Have the Setas Run Out of Course and Cause?

In a recent article in the Financial Mail (14–20 August), Claire Bisseker concluded that “…this massively inefficient edifice consistently fails to meet its own skills targets, is plagued by allegations of malfeasance, and facilitates training more costly on some metrics than obtaining a university degree.”

The SETA system has grown to absorb about R20 billion in levies a year and employs close to 3,000 staff. Yet fewer than 100,000 individuals were certified in 2023/24. This is evident from an analysis by the Financial Mail of research published by the reputable Bureau for Economic Research (BER), which reviewed the performance of the 21 Setas from 2011/12 to 2023/24.

Here are some of the inefficiencies cited in the report:

1. Excessive costs: The cost per Seta enrolment (R162,879) was more than double that of a university enrolment (R76,405), when low-cost, high-volume Seta skills programmes were excluded.

2. Poor comparison with other funding: The cost per Seta enrolment was also significantly higher than NSFAS funding per university student (R73,829) and TVET college funding per student (R34,230).

3. High dropout rates: Over 13 years, 2.6 million individuals were registered in Seta learnerships, artisanal programmes and skills programmes. Of these, 631,000 dropped out before certification. Internships are particularly concerning: for every 10 who start, only six complete—a 40% dropout rate. (It should be noted that artisanal programmes achieved an 83% success rate, and skills programmes 96%.)

4. A ballooning wage bill: The Seta wage bill grew from R746 million in 2014/15 to R1.9 billion in 2023/24—an average increase of 12% per year.

5. Failure to meet targets: Setas are underperforming compared to their own and government’s targets. The aim is to train about 10% of the 25 million-strong workforce, but in 2023/24 the system registered only 165,125 people—or just 0.7% of the labour force.

6. Declining productivity: While SETA revenues increased by 46% over the review period, certifications decreased by 23%. Certifications per staff member fell from 92 in 2014/15 to 35 in 2023/24.

Further criticism comes from Khulekani Mathe, CEO of Business Unity South Africa (BUSA), who argues: “Rigid rules requiring funding to go to only accredited programmes exclude many agile, workplace-relevant offerings, especially in fast-changing industries, due to slow accreditation timelines. The outcome is a system disconnected from both economic demand and labour market realities.”

So What’s to Be Done?

Business and employer organisations believe the system needs a radical overhaul. Some researchers and labour academics even suggest scrapping it entirely.

The BER report suggests four options for reforming the skills development system:

1. Phase out the Seta system and levy
   Replace the centralised system with a tax-incentivised, employee-led skills development programme.

2. Halve the levy from 1% to 0.5%.

3. Redirect part of the levy to other skills development activities.

4. Scrap and decentralise: Abolish Setas and create a more flexible, growth-oriented model funded by a revenue-neutral skills tax incentive.

In response, Minister of Higher Education Buti Manamela defended the Setas, saying the system should be refined, not scrapped (Financial Mail, 4–10 September). He proposed reforms to:

• Strengthen Seta capacity in governance, monitoring and delivery.

• Tie skills to economic strategy.

• Support SMMEs and co-operatives directly.

• Improve co-ordination across government, avoiding duplication while aligning industrial, skills and education policy.

A System Not Fit for Purpose

It is clear that the Setas are not fit for purpose. The realities of the South African labour market call for drastic action. With digitisation, the impact of AI, heightened global competition, and rapid technological shifts, organisations require faster decisions and action on upskilling and reskilling. In many cases, these skills are essential for competitiveness—or even survival.

At the same time, a large proportion of the economically active population remains unemployed, underemployed, or working in the informal sector.

Against this backdrop, the following restructuring could be considered:

1. Cut the skills levy to 0.5% of payroll and raise the threshold from R500,000 to R10 million per annum. This would free SMMEs from an additional administrative burden and reduce labour costs.

2. Restructure Setas into a single organisation focused on training the unemployed, supporting SMMEs, and providing generic entry-level skills. Priority should be given to practical capabilities such as business acumen, financial literacy, communication, managerial skills, time management, housekeeping, and supply chain basics. Delivery could be through mobile units, community centres, and online platforms.

3. Transfer learnerships to TVET colleges, which are better positioned to manage and deliver them.

4. Let companies manage their own formal-sector training, encouraging collaboration within and across industries. Scrap tax incentives for training to reduce the administrative burden on already stretched L&D departments.

5. Invest in L&D practitioners’ professional growth. Practitioners must stay at the cutting edge of new techniques, strategies, and approaches. Networking across industries, sharing case studies, and collaborating on solutions will help ensure South Africa’s workforce remains globally competitive.

The evidence is clear: while the Seta system continues to absorb billions, it is failing to deliver the skills impact South Africa urgently needs. As digitisation, AI, and shifting labour market demands accelerate, the gap between training provision and workforce realities is widening. Reform is not just desirable—it is essential if we are to build an agile, competitive, and inclusive economy.

These are not challenges that policy-makers alone can solve. They require active participation from business leaders, HR professionals, and L&D practitioners willing to reimagine how skills are developed and measured. That’s why conversations like the upcoming Learning & Development Conference 2025 (20–22 October, Stellenbosch) are so important. This gathering will bring together thought leaders, case studies, and practical tools on issues such as AI in learning, skills intelligence, measuring learning impact, and building cultures of psychological safety.

If you’re committed to shaping a skills system that works, for both the formal and informal economies, this is a space to connect, learn, and contribute. I invite you to share your thoughts on how South Africa can move from debate to decisive action. What reforms do you believe are most urgent?