Skills development critical to achieving inclusive growth and alleviating poverty

Skills development is crucial for the youth in the country, says the writer. Picture: Supplied

Skills development is crucial for the youth in the country, says the writer. Picture: Supplied

Published Oct 30, 2023


By Tom Mkhwanazi

Poverty is a crucial constraint that is in the way of economic development. If poverty is closely connected with human capital, can skill development help reduce poverty? Yes.

As defined by Dutch economists Peter Kooreman and Sophia Wunderink, poverty is “all those qualities of a person, including training, skill, health, and know-how, affecting his or her money earning possibilities.”


If we all agree that the foundations of human capital are assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality, then providing employees with the skills and knowledge they need to succeed in the workplace helps to drive economic development and reduce poverty.

It has been revealed from different studies that human capital has positive impacts on income and negative impacts on poverty, and it was proposed that to enhance the welfare of people, investment in human capital is the best way to eliminate poverty.

To improve human capital and human welfare, skills development is the most important factor.

That is why, in 1998, the South African Parliament introduced the Skills Development Act, which made sure that every industry and job in the country is covered by one of the 21 Skills Education Training Authorities (Setas).

SETAS AND National Skills Development Plan

Twenty years later, in 2020, the National Skills Development Plan (NSDP) was introduced to “ensure that South Africa has adequate, appropriate, and high-quality skills that contribute towards economic growth, employment creation, and social development.”

The NSDP is derived from the broader government plan, namely the National Development Plan (NDP), which aims to put in place the framework whereby we “build the capabilities of our citizens to make our future work”. The NDP notes that “several challenges require attention, including a critical shortage of skills, a complex intergovernmental system, high levels of corruption, weak lines of accountability, and inadequate legislative oversight, amongst others. These are difficult issues, requiring honest reflection, careful planning, and decisive leadership.”

The Setas and NSDP have given priority to human capital development in all their development agendas, as it is pivotal to transforming the national economy.


Human capital development through skills development is an investment that enhances the well-being of citizens through workplace development.

By investing in skills development, workers bring to bear their talents, knowledge, skills, and experiences as they function in the various sectors of the economy.

Human capital development is therefore a prerequisite for economic growth and development, as well as a necessary and sufficient condition for poverty reduction in our Rainbow Nation.

Therefore, investing in human capital through skills development is one of the main strategies for overcoming the developmental challenges in the country, especially poverty reduction and unemployment. This will be achieved by ensuring effective skills training that is well-funded, equipped, dynamic, and innovative. Embracing apprenticeships and on-the-job training enhances skills and productivity.

It means an employee with quality education and skills has more opportunities and could get a good job and carry out favourable business while enhancing earnings. Consequently, skills training is helpful for an individual to escape the clutches of poverty.


The government, the private sector, and civil society should collaborate to create an enabling environment for skills training and job creation, including investment in youth skills training.

Just consider these startling statistics for unemployment: 63.9% for those aged 15-24, 1% for those aged 25-34 years, while the current official national rate stands at 34.5%. With an ever-escalating youth unemployment rate, skills development has increasing relevance today, not only because it helps entrepreneurs better meet their personal needs but also because of its contributions to economic growth and poverty alleviation. A skills-training mindset helps to create perspective and a level of thinking to see challenges and disregard a fear of failure.


To highlight and review the Wholesale and Retail Sector’s successes, challenges, and future opportunities, the Wholesale and Retail Sector Education and Training Authority (W&RSETA) hosted a Skills Development Summit on October 25.

As the third biggest contributor, providing employment opportunities for millions of people across the country, the wholesale and retail industry plays a pivotal role in the economy. This summit granted us space to frankly review our sectoral contributions to skills and our response to the evolving skills needs of the sector. Additionally, the summit allowed us to engage our stakeholders on the role and contribution our sector is making towards the goals and objectives of the NSDP.

The summit will be followed by the Good Practice Awards to recognise and celebrate excellence by stakeholder companies, training providers, institutions of learning, women leaders, beneficiaries, and individuals that demonstrate exceptional commitment to skills development, particularly skills development planning and reporting and going beyond compliance with legislation.


Skills development is crucial for promoting economic development and reducing poverty. When employees and young people have access to skills training, they are more likely to be able to secure decent employment and/or promotion, thus lifting them out of poverty and improving their overall standard of living.

The private sector is the engine of economic expansion, and job creation shoulders a significant responsibility for skills development, which is why we must play a role in skill development initiatives, including employee training, youth empowerment through training, and others for career advancement.

As South Africa’s first democratic President Nelson Mandela once said, “Education is the great engine to personal development,” by working together, we can create a skills development ecosystem that empowers South African workers to reach their full potential and contributes to inclusive, sustainable growth for the nation.

*Mkhwanazi is the Chief Executive Officer of the Wholesale and Retail Sector Education and Training Authority

**The views expressed do not necessarily reflect the views of Independent Media or IOL