Transcript Document

Transformation of the
Workforce in the Financial
Services Sector
Give a man a fish, and you feed him
for a day
Teach him how to fish, and you feed
him for a lifetime
Chinese Proverb
Training Creates
The Need to Transform in
South Africa
Political reality
Economic rationale
In terms of both the political reality
and the economic rationale,
A pre-requisite for the sort of society
all South Africans want.
The Forces for Transformation
Preferential Procurement Framework Act
Employment Equity Act
Skills Development Act
The Forces for Transformation
Where is your market growth ?
Who are your future customers ?
Where are your future skills ?
Have you got a future business ?
If not now, when ?
Approach to Topic
1. The Beanbrick Problem & jobless growth
2. Wages, productivity & marginal revenue
3. What does the SDA & the EEA really
mean ?
4. When societal & economic forces collide
5. Size & structure of the sector the
skewness problem
6. Where to from here ?
1. The Beanbrick Problem
• Does technological progress create job
opportunities ?
• How did blacksmiths react when they
heard the first hoot of an approaching
car ?
The Beanbrick Answer
• Technological progress creates job
• New technology demands more
sophisticated skills
• If unanticipated will result in structural
unemployment, resistance to
technological progress, and job
Jobless Growth (1)
• Distinguish productivity of capital and
productivity of labour
• Differing industries have different capital/labour
(K/L) ratios, as well as employment creation
Jobless Growth (2)
• In our industry, technology deepens the K/L
ratio in favour of capital and tends to decrease
traditional employment opportunities, while
demanding even more skilled labour
• International competition compels us to equal
the best
• Overall view forward in our sector is positive
growth with low to negative employment
elasticity, & rising wages
• This accentuates the avoidance of labour
displacement, and structural unemployment by
training & retraining
• Besides, where best do we find people for our
sector other than in our own sector ?
2. Wages, Productivity &
Marginal Revenue Product (1)
• Technological progress raises wages
• K/L ratio allows for increase wages
2. Wages, Productivity &
Marginal Revenue Product (2)
• Theories of investment in human capital
confirm that training increases
contribution & leads to higher earnings
and greater efficiency
• If training increases the MRP of labour,
this, ceteris paribus to offsetting by
capital installations, & hence to lower
• Unless there is a concomitant increase in
volumes to counter and offset
technological progress in the industry,
there is likely to be a net decrease in
employment opportunity in the medium
term, coupled with a shortage of supply
of those skills demanded
Does this mean that it is
time to leap under a
3. What do we really mean by
AA, & what is the SDA all
about ? (1)
• The most important point (all too often
forgotten) is that both of these are long
haul strategies
• Despite political pressure for change, it is
going to take a decade or more before
we see significant changes in national
3. What do we really mean by
AA, & what is the SDA all
about ? (2)
• There is less scope for “arithmetical
equity” in some sectors than others
• Remember Section 42 – assessment of
• There are disparities in income &
opportunity in the national labour market
• Employers must achieve a diverse
workforce broadly representative of our
people & promote economic development
and efficiency in the workforce
subject to
• Macro labour supply factors
• Economic realities of the employer in the
• The future vacancy opportunity
• Employment equity is not a numbers and
ratios game
• Exogenous and structural factors
determine the extent to which a
contribution can be made
• We cannot expect most from those who
have least opportunity to manoeuvre
• Creative alternatives must be sought
4. When Societal Values &
Economic Forces Collide?
• Economic forces have no social
• Economic forces often are harshest for
the weak
• The only way we can impact upon
economic forces is by legislation, which is
a costly and imperfect route
Skills Development Act (1)
• Is really less about getting your money
back ?
• And more about positive macro
interventions in the labour market to
enhance the supply side, & make the
working of the market more efficient
Skills Development Act (2)
• Both of these actions, if successful will
yield positive benefit for the economy as
a whole
• In the medium term, this is the only way
in which the problem of structural
unemployment can be tackled with any
chance of success
The only time men and women will
strive for an egalitarian society is not
when legislation compels it, but when
they perceive it to be a desirable end in
itself, or in their own self-interest
5. The Size & Structure of the
Sector (1)
• The most notable factor which is
discernable in the sector is the hyperskewness of size distribution of
employers and employees
• The most notable factor which is
discernable in the sector is that the
greater majority of the employees are
employed by the large and super large
5. The Size & Structure of the
Sector (2)
• It is fair to ask – is this a homogeneous
and comparable whole ?
• The answer must be no !!
• The issue of skills development and
transformation cannot be approached on the
basis of a uniform policy and plan
• Most of all, we need to give attention to
the small employer!
Problem 1
The central problem is to provide
services to the small employer, on the
basis that this will give the employer a
real incentive to upgrade staff skills
Problem 2
There is a clearly demarcated
occupational stratification of skills
demanded – you need a few rocket
scientists and a large number of clerks
Problem 3
Logistics, communication and delivery in
the sector are seriously hampered by the
wide geographical distribution of
Problem 4
There is a clear labour market gender
bias to the industry’s labour supply.
Macro issues of female participation rates
are important here
Issues arising from the size of
undertakings (1)
• Training costs do not only comprehend the cost
of the trainer/training and the employment cost
of the trainee
• The smaller the organisation, the greater the
relative cost of the training
Issues arising from the size of
undertakings (2)
• The relative cost of any given training is
therefore likely to be both actually and
proportionately greater for the small employer
• Hence the smaller the employer, the less the
propensity to train
Further inherent difficulties of
skew size distribution
Large geographic distribution in the sector means
that :
• communications are problematic
• logistical support is costly and difficult
• labour market efficiency is impaired
• training delivery by traditional methods is
Skills gap identified is multitiered
• Specific financial and accounting skills, usually
involving university degree-level study and
requisite experience
• Literacy, computer and IT skills
• Management and leadership skills
• Work-readiness skills
Remember, we all benefit from increases in
capacity of the national manpower pool –
particularly in the light of loss of skills through
So where are we ?
• The industry is composed of two materially
different components
• Separate consideration is needed for each
• There is less scope for the larger players to
make significant shifts – they are well on the
road already
• Attention to the small firms is more urgent
• For them, we will need to think outside the box.
What is to be done ? (1)
• Establish simple, learner controlled on-line
CBT – course on core skills available free to
any member of the industry
• Open a web based industry ‘university’ for
those who want to upgrade their own skills
• Attend on a macro industry basis to identified
skills shortages e.g. establish
scholarships/bursaries and finance bridging
programme, start a student support service
What is to be done ? (2)
• Publish booklet for small employers on ‘Why I
should train and how I can do it?’
• Provide a similar booklet for employees ‘how
to get ahead through training in the industry’
• Consider establishing a recruitment and
placement service for the industry, at a nominal
user fee
• Calculate the true cost of training for the small
employer and rebate 100% plus