John Botha | Joint CEO | Global Business Solutions | mail me |
South Africa’s businesses pay billions in skills levies. Yet the Services Sector Education and Training Authority (Services SETA’s) administration signals a crisis that could derail our economic future. This retains the original intent but adds urgency.
This is not simply a story about governance. It is about whether South Africa’s skills system delivers value for the billions of Rands in levies collected every year. The current situation puts the skills levy under scrutiny, raising questions about effectiveness and accountability.
Employers, both large and small, contribute 1% of their payroll through the skills development levy. They do so with the expectation that funds will be used to develop critical workplace skills. When a SETA is placed under administration, accountability, transparency and value for money move to the front of the boardroom agenda.
A credibility gap
SETAs collectively manage approximately R20 billion in levies annually, according to Department of Higher Education and Training reports. When one of the largest is placed under administration, the risks to business confidence and job creation become profound.
In recent years, delays in Services SETA grant disbursements have left training providers unpaid for months. As a result, some have suspended programmes, leaving learners stranded midway. This is another reason the skills levy is under scrutiny from business and policymakers alike.
The Services SETA covers some of the country’s most labour-intensive sectors. These include retail, hospitality, motor trades, staffing services and professional services. Industries in these areas rely heavily on a steady pipeline of trained employees. When learnerships stall or internships collapse, companies feel it immediately in their operations.
For big corporates, the issue is strategic. They need qualified people to adapt to new technologies and remain competitive in global markets. They also depend on learnerships for certain B-BBEE initiatives within their transformation strategies. For small businesses, the loss is even more acute.
Many rely on subsidised learnerships and internships to bring in talent affordably. When those pipelines dry up, hiring and training costs escalate. At the same time, young job seekers eager for opportunities are left in limbo when learnerships stall.
The reality is that trust in the SETA system has been fragile for years. Delays in funding approvals, administrative inefficiencies, and poor governance have repeatedly left employers feeling short-changed. The Services SETA crisis risks deepening this trust deficit at a time when confidence in the economy is already low. With so much at stake, the skills levy under scrutiny cannot be ignored.
Why businesses should pay attention
This is not just a government matter. Employers need to engage directly with the administrator and insist on clarity about how levy funds will be safeguarded and redirected.
The private sector cannot afford to sit back. If the Services SETA fails to stabilise, the credibility of the entire levy system will be undermined. As a result, calls for more radical alternatives to SETAs will only grow louder.
Industry bodies and policymakers must join employers in demanding answers to restore trust in the system.
A chance to reset
Handled correctly, administration could be a turning point.
Three priorities stand out:
- Forensic accountability – businesses need to see a clear accounting of what went wrong, and consequences for those responsible.
- Competence in governance – board and management appointments must reflect technical expertise and sector knowledge, not political patronage.
- Stronger oversight – the Department of Higher Education and Training must shift from reactive crisis response to ongoing, proactive monitoring.
Looking ahead
The skills pipeline is the lifeblood of competitiveness. Should the Services SETA collapse, the entire levy system comes under threat. If the levy system fails, South Africa’s businesses and jobs will pay the price.
In an economy battling slow growth and high unemployment, employers cannot be expected to carry training costs alone. The levy system was meant to be a partnership between government and business. When it fails, productivity and competitiveness are directly at risk.
From my perspective, the Services SETA collapse into administration is not just a bureaucratic shuffle. It is a signal to business leaders to demand more from a system they fund. The question is whether this crisis will lead to meaningful reform or simply another cycle of breakdown and patch-up.
South Africa’s economy does not have the luxury of another decade of skills failures. This must be the moment when levy money translates into real skills, real jobs and real competitiveness.
