequate pool of potential candidate managers

and professionals that can be channelled into specific W&RSETA pivotal programmes. It

must be noted that there are very few programmes at formal institutions that are dedicated

237 058 236 256

364 321

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

Science and Technology Business and Commerce Education and otherhumanities


Page223

to preparing students for employment in the retail sector. Candidates applying for work

come from a myriad of backgrounds. Graduates from these institutions may therefore

exhibit the necessary skills to enter the retail sector, but opt for positions in other industries.

Recognition of prior learning (RPL) - is a process whereby, through assessment, credit is

given to learning that has already been acquired primarily in the workplace. RPL is a

process that allows candidates an opportunity to demonstrate their knowledge and skills.

Over time, a myriad of skills have been acquired by people who have worked and

specialised in a job over a number of years. This is especially so in the wholesale and retail

sector. Effective implementation of RPL could go a long way to address the shortage of

skills in the retail sector.

Due to various reasons, RPL has not really been successful in most industries. Proper

implementation of RPL would assist in addressing some of the skills backlog. This topic is

expanded on in the Strategic Plan in Chapter five. To address some of these concerns the

following needs to be instituted:

The development of an RPL toolkit to facilitate RPL.

The availability of qualified assessors to assess prior learning and map this learning

against requirements.

Enabling providers to conduct RPL.

Encouraging and incentivizing organisations by allowing learners to undergo the

RPL evaluation.

Putting measures in place to mitigate the high cost of assessments and the

misunderstanding of what RPL entails.

It is clear that RPL will not substantially increase the skills base, but it is important to

implement it in order to enable workers to obtain qualifications. RPL clearly has a purpose

to redress past inefficiencies of the skills delivery system, but it will also facilitate the access

of individuals qualified to conduct RPL in the labour market in positions that are higher than

those for which they previously qualified on the basis of their formal qualifications. For the

W&RSETA intervention, refer to chapter five page 206/7.

Small, Medium and Micro Enterprises (SMME) - the educational distribution of employees

in the SMME category (those who submitted WSP data) is similar to that of employees in larger

enterprises.


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Figure 3-3: Distribution of employees in SMME’s

Source: WSP 2012

Anecdotal evidence indicates that the educational levels of individuals in smaller companies

(those who are either exempt from submitting WSP’s or who are non-compliant) are much

lower. This further suggests the need for targeted intervention by W&RSETA to increase

compliance and greater research into the needs of the SMME category. A focus group with

SMME’s was held to address the most critical needs of this sector. Their identified skills

demand will be addressed later in the chapter.

3.6 Employees to be trained in the sector

The workplace skills plans (2011/12) provide information on the number of employees to be

trained by Organising Framework for Occupations (OFO), race, gender and NQF levels.

This information helps the W&RSETA to plan and support the sector in all skills

development initiatives. Figure 3-4 provides a summary breakdown of planned training in

the sector for the current financial year.

2313

12635

10762

16564

2141

666

298

137

81

95

0 2000 4000 6000 8000 10000 12000 14000 16000 18000

NQF1

NQF2

NQF3

NQF4

NQF5

NQF6

NQF7

NQF8

NQF9

NQF10


Page225

Figure 3-4: Total employees to be trained in the sector


According to Figure 3-4, planned training is at its highest level for sales workers (46%),

followed by elementary occupations (16%), managers (12%) and clerical workers (11%)

following closely behind. This indicates that the demands for training interventions are at

their highest from NQF Level 1 to Level 4 and start tapering off at NQF Level 5 to Level 8.

Figure 3-5: Employees to be trained according to race and occupational class


In terms of the information contained in Figure 3-5, the demand for training is the highest

among black employees (226 157) across the Organized Framework of Occupations,

followed closely by Coloured employees (56 923), Whites (42 848) and Indians (19 418)

trailing far behind. The demand for sales and clerical workers is still dominant among

MANAGERS 12%

PROFESSIONAL 3%

TECHNICIANS AND ASSOCIATE

PROFESSIONAL 7%


11% SERVICE AND SALES WORKERS

46%

SKILLED AGRICULTURAL, FORESTRY, FISHERY, CRAFT AND RELATED TRADES WORKERS

3%

PLANT AND MACHINE OPERATORS AND

ASSEMBLERS 3%


16%

40%

27%

45%

55%

74%

73%

80%

82%

16%

15%

18%

23%

15%

16%

13%

14%

9%

11%

8%

9%

3%

5%

3%

2%

35%

46%

29%

14%

9%

6%

5%

2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

MANAGERS

PROFESSIONALS









Page226

African (116 641) and Coloured employees (25 891), while manager skills demands

dominate between Africans (16397), followed by Whites (14342), Coloureds (6453) and

Indians (3855) trailing behind. Planned training for White professionals is dominant (4837),

followed by Africans (2 864) and Indians (1197). It is essential that, where lower numbers

were trained when compared to the previous year, they be followed up by the W&RSETA.

In relation to the composition of the workforce, companies need to increase the number of

people that will be trained in management and professional levels in order to ensure

proportional representivity across racial splits.

Figure 3-6: Employees to be trained according to age

Source: W&RSETA (2012)

Figure 3-6 shows that the highest number of employees to be trained is that of sales

workers under the age of 35, followed by sales workers in the age group 35 - 50 years.

Sales workers represent the core skills of the wholesaling and retailing business and

training a younger workforce will ensure growth, productivity and stability going forward.

The next group to be trained is managers between 36 and 55 years of age, followed by

clerical workers under 35. The number of managers under 36 is significantly high at 72 262,

with elementary workers following closely behind at 21 660. The bulk of the employees to

be trained are between 36 and 55 years of age, whilst those under 35 are the second

highest across the occupations. The planned intakes into management are designed to

ensure long term stability by engaging managers at the youngest possible age with the

necessary experience to ensure long service potential.

- 20 000 40 000 60 000 80 000 100 000 120 000

MANAGERS

PROFESSIONALS







55+ 36-54 <35


Page227

3.7 Fuel Retailers

Fuel retailers were included in the W&RSETA landscape in 2010/11.In South Africa, fuel

prices and margins, with the exception of diesel, are regulated. This setup has resulted in

employment being regulated and standardized across the industry. Oil companies have an

enormous amount of leverage in respect of forecourt outlets. Training is mandated by the

oil companies and outlets are required to send certain key personnel for training. Given the

educational levels of forecourt staff, there is a significant need for Adult Education and

Training (AET). According to the WSP Data (2012), the sector employs a total of 19 464

people.

South Africa is one of the few countries with such a stringent regulation of its fuel retailing

industry. The major risk for fuel retailers is the eventual deregulation. When this happens,

there will be major retrenchments in the industry.

Table 3-1: Training required per occupational category in the fuel retailers sector

Skills African Coloured Indian White

Artisan/ trade 13388 3434 1683 7346

Computer/ IT 5208 2175 1127 7795

Engineering 4892 1663 611 4382

Financial 2623 643 267 3172

Health and safety 67827 13227 4086 32410

HR training 8008 3787 1245 6437

Instrument use 6276 1828 316 1762

Management 3743 1347 1585 6858

Operator 49300 7008 2857 18490

Other 30664 8272 3013 14809

Petrol attendant 3596 246 10 116

Product knowledge 29143 13600 3089 20272

Sales/marketing 2490 817 778 6146

Soft skills 18278 6144 2211 11694

Supervisory 2958 1049 383 1233

Grand total 248 411 65249 23261 142 950

Source: MerSETA Annual Training Report, 2011/12

It can be seen that, despite the number of petrol attendant staff in the sector, the number

requiring training is low. This is because all oil companies require businesses to send their

employees for training that is subsidized by the oil companies. The oil company training

applies to the staff employed in forecourt located convenience stores, as well as staff

requiring training in sales, marketing and supervisory skills.


Page228

Table 3-2: Training programmes required in the fuel retailers subsector

Programmes African Coloured Indian White

Apprenticeship 4146 921 425 2567

Continuing professional development 10554 2901 1833 11560

Educational degree 460 220 80 369

Learnerships 5241 1458 1162 1558

Other 33232 11406 3214 14494

Short courses 103 143 27816 10813 75278

Skills programme 25136 5117 1921 11305

Technical certificate 1308 321 220 1134

Workplace experience 60842 14778 3422 23370

Grand total 244062 64938 23090 141 635

Source: MerSETA Annual Training Report, 2011/12

There is no Career Junction information available for this sector. It is anticipated that the other

categories (Computer/IT, Management, Financial, etc.) will be similar to the demand and supply

of similar skills in other W&R sub-sectors.

Figure 3-7: Training programmes in fuel retail

The training programmes for all the occupational categories are shown above. “Other”

includes training by the oil company and on-site training, as well as training that do not fall

in the other categories. Indian female is listed as zero in all categories. This must be

interrogated. It can be seen that although a lot of training is done by the oil companies,

there is a need for additional training to be done by the W&RSETA. The training provided

0 2000 4000 6000 8000 10000 12000

0

Apprenticeship

Continuing Professional…

Educational Degree

Internship

Learnerships

Other

Placements

Professional Degree

Short Courses

Skills Programme

Technical Certificate

Technical Degree

Workplace Experience

Training programmes in fuel retail

White - Male

White - Female

Indian - Male

Indian - Female

Coloured - Male

Coloured - Female

African - Male

African - Female

0 - 0

Merseta ATR (2010)


Page229

by the oil companies is very specific to the delivery of its product. Generic skills are not

emphasized in training of this nature.

Leadership - a learnership is a structured learning programme made up of theoretical and

practical elements of learning and assessment. Learnerships are the main vehicle used by

SETA’s to encourage skills development in the workplace. In addition to giving companies

learnership grants, Government also provides tax incentives for companies registering

learners and ensuring that they complete their learnerships. Most of the learnerships in the

W&R sector are located in the further education and training (FET) band (NQF Level 2 to

Level 4). Only the National Certificate in Wholesale and Retail Buying and Planning (NQF

Level 5) is a post-matric qualification.

In addition to learnerships in the FET band, which caters for clerks and elementary workers,

there is an urgent need to develop learnerships in the higher education and training band

(NQF Level 5 to Level 10). As work in the W&R sector becomes more knowledge intensive

in nature, advanced training for managers, professionals, technicians and clerks is an

imperative to ensure competitiveness. The International Leadership Development

Programme begins to address this need. The following qualifications (or learnership) are

offered currently by the W&RSETA:


Page230

In addition to the above qualifications, further progress can be summarised as follows:

a) New qualifications being developed and aligned with the QCTO:

- Cashier qualification

- Buyer planner

- Retail Supervisor

- Warehouse distribution

b) Qualifications that are in the process of registration:

- Retail Store Manager

W&RSETA entered into memoranda of understanding (MoU’s) with other SETA’s in order

to advance the skills development agenda and attract more skilled workers into the sector.

This collaboration saw 4172 MoU’s being signed between the W&RSETA and other SETA’s

between 2005 and 2010. This relationship yielded 1116 completed learnerships and 2437


Page231

learnerships still active under the W&RSETA banner. This collaboration needs to improve,

as it will improve the quality of skills of the workforce in the sector.

W&RSETA learnership statistics between 2005 and 2010 - W&RSETA registered a total

of 18784 learnerships between 2005 and 2010. Of these, 7 744 were completed, 5832 are

still active, 3864 are stagnant and 4610 were terminated. W&RSETA needs to rethink the

learnership strategy going forward as more than 40% of learnerships registered between

2005 and 2010 were either stagnant or had been terminated.

Over the past five years, W&RSETA has successfully completed 21163 learnerships,

including learnerships completed as a result of MoU’s entered into with other SETA’s, and

4 116 were terminated. There are a variety of reasons for terminating learnerships. This

includes abscondment, resignation, incompetence, project cancellation and people

obtaining permanent employment.

Training providers, assessors and moderators by region - as a part of establishing its

delivery capacity, the W&RSETA registers training providers, assessors and moderators

that are subject matter experts in the wholesale and retail sector. These specialists assess

and validate all learning that takes place in the sector. W&RSETA has registered a total of

344 accredited training providers, 2 947 assessors and 531 moderators who are distributed

across all nine provinces. These providers present a menu of offerings of both full

qualifications and part qualifications. Of the 344 providers, only 100 providers have scope

for full qualifications. The following table reflects the QCTO status in relation to the

W&RSETA programmes and learnerships:

ETQA (QCTO) update for the period March 2005 - March 2012

Area Value

Total Number of learnerships registered 37 133

Total number of learnerships completed 12 869

Total number of still active 13 983

Total number stagnant 1440

Total number terminated 6886

Total number of learnerships successfully completed including MOU learners 14 748

Total number of registered assessors 3209

Total number of registered moderators 652

Total number of providers 332

Total number of active providers with scope for full qualifications 109


Page232

EC FS GP KZN Limpopo MP NW NC WC Total

Active

Assessors 259 103 1422 636 88 62 18 33 588 3209

Active

Moderators 33 8 368 117 10 5 5 8 98 652

Active

provider 24 10 141 44 16 17 4 8 68 332

Figure 3.8: Distribution of providers, assessors and moderators by region

Source: W&RSETA ETQA Division 2012

3.8 Recruitment conditions

Employment increased in September, growing at an annualized rate of 1.61%. During the

month the economy added 25,855 jobs, partly reversing the decline of 82,431 jobs

observed in the four-month period of May, June, July and August. This is according to

According to Adcorp Employment index results for September 2012.

Job growth was observed in all sectors, but the informal sector continued to outperform the

others, growing at a rate of 2.3% or 12,059 jobs during the month. Strong growth was

observed in temporary and agency work (0.9% and 1.0% respectively), which is likely to

continue as the economy ramps up for the year-end retail season.

The primary and secondary sectors (mining and manufacturing) continued to shed jobs,

losing 14,000 jobs between them during the month. The tertiary sectors (mostly services)

gained 23,000 jobs during the month. The strongest employment growth was observed in

transport (10.7%), construction (7.1%) and financial services (6.5%). High-skilled jobs


Page233

continue to outperform low-skilled jobs: professional and clerical “White-collar” employment

grew 9.8% and 7.2% during the month respectively, while low-skilled “Blue-collar”

employment fell by 3.2%.

Figure 3-9: Adcorp Employment Index

Source: Adcorp Holdings Limited, 2012

According to the Adcorp Employment Index of 2012, employment in the W&R sector in July

increased by 3.4% over the previous month.

Table 3-3: Employment and growth by industry (September 2012)

Source: Adcorp Employment Index (2012).

Three sectors recorded month-on-month declines in terms of employment by occupational

categories for August 2012 - Mining, Manufacturing and Construction.


Page234

Table 3-4: Occupational employment by industry

Five occupational levels across the economy experienced negative employment growth for

the period August 2012.

3.9 Recruitment activity

Adcorp’s Employment Index of July 2010 shows that recruitment (labour demand) in South

Africa remained stable between 2001 and 2007 at around 20%, but a steep decline was

experienced in 2008 and 2009 as a result of the global financial crisis. Permanent and

fulltime recruitment picked up in the latter part. The following excerpt from the 2012 report

gives another picture: 13 August 2012 –“SA labour productivity at the lowest level in 46

years. Alarmingly, the Adcorp report shows that since 1967 labour productivity has fallen

from R7 297 to R4 924 a year, which is a decline of 32,5%. From the 1993 peak, labour

productivity has fallen by a steep 41.2%. ...”

http://www.adcorp.co.za/NEws/Pages/SAlabourproductivityatthelowestlevelin46years.aspx

http://www.adcorp.co.za/NEws/Pages/SAlabourproductivityatthelowestlevelin46years.aspx


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Figure 3-10: Recruitment activity


Adcorp’s Employment Index 2011 for 2010 shows that recruitment for part-time and

temporary positions performed better than full time and permanent positions. This indicates

that structural constraints exist in the labour market, which inhibits the hiring of labour. Even

during the recession, recruitment dropped marginally and picked up steadily in 2010.

Figure 3-11: Recruitment activity – temporary workers



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3.10 Sector Comparisons

Table 3-5 illustrates supply and demand trends experienced by all industry sectors over a

six-month period, where the first three months’ data is compared to the next three months’

data (Career Junction, 2011).

Table 3-5: Supply and demand trends

Source: CareerJunction 2011

A six months’ analysis of the online labour market in South Africa reveals an overall

decrease in online labour supply. Demand for labour increased during this period. As a

result, recruitment conditions weakened across most industries. Recruiters face difficult

recruitment conditions in the distribution, warehousing and freight and engineering sectors.

The supply pool of talent is limited to less than ten potential career seekers per job vacancy

in these sectors. In the W&R sector, the supply of labour was 137.5% and demand was

89.5% during this period. There were 13.87 career seekers per job advert (Career Junction,

2010:16).


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3.11 Nett employment outlook

Employers in nine of the 10 industry sectors anticipated headcount growth during the third

quarter of 2012. The strongest hiring prospects were reported in the Wholesale and Retail

sector, where the nett employment outlook was +12% (Manpower SA, 2012:5).

Figure 3-12: Nett employment outlook

Source: Manpower Employment Outlook Survey, Quarter 3, 2012

3.12 Supply-demand equilibrium for specific occupational fields

The W&R sector is one of South Africa’s largest and most diverse industries, creating a

large number of jobs each year. Recruitment in this sector has been hugely affected by the

economic downturn. However, it is now showing signs of stabilization. Despite signs of a

reviving market, a lack of skills still poses a threat to one of the world’s most vibrant sectors.

Various skills development programmes have been put in place as long and short term

strategies in an attempt to improve the current skills crisis. W&RSETA facilitated the

training of 1 342 learners in 466 companies during 2007/08 and put together extensive

skills development programmes for 2009/10.

Recruitment remains moderate in the W&R sector, but is difficult in certain occupational

fields as there is a high demand for labour and a limited number of qualified professionals in

the job market. A steady increase in online labour demand is evident for the previous three


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months, while the workforce remains unchanged. The CJI for the W&R sector is currently

positioned at 113.12 index points, signalling weakening recruitment conditions and possible

market recovery (Career Junction, 2011).

The limited workforce in the W&R occupational fields is a cause for concern, particularly

during the time of market recovery. Further growth in labour demand will have a negative

impact on recruitment in this sector and could possibly leave recruiters with severe skills

shortages across a large part of the W&R sector. Therefore, it is vital for businesses to

invest in strategic long term planning in order to combat a possible skills crisis and to

ensure the profitability of businesses.

The analysis of online labour supply and demand provides the positioning of each industry

sector, based on the average number of potential career seekers available per job advert.

Integrating the number of job adverts and the number of potential career seekers per job

advert for each industry sector reflects the online labour supply versus demand per industry

sector.

Figure 3-13: Difficulty of recruitment


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Recruitment in the W&R sector falls in the yellow band, indicating moderate difficulty in

recruitment. There are 15.89 career seekers per job advert. In total, a high number of job

adverts were placed- in the region of 2000 in the last six months (Career Junction, 2011).

3.13 Lack of skilled labour

South Africa is facing major skill shortages in the online labour market. These skill

shortages are evident in the W&R profession and are believed to be as a result of poor

training and education facilities, as well as a lack of experience. The current skills shortages

in the W&R sector pose a threat to businesses, as well as recruitment agencies and

demand attention. Skills shortages are currently evident in client services. Recruitment

conditions in this field are currently difficult.

While mid-level professionals are in very high demand, the supply of labour is limited. The

opposite is seen for entry and junior level professionals where demand for labour is low, but

the supply pool is significantly large. The imbalance of labour demand and labour supply

creates undersupplies in some areas and oversupplies in other areas. As a result,

recruitment conditions are challenging for certain professionals.

Currently, more than 17% of the potential W&R labour force falls under the entry and junior

categories. Demand in these categories is very low, creating an oversupply of potential

career seekers. On the other hand, the W&R sector reveals a major demand for mid-level

professionals. Currently, nearly 70% of the posted job adverts require skilled and senior

labour, but only 44.61% of potential career seekers represent the demanded skills. The

supply and demand of labour in the senior level category seems to be balanced in most

occupational fields. On an analysis of higher job levels (management and executive levels),

an oversupply of labour is evident. The current skills gaps are a cause for concern,

particularly in the following occupational fields:

Sales (lack of skilled level labour).

Client services (lack of skilled and management level labour).

Branch and store management (lack of skilled level labour).

General management (lack of skilled and senior level labour).

3.14 Qualitative skills demand forecast: Skills demand towards the 2020 operating environment

As stated in Chapter one, this SSP looks beyond the planning period 2011 - 2016. Based

on in-depth revised drivers of change analysis for 2020, a number of key skills areas have


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been identified. During focus groups with W&RSETA levy payers and stakeholders, further

value was added to the drivers of change in terms of future skills requirements. Participants

were requested to identify new skills that will be required for the 2020 landscape. It is clear

that considerable work is required to further contextualize the 2020 skills needs per job or

job clusters. However agreement was reached that the skills will be required in the following

areas:

The green agenda: skills will be required in terms of the new legislation and how the

W&R sector should comply with the requirements. For example, as a major creator of

waste, skills will be required on waste management, packaging and related areas.

Skills on how to deal with an ageing population: since the ageing population is a

future reality, specific skills to deal with this trend will be required.

Skills to exploit the opportunity of the growing middle class: such skills will be

required.

New regulatory skills to successfully manage the changing regulatory environment:

such skills will be required.

Technological innovations due to factors such as the convergence of industries; this

will result in new skills requirements. For example, convergence with the banking

industry could imply more knowledge on banking and mobile technology.

Social media: the growing importance of social media in the W&R sector requires

specialised skills to optimize the application of the social media.

Updated SMME needs and requirements - big levy payers have realized that there is a

huge skills demand from small business owners on how to manage a business and made

the following suggestions: (i) More assistance should be provided to SMME operators, and

(ii) More SMME trainers should be developed to empower them for the challenges.

Chapter five contains a detailed SMME empowerment strategy. As stated in Chapter two, a

special focus group with SMME’s confirmed the following training needs:

Numeracy and visual skills.

Legislative knowledge.

Technology skills.

IT skills.

Skills on basic business management principles.

Customer care skills.

Basic business management principles.

Basic communication skills.

Safety skills.


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The establishment of cooperatives to further empower SMME’s.

New venture creation skills (the training should commence with a skills programme

that can lead to full qualifications for interested operators.).

Knowledge about the regulatory requirements.

Knowledge of the voucher system.

Knowledge about funding and venture capital.

Knowledge about business models and co-operatives.

Knowledge of skills development facilitator (SDF) functions and assistance to

conduct the work.

The need for interventions outside the classroom, such as exposure and mentoring.

Knowledge to grow the business.

Latest supply of skills assessment - during recent (July/August 2012) intensive

stakeholder consultation in the various regions, stakeholders provided specific inputs to

address the management of skills supply to the industry. The stakeholder inputs can be


Lack of retail qualifications from FET colleges and HEI’s.

Existing qualifications and learning material from all institutions not focusing on

2020 skills.

Difficulty in getting accreditation.

Differences between the SETA’s.

Schools output with regards to Mathematics and English literacy.

Funding for critical skills.

The 2020 requirements are not part of the existing syllabi.

Matriculants cannot budget and need basic financial skills.

Matriculants need business language skills.

Higher education institutions do not multi-skill people, for example, the combination

of marketing and public relations and the industry should advise accordingly.

More practical skills are required.

Sales training is too generic and should be streamlined for sub-sectors and be

more industry-specific.

Casualisation deprives people of training and this issue should be addressed.

More focused soft skills are required in areas such as assertiveness, emotional

intelligence, negotiating skills and customer service.


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Probably the most important conclusion to be drawn from the consultation process is the

fact that existing syllabi and programme content should be assessed for compliance with

future skills requirements and should be updated accordingly. The most important output

variables can be summarised as follows:

Table 3-6: Output variables

Institution Outputs

Schools Low output of matriculants with Mathematics as a subject.

Schools and FET

colleges Limited level of literacy and numeracy.

Schools Need for career guidance.

All institutions Much additional training is required before they are proficient for

employment and bridging courses are required.

All institutions Increase soft skills training and ethics.

Increase RPL, for example, people without matric who can do the job.

Private providers Acceptable results.

3.15 Constraints to skills development to be addressed in the strategy

At least a quarter of employees in the sector are in informal employment. These employees

are employed as casual, temporary and fixed term employees without social benefits or the

full protection of the law. There is a growing trend towards informalisation in the sector, with

negative consequences for labour peace, worker morale, productivity and investments in

skills development. There is a need for the W&RSETA to actively support the concept of

decent work and to implement a sector programme to improve conditions of employment.

Although informalisation is seen in some quarters as having the potential to create jobs, the

nature of informal work is survivalist and not conducive to job creation. The trade union

movement in South Africa argues that informalisation perpetuates inequalities that exist in

society. A major problem with non-permanent employment is that it discourages investment

in skills development and training infrastructures.

A feature of flexibility in the recent period has been the growth in labour broking and sub-

contracting and the emergence of the Confederation of Employers of South Africa

(COFESA). The organization advises employers on restructuring their production so that

employment contracts are converted into service contracts and employees become


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independent contractors. The firm is then run as a network of contractors. COFESA’s

activities have been concentrated largely, although not exclusively, in the clothing industry.

The activities of COFESA and similar organisations are mainly aimed at bypassing

minimum standards labour legislation and collective bargaining agreements. Research

commissioned by the W&RSETA on the effect of casualisation on the skills development of

workers in Gauteng revealed the following: The most serious practical implication of

casualisation is that casuals receive little, if any, skills development. In many instances,

where permanent jobs are replaced by casual ones, the concept has a very obvious and

serious negative influence on the working environment as a whole.

Table 3-7: Categories employed by employers

Category Number employed Percentage

Casual 18 35%

Temporary 21 41%

Contract 12 24%

Figure 3-15: Categories employed

Source: Tiso research into the effect of casualisation on skills development of workers

As reflected above, employers prefer to use the term “temporary employees” in 41% of the

instances. The nature of the job seems to be similar whether called casual or temporary

employees. Contract workers are mostly employed for a specific assignment and period.


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Table 3-8: Motivation for employing casual employees

Need Numbers employed Percentage

Cyclical 28 54%

Transitional 7 13%

Cost saving 2 4%

Admin ease 12 23%

Other 3 4%

Figure 3-16: Motivation for employing casual employees

Source: Tiso research into the effect of casualisation on skills development of workers.

The majority of employers (54%) prefer to use the services of casual workers during peak

periods, whereas some employers use the principle of temporary worker contracts as a

probation period during which time their daily performance is assessed and, when satisfied,

permanent employment is offered. Some employers (23%) utilise the services of labour

brokers to ease the administrative burden of recruitment, the selection process and payroll.

These employers normally enter into service level agreements with such labour brokers.

The services rendered by labour brokers include the following, amongst others: recruitment,

selection and payroll administration.

Table 3-9: Training provided

Training Casual Permanent

Process (job) training 32 39

Skills (tech) 12 23

Super 0 6

Learnerships 1 8

54%

13%

4%

23%

6%

Motivation for employing casual employees

Cyclical

Transitional

Cost saving

Admin ease

Other


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Figure 3-17: Training provided

Process training (on-the-job training) is provided to permanent and casual employees. This

is inevitable to provide the necessary skills just to perform the required job. Technical

training skills are provided to a lesser extent. No supervisory training is provided to casual

employees. Only permanent employees participate in learnerships.

Labour broking and casualisation is evident in the enterprise, but not at the same levels as

for example in Mining, Manufacturing, Agriculture, etc. However, the practice of casual

labour is also very real in the sector and is influenced by seasonal trends and for example

in the ‘inventory management functions’ such as shelf packing, etc. Such casual labour is

derived from opportunities to be part of structured training interventions. Labour brokers

and clients of this service should be forced to also create equal training opportunities.

Skills supply from a stakeholder perspective – in addition to various sources of skills

supply it was agreed to consult stakeholders specifically on their inputs pertaining to the

skills outputs from institutions. The consultation focused specifically on the following

providers of skills to the W&R industry:

Schools.

FET colleges.

Universities.

Private providers.

Specific responses per province can be found in Annexure A: regional SSP consultation

report. The following shortcomings pertaining to skills supply were reported from an

integrative perspective:

39

23

6 8

05

1015202530354045

Process (job) training

Skills (technical)

Supervisory Learnerships

Training Provided

Casual

Permanent


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Schools

School leavers joining the industry cannot read and write properly.

They lack sufficient life orientation skills.

They have insufficient career and W&R industry knowledge.

No subject on entrepreneurship.

School pass standard (30%) appalling.

Business English communication skills insufficient.

Basic numeracy and language skills.

Career guidance required to assess learners and determine where their abilities and

interests are.

Attendance and punctuality abilities are required.

Basic numeracy and language skills required.

Learners want to have qualifications and not necessarily be employable.

People need to spend time in working environment.

Qualifications must be structured (theory) and workplace exposure.

Job seeking skills required.

FET Colleges

Most shortcomings as per schools listed above.

Too theoretical and limited workplace experience.

Too few Subject matter experts lecturing.

No subject on entrepreneurship.

Public FET: No W&R qualification.

Lack of good retail qualifications in general.

Universities

Limited focus on SMME’s.

Retail degrees required.

Integrity and ethics.

Graduates not coming back into retail sector and leaving for other sectors, for better

opportunities.

Experience is the problem – work experience is not part of the system at universities.

Private providers

Quality & cost concern.

Charge higher cost per credit than SETA approves.


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There must be good relations between private providers and employers.

Practical skills.

Experiential training is better.

Being part of the solution and not the problem.

Assisting with growth of the smaller providers – capacity building and create

opportunities for work by private providers.

Review cost structure for learning programmes.

Private Providers are linked to specific levels and not various levels (accredited for

only one level and not multiple).

General comments and inputs

Introduce bridging courses before employment.

Orientate lecturers on the industry.

Basic business knowledge required throughout.

People do not have responsibility.

Business and work ethic required.

Report writing skills insufficient.

General lack of willingness to work / work ethics.

Lack of work readiness programmes.

It was suggested that W&RSETA can play a key facilitating role to resolve skills

supply issues.

Limited knowledge of the industry or life in general in terms of high expectations.

Some qualifications are offered that are not accredited (Welding: MerSETA).

Create website that provides detail on qualifications.

Provide internships for university graduates before graduation.

W&RSETA to play a strong facilitating role between stakeholders.

Stakeholder executive development group survey input

In addition to the above information, 60 key stakeholders who can be regarded as

champions of industry completed a questionnaire. These stakeholders were part of the

W&R executive development programme and their inputs are viewed as vital. Given their

position and experience in the enterprise, their responses to the questionnaire are therefore

highly regarded; however, such should be interpreted and treated merely as their individual

impressions and understanding of the current skills challenges. The following scarce skills

are viewed as the most important occupations:

Management.


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Buyers.

Planners.

There is a remarkable similarity between these occupations and the results obtained from

the provincial focus groups. More value is added through the identification of the NQF

aligned educational level of these scarce skills occupations, namely at tertiary level

(Diploma/BCOM degree). At NQF level 5 and higher the scarcity of these occupations is

further highlighted. The group indicated that on average more than 14 of these scarce skills

occupants are required in their organisations. Absolute scarcity is indicated as 17 and

relative scarcity as 13, which indicated the importance to develop people for these

categories. If the time to fill these positions, namely 4.7 months is taken into consideration,

the situation is even more significant from a proactive management point of view. The

average annual remuneration of R 367 857.14 is viewed as definitely no restraining force to

recruit the required number of people, but rather real scarcity due to insufficient numbers of

people in the labour market in these categories.

As far as critical skills in the management categories are concerned, soft skills, or people

skills have been identified. An average of 11 incumbents per organization is required, which

implies an absolute scarcity of 11 and relative scarcity of five. The average time to fill these

positions is 4.2 months. With an average monthly remuneration, the scarcity of these

people in the market is underpinned.

Participants also identified the need to focus on the skills output of tertiary institutions. The

development of tertiary institutions to effectively deal with interventions such as

learnerships should receive priority attention. Senior management shows remarkable

insight in problem solving by suggesting the following interventions:

Focused management training from a business content perspective that includes 2020

skills requirements.

Soft skills required in terms of customer skills, people management skills and other soft

skills that were confirmed during regional focus groups with champions of industry.

Short courses are recommended due to the difficulty to relieve people in these

positions for longer training periods.

The critical need for sales training was also identified. It is clear that product knowledge

dominates, especially due to the rapid changes in technology. These needs were confirmed

at regional focus groups. The above scarce and critical skills should be viewed in

conjunction with the scarcity of skills of formerly disadvantaged individuals.


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W&RSETA interventions - the following solutions are proposed:

That the solutions suggested above by the regional stakeholders be favourably

considered by the W&RSETA for implementation.

Create incentives for employers to create permanent positions for precarious workers.

Support the provision of education and training for irregular workers to help them into

better jobs.

Encourage companies to integrate the casual workers in specific company activities

and have a dedicated training plan and strategy for the casual workers.

Engage the sector companies to consider training those casual workers on specific

scarce and critical skills that are needed in the sector.

Devise a specific training intervention for young casual workers in conjunction with

various sector companies.

Consider the recruitment of casuals into learnerships and various skills programmes.

Investigate introducing incentive schemes to entice companies to introduce skills

development for casual workers.

Build a database of casuals in the sector for the purpose of managing the improvement

of the situation. This should include a skills audit of casuals in order to better determine

their employability, matching them to appropriate positions and determining the skills

required.

3.16 Conclusion

Stakeholders’ inputs through questionnaires and focus groups contributed significantly to a

further understanding of skills demand and supply in the wholesale and retail sector. A

major problem that impacts adversely on the skills development environment is the lack of a

national labour market information system. As a result, users of labour market information

are making policy choices and public investments in education and training without credible

data. An additional problem facing SETA’s is that no occupational forecasting is undertaken

by research agencies or government departments.

Therefore, it is not possible to predict future skills demands within reliable parameters. With

these limitations, the only reliable sources of occupational supply-demand information are

the analyses of job adverts conducted by Career Junction, Manpower SA and Adcorp. The

following conclusions are drawn from this chapter:


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The fact that entrants to the industry that are supplied by institutions are not practically

ready for the work environment requires further proactive work by W&RSETA and the

industry.

The occupational structure of the W&R sector is consistent with the historical legacies

of the apartheid era with a high concentration of Africans at the bottom end of

occupations and, conversely, a high proportion of whites in the higher wage-earning

occupational levels.

W&RSETA has made significant gains in encouraging companies to apply for

mandatory grants, with the majority of large, medium and small companies doing so.

Employee coverage for mandatory grants dropped below 300 000 from above 500 000

in the previous year. This might suggest that companies are focusing more on their

core business, as well as implementing cost-cutting measures in order to survive the

recession.

There are real challenges facing the SETA’s in areas such as qualification and

curriculum development, employee retention and opportunities, research capacity and

business compliance. The SETA’s should engage stakeholders in future skills planning

exercises.

Stakeholder consolation, as prescribed by the NSDS and followed with the compilation

of this updated SSP, adds further value and should be used more regularly to update

the quantitative database.

Unless the sector invests in infrastructure for research, decision making will be

speculative if it is not supported by appropriate statistics.

There are no prerequisite entry requirements in the sector. This might contribute to low

job status and consequently low wages.

Increasing collaboration with public FET institutions and HEI’s could greatly improve

the W&RSETA’s capacity to deliver on its mandate.

It can be concluded that a substantial factual base exists based on quantitative and

qualitative research done by the W&RSETA to proactively address most skills supply and

demand issues. It is clear that various challenges pertaining to the skills supply from

institutions (Schools, FET Colleges and Higher Education Institutions) required greater

alignment between enterprise skills requirements and skills output. Initiatives such as the

establishment of a W&R Academy should seriously be considered for inclusion in future

strategy.


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Chapter 4: Scarce and critical skills

This chapter presents a scarce and critical skills list of the W&R sector drawn from the

annual Workplace Skills Plan/Annual Training Report, careers guide, literature review,

scarce skills questionnaire and workshops with stakeholders in the designated sector. It

should be noted that considerable value was added by the following qualitative research

methods:

Qualitative desktop research on future skills requirements based on the anticipated

2020 landscape.

Focus groups with key stakeholders in the various provinces.

Recently, the data obtained through consultation with stakeholders in the regions also

indicate longer term skills requirements that are directly related to the drivers of change.

Scarce skills are listed according to occupation (at unit group, level 4, on the Organising

Framework of Occupations). The skills required for the 2020 landscape, as introduced in

Chapter 3, are also listed. It should be stated that the previous regional consultations

resulted in a very huge database in terms of critical and scarce skills. Although some skills

are organization based and not relevant to the entire industry, all requirements were listed.

During the 2012 update consultations, deliberate efforts were made to focus on the most

important and prioritized skills requirements. It is essential that organisations that have such

skills requirements take initiatives from within.

The chapter also presents a list of priority occupations, which, although not scarce, are

regarded as important for the W&R sector, because they are vital to the activities of

wholesale and retail enterprises. Therefore, stakeholders have prioritized occupations for

investments in skills development. It should also be taken into account that new jobs could

emerge during the planning period and beyond (up to 2020, as outlined in Chapter 1) that

do not exist today. Further research to determine the requirements more specifically will be

required as set out in Chapter 5.

A list of critical or “top-up” skills requirements that address skills gaps is also identified. The

top-up list required for 2020 is also suggested, but further research is required to allocate

these skills requirements to specific occupations and positions. It was concluded that

especially senior positions increasingly require top up skills in areas such as the green

agenda, social media and marketing skills based on the revised drivers of change. The

research on the 2020 landscape added considerable value to this SSP. The 2020


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landscape was further updated with regional inputs and contributions. The sector has been

characterized by a shift towards technological solutions in response to both manpower

constraints and the need for greater efficiencies with concomitant implications for skills

development. These developments are worse in the rural areas where large retailers have

curtailed operations to move to the larger urban centres. This results in a migration of

labour to the larger towns and cities.

The above developments lead to a disjoint between supply and demand for skills in the

sector with many skills classified as scarce in the rural areas and being abundant in the

urban areas. Nevertheless, skills should be provided where they are required and skills

shortages in the rural areas should therefore be classified as scarce skills. An interesting

feature of the W&R sector is the correlation between the growth of the sector and the

growing demand for highly skilled people in specific occupational categories on the other.

Conversely, there is a decline in demand for specific low-skilled occupations in the sector,

which is further adversely affected by the use of casual labour.

Structural economic changes and increased knowledge intensity in the sector are

combining to bring about major shifts in formal sector employment patterns. These two

processes are creating aggregate labour demand in skilled occupational categories and are

contributing to unemployment in unskilled and semi-skilled occupations.

With technological advancements, the ratio of skilled labour to total employment can be

expected to increase with a concomitant decline in unskilled labour, as is the prevailing

trend. Combined with the historical legacy of the apartheid educational provision, this trend

is further differentiated by race, educational level and gender. The global trend of fewer

people doing more work can also have an effect.

Basic skills needs identified at stakeholder workshops are included, although they are not

limited to the following: life skills (including adult education and training and especially basic

life skills beyond literacy and numeracy in the rural areas), succession planning, generic

business management skills for SMME’s, legislative skills and HIV/AIDS awareness for

management and supervisory personnel.

Scarce skills identified through quantitative analysis included management at all levels,

supervisory personnel, IT professionals, supply chain and distribution managers, logistics

managers and buyers. It was felt that there are insufficient trainers or assessors for

specialist skills such as buyers. There are certain occupations that, although not regarded


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as core, are crucial to the functioning of the business. A prime example is a cashier. For

every cashier position advertised, there are multiple applicants and the occupation is not

regarded as scarce. However, insufficient or incorrect training could be detrimental to a

business. The most pertinent scarce skills identified were financial, industrial safety,

interpersonal and communication skills, negotiating and conflict resolution skills and life

skills.

There is widespread lack of information and understanding regarding the recognition of

prior learning (RPL) and, of particular interest, is the shortage of training providers servicing

the rural areas. They are deemed too expensive to service by service providers as the

numbers are too small. Small numbers of learners in classes are not attractive from a

provider’s point of view. In the rural areas, literacy courses are required for a large section

of the workforce, which has a further restraining effect on people empowerment.

Participants felt that training course levels were too high and did not address the needs of

the people. In addition, courses should be modularized to make them more accessible,

particularly to participants who belong to the category of SMME’s. These participants

experience time and availability constraints because of the nature of their businesses. It is

simply not viable to attend training sessions during working hours.

4.1 Demand for skills

It is useful to consider the definition of scarce and critical skills that is used by the

Department of Labour to assist in the identification of skills, as outlined below:

Scarce skills refer to those occupations in which there are a scarcity of qualified and

experienced people, currently or anticipated in the future, either because such skilled

people are not available, or they are available, but do not meet employment criteria.

Critical skills refer to specific key or generic and “top-up” skills within an occupation.

In the South African context, there are two groups of critical skills: Key or generic skills,

including critical cross-field outcomes. These would include cognitive skills (problemsolving,

learning to learn), language and literacy skills, mathematical skills, ICT skills and working in

teams. Particular occupational-specific “top-up” skills required for performance within that

occupation to fill a “skills gap” that might have arisen as a result of changing technology or

new forms of work organisation.


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It should be taken into account that the drivers of change up to 2020 identified critical skills

in a few new areas. Both scarce and critical skills must be identified at the occupational

level, with scarce skills being considered against the occupation itself and critical skills

being reflected as specific skills within the occupation.

Skills needs identified at stakeholder workshops - basic skills needs identified at the

stakeholder workshops in 2010 were as follows:

Life skills, including Adult Basic Education and Training (ABET), 71.36% (Bureau of

Market Research, University of South Africa) of workers in the sector have ABET NQF

Level 1.There is a need for basic life skills beyond basic literacy and numeracy,

especially in the rural areas.

Succession planning.

Generic business management skills for SMME’s.

Opportunities for W&RSETA to take part in the Expanded Public Works Programme

(EPWP).

Legislative skills (employees’ rights and responsibilities).

HIV/AIDS awareness for operational personnel.

HIV/AIDS awareness for management and supervisory personnel.

In addition, a qualitative assessment of scarce skills identified in the stakeholder workshops

revealed the need for the following:

Management – at all levels and across all operational functions.

Supervisory skills (stock controllers, storeroom controllers, etc.).

Buyers, planners and merchandise category managers.

Further, a qualitative assessment of critical skills identified in the stakeholder workshops

revealed the need for the following:

Financial skills (personal, accounting, budgeting, etc.).

Industrial safety (Occupational Health and Safety Act requirements).

Health (first aid, care of AIDS patients, care of the disabled).

Health (personal hygiene, food safety, etc.).

Loss control management.

Interpersonal relations skills.

Customer service skills.

Negotiating skills.

Communication skills.


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Morals/ethics skills.

ICT basic skills.

The fact that more needs have been identified in 2011 indicates the rapid changes in the

wholesale and retail environment. Focus groups with levy payers and key stakeholders

during the latest consultations in 2012 identified the following skills needs/areas, some of

which are especially from the 2020 operating environment perspective:

Computer end-user skills.

Accountants need banking skills.

Enterprise resource software skills for example, SAP.

Operational changes, implementing different technologies.

Social networking skills must be part of the overall strategy.

New skills at the help desk, including online skills.

Small business owners need skills on how to manage a business.

Compliance with legislation.

Supply chain skills (both logistics and procurement).

Clothing technologies.

Food technologies (where to source food, how to procure healthy foods in a green

environment).

Customer advice on other aspects of the product (green themes)

Quality assurance.

Educational skills, for example, on sustainable farming.

SMME’s need training on legal compliance and access to funding.

Assistance of SMME’s by larger retailers.

Supplier assistance programmes.

Franchising.

Data management.

Human resources skills.

Skills on statutory requirements.

Information algorithms (meaningful data).

Data integrity skills.

Skills on alignment of Workplace Skills Plan with business processes.

Qualified warehouse staff.

Bakery and butchery managers to run a department as a business.

Online skills experts.

Relief managers.


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The inadequate employment and skills statistics about the sector presented a challenge

and thus most of the skills needs are expressed in general terms. The current scarce and

critical skills needs identified are, at best, tentative, given the difficulty in assessing future

needs with any degree of accuracy. The current scarce and critical skills identified in the

sector are based on training needs and are not projected on employment vacancy needs.

However, it is important for sectoral (and national/provincial) policy to be able to assess

future skills needs. Other resources were therefore also accessed to strengthen the

research base. These included work undertaken by the University of South Africa’s Bureau

for Market research and the Human Capital Engine Consortium, as well as the

PriceWaterhouseCoopers (PWC) research that is presently being undertaken. The latter

confirms data already researched from other sources.

Skills needs identified through quantitative analysis - a quantitative analysis based on joint

research by the Human Sciences Research Council (HSRC) and the University of South

Africa’s Bureau of Market Research (2004) commissioned by the European Union and the

Department of Labour, inter alia, investigated the skills profiles of the various economic

sectors in South Africa. This research, as well as extracts from the workplace skills plans,

reveals the following needs:

Scarce skills:

Management (at all levels and across all operational functions).

Supervisory skills (stock controllers, storeroom controllers, etc.)

Information technology professional skills.


Critical skills:

Financial skills (personal, accounting, budgeting, etc.).

Industrial safety (Occupational Health and Safety Act requirements).

Health (first aid, care of AIDS patients, care of the disabled)

Health (personal hygiene, food safety, etc.).




Negotiating skills.

Communication.


Page133


ICT basic skills.

Life skills (understanding employee rights, banking system, personal finances, etc.).

Even though 72% of workers have ABET NQF Level 1, there is a need for basic life skills

beyond basic literacy and numeracy. There is also a widespread lack of information and

understanding regarding recognition of prior learning (RPL). These inputs are in direct

correlation with those identified in the stakeholder workshops. Once again, it should be

noted that quantitative research shows 72% of workers in this sector have educational skills

at ABET NQF Level 1 or above. There are a growing number of young people employed in

the sector, most of whom have had schooling up to Grade 12. They influence the average

literacy levels upwards. However, there is a need for basic life skills. This is an area that the

W&RSETA will pursue further. The W&RSETA has undertaken a stakeholder consultation

project with a view to identifying and quantifying the scarce and critical skills requirements

in the sector.

Skills needs identified through other research - a group known as the Human Capital

Engine Consortium was tasked to undertake research into the development of a

qualifications framework for the W&RSETA and to investigate the education and training

provision landscape in the wholesale and retail sector. Extracts from this independent

research largely confirms the findings of the work done by the SSP development team.

4.2 Supply of skills

Skills supply issues identified at stakeholder workshops - at present, there are 29

constituent providers (own courses) and 11 independent providers, as well as four external

providers with extension of scope. There are also 24 W&RSETA partnered FET colleges

accredited by Umalusi. Some participants at the stakeholder workshops felt that there

should be more providers and that W&RSETA should support these existing providers to

increase their capacity.

Quality assurance of training intervention delivery and follow-up is a matter of concern to

participants and is a challenge that must be addressed by the W&RSETA to ensure

effective skills development initiatives. One of the problems associated with quality

assurance is that there are relatively few registered assessors and moderators. Suggested

ways to address the problem are to investigate using skills development facilitators (SDF’s)

to do assessments until a sufficient number of assessors have been trained.


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Corporate representatives also indicated that problems were experienced with the Level 5

pilot learnership. In general, they regarded their own in-house training programmes to be

more effective than this learnership. Providers proved to be too academic and did not

appear to understand the industry. Assessment needed to be more pragmatic and needed

to be done by senior people at a higher level. Large corporates were using store managers

as assessors. It was felt that this was far too laborious. However, corporates were of the

opinion that by dealing with their own skills shortages, they were contributing to the national

skills development priorities.

Availability of training courses - a number of the participants held the view that training

course levels were too high. Therefore, they did not address the needs of people at ground

level. Training must be at the level of the learner and needs to be presented in the right

language. (Note: In 2005/06, W&RSETA introduced qualifications at NQF Level 2 and Level

4). During the focus group sessions the new venture creation learnerships were also

viewed as being too difficult at NQF Level 2 and Level 4; in other words, at a higher NQF

level. Some participants also raised issues such as the large amount of paperwork of the

learnership and the timeframe for completion.

Courses should be modularized (i.e. made into smaller skills programmes) to make them

more accessible, particularly to participants from SMME’s who experience time and

availability constraints because of the nature of their businesses. There is also a need for

skills programmes focusing on the youth to equip them for employment or to impart

entrepreneurial skills so they can start their own new business ventures. This view supports

the youth focus in the NSDS consultative document (Objective 4: “Assisting new entrants

into the labour market and self-employment”).

In rural areas, literacy courses are required for a large section of the population. When

probed about the national target of 70% on ABET NQF Level 1, there was a general view

among stakeholder participants that delivery was not taking place in the rural areas and that

the levels may be lower in these areas.

Learning outcomes - stakeholders expressed the view that learning outcomes on

learnerships are not addressing expectations. The following are among the difficulties that

were mentioned:

Even though learners had undergone the academic portion of the training, they were still

being used in lower level functions and were not exposed to the practical aspects of

what they were supposed to learn.


Page135

Some mentors were uncertain of their roles and so could not effectively guide learners.

Learnerships need to be monitored to ensure effective overall delivery to the learner.

There are very few learning programmes for people with disabilities.

The W&RSETA needs to make information available to disabled persons.

SMME’s prefer both learnerships and skills training courses as they lead to a

comprehensive qualification.

Courses should be adapted to the needs of SMME’s. At present, it seems that the focus

is on large retailers – smaller companies feel that their needs are overlooked.

Learnerships delivery should be consistent across all provinces.

The W&RSETA must be more involved in the quality assurance of learnerships.

Training provider accessibility - training providers are not accessible. Few of the non-

training provider participants in the workshops were able to identify any training providers in

their area or were aware of their existence. W&RSETA could assist through the

development of a database that can be made available through the local media and support

services organisations. Training providers must make information regarding the courses

they offer available and should ensure that their training is practical and user-friendly. On

the other end of the scale, the training providers that attended the workshops indicated a

need to streamline the provider accreditation process. At present, the accreditation process

is complex and time consuming and the smaller providers were having great difficulty in

achieving accreditation.

Most deem the process to be too involved and so don’t attempt to gain accreditation. Some

stakeholders at the workshops suggested the possibility of a joint venture between SETA’s

to accredit training service providers in order to expedite delivery of skills across all sectors

of the economy. There was also a suggestion to create a network of accredited providers

across all SETA’s so that the available pool of W&RSETA constituents is dependent on

their ability to provide wholesale and retail focused courses, as well as their capacity to train

across all sectors.

Skills supply identified through quantitative analysis - the quantitative analysis completed in

Chapter three of this plan indicates a definite correlation between employability and the

skills levels of those available in the labour market. This correlation reiterates the need for

the skills development supply side to be urgently and widely researched to ensure

maximum achievement in the delivery to all constituents. It is also apparent from the study

of the HSRC and the University of South Africa’s Bureau for Market Research (2004) that,


Page136

in order to ensure an adequate supply of skilled people to the wholesale and retail sector

and especially to address gaps between the skills demanded and the skills profile supplied,

institutions in the sector have to implement a variety of programmes to address such skills

gaps and shortages. On-the-job training interventions are most used in skills development

to upgrade and develop skills in order to address skills gaps and shortages. This is followed

in importance by in-house courses presented to staff and then by mentoring/coaching and

teamwork. Courses presented by external agencies and multi-skilling are the least used

methods of addressing the skills shortages.

Skills supply identified through an analysis of the WSP/ATR - table 4.1 below shows the

occupations and qualifications needed to supply the sector of scarce skills. This table also

indicates the number of qualified persons required by the sector to satisfy the overall need

of the sector and eliminate demand.

Main skills needs identified through the W&RSETA’s stakeholder survey - the W&RSETA’s

stakeholder consultation survey identified the following scarce and critical skills needs:

Scarce skills:

Financial (accounting, internal audit, credit controller, credit clerks, etc.).

Management skills (store manager, marketing manager, financial manager, etc.).

Supply chain (merchandise planner, warehouse management, logistics, and

inventory).

Retail information technology professional skills.

Critical skills:

Retail technical skills (butchery/blockman, baker/confectioner, window dresser,

beauty sales, food preparation, store designer, visual merchandisers, etc.).

Retail information technology use.

Life skills (HIV, cultural diversity, etc.).

The information from this survey complements and expands on the information gleaned

from the other research such as the stakeholder workshops, the research of the HSRC and

the Bureau for Market Research, etc.

4.3 Scarce skills list

The term “scarce skill” is reserved for those occupations in which there is a scarcity of

qualified and experienced people – current or anticipated. Scarce skills can involve relative


Page137

scarcity (suitably skilled people that are available, but do not meet other employment

criteria) or absolute scarcity (suitably skilled people are not available in the labour

market).The information provided in this chapter enables policymakers to make better

decisions about the numbers and types of persons to be trained.

The following is a comprehensive list of scarce skills required by the sector. This list is a

culmination of the skills identified in the previous SSP, the literature review, the survey

results, WSP and the consultative workshops.

Table 4.1 Scarce skills

Scarce Skill OFO

Code Occupational Class Job Title

Sum of

TOTAL

Retail Supervisor 522301 Service and sales workers Sales Workers 86540

Retail Managers 332301 Technicians and associate

professionals

Business and

Administration

Associate

Professionals

49198

Bakers 522301 Service and sales workers Sales Workers 2828

Retail Buyer 332301 Technicians and associate

professionals

Business and

Administration

Associate

Professionals

1838

Butchers 681201

Skilled Agricultural, Forestry,

Fishery, Craft And Related Trades

Workers

Food Processing,

Wood Working,

Garment and Other

Craft and Related

Trades Workers

605

Supply and

Distribution Manager 122101 Managers

Administrative and

Commercial Managers 600

Sales and Marketing

Manager 142103 Managers

Hospitality, Retail and

Other Services

Managers

572

Training and

Development

Professional

241101 Professionals

Business and

Administration

Professionals

496

Planner 142103 Managers

Hospitality, Retail and

Other Services

Managers

392

Human Resource

Practitioners 132401 Managers

Production and

Specialised Services

Managers

305

Accountants 241101 Professionals

Business and

Administration

Professionals

279


Page138

Advertising and

Public Relations

Manager

132401 Managers

Production and


Managers

64

Chefs 132401 Managers

Production and


Managers

35

Industrial Relations

Officer 343401

Technicians And Associate

Professionals

Legal, Social, Cultural

and Related Associate

Professionals

25

Industrial Designer 522201 Service And Sales Workers Sales Workers 22

Electricians 241101 Professionals

Business and

Administration

Professionals

14

Food Technologist 522301 Service And Sales Workers Sales Workers 12

Assessment

Practitioner 242401 Professionals

Business and

Administration

Professionals

9

Education and

Training Reviewer

(Moderator)

242403 Professionals

Business and

Administration

Professionals

2

Grand Total 143836

Source: W&RSETA ATR 2012


Page139

Table 4-2: Educational levels per scarce skills identified in the WSP Educational Level

Scarce Skill NQF1 NQF2 NQF3 NQF4 NQF5 NQF6 NQF7 NQF8 NQF9 NQF10

Accountants 14 22 22 25 36 27 12 6 1 0

Advertising and Public Relations Manager 0 0 0 2 4 32 1 0 0 0

Assessment Practitioner 0 0 0 0 8 1 0 0 0 0

Bakers 7 453 15 66 0 0 0 0 0 0

Butchers 37 13 99 39 7 0 0 0 0 0

Chefs 1 5 4 6 5 0 0 0 0 0

Education and Training Reviewer (Moderator) 0 0 0 0 2 0 0 0 0 0

Electricians 0 0 0 9 3 5 0 0 0 0

Food Technologist 0 7 0 1 0 1 0 0 0 0

Human Resource Practitioners 1 3 6 27 78 4 5 2 0 0

Industrial Designer 0 0 0 10 10 0 0 0 0 0

Industrial Relations Officer 0 1 0 5 12 3 0 0 0 0

Planner 0 116 37 37 55 12 5 0 0 0

Retail Buyer 0 12 29 64 267 14 6 0 1 0

Retail Managers 13 1086 283 2890 331 128 5 3 0 0

Retail Supervisor 228 542 58 573 79 29 1 0 0 0

Sales and Marketing Manager 0 23 10 152 163 32 8 0 0 0

Supply and Distribution Manager 0 84 14 59 51 5 1 0 0 0

Training and Development Professional 0 13 5 20 113 4 1 0 0 0

Grand Total 301 2380 582 3985 1224 297 45 11 2 0



Page140

The provincial breakdown is as follows:

Table 4-3: Scarce skills identified at workshops Identified scarce skills (workshops

however provincial data was

uploaded from WSP input)

Ga

ute

ng

We

ste

rn C

ap

e

Kw

aZ

ulu

-Na

tal

Ea

ste

rn C

ap

e

Mp

um

ala

ng

a

Lim

po

po

Fre

e S

tate

No

rth

We

st

No

rth

ern

Ca

pe

Accountants 85 65 70 25 35 3 5 10 0

Advertising and public relations

manager

15 5 10 10 10 5 4 6 4

Assistant/general/ company buyer 270 125 135 90 100 75 15 1 2

Bakers 175 122 160 75 140 70 0 35 0

Butchers 115 60 55 70 30 20 15 5 10

Cashiers 1 800 1 440 950 660 0 340 120 0 10

Chefs 10 5 5 5 5 5 2 2 5

Credit clerk 235 150 185 100 135 70 45 35 20

Debt clerk/ collector(debtors clerk) 475 270 340 170 135 205 38 70 36

Deli supervisors 140 110 100 65 16 65 25 15 10

Electricians 15 0 10 0 5 5 0 5 0

Fish supervisors 5 35 25 40 5 0 0 5 8

Food technologist 40 20 20 15 10 15 0 0 0

Fruit and vegetable supervisors 25 20 20 15 10 10 5 5 5

General administrators and finance 775 325 390 260 130 195 65 135 60

Human resource practitioners 185 120 130 65 105 65 15 10 15

Industrial designer 10 0 5 5 0 5 0 0 0

Industrial overlocker

operators(carpets)

0 0 2 0 0 0 0 0 0

Industrial relations officer 15 10 10 8 6 16 7 8 12

Merchandise planner 1 025 490 535 225 315 180 45 0 45

Merchandisers 550 360 295 165 195 10 0 35 35

Office cashier 75 50 10 0 0 20 0 5 5

Retail managers 8 560 5 140 5 140 3 000 1 715 1 715 860 430 430

Sales and marketing manager 170 80 85 40 40 50 0 20 0

Salespersons and assistants,

representatives

4 435 3 070 2 730 1 705 2 730 2 050 60 345 345

Store person(including packer/shelf

packer/driver)

480 370 445 295 225 115 0 75 0

Supply and distribution manager 180 110 150 85 55 55 15 0 15

Trade union official 40 30 45 15 10 5 5 19 5

Training and development

professional

85 75 90 45 40 25 15 10 10


professional(assessors)

50 20 25 15 20 25 20 22 35


professional(moderators)

330 120 180 75 105 90 30 15 40



Page141

4.4 Priority occupations list

Stakeholders have identified a number of priority occupations, which are important to the

future of the sector. People in these occupations play an important role in the operating

activities of wholesale and retail enterprises. Therefore, the training of people in these

occupations is vital for the sector. The following list has been extracted from the WSP 2010

and shows the number of persons required in each category. Once again, a comparison

between 2010 and 2011 data illustrates the rapidly changing nature of the industry.

Table 4-4: Priority occupations list

Scarce Skill Occupational

Code Grand Total

Retail Assistant 522301 2620

General Secretary (Trade Union) 111401 1245

Retail Store Manager 142103 364

Processed Meat Maker 681103 114

Office Coordinator 334102 106

Cake / Bread Baker 681201 104

General / Company Buyer 332301 99

Sales Person / Consultant 522301 94


Sales Department Supervisor 522201 62

Fast Food Assistant / Operator 522301 57

Hardware Sales Assistant 522301 40

Printing Machine Operator / Setter 662201 37

Cash Register Operator 523101 34

Cosmetic Sales Assistant 522301 33

Meat Cutter / Trimmer 681102 33

Sausage Maker 681103 32

Technical Representative / Salesman 243301 32

Window Dresser 343203 29

Medical Representative 243302 25

Call or Contact Centre Agent 422206 24

Checkout Supervisor 522201 24

Sales Executive 122102 22

Rigger (Metal Engineering) 651501 20

Shop Assistant 522301 18

Cook 512101 18

Warehouse Assistant 833402 16

Grocery Checkout Operator 523101 16

Sales Representative (Advertising) 333903 16

Business Operations Manager 121901 16

Source: W&RSETA ATR (2012)


Page142

4.5 Critical skills

Critical skills refer to skills gaps within occupations and are distinguished from scarce skills,

which refer to occupations. Usually critical skills training take the form of short courses that

are not accredited by ETQA bodies. The following critical skills were identified by

stakeholder workshops for the related occupations:

Table 4-5: Critical skills

Number Critical Skill Occupation

1 Selling skills 1,2,8,13

2 Customer service skills 1,2,3,5,7,8,12,13

3 Interpersonal relations skills 1,2,3,7,8,13

4 Problem solving and decision-making skills 1,2,3,5,6,7,8,9,10,11,12,13

5 Conflict resolution skills 1,2,3,4,7,8,10,12,13

6 Mentoring and coaching skills for Managers & Supervisors 1,2,3,8,9,11,12,13,15

7 HIV Awareness 5,8,13

8 Numeracy skills 5,7,8,10,13

9 Financial skills 1,2,3,5,8,10,13

10 Negotiation skills 1,2,5,14

11 Health (i.e. Personal hygiene, food safety, first aid, care of HIV/AIDS

patients, & care of disability) 2,3,5,6,7,8,9,10,12,132

12 Communication skills 1,2,3,8,10,12,13

13 Time management skills 1,2,7,8,9,10,12,13

14 ICT basic skills 2,3,5,10,13

15 Life skills (i.e. Personal finances, budgeting, employee rights & Banking

system) 3,8,10,13

16 Anger management skills 1,3,12

17 Analytical skills 2,3,11,12

18 Project management skills 1,3,6,8,10,11,12,15

19 Scenario planning skills 1,2,3,7,12,13

20 Listening Skills 1,3,8

21 Business and general skills training for Shop stewards 2,3,13

22 Telephone etiquette 10,13

23 Literacy 2

24 How to use social networking information 1,3

25 Report-writing skills 3

26 Morals/ethics skills 13

27 Skills to address the Green Economy Agenda 10

Source: W&RSETA WSP 2012


Page143

Table 4-6: Skills list per occupation

Number Occupation

1 Administrative and Commercial Managers

2 Business and Administration Associate Professionals

3 Business and Administration Professionals

4 Chief Executives, Senior Officials and Legislators

5 Customer Services Clerks

6 Electrical and Electronics Trades Workers

7 Food Processing, Wood Working, Garment and Other Craft and Related Trades Workers

8 Hospitality, Retail and Other Services Managers

9 Legal, Social, Cultural and Related Associate Professionals

10 Other Clerical Support Workers

11 Physical, Mathematical and Engineering Science Professionals

12 Production and Specialised Services Managers

13 Sales Workers

14 Science and Engineering Associate Professionals

15 Teaching Professionals

Source: W&RSETA WSP 2012

Table 4-7: Soft, technical and other skills

Management/Leadership Soft skills Technical Other

Leadership and

management skills

Mentoring and

coaching

Planning and project

management

Conflict management

Negotiation and

persuasion

Business skills

Decision

making

Interpersonal

skills

Emotional

intelligence

Assertiveness

Teamwork

People skills

such as

managing

diversity

Communication

Presentation

skills

Listening skills

Life skills

(personal,

finance, time

management,

resilience,

stress

management)

Innovation and

creativity

Financial skills (basic

bookkeeping such as

control and accounting)

Product development

Basic understanding

of business (to find EE

candidates is difficult

e.g.

Retail reps with the

basic knowledge/

understanding of

business)

Pharmacy

IT literacy (PC trained

people)

Selling skills

Product knowledge

Merchandising,

especially visual

Production and product

knowledge

Knowledge of contracts

Customer

relations

Customer

service

Communication

skills

Telephone

etiquette

ABET/numeracy

and literacy

Ability to apply

knowledge

Access to

information

Source: Scarce and critical skills in the W&R sector (updated 2010)


Page144

The graph below provides a list of critical skills according to percentage demand:

Figure 4-1: Critical skills according to percentage demand

Source: Scarce and critical skills in the W&R sector (updated 2012)

4.6 Stakeholder consultation

With the 2020 landscape in mind, it was decided to secure qualitative inputs through focus

group consultation with stakeholders in the W&R regions. Delegates were consulted on the

following critical SSP issues:

Any changes to existing and future skills within occupations.

Any changes to existing and future skills requirements of occupations (scarce and

critical skills).

Opinion about skills outputs from institutions.

Skills demand from sector.

Existing and future skills shortages.

Develop scenarios and suggest solutions to deal with skills demand for the next five

years.

Skills Accord and New Growth Path – the role of the SETA in fulfilling these objectives.

Respond to and be aware of employers’ latest views and trends from the SETA.

New regulatory challenges:

FAIS Act – qualification in development.

Consumer Protection Act.

Waste management and green legislation.


Page145

It was viewed as necessary to strengthen the comprehensive database with qualitative

information. Since it is not possible to quantify a landscape (2020) that does not yet exist, it

was not possible to allocate specific numbers to the anticipated skills that will be required.

However, an understanding of future skills requirements will enable the W&RSETA to put

actions in place to ensure that the required skills are delivered through the supply chain.

Numbers will be determined once a more solid basis for future skills requirements has been

established.

In the meantime, however, it is necessary to benchmark anticipated skills requirements in

terms of existing learning material and curricula. A first assessment of existing learnerships

and other learning material has shown that very little of the 2020 landscape is addressed. It

would therefore be necessary to determine the gap between existing material and future

skills requirements and to update the learning material in good time.

4.7 Scarce skills update

Although there are expected overlaps between the quantitative and newly created qualitative

databases, a number of new scarce skills emerged. The qualitative database is viewed as

reliable and valid due to the fact that there was a large degree of similarity and agreement

between the regions. The complete set of scarce skills generated at the stakeholder focus

groups are as follows:

Specialised service department people, for example, butcher, baker, blockman, sausage maker, confectioner, cook, master baker, food technologist, master butcher, home meal replacement specialist.

Forklift drivers. Truck drivers. Branch managers. Saw operators. Butchers. Business analysts. Project managers. Food technologists. Chartered accountants. Buyers. Planners. Window dressers. Building estimators. Flooring specialists. IT programmers. Sales reps. Black senior management, for

example, buyers, planners, senior store managers.

Retail/wholesale managers at branch and regional level.

Lease administrators. Risk managers. Operations managers. Point of sale computer specialists. Fresh produce specialist. Retail admin managers. Front-end controllers/supervisors. Quality controllers. Quality assurers. Diesel mechanics. Auto electricians. Diesel technicians. Retail/wholesale managers at branch

and regional level. Lease administrators. Point-of-sale computer specialists. Fresh produce specialists. Retail admin managers. Front-end controllers/supervisors Quality controllers. Quality assurers.


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During discussions with W&RSETA management, after the regional stakeholder

consultations, it was noted that certain positions are employer specific and not required

throughout the industry. It was therefore agreed that future stakeholder consultation also

makes a clear breakdown of positions and employers.

4.8 Critical skills update

It is clear that an in-depth discussion of the updated drivers of change resulted in the

identification of top-up skills in various occupations, especially in terms of the green agenda,

regulations, the social media and the ageing population. The critical skills listed below were

identified by stakeholders at the focus group consultation sessions. It should be taken into

account that the revised drivers of change inspired some of these anticipated critical skills.

Due to the uncertainty about the occupations and possible new occupations that could

emerge up to 2020, it was not possible to directly link anticipated critical skills to

occupations. The list does not only reflect the 2020 operating landscape and the green

agenda.

However, it is clear that senior positions will increasingly require important generic skills

relating to the updated drivers of change towards 2020 in areas such as social media,

environmental protection, regulation and technology. Much more research is required to

identify the specific skills required and to relate them to specific positions. The most

important critical skills requirements identified during the latest stakeholder consultations are

as follows:

Negotiating skills.

Project management skills.

Scenario planning.

Analytical skills.

Problem-solving and decision-

making skills.

Green implementation skills.

Financial skills.

Conceptual skills.

How to use social networking

information.

Selling skills.


Conflict resolution skills.

Ethical retail skills.

Report-writing skills.

Numeracy skills and technology

skills.

Wholesale internal sales (technical

ability to apply technology, product

knowledge).

Merchandisers (customer service,

selling and general merchandising

skills).

Communication as a general need.

Mentoring and coaching skills for

managers and supervisors.

Distribution, lead time and supply

chain management skills or

distribution managers.

Business skills for shop stewards.

Time management.

HIV awareness.

General occupational health

awareness.


Page147

Opinion about skills outputs from

institutions.

Telephone etiquette

Good IR skills.

Buyers in clothing (fashion and

style).

Analytical accounting skills (for

sales reps).

Service department staff (butchers

and bakers).

Payroll officer duties.

Multi-skilling is required, especially

in smaller firms that cannot afford

specialists in all areas (training in

human resources, public relations,

marketing and sales).

Wholesale internal sales (technical

ability to apply technology, product

knowledge).

Product knowledge.

Merchandisers (customer service,

selling and general merchandising

skills).

Communication as a general need.

Facilitation skills (managers).

Mentoring and coaching skills for

managers and supervisors.

Distributions, lead time, supply

chain management for distribution

managers.

Business skills for shop stewards

4.9 Anticipated critical skills required with refernce to the 2020 operating landscape

As stated, further research is required to more accurately determine critical skills required up

to 2020. The following table summarizes the work done to date and it is critical that actions

be put in place to prepare for the development of these skills for 2020.The comments made

were derived from focus group inputs to illustrate the impact of the updated drivers of

change on the unfolding longer term landscape.

Table 4-8: Anticipated critical skills required for 2020 landscape

Critical skills required Comments on the occupations skills will be

required

Green agenda:

Environment Conservation Act, Act

No. 73 of 1989

National Environmental Management

Act, Act No. 107 of 1998

National Environmental

Management: Waste Act, 2008, Act

No. 59 of 2008

Top and senior management should have a

good understanding of the changing landscape

and the impact of legislation.

Top and senior management should have the

knowledge and skills to effectively develop and

implement strategies on environmental

protection and sustainability.

People responsible for operations should have

a much clearer understanding of environmental

protection and aspects such as waste

management.

Legal personnel should have an excellent

understanding of all the required acts.

All other staff should have an awareness of the

impact of the changed landscape on the sector.


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Ageing population

At supervisory level and higher, staff should

have an awareness of the implications.

Marketing staff should have much more

focused knowledge on the changing market

and the buying power of older customers, and

should be in a position to identify and exploit

changing market opportunities.

Regulations:

National Credit Act, Act No. 34 of

2005

Consumer Protection Act, Act No. 68

of 2008

Financial staff should possess the knowledge

and skills to effectively manage revenue and

expenditure in accordance with the new acts

and regulations.

Legal staff should know the entire regulation

landscape and advise on the implementation of

the new regulations.

Marketing staff should have a thorough

understanding of the impact of the new

regulations on the market.

Technological

Changing technology will have a profound

impact on the entire industry and it is therefore

essential that all staff members dealing with

technology have sufficient understanding and

capacity to deal with these technologies.

Marketing staff should have an understanding

and knowledge base to deal with technology

from a marketing perspective.

Financial staff should have the knowledge to

optimize the implementation of technological

changes from a financial perspective.

Operations staff should be able to implement

all technological changes.

Social media

Since most employees are kingpins in the

social media environment, they should have a

basic understanding of the power and

application of social media.

Supervisory and management staff should

have an understanding and competency to

deal with the impact of the social media.

Marketing staff should have first-hand

knowledge and competency to effectively

optimize social networks.

Public relations staff should know how to deal

with positive and negative feedback through

the social networks.

Top and senior management should have the

knowledge and competency to effectively

integrate social media strategy with corporate

strategy.


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The 2020 Retail landscape

Throughout the W&R industry, an awareness of the

rapid changes towards 2020 should be created and

the impact of these changes on the workforce and

all key stakeholders communicated.

It should be noted that further research is required on the 2020 landscape and actions have

been included in the strategy in Chapter 5. The following conclusions by the United Kingdom

equivalent of the W&RSETA are viewed as a learning experience for South Africa that

should be taken into account:

Drivers of skills demand

Economic performance and consumer confidence.

Retail productivity and an appropriately qualified workforce.

Changing consumer behaviours – the universal shopper.

Converging demographic and social trends influencing buying patterns and employee

recruitment.

Government planning policy and employment law.

Technological advancements, such as online retailing, laser scanning and self-service

tills, and the development of the National Skills Academy for Retail, opening up access

to appropriate retail qualifications.

Current skills needs

UK retailing employs large numbers of people with relatively low levels of formal

qualifications; just under a third (31%) of sales staff have formal qualifications below

the standard of five good general certificates of secondary education (GCSE’s) (or

Scottish standard grades), which is the qualification level that retailers prefer their

employees to have.

Despite these low levels of formal qualifications, sector employers seem to consider

that their employees are mostly proficient.

The main skills gap areas for improvement are technical and practical skills (55%),

customer handling (48%) and management skills (43%).

Just under a third of managers in the sector hold formal qualifications at Level 4 or

above. Since 2002, there has been approximately a 10 percentage point rise in

managers in retail who are qualified at Level 4.

The main managerial skills gap areas are entrepreneurial skills, commercial

acumen/awareness and leadership skills/vision.


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Future skills needs - primary research commissioned by Skillsmart Retail suggests that the

major future skills challenges will be the following:

Changing UK demography affecting retailers’ ability to employ certain age groups.

The effect of the current economic conditions affecting consumer behaviour and the

retail skills needed to meet this demand.

A qualified and appropriately skilled workforce leading to higher productivity.

Improving customer service to maintain point of difference and improved product

knowledge to meet increased customer expectations.

Online retailing development posing new challenges in terms of web design skills,

frontline administration, data analysis, logistics and distribution.

Technological advancements in-store and within the supply chain to increase efficiency

(this requires skilled staff to effectively drive up productivity).

The keys factors relating to online retail web developments were seen to be the following:

Web analytics track how customers interact with the website, which enables web design

and email marketing to be optimized to drive customers to make purchases. The

potential it offers to target users with relevant and personalized offers means that web

analytics can provide a direct, measurable financial advantage for online retailers using

it effectively.

High level IT strategists that are able to integrate the different platforms and

technologies online retailers are using and to structure and co-ordinate outsourced web

development.

Social media, including blogs, customer communities, Facebook and Twitter, taking

brands from their home websites into the consumer’s wider online social environment.

Business managers with multichannel experience who are able to develop brand values

and promotions between in-store retail, online and any other channels such as

catalogues or third-party stockists.

Digital marketing, which now requires a distinct skillset in addition to traditional retail

marketing, including greater competency with online metrics to provide accurate

measurement of the return on investment of online initiatives.

Marketers will require strong social media expertise to keep up with the pace of change

in this field, including a diverse mix of skills covering both brand communications and

online metrics.


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Greater investment in content management roles as retailers offer a higher number of

product lines and a faster turnover of stock, all requiring display photography and written

copy.

Web designers who are able to put usability and the customer journey at the heart of

their design process. This is particularly important for the developing field of m-

commerce, given the smaller screen size available for display.

M-commerce, i.e. online retail for web-enabled smartphones, using either a mobile-

optimized website, or a brand specific shopping application (Skillsmart, 2010).

As stated in Chapter two, the convergence of technologies and industries makes the impact

of global developments more significant and it is clear that valuable lessons can be learned

from the above trends experienced in the UK.

4.10 Job Indexes

Introduction - economies wax and wane. New technologies emerge. Current trends transform

themselves into ‘business as usual.’ We don’t know what glittery object will be the “Next Big

Thing”. But, we do know that Retailers must now maintain three simultaneous channels: in-store,

online and mobile (smartphone or tablet). If this juggling act sounds challenging, remember the

pay-off. Consumers are obtaining information from more than one channel. If you don’t have a

consumer marketing plan that encompasses all these environments, now is the time to create

one to ensure this year is your best year ever.

In spite of the statistical mixed numbers, the wholesale and retail sector is going to be a

challenging year once again. The outlook for domestic economic growth remains subdued. This

is indeed going to be a very challenging year; a year of great uncertainty. Nevertheless “it is a

time that needs thoughtful answers, collective action, courage and integrity. It is a time that

questions what we know, what we thought we knew and the paradigm of our thinking.”3

Financial markets were caught off guard by the political fallout in many EU countries against

austerity measures, most notably in Greece and France, while weaker economic data in the US

and the continued growth moderation in China also dampened sentiment. Combined, these

trends have led to downward revisions to global growth forecasts, especially for 2012.

3

Marcus, G. 2012. South African Reserve Bank: Volatile economic and financial market environment.http://www.resbank.co.za/Publications/Detail-Item-

View/Pages/Publications.aspx?


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Background - the Job Opportunity Index (JOI) is an internal pilot project that has been

implemented as an addendum to the sector skills plan (SSP). The JOI monitors and

analyses job opportunities within the FMCG W&R sector in the South African labour market.

The main areas of emphasis include tracking types of job opportunities that are available

(i.e. permanent, part time, contract and casual jobs); the occupational fields most in demand

as advertised in the W&R sector against the W&RSETA’s scarce skills profile; regional

trends; and the scale of salaries/wages index in the sector. The JOI report is generated on a

monthly basis.

JOI utilises multi-dimensional data sources to track and monitor the South African labour

market, including newspapers such as the Jobmail, Sunday Times, Citizen, Start, Business

Day, Pretoria News, Herald, Volksblad, New Age and the Mail and Guardian. Internet-based

research is also undertaken and resources such as the Career Junction, Indeed Jobs,

careers24 and Careerjet websites are used.

Job opportunities in the W&R Sector - in the period of April to October 2012, there were

approximately 1190 job opportunities in the FMCG, Wholesale & Retail sector. The rising

inflation, high food, oil and house prices, as well as the National Credit Act (NCA) have

caused a slowdown in consumer spending. As consumers across all income brackets have

less cash to spend on groceries, they are leaving more unnecessary items out of their

baskets. Consequently, businesses are reluctant to expand their workforce as consumers’

confidence and business activities are at its lowest.

Gauteng is leading with 50.2% job opportunities, followed by Western Cape and KwaZulu-

Natal with 31.1% and 12.1% respectively. The pie chart below reflects the regional

percentage of geographic job opportunity distributions. The other regions such as Free

State, Limpopo, Mpumalanga, North West and Northern Cape are experiencing lower levels

of job demand:


Page153

Job opportunities (%) geographic distribution (April –October 2012)

Most in demand occupational fields for the period: April - October 2012 - the Career

Job Index (CJI) for the FMCG, W&R in October was sitting above 100 index points. This

means that there are less job opportunities for potential career seekers, but relatively many

potential career seekers per job advert. This makes recruitment easier, due to more potential

career seekers. Gauteng, Western Cape and KwaZulu-Natal are the leading provinces

where FMCG, W&R businesses are located. Demand for jobs in these provinces is at the

highest. Figure 2 below provides an overview of the trends experienced by the various

occupational fields, in which skills are in high demand for this period.


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Most in demand jobs (April – October 2012)

There is a high demand for skilled and senior level FMCG, W&R professionals. Almost 52%

of the posted job adverts require a skilled and more senior level labour force. This presents a

major challenge for the growth and competitiveness of the sector, as the skills deficit

remains a major challenge for the sector.

Consumer confidence is currently at its lowest level since the onset of the global financial

crisis in the second half of 2008. Coupled with deterioration in the outlook for household

income growth, the decline in consumer confidence foreshadows a substantial slowdown in

the growth in household consumption expenditure during the remainder of 2012.

6.9%

3.2%

6.0%

2.6%

5.5%

7.8%

3.4%

5.5%

4.0%

3.7%

4.3%

2.3%

6.6%

4.0%

9.5%

3.2%

4.6%

6.6%

8.3%

2.0%

Assistant Store Manager

Accounts Clerk

Branch/Store Manger

Business Development…

Buyers

Cashiers

Chefs

Client Service

Debtors Clerk

Design Planner

Electricians

Food Technologist

Financial Manager/Accountant

HR Manager/specialist

Merchandiser

Operational (Control &…

Procurement, SCM & Logistics

Sales & Marketing Manager

Sales Representative

Warehouse (Control) Manager

Most in demand jobs(April - Oct 2012)


Page155

Conspicuously, the recruiters are finding it difficult to source suitable and qualified

candidates due to low search of career seekers with relevant and appropriate skills.

Summary of the top 15 scarce skills are summarised in the table below:

Summary: Scarce skills list and its priority 2012/13 update

Scarce Skills Occupation OFO codes Priority

Retail Manager 142103 1

Retail supervisor 522201 2

Program and Project Administrators /General Admin and

Finance 441903 3

Bakers 6812 4

Supply and distribution manager 1324 5

Sales and marketing manager 1221 6

Butchers 6811 7

Accountants / Financial Managers 2411 8

Chefs 3434 9

Industrial designer 216302 10

Retail Buyer 332301 11


Credit Clerk /Debt Clerk 331201 13

Education and training reviewer (moderator) 235102 14

Training and development professional 242401 15


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Summary of the critical skills the top 15 critical skills are summarised in the table below:

Summary: Critical skills list and its priority 2012/13 update

Key critical skills Generic critical skills


Key c

riti

cal s

kills

ve

rsu

s

gen

eri

c c

riti

cal

skil

ls


Negotiation skills Negotiation skills

Communication skills Communication skills

ICT basic skills ICT basic skills

Morals/ethics skills

Health (i.e. Personal hygiene, food

safety, first aid, care of HIV/AIDS

patients, & care of disability)

Financial skills Interpersonal relations skills

Telephone etiquette

Life skills (i.e. Personal finances,

budgeting, employee rights & Banking

system)

HIV Awareness Anger management skills

Time management skills Listening Skills

Report-writing skills

Analytical skills

Project management skills

How to use social networking information

Business and general skills training for Shop

stewards

Conflict resolution skills

4.11 Additional research

This chapter has clearly confirmed the value of research required for SSP purposes. It is

clear that the skills development policy framework actually promotes additional research that

can be directly related to the effective implementation of SSP’s. This revised SSP clearly

shows the following essential research themes that should be taken further, especially to

proactively address scarce and critical skills requirements:


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Table 4-9: Proposed research projects

Research required Essence of the proposed research project Timeframe

1. Understanding

the 2020 operating

environment

Although drivers of change indicate major changes in

learning content, further research is required to

estimate what skills will be required by whom.

To be done before the

next project since it

will lay the foundation

2. Updating

curricula

Drivers of change clearly indicate specific skills

clusters that will be required in areas such as social

media, marketing, multi-skilling and the green

agenda. These themes do not form part of existing

curricula and learning material, or are not sufficiently

addressed

Due to the time

required to develop

new learning material

it is essential that the

research commences

as soon as possible,

within 3-6 months.

3. SMME research

Although a study has been done on W&R SMME’s,

much further research will be required to include

areas such as rural areas. If SMME empowerment

can be successfully extended to rural areas, two

government policies are addressed simultaneously

6 months -1 year

4. Toolkit for SMME

operators

Sufficient classroom training is not always possible to

attract SMME’s with businesses.

A toolkit based on the how-to principle, for example

how to develop a business plan, how to budget -that

will make a substantial contribution. The toolkit

should have templates for all activities such as a

strategic plan, appointment letter etc.

3-6 months

5. BBBEE

Acceleration of BBBEE is essential in view of most

government policies implemented after 1994. A

research project is proposed where historically

disadvantaged citizens are identified and placed on

individual development programmes that include

education, training courses, job exposure and

practical assignments that are controlled by means of

a logbook.

As soon as possible

and preferably within

2-3 months

6. E learning

Research into E-Learning as an alternative to face to

face instruction. This research should address the

need for alternatives to classroom training due to the

difficulty for learners to attend formal training due to

working responsibilities, transport, etc.

As soon as possible

and preferably within

2-3 months

7. Assessment

centres

Feasibility study on the establishment of assessment

Centres for the W&RSETA QCTO qualifications

Before next SSP

update

8. Skills supply

Research into the supply of skills from FET schools,

FET colleges and HET institutions to the wholesale

and retail sector. These institutions provide a

substantial number of W&R entrants and specific

problems pertaining to work readiness should be

researched.

Within 6 months


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9. Online retailing

Impact of Online retailing on the sector and the

identification of growth markets for online retailing.

Online retailing has gained popularity internationally

and specific learning experiences should be

incorporated in solutions.

As soon as possible

10. Economic

changes

The impact of economic changes on the W&R sector

with the aim of identifying solutions to mitigate job

losses

Ongoing research

4.12 Consultative summary as basis for the skills development interventions

Overview The W&RSETA firmly believes that one of its primary responsibilities is to serve

its stakeholders. Extensive consultation was therefore of primary concern during the initial

SSP development during 2011, as well as the updating process in 2012. Focus groups were

held in the provinces that were attended by levy payers, including various industry experts

that can beyond doubt be described as champions of industry, as well as building an

essential platform for engagement and co-determination. A total of 12 key issues were

placed on the agenda that included an additional three that were not part of the initial 2011-

2012 planning process.

Due to the fact that the delivery strategy in chapter five contains various new focus areas

that were directly initiated during the consultation process, it was decided to summarize the

entire consultation process before the strategy is discussed in chapter five.

Contributions to the drivers of change - due to the fact that some drivers of change are

beyond the 2011-2016 planning period and not at this stage amply reflected in learning

material, it was deemed necessary to consult stakeholders and the following inputs and

suggestions were received after a comprehensive presentation on the 2020 landscape:

Train all people responsible for clients on social media.

Do training on the green agenda, especially the Waste Act.

Consider training customers on their diets.

Do life orientation skills training.

Add consumerism as driver of change.

Make E-learning a driver of change.

Retail sector under huge pressure. How the consumer is shopping. Investigate the

impact of generation Y.

Focus more on ethics, respect, responsibility, accountability and rights.

New retail curricula needed.


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Advise clients on health implications.

Retailers are moving into Africa. Knowledge on these countries’ requirements is

needed.

Focus on convergence (banking) skills.

Focus on packaging. Less plastic. Recycled plastic can be used.

Start using the internet (technology) more for marketing.

QCTO and new W&RSETA qualifications - after comprehensive discussions on the

proposed changes in the training and development landscape, the following contributions

and proposals were made:

Consult with ETDP SETA to find out what qualifications they will look to replace

facilitators, assessors and moderators.

How will the QCTO work?

More consultation required with industry.

SETA develops qualification, as well as the learning material. Customization to be done

per province/region.

Customize material for rural areas (mobile training centre).

Evaluate online evaluation strategies.

QCTO too academic.

QCTO charges too expensive.

Delivery of skills should take the following skills requirements into account:

Green skills.

Sustainability skills.

Environmental skills.

Social networking skills.

Marketing skills (Ageing, growing middleclass).

Technological skills (Mobile technology).

Diet skills.

Social/education skills.

Banking skills.

Improving life skills.

FET’s offer to provide programmes after hours. Employers are required to take the

matter up with FET’s.


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Changes that will occur pertaining to existing and future skills within occupations - based on

this follow-up matter, the following contributions were received:

Life orientation for factory workers and other employees:

Training on women abuse and different types of abuse.

Sexual harassment.

Training on TB (linked to HIV and STD’s).

Training in cultural differences.

Training managers to better incorporate disabled people in the workplace.

Improve writing skills at all reporting levels.

Critical thinking skills at all levels.

More knowledge required on products.

Merchandising skills.

Accelerate artisan skills.

Managers and supervisors become more responsible for mentoring and will need skills

in various areas, especially counselling.

Emotional intelligence becomes more important and provision should be made to

acquire the skills.

ICDL (International Computers Driver’s License.) FET Colleges should have basic

programmes for retailers (we need a retail academy).

Disability targets should be adhered to, which is challenging. Link occupations to

disabilities (for example social media).

There is a need for budgeting and hygiene.

Life orientation skills in general.

Changes to existing and future skills requirements of occupations in terms of scarce and

critical skills. The prioritized contributions set out hereunder were received. Please note that

the contributions are given per region to illustrate the remarkable similarity in terms of skills

required. It was agreed to make these templates available to the provinces to include the

required/magnitude numbers.


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Provincial Breakdown of Scarce & Critical Skills

Eastern Cape – top 10 scarce skills list

Occupation OFO

Code

NQF

Level Required/Magnitude

1. Retail Managers 142103 5 Throughout industry

2. Retail Supervisors 522201 4 Throughout industry

3. Bakers 6812 4 Food industry

4. Blockmen and

Butchers 6811 4 Food industry

5. Code 14 Drivers 733 3 Throughout industry

6. Buyers 332301 5 Throughout industry

7. Shop fitters 641501 4 Throughout industry

8. Graphic designers 216601 6 Throughout industry

9. Forklift 734402 2 Throughout industry

10. SCM, Logistics &

Procurement 132402 5 Throughout industry

Free State – top 10 scarce skills list

Occupation OFO

Code

NQF


1. Merchandise planners – buyers 3323 5 Across sector

2. Merchandisers 332302 5 Across sector

3. Delivery drivers 732101 3 Across sector

4. Blockmen (butchers) 6811 3 Food sector

5. Checkout operator 523101 2 Across sector

6. Telephone operators 4223 3 Across sector

7. Supervisors 5222 4 Across sector

8. Technical in clothing –

technicians 313903 4 Clothing sector

9. Machinists 682303 4 Across sector

10. Chef 3434 3 Food industry


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Gauteng – top 10 scarce skills list

Occupation OFO

Code

NQF


1. Middle

management 142103 5 Throughout the industry

2. Maintenance staff 312202 3 Throughout the industry

3. Artisan level 313907 4 Throughout the industry

4. Bakery staff 6812 4 At all retail bakery departments

5. Field marketers 52 4 Throughout the industry

6. Buyers 3323 5 Throughout the industry

7. Sales

demonstrators 524201 4 Throughout the industry

8. Planners 3323 5 Throughout the industry

9. Technical Driver 73 2 Throughout the industry

10. Assessment

Practitioner 242403 5 Throughout industry

KZN – top 10 scarce skills list

Occupation OFO

Code

NQF


1. Professional Drivers (Code 14 in

the market, but focus on good

drivers)

733 3 All companies need more

quality drivers

All food retailers

2. Butchery Managers and supporting

specialised staff

6811 5 Need throughout Wholesale

and Retail industry

3. Buyers of specialised merchandise 332301 5 Industry wide

4. Stock controllers 432101 3 Industry wide

5. Specialised artisan for example

buyer

313907 5 Industry wide

6. IT Programmer 2514 5 Industry wide

7. Sales & Marketing Manager 522201 6,7 Industry wide

8. Account Clerk 441905 3 Industry wide

9. Industrial Developer 216302 5 Industry wide

10. Technical Driver 73 2 Industry wide


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Mpumalanga – top 10 scarce skills list

Occupation OFO Code NQF Level Required/Magnitude

1. Bakers 6812 4 Food industry

2. Butchers 6811 3 Food industry

3. Chef 3434 4 Food industry

4. Retail manager 142103 5 Throughput the industry

5. Buyers 3323 5 Throughput the industry

6. Supervisors 5222 4 Throughput the industry

7. Refrigerator

technicians 311903 4 Throughput the industry

8. Logistics supervisors

and managers 132402 5 Throughput the industry

9. Risk management 242208 5 Throughput the industry

10. Food safety 213205 5 Food industry

Western Cape – top 10 scarce skills list

Occupation OFO Code NQF


1. Planners 242302 5 Industry wide

2. Business & System

analysts 242101 5 Industry wide

3. Food Technologists 213205 5 Food industry

4. Garment technologists 683 4 Clothing industry

5. Supply chain managers 333905 5 Industry wide

6. Warehouse Supervisors 132404 4 Industry wide

7. Visual merchandisers 343203 4 Industry wide

8. IT systems / SAP

programmers 251101 5 Industry wide

9. Retail managers 142103 5 Industry wide

10. Bakers 6812 4 Industry wide


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Limpopo – top 10 scarce skills list



1. Retail Manager 142103 5 Industry wide

2. Sales & Marketing

Manager 522201 6,7 Industry wide

3. Credit Control Clerk 331201 2 Industry wide

4. Financial Manager 241301 6,7 Industry wide

5. Training & Development

Manager 121202 6 Industry wide

6. Supply & Distribution

Manager 132401 5 Industry wide

7. IT Manager/Specialist 243401 5 Industry wide

8. Human Resource

Manager/Specialist 1212 6,7 Industry wide

9. Industrial Relation

Officer 242304 5 Industry wide

10. Food Technologist 213205 5 Industry wide

North West – top 10 scarce skills list



1. Petrol Attendant 5245 5 Fuel industry

2. Sales

Representative/Person 524201 4 Industry wide

3. Cashier 523 2 Industry wide

4. Confectionary Maker 681201 4 Industry wide

5. Retail buyer 332301 5 Industry wide

6. Retail Manager 142103 5 Industry wide

7. Book keeper 331301 5 Industry wide

8. Financial Manager 241301 7 Industry wide

9. Credit Control Manager 134602 6 Industry wide



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Northern Cape – top 10 scarce skills list



1. Retail Managers 142103 5 Industry wide

2. Salespersons and

assistants,

representatives

522201 3

Industry wide

3. Retail Buyers 3323 5 Industry wide

4. General administrators

and finance 121101 2

Industry wide

5. Sales and marketing

manager 1221 6/7

Industry wide

6. Deli supervisor 522201 4 Industry wide

7. Bakers 6812 4 Industry wide

8. Debt clerk/

collector(debtors clerk) 431101 3

Industry wide


10. Merchandiser 332302 4 Industry wide

The top 10 critical skills per province can be summarised as follows:

Eastern Cape – top 10 critical skills list

Critical skill

1. First Aid Skills

2. Customer Service Skills

3. Occupational Health & Safety Skills

4. Computer Skills

5. Basic Accounting Skills

6. Selling/Marketing Skills

7. Financial Management Skills

8. Fire Fighters Skills

9. Planning & Project Management Skills

10. Product Knowledge Skills


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Free State – top 10 critical skills list

Critical skill

1. Health & Safety Skills

2. Product Knowledge Skills

3. Numeracy & Literacy Skills

4. Business & Management Skills

5. Book Keeping Skills

6. First Aid Skills


8. IT basic Skills

9. Communication Skills

10. Basic Accounting Skills

Gauteng – top 10 critical skills list

Critical skill



3. Industrial Safety Skills

4. Reading drawings & Assembling Unit Skills


6. Personal Hygiene & Food Hygiene Skills

7. Business & Financial Administration Skills

8. Understanding Foreign Exchange Skills




Page167

KZN – top 10 critical skills list

Critical skill

1. Computer Skills



4. HIV/AIDS Skills

5. First Aid Skills



8. Environmental Policy Skills

9. Basic Business Management Skills

10. Time Management Skills

Limpopo – top 10 critical skills list

Critical skill


2. Computer Skills


4. Ethics


6. ICT Skills




10. First Aid Skills


Page168

Mpumalanga – top 10 critical skills list

Critical skill


2. First Aid Skills


4. Book Keeper


6. Computer Skills


8. Stock Control Skills


10. Labour Relation Skills

North West – top 10 critical skills list

Critical skill



3. Book Keeper Skills



6. Reading, Operating Digital Scale Skills


8. Computer Skills

9. Leadership & management Skills

10. Planning Skills


Page169

Northern Cape – top 10 critical skills list

Critical skill

1. Customer service skills

2. Basic Computer Skills

3. Information Technology

4. Financial & numeracy skills

5. Planning & Analytical Skills

6. Problem solving and decision-making skills

7. Time management skills

8. Telephone etiquette

9. Communication skills

10. Selling skills

Western Cape – top 10 critical skills list

Critical skill


2. IT Skills

3. Stock Control Skills


5. Labour Relation Skills


7. Analytical Skills

8. Management Skills



Skills outputs from institutions - although this key matter was discussed in chapter three, the

key conclusions can be summarised as follows:

Prospective employees need more exposure to the industry.

Even lecturers at the various institutions don’t have the required industry experience.

Incentives need to be introduced to enhance exposure.

Sometimes learners expect too much after completion of their qualifications.


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Other skills demand from the sector from a future perspective - this issue was raised for

cross-checking purposes to ensure that all skills needs, especially from a future perspective,

are appropriately addressed and the following responses were obtained:

RFID and other new technological skills.

Loss control/theft training (orientation throughout the organization).

Conflict management.

Change management.

Need for employee wellness programmes are increasing.

Growing need for online retailing and skills required.

Employee personal finances.

A further search for solutions resulted in the following responses:

New Venture Creation.

Improvement functioning of Spaza shops.

Toolkit for SMME’s.

Mentors for SMME’s.

Ethical behaviour.

E-learning, especially due to the improvement of Internet access in rural areas.

Technical selling skills.

Inter-cultural skills.

The scenarios and suggested solutions to deal with skills demand for the next five years. It

was deemed necessary to also consult stakeholders in terms of skills solutions required and

the following contributions were received:

Interventions are NOW required to deliver skills over the longer term (2020).

IT training should be accelerated.

Change the future mindset.

New Venture Creation programmes need a different model. Teaching should be taken to

them since time to attend classes are limited due to working responsibilities.

Establish a SMME SETA.

The solutions to assist the W&RSETA in fulfilling the objectives of the Skills Accord and

New Growth Path. The following suggestions were submitted:

W&R to present a programme for people for a 1-year opportunity to get into the industry.

Introduce work readiness programmes.


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Create programmes with multi-entry levels.

Incentivize RPL to make RPL more attractive to employers.

Advertising and more proactive marketing of the SETA among stakeholders.

Subject on career guidance at schools must include the W&R sector.

Entry level to sector should be completely unregulated.

Need to complete WSPs/ARTs - stakeholders expressed the following needs to improve the

quality of their WSP’s:

Indicate exactly what training interventions will be done.

Incorporate more long term thought in WSP’s.

Levy paying companies must understand that a good SSP is the result of good

WSPs/ARTs.

Some OFO codes do not work at present and should be revised.

Green economy skills for the W&R sector - participants were given a further opportunity

to identify green skills requirements and the following contributions were made:

Include waste management in skills development initiatives.

Stress the impact on the environment.

Do more research on green agenda and the impact on industry.

Green economy skills required:

More detailed knowledge at senior levels.

Basic knowledge for most employees.

Key legislation such as the Waste Act needs to be incorporated.

CPA skills need to be included.

4.12.13 Provincial Skills Development Strategies

The following contributions were made:

How to integrate W&R with other industries such as tourism, transport etc.

Investigate the need to adjust business hours.

Assisting FET’s to expand.

FET colleges to be consulted and SETA to play a strong facilitating role.

Support the development of community education and training centres and facilitate

partnerships with them.

Use of schools in the afternoons and evenings.


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National Infrastructure Development Plan - the following proposals were submitted:

Providing transport to malls.

Improve parking.

Establish W&R school/academy in each province.

Infrastructure not fully optimized should be used for training and development.

Optimize use of schools, churches, etc.

Buildings (hostels) can be converted into skills centres.

Mobile training centres.

With the above qualitative research base created through high level stakeholder consultation

in the provinces, a much more solid base on information exists to guide the skills

development interventions outlined in the next chapter.

4.13 Conclusion

It can be concluded that a much more informed database has been created to determine

critical and scarce skills. This was made possible through the incorporation of desktop

research (drivers of change assessment) and qualitative stakeholder inputs obtained at

focus groups. The future landscape will produce jobs that most probably do not exist at this

stage. To link future critical skills to positions is therefore not possible at this stage and will

rely heavily on the required follow-up research that will be set out in Chapter five.

As stated in Chapter one, the idea was to create a big picture to guide this SSP. This big

picture has been reconfirmed in all the chapters up to now and will culminate in the strategy

in Chapter 5. In this chapter, scarce skills, priority skills and critical skills were identified. An

identification of future skills signalling the W&R sector was also undertaken to determine

skills that will most likely be needed in the future.

The W&RSETA would need to develop an external communications plan that will ensure an

informed constituency that is up to date with the SETA’s skills initiatives, but also the

communication of stakeholder needs to be met by the SETA. The possibility of using existing

structures such as non-governmental organisations and community-based organisations to

facilitate communication should be investigated.

It is essential that all contributors to this SSP and stakeholders be constantly kept in mind

when communicating the SSP and related themes. Compiling a journal article on the big

picture for publication should be considered. It can be concluded that this chapter is a


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culmination of the big picture outlined in the previous chapters. It provides a sound

methodological basis for the skills development strategy that will be presented in the next

and final chapter of this SSP.

It is clear that global forces have a significant impact on the industry and it is recommended

that extensive ongoing research is done, especially in terms of technological developments.

A multi-skilling approach will be required at senior levels in the industry to successfully

address new requirements such as social media and the green agenda.

This chapter sets the foundation for a comprehensive skills development strategy set out in

chapter five.


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Chapter 5: Skills Development Strategy

5.1 Introduction

This final chapter aims to express this SSP update into a coherent delivery framework with

the required methodological reasoning to put the new strategic matters that were identified

after the initial 2011-2016 SSP into perspective. The first part of the chapter, as well as the

concluding paragraphs 5.14-5.17 deal with the required W&RSETA reporting procedures,

while paragraphs 5.12 and 5.13 are introduced to capture the updated information and

related strategic initiatives and objectives.

5.2 Vision, Mission And Values

The Wholesale and Retail SETA (W&RSETA) was established in terms of the Skills

Development Act No. 97 of 1998 as a new public entity to address skills development needs

of the Wholesale and Retail sector.

We are the premier authority in skills development, exceeding stakeholder expectations in

the Wholesale and Retail sector.

Our mission is to develop a skilled and capable workforce in the Wholesale and Retail

Sector, thereby contributing to the sustainable socio-economic development and growth of

the country.

We place high value in the members of the W&RSETA team.

We continually treat each other with dignity and respect.

We support each other in action, word and behaviour.

We optimize strong ethics, integrity and trustworthiness.

We care for each other and are sensitive of each other’s’ feelings, concerns,

frustrations and limitations.

Vision

Mission

Values


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We are honest with each other and are prepared to engage openly and frankly on

differences.

We thrive on positive and constructive feedback.

We are zealously co-responsible and accountable for the teams’ efforts.

We respect the unique contribution that each individual makes and recognize that I

cannot be fully “me” without “you”.

We give each other space and accept the responsibility for the impact of our actions

in the team.

We positively affirm our confidence in each individual’s ability to deliver excellently.

We make time to regularly interact and reflect meaningfully on what is really

important.

5.3 Guiding principles

In terms of its guiding principles, the W&RSETA accepts, promotes and will give effect to the

applicable legislation and to its vision, mission and objectives by adhering to the following

principles:

Encourage and promote ILO’s decent work agenda.

Apply non-discriminatory employment practices.

Be fair and equitable in all dealings with and treatment of stakeholders, suppliers and

vendors.

Develop and implement best business practices.

Provide quality service to stakeholders in an effective, economical, efficient, and

innovative manner.

To encourage adherence to the Sectoral Determination within the Wholesale and Retail

sector.

Foster principles of sound corporate governance as outlined in the King III report.

An Operational Management Plan supports and gives effect to these objectives.

The W&RSETA Strategic Plan has been developed in accordance with the requirements of

the PFMA, Treasury regulations and the Skills Development Act. Embracing an integrated

approach, the Strategic Plan has taken cognisance of all government initiatives, including,

but not limited to, the New Growth Path, National Development Plan, Decent Work Country

Programme, National Industrial Policy Framework and the National Skills Accord to ensure

the successful implementation of the NSDS III. This Strategic Plan is based on the following

key assumptions:


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There are no major changes in relevant legislation.

Buy-in from all relevant stakeholders.

The Quality Council for Trades and Occupations will license the W&RSETA as a

Qualifications Development Partner and Assessment Quality Assessment Partner.

While the Sector Skills Plan (SSP) draws inter alia on research collected through

consultation with W&RSETA stakeholders and information garnered from the Workplace

Skills Plan / Annual Training Report (WSP/ATR) completion process, the SSP describes the

Sector, analyses skills demand within the Sector and, as such, guides the W&RSETA in

identifying strategic objectives and priorities.

5.4 Situational Analysis

Sector profile - the Wholesale and Retail (W&R) sector is the fourth largest contributor to

Gross Domestic Product (GDP) in South Africa and accounts for 15% of GDP. The sector is

dominated by small enterprises: 87% of the sector consists of small enterprises, 9.5%

medium sized enterprises and 4.5% large enterprises. Retailers make up 70% of

economically active enterprises and wholesalers make up the balance. Turnover in the W&R

sector is around R1.1 trillion. Fuel and retail account for R100 billion.

W&R sector economic outlook - there has been strong sales growth for the 2009/2010

financial year. The economy is emerging from the recession and real GDP is expected to

hover in the 2.6% to 3.7% range until 2014. Unemployment during the same period could

decrease from 24% to 20% (Business Monitor International 2010:20).

Factors such as rising fuel prices, inflationary pressures, high levels of household debt,

excessive wage demands, increasing casualisation and unemployment, skills shortages,

regulatory burdens, under capacity in the manufacturing industry, pressure on exports from a

strong currency, an increase in shoplifting and commercial crime and the HIV/AIDS

pandemic, could, however, impact negatively on the expected growth in GDP.

Trends in the sector - South Africa has moved increasingly towards mall-based retailing.

The number of retail space in malls has grown faster than the number of retail stores to a

point that malls can no longer guarantee that they will attract the major anchor tenants.

Unlike the trend in the USA or Europe, online shopping is an ever decreasing component of

retailing. Franchising is also a growing industry in South Africa. Most major food retailers

boast significant holdings in franchise divisions. In marked contrast to this trend, Woolworths


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is currently in the process of repurchasing their franchised stores, ostensibly to cut costs and

to enhance efficiency.

Employment profile - the W&R sector employs 22% (2 825 000) of South Africa’s total

active workforce. Around 66% of employees are in formal employment. There is, however, a

growing trend towards informalisation. Almost a quarter of employees in the sector are in

informal employment. 54% of employers prefer to use casual workers during peak periods.

Approximately 23% of employers use labour brokers. Only 24% of the workforce is

unionized.

Gauteng, KwaZulu-Natal and the Western Cape account for 76% of the workforce in the

sector. An analysis of the 2010 WSP/ATR’s data indicates that there are a total of 79 151

females and 400 720 males employed in the fuel retail sector.

The sector is an important creator of employment in South Africa. Capital barriers to entry

are very low, skills requirements are low and regulatory impediments are virtually non-

existent. The W&R sector has compensated for job losses in the primary and secondary

sectors. The expansion of employment in the sector is problematic, due to the increased

casualisation of permanent employment.

High levels of informalisation, including casualisation, outsourcing and labour broking have

reduced operating costs, but have also resulted in poor working conditions, exploitation, low

wages, the discouragement of unionization and the removal of social benefits such as

medial aid, pension and UIF.

Demographic profile - the W&R sector is one of the least transformed sectors of the

economy:

51% of senior management positions are held by white males, 7% by African males.

53% of management positions are held by whites, 22% by Africans.

Africans constitute 76% of labourers, whites constitute 2%.

Africans constitute 76% of casual labourers; whites hold 5% of these positions.

Africans account for over 75% of the workforce in all provinces except the Western

Cape and the Northern Cape where the percentage is 35% in both cases.

The percentage of disabled in relation to the workforce is less than 0.2%.


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Educational levels - within the sector are generally low as illustrated in the graph below.

Figure 5-1: Education levels within the sector

Source: Chatindiara K, QLFS (Quarter 1, 2009) & Sigcau, A, QLFS (2nd Quarter 2010) unpublished raw data.

Having specialised in a job for a number of years, many employees have acquired extensive

skills. Unfortunately, much of this expertise is not recognized formally. RPL (Recognition of

Prior Learning) could go a long way towards addressing the skills deficit within the Retail

sector. Anecdotal evidence indicates that educational level in smaller companies who are

either exempted from submitting WSP’s (Workplace Skills Plans), or who are non-compliant,

are much lower.

Implication for skills development - skills development must include measures to address

the representation of black people in senior management positions. There is also a dire need

to pay serious attention to the training needs of survivalist informal sector workers. Training

programmes and SMME toolkits to support enterprises in complying with legal requirements

conducting businesses would help unregistered enterprises in the sector. There is also a

need for innovative programmes, including mentorships and learnerships, which empower

entrepreneurs; enterprise development for SMME’s.

As the sector expands, demand for critical and scarce skills will increase. Knowledge and

skills need to be developed in areas such as the National Credit Act, the Consumer

Protection Act, labour compliance, labour relations, supply chain management, market


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research, total quality management, information management and consumer behaviour.

Shop floor stewards training has also been identified as a need. The W&RSETA needs to

identify the changing nature of occupations, new occupations and occupations in decline.

The sector needs to upgrade its skills base with an increasing bias towards knowledge

intensive skills. W&RSETA must take cognisance of social drivers such as unemployment,

the need to create decent work, HIV/AIDS and crime.

Employers need to be incentivized for training unemployed youth and for implementing

programmes which promote decent work. Decent work needs to be monitored, measured

and evaluated. There is also a need to collaborate with other SETA’s to advance the skills

development agenda within the sector.

5.5 Drivers Of Change

Drivers of change, which will impact on skills development within the sector, include

technology requirements and Internet-based retailing, legislation such as the National Credit

Act (NCA) and the Consumer Protection Act (CPA), Black Empowerment, social challenges

such as high levels of unemployment nationally, Government’s policy of Decent Work for All,

the very high concentration of small enterprises in the wholesale and retail sector and the

casualisation of labour.

Implication for skills development - technological changes will require workers to have a

different skills set, further widening the gap between skilled and unskilled workers. Changes

in legislation will require industry to invest in training so that companies do not fall foul of the

law. Skills development measures need to be taken to address the representation of black

people in senior management.

5.6 Supply and demand of skills

In the absence of a national labour market information system, the W&RSETA has consulted

very broadly with stakeholders to identify skills shortages. This research is also informed by

market information analysis, specifically supply-demand research conducted by Manpower

SA, Career Junction and Adcorp Group Holdings. The research was also informed by

Annual Reports of employer companies within the sector and stakeholder WSP’s and ATR’s.

Supply of skills: education and training provision - the sector draws skills from schools,

FET Colleges and Higher Education Institutions. It also relies on skills acquired on the job,

although RPL is an under-utilized avenue for meeting skills needs.


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PIVOTAL occupational programmes - an innovation, in terms of NSDS III, is the

introduction of PIVOTAL Grants. The grants have been devised to encourage employers to

train both employed and unemployed people in structured education and training

programmes. The W&RSETA could potentially channel employees from the schooling

system, as well as matriculants, who have not obtained university entrance into learnerships

and PIVOTAL occupational programmes. Employers could be incentivized to upskill these

employees by way of discretionary grants.

FET’s - have an important role to play in accommodating scarce and critical skills within the

sector. Only six FET’s have provisional accreditation with W&RSETA ETQA. A minimum of

two FET institutions need to be accredited per province. Working in partnership with FET

institutions, Marketing, Management, Office Administration, Finance, Economics,

Accounting, Information Technology, Computer Science and Hospitality programmes could

be repackaged.

Higher Education - while very few programmes at formal institutions are dedicated to

preparing students for employment in the Retail sector, most of the qualifications in the W&R

sector can be located within Business and Management studies. Students in these

disciplines are potential candidates for managers and professionals within the W&R sector.

RPL - The implementation of RPL could address some of the skills backlog. A RPL toolkit

should be implemented to facilitate the recognition of RPL. Qualified assessors need to

assess prior learning and providers must be enabled to conduct RPL. Organisations should

be incentivized for allowing learners to undergo RPL.

Learnerships - with the exception of the Certificate in Retail Operations Management (NQF

Level 5), all learnerships in the W&R sector are located in the FET band (NQF Level 2-4).

Skills demand - There are a number of factors that will impact skills demand within the

W&R: Changing technology, including the potential to grow Internet-based retailing in South

Africa, the requirement that employees have a good understanding of the National Credit Act

and the Consumer Protection Act, the need to increase the representation of Black people in

senior management positions, Government’s economic and social policies, including the

creation of Decent Work and the need to support entrepreneurship and management training

for small enterprises on a far greater scale than in the past.


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Employee to be trained in the sector – employee coverage for mandatory grants has

dropped below 300 000 from 500 000 in the previous year. Companies may be focusing on

cost-cutting measures to survive the recession. The Workplace Skills Plan (2012) provides

information on the number of employees to be trained by OFO, race, gender and NQF

levels. According to WSP’s submitted, the W&R sector plans to train 284 966 employees in

2009/2010 across all occupations. Planned training is at its highest level for service and

sales workers, followed by elementary occupations and managers. The demand for training

is as follows:

African employees (190 722).

Coloureds (49 564).

Whites (29 373).

Indians (15 307).

Fuel retailers – have moved from the MERSETA to the W&RSETA. Skills development is

driven by oil companies and is specific to the delivery of product. Outlets are required to

send certain key personnel for training. There is a significant need for AET (Adult Education

and Training) among forecourt staff. As the sector becomes more knowledge intensive, there

is also a need for advanced training for managers, professionals, technicians and clerks.

The International Leadership Development Programme begins to address this need.

Recruitment conditions - the economic downturn has impacted negatively on recruitment.

Since the beginning of 2010, recruitment for permanent positions has increased by 18%

year-on-year, while recruitment for temporary positions has increased by 7.7%. There has

been a noticeable increase in demand for black staff within the sector. This employment

trend has significant implications for skills development, since the introduction of technology

has made the sector more knowledge intensive. W&R sector employers anticipate a nett

employment outlook of around 11%.

There is a high demand for skilled W&R professionals, professionals at a senior level, and

management level professionals. Casualisation, a growing trend in the sector, also has

implications for training. Casualisation is a constraint to skills development as casuals

receive very little if any skills development. While process (on-the-job) training is provided to

both permanent and casual employees, technical training is provided to a lesser extent. Only

permanent employees participate in learnerships.

In order to address challenges around casualisation, the W&RSETA could create incentives

for companies to train casual workers, particularly in scarce and critical skills. The


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W&RSETA could also consider recruiting casuals onto learnerships and various sector

programmes. A database of casuals within the sector could be established and a skills audit

conducted to ascertain employability. Candidates could be matched to appropriate positions.

Stakeholders concerns - some stakeholders indicated that training providers are not

accessible. The shortage of registered assessors and moderators was also raised as a

concern. While corporate representatives indicated that problems had been experienced

with the NQF Level 5 pilot learnership, a number of participants indicated that they felt that

the level of training courses is too high.

Implications for training - the W&RSETA needs to develop an external communications

plan that will ensure its constituency is kept abreast with W&RSETA skills upliftment

initiatives.

Government strategic goals - in 2011, the Minister of Education and Training launched the

NSDS III whose vision is to build a skilled and capable workforce. The vision is derived from

outcome 5 that focuses on Education. This outcome is one of the 12 Government priorities

for the 2010-2015 financial years.

Outcome 5 requires SETA’s to build a skilled and capable workforce to support an inclusive

growth path. In response to this priority, the NSDS III, duly informed by and guided by the

Human Resources Development Strategy (HRDSA II), the New Growth Path (NGP), the

Industrial Policy Plan (IPAP II), the Rural Development Strategy, as well as the outcomes of

the Medium Term Strategic Framework, outlines the eight goals to which the SETA’s must

respond, namely:


Increasing access to occupationally directed programmes.

Promoting the growth of a FET college system, so that it will be responsive to the sector,

as well as national skills needs and priorities.

Addressing the low level of youth and adult language and numeracy skills development.

Encouraging better use of work place based skills development.

Encouraging and supporting co-operatives, small enterprises, worker initiated, NGO’s

and community training initiatives.





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5.9 Institutional strategic goals

The Board and Management of the W&RSETA held a strategic planning session in August

2011 and identified the following strategic goals, challenges and risks:

To create a culture of lifelong and workplace learning.

To address historic imbalances with a focus on class, race, gender, geographical

location and disability in the development of people in the W&R sector.

To facilitate funded and accessible training to meet the sector needs.

To align with national development strategies in line with the requirements of

Government to foster skills development in the W&R sector for productivity and

employment growth.

5.10 Strategic challenges

The following strategic challenges have been identified as critical in the implementation of

the NSDS III and the SETA’s institutional goals:

High Cash Reserves.

High learner drop-out rate.

Implementation of Recognition of Prior Learning (RPL).

Rural Development.

Retail Business Schools.

Establishing the credibility of the W&RSETA’s SSP among sector stakeholders.

Development Strategy for Small and Micro Enterprises (informal).

Absence of W&R professional body to recognize retail as a career.

5.11 Institutional strategic risks

The W&RSETA is very cognizant of environmental risks and the following risks have been

identified:

Failure to deliver sufficiently qualified and skilled workforce.

Failure to address the transformation mandate (reputational risk).

Lack of alignment and relevance to Government objectives and national imperatives

(strategies and policies on skills development).

Lack of corporate governance.

Loss of funds (including risk of non-reallocation of funding by National Treasury).

In addition, the SETA has developed a Strategic Risk Register to further assist the SETA in

managing the risks. When formulating strategy, identifying, allocating funding, or

implementing projects, these risks inform the decision making process.


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5.12 Strategic Analysis

Methodological considerations - in an effort to determine the focus of the skills development

strategy, especially in view of the wealth of both quantitative and qualitative information that

was obtained during 2012, it was decided to do a further strategic analysis based on

existing, as well as new information as set out below. It was agreed that the chapter five

structure of the first 2011-2016 SSP was not accommodative enough for the new initiatives.

PESTEL analysis - it was agreed to strengthen the skills development decision making

basis with the inclusion of a PESTEL analysis that focuses on the key external

environmental influences on the W&R Sector. To improve the relevance of the PESTEL

analysis, the focus on the various parameters is very brief, with a strong skills development

perspective. The drivers of change presented in chapter two are now taken one step further,

namely, to summarize the essence of the various drivers of change under PESTEL headings

to guide the strategic analysis component of this updated SSP.

Political - as far as the political environment is concerned, by far the most significant impact

on the W&R sector is the wide range of mandatory policies that have an effect on skills

development. These policies include the NSDS III, Skills Accord, New Growth Path, Medium

Term Strategic Framework and others. It is clear that the greatest challenge would be to

adhere to the South African political policy framework, whilst keeping in line with contrasting

global forces such as reduced job creation.

It is essential that the sector stays in touch with political decisions in terms of the skills

development landscape such as further possible rationalization of SETA’s and the further

refinement and implementation of the QCTO. As stated in chapter two, the essence of this

SSP would be to determine what is best for the South Africa solution since global forces

such as reduced employment is in steep contrast with the South African policy agenda. The

political environment is also challenging from key focus areas such as increased rural

development.

Economical - according to various credible resources, the economic environment is

currently less favourable than it was in the period prior to the start of the Global Economic

Crisis in 2008 and South Africa’s economy is battling to regain lost momentum in the face of

a combination of depressed levels of domestic spending and confidence and weak demand

from many traditionally important trading partners. Despite the economic recession and

these adverse economic factors, the W&R sector is positioned for further growth amid

challenges


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Retailers are cautiously optimistic heading into 2012. However, household income from

property and employment growth may be adversely affected by international developments,

while rising prices are likely to limit real wage increases going forward. Coupled with

subdued credit growth amid global uncertainty, the resulting slowdown in real disposable

income growth should weigh on consumer spending for the remainder of 2012. (Kemp &

Ellis, 2012).

This report further states: “Consumer confidence is currently at its lowest level since the

onset of the global financial crisis in the second half of 2008. Coupled with deterioration in

the outlook for household income growth, the decline in consumer confidence foreshadows a

substantial slowdown in the growth in household consumption expenditure during the

remainder of 2012.”

Social - It is clear that the South African policy agenda is also loaded with various social

challenges and opportunities. The W&R sector is well informed on the opportunities and

challenges of the social landscape. During consultation with regional stakeholders various

key social challenges have been identified, such as the need for life skills to enable workers

and potential workers. It was agreed that initiatives such as employee wellness programmes

are required to uplift social prosperity in the industry. The rapid growth of social media also

has important implications for the W&R sector.

Technology - at the various regional consultative sessions, participants agreed on the

enormous impact of technology on the W&R sector. Since the two dimensional barcode

revolutionized the industry in terms of factors such as improved speed of transactions and

stockholding over three decades ago, various new technological challenges were faced by

the industry. For example, the convergence into the banking industry and the increased

importance of mobile technology are also challenges that the industry deals with on a daily

basis.

According to the leading property group Jones Lang LaSalle (2012), an international

commercial property consultants company, new challenges facing the industry over the next

ten years especially includes:

RFID labelling systems (Radio Frequency Identification).

Cashier-less payments.

NFC Payments Contactless NFC (Near Field Communication).


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Consumer-interactive barcodes. Tag Reader that allows users to snap photos of

interactive 2D bar codes and immediately be transported to more information.

Augmented Reality aided selection (creating a virtual experience.).

It is therefore clear that the W&R industry operated in a challenging and technologically

driven environment that requires creative and proactive skills development solutions.

Legislation - it is clear that, in addition to the FAIS Act, Consumer Protection Act and other

legislation that has a major impact on the industry, provision should also be made for the

preparation of the sector for changes in the training and development landscape such as the

proposed functioning of the Quality Council for Trades and Occupations (QCTO). Since

considerable time has been spent on other legislative matters, it is now appropriate to focus

on the implications of the QCTO on the wholesale and retail landscape. It is clear that

shorter qualifications with less unit standards are now possible, which can be viewed as an

ideal opportunity for the wholesale and retail sector to accelerate skills development and

recognition in key areas.

5.13 SWOT Analysis

Assumptions about the external environment - based on a careful analysis of the

anticipated external environment, the following opportunities and threats have been

identified:

Opportunities

Rural penetration and participation (InterSETA collaboration/increased trainer base).

Reduction of unemployment among the youth and graduates.

Institutions of Higher Learning collaborations.

Development of qualifications in the sector from NQF Levels 5-10.

Integration of work-based experience with curriculum.

Development of a career path to make W&R a career of choice from school to college -

top university - to workplace (to cause a natural progression).

New SETA Landscape.

The establishment of QCTO – becoming a Qualifications Partner.

Ever-growing informal businesses in the retail sector.

Emerging new trends in the sector.

High number of unskilled people in the sector.

Developing innovative programmes (approaches) to improve SMME participation.


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The need for SMME development.

Rural development.

Improved Internet access in rural areas could stimulate E-learning.

Increased E-learning is viewed as an overarching opportunity to enhance skills

development.

Shorter relevant qualifications made possible by new QCTO regulations.

Threats

SETA re-license (landscape).

Limited cash reserves from Treasury.

Economic crises/recession.

Drastic change in legislation in respect of SETA’s.

Loss of credibility among stakeholders.

Fraudulent activities.

Implications from National Treasury as a result of cash reserves or excess funds.

Registrations as an assessment and qualification partner.

Non-collection of levies by SARS (SARS System).

Loss of intellectual sectoral capital.

Lack of strategic partners to sustain NVC Projects.

The negative impact of global trends on job creation.

The impact of industry regulation on skills development.

The fairly low growth of the economy.

Uncertainty about the implementation of the QCTO.

The new technology threatened the funding base to empower people.

Uncertainty about the implementation of the QCTO.

High cost implication of QCTO processes.

Assumptions about the internal environment - based on an analysis of the internal

environment, the following strengths and weaknesses have been identified:

Strengths

Direct physical regional presence.

Large constituency – Strong levy income.

Good governance:

10 Years clean AG Audit.

SAQA Accreditation /Audits.


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DoL SLA Audits.

Well-researched SSP.

Qualified staff (intellectual capital).

Formalized policies which encourage

internal staff mobilization.

PMS in place (five years) – reward

good performance.

IiP Standard.

Efficient Mandatory Grant

Disbursement System.

SGB in place (CEP).

Good rapport with stakeholders.

Responsive to stakeholder needs

(projects in place).

Stable Board.

Career Path NQF Levels 1-5.

Scarce & Critical Skills Guide.

Qualifications Framework.

Leadership Stability.

A well-researched and high quality

SSP (2011-2016) as acknowledged

by DHET.

Credibility with key stakeholders and

decision makers.

Ten SSP supportive research projects

identified, of which two have

commenced.

Committed key stakeholders.

Low barriers to entry in the SMME

market.

Strong provincial support base.

A strong research base.

Strong W&R brands in the industry

that support skills development.

Weakness

Fragmented SMME Sector.

Bureaucratic governance policies that

impede disbursement of funds

(delegation of authority).

Ratio between the numbers of

employees in the sector versus

accredited providers.

High drop-out rates.

The sector is not the preferred

employer of choice by young learners

due to sectoral determination.

Stakeholder buy-in in the sector is still

a challenge (SMME).

Lack of database of qualified learners.

Poor IT infrastructure.

Lack of capacity and partnerships

among the role players e.g. FET’s.

Capacity to disburse funds and

deliver on our mandate.

Inadequate project management.

Ineffective/inadequate marketing.

Insufficient contact with small

business owners.

Insufficient funds to address all

research needs.

Insufficient consultation with all key

stakeholders.


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Not sufficient visits to all provinces,

e.g. Northwest and Northern Cape.

Qualifications and learning material

not aligned with longer term (2020)

requirements

5.14 Priorities

Based on the above strategic analysis, the following priorities or focus areas have been

identified:

To address institutional goals and outcomes.

To contribute to rural development by empowering people for employment in the

W&R sector in the rural areas. The W&RSETA has a physical presence in nine

provinces.

To introduce incentives to secure increased employment as well as employee and

instructor workplace exposure.

To conduct SSP support research in areas identified.

To introduce an employee wellness programme.

To establish E-learning as significant contributor to skills development.

To align qualifications with QCTO requirements.

5.15 Qualifications development strategy

Partnership with Universities and FET Colleges - the W&RSETA has established

partnerships with a number of public Universities and FET colleges:

a) Public Universities

University of Pretoria (UP).

University of Johannesburg (UJ).

Durban University of Technology (DUT).

Tshwane University of Technology (TUT).

Cape Peninsula University of Technology (CPUT).

Vaal University of Technology (VUT).

b) FET Colleges

Currently the W&RSETA has established the interSETA FET forum in KZN and Western

Cape. The following FET’s are involved:


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KwaZulu- Natal

Coastal FET College.

Elangeni FET College.

Esayidi FET College.

Majuba FET College.

Mnambithi FET College.

Mthashana FET College.

Thekwini FET College.

Umfolozi FET College.

Umgungundlove FET College.

Western Cape

College of Cape Town.

Boland College.

Northlink College.

West Coast College.

False Bay College.

South Cape College.

Eastern Cape

Eastern Cape Midlands FET College.

Port Elizabeth FET College.

Lovedale FET College.

Buffalo City FET College.

King Sabata Dalindyebo FET College.

King Hintsa FET College.

Ikhala FET College.

Ingwe FET College.

Other initiatives include:

a) The W&RSETA is currently embarking on a comprehensive feasibility study that

seek to understand:

The demand for skills in the industry versus the supply of skills from the FET Colleges and the

HET institutions project is an initiative to identify, explore the skills supply by the FET Colleges and

HET Institutions in the sector. This feasibility study will be critical for the SETA’s strategic direction

in terms of establishing partnership with the FET Colleges and HET Institutions.

This study will assist and informed the W&RSETA as it establish partnerships with the FET

Colleges and HET Institutions.

b) Qualifications Management Body (QMB)

The QMB is a body that comprises various stakeholders, specialists within the industry,

Universities, FET’s, researchers and alumni. This body designs and makes inputs to the

development qualifications which will address some of the scarce skills in the industry.

Because of the rich knowledge that this body possesses, it is also a contributor to the SSP

development.


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c) Retail Chairs

QMB OPERATIONAL STRUCTURE

Retail Chairs – the purpose of retail chairs is to facilitate the establishment of the Retail

Centres of Excellence within HEI’s.

Promote research and development in retail sector.

Facilitate the development of retail qualifications within HEI’s.

Provide support to masters and PhD bursaries.

QCTO

W&RSETA

DQP & AQP

W&R-Industry

QMB Qualification

Management Body

“

CHE / HEQC

CEP Ad Hoc Work groups

Consultants Subject Matter

Experts W&R Regional

Forums




Forums




Forums

FET / Umalusi

W&R - HET

QMB Qualification

Management Body

W&R-FET

QMB Qualification

Management Body

SAQA

NQF

QMB Co-ordinating Committee

Services to the

W&RSeta

Research information for the SSP

of the W&RSETA

Research training

needs in the W&R sector

Database of research output in

W&R sector

Do project research for W&RSETA

Publications of research

for W&RSETA

Manage Masters and

PHD bursaries

Services to HEI's

Publications of research

Capacitate Supervisors

and examiners

Guide M & D students

Database of research output

Database of researchable

problems in the W&R sector

Services to the W&R Sector

International W&R

conferences

National W&R

symposium

Exchange programmes

International collaboration

on W&R research


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5.16 Skill Development Strategies

Institutional goals and outcomes – the W&RSETA’s five-year institutional goals are institution specific and are distinct from NSDS III goals and

outcomes. W&RSETA’s five-year table identifies the strategic challenges confronting the W&RSETA and which are all incorporated in the

Annual Performance Plan with the exception of the high cash reserves.

Performance Plan Goals will ensure the reduction of the high cash reserves.

Strategic challenges Goals Outcomes Performance

measurement

1. High cash reserves

The W&RSETA has high cash reserves,

which may be at risk of being reallocated by

Government in the future. Commencing from

current levels of 16 months cash-in hand

over the next five years, the SETA plans to

reduce cash-in-hand to 12 months.

Another unintended consequence of high

cash reserves is the fact that learners are not

able to realise their dreams.

To reduce high cash reserves by increasing

the number of programmes and learner

completions

Increased skills pool for the

sector, thereby addressing the

scarce and critical skills

shortage

Reduce cash in hand to

four months over a five-

year period

2. High learner drop-out rate

The W&RSETA, like many of the other

SETA’s, experiences high learner drop-out

rates from its learning programmes.

The W&RSETA intends to reduce its current

learner drop-out rate of 50% for NQF Level 2 -

4 programmes - to 20% over a five-year

period.

To reduce the learner drop-out rate, thereby

improving the success rate

Increased skills pool for the

sector, thereby addressing the

scarce and critical skills

shortage

Drop-out rate declines to

20% over a five-year

period.


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3. Implementation of Recognition of Prior

Learning (RPL)

Challenges around the implementation of

RPL have been identified in NSDS III. The

challenge of implementing RPL within the

Wholesale and Retail Sector is exacerbated

by a very poor understanding within the

sector as a whole of what the RPL process

entails. High costs associated with

assessment poses an additional challenge.

Promote life-long learning within the Sector

More competent and skilled

workforce

Over a five-year period

4000 employees to be

assessed through RPL.

4. Rural development

To date the W&RSETA has not addressed

skills development needs of the rural

communities in terms of NSDS III and other

government strategies satisfactorily.

Promote skills development in rural areas

Participation in the mainstream

economy

Over a five-year period, the

W&RSETA must initiate at

least one region-specific

skills upliftment initiative in

each province, which

promotes rural

development.

5. Retail business schools

Retail Business Schools do not currently

exist in South Africa. This poses a challenge

in terms of developing the necessary skills

for the Wholesale and Retail sector.

Establish Wholesale and Retail Centres of

Excellence

Elevating wholesale and

retail as a career of choice

Delivery of occupationally

directed qualifications for

the sector

Addressing high level skills

Establish three retail

business schools nationally

over a five-year period.


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Strategic challenges Goals Outcomes Performance measurement

6. Establishing the credibility of the

W&RSETA’s SSP among sector

stakeholders. Since 87% of the Wholesale

and Retail sector comprises small

enterprises, the majority of these

enterprises do not participate in SETA

initiatives. Establishing the credibility of the

W&RSETA’s Sector Skills Plan presents an

ongoing challenge

A credible SSP Addressing sector needs The credibility of the SSP is

tested through a survey

7. Development of an integrated strategy for

Small and Micro Enterprises

Facilitate the skills development of

small enterprises

Increased participation of SME’s

in the mainstream economy

Develop 500 enterprises

nationally over a five-year

period.

8. Absence of W&R professional body to

recognize retail as a career

Establish a professional body which

will serve the interests of the

Wholesale and Retail sector

Professionalized retail sector

Established professional

body

To contribute to rural development by empowering people for employment in the W&R sector in the rural areas


Empowering people in the rural areas to

successfully enter the W&R industry and to

empower existing business to grow

Develop and empowerment toolkit for

SMME operators

New W&R businesses in all nine

provinces

Number of new successful

entrants to the industry and

growth of existing businesses


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To introduce incentives to secure increased employment as well as employee and instructor workplace exposure


Securing funding resources to introduce the

incentive scheme and to convince employees to

participate

Introduce the incentive scheme

throughout the industry and secure the

participation of 30% of levy payers

Increase workplace exposure to

at least 40% of new industry

entrants and instructors in skills

delivery institutions

Number of employees, new

entrant and instructors

exposed to the W&R

industry. Exposure to be

controlled by means of a

logbook

To conduct SSP support research in areas identified


To conduct research in all areas where

sufficient information cannot be obtained

through normal and readily available

sources of information

Identify key areas in which

further research is required and

secure sufficient funding to

conduct such research

Conduct research in the following

areas:

Understanding the 2020

operating environment

Updating curricula

SMME research

Toolkit for SMME operators

BBBEE

E learning

Assessment centres

Skills supply

Online retailing

Economic changes

Board approval of at least two

successfully completed projects per

annum during the 2011-2012 SSP

planning period


Page196

To introduce an employee wellness programme


To introduce employee wellness

programmes throughput the W&R

industry and to secure sufficient funding

for this important initiative.

Introduce employee wellness

programmes in at least 30% of

levy paying W&R companies

Increased effective functioning of

W&R employees who are skilled in

life skills and life orientation

Number of employees who successfully

attended the wellness programmes

To establish e-Learning as significant contributor to skills development


To bring the classroom (learning interventions

to the learner) especially to business owners

and employees who don’t have sufficient time

to attend classes. The key challenge would be

to secure funding and to orientate potential

users to participate.

To reach at least 30% of

business owners or employees

with E-technology

Business owners and employees

who find it difficult to attend classes

have access to E-learning facilities

and participate

Number of people who have access and

make use of electronic toolkits in areas

in which they need knowledge and

competencies.


Page197

To align qualifications with QCTO requirements


To align the current qualifications system

and all accredited qualifications with

QCTA requirements

To optimize all opportunities in

terms of the QCTO system

Qualifications and recognition of

skills in key W&R areas

Full alignment with QCTO requirements

within current planning period (2011-

2016)

To update existing curricula with 2020

themes

To include critically important

themes such as social media

and the green agenda in all

learning material

Completely updated learning

material

Number of total qualifications up to date.


Page198

5.17. Resource allocation to achieve institutional goals and outcomes:

The core business of the W&RSETA is to facilitate skills development as required by the

Skills Development Act. The necessary governance and operational management

structures have been established to achieve the SETA’s mandate.

Both governance and operational management structures seek to enable an effective

system which allows the W&RSETA to manage and implement its strategic objectives.

The Board develops the SETA’s Strategic Plan and is kept informed of progress on the

implementation thereof.

To govern the functioning of the different Board Committees, the W&RSETA has

developed and implemented Board approved W&RSETA policies. These policies enable

management and the Board to regulate, monitor and evaluate the governance process

within the SETA.


Page199

Figure 5-2: Corporate governance structure

BOARD LEVEL

BOARD COMMITTEES

MAIN BOARD

Chairperson: E.T. Mazwai

AUDIT Chairperson: Pascalis Mokupo

(External)

FINANCE & REMUNERATION Chairperson: M. Tau

EXCO Chairperson: T. Mazwai

GOVERNANCE & STRATEGY Chairperson: V. Harbhajan

PROJECTS Chairperson: Ivan Molefe

RISK MANAGEMENT

Chairperson: Joel Dikgole (CEO)


Page200

Figure 5-3: Management structure

CEO J Dikgole

COO: Delivery H Zwarts

EM: Northern Regions

Vacant

RM: MP L Sebalo

RM: GPS I Mpe

RM: GPN G Mushaike

RM:North-West D.Maake

RM:Limpopo S. Shoba

EM: Southern Regions

A Kemp

RM: WC L vd Westhuizen

RM: EC J Mpongoshe

RM: FS M Letsie

RM: KZN D Lawson

Northern Cape T.Thusani

EM: National Projects R Mokgata

Manager: National Projects L. Khumalo

CFO D Matloa

EM: HR

N Dludla

EM: SCM

M Wajoodeen

Manager :Tenders &

contracts

I Lehari

EM: Finance

P Mudonhi

PSO Manager

J.Nene

CQO: Qual & Research

A Sipengane

EM: M&C

S Malaku

Manager: QLP

T Mabasa

Manager: ETQA

I Marrian


Page201

5.18 Personnel trends

W&RSETA is committed to ensuring that the SETA is able to attract and retain the requisite

technical skills and competencies, which are aligned to the SETA’s key objectives and

deliverables. The employment of a skilled and capable workforce will ensure that the SETA

continues to deliver at a very high level.

The W&RSETA is committed to transformation and has not only complied with, but

exceeded its Employment Equity requirements over the past five years. Of the total of 115

approved positions to date, 80.3% are female employees and 5.5% of employees, overall,

are employees with disabilities. The implementation of W&RSETA’s Retention Strategy has

resulted in a manageable turnover rate of 5% over the past two years.

The recruitment strategy and employment equity tracking over the next 3 years will also give

priority to increasing the W&RSETA’s disability rating from the current 5.5% to 7%. The goal

is to attract and appoint at least two individuals with disabilities at technically skilled levels,

either through replacements, or in project related fixed term contracts.

This current pool of competent individuals will ensure that the W&RSETA, which is fully-

represented in all nine provinces, has sufficient human resources to meet and exceed its

Service Level Agreement (SLA) and Strategic Plan targets of increasing access to

intermediate and high level learning. Therefore, there will be no other new permanent

positions that will be required by the organization, except to ensure that the existing pool is

utilized to its maximum potential.

As a project management driven organization, any additional human resources will be

acquired on a project-by-project basis using fixed term contractual arrangements linked to

specific projects. The SETA has sufficient financial resources projected for employment

costs for the next five years.

5.19 Income and expenditure trends

The budgetary projections for the period 2012 – 2017 confirm that the W&RSETA has the

financial resources to fund initiatives specified in the SETA’s Strategic Plan. The SETA is

cognizant of the need to reduce the high cash reserves by initiating and funding more

discretionary projects.


Page202

During the past five years, revenue has been budgeted at an average increase of 5% and

we intend to maintain it at this level. R3.6 billion is forecasted as total revenue for the next

five years.

Expenditure amounting to R4.6 billion for the next five years is expected to increase at a

much higher rate. The objective is to reduce the cash reserves from 16 months cash in hand

to four months by the end of the five years. Details, including expenditure trend are provided

in the table below.

Mandatory and PIVOTAL Grants expenditure are forecasted to increase at an average rate

of 5% per annum, whilst Discretionary Grants funding is expected to increase at an average

of 15% per annum during the five-year period. The reason for this high expenditure is to

address the high cash reserves that were accumulated due to a number of factors, some of

which are alluded to in this Plan as challenges experienced during implementation. A deficit

of R1bn is thus projected over the next five years and is part of the cash reserve strategy

which will ensure that the cash reserves are reduced significantly.


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R thousand 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Administration/Operations 37 554 47 247 55 342 35 863 60 354 65 185 60 000 63 000 66 150

Discretionary Grants 13 577 48 246 158 427 366 000 429 100 506 900 509 700 550 000 560 000

Mandatory Grants 213 702 233 687 254 716 295 000 309 750 325 238 341 500 359 000 376 500

Skills Dev elopment and Research 1 776 (4 228) 600 16 365 5 111 4 600 9 500 10 000 15 000

Standards Generating Body 73 117 109 043 7 019 17 658 11 056 9 951 14 000 15 000 18 000

Other Objectiv es – – – – – – –

Total expense 339 726 433 995 476 104 730 886 815 371 911 874 934 700 997 000 1 035 650

Check expenditure - - - - - - -

Table A.3 Wholesale and Retail Sector Education and Training Authority: Financial information

Statement of financial performance Revised

Audited outcome estimate Medium-term estimate

R thousand 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Revenue

Tax revenue – – – – – – –

Non-tax revenue 80 253 64 986 58 572 54 000 50 000 40 000 35 000 35 857 37 650 Sale of goods and serv ices other than capital assets – – – – – – –

of which:

Admin fees – – – – – – –

Sales by market establishments – – – – – – –

Other sales – – – – – – –

Other non-tax revenue 80 253 64 986 58 572 54 000 50 000 40 000 35 000 35 857 37 650

Transfers received 437 382 466 515 502 416 590 000 619 500 650 475 682 999 717 150 753 000

Total revenue 517 635 531 501 560 988 644 000 669 500 690 475 717 999 753 007 790 650 Expenses .

Current expense 43 167 52 521 62 961 69 886 76 071 79 736 83 500 86 000 53 250 Compensation of employ ees 25 078 29 122 33 704 36 454 41 330 43 388 44 360 45 000 47 000

Goods and serv ices 17 030 22 014 27 933 32 106 33 711 35 408 37 390 39 000 4 050

Depreciation 1 059 1 385 1 324 1 326 1 030 940 1 750 2 000 2 200

Interest, div idends and rent on land – – – – – – –

Transfers and subsidies 296 559 381 474 413 143 661 000 739 300 832 138 851 200 909 000 936 500 Total expenses 339 726 433 995 476 104 730 886 815 371 911 874 934 700 997 000 1 035 650 Surplus / (Deficit) 177 909 97 506 84 884 (86 886) (145 871) (221 399) (216 701) (243 993) (245 000)


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5.20 Conclusion

The establishment of W&RSETA has addressed the long-standing need for the provision of

skills development within the Wholesale and Retail sector by a recognised and formalised

entity. This Strategic Plan represents W&RSETA’s philosophy and Strategic Framework.

The functional outputs, timeframes and costs constitute the basis for W&RSETA’s budget

and financial forecasts for the period 1 April 2012 to 31 March 2015.The Strategic Plan

should be regarded as a dynamic plan, which will continue to evolve in response to factors

which influence and impact on the sector’s needs, as well as changes in legislation.

This final chapter summarises the exciting revised five-year plan to ensure that sufficient

skills are delivered to the Wholesale and retail industry. It can be concluded that this SSP

directly contributes to the achievement of the NSDSIII objectives as set out below:

Goal 1: Establishing a credible institutional mechanism for skills planning

It can be concluded beyond doubt that the W&RSETA exceeds the requirements of skills

planning as set out in the DHET requirements. The planning period has been extended with

four years to 2020 to identify skills priorities that need to be addressed in the current 2011-

2016 SSP planning period. In addition, ten research themes that fully support SSP

development have been identified. Furthermore, research within the structure of the

W&RSETA also receives priority attention.

Goal 2: Increasing access to occupationally directed programmes, both intermediate level as well as higher level professional qualifications

During comprehensive quantitative, as well as qualitative research, the urgent need for

occupationally directed programmes have been identified and included in the delivery

programme outlined in chapter five. The output of wholesale and retail skills by institutions

received priority attention during regional consultation with key stakeholders. The

establishment of a W&R Academy and QCTO curriculum refinement are high on the

planning agenda.

Goal 3: Promoting the growth of a public FET college system that is responsive to sector, local, regional and national skills needs and priorities.

Further Education and Training initiatives are appropriately addressed. Further

improvements of FET skills include envisaged incentives for earners, as well as lectures to

gain more focused exposure to the wholesale and retail industry.


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Goal 4: Addressing the low level of youth and adult language and numeracy skills to enable additional training.

Stakeholder consultation revealed the urgent need to improve language and numeracy skills

of entrants to the wholesale and retail industry. These critical skills needs will be taken up

with DHET and schools, FET colleges and Higher Education Institutions

Goal 5: Encouraging better use of workplace-based skills development

The W&RSETA realized that workplace skills development is absolutely critical to ensure a

competent skills base. Through learnerships and skills programmes, a fair amount of skilled

people are secured. However, the skills supply from institutions such as schooled and FET

Colleges needs a focused workplace exposure component that is addressed in chapter five.

Goal 6: Encouraging and supporting co-operatives, small enterprises, worker initiated, NGO and community training initiatives.

These initiatives are clearly imbedded in the W&R skills delivery strategy. SMME

development, the development of a SMME toolkit and rural development have been

identified as three of ten new research projects in which this goal will be addressed.

Goal 7: Increasing public sector capacity for improved service delivery and supporting the building of a developmental state.

Various initiatives such as the utilization of unused or under-utilized infrastructure for skills

development and empowerment initiatives will clearly make a significant contribution to this

NSDS goal.

Goal 8: Building career and vocational guidance

Research has shown that the wholesale and retail sector is not well known to learners in

schools, FET Colleges and other institutions. Proposed incentives to increase industry

exposure are expected to make a major contribution. For the W&RSETA intervention, refer

to page 217.

W&RSETA 2012/13 ANNUAL TARGETS The following is the list of projects and estimated budget that the W&RSETA is currently

implimenting in support of the government national priorities, NSDS III and the W&R sector

stakeholder needs as reflected in chaper 2, 3 and 4 of this document.


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INTERVENTION TARGETS ESTIMATED BUDGET

MBA 4 R600k

PHD 4 R2m

NQF 2-4 Learning Programmes 1000 R42m

RMDP 200 R10m

Women Development Programme 150 R8.5m

ILDP 40 R13.8m


AET-NQF 1 500 R8m

Rural Development Programmes 500 R 25m

Rural Development Co-ops 150 R7m

SMME Support 7000 R11m

Capacity Building for FETC’s Lecturers 50 R9m

SMME Voucher System 8000 R32m

Capacity Building for Trade Unions 6 trade unions R6m


WEEG FETC Graduates (WiL programme)

1000 R46.2m

WEEG for Bursars (WiL programme) 1000 R31.729m

Career Guidance 200 R10m

RPL 500 R6m

Retail Business Schools 3 R9m

Artisan Development 140 R14m

Critical Skills 1000 R5m

Discretional Grant Funding Windows 2011/12 (i.e. addressing critical skills identified in the sector)

20000 Unemployed/employed Learners

327m

NFSAS Bursary 2000 R185m

SADDT Diability Project 420 R30m

W&RSETA Bursary Scheme 2667 HET & FET R153m


Page207

Sector Skills Plan Budget

Financial year Budget Estimate

2012/13 2013/14 2014/15

R 500k R600k R700k


Page208

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http://www.gartner.com/DisplayDocument?ref=g_search&id=633007&subref=simplesearch

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http://www.pmg.org.za/report/20111122-national-planning-commission-national-development-plan-vision-2030

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http://www.whythawk.com/index.php/research-journalism?start=30


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**End of Document**


Page213

Annexure A: Additional information on critical and scarce skills

Prioritised scarce and critical skills

The database secured through WSP, ATR and consultation is so comprehensive that it was

deemed necessary to summarize and prioritize the critical and scarce skills. It is clear from a

planning perspective that skills needs identified through whatever research method, should

be prioritized in some way. However, a sequential numbering system to prioritize is not

viewed as appropriate, since it is very difficult to identify one most important skills

requirement. The focus should rather be on all skills that are required. Based on a critical

evaluation of all information obtained, critical and scarce skills can be summarised as

follows:

Basic skills needs

Basic skills needs, that can either be scarce or critical, identified at the stakeholder

workshops in 2010 were as follows:

Life skills, including Adult Basic Education and Training (ABET), 71.36% (Bureau of

Market Research, University of South Africa) of workers in the sector have ABET NQF

Level 1.There is a need for basic life skills beyond basic literacy and numeracy,

especially in the rural areas.

Succession planning.

Generic business management skills for SMME’s.

Skills for W&RSETA to take part in the Expanded Public Works Programme (EPWP).

Legislative skills (employees’ rights and responsibilities).

HIV/AIDS awareness for operational personnel.

HIV/AIDS awareness for management and supervisory personnel.

Scarce Skills

Scarce skills can be summarised as follows:

Management

Management (at all levels and across all operational functions).

Supervisory skills (stock controllers, storeroom controllers, etc.).

Information technology professional skills.


Branch managers.


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Operations managers.

Black senior management, for example, buyers, planners, senior store managers.

Retail/wholesale managers at branch and regional level.

Project managers.

Risk managers.

Retail admin managers.

Professional and highly specialised

Chartered accountants.

IT programmers.

Business analysts.

Accountants.

Technical

Diesel mechanics.

Auto electricians.

Diesel technicians.

Forklift drivers.

Saw operators

Other specialised

Specialised service department people, for example, butcher, baker, blockman, sausage

maker, confectioner, cook, as well as specialists in these positions such as master baker,

food technologist, master butcher, home meal replacement specialist.

Butchers.

Buyers.

Planners.

Window dressers.

Building estimators.

Flooring specialists.

Food technologists.

Sales reps.

Lease administrators.

Point of sale computer specialists.

Fresh produce specialist.

Front-end controllers/supervisors.

Quality controllers.

Quality assurers.

Retail/wholesale managers at branch

and regional level.

Lease administrators.

Point-of-sale computer specialists.

Fresh produce specialists.

Retail admin managers.

Front-end controllers/supervisors.

Quality controllers.

Quality assurers.

Truck drivers.


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Critical skills

Critical skills requirements can be


Financial skills (personal, accounting,

budgeting, etc.).

Industrial safety (Occupational Health

and Safety Act requirements).

Health (first aid, care of AIDS

patients, care of the disabled).

Health (personal hygiene, food safety,

etc.).




Negotiating skills.

Communication.


ICT basic skills.

Computer end-user skills.

Accountants need banking skills.

Enterprise resource software skills for

example, SAP.

Operational changes, implementing

different technologies.

Social networking skills must be part

of the overall strategy.

New skills at the help desk, including

online skills.

Small business owners need skills on

how to manage a business.

Compliance with legislation.

Supply chain skills (both logistics and

procurement).

Clothing technologies.

Food technologies (where to source

food, how to procure healthy foods in

a green environment).

Customer advice on other aspects of

the product (green themes).

Quality assurance.

Educational skills, for example, on

sustainable farming.

SMME’s need training on legal

compliance and access to funding.

Assistance of SMME’s by larger

retailers.

Supplier assistance programmes.

Franchising.

Data management.

Human resources skills.

Skills on statutory requirements.

Information algorithms (meaningful

data).

Data integrity skills.

Skills on alignment of Workplace

Skills Plan with business processes.

Qualified warehouse staff.

Bakery and butchery managers to run

a department as a business.

Online skills experts.


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Top ten critical skills

It is clear that the 2020 horizon largely influenced the critical skills priority list that can be


Critical skills Discussion

1. Customer skills, especially to deal with new

products and customer requirements on the

new business environment

All people dealing with customers need these

skills.

2. Green agenda skills, especially to deal with

critical aspects such as waste management

It is recognized that the W&R retail industry

creates large percentages of waste and

appropriate skills to deal with aspects such

as waste management is required.

3. Middle management skills across industry The situation is aggravated by the shortage

of suitable numbers of staff in the historically

Disadvantaged categories.

4. Supervisory skills is a critical skill required

throughout the industry

Supervisory skills are required at all sub-

sectors of the W&R industry.

5. Language and basic arithmetic skills, especially

for new entrants to the industry from institutions

such as schools, FET colleges and Higher

Education Institutions

New entrants to the industry, especially from

institutions, are not suitably competent in

language and arithmetical skills.

6. Life skills to enable workers to deal with basic

skills required to ensure sustainable living in

South Africa such as budgeting skills

Life skills are also required throughput the

industry. Employee wellness programmes

are viewed as proactive solutions as set out

in chapter 5.

7. Social media skills across industry, especially

for people in marketing positions

Social media is dominating the industry and

people at most levels require basic social

media skills.

8. Risk management skills, especially in terms of

legislative requirements and other risk

challenges. These skills are required

predominantly at management level

Various new factors in the operating

environment require proactive risk

management practices, especially at the

senior levels.

9. ICT skills throughout the industry The level of technological advancement

requires new technological skills to be

proactive in the industry.

10. Selling skills New products require people with state of the

art selling skills in terms of new products and

technology.


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Annuxure B: W&RSETA Career Guide Strategy 2012/13

Deliverables

Initiative

Purpose

Target Audience

Methodology

Timeframes

Responsibility

Cost

PLANNING STAGE OF THE CAREER GUIDANCE PROEJCT

Initiate RFP processes to

acquire all the necessary

materials and promotional

items

Invite bidders to submit

proposals to print all the

necessary materials and

promotional material

These are necessary tools needed

for the career guidance project to be

roll-out effectively

SCM, Marketing &

Communications, COQR &

CEO

Electronic RFP process 03 September 2012 – 30

September 2012

Marketing &

Communications

Nil

Update and edit the current guides for LEARNERS in

school and print 50 000

copies

Printing and distribution of post-school career guides

To send to schools and institutions of higher learning in order to inform

the learners of careers and

opportunities in the sector

Grade 10, 11 and 12 learners Organize a seminars at a central place and arrange for all career

guidance educators of that district

to attend the seminar

15 October 2012 Marketing & Communications

SCM

R300 000.00

Develop new career guides

for students in

universities/FET Colleges and print 50 000 copies

Printing and distribution of

post-school and post-

university/FET career guides

To expose learners to careers in the

sector and other skills and

learnership programmes run by the SETA




University, University of

Technologies and FET

Students

As opposed to the current

situation where careers guides are

only for post-school purposes, we will also print post-

university/FET career guides

target at the graduates

15 October 2012 Marketing &

Communications

SCM

R300 000.00

Develop Electronic guides

for in-school and

university/FET colleges learners and print 100 000

fully branded DVD copies

Development and

distribution of post-school

and post-university/FET career guides

To expose learners to career in the

sector and other skills and

learnership programmes run by the SETA




School and University/FET

learners

Distribute DVD material during

school open days and

universities/FET open days/

Send some of the material by

mail.

31 October 2012 Marketing &

Communications

SCM

R200 000.00

Procurement of promotional items

Printing of promotional items to be distributed to learners

and teachers during career

guidance and teacher capacitation sessions

Learners: Acquire aides of trade such as school bags and fully brand

them distribute to learners attending

career guidance sessions Teachers: Acquire aides of trade

and distribute to life Orientation

teachers to help them continue with career guidance.

Learner in School (Grades 8 – 12)

Follow all SCM processes to acquires the items and distribute

them during the face-to-face

contact with the learners and teachers

30 September 2012 SCM R400 000.00

Getting permission from the

Department of Education, School Principals and School

Governing Bodies

Prepare a formal letter to be

sent to Circuit Offices and schools to ask for permission

to visit schools

Request permission to visit schools Education Officials

School Principals School Governing Bodies

Prepare a formal letter to the

officials. Meet with the officials to discuss

the project

01 October 2012 – 15

December 2012 Regional Offices

Marketing &

Communications

R40 000.00

Local Service Provider Enlist the services of local services providers

Service providers to facilitate implementation, arrange venue,

Local Service Providers (in provinces)

Initiate the RFP process to acquire the services of providers

01 October 2012 – 15 December 2012

Marketing & Communications

R600 000.00


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arrange transport, arrange catering,

approach departmental officials, etc

in provinces Regional Offices

SCM

EXECUTIONS STAGE OF THE CAREER GUIDANCE PROJECT: PHASE I

Develop ICT-based platforms

such as Facebook, Twitter,

MixIt, LinkedIn, Career Guidance Website and

Helpline.

Establish ICT based

communication platforms

To enable learners in all areas, those

in rural areas in particular, to

interact with the SETA on career guidance issues.

All learners across the

country, particularly those in

rural areas

Launch social media networks

such as Facebook, Twitter, MixIt

and LinkedIn.

Launch ICT platforms such as the

website and helpline

01 October 2012 – 31

October 2013 Marketing &

Communications

R150 000.00

Media Campaign:

Place adverts in at least 9 University/FET

College (Campus)

Radios Stations

Place adverts in at least

9 Community Radios

Stations


10 SABC Radio Stations.


15 community,

university, regional and

national newspapers, as well as in various career

guidance magazines

Media publicity and

awareness

To reach out to the youth to talk

about W&RSETA offerings and

opportunities in the Sector

In school youth

Employed youth

University/FET College

youth

Unemployed youth

Buy space in youth radio stations

to talk about W&RSETA

offerings and opportunities in the Sector.

Youth Radios: unemployed & school youth.

Community Radios:

Unemployed & rural youth

Community Newspapers:

Unemployed & rural youth.

Campus Radio:

University/FET College

youth.

National Print Media: All

youth groups.

01 March 2013 – 30

September 2013 Marketing &

Communications

R2 500 000.00

Career Festivals and Expos Attend career exhibitions,

festivals, seminars, expos, conferences, workshops, etc

To exhibit W&RSETA career

guidance offerings as well as interact face-to-face with the

learners

Learners across the board Take part in expos organized by

credible institutions that drive the career guidance agenda

01 October 2012 – 31

August 2013 Regional Offices

Marketing &

Communications

R200 000.00

EXECUTIONS STAGE OF THE CAREER GUIDANCE PROJECT: PHASE II

Visit a minimum of 20

secondary schools in

Limpopo

Conduct Career Guidance

workshops in the schools to

interact with learners

To interact with learners for career

guidance lectures

Grades 8 – 12 Learners Depending on whether

permission is granted either by

the Circuit Education

Department, or School Governing Body or Head Master, one of the

two options will be pursued:

Visit each school to conduct 1

hour career guidance lectures.

Cluster schools per municipal district and put them all under the

same roof and conduct 3 hours

career guidance lectures.

14 January 2013 – 18

January 2013

Limpopo Regional

Office


R150 000.00


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secondary schools in Free State


workshops in the schools to interact with grades learners


guidance lectures


permission is granted either by the Circuit Education

Department, or School Governing

Body or Head Master, one of the two options will be pursued:

Visit each school to conduct 1 hour career guidance lectures.

Cluster schools per municipal

district and put them all under the



28 January 2013 – 01

February 2013 Free State Regional

Office

Marketing &

Communications

R150 000.00

Visit a minimum of 50 secondary schools in

KwaZulu-Natal

Conduct Career Guidance workshops in the schools to

interact with grades learners

To interact with learners for career guidance lectures

Grades 8 – 12 Learners Depending on whether permission is granted either by




Visit each school to conduct 1 hour career guidance

lectures.

Cluster schools per

municipal district and put them all under the same roof

and conduct 3 hours career

guidance lectures.

11 February 2013 – 15 February 2013

KwaZulu-Natal Regional Office


R200 000.00

Visit a minimum of 20 secondary schools in North

West











district and put them all under the same roof and conduct 3 hours


18 February 2013 – 22 February 2013

North West Regional Office


R150 000.00


secondary schools in Mpumalanga


workshops in the schools to interact with grades learners


guidance lectures





25 February 2013 – 01

March 2013 Mpumalanga

Regional Office

Marketing &

Communications

R150 000.00


Page220





Visit a minimum of 80 secondary schools in

Gauteng












same roof and conduct 3 hours career guidance lectures.

04 March 2013 – 08 March 2013

Gauteng North Regional Office

Gauteng South

Regional Office


R250 000.00


secondary schools in

Northern Cape





guidance lectures









11 March 2013 – 15

March 2013 Northern Cape

Regional Office

Marketing &

Communications

R150 000.00


secondary schools in Western

Cape





guidance lectures


permission is granted either by

the Circuit Education Department, or School Governing

Body or Head Master, one of the






18 March 2013 – 22

March 2013 Western Cape

Regional Office


R200 000.00


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Visit at least 20 secondary schools in Eastern Cape












same roof and conduct 3 hours career guidance lectures.

25 March 2013 – 29 March 2013

Eastern Cape Regional Office


R150 000.00

Capacitate 300 Life

Orientation or Career Guidance teachers

Conduct career guidance

capacitation workshops for Life Orientation or Career

Guidance teachers

To capacitate Life orientation or

Career Guidance teachers to be able to continue with career guidance

Life Orientation or Career

Guidance teachers in Limpopo, Free State and

KwaZulu-Natal

Conduct capacitation sessions

alongside career guidance workshops

14 January 2013 – 29

March 2013 Regional Managers


R100 000.00

EXECUTIONS STAGE OF THE CAREER GUIDANCE PROJECT: PHASE III


university Campuses and 8 FET College Campuses in

Western Cape


open day and Job Fairs

To interact with interact with

students about various offerings of the SETA and opportunities in the

Sector

University and FET College

Students studying in areas related to the Sector

Hold and take part in open days

and job fairs on the campuses

15 April 2013 – 19 April

2012 Western Cape

Regional Office


R100 000.00


university Campuses and 5

FET College Campuses in Eastern Cape




students about various offerings of

the SETA and opportunities in the Sector


Students studying in areas

related to the Sector



29 April 2013 – 03 May

2013 Eastern Cape

Regional Office

Marketing &

Communications

R100 000.00

Visit a minimum of 3 FET College Campuses in

Northern Cape

Conduct Career Guidance open day and Job Fairs

To interact with interact with students about various offerings of

the SETA and opportunities in the

Sector

FET College Students studying in areas related to

the Sector

Hold and take part in open days and job fairs on the campuses

13 May 2013 – 17 May 2013

Northern Cape Regional Office


R50 000.00



North West





Sector





27 May 2013 – 31 May

2013 North West

Regional Office

Marketing &

Communications

R60 000.00


university Campuses and 5

FET College Campuses in Limpopo




students about various offerings of

the SETA and opportunities in the Sector


Students studying in areas




10 June 2013 – 14 June

2013 Limpopo Regional

Office

Marketing &

Communications

R100 000.00

Visit a minimum of 3 FET College Campuses in

Mpumalanga




Sector

University and FET College Students studying in areas



24 June 2013 – 28 June 2013

Mpumalanga Regional Office


R50 000.00


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Gauteng





Sector





08 July 2013 – 12 July

2013 Gauteng North

Regional Office

Gauteng South

Regional Office

Marketing &

Communications

R100 000.00

Visit a minimum of 1 university Campus and 5

FET College Campuses in

Free State




Sector

University and FET College Students studying in areas



22 July 2013 – 26 July 2013

Free State Regional Office


R100 000.00



KwaZulu-Natal





Sector





05 August 2013 – 09

August 2013 KwaZulu-Natal

Regional Office

Marketing &

Communications

R100 000.00

EXECUTIONS STAGE OF THE CAREER GUIDANCE PROJECT: PHASE IV

Bus Road Shows Rent a bus with a complete

computer labs and fully

branded

To be able to conduct career

guidance in rural areas where there

is no infrastructure

Learners in rural areas Acquire a bus using normal SCM

processes and use it to conduct

career guidance in rural areas.

22 April 2013 – 29

February 2014 Marketing &

Communications

Regional Offices

SCM

R2 000 000.00

Nelson Mandela Day Skills Festival

Participate in the 2013 Nelson Mandela Skills

Festival

To interact with learners in a rural area that has been chosen to host the

Nelson Mandela Skills Festival

Grade 8 – 12 Learners Put up an exhibition stall and interact with learners per school

and advice them on careers in the

sector and W&RSTA offerings

01 July 2013 – 31 July 2013

Host Province (Regional Office)


R300 000.00

Career Festivals and Expos Attend career exhibitions,

festivals, seminars, expos, conferences, workshops, etc

To exhibit W&RSETA career

guidance offerings as well as interact face-to-face with the

learners

Learners across the board Take part in expos organized by

credible institutions that drive the career guidance agenda

01 October 2012 – 31

August 2013 Regional Offices

Marketing &

Communications

R200 000.00

SAQA, DHET, Provincial Career Guidance Initiatives,

Institutions of Education,

Government Bodies

Partner which relevant government institutions and

departments on career

guidance initiatives

To take part in various career guidance initiative organized by

other parties other than W&RSETA

Learners across the board Take part in expos, exhibitions, workshops, conferences, etc

01 October 2012 – 31 August 2013


Regional Offices

R300 000.00

CLOSING STAGE OF THE CAREER GUIDANCE PROJECT

Workshop with Regional Managers

Host a workshop with all Regional Managers to debrief

on the Roll-out and how we

can improve in the new financial year

Document lessons learner, suggestions for improvement and

new way of implementing the next

phase of career guidance.

Regional Managers Host a one-day workshop for all Regional Managers and other

stakeholders

06 September 2013 Marketing & Communications

Regional Offices

R100 000.00

Close-out Report Prepare a close-out report

and submit to management and board

Detail all the success and pitfalls of

the career Report and submit to management and board

Management

Board

Prepare a report detail how the

project was implement and issues to be improved on

14 September 2013 Marketing & Communications

Nil