Bhorat, H., Naidoo, K., (2016) The returns to training and the determinants of training expenditure: The case of manufacturing firms in South Africa.

The South African economy is marred by low growth rates, high unemployment rates and skills shortages. Given the historical deficits in the basic education system, a well-researched skills development plan is a crucial input into a broader economic development strategy. The current data constraints to achieve this are the motivation for the firm-level survey piloted on the Manufacturing, Engineering and Related Services Sector Education and Training Authority (merSETA). This survey data allows us to present a disaggregated picture of the training intensity of firms by sub-sector and firm size, with results detailing the type and amount of training by employee sub-groups (gender, race, age, educational level etc.). We shed light on the relationship between training and employee wage outcomes, as well as uncover some of the common skills gaps that were noted by these firms. These are precisely the insights required as inputs into a skills planning mechanism, which would feed into other labour market intelligence, to arrive at strategic policy interventions. As an implementation strategy, it would be necessary for a Skills Planning Unit to be formed and integrated with the Department of Higher Education and Training (DHET), which can oversee the creation and use of reliable data.