sector skills plan for the food and beverages ... · pdf filesector skills plan for the food...

Sector skills plan for the food and beverages

manufacturing sector

2011/12 – 2015/16January 2011

The FoodBev SETA Council endorses the contents of thesector skills plan and is committed to driving, supportingand promoting its implementation together withFoodBev SETA personnel and other stakeholders, toachieve increasingly successful skills development in thesector.

Signatories:

______________________________W PrinslooChairperson: FoodBev SETA Council

16 February 2011

______________________________R DeonarainChief Executive Officer: FoodBev SETA

16 February 2011

Endorsement

1Sector Skills Plan For The Food And Beverages Manufacturing Sector

List of figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3List of tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4List of acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Chapter 1INDUSTRIAL AND OCCUPATIONAL PROFILE OF THE FOOD AND BEVERAGES MANUFACTURING SECTOR1.1 Industrial profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

1.1.1 Overview – the food and beverages manufacturing sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61.1.2 The global food and beverage manufacturing sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81.1.3 The food and beverage manufacturing sector in South Africa – performance . . . . . . . . . . . . . . . . . . . . . . . . . .91.1.4 The food and beverage manufacturing sector in South Africa – structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

1.2 Drivers of change in the food and beverages manufacturing sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .131.2.1 Demographic and social factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .131.2.2 Economic trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141.2.3 Technological changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141.2.4 Legislative and regulatory trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161.2.5 Safety and environmental trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .171.2.6 Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .171.2.7 Factors influencing demand for labour in food and beverages manufacturing . . . . . . . . . . . . . . . . . . . . . . . .191.2.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

1.3 Employment profile of the food and beverages manufacturing sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .221.3.1 Overall employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .221.3.2 Geographical spread of employers in the sector by SIC codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

1.4 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Chapter 2DEMAND FOR SKILLS IN THE FOOD AND BEVERAGES MANUFACTURING SECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312.2 Sector growth and development strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312.3 Scenarios for the food and beverages manufacturing sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

2.3.1 The driving forces behind the issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322.3.2 Likely implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342.3.3 Skills demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

2.4 Factors Influencing sector needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .352.4.1 Age profile of the sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .352.4.2 Replacement and projected demand 2011–2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .372.4.3 Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

2.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Chapter 3SUPPLY OF SKILLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .403.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .403.2 Demand side initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

3.2.1 Employment trends and patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .413.2.2 Productivity in the FoodBev sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Table of contents

3.2.3 Remuneration and value added . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .433.3 Supply side initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

3.3.1 Occupational profile of the food and beverage manufacturing sector in South Africa . . . . . . . . . . . . . . . .443.3.2 Qualifications profile of the sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .443.3.3 Changes in occupational structure of employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

3.4 Supply of skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .493.4.1 Supply from the sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .493.4.2 Supply from further education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .493.4.3 Supply from higher education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

3.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Chapter 4SCARCE SKILL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .514.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .514.2 Scarce skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .524.3 Scarce skills list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

Chapter 5SECTOR STRATEGY FOR SKILLS DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .555.1 Link to other national skills development imperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .555.2 FoodBev SETA/sector strategic objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .575.3 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

List of references . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

FoodBev SETA2

Figure 1: The food industry value chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Figure 2: Subsector composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Figure 3: Net exports into South Africa, R million at current prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Figure 4: Output at basic prices, R million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Figure 5: Gross value added at basic prices, R million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Figure 6: Real output of the food and beverage sector in South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Figure 7: Sales by food and beverages manufacturing subsector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Figure 8: Sales trends in food and beverages manufacturing (R 000, current prices) . . . . . . . . . . . . . . . . . . . . . . . . . . .11Figure 9: Food imports and exports of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Figure 10: Beverage imports and exports of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Figure 11: Fixed capital stock output ratio, food and beverages manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15Figure 12: Fixed capital productivity, food and beverages manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15Figure 13: Food and beverage productivity indices (Index 1990 = 100) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19Figure 14: Food and beverage capital labour ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Figure 15: Net exports, 1995 – 2009 (R millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Figure 16: Food and beverage unit labour cost (index 2005=100) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Figure 17: Employment trends in food and beverages manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22Figure 18: Provincial spread of employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Figure 19: Gender breakdown of occupational groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Figure 20: Equity breakdown of occupational groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Figure 21: Employment levels – food and beverages subsectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40Figure 22: Productivity categories in the food manufacturing industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41Figure 23: Productivity categories in the beverage manufacturing subsector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42Figure 24: Remuneration per employee, food and beverages manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42Figure 25: Qualifications of SA population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44Figure 26: Qualifications profile 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45Figure 27: Qualifications profile 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45Figure 28: Qualifications profile of sector by race and gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45Figure 29: Occupational structure of employment – food manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46Figure 30: Occupational structure of employment – beverage manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46Figure 31: Occupational structure of employment – food and beverages manufacturing . . . . . . . . . . . . . . . . . . . . . . .47Figure 32: Occupational structure of employment – food and beverages manufacturing . . . . . . . . . . . . . . . . . . . . . . .47


List of figures

FoodBev SETA4

Table 1: Constituents of the food and beverages manufacturing sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Table 2: Manufacturing net sales, 2008 – 2009 (R millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Table 3: Percentage change in indicator from previous year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Table 4: Drivers of change in the food and beverage manufacturing sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Table 5: Provincial spread of employment, per subsector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23Table 6: SIC codes: registered and levy-paying companies by SIC and subsector group . . . . . . . . . . . . . . . . . . . . . . . .25Table 7: Occupational profile of the sector 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Table 8: Scenarios and their potential effect on the food and beverages manufacturing sector . . . . . . . . . . . . . . .33Table 9: Expected impact on the demand for labour in each scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34Table 10: Age profile of sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35Table 11: Forecasted percentage changes in employment across subsectors, food [SIC 301-304] . . . . . . . . . . . . . . .36Table 12: Forecasted percentage changes in employment across subsectors, beverages [SIC 305] . . . . . . . . . . . . .36Table 13: Company and industry turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Table 14: Projected net additional demand, 2011-2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Table 15: Projected scarce skills required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Table 16: Skills requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Table 17: Remuneration in the FoodBev sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43Table 18: Current qualifications to address scarce skills in the sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48Table 19: Scarce skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

List of tables


Abet Adult basic education and trainingAET Adult education and trainingBBBEE Broad Based Black Economic Empowerment (Act)BCEA Basic Conditions of Employment ActBEE Black economic empowermentCBO Community-based organisationCPA Consumer Protection ActDHET Department of Higher Education and TrainingDTI Department of Trade and IndustryFET Further education and training FoodBev SETA Food And Beverages Manufacturing Sector Education and Training AuthorityGAP Good agricultural practicesGET General education and trainingGMO Genetically modified organismHACCP Hazard analysis and critical control points HET Higher education and training ICT Information and communication technologyIPAP 2 Industrial Policy Action Plan 2010/11 – 2012/13 ISOE Institution of sectoral or occupational excellenceIT Information technologyJSE Johannesburg Stock ExchangeLFS Labour Force SurveyLRA Labour Relations ActMTEF Medium-term expenditure framework MTSF Medium-term strategic framework NGO Non-governmental organisationNLP Non levy payingNPO Non-profit organisationNQF National Qualifications FrameworkNSDS National Skills Development StrategyNSF National Skills FundNVC New venture creation OFO Organising Framework for OccupationsPDI Previously disadvantaged individualPPPFA Preferential Procurement Policy Framework ActQCTO Quality Council for Trades And OccupationsSETA Sector education and training authoritySIC Standard industrial classificationSMEs Small and micro enterprisesSMMEs Small, medium and micro enterprisesSSP Sector skills planWSP Workplace skills plan

List of acronyms

1.1 INDUSTRIAL PROFILE

1.1.1 Overview – the food and beverages manufacturing sector

The food and beverages manufacturing sector is asignificant component of the South African economy,accounting for 18% of manufacturing sales (food –13,5%, beverages – 4,4%) and 17% of gross value addedin the manufacturing sector, and employingapproximately 230 000 employees in 2009. The sector ispart of the food industry value chain (Figure 1), whichcomprises a range of activities, including:i) Farming and the production of raw agricultural

produce;ii) Processing of raw agricultural commodities;iii) Manufacturing, transforming the raw and processed

produce into finished/processed commodities;iv) Wholesalers and retailers of the finished products,

andv) Consumers.

Figure 1: The food industry value chain

Adapted from: Chandler et al (2006)1

FoodBev SETA6

The South African food and beverage manufacturingsector focuses on the third link in the chain below andtransforms through industrial processes agriculturalcommodities into semi-processed or fully processed foodingredients or products. Although there are up- anddownstream interdependencies, the food and beveragesmanufacturing sector differs from the primaryagriculture sector through its complexity, use of capital-intensive technology and processes, and the large numberof suppliers, distributors and channels involved in takingproducts to market.

According to the classification of economic activities inSouth Africa, the food and beverages sector includes themanufacture of food products and the manufacture ofbeverages, but, contrary to practice in most othercountries, excludes the tobacco manufacturing sector,which is included in the agricultural sector. The sector isfurther subdivided into five subsectors, as shown on thenext page, with their SIC codes.

CHAPTER 1

Industrial and occupational profile of the food and beverages manufacturing sector

in South Africa

Farmequip-mentsupplies,geneticsetc

Land,pasture etc

Raw produce

Livestock,milk, grains,fruit andvegetables,fish and otherseafood, foodimports

Food and beveragesmanufacturing

Meat processing, dairyprocessing, grain-basedmanufacturing, fruitand vegetableprocessing, seafoodprocessing and otherfood manufacturing

Wholesalingand retailing

Wholesaling,retailing andfoodservices

C

O

N

S

U

M

E

R

Supportfunctions

Education, recruiting and human resources, logistics and distribution,market research, advertising and design, research and development,information systems, banking and finance, insurance, packaging


The largest subsector by number of registered companiesis the 'manufacture of food preparation products' with 2 770 companies, and the smallest is the 'dairymanufacturing' subsector. However, the subsector withthe largest number of levy-paying companies (medium tolarge firms) is 'processed foods' and that with the largestnumber of small enterprises the 'manufacture of foodpreparation products' (Figure 2).

Figure 2: Subsector composition

All subsectors, however, reflect similar patterns, with alarge number of small firms and few large firms. Indeed,South Africa's food and beverages manufacturing sectoris highly concentrated, with several large verticallyintegrated conglomerates controlling both productioncapacity and sales in most food categories. For example,one of the largest firms, Tiger Brands, has a controllinginterest in the Spar retail group as well as in grainmilling. The largest firms in poultry production haveinterests in 'parent material', day-old chick and broiler

Table 1: Constituents of the food and beverages manufacturing sector

SIC code Subsector Constituents

301 Processed and preserved meat, 3011: Production, processing and preserving of meat and meat productsfish, fruit and vegetables 3012: Processing and preserving of fish and fish products

3013: Processing and preserving of fruit and vegetables 3014: Manufacture of vegetable and animal oils and fats

302 Dairy manufacturing 3020: Manufacture of dairy products

303 Manufacture of food preparation 3031: Manufacture of grain mill productsproducts 3032: Manufacture of starches and starch products

3033: Manufacture of prepared animal feeds

304 Baking, cereals, confectionery and 3041: Manufacture of bakery productssnacks manufacturing; 3042: Manufacture of sugar, including golden syrup and castor sugar

3043: Manufacture of cocoa, chocolate and sugar confectionery 3044: Manufacture of macaroni, noodles, couscous and similar farinaceous

products 3049: Manufacture of other food products not elsewhere considered

305 Beverage manufacturing 3051: Distilling, rectifying and blending of spirits, ethyl alcohol production from fermented materials, manufacture of wine

3052: Manufacture of beer and other malt liquors and malt 3053: Manufacture of soft drinks, production of mineral waters

Source: FoodBev SETA/SARS downloads

rearing, feed manufacturing and final processing ofmature chickens, and the level of concentration in thedairy sector is also quite high.

Food and beverages manufacturing is important in SouthAfrica because of its high degree of forward andbackward linkages with other industries, which allow it toplay an important role in accelerating economic activity.It is also suited to South Africa's developing countrycharacteristics due to the fact that processing plants arenot always scale-dependent and small operations may beas economically efficient as larger plants, encouraging theparticipation of small, medium and microenterprises(SMMEs) in niche markets.

1.1.2 The global food and beverage manufacturing sector

Globalisation has affected the food and beveragesmanufacturing sector, in particular beverages and moredurable food products, in several ways. For example, thelowering of trade tariffs, development of new marketsand suppliers, and increased global sourcing of rawmaterials have led to extended and more complex supplychains and competitiveness in local and world markets.In response, cost-efficiency in production and reliablesupply chain management have become increasinglyimportant criteria for success in the sector. Increasingcompetition has increased net imports especially in thefood sector in South Africa, although net imports haveincreased less than in the total economy and inmanufacturing (Figure 3).

The beverage industry has high entry barriers, due to its

domination by large corporations, and a large portion ofalcoholic beverage production (especially wine) isexported, leading to its better-than-average exportperformance.

International trade in processed foods and beverages ispredicted to grow at an annual average of 5% between 2003and 2020, driven by global population growth and growthin Gross Domestic Product (GDP) per capita.2 The fastestgrowth was in the Middle East, Africa, and Central Asia,with the major food and beverage products being meat,vegetable oils, dairy, and grain products. The larger shareof this globalised trade is carried out by developedcountries: France, the United States of America, Germany,the Netherlands, and Australia accounted for 38% of globaltrade in 2004. However, emerging players such as Braziland Argentina are increasing their share of this trade.

Global sales of food and beverage products was $11,6 trillion in 2009, and is projected to reach $15 trillionin 2014 as the population continues to grow from 6 billionpeople in 2000 to a projected 7,5 billion in 2020. One maindriver of this increase in demand is increased householddisposable incomes in the Asia Pacific region, which areprojected to contribute to about one third of global foodsales by 2014.3 Thus, there are significant exportopportunities for the South African food and beveragesmanufacturing sector.

The main reasons for the developed world's large share ofthe global market include: its large population, highincome levels, which allow almost all to afford food anddrink, and very low levels of subsistence farming, whichcompels the vast majority of the population to purchase

FoodBev SETA8

Source: Quantec Economic Database

Figure 3: Net exports into South Africa, R million at current prices


from the food and beverage markets. These factors maybe important in projecting the growth of the food andbeverages manufacturing market in South Africa and arerevisited in a later section.4

1.1.3 The food and beverage manufacturing sector in South Africa – performance

Output and value-added

The manufacturing sector in South Africa contributed31% of output by sales in South Africa in 2009, with thefood and beverages manufacturing sector contributing

18% of the manufacturing output (food manufacturing14% and beverages manufacturing 4%). Thus, the foodand beverages manufacturing sector accounts for 5% oftotal economic output in the country. The manufacturingsector accounted for 18% of gross value-added in theeconomy, adjusted for inflation (16,7% of South Africa'sreal GDP, 15,2% of GDP at current prices). As can be seenfrom Figure 4 and Figure 5, these ratios have remainedrelatively steady over the last decade, and output andvalue-added trends mirror each other.

Total output in the food and beverages manufacturingsector has grown steadily over the last two decades, and isrelatively unaffected by economic fluctuations. Output in


Figure 5: Gross value added at basic prices, R million


Figure 4: Output at basic prices, R million

10

food manufacturing has grown faster than in thebeverages sector, and total sales for both sectors stood atR258 490 million in 2009. At constant prices –eliminating the inflation factor – the sectors still showsignificant growth.5 Comparing this output with that of thetotal economy and the entire manufacturing sector showsthat the food and beverages sector is relatively insulatedfrom downturns in the economy. Between 2008 and 2009,output fell slightly in the manufacturing sector (from R1174 789 to R1 021 743 million) and in the total economy(from R3 785 602 million to R3 679 521 million), but foodand beverages manufacturing sector output increased inthis period (from R188 501 million to R190 826 million).6

Data on net sales in South Africa (ie gross sales lessreturns, discounts and other deductions) show that thefood and beverages sector is currently the second largestmanufacturing sector by sales, having overtaken the 'basiciron and steel, non-ferrous metal products, metalproducts and machinery' sector in the last year.

Most of these sales come from the 'meat, fish, fruit,vegetables, oils and fats' subsector, with the smallest beingthe 'dairy' subsector (Figure 7).

Sales trends indicate the steady growth (at current prices)in all sectors except grain mill products. This growth hasbeen highest in meat, fish, fruit and similar freshproducts.

FoodBev SETA


Figure 6: Real output of the food and beverage sector in South Africa


Figure 7: Sales by food and beverages manufacturingsubsector

Table 2: Manufacturing net sales, 2008–2009 (R millions)

2008 2009

Food and beverages 230 362 367 240 845 177 Textiles, clothing, leather and 43 745 997 38 323 315footwear Wood, paper, publishing and 110 137 969 101 721 747printing Petroleum, chemical products, 316 559 125 269 871 735rubber and plastic products Glass and non-metallic mineral 37 229 204 36 097 324products Basic iron and steel, non-ferrous 310 428 978 226 472 456metal products, metal products and machinery Electrical machinery 41 188 668 37 917 103 Radio, television, communication 14 956 319 14 337 276apparatus Motor vehicles, parts and accessories 192 164 112 139 600 661 Other manufacturing 60 751 590 56 413 006 Total manufacturing 1 357 524 329 1 161 599 800

Imports and exports

Imports and exports of manufactured food and beveragesare illustrated in Figure 9 and Figure 10, which highlightthe fact that the food manufacturing sector has since2004 been a net importer of goods and services. This isprobably a result of the opening up of the South Africanmarket due to globalisation. Increased economicparticipation and the increased disposable incomes of theSouth African population have also spurred demand forimported food products. The beverage manufacturingindustry shows the inverse, with more exports thanimports. Wine is the main component of these exports.

In 2009, imports accounted for around 17% and 12% ofdomestic consumption of manufactured food andbeverages respectively (the comparative figure in Australiawas 10% for both). Exports are mainly to the traditionalmarkets of the UK, Mozambique, Germany, Japan and theNetherlands. New markets are also developing in China,Somalia, Norway, Malaysia, Thailand and Denmark, andefforts to create strategic international partnerships pointto further measures to grow markets.

Increased exports will require commensurate skills in theworkforce to meet stringent international food and


Source: Statistics South Africa7

Figure 8: Sales trends in food and beverages manufacturing (R 000, current prices)


Figure 9: Food imports and exports of goods and services

beverage handling, processing and packaging regulations.

1.1.4 The food and beverage manufacturing sector in South Africa – structure

In South Africa, food and beverages manufacturing isfragmented and highly concentrated, with a relativelysmall group of large companies with both forward andbackward linkages producing most of the output andvalue added, and a large number of small and medium-sized firms producing for local markets. In 2009, out oftotal income of R225 421 million, large enterprisesaccounted for R204 672 million (91%), mediumenterprises R13 280 million, small enterprises R4 413million and micro enterprises R3 056 million.

This type of bipolar structure is typical of the sector andoccurs all over the world as a result of the advantages ofeconomies of scale, and mergers, acquisitions of andvertical integration with agricultural enterprises toachieve efficiency gains. In Europe, for example, despitethe presence of large multinationals such as Italy's Barilla,Frances' Danone and Unilever from the Netherlands,more than 80% of the companies in the sector are smalland employ fewer than 50 employees. Similarly, in theprocessed food and beverage industry in Australia, the 20largest food manufacturing companies account for almost50% of total industry turnover.

However, there are still ample opportunities for theparticipation of SMMEs in niche markets, providing

opportunities for sector growth. Manufacturing in thesector is not always scale-dependent and small operationsmay be as economically efficient as larger plants. Inaddition, often the smaller privately owned companieswith their greater flexibility and shorter response timesare better partners than larger, top-heavy firms, despitethe perceived greater resources of the latter. Small- andmedium firms have actually increased their market sharesince 1996 and play an increasingly important role in thefood processing environment in South Africa. There isalso wide diversification especially among larger firms.

While the traditional sectors in food and beveragesmanufacturing are still growing, many other nichesubsectors are achieving varying degrees of success. Forexample, the wine industry, which is reasonably large byworld standards (number six in world production ofwine) harvests just over a million tons of grapes, yieldingmore than 900 million litres of wine. Aseptically packedand bottled fruit juices from South Africa are exportedworldwide and processed meats are an important part ofthe South African economy. Dairy products, althoughnot attaining the status of the New Zealand industry, arealso important, with milk powders and semi-milkproducts representing the bulk of the spray-driedproducts in South Africa, together with coffee andchicory-based coffee substitutes.

The sector has a high degree of forward and backwardlinkages with other industries, allowing it to play animportant role in economic activity. In 2009, forexample, intermediate input costs in beveragesmanufacturing, ie the value of products bought from

FoodBev SETA12


Figure 10: Beverage imports and exports of goods and services

other industries to manufacture its products, was R35 638million, only R3 391 million of which was imported. Infood manufacturing, the figure was R154 302 million andof this R14 083 million was imported. Therefore, totalinput costs in food and beverages manufacturing wereR189 940 million in 2009, R17 474 million of which wasimported.9

The sector includes a large basket of well-known brandsand some of the largest companies in the world, such asSAB Miller, the second largest brewer in the world.Twenty-four food manufacturing firms are listed on theJohannesburg Stock Exchange (JSE).

Many South African companies have formed associationsof various types with overseas firms, which give theformer access to the latest technology and expertise intheir industries. Examples of these are Simba with Frito-Lay of the USA in the snack food industry, Robertsons(formerly part of HLH, which was part of Rembrandt)with Best Foods in the USA (formerly known as CPCInternational), thus cementing a longstanding associationin the savoury foods/soup industry, and NCD Clover withDanone of France in dairy products. The benefit for theoverseas companies is penetration of the South Africanmarket, but also a springboard into other Africancountries, particularly those south of the Sahara. As is thecase in most foreign markets, the help and knowledge oflocals well versed in the special requirements of themarkets are invaluable, and overseas companies seeking todevelop African markets should explore this possibility.

1.2 DRIVERS OF CHANGE IN THE FOOD AND BEVERAGES MANUFACTURING SECTOR

The key factors impacting the food and beveragesmanufacturing sector are demographic and social factors,economic trends, technological changes; diet, nutritionand consumer demands, legislative trends, and safety andenvironmental trends.10

1.2.1 Demographic and social factors

Demographic and social factors include population andhousehold numbers – which affect sales particularly forbasic foodstuffs – and market segmentation. Also,different population groups have different patterns ofexpenditure on foods and beverages.

The South African population

South Africa's population has grown steadily over the lastdecade, with mid-year population estimates for 2009 being

49 320 500. The population growth rate of 1,3% mirrorsthe rate of household formation at 1,1%. This will placeincreasing pressure on food supply and food security.11

Demographically, South Africa displays the typicaldeveloping country pattern, with the majority of itspopulation aged below 24 years. The 'African'demographic group dominates the population. Menoutnumber women in the age group 0 – 19, while womenoutnumber men in all other age groups.

South Africa recorded an unemployment rate (narrowdefinition) of 24,3% in 2009. If the broad definition isconsidered, the unemployment rate rose from 26,7% to31,3%. As a direct consequence of the global economicdownturn in 2008, 870 000 formal jobs were lost in2009.12 Others have quoted a figure of more than 1 million. In the age group 18 – 24, an average of morethan 40% of people are unemployed, not severelydisabled, and not attending any form of training/education programme.13 This has serious implications forskills development.

HIV/Aids

South Africa has a high prevalence of HIV and Aids: theHIV rate among people two years and older wasestimated at 10,9% in 2008.14 This situation is a majorsignal of both current and future replacement demand.The main target groups for training are also those mostsusceptible to HIV infection, including Africans, women,youth and the unemployed – unskilled and semi-skilled.

In the food and beverages manufacturing sector, the HIVprevalence was estimated to be 16, 1% in 2005 and, by2010, the percentage of Aids-sick workers is likely to beabout 2,3%, while Aids-related deaths will be about 1,2%.The weighted risk index for the sector in 2005 was 7.4 outof 11.

These figures are, however, not considered to be a truereflection of the crisis, with some research indicating riskindex figures two and three times those presented here.About 48% of companies in the sector report that HIVhas negatively affected output levels: 42% contend thatthey have lost highly skilled personnel to Aids-relatedillnesses and deaths; and 58% report that HIV/Aids hascontributed to declines in labour productivity because ofincreased sick leave and frequent visits to hospital.15

As noted, most workers in the sector are between the agesof 35 and 55. This is cause for serious concern in respectof skills development because these people age and retiresooner or are lost through other forms of attrition.


experienced in many parts of the world has only recentlyended and there are strong indications of a recovery inthe global economy over the next two to three years(Table 3). The improved economic condition of the globaleconomy could see increased demand for South Africanniche food products. This signals a need for skillinginitiatives that spur innovation and position the sectorstrategically to compete both locally and internationally.

Table 3: Percentage change in indicator from previous year

Indicator 2008 2009 2010* 2011* 2012*

World trade volume 3,2 (11,6) 11,2 6,8 7,2

Real GDP growth

World 1,7 (2,1) 3,3 3,3 3,5

High income 0,4 (3,3) 2,3 2,4 2,7

Developing countries 5,7 1,7 6,2 6 6

Sub-Saharan Africa 5 1,6 4,5 5,1 5,4

South Africa 3,7 (1,8) 3,1 3,4 3,9

*Forecasted

Source: The global outlook in summary, 2008-2012, World Bank

1.2.3 Technological changes

The sector is volume-, cost- and technology driven. Inthe past three years, spending on technology has droppeddue to the economic climate, and more emphasis hasbeen placed on optimising existing resources andimproving productivity. However, based on trendselsewhere the increasing uptake of technology inproduction is likely in future.

In South Africa, current skills are frequently not alignedto new technologies – advanced engineering skills inoperations and maintenance are required and are alsohard to find. Subsequently, plant performance is affectingcosts, service levels and working capital. Decision-making often is not optimised nor based on sound real-time data. Frequently, operators are not equipped to usenew technology optimally. This implies a skills shortage.

New methods of production

New methods of production have also had an impact onthe sector. The fixed capital stock output ratio (the ratioof capital stock to the output in the sector as a percentage– Figure 11) shows that the amount of capital in use inboth food and beverages manufacturing industries hasfluctuated over the years, but there has been nosignificant change in this ratio since 1970.

FoodBev SETA14

Consumerism

Increased urbanisation in developing countries hascontributed significantly to the growing middle class.Locally, the 'black middle class' continues to grow. Thisleads to the emergence of new market segments andgrowth in others, as well as to changes in consumerprofiles.

Branded products perform better in the current economicenvironment – there is a growing demand for quality.Greater flexibility and rapid response to changingconsumer profiles and needs will be key to competitiveadvantage. Pricing strategies have become moreinnovative, eg value labelling and changes in packaging(debulking).

More emphasis on healthy eating and a move towardsorganic foods places increasing emphasis on productresearch and development to stay abreast of trends, andon marketing to address changes in consumer needs.

Demand for convenience foods is growing in urban areas,driven by urbanisation and the growing middle class.More products need to respond to this need.

This trend necessitates improved technology and skills infood safety and packaging, which, in turn, typically resultin lower prices arising from improved efficiencies and thehigher productivity of better skilled labour.

1.2.2 Economic trends

Competition and consolidation

Both competition and consolidation are high in the foodand beverages manufacturing sector and have acceleratedin recent years. Depending on the subsector, net incomesin the economy have a significant effect on sales. Afurther consideration is the income inequalities in thecountry. As household incomes increase, the proportionand pattern of spending on food and beverages change,changing the demand patterns and the overall marketsize. Consolidation is especially important in SouthAfrica's food and beverages manufacturing sector as thelevel of industry concentration is quite high. Largeretailers control a significant portion of outlets for thesector's products and have a loud say in how products aremanufactured/produced, delivered and stored.

Globalisation

The global nature of the sector compels participants totake note of trends in the global economy. The recession


2006 in the beverages subsector. This drop was causedmainly by an increase in the number of unskilledworkers, and no rational explanation has been adducedfor this. Apart from that aberration, there has been anincrease in the substitution of capital for labour. Theprobable reason for the increased use of capital is thesteep increases over the years in the costs of labour. Evenaccounting for changes in price levels, this increase is stillsignificant enough to act as a deterrent to potentialemployers. Employment trends are discussed in moredetail in other sections.

Fixed capital productivity is also illustrative. Figure 12below shows (using the year 2005 as a base year) that thefixed capital productivity (output per unit of fixed capitalinput) has actually decreased over the years. Thus,technological improvements do not seem to have animpact in the sector.

Despite the above conclusion, firms in the sector areusing more capital than labour now than in the past andthis has been an increasing trend with the exception of amajor drop in the ration of capital to labour from 2002 to


Figure 11: Fixed capital stock output ratio, food and beverages manufacturing


Figure 12: Fixed capital productivity, food and beverages manufacturing

FoodBev SETA16

New inputs

Packaging has become an increasingly important input asproducers try to differentiate their products from othersin the market, and because of technological developmentsin packaging. This has resulted in price increases in manyproducts that either reduce company margins or arepassed on to the consumer and reduce demand. Highcrude oil prices increase the cost of transport, which is amajor constituent of prices in food and beveragesmanufacturing products.

New foods and crops

New foods and crops may influence sales. Trends towardsmore natural products and increasing consumerpreferences for healthy products with clean labels,fortification of food products with compounds possessinghealth-enhancing properties (such as vitamins) will allimpact on the pattern of demand in the sector. Anotherimportant impact is the resultant diversification andwidening of the range of products on offer, eg low fat, lowsalt and gluten-free products.

In addition, the use of genetically modified organisms(GMOs) has an impact on sales, exports – especially toEurope, where genetically modified foods are regardednegatively- and skills – as these GMOs have to be labelledand require good agricultural practices (GAP) and hazardanalysis and critical control points (HACCP) practices.GMO crops in South Africa include yellow and whitemaize, and soybean.

Information and communication technology

The consolidation in the sector and the imperatives ofreducing operating costs have encouraged the installationof interconnected local networks among large companies,as support for strategic decision making. The need forgreater efficiency in internal processes (production,supply chain management, administration, marketingand sales etc.) and the integration of internal processeswith external organisations are other factors that drivethe increased adoption of information andcommunication technology (ICT) solutions in largefirms. Increased emphasis on packaging processes, thecontrol of quality in HACCP and product quality makesICT increasingly important.16

Production by smaller food and beverages manufacturersis characterised by small batch processes that are hard toconsolidate and integrate, but increased capital-intensiveness and the availability of smaller solutionssuch as enterprise software for smaller companies haveinfluenced production.

1.2.4 Legislative and regulatory trends

Numerous pieces of legislation are impacting the sector.The recently promulgated Consumer Protection Act givesconsumers the right to address to a tribunal complaintson the quality of products. This may lead to heightenedconsumer awareness and will require increased focus onquality and compliance with 'end product specification'.

The Labelling Act places greater emphasis on opencommunication with the consumer. This has an impacton industry labelling requirements, given the increasedpower of the consumer.

Implementation of the BEE Act will continue. For theFoodBev sector it implies more focus on black femalesand up- and downstream small business development.Qualified previously disadvantaged individuals (PDIs) atmarket-related salaries will remain in short supply, asmentioned earlier.

Labour laws (Labour Relations Act – LRA, BasicConditions of Employment Act – BCEA) will be appliedmore stringently. Concerns that labour brokers areundermining worker rights may lead to companies'increasingly employing staff permanently, with anincrease in the need to skill these people to ensureincreased return on investment and productivityenhancement. In addition, the alignment of the BBBEEAct and its codes of good practice vis-a-vis thePreferential Procurement Policy Framework Act (PPPFA)could see the institutionalisation of the BBBEE Act and itscodes. This will exert pressure on companies totransform to mitigate the historical divide attributed toapartheid. As a result, companies will need to investadequately in skills development and employment equitynot only as a compliance measure, but as a form of goodcorporate governance and good corporate citizenship.This should imply an increased role for the SETA inensuring increased participation of PDIs in the higherechelons of the sector.

Increased focus on food safety and security (HACCP) willforce more companies to apply for or maintainaccreditation, with direct implications for skillsrequirements.

The political and regulatory environment influences therate of globalisation and regionalisation. Also, increasedgovernment and regulatory influence and nationalpolicies towards industries, such as those governingcompetition, and those providing incentives towardsexport-promotion, may have impacts on food andbeverages sales.

1.2.5 Safety and environmental trends

Environmental issues

Climatic variability is already impacting on foodproduction and supply to manufacturers. In addition,concerns exist about the food production capacity of landreform beneficiaries who do not receive appropriateskilling and mentoring. Insufficient availability of water,arable resources, and concerns about sewage,contamination, purification and waste control, signals theneed for conservation and waste treatment training.

Emphasis on global warming, greenhouse gas emissionsand energy effectiveness will require multidisciplinarystudies aimed at international benchmarking (egmicrobiology, biochemistry, chemistry, all aimed atprocess improvement) and the implementation of new'forensic' analytical methods (chemical, biochemical,microbiological and physical). This imperative calls forhighly skilled individuals to drive and implementprocesses in the sector.

Hygiene and safety issues

Environmental and safety concerns cover increasedconsumer awareness of the quality, hygiene and safetyissues surrounding their food and beverages. Nutritionalvalue issues have become increasingly important. Inaddition, the conditions in which food is grown or raisedand the effect of transporting produce on the environment(calculated by greenhouse gas emissions during transport)is now a consideration for consumers especially in

developed economies. Food safety is critical in the foodand beverages manufacturing sector and of increasingconcern as the food supply chain widens. Incidents such asthe 2005 non-nutritional infant powdered milk and milkproducts tainted with melamine in China, the Belgiandioxin scandal, bovine spongiform encephalopathy (madcow disease) have highlighted concerns for food safety.

Water quality and supply

Water availability and quality will impact on companies inthe sector because of its close links to agriculturalproductivity, and the need for safe and high-quality waterin manufacturing processes. Access to stable water suppliesis a prerequisite for reliable production of agriculturalinputs required for the food and beverage sector, andconsumer trends towards more processed foods andincreased meat and dairy consumption require more waterper unit of food produced. Together, these trends areincreasing the sector's use of water at a time when waterscarcity, increased demand and climate changes threaten toreduce its supply.

1.2.6 Implications

The key drivers shaping the food and beveragemanufacturing sector both globally and locally aresummarised in Table 4. These factors affect the level ofdemand, patterns of demand, and skills required of theworkforce in the sector, and therefore need to be factoredin when assessing present and future skills needs, and therequired education and skills interventions.


Table 4: Drivers of change in the food and beverage manufacturing sector

Trend Trend description Business implication Implications for skills development

Economic

Value added output Steady growth over past two Not as subject as other Supplier of employment. Stablecontributes 5% to GDP decades sectors to influence of employment opportunities. Can

economic fluctuations train and retain

'Rebalancing' the world Emerging countries Improvement in trading Labour productivity, quality, optimi-of power increasingly significant in the conditions with developed sing logistics to be competitive. Skills

global economy – much world, removal of certain development across all occupationalhigher GDP growth than in market barriers levels. Increased demand for qualifieddeveloped countries sales and marketing personnel

Productivity Gradual improvement in Due to global competitive- Upskilling, developing a pool of skilledproductivity levels over past ness, need to continuously people sector-wide. Low qualificationten years improve levels of operators a challenge

Imports/exports Production in certain sub- Increase competitiveness Train for productivity improvementsectors threatened by imports at all occupational levels. Role of– dairy industry, meat industry. technology becomes moreNot competitive in the export important to maximise efficiencies market

FoodBev SETA18

Trend Trend description Business implication Implications for skills development

Economic continued

Rising costs of electricity, Electricity to increase by Increased pressure on price, Train for productivity improvement atfuel 25%, fuel by 1,5% per month competitiveness all occupational levels. Role of

technology becomes more important to maximise efficiencies. Upskilling required at operator level

Political

Worker rights and Concerns that labour brokers Stricter application of labour More focus on development oflabour absorption are undermining workers' relations, increase in internal workforce – operator level.

rights employment Demand for historically disadvantaged individuals in affirmative action positions

Social

Emerging middle class Growing black middle-class in Emergence of new market Increased focus on development ofSouth Africa, rising per capita segments, growth in others. research and development, andincomes driving black middle- Change in consumer profile consumerism sciencesclass growth across all groups

Changing consumer Organics, healthy living, Changes in product Increased focus onbehaviour convenience foods, and rising development, traceability, development of research and

per capita incomes to drive packaging, marketing development, andtrends consumerism sciences

Growing population, Social grants and their nega- Food prices to remain high Skilled, productive workforcefood security, increasing tive effects on subsistence and above inflation rate requiredurbanisation farming, increased pressure on

food supply

HIV/Aids Estimated to be 2,3% of Replacement demand, Train for replacement demandworkforce, with 1,3% of deaths decrease in labourrelated to Aids productivity due to illness

Technical/Technological

Technology spend Reduced spending over past Optimising resources, increase Skilling especially at operatortwo years due to recession labour productivity level

Technical capability In certain industries, systems Productivity challenges Skills not aligned to new technologies.are limiting plant performance, threaten competitiveness Advanced engineering skills, bothexacerbated by inadequate operations and maintenanceskills levels required.

Environmental

Climate change Impact on natural resources, Access to some markets may Need to educate the workforceavailability of raw material be restricted through issues continuously on trends and(eg fishing industry) such as food miles in the innovations towards green

supply chain manufacturing

Legislation

Consumer Protection Consumers can address quality Heightened consumer aware- Retraining, inclusion inAct concerns to a tribunal ness of quality, compliance to qualifications

end-product specifications

Labelling Act Requires open communication Labelling could increase cost Retraining, inclusion in qualificationswith consumer, promotes without the benefit ofhealthy lifestyle products and increased pricingrestricts advertising of unhealthy products

Various other pieces of Addressing the historical Adoption of BBBEE Act and its Retraining, inclusion in qualificationslegislation divides of the country codes of good practice – skills

development that will enhance employment equity

1.2.7 Factors influencing demand for labour in food and beverages manufacturing

While the above factors impacting on the food andbeverages manufacturing sector will influence outputs,sales, and sectoral and subsectoral trends, such changesmay not necessarily lead to increased employment. Thekey factors determining changes in the level ofemployment are discussed below.

Demand for the sector's products

Demand for the sector's products varies widely. Somesubsectors produce mainly basic foodstuffs that arerelatively immune to changes in demand, while othersproduce goods that are seen as more luxurious andtherefore have higher elasticity of demand. Demand isdriven mainly by income levels, market segmentation andthe proportion of high-to low-income earners and prices.

Labour productivity

The productivity of labour compared to capitalproductivity, and sectoral/subsectoral shifts towards morecapital- or labour-intensive production techniques arerated by many researchers as the key variable influencingchanges in employment levels and patterns. Bhorat andHodge (1999)17 found, for example, that sector shifts inthe occupational structure of employment explain mostof the rising skill intensity of employment inmanufacturing and services. Labour and capitalproductivity are influenced mainly by technology and

technological change, such as the use of informationtechnology and micro-electronics in the productionprocess. This also influences the type of labour likely tobe employed: skilled labour benefits more whereproductivity is critical and technological changes areintroduced. Analysis suggests that productivity trendsare resulting in a more segmented food industry,concentration and cost-cutting among large companies,diversification and specialisation among small and microenterprises (SMMEs), fewer people employed in thesector and a demand for new skills to matchtechnological developments.

Labour productivity in the food manufacturing sub-sector has increased markedly since 2000, whilecorresponding fixed capita productivity has decreasedsince 2006 after increasing from 2000. In the beveragesmanufacturing sub-sector, both indices have stagnatedsince 2006 after dramatic fluctuations over the last 30years (Figure 13). Increased efficiency in productionprocesses in the food industry has thus seen its labourproductivity index surpass that of the beverage industry.

Ease of substitution of capital for labour

The elasticity of substitution between labour and capitalis also important, as this determines the degree ofresponsiveness of an industry to productivity changes. Infood and beverages manufacturing, the elasticity ofsubstitution is high, and this can be attributed mainly topolicies that discourage the firing of labour, and thusmake employers more reluctant to hire labour in case ofshifts in demand (hiring and firing rigidities).



Figure 13: Food and beverage productivity indices (Index 1990 = 100)

FoodBev SETA20

The capital to labour ratio is useful in identifying theincreasing use of machinery and equipment over labour,and is also a useful indicator of changes in efficiency.18

The ratio for the two subsectors shows significantlydiffering patterns over the last decade. While the capitallabour ratio has increased by about 40% in foodmanufacturing since 2000, it appears to have fallen by asimilar amount in beverages manufacturing.19 This is due

mainly to the adoption of innovation and technology toaddress consumers' food safety concerns, necessitatingincreased investment in productive processes andcontinuous education of staff to keep up with industrytrends. This is documented in Figure 14 above.

Two other factors influence the ease of substitution oflabour for capital. These are the state of the labour


Figure 14: Food and beverage capital labour ratio


Figure 15: Net exports, 1995 – 2009 (R millions)

market measured by the national employment rate, andthe skill levels of the labour force. The tighter the marketfor labour (as evidenced by increased employment levelsin the country) the more expensive labour is and themore difficult it is to employ labour in response toincreased output. Availability of skills is also a criticalissue, as demand for labour may be skill-specific, andhigher skills levels also allow for higher labour flexibility.20

Imports and exports

The balance of trade influences employment, asincreasing imports displace production from South Africato other countries, and thus the level of importpenetration in a sector will affect total employment. It iscalculated that rising import penetration between 1985and 1993 reduced total employment in South Africanmanufacturing by 10%.21 In the food and beveragesmanufacturing sector, net exports in 2009 were R4 134 333 899, having increased by 41% in the previousten years (Figure 15).

Exports were driven largely by beverages, spirits andvinegar, sugars and sugar confectionery, and vegetables,fruit and nuts, while South Africa was a net importer ofresidues, food industry wastes and animal fodder, and ofmeat, fish and seafood. The trends show the increasingvalue of beverages exports, which are mainly driven bywines exports) over the years to become the sector's bestperforming exporter. Sugars and sugar confectionery; andvegetable, fruit, nut, are the other categories of productsthat are increasing their export values. The implicationsfor skills development are significant. All three well-

performing categories are highly regulated and have tomeet stringent health and safety standards internationally,so there is likely to be increased demand for these skills.Production efficiencies in the sectors will also becomeincreasingly important if they are to compete ininternational markets, and marketing and sales skills willbe required for the necessary branding that allows SouthAfrican products to be differentiated.

On the other hand, most of the categories where trendsshow imports are increasingly important (such as meat,fish and seafood food preparations; and residues, wastes offood industry, animal fodder) require mainly low-levelskills. These are likely to be lost to foreign markets.

Wage levels

Related to the above, the level of wages for workers affectsthe cost and therefore the desirability of employing labour.This is, however, moderated by productivity: higher labourproductivity correlates with higher levels of training,experience and qualifications, which require higher wages.Wages for workers may, therefore, be high in a sectorbecause it is more efficient, there is more value-added perworker and it can pay its workers higher wages.22

1.2.8 Conclusion

Several factors have been discussed in the precedingsections that have implications for labour and skillsdevelopment in the food and beverages manufacturingsector. High usage of capital-intensive technology andprocesses, complex distribution channels involved in



Figure 16: Food and beverage unit labour cost (index 2005=100)

FoodBev SETA22

taking products to market, and the concentrated structureof the sector all call for a wide range of specialised skills.

Globalisation, and the resultant importance of importsand exports, also has an effect. While most of the sector isrelatively insulated from import competition, exportshave risen and with this issues such as compliance withinternational quality standards are increasingly important.The increasing number of associations between SouthAfrican companies and international companies hashelped in the adoption of latest technology and expertise,and this calls for a more flexible and trainable labourforce.

Output and sales in the sector have grown steadily andare relatively unaffected by economic fluctuations. Thisgrowth has been highest in meat, fish, fruit and similarfresh products, and as freshness and distance to marketsare important in this category imports are unlikely tomake significant inroads.

While most of the industry output comes from the fewlarge firms, there are many small firms in the sector,especially those catering to niche markets. Small andmedium firms have seen increasing market share. Asthey have different skills needs from larger firms, theneed to consider this dichotomy is important whendeveloping a sector skills plan.

The key factors influencing demand in the food andbeverages manufacturing sector are economic trends,technological changes, demographic and social factors;diet, nutrition and consumer demands, and safety and

environmental trends. The most significant and mostlikely to change are competition and consolidation,changes in net incomes in the economy, incomedistribution patterns and increasing use of new technologyand packaging, resulting in the substitution of capital forlabour. While population and household numbers areimportant, especially when analysing the demand for basic foodstuffs, this is unlikely to change dramatically infuture.

Demand influences the level of employment and type ofskills required. Other predictors are the productivity oflabour compared to capital, degree of substitution ofcapital for labour, import penetration and wage levels.These are incorporated into a scenario analysis of thesector in the next chapter.

1.3 EMPLOYMENT PROFILE OF THE FOOD AND BEVERAGES MANUFACTURING SECTOR

1.3.1 Overall employment

Overall employment in the sector has fallen over the last12 years. This has been attributed primarily to theincreasing use of capital and the increasing productivity oflabour.

1.3.2 Geographical spread of employersin the sector by SIC codes

The table on the next page provides detail of the provincialdistribution of employment in the sector, per subsector.


Figure 17: Employment trends in food and beverages manufacturing

Table 5: Provincial spread of employment, per subsector

SETA subsector Provincial coverage Employee numbers(by registered employers)

Large Medium Small Total

Dairy manufacturing Eastern Cape 421 - - 421Free State 260 - 28 288Gauteng 8 223 231 88 8 542KwaZulu-Natal 807 122 49 978Limpopo - - - -Mpumalanga 422 - - 422North West Province - 133 - 133Northern Cape - 133 - 133Western Cape 4 020 339 198 4 557Unknown - - - -Total subsector 14 153 958 363 15 474

Baking, cereals, Eastern Cape 2 714 58 46 2 818confectionery and Free State 632 565 31 1 228snacks Gauteng 8 596 1 439 633 10 668

KwaZulu-Natal 2 127 369 180 2 676Limpopo 711 298 - 1 009Mpumalanga 150 219 41 410North West Province 358 - - 358Northern Cape - 61 46 107Western Cape 4 596 601 270 5 467Unknown - - 36 36Total subsector 19 884 3 610 1 283 24 777

Beverages Eastern Cape 242 87 49 378manufacturing Free State 200 - - 200

Gauteng 13 003 456 89 13 548KwaZulu-Natal 235 463 60 758Limpopo 802 - - 802Mpumalanga 436 - - 436North West Province - - - -Northern Cape - - - -Western Cape 8845 1453 755 11053Unknown - - - -Total subsector 23763 2459 953 27175

Food preparation Eastern Cape 390 63 - 453products Free State 155 - 5 160

Gauteng 15 572 2 151 812 18 535KwaZulu-Natal 4 133 966 251 5 350Limpopo - - 5 5Mpumalanga - 118 8 126North West Province - 218 18 236Northern Cape - - 37 37Western Cape 1 408 1 387 392 3 187Unknown - - - -Total subsector 21 658 4 903 1 528 28 089

Processed meat, Eastern Cape - 163 380 543fish, fruit and Free State 268 194 51 513vegetables Gauteng 21 257 989 347 22 593

KwaZulu-Natal 1 814 476 118 2 408Limpopo - 62 14 76Mpumalanga - - - -North-West Province - 228 27 255Northern Cape - 67 23 90Western Cape 16 816 1 845 875 19 536Unknown 495 61 32 588Total subsector 40 650 4 085 1 867 46 602

Unknown 857 7 1 481

Source: FoodBev SETA WSPs 2009


FoodBev SETA24

The urban-based nature of the sector is reflected inFigure 18 below. The largest component of employmentis found in Gauteng, then Western Cape and KwaZulu-Natal. Similarly, the largest number of SMMEs isconcentrated in these provinces.

The provinces all have different focuses in theirdevelopment strategies for agroprocessing. Theunderlying principle is the improvement of the lives ofthe people through employment creation in agricultureand provision of food security through investment inagricultural processes and beneficiation.

In the Eastern Cape, development of agriculture providesemployment and an income to many families. The focusof the growth and development strategy includes thepromotion of household food security through expandedsmallholder production.23

The Free State's focus is on agriculture diversification andagribusiness. Agribusinesses are to add value fromprimary agriculture through processing of raw materialsand provision of services to add value to produce.24

Limpopo aims to increase the value of agriculturethrough enterprise diversification, invest in water savingtechnologies and add value to the agro-value chain.25

KwaZulu-Natal's focus is poverty alleviation, as mostareas of poverty in the province are rural. The plan is tolink up rural subsistence agricultural activity withcommercial agriculture to develop subsistenceagricultural projects into commercial ones. The agrarianrevolution strategy involves enabling access to marketsand farmer development through the set-up ofagribusinesses.26 The Northern Cape's focus is thedevelopment of agroprocessing.27

Even though the sector is concentrated in threeprovinces, the possibility of cross-sectoral collaborationin terms of beneficiation projects in all these provinceswill be explored as processing of agriproduce isinfluenced mostly by proximity to markets. Companiesare not always scale-dependent in the food and beveragesmanufacturing sector. Small operations may be aseconomically efficient as larger plants, encouraging theparticipation of SMMEs in niche markets providingopportunities for sector growth.

The sector is diverse in terms of the range of productsmanufactured, and this is reflected in the five subsectors.Following is the SIC code grouping of companies in thesector.


Figure 18: Provincial spread of employment


Tabl

e 6:

SIC

code

s: re

gist

ered

and

levy

-pay

ing

com

pani

es b

y SI

C an

d su

bsec

tor g

roup

Smal

l com

pani

esM

ediu

m c

ompa

nies

Larg

e co

mpa

nies

Tota

lSI

CD

escr

iptio

n20

0920

1020

0920

1020

0920

1020

0920

10Re

gPa

y le

vyRe

gPa

y le

vyRe

gPa

y le

vyRe

gPa

y le

vyRe

gPa

y le

vyRe

gPa

y le

vyRe

gPa

y le

vyRe

gPa

y le

vy

Baki

ng, c

erea

ls, c

onfe

ctio

nery

and

sna

cks

3031

2M

anuf

actu

re o

f bre

akfa

st fo

ods

386

385

2-

2-

43

43

449

448

3041

0M

anuf

actu

re o

f bak

ery

prod

ucts

1129

174

715

175

8539

8540

5226

5228

1266

239

852

243

3043

0M

anuf

actu

re o

f coc

oa, c

hoco

late

an

d su

gar c

onfe

ctio

nery

128

2891

349

89

88

1010

714

546

110

49

3049

2M

anuf

actu

re o

f nut

food

4913

3113

64

64

33

33

5820

4020

TOTA

L1

344

221

875

227

102

5110

252

6742

6941

1 51

331

41

046

320

Beve

rage

man

ufac

turin

g

3050

0M

anuf

actu

re o

f bev

erag

es11

923

119

1915

715

614

1014

1014

840

148

35

3051

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istill

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rect

ifyin

g an

d bl

endi

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385

9638

596

2414

2416

137

137

422

117

422

119

of s

pirit

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coho

l pro

duct

ion

from

fe

rmen

ted

mat

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ls an

d m

anuf

actu

re o

f win

e

3052

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actu

re o

f bee

r and

oth

er

649

648

--

--

1-

1-

659

658

mal

t liq

uors

and

mal

t

3052

1Br

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ies

(exc

ept s

orgh

um)

7513

7511

--

--

33

33

7816

7814

3052

2So

rghu

m b

eer b

rew

erie

s21

-21

--

--

-1

11

122

122

1

3052

3M

anuf

actu

re o

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t14

214

23

33

3-

--

-17

517

5

3053

0M

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re o

f sof

t drin

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prod

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n of

min

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wat

ers

123

3012

328

97

97

1611

168

148

4814

843

TOTA

L80

117

380

116

451

3151

3248

3248

2990

023

690

022

5

Dai

ry m

anuf

actu

ring

3020

0M

anuf

actu

re o

f dai

ry p

rodu

cts

231

5523

155

168

167

3323

3324

280

8628

086

3020

1Pr

oces

sing

of fr

esh

milk

104

2010

421

86

86

32

32

115

2811

529

3020

2M

anuf

actu

re o

f but

ter a

nd c

hees

e23

623

62

22

21

-1

126

826

9

3020

3M

anuf

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f ice

cre

am a

nd

1380

119

69

61

-1

-90

1990

1780

othe

r edi

ble

ice

3020

4M

anuf

actu

re o

f milk

pow

der.

286

285

--

--

--

--

286

285

Cond

ense

d m

ilk a

nd o

ther

edi

ble

milk

pro

duct

sTO

TAL

466

100

466

9835

2235

2138

2538

2753

914

753

914

6

Cont

inue

d ov

erle

af

FoodBev SETA26

Tabl

e 6:

SIC

code

s: re

gist

ered

and

levy

-pay

ing

com

pani

es b

y SI

C an

d su

bsec

tor g

roup

cont

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d

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pani

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n20

0920

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Man

ufac

ture

of f

ood

prep

arat

ion

prod

ucts

3011

3Pr

oduc

tion

of la

rd a

nd o

ther

edi

ble

71

71

--

--

--

--

71

71

fats

3014

0M

anuf

actu

re o

f veg

etab

le a

nd

3912

399

74

73

65

64

5221

5216

anim

al o

ils a

nd fa

ts

3014

1M

anuf

actu

re o

f cru

de o

il an

d oi

l 11

411

37

37

21

11

119

819

6se

ed c

ake

and

mea

l

3014

2M

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actu

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f com

poun

d co

ok-

94

94

21

21

33

32

148

147

ing

fats

, mar

garin

e an

d ed

ible

oils

3040

1M

anuf

actu

re o

f foo

d pr

epar

atio

n 10

7917

810

7916

728

1828

1818

1118

911

2520

711

2519

4pr

oduc

ts

3044

0M

anuf

actu

re o

f mac

aron

i, no

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s 24

424

43

33

32

12

129

829

8an

d sim

ilar f

arin

aceo

us p

rodu

cts

3049

0M

anuf

actu

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f oth

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od

1223

173

1223

169

5236

5239

2315

2315

1298

224

1298

223

prod

ucts

not

con

sider

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3049

1M

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actu

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f cof

fee,

cof

fee

subs

titut

es a

nd te

a66

1766

163

23

23

23

272

2172

20

3049

9M

anuf

actu

re o

f spi

ces,

cond

imen

ts,

125

4112

836

1711

1710

95

94

151

5715

450

vine

gar,

yeas

t, eg

g, p

rodu

cts,

soup

s an

d ot

her f

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prod

ucts

TOTA

L25

8343

425

8640

911

978

119

7865

4365

3827

6755

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7052

5

Proc

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frui

t and

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etab

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3010

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pro

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and

401

8440

179

3121

3119

1410

149

446

115

446

107

pres

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tion

of m

eat ,

fish

, fru

it,

vege

tabl

es, o

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3011

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tion,

pro

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and

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866

164

866

161

4827

4823

3317

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947

208

947

201

ving

of m

eat a

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rodu

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3011

2M

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pare

d an

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139

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3912

712

67

67

622

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220

51pr

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ved

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3012

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sing

and

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f fish

17

452

174

5224

1024

106

36

320

465

204

65an

d fis

h pr

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3012

1M

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actu

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ned,

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serv

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3710

377

118

117

65

65

5423

5419

and

proc

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rust

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and

simila

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Tabl

e 6:

SIC

code

s: re

gist

ered

and

levy

-pay

ing

com

pani

es b

y SI

C an

d su

bsec

tor g

roup

cont

inue

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l com

pani

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m c

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mpa

nies

Tota

lSI

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escr

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n20

0920

1020

0920

1020

0920

1020

0920

10Re

gPa

y le

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gPa

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vyRe

gPa

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gPa

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vy

Proc

esse

d fis

h, m

eat,

frui

t and

veg

etab

les

cont

inue

d

3013

0Pr

oces

sing

and

pres

ervi

ng fr

uit

239

4523

941

3014

3013

119

117

280

6828

061

and

vege

tabl

es

3013

1M

anuf

actu

re o

f can

ned,

pre

serv

ed,

8325

8322

1911

1919

52

52

107

3810

743

proc

esse

d an

d de

hydr

ated

frui

t an

d ve

geta

bles

(exc

ept s

oup)

TOTA

L2

001

419

2 00

140

117

598

175

9782

5282

492

258

569

2 25

854

7

Unk

now

n67

923

61

-1

-1

01

-66

966

10

TOTA

L: A

LL7

262

1 35

66

752

1 30

548

328

048

328

030

119

430

318

48

043

1 83

07

579

1 77

3

Sour

ce:F

oodB

ev/S

ARS

dow

nloa

ds

Although the number of registered companies in thebaking, confectionery, cereals and snacks industrydecreased by 30% between 2009 and 2010, this isattributable to the consolidation of levy numbers by anumber of companies. The number of levy-payingcompanies increased marginally. For the othersubsectors, there is not a marked difference betweenregistered and participating companies between 2009 and2010. This confirms that production in the sector is notas sensitive to economic slowdowns as are many otherindustries. A stable pattern in demand is experienced.

The breakdown of employee profiles by demographicsindicates that the occupation classifications frommanagers to professionals are dominated by white people.The classifications from technicians to elementaryworkers are dominated by PDIs. It is evident that learninginitiatives should be further institutionalised to enablethe upward mobility of PDIs to the higher echelons ofthese organisations.

FoodBev SETA28

Title

Man

ager

s

Prof

essio

nals

Tech

nici

ans

and

trad

es w

orke

rs

Com

mun

ity a

nd p

erso

nal s

ervi

ce w

orke

rs

Cler

ical

and

adm

inist

rativ

e w

orke

rs

Sale

s w

orke

rs

Mac

hine

ry o

pera

tors

and

driv

ers

Elem

enta

ry w

orke

rs

Tota

ls

Sour

ce:F

oodB

ev/S

ARS

dow

nloa

ds

Afric

an

mal

e

1 01

9

614

1 81

6

325

5 54

1

3 76

0

11 1

62

16 2

80

40 5

17

Afric

an

fem

ale

397

563

693

336

1 57

1

1 18

2

1 24

5

8 73

5

14 7

22

Afric

an

disa

bled

1 2 4 1 23 2 21 40 94

Colo

ured

m

ale 49

7

341

692 37

1 28

2

816

2 27

8

3 15

6

9 09

9

Colo

ured

fe

mal

e

185

329

196 52

1 43

1

346

955

4 09

9

7 59

3

Colo

ured

di

sabl

ed

2 2 1 – 5 1 1 18 30

Indi

an

mal

e

524

268

383 12 691

413

614

416

3 32

1

Indi

an

fem

ale

130

224 47 9

608

116

104

117

1 35

5

Indi

an

disa

bled

5 2 3 – 5 1 – 3 19

Whi

te

mal

e

3 03

4

1 30

1

1 77

9 30 895

912

441

493

8 88

5

Whi

te

fem

ale

916

1 01

7

168 32

2 73

7

773 62 172

5 87

7

Whi

te

disa

bled

18 10 13 1 35 – – 12 89

Tota

l m

ale

5 07

4

2 52

4

4 67

0

404

8 40

9

5 90

1

14 4

95

20 3

45

61 8

22

Tota

l fe

mal

e

1 62

8

2 13

3

1 10

44 429

6 34

7

2 41

7

2 36

6

13 1

23

29 5

47

Tota

l di

sabl

ed

26 16 21 2 68 4 22 73

232

Tabl

e 7:

Occ

upat

iona

l pro

file

of th

e se

ctor

200

9

Maj

or o

ccup

atio

n (O

FO)

Empl

oyee

pro

file

29

An analysis of the table alongside indicates:• 67% of total employment is male – typical of a

traditional manufacturing environment.• Only 0,25% of employees are disabled.• Among the occupational groups of managers and

specialists, 55% of employees are white. When

compared with the occupational profile of 2005, where59,3% was white (FoodBev SSP 2005), the indication isthat there has been some attention to redress thesituation. However, this still strongly reflects thelegacy of apartheid and signals the need for continuedfocus on the development of equity candidates


Figure 19: Gender breakdown of occupational groups


Figure 20: Equity breakdown of occupational groups

FoodBev SETA30

• Machinery operators, drivers and elementary workers comprise 55% of total employment. As will bediscussed later in the chapter, a great need for skillsdevelopment exists among these occupational groups,as a result of technology changes and the drive forproductivity improvement.

Across almost all occupations, females constitute a lowerproportion of the workforce, even in occupations that arenot traditionally male, such as sales workers, clerical andadministrative workers and professionals (Figure 19).

It is evident from the Figure 20 alongside that Africansare still employed largely in the 'lower-skilled'occupational levels, while management and professionalsare predominantly white.

1.4 Conclusions

The South African food and beverage sector plays asignificant role in economic development andemployment in the country. While the outlook for thesector in terms of output and sales is largely positive,employment numbers continue to drop. This, and thetype of skills needed in the sector, is influenced greatly bytechnological developments and capital laboursubstitution.

Changes in the structure of the industry as well as theimpact of imports and competition from aboard areactively changing employer requirements. The next sectorwill focus on understanding the impact of these changeson the demand for skills.

2.1 INTRODUCTION

The methodology employed to derive the demand forskills in the food and beverage manufacturing sectorincorporated two sector surveys conducted in 2006 andanother over the period 2007–09. The first survey tookthe form of interviews with 'captains of industry' in thesector, chosen via a convenience sample. Additionally,questionnaires were sent to human resource and skillsdevelopment managers. The surveys sought to identifythe skill level requirements of manufacturers in the sectorand the factors that impacted availability or scarcity.Secondary data were also obtained from socioeconomicdatabases such as Statistics South Africa and Quantec.

Companies were further requested to provide data in theworkplace skills plans (WSPs) on scarce occupations, andto quantify their projected needs over one year and threeyears. Also provided were the reasons for scarcity, anddetails of the typical learning pathways required todevelop individuals for these occupational roles. This hasbeen used as an input in the scarce skills described inChapter 4.

Finally, qualitative inputs on skills supply challenges wereobtained through a survey of sector specialists, which wassubsequently refined at a sector skills planning committeemeeting. The survey identified some common trends,and the key ones are listed below.

n Manufacturers are constantly demanding higher skills levels, especially at NQF level 5 and above;

n Competition in the sector is intensifying, driven by the increasing rate of globalisation and integration of thefood and beverage sector across geographies, customerdemands and the creation of niche markets;

n The sector is adopting high technological innovations hat require personnel with higher skills than at present;

n The HET system has a tendency to develop personnel with general skills, as opposed to the specialised skillsin growing demand in the sector. This impacts furtheron the supply of skills to the sector.

n There is a need to focus on the content of the HET system to ensure the skills developed are sector-

specific and in demand, thereby enabling a better fitbetween training and sector workforce demand, and

n The deviation between the number of HET trainees and the number who complete the training is ofconcern,28 and aggravates skills scarcity in the sector.

Finally, it is worth noting that FoodBev SETA hasdeveloped and distributed a skills forecasting tool toassist companies to carry out labour forecasting anddetermine replacement demand at company level. Thetool takes cognisance of labour turnover, productivityfactors, the impact of legislation on staff requirements,and the projected growth/decline of the company. Thiswill assist greatly in the future identification of scarceskills.

2.2 SECTOR GROWTH AND DEVELOPMENT STRATEGIES

There are various growth and development strategies atdifferent levels of government that impact the sectordirectly and indirectly. These are derived frommacroeconomic perspectives founded on various policyand regulatory frameworks adopted by the country. TheIndustrial Policy Action Plan of 2010/11 – 2012/13 (IPAP2) has a direct impact on its competitiveness andemployment. IPAP 2 has identified five challenges thatexisted in the economy before the global economicdownturn. These are:

1. Structural imbalances in the growth path, including growth that is lagging behind other medium- andlow-income countries;

2. Uneven performance of the manufacturing sector, with divisions such as the automotive sectorexperiencing exponential growth while other sectorshave stagnated;

3. Employment growth sustained by credit extension and consumption rather than by productive sectors,leading to a large current account deficit;

4. Low profitability of manufacturing, and5. Low savings and investment from financial sector

growth (only 5,2% of private credit was extended tofixed investment in 2008).


CHAPTER 2

Demand for skills in the food and beverages manufacturing sector

FoodBev SETA32

Key sectors identified for IPAP 2's focus includeagroprocessing, which has a diverse group of industriesand subsectors including food processing and beverages.IPAP 2 action plans for the agroprocessing sector arisingare:

n Development of a national food control agency to consolidate the sector;

n Development of aquaculture to supplement dwindling wild fish stocks;

n Designation of specific areas for utilisation of aquaculture;

n Development of the organic food sector; n Development of the small milling industry; n Enhancement of competitiveness in fruit and vegetable

canning, and n Beneficiation of rooibos and honeybush products.

These are national economic imperatives that the sectorwill have to embrace, though other food and beverageareas need to be explored and a needs analysis done onpossible beneficiation projects.

2.3 SCENARIOS FOR THE FOOD AND BEVERAGES MANUFACTURING SECTOR

To better understand and forecast future employmentpatterns and skills trends, FoodBev SETA carried out ascenario planning exercise that examined key variablesand how they might impact employment in the food andbeverages manufacturing sector.

The scenario planning was carried out in two steps. First,key variables affecting employment in the sector wereidentified and their potential influence mapped through aqualitative Delphi exercise. Three scenarios were thendrawn up for the future development of the sector, afterwhich the potential effect of each scenario on employ-ment and skills needed was mapped.

The three scenarios represent realistic and plausiblepictures of alternative futures:

n Scenario 1: high growthn Scenario 2: medium growth n Scenario 3: low growth

Each is structured around six main variables:

n Disposable income levels n The proportion of high-to low-income earnersn Price levels

n Shifts towards capital- or labour-intensive production techniques

n Labour productivityn Imports and exports, andn Wage levels

The above factors would have a direct effect on thedemand for each subsector's products – based onsensitivity to income levels, market segmentation and theproportion of high-to low-income earners, and prices.This effect was then postulated and used to estimate eachsubsector's growth.

Population growth rates were assumed to be stable andunlikely to change. The ratio of capital to labour(signifying shifts towards capital-intensive productiontechniques) was also unlikely to change, irrespective ofthe scenarios and thus was kept constant for allsituations.

2.3.1 The driving forces behind the issues

From the review of literature and data, the variables mostlikely to affect output in the food and beveragesmanufacturing sector are:

n Disposable income in the economyn Population changes n Income distribution n Trends in diet, nutrition and consumer demand, andn Globalisation, competition and consolidation

The potential scenarios in the next five years are depictedin the Table 8.


Disposable income levels

Economic growth

The proportion of high-to low-income earners

Price levels

Imports and exports

Wage levels

Labour productivity

Rise by 6% pa

Rises to 6% pa

Improves slightly

Inflation at 5%, interest rates steady,disposable incomes rise steadily

Increase in exports over imports infood and beverages manufacturing,increased demand abroad for SouthAfrican goods

Wage levels rise faster than economicgrowth

Rises significantly as companies try tocompensate for higher wages,increased funds available forinvestment in equipment/technology

A rise in disposable incomesand an improvement in theincome distribution in thecountry lead to steadygrowth in demand for basicfoodstuffs, and a highgrowth in demand forhigher-end food andbeverages. The surplus ofexports over imports alsocontributes to the demandfor South African production.Jobs are maintained insectors producing basicfoodstuffs and demand forlabour increases for moreluxurious goods , increasedproduct differentiation,branding

Unlikely to occur givenanaemic global economy


Economic growth


Price levels

Imports and exports

Wage levels

Labour productivity

Rise by 3%

Rises by 3%

Deteriorates slightly

Inflation at 4%, interest rates steady,disposable incomes stay the same

Imports and exports balance out infood and beverages manufacturing

Wage levels grow at the same rate aseconomic growth

Rises marginally, continuedinvestment in equipment andtechnology

Steady growth in incomes,almost at par with inflation,means little change indemand for food andbeverages of all types. Thetrend towards laboursubstitution and decreasingemployment due to highercapital productivity results incontinuation of steady joblosses in both food andbeverages manufacturing,except for specific nicheproducts. Uncertainty abouteconomic growth also leadsto conservativeness abouthiring

Most likely to occur

Table 8: Scenarios and their potential effect on the food and beverages manufacturing sector

Variables Expected change under Impact Possibility growth scenario

HIGH GROWTH SCENARIO

MEDIUM GROWTH SCENARIO


Economic growth


Price levels

Imports and exports

Wage levels

Labour productivity

Rise by 1%

Rises by 1%

Deteriorates slightly

Inflation at 3%, small cuts in interestrates steady, disposable incomes fall

Excess of food and beverages importsover exports, some jobs lost toproduction abroad

Wage levels do not increase, exceptto account for inflation

Remains constant, little investment inequipment and technology

The drop in real disposableincome and the rise ininflation lead to lowerdemand for higher-endfoodstuffs, but demand forbasic foodstuffs remainsunaffected. Job losses occur,especially where importscompete

Least likely to occur

LOW GROWTH SCENARIO

FoodBev SETA34

2.3.2 Likely implications

The likely impact on the derived demand for labour in allsubsectors is postulated in Table 9. Impact projectionswere based on the sensitivity of the subsectors to changesin the scenario variables. For example, the consumptionof meat and meat products is likely to increase

significantly if disposable income levels and theproportion of high- to low-income earners improve, as isthe case in a high growth scenario. The total utilisation ofproduction capacity in the manufacturing industry wasalso a factor – this is currently 79,6%, which indicatesspare capacity.

Subsector

3011: Production, processing and preserving of meat and meat products

3012: Processing and preserving of fish and fish products

3013: Processing and preserving of fruit and vegetables

3014: Manufacture of vegetable and animal oils and fats

3020: Manufacture of dairy products

3031: Manufacture of grain mill products

3032: Manufacture of starches and starch products

3033: Manufacture of prepared animal feeds

3041: Manufacture of bakery products

3042: Manufacture of sugar, including golden syrup and castor sugar

3043: Manufacture of cocoa, chocolate and sugar confectionery

3044: Manufacture of macaroni, noodles, couscous and similar farinaceous products

3049: Manufacture of food products not considered elsewhere

3051: Distilling, rectifying and blending of spirits, ethyl alcohol production fromfermented materials; manufacture ofwine

3052: Manufacture of beer and other malt liquors and malt

3053: Manufacture of soft drinks; production of mineral waters

High growth scenario

Increase in demand for labour

Increase

Increase

Constant

Increase

Constant

Increase

Increase

Increase

Increase

Increase

Increase

–

Increase

Increase

Increase

Medium growthscenario

Slight increase

Slight increase

Constant

Constant

Constant

Constant

Constant

Constant

Constant

Slight increase

Constant

Constant

–

Slight increase

Slight increase

Slight increase

Low growth scenario

Constant

Decrease

Constant

Constant

Decrease

Constant

Decrease

Decrease

Decrease

Constant

Decrease

Decrease

-

Constant

Constant

Constant

Table 9: Expected impact on the demand for labour in each scenario

Impact on demand for labour

While these postulated scenarios will vary from companyto company and across the main occupation types, ingeneral where there are no compelling reasons forincreases in employment the scenarios foresee acontinuation of the gradual trend towards (i) fewerworkers, or at best (ii) maintaining of current levels ofemployment. (See Tables 11 and 12 overleaf.)

2.3.4 Skills demand

The likely trends in employment figures in the food andbeverages subsectors are given in Table 11 and Table 12for the medium growth scenario described above, whichwe believe is the most likely over the next five years. Thetrends would continue largely in the lower qualificationoccupations, and there would be a slight increase in thehigher qualifications. In both food and beveragessubsectors, the informal employment sector contributesmost to the increase in employment numbers.

Overall employment is expected to decrease in both foodand beverages subsectors, with the exception of informalemployment in the beverages industry, which is likely tocontinue rising. The reduction in employment numbersis likely to slow down with improved economiccircumstances, but the increasing use of capital-intensivetechnologies, more efficient methods of production andconsolidation of markets will still result in losses in totalemployment figures.


2.4 FACTORS INFLUENCING SECTOR NEEDS

Current employment trends in the sector as a wholeindicate that while numbers of employees are decreasing(and this is expected to continue), demand isstrengthening for a more highly qualified workforce andfor upskilling of the current workforce to meet newchallenges.

An analysis of planned training interventions for 2010,based on WSPs, indicates planned training interventionsfor 77 500 employees. This represents more than 70% ofemployment of companies that submitted WSPs. Thelargest component of planned training interventions liesbetween NQF 4 and 6.

2.4.1 Age profile of the sector

The sector is not reflective of the population dynamics ofthe country, with more than 60% of the workforce in the35+ age group. The categories most affected are 'seniorofficials and managers', 'machinery operators and drivers'and 'technicians and trades workers'. This signals theneed for succession planning where many employees areabove 55 years of age and close to retirement. The tablebelow depicts the age profile of the industry.

Younger than 35

1 707

1 954

1 843

403

4 179

2 727

4 433

12 102

29 348

Between 35 and 55

3 938

1 975

3 038

333

5 937

2 941

8 772

13 909

40 843

Older than 55

475

240

323

29

790

245

1 275

1 697

5 074

% younger than 30

27,89%

46,87%

35,42%

52,68%

38,32%

46,12%

30,61%

43,68%

38,99%

% between

35 and 55

64,35%

47.37%

58,38%

43,53%

54,44%

49,74%

60,58%

50,20%

54,27%

% older

than 55

7,76%

5,76%

6,21%

3,79%

7,24%

4,14%

8,81%

6,12%

6,74%

Occupation

Senior officials andmanagers

Professionals

Technicians and tradesworkers

Community andpersonal serviceworkers

Clerical andadministrative workers

Sales workers

Machinery operatorsand drivers

Labourers

Total

Table 10: Age profile of sector

Source: WSPs 2009

FoodBev SETA36

Tabl

e 10

:For

ecas

ted

perc

enta

ge c

hang

es in

em

ploy

men

t acr

oss

subs

ecto

rs, f

ood

[SIC

301

-304

]

Tota

l for

mal

em

ploy

men

t:

Form

al –

hig

hly

skill

ed

Form

al –

ski

lled

Form

al –

sem

i- an

d un

skill

ed

Tota

l em

ploy

men

t inf

orm

al

Tota

l em

ploy

men

t: fo

rmal

and

in

form

al

* p

roje

cted

1995

1,10

2,91

0,59

1,21

20,0

4

1,62

1996

3,93

5,29

3,20

4,25

19,2

1

4,43

1997

(3,7

9)

(2,9

3)

(4,5

7)

(3,3

8)

16,4

1

(3,0

4)

1998

(3,9

2)

(3,3

7)

(4,7

4)

(3,4

5)

14,6

2

(3,1

0)

1999

(0,3

7)

(0,0

2)

(1,2

2)

0,14

13,1

9

0,34

2000

(4,7

0)

(4,4

9)

(5,4

9)

(4,2

2)

11,1

4

3,76

2001

(2,0

0)

(1,8

6)

(2,7

6)

(1,5

4)

6,99

(1,3

9)

2002

(1,4

3)

(1,3

2)

(2,1

2)

(1,0

1)

(7,3

5)

(1,8

7)

2003

(9,1

1)

(9,0

2)

(9,6

7)

(8,7

7)

(12,

66)

(9,3

5)

2004

(1,5

8)

(1,4

9)

(2,0

9)

(1,2

7)

(6,3

1)

(1,8

9)

2005

1,61

1,68

1,18

1,86

(10,

66)

0,82

2006

(2,2

4)

(2,1

8)

(2,5

5)

(2,0

6)

9,20

(1,5

9)

2007

(2,3

5)

(2,3

0)

(2,5

9)

(2,2

1)

8,17

(1,6

8)

2008

(0,3

2)

(0,2

8)

(0,5

2)

(0,2

1)

(6,1

9)

(0.7

3)

2009

(1,1

2)

(1,0

8)

(1,3

0)

(1,0

1)

(0,9

1)

(0,9

8)

2010

–20

15*

(0,2

6)

(0,3

8)

(0,0

6)

(0,8

6)

1,40

(0,1

4)

Tabl

e 11

:For

ecas

ted

perc

enta

ge c

hang

es in

em

ploy

men

t acr

oss

subs

ecto

rs, b

ever

ages

[SIC

305

]

Tota

l em

ploy

men

t: fo

rmal

and

info

rmal

Form

al e

mpl

oym

ent:

tota

l

Form

al –

hig

hly

skill

ed

Form

al –

ski

lled

Form

al –

sem

i- an

d un

skill

ed

Empl

oym

ent i

nfor

mal

: tot

al

* p

roje

cted

1995

(0,9

3)

(1,9

1)

1,26

(1,3

4)

(2,7

6)

9,63

1996

(2,0

3)

(3,1

9)

(1,0

1)

(2,9

0)

(3,7

4)

9,20

1997

(1,2

4)

(2,4

4)

(0,9

5)

(2,3

7)

(2,7

5)

8,94

1998

1,64

0,71

1,75

0,61

0,56

8,81

1999

2,78

2,19

2,94

1,97

2,17

6,94

2000

(4,5

7)

(5,6

1)

(5,0

7)

(5,8

7)

(5,5

7)

2,46

2001

(0,7

6)

(5,9

7)

(5,5

1)

(6,2

6)

(5,9

0)

31,6

8

2002

(2,4

0)

(6,3

3)

(5,9

0)

(6,6

1)

(6,2

6)

15,1

1

2003

(2,1

0)

(6,3

1)

(5,9

0)

(6,5

7)

(6,2

5)

13,1

3

2004

6.07

(0,2

6)

0,14

(0,5

0)

(0,2

2)

25,0

7

2005

10,9

5

6,58

6,96

6,38

6,61

21,4

2

2006

6,74

3,83

4,14

3,68

3,85

12,8

4

2007

7,89

3,03

3,27

2,91

3,04

17,2

7

2008

(2,2

6)

0,07

0,27

(0,0

2)

0,07

(6,2

2)

2009

0,73

(5,5

0)

(5,3

2)

(5,5

7)

(5,4

9)

12,0

0

2010

–20

15*

0,51

(1,4

8)

(3,7

6)

(2,1

0)

(0,9

6)

12,0

7

2.4.2 Replacement and projected demand, 2011–2015

Annual labour turnover in food and beveragesmanufacturing ranges from 9 to 15%, but a large numberof these individuals will move to companies in the sectorand therefore are not lost. Actual losses to the sectorarising from turnover were estimated from StatisticsSouth Africa's survey of total employment and earnings.These, however, were calculated for the wholemanufacturing sector and not specifically for food andbeverages.

Company turnover information supplied in Table 13 isbased on data provided by a sample of small, mediumand large companies during 2010. The industry turnoverfigures, which include retirement as expected from theage profile above, and projected deaths as a result ofHIV/Aids (currently 2 600 a year) are shown in the table.These consider the percentage of employees appointedduring year and the percentage of employees who leftduring the year.

As few firms are expected to downsize in the 'medium'scenario, labour turnover for the sector would roughly

equate to the replacement demand figures. When factoredinto the expected percentage changes in employmentacross food and beverages subsectors, the projectedadditional demand for labour in the sector over the nextfive years is derived (Table 14).



Professionals




Sales workers


Labourers

% Companylabour turnover

10%

13%

15%

9%

10%

13%

10%

15%

% Industrylabour turnover

3%

4%

5%

2%

2%

3%

5%

4%

Table 13: Company and industry turnover

350

329

561

32

271

379

1 308

2 419

5 299

(36)

8

116

(11)

87

41

449

3 420

4 110

359

341

589

33

274

391

1 363

2 516

5 507

(35)

8

119

(15)

88

41

467

3 969

4 677

369

354

618

34

278

402

1 419

2 616

5 721

(35)

8

123

(24)

89

42

486

4 607

5 331

393

377

662

34

281

456

1 549

2 721

6 080

81

40

126

1

90

89

493

3 351

4 190

403

391

695

35

284

471

1 616

2 830

6 322

82

40

130

1

91

90

513

1 857

2 722

1 874

1 792

3 125

168

1 388

2 099

7 255

13 102

28 929

57

104

614

-48

445

303

2 408

17 204

21 087

Occupation


Professionals




Sales workers


Labourers

Total

2011 2012 2013 2014 2015 Total netadditional

demand2011—2015

Table 14: Projected net additional demand, 2011-2015

Food

m

anuf

actu

ring

Beve

rage

sm

anuf

actu

ring

Food

m

anuf

actu

ring

Beve

rage

sm

anuf

actu

ring

Food

m

anuf

actu

ring

Beve

rage

sm

anuf

actu

ring

Food

m

anuf

actu

ring

Beve

rage

sm

anuf

actu

ring

Food

m

anuf

actu

ring

Beve

rage

sm

anuf

actu

ring

Food

m

anuf

actu

ring

Beve

rage

sm

anuf

actu

ring

Source: Data supplied by FoodBev companies 2010, own calculations

FoodBev SETA38

To estimate the figures needed in scarce occupations, thepercentage of people in occupations identified as 'scarce'at six-digit level of the Organising Framework for

Occupations (OFO), were calculated. These percentageswere then applied to the total additional demand.

1 874

1 792

3 125

168

1 388

2 099

7 255

13 102

28 929

57

104

614

(48)

445

303

2 408

17 204

21 087

1 931

1 896

3 739

120

1 833

2 402

9 663

30 306

50 016

74%

62%

58%

0%

0%

67%

63%

13%

1 429

1 176

2 169

–

–

1 609

6 088

3 940

16 410

Occupation


Professionals




Sales workers


Labourers

Total

Total additional demand over five years

Table 15: Projected scarce skills required


Foodmanufacturing

Beveragesmanufacturing

Total food andbeverages

manufacturing

% of totalemployment per

OFO categorylisted as scarce

occupations

Scarce skillsrequired

Replacement/scarcity



Replacement/ scarcity




Replacement

6 – 8

6 – 7

4 – 5

4

4

4 – 5

4

1 – 4

Learnership/managementdevelopment programme

Learnership: functionalspecialisation/work experience

Apprenticeship,learnership/technical degree

Work experience

Learnership/work experience

Learnership, apprenticeship

Learnership

Learnership

Abet level 4/learnership

OFO


Professionals


Community and personalservice workers

Clerical and administrativeworkers

Sales workers

Machinery operators anddrivers

Labourers

Total

Intervention

Table 16: Skills requirements

Source: Sector research 2010

Total estimateddemand for

five-year period

Driver(eg replacement/scarcity/ growth

demand)NQFlevel

Type of intervention(learning programme

matrix)

Top-up skills demand

1 931

1 896

3 739

120

1 833

2 402

9 663

30 306

50 016

Degree/honours/masters

Professional qualification/honours/degree

National certificate/diploma/learnership

National certificate/diploma/degree/learnership

Matric/national certificate/learnership

Matric/national certificate/learnership

Learnership/matric

Matric/learnership

2.4.3 Requirements

From the above, it can be derived that, from a total of 50 016 additional employees required by the sector overthe next five years, 16 410 people will be required inoccupations identified as scarce.

Table 16 (previous page) provides projected skillsrequirements over a five-year period.

2.5 Conclusion

This chapter looked at the demand for skills in the foodand beverages manufacturing sector through projectedscenarios, a review of the sectoral trends, and qualitativeand quantitative analyses.

It is likely that the next five years will see medium growthin South Africa with moderate increase in demand forthe sector's products. However, only slight increases areexpected in the demand for labour, with possible joblosses in some types of employment. However, the natureof the sector is such that there will be increased demandfor skilled labour and a need to upskill existing labour tocope with changes. Also, replacement demand isexpected to remain steady to cope with retirement,mortality and turnover into other sectors. The netdemand for labour will, therefore, increase slightly, butthere will be a much greater need for skills developmentif companies are to cope.

Workplace training is a crucial component of skillsdevelopment in South Africa. In the analysis of HETskills supply it is evident that there is a need for a labourforce that not only holds the necessary qualifications, buthas the requisite experience and understanding of thework environment to match.

Skills development and workplace learning provides aunique opportunity to develop a workforce with skillsaligned to sectoral and general economic needs.Workplaces are increasingly embracing opportunitiesoffered by FoodBev SETA to provide workplaceexperience to young entrants into the labour market.Bursaries are provided for further studies at HETinstitutions, and more than 600 artisans are beingdeveloped by the sector.


3.1 INTRODUCTION

The methodology employed in understanding the supplyof skills to the food and beverage manufacturing sectorencompassed the following survey tools and secondarydata:

n Research surveys conducted in 2006 and a survey for the period 2007-09;

n A skills forecasting tool that has been developed to assist companies to forecast their labour needs anddetermine replacement demand. This tool has amodule that solicits inputs on the availability of skills,such as the time taken to fill vacant positions, labourturnover, productivity factors, and projected skillsneeds and qualifications required;

n Companies are requested to provide data in the WSPs on scarce occupations, and to quantify the need over ayear and three years. Data provided also cover thereasons for scarcity and the typical learning pathwayrequired to develop individuals for these occupations.

This has been used as an input in the scarce skillsdescribed in Chapter 4;

n Qualitative inputs on challenges with supply of skills provided by sector specialists at a sector skills planningcommittee meeting, and

n Quantitative data from Stats SA and Quantec.

The research found that:

n The supply of skills does not meet – or fit strategically – with industry demands, as FET and HET institutionsare imparting general skills while industry requiresspecific skills;

n High-level skills are required while throughput from HETs is sub-optimal;

n The labour force over the past ten years has become younger and better educated with increasing numbersof tertiary level graduates. However, they still do nothave the type of skills needed to meet the demands ofthe sector, which may contribute to and explain thehigh number of unemployed graduates, and

FoodBev SETA40

CHAPTER 3

Supply of skills


Figure 21: Employment levels – food and beverages subsectors

n More focus on technical content is required from HET institutions.

3.2 DEMAND SIDE INITIATIVES

3.2.1 Employment trends and patterns

The supply of skilled personnel in the food and beveragemanufacturing sector is a direct function of the demandfor skills by manufacturing entities. This is imperative asthey absorb the relevant skills given the macro-environment and the local and global markets in whichthey function. Figure 21 depicts the absorption of labourin the sector.

Figure 21 documents that total employment in the foodsubsectors continues to fall from its peak in 1996.Formal employment has fallen faster than informal,though informal employment constitutes a negligible 7%of the subsector's employment numbers in 2009. Thisproportion has remained constant over the last decade.Total subsector employment fell by 17% from 2000 to2009, with formal employment falling by 17% andinformal employment by 19%.

In the beverages subsector, total employment increasedfrom 2000 to 2009. This increase was driven by anincrease in the informal sector: while formal employmentfell by 11% in the period informal employment rose by a

remarkable 262%, resulting in a net increase in totalemployment of 27%. As a result, the structure ofemployment has changed significantly.29

While formal employment constituted 95% of totalemployment in 1990 and informal employment 5%, thefigures for 2000 were 86% and 14% respectively, and in2009 were 60% and 40%. Employment in the subsector istherefore increasingly informal.30 This may be attributableto an increase in the use of casual and seasonal workersespecially in the winemaking industry.

3.2.2 Productivity in the FoodBev sector

The food subsectors have witnessed a large drop informal and informal employment, but this has not beenmirrored in the output figures. As a result, the output peremployee, measured in thousands of Rands per employeeat constant prices (2005), shows a marked increaseespecially in the last decade.31 This is detailed in Figure22.

Using 1990 as a base year, it can be seen that fixed capitalproductivity in the food manufacturing subsector hasfluctuated over the decades and deteriorated slightly inthe last few years, while there has been a steep increase inboth labour and multifactor productivity (presumablydriven by the increase in labour productivity). Theincrease in labour productivity is especially significant- it



Figure 22: Productivity categories in the food manufacturing industry

has risen by approximately 20% over the last five years32

(Figure 22).

In the beverages manufacturing subsector, labour andmultifactor productivity appear to have declined (using1990 as a base year) since 2000 while fixed capitalproductivity is at about the same level. Historically,productivity in the sector had a cyclical pattern thatpeaks approximately every ten years, but the indicationsfor 2010 are for lower productivity in all categories(Figure 23).

The output per employee (both formal and informal) fell,however, in tandem with the increase in informal employment in the mid-2000s, but has since recovered. Asimplied in the above observations, the productivity changesin the beverages subsector are not as clear-cut as in the foodsubsectors. Productivity in certain aspects has fluctuatedover the last two decades and has actually decreased fromhighs in 1981 to current levels. Not surprisingly, the in-crease in informal employment in the mid-2000s coincidedwith a drop in labour productivity, but fixed capitalproductivity also fell slightly during the same period.

FoodBev SETA42


Figure 23: Productivity categories in the beverage manufacturing subsector


Figure 24: Remuneration per employee, food and beverages manufacturing

Among the larger companies there is, however, aconsistent drive for productivity improvement.

3.2.3 Remuneration and value added

Comparing the changes in remuneration per employee inboth real and constant terms shows that although wageshave risen sharply for the employed in food andbeverages manufacturing, most of these increases havebeen due to increases in the value of money (inflation)rather than in real wages. The remuneration peremployee (compiled at 2005 prices) shows a steadyincrease over the last ten years for the food subsectorsand a steep drop followed by a recovery for the beveragessubsector, as can be seen in Figure 24. At current prices,this stands at R151 817 for food manufacturing and

R150 984 for beverages manufacturing employees. Theseare both above the national average.

Despite the increase in real and adjusted remuneration,the food subsectors have still seen a slight fall in wagesper value added, although this has increased in the lastthree years. The slight increase in the beverages subsectorhas also intensified in the same period. Employees are,therefore, paid more now for similar value-added outputthan they were in 2007.

It is difficult to obtain detailed annual statistics onremuneration per occupational group, partly because thesector is not organised and wages are negotiated atcompany level. Table 17 is derived from data obtainedduring research conducted to develop the FoodBev SETAscarce skills guide.


R 405 361

R 706 000

R 406 000

R 398 999

R 368 000

R 455 000

R 325 000

R 325 000

R 345 000

R 325 000

R 335 000

R 324 000

R 230 000

R 180 000

R 230 000

R 260 000

R 220 000

R 169 528

R 210 636

R 163 000

R 209 499

R 212 500

R 75 000

R 75 000

R 70 000

R 75 000

R 73 125

R 405 361

R 800 000

R 800 000

R 656 000

R 543 000

R 543 000

R 501 527

R 480 000

R 480 000

R 390 000

R 480 000

R 464 000

R 377 000

R 336 000

R 215 000

R 300 000

R 325 000

R 320 000

R 253 456

R 236 782

R 231 000

R 233 347

R 245 000

R 153 000

R 153 000

R 89 000

R 115 000

R 105 000

R 800 000

R 635 000

R 925 999

R 508 000

R 420 000

R 442 000

R 500 000

R 432 000

R 432 000

R 440 000

R 432 000

R 435 000

R 330 000

R 308 000

R 229 000

R 230 000

R 260 000

R 226 000

R 204 000

R 220 000

R 225 000

R 212 500

R 215 000

R 125 000

R 125 000

R 91 000

R 99 500

R 79 000

R 635 000

R 800 000

R1 200 000

R 657 000

R 620 000

R 620 000

R 600 000

R 550 000

R 550 000

R 540 000

R 500 000

R 497 000

R 480 000

R 480 000

R 320 000

R 300 000

R 295 000

R 273 000

R 254 000

R 253 000

R 250 000

R 245 000

R 238 000

R 200 000

R 200 000

R 135 000

R 108 000

R 105 000

R 800 000

57%

31%

25%

5%

20%

10%

33%

33%

28%

33%

30%

2%

34%

27%

0%

0%

3%

20%

4%

38%

1%

1%

67%

67%

30%

33%

8%

1%

Occupation

Engineering manager

General manager

Finance manager

Production/operations manager

Quality assurance manager

HR manager

Electrical engineer

Electronics engineer

Supply and distribution manager

Mechanical engineer

Sales and marketing manager

Management accountant

Accountant

Food science technician

Cellarmaster

Electronics engineering technician

Food technologist

Dairy products maker

Millwright

Sales representatives

Electrician

Fitter and turner

Process machine operator

Packing machine operator

Telemarketer

Boiler or engine operator

Baker

Butcher

2007 2009

Table 17: Remuneration in the FoodBev sector


Average Maximum Average Maximum

% increase

on average

not being absorbed by the sector, which implies that theeducation or skills levels of the unemployed do not meetthe skills required by the market.

In addition, according to the Labour Force Surveysof2000, 2005 and 2010, the majority of the populationhave a general education and training (GET)qualification, followed by those with FET qualifications.In 2010 only 5% had a HET qualification, while 25%having no schooling nor general education (presumably asignificant proportion of these are non-school goingchildren). This shows that the majority of the populationhas some formal training (Figure 25).

3.3.2 Qualifications profile of the sector

A comparison between 2006 (FoodBev SSP 2006) and2009 indicates an improvement in the baseline educationlevels of the sector. The number of employees with abelow-GET qualification decreased from 12 to 8%, andthose with an NQF 1 qualification from 13 to 11%.Employees with an NQF 4 and higher qualificationincreased from 35 to 40%. Generally, qualification levelsof employees increased between 2006 and 2010. Peoplewith a qualification of NQF 5 and above increased from13 to 15%, and workers with an NQF 4 qualificationincreased from 24 to 25%. This is illustrated in figures 26and 27.

FoodBev SETA44

It can be inferred from the table that:n The highest-paid position is that of general manager,

with remuneration of engineering managers a thirdlower, and other managers earning approximately 50 –55% of the earnings of a general manager;

n Engineering and finance offer marginally higher incomes than other occupational fields, and

n Process and packaging machine operators experienced the largest remuneration growth, with generalmanagers third in salary growth. Engineeringoccupations also experienced above-inflation growth.

Labour elasticity evaluates the responsiveness of demandfor labour as a factor input in production when there is achange in the ruling market wage rate. The proportion oflabour costs in the total cost of business in the FoodBevsector is relatively low (when compared with the servicessector), which may lead to a less elastic response tolabour costs. This may be a contributing factor in therelatively low increase in artisan wages illustrated above,and emphasises the need for retention strategies, andskilling and upskilling of people to increase productivitygains that could boost remuneration.

3.3 SUPPLY SIDE INITIATIVES

3.3.1 Occupational profile of the food and beverage manufacturing sector in South Africa

Unemployment in South Africa remains relatively high.This means that there is an available workforce, but it is

Source: LFS September 2000, 2005, 2010

Figure 25: Qualifications of SA population

The figure below documents that qualifications ofemployees are concentrated around NQF 4. AlthoughAfrican males dominate in the NQF 4 qualification level,they proportionally have lower qualifications than otherequity groups in the sector. They are also the largestproportion of employees with a qualification below NQF 4.

White males and females dominate at NQF 5 level andhigher. As can be seen from Figure 28 below, higherqualifications are held in the main by white individuals.Obtaining and retaining adequately qualified equitycandidates in many scarce occupations remains achallenge. Skills needed by the sector are supplied thoughuniversities, universities of technology, technical colleges,learnerships and private training providers.


Source: WSPs 2009

Figure 28: Qualifications profile of sector by race and gender

Source: WSPs 2006

Figure 26: Qualifications profile 2006

Source: WSPs 2009/10

Figure 27: Qualifications profile 2010

FoodBev SETA46


Figure 29: Occupational structure of employment – food manufacturing

Source: LFS September 2000, 2005, 2010

Figure 30: Occupational structure of employment – beverage manufacturing

3.3.3 Changes in occupational structure of employment

Since 2000, the food manufacturing subsectors have seena decrease in employment at all occupational levels, withskilled employee numbers down 21%, informal down19%, semi-and unskilled down 15% and highly skilleddown 17%.33

The beverages manufacturing subsector witnessed a dropin the employment numbers of 8% for highly skilledemployees and 11% for semi-skilled and unskilled

employees. Skilled employee numbers fell by 13%, while,as discussed earlier, there was a large increase, 262%, ininformally employed persons. This is evident in Figure30.

Figure 31 indicates that the beverages subsector appearsto have more informal, semi-skilled and unskilledemployees than the food sector.

Compared to the rest of the economy and to themanufacturing sector as a whole, beveragesmanufacturing has a higher proportion of skilled and



Figure 32: Occupational structure of employment – food and beverages manufacturing


Figure 31: Occupational structure of employment – food and beverages manufacturing

FoodBev SETA48

FoodBev SETA website.

Table 18: Current qualifications to address scarce skills in the sector

semi-skilled workers, while food manufacturing has asignificantly higher proportion of semi-and unskilledworkers.

From Figure 32 it can be concluded that skillsdevelopment will need to be linked to other changes inthe sector if it is to contribute meaningfully to jobcreation – something that is not strictly a SETA function.However, it is important to link skills planning to othernational processes, and opportunities for this will beexplored.

3.4 SUPPLY OF SKILLS

3.4.1 Supply from the sector

FoodBev SETA currently has 35 qualifications acrossNQF Levels 1-6. Training providers are accredited toprovide these qualifications in the sector with inherentquality frameworks to ensure adequate training andassessment of the workforce to establish its competence.The qualifications listed below are supporting efforts tomitigate the scarce skills in the sector.

Companies in the sector have adopted the learnership asa 'preferred' vehicle for occupational skills developmentand more than 10 000 people have been beneficiaries ofthis learning pathway. Successful completion rate isapproximately 60%, and absorption of previouslyunemployed learners 50%.

Qualifications are available for skills needs across thesector, and support is provided for 'non-primary focus'learnerships needed in the sector as well. An adequatenumber of providers are accredited to deliver theseprogrammes.

Companies invest in training and more than 70% of theworkforce is exposed to some form of training annually(as reported in WSPs). More than 600 artisans are beingdeveloped, bursaries are provided to employees and morethan 100 students are exposed to work experienceopportunities.

3.4.2 Supply from further education

The restructured public FET sector is expected to play asignificant role in supplying intermediate skills.Currently, though, the FoodBev sector is primarily usingprivate providers for the implementation of learnerships,which has become the preferred training vehicle at NQFlevels 3–5. The perception exists that the FET structurein its current form is neither providing the required

theory training nor the flexibility to render services thatrequire workplace training and assessment.

3.4.3 Supply from higher education

Provision in the formal education system is regarded asinadequate. Graduates with 'generalist' knowledge areproduced, and in certain instances (eg food technology,food science) the knowledge is outdated and not meetingthe needs of industry.

It is difficult to do an analysis of the adequacy of supplyfrom the formal education system because of the cross-sectoral nature of most of the occupations identified asscarce. This type of analysis should be done at anaggregated national level.

Engineering, trades and finance typically produced bythe HET system have been identified by the sector as'absolute' scarce skills. These are, however, occupationsneeded in many economic sectors in the country, and thescarcity may be underpinned by factors described asrelative below. Scarcity in these fields also lies in themanagerial bands, and may point to a need for improvedsuccession planning and appropriate related skillsdevelopment.

Many of the occupations identified as scarce can bedescribed as 'cross-sectoral', and supply is influenced byflows in and out of the sector, which are difficult toquantify, but are influenced by the perceivedunattractiveness of the sector as an employer, and theperceived lower than average remuneration paid bycompanies in the sector.

A further important aspect of supply – and that mostfrequently cited by companies as the main reason forscarcity – is the lack of qualified equity candidates. Thisillustrates a 'relative' scarcity, where candidates areavailable, but do not meet the requirements of the role oroccupation.

3.5 CONCLUSION

Unemployment levels have risen in recent years, and nowstand at 31% (expanded rate). The food and beveragesmanufacturing sector has, to some extent, been insulatedfrom the economic downturn, and the decrease in formalemployment is more likely attributable to technology,outsourcing of non-core functions and use of labourbrokers. Indications are that companies are starting toemploy full-time staff rather than using labour brokers.


Over time, therefore, there will be a need for higher skillslevels and skilled labour as the sector seeks to ensure itscompetitiveness and sustainability through newtechnology and innovation.

FoodBev SETA50

4.1 INTRODUCTION

Based on the analysis in the previous chapters, takingcognisance of the key drivers of change, and consideringinputs from a stakeholder workshop held during August2010 (with representatives from all subsectors), scarceskills requirements will be grouped based on thefollowing needs:

n Existing employees in the sector: improving skills levels, opportunities for career advancement;

n Companies in the sector: ensuring that skills development leads to improved productivity,competitiveness, innovation, sustainability andprofitability;

n The unemployed: assisting them to gain or regain entry into the labour market;

n New entrants to the labour market: improving the employability of individuals by exposing them to theculture and ethics of the work environment, and

n School leavers: facilitating access to further education and training opportunities, thus improving theiremployability.

In analysing the needs of these categories, adifferentiation will be made among the following'causative' factors influencing skills requirements:

n Attractiveness of the sector as an employer;n Skills gaps (availability of recruits who lack all the

requisite skills sets required);n Availability of equity candidates, andn Skills shortages (national/regional shortages)

The match between demand and supply of skills in thefood and beverage manufacturing sector requires thefacilitation of a better strategic fit. The demand issuesisolated are:

n Higher levels of education and work experience are required in the sector, mainly at NQF levels 4-6 –due to globalisation, local and internationalcompetition and technology;

n The need for increased artisan development – as part of a sectoral and national imperative;

n Upskilling and reskilling of operators to decrease the gap between operator and management level andimprove the capability of dealing with new technologyand higher productivity requirements;

n The need for gender and equity transformation, especially in the higher skilled occupational levels;

n 'Pipeline' planning to develop a supply pool as a potential recruitment source for a sector with anageing workforce;

n Stakeholder interactions between the sector and educational institutions to develop curricula that aregeared to specialisation rather than generalisation,(including technology, innovation and 'greening' inthe sector);

n The need for management development across all managerial levels – to develop strategic managementcapacity and focus on succession development ofequity candidates, and

n Adult education to provide improved access to higher levels of learning.

The supply issues identified are:

n Attracting talent to the sector: Improved career guidance on employment opportunities in the sector,entry level requirements to qualify for work in thesector to be driven nationally. Facilitate the exposureto scholars to 'the world of work' in the sector;

n Improving the 'work-readiness' component of supply from HET institutions:

n Influence collaboration between HET institutions and sector role players on appropriate technology andinnovation that should be included in HET curricula;

n Facilitate structured workplace exposure to HET students.

n Provide workplace experience to young people with appropriate academic qualifications to introduce themto the culture and ethics of the workplace and providethem with the opportunity to gain work experience;

n Providing support to develop the delivery capacity of providers for artisan development and operatordevelopment'

n Providing support for the development of 'bridging' opportunities for young people with no access to FETopportunities (eg foundational learning combinedwith sector-specific learning);


CHAPTER 4

Scarce skills requirements

n Supporting 'bridging' opportunities for existing employees to access further learning (eg adulteducation and training [AET], learnerships);

n Improving the skills levels of existing employees to meet requirements of technology changes,competitiveness and productivity;

n Facilitating the development of a 'supply pool' of qualified people available to the sector or the broadereconomy (an initiative such as IPAP 2) throughlearnerships, apprenticeships, bursaries and workexperience opportunities, and

n Supporting young entrepreneurs with an interest in food and beverages manufacturing to obtainqualifications, establish new small businesses andcontribute to sector growth.

4.2 SCARCE SKILLS

The mismatch of demand and supply of skills in thesector can be further broken down to variousoccupational levels. These are:

n Management level: there is a shortage of experienced, high level managers who are willing to commit to andgain insight into business and add value. Strategicthinking, change management, managementexcellence, conceptual analysis and problem solvingare lacking;

n At lower levels (operators): multiskilling, different and higher level skills sets to align with technology arerequired. Numeracy and literacy skills, informationtechnology (IT) skills to use appropriate technologiesand enhance innovation. These will increaseproductivity and competitiveness of the sector, which

will result in process ownership being moveddownward. There is a need to balance the desired newmanagement capacity and required new skills ofoperators with the capacity of the total workforce – thegap between positions and levels needs to be closed;

n Artisan development remains a major need, especially increased demand for apprentices to use and maintainthe technology that is increasingly being adopted bythe industry;

n A shortage of people qualified in logistics;n The occupational field of sales, marketing and

merchandising consistently experiences skills shortages(as reported in previous SSPs – skills gaps areexperienced at management level, and high labourturnover/retention of staff at lower occupational levelsremain a challenge), and

n Engineering: as industries adapt to the dynamic environment of continuous improvement, the numberof engineers needed by the sector increases.Engineering as an entry point is required frequentlyfor occupations such as operations managers, qualityassurance managers, and research and developmentmanagers.

4.3 SCARCE SKILLS LIST

The analysis of skilling needs in the sector (as providedannually in WSPs) resulted in the 'scarce skills' that follow.The data provided in WSPs has been adjusted to the'population' of occupations in the sector, as per theanalysis in Chapter 2. The SETA is piloting a forecastingtool among sector companies and it is hoped this willproduce more detailed identification of future skillingneeds.

FoodBev SETA52

OFO code

133201

111101

111402

133502

133906

132501

Occupation title

Engineering manager

Director (enterprise/organisation)

General manager (including public service)

Production/operationsmanager

Quality assurance managers

Research and developmentmanager

Estimatedtotal scarcity

2011-2012

129

25

520

89

13

13

Estimatedtotal scarcityover five-yearperiod (2011

to 2016)

654

125

2 600

445

65

65

Type of scarcity and

driver

n Equityn Locationn ExperienceDrivers: long-termvacancies,wagepremiums, pull to othersectors,regionallabourmarkets, global labourmarkets

NQF level

6 – 8

Qualifications inwhich intervention

is required

Degree/honours/masters/managementqualification/learnership/managementdevelopment

Genericoccupation

Managers

Table 19: Scarce skills

Intervention level


OFO code

131102

132201

132301

133601

135102

233503

233301

233401

233101

233501

234201

234202

234507

234203

234503

221101

223301

263202

261102

312301

312302

312501

312401

323501

341101

342101

323202

342303

342304

311402

311403


2011-2012

115

156

10

43

5

84

104

20

5

146

97

191

14

28

5

42

38

17

63

58

4

192

26

275

90

4

170

4

113

26

15


to 2016)

575

780

50

215

25

420

520

100

25

730

485

955

70

140

25

210

190

85

315

290

20

960

130

1 375

450

20

850

20

565

130

75


driver

n Equityn Locationn ExperienceDrivers: long- termvacancies,wagepremiums, pull to othersectors,regionallabourmarkets, global labourmarkets


NQF level

6–8

6–7

4–5


is required

Degree/honours/masters/managementqualification/learnership/managementdevelopment

Professionalqualification/honoursdegree/workexperience/learnership

National diploma/apprenticeship/certificate/learnership/work experience

Genericoccupation

Managerscontinued

Professionals

Techniciansand tradeworkers

Intervention levelOccupation title

Sales and marketingmanager

Finance manager

Personnel/human resourcemanager

Supply and distributionmanager

ICT project manager

Mechanical engineer

Electrical engineer

Electronics engineer

Chemical engineer

Industrial engineer

Chemist

Food and beverages scientist

Microbiologist

Winemaker

Biochemist

Accountant

Training and developmentprofessional

ICT support engineer

Systems analyst (skill level 5)

Electrical engineeringdraftsperson

Electrical engineeringtechnician

Mechanical engineeringtechnician

Electronic engineeringdraftsperson

Millwright

Electrician

Air-conditioning andrefrigeration mechanic

Fitter and turner

Electronic equipment tradesworker (skill level 3)

Electronic instrument tradesworker

Food technician

Beverages technician

FoodBev SETA54

OFO code

611304

323204

711909

711912

712901

732101

351101

831301

831104


2011-2012

1 706

20

2 714

392

20

270

20

93

103


to 2016)

100

13 579

1 960

100

1 350

100

465

515


driver




NQF level

4

4

1

Genericoccupation

Sales workers

Machineryoperatorsand drivers

Elementaryworkers

Intervention levelOccupation title

Sales representatives

Metal machinist (first class)(skill level 3)

Food and beverages processmachine operator

Packaging machine operator

Boiler or engine operator

Truck driver/delivery driver

Bakers

Meat process worker

Dairy products maker


is required

Degree/diploma/nationalcertificatelearnership/work experience

National certificate/apprenticeships/learnership

Matric/learnership

Source: FoodBev SSP 2009-10

In accordance with the Skills Development Act (SDA)Section 10(1), each SETA is required to develop a sectorskills plan within the framework of the National SkillsDevelopment Strategy.

SETAs are expected to:

n Identify sector-specific skills needs and develop strategies to address these, and

n Provide an indication of support to various key national growth strategies as discussed in chapters 1and 2 of this document.

The diagrams below provide information of the linkagesbetween FoodBev SETA goals and objectives, the MTSFobjectives, the president's five outputs for MTSF objective4 ('Strengthen the skills and human resource base') as wellas possible linkages to IPAP2. Refer to Annexure D for alist of FoodBev SETA performance indicators.


CHAPTER 5

Sector strategy for skills development

5.1 LINK TO OTHER NATIONAL SKILLS DEVELOPMENT IMPERATIVES

Strengthen the skills and humanresource base

Comprehensive rural development strategy linked to land and agrarianreform and food security

Food and agroprocessing – increased support for entrants and smaller rivals to entrenched, dominant firms

Development of the rooibos and honeybush domestic packagingcapacity

Promotion of small-scale maize millers

n Support for adult educationn Support for both existing employees and pre-

employed persons to obtain access to bursaries,learnerships, apprenticeships, internships andwork experience

n Bursaries for innovative researchn Management development programmes for

employeesn Support to NGOs, community-based

organisations (CBOs) and rural cooperativesn Sustainable NVC establishment support in rural

areas

Initial discussion with the Department of Trade and Industry (DTI) indicates that support can be providedthrough learnerships and internships

Projects still in conceptual stages

Needs analysis in year 2 will provide more detail

MTSF

IPAP 2

Link with FoodBev goals and objectives

OUTPUTS FOR THE PRESIDENT'S OUTCOME 5 – A SKILLED AND CAPABLEWORKFORCE TO SUPPORT AN INCLUSIVE GROWTH PATH

FoodBev SETA56

Outputs

Measures

Establish acredibleinstitutionalmechanism forskills planning

n Develop a standardisedframework forthe assess-ment of skillsshortages andvacancies inthe country

n Well-researchedSSP thataccuratelyidentifies skillsneeds andcontains anappropriatestrategy foraddressingthese

Increase access toprogrammes leading tointermediate and high-level learning

n Provide young people with foundationallearning qualifications

n Increase the number of Abet level 4 entrants

n Create 'second-chance' bridging programmesleading to matricequivalent

n Provide a range of learning options tomeet the demand ofthose with matric, butwho do not meet therequirements foruniversity entrance

n Support to AET programmes

n Artisan developmentn Work experiencen Learnershipsn Bridging programmes

in collaboration withFET colleges

Application to theNational Skills Fund (NSF)to train 800 young peopleon learnerships

Increase access tooccupationally directedprogrammes in neededareas and therebyexpand the availability ofintermediate level skills(special focus on artisans)

n Increase the number of learnerships

n Increase annual production of artisans

n Improve trade test pass rates

n Increase placement rate of learners from Nand NVC programmeswho require workplaceexperience

n Increase the proportion ofunemployed people,compared toemployed people

n Management developmentprogrammes

n Artisan developmentn Learnershipsn Internshipsn Work experiencen Bursaries

Additional support fortrade test preparation(NSF)

Increase accessto high-leveloccupationallydirectedprogrammes inneeded areas

n Increase the graduateoutput inengineeringsciences/natural and physicalsciences

n Bursaries

Research,development andinnovation inhuman capital fora growingknowledgeeconomy

n Increase the output ofhonours,masters,doctoral andpost-doctoralgraduates

n Bursaries for research tosupportinnovation inthe sector

1 2 3 4 5

FOODBEV SETA CONTRIBUTIONS TO OUTPUTS

FOODBEV SETA INTER-VENTIONS

5.2 FOODBEV SETA/SECTOR STRATEGIC OBJECTIVES

Based on the analysis contained in the SSP, the following are the key strategic skills development objectives for thesector for the next four years:


Improve theskillsdevelopmentintelligence ofthe sector

Facilitate theattraction oftalent to thesector

Support skillsdevelopmentamonglearners tomaximiseequity impact

Reliable skillsdevelopmentdata availablethat supportsplanning,monitoring andevaluation

Career guidancenationallyavailable toscholars, school-leavers andstudentscompleting HETstudies

Learner profilesadhere to equityrequirements

Utilisation of skillsforecasting tool bythe majority ofcompanies in thesector

Knowledge of sectorskills developmentneeds understoodand supported

A comprehensiveoccupational profileand a guide toemploymentopportunities insector developedand distributed

Equity profile oflearners onlearnerships,internships, workexperience 85% blackand 54% female

Strategicobjectives

Outcomes Outputs Linkages with NSDS III

Outcome 4.1.1: “National need in relation toskills development is researched, documentedand communicated to enable effectiveplanning across all economic sectors”

Output 4.1.1.2: “Sector skills plans areprofessionally researched, provide a soundanalysis of the sector and articulate an agreedstrategy to address skills needs”

Outcome 4.2.1: “Middle level skills needs areidentified and addressed in all sectors”

Output 4.2.1.1: “SETAs research and identifymiddle level skills needs and put in placestrategies to address them...”

Outcome 4.2.2: “10 000 artisans per yearqualify with relevant skills and findemployment”

Outcome 4.2.3: “High level national scarceskills are being addressed by work readygraduates from higher education”

Outcome 4.2.4: “Relevant research anddevelopment innovation capacity is developedand innovative research projects established”

Outcome 4.2.1: “Middle level skills needs areidentified and addressed in all sectors”

Output 4.2.1.1: “SETAs research and identifymiddle level skills needs and put in placestrategies to address them…”

Outcome 4.2.2: “10 000 artisans per yearqualify with relevant skills and findemployment”

Outcome 4.2.3: “High level national scarceskills are being addressed by work readygraduates from higher education”

Outcome 4.2.4: “Relevant research anddevelopment innovation capacity is developedand innovative research projects established”

Outcome 4.5.1: “Training of employedworkers to address critical skills, enablingimproved productivity, economic growth andthe ability of the workforce to adapt to changein the labour market”

Utilisation of skillsforecasting tool forforecasting

WSPs used as strategicskills planninginstrument

Training interventionslinked to identifiedsector needs

Learners obtainingwork exposure in thesector

Learners choosingcareers in the sector

Change in equityprofile of workforcetraceable

Indicators

FoodBev SETA58

Skillsdevelopmentsupport tocompaniesforproductivityimprovementandinnovation

Improveaccess tolearningprogrammes

Supportsectorgrowth viasmallbusinesssupport(rural focus)

Support todevelop anetwork ofdeliverypartners

Training needs insector addressedvia accessiblequality-assuredprogrammes

Trainingprogrammesavailable acrosscareer pathways

Productivityimprovementsmeasurable

Innovation insector as a resultof study support

AET and bridgingprogrammesavailable tosupport learnersto enter furtherlearningprogrammes

Entrepreneurshipdevelopmentand support toSMMEs, CBOsand NGOs in linewith governmentgrowth strategies

FET and HETinstitutionsdeliver qualityprogrammes,across careerpathways, thataddress sectorneeds

Employed andpreviouslyunemployed learnerson learnerships,apprenticeships,internships, workexperience,managementdevelopmentprogrammes andHET studies

People enteringlearning programmesvia AET and bridgingprogrammes

Individuals, smallcompany supportacross theagroprocessingsupply-chain

Utilising FET collegesto develop bridgingprogrammes foraccess to HETinstitutions

Collaborate with FETand HET institutionsto adjustprogrammes to meetsector requirements

Strategicobjectives

Outcomes Outputs Linkages with NSDS III

Outcome 4.3.2: “Partnerships between DHET,SETAs, employers, private providers and publicFET colleges are resulting in increased capacityto meet industry needs …”

Output 4.3.2.2: “SETAs identify FET collegeswith relevant programmes and put in placepartnerships to offer vocational courses andwork experience for college learners”

In support of Outcome 4.4.1: “A nationalstrategy is in place to provide all young peopleleaving school with an opportunity to engagein training or work experience and improvetheir employability”

Outcome 4.6.1: “Cooperatives supported withskills training and development expand andcontribute to sector development and growth”

Outcome 4.6.2: “Partnership projects toprovide training and development support tosmall businesses…and their impact reportedon”

Outcome 4.6.3: “Worker, NGO andcommunity based education programmes aresupported and their impact measured andreported on”

Outcome 4.8.1: “Career paths are mapped toqualifications in all sectors and subsectors,and communicated effectively, contributing toimproved relevance of training and greatermobility and progression”

Impact studiesindicating productivityimprovement

Succession planning incompanies linked totraining interventions

Learners onlearnerships,apprenticeships andHET programmesentered viaAET/bridging support

New businessesestablished

Growth (economic/employment) ofexisting enterprises

Appropriate network ofproviders available todeliver quality trainingacross career pathways

Indicators

5.3 CONCLUSION

These findings call for serious investment in humanresource development to meet sector requirements.Efforts to ensure successful completion of learning

programmes for both employed and unemployed learnersthus need to be intensified. The identified strategicframework should facilitate the development andrealisation of an approach that should see the sectoraddress most of its scarce skills requirements.

28 Also confirmed by DPRU, 2007.29 Percentage Change in Employment, Quantec30 Total, formal and informal employment, beverages subsector;

Source: Quantec31 Comparing output and total employment, food subsectors;

Quantec32 Productivity, food manufacturing; Quantec 33 According to Development Bank of South Africa definitions,

highly skilled occupations consist of: professional, semi-professional and technical occupations; and managerial,executive and administrative occupations. Skilled occupationsinclude artisans, apprentices, production foremen, productionsupervisor and related occupations. Semi- and unskilledoccupations are all occupations that are neither highly skillednor skilled.


NOTES1 Chandler, N, Nana, G, Sanderson, K and Leung-Wa, J (2006)

Food and Beverage Labour Forecasting Framework: developmentand indicative applications, Business and Economic ResearchLimited, Wellington, New Zealand.

2 Caribbean Export Development Agency (2008) Processed Foods – Ten Strategies For Success Within The Caricom Single Market& Economy (CSME), Caribbean Export Development Agency,St. Michael, Barbados

3 Frost and Sullivan (2010) 2020 Vision – Global food and beverage industry outlook, Online, Available athttp://healthcare.frost.com/prod/servlet/press-release.pag?docid=201630945 (accessed October 20 2010).

4 Datamonitor (2006 ) Global Food, Beverage and Tobacco Industry Profile, Online, Available at http://www.marketlineinfo.com/mline_pdf/industry_example.pdf

5 Food and beverages manufacturing sector output in R million at current and constant prices; Quantec Economic Database

6 Ibid.7 Statistical release, P3041.2, Manufacturing: production and

sales, (Preliminary), September 20108 Quantec Economic Database.9 Quantec Economic Database10 Agriculture and Food Policy Reference Group (2007) Food and

beverage manufacturing, Australian Agriculture and FoodSector Stocktake, available athttp://www.agfoodgroup.gov.au/data/assets/pdffile/0009/251586/agfoodstocktakefoodbev.pdf.

11 Population and number of households, 1995-2009; Source: Quantec.

12 National Treasury (2010) Economic policy and outlook, 2010 Budget Review, National Treasury, Pretoria.

13 CHET 2009, Responding to the educational needs of post-school youth determining the scope of the problem and developing acapacity-building model, First Draft Synthesis Report June 2009,Centre for Higher Education Transformation (CHET),Wynberg.

14 Avert (2009), HIV and Aids in South Africa, available at http://www.avert.org/aidssouthafrica.htm (accessed 29 November 2010).

15 BER 2006.16 European Commission (2003) ICT and e-Business in the Food,

Beverages and Tobacco Industry, The European e-BusinessMarket Watch Sector Report, No1 III/July 2003, Bonn/Brussels.

17 Bhorat, H and Hodge, J (1999) Decomposing shifts in labour demand in South Africa, South African Journal of Economics,Economic Society of South Africa, vol. 67 no 3, pp. 155–168.

18 Hazeldine, T (1979 ) Explaining differences in cyclical employment behaviour in thirteen Canadian food and beverageprocessing industries, The Journal of Industrial Economics, vol28, pp 161–175.

19 Capital to labour ratios, food subsectors and beverages subsector, Quantec.

20 Fedderke, JW and Hill, A J (2006) Industry structure and labour market flexibility in the South African manufacturingsector: a time series and panel data approach, Working PaperNumber 43, School of Economics, University of Cape Town.

21 Bell, T and Cattaneo, N (1997) Foreign trade and employment in South African manufacturing industry, Occasional Report no 4,Employment and Training Department, International LabourOffice, Geneva.

22 Gyan-Baffour, G and Betsey, C (2001) Increasing labour demand and labour productivity in Ghana, African EconomicPolicy Discussion Paper no 50, United States Agency forInternational Development.

23 Eastern Cape Growth Development Plan, 2004 – 2014.24 Free State Growth Development Strategy, 2004 – 2014.25 Limpopo Growth Development Strategy, 2004 – 2014.26 KwaZulu-Natal Growth Development Strategy, 2006.27 Northern Cape Growth and Development Strategy, 2006.

FoodBev SETA60

Barbour, Tand Sowman, M (2004) Eastern Cape Growth Development Plan 2004 – 2014: Mainstreamingenvironmental sustainability considerations into thePGDP, Bisho: Eastern Cape Provincial Government.

Bureau for Economic Research (BER) (2006) The macroeconomic Impact of HIV/Aids underalternative intervention scenarios (with specificreference to ART) on the South African economy,South Africa, University of Stellenbosch.

Cloete, J M, Lenka, L, Marais, A and Venter, A (2009) The role of urban agriculture in addressing householdpoverty and food security: the case of South Africa,Paper prepared for the Global Development NetworkProject, Institutional Capacity Strengthening ofAfrican Public Policy Institutes to Support InclusiveGrowth and the MDGs, April 2009.

Department of Agriculture, Fisheries and Forestry (2007) Australian Agriculture and Food Sector Stocktake,available athttp://www.agfoodgroup.gov.au/__data/assets/pdf_file/0009/251586/agfood_stocktake_foodbev.pdf (accessed 15 September 2010).

Development Policy Research Unit (DPRU) (2007) Graduate unemployment in the face of skillsshortages: a labour market paradox, Cape Town,University of Cape Town.

DPRU (2007) Informal work and labour rights in South Africa, Proceedings, the regulatory environment andits impact on the nature and level of economic growthand development in South Africa, EmploymentPromotion Conference 2008, Cape Town.

Frost and Sullivan (2010) 2020 Vision – global food and beverage industry outlook, Available athttp://healthcare.frost.com/prod/servlet/press-release.pag?docid=201630945.

Free State Provincial Government (2005) Free State Growth Development Strategy, 2004 – 2014, Availableatwww.fs.gov.za/.../FS%20Prov%20Growth%20Strat/FSGDS%20Exec%20Summary%20combine%20foreword.doc, Bloemfontein.

KwaZulu Natal Provincial Executive Committee (2006) KwaZulu Natal Provincial Growth and DevelopmentStrategy, Pietermaritzburg.

National Treasury (2010) Adjusted Estimates of National Expenditure, Vote 4. Quantec Economic Database,2010.

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