The importance of human capital in the manufacturing sector of the South African economy.

A country that is unable to develop the skills and knowledge of its people and to utilise them effectively in the national economy is unable to develop. No country can sustain economic development and international competitiveness if its human resources are not developed to contribute significantly to the economy. Human capital refers to the knowledge and skills that people in the work force acquire through education, on-the-job training and self-teaching. According to human capital theories, education and training enhance a person’s stock of human capital, increasing productive potential and leading to higher earnings. South Africa has a shortage of skilled workers and an oversupply of unskilled workers that resulted from bottlenecks in the labour market generated by apartheid. People play a crucial role in any company’s ability to produce products and services that will improve a country’s productivity and economic growth. The role of human capital and resources for development is of paramount importance in a country like South Africa, as its human resources are underdeveloped and the potential of people are not realised or taken into account. Experts agree that to maintain a relative standard of living, countries must upgrade the education and skill levels of the labour force. Labour plays an essential role in the economic growth of the country and it is important to develop manpower efficiently to be able to supply the necessary skills required by a growing economy. The SADC region should continuously improve its human capital to enhance high levels of productivity and, by employing modern technology, the standard of living will be harnessed. During 2001, 10,2 percent of the manufacturing labour force was classified as highly skilled. It is important for the manufacturing sector to keep up with technological advancement in order to compete globally. To increase exports, labour productivity, employment level and wages, the manufacturing sector should continuously train, retrain and educate its labour force. Without technological changes, growth would come to a standstill and education and training should therefore continue to meet these technological changes. The South African manufacturing sector is characterised by structural changes that are shifting from labour intensive, low technology and resource-based industries, to medium and high technology and sales-based industries. The manufacturing, finance and communications sectors have shifted from semi-skilled to highly skilled industries. In the secondary sector, skills that are in demand include an understanding of global markets and the regulations governing access to these markets. There should be better linkages with, and co-operation between education and training. Training is part of the world of work. Training should remain the responsibility of employers, the Departments of Labour and Education, training providers and government and should be at the heart of the new institutional regime for skills development. Therefore, it necessitates individual employers to improve the co-ordination of training and increases their investments in skills formation. Improving human capital should be regarded as a benefit with positive externalities. SETA’s are required to respond to the skills backlog and the enterprise training needs of the various stakeholders by overseeing designated skills training programmes and development initiatives. The guidelines of the Skills Development Act and the Skills Development Levy Act govern such requirements set for the SETA’s.Prof. G. Van Zy