Like the UK, there is little correlation between the university system and the job market in South Africa. Cheryl James, CEO of Fasset, outlines some of the issues with the education landscape and the initiatives that have been put in place to help tackle youth unemployment.

Like the rest of the world, South Africa has a huge challenge in tackling youth unemployment.

A high proportion of young South Africans do not complete their education. For example, of the 1.2m children who started in 1999 – a process which should take a minimum of 12 years to complete – only 364,513 (29.8%) had successfully completed and passed high school by 2010.

The harsh reality is that only four in 10 of those that go through the high school system and successfully pass are likely to find employment. Our education system is simply not providing them with the necessary skills to enter the job market or to go into further education.

Ironically, despite skills shortages, there are currently 300,000 unemployed graduates in South Africa. Like the UK, there has been little correlation between the university system and the overall job market. A large amount of young people have softer skills, but we have a deficiency in core subjects like mathematics, finance, accounting and sciences. A global problem of university courses being led by demand rather than the job market.

Currently very small proportions of those in the high school system study mathematics, or obtain the necessary marks in the subject, to pursue careers in finance, accounting or engineering. Last year the average pass rate for mathematics, physical science and accounting was between 32-35%. Of those who passed, only one in 10 obtained 50% or higher and only 1.6% obtained a distinction.

The Minister of Higher Education and Training, Dr Blade Nzimande, recognised this earlier this year in the Green Paper for Post-school Education and Training.  Major improvement must be made to post-school education and training, quantity, diversity and in some instances, quality also must be addressed.

More recently, a report in August by ADCORP (an authority on the South African labour market) informed us that there are 829,000 unfilled positions for high-skilled workers across a range of occupations in South Africa. The Government has reacted by ‘pulling out the stops’ to address the problem. Education receives the lion’s share of the 2012/2013 (roughly R207bn) budget.

How South Africa is dealing with the skills gap

While the skills gap in South Africa is big, inroads are being made. The National Skills Development Strategy was developed in 2000 to address skills shortages across all sectors of business. More than 20 Sector Education and Training Authorities (SETA) were established tasked with facilitating skills development within their specific sectors.

Employers are now being rewarded for developing their employees’ skills by way of tax incentives across both public and private sectors. Employers, who contribute to the Skills Development Levy, are rewarded by access to mandatory grants, which enable them to recoup 50% of their Skills Development Levy.

There is also the National Student Financial Aid Scheme (NSFAS), which provides student loans to deserving students with the potential to succeed at university or further education colleges and training providers. In addition, student enrolment at universities has increased 4.2% per year on average since 2000.

The Green Paper mentioned above seeks to create a policy framework that will enable the Department of Higher Education and Training (DHET) to create an accessible, equitable and affordable post-school education and training system. This system is designed to improve education for all sections of the population, and provides free education and training for the poor.

The DHET’s vision is to create a Further Education and Training (FET) system that offers high quality education by FET colleges throughout the country.  In effect, the system will empower all graduates to address the needs of the economy and the country and equip them with the skills to allow for a productive, flexible, innovative workforce in a fast changing economy.

These developments predict well for the future. While the foundations are being laid to equip South Africa with the skills, it will take a number of years before South Africa enjoys the fruits of success.

As for the Finance and Accounting sector, considerable progression has been made over the past 12 years. During the past financial year alone, 19,561 individuals were up skilled through Fasset learnerships, Fasset-funded development projects and Fasset’s lifelong learning events. Collectively, 123,392 individuals have completed, benefited from or attended these initiatives since 2000.

These achievements confirm that Fasset has embraced Dr Blade Nzimande’s directive to make every workplace a training space that addresses skills within finance and accountancy.

You can read more about AAT’s work in South Africa on its dedicated blog, Voice of AAT (SA).

An underwhelming new government website, eBay in the tax avoidance dock and Argos taking Amazon on at its own game all hit the headlines this week. Steven Perryman clicks his way through this week’s news

1. Public sector: GovUK website launches (minus Kelly Brook)

London 2012. Remember that? When we all talked to strangers on the Tube, the weather was sunny and we all thought we could run a sub-30 minute 10,000m, Mo-style?

The Olympics was dragged one last time into the public consciousness this week (well, until Sports Personality of the Year in December) with news that the ‘summer like no other’ actually came in £377m under budget. In the same week that news broke of the economy growing in the third quarter of this year, it’s Mobot time at Whitehall it seems.

Or maybe not, given that only this week the National Audit Office has slammed Whitehall’s budgeting system, saying it is still not good at demonstrating whether spending decisions represent value for money.

Speaking of value for money: who remembers the £2m TV advert the Government used to launch its Directgov website three years ago (hint: Suggs and Kelly Brook were in it)? Thought not. Here’s a reminder:

Its production cost rightly caused a furore at the time, even if getting a glamour model into an advert for a Government website was admirable work by the marketing agency. It was therefore with interest that we noticed that the Government has now disbanded the site and given it a new name and look: GovUK. The move will save an estimated £70m a year and there wasn’t a glamour model in sight for the launch, either.

The new site certainly looks cheaper. The content certainly is. This week esteemed luminaires from the accounting world have been pouring scorn on the content of the new site via the UK Business Forums website. One of the glaring errors involves information about registering for self assessment. Nice timing guys, especially with the deadline for paper tax returns under a week away.

2. Tax: eBay can’t take spotlight off of Starbucks

The end of the Olympics has left such a hole on the news agenda websites in the UK have seen a slide in visitors since it finished. It’s no surprise, then, that they continue to try and fill the void with tax avoidance stories on high profile brands.

This week it was eBay’s turn with news that it has paid £1.2m in tax in the UK despite generating sales of £800m. How Starbucks must feel aggrieved. It continues to be the case in point, despite the auction site taking some heat.

Only this week AAT’s Adam Harper wrote a letter to The Guardian bemoaning the American coffee chain’s ethical hypocrisy – big on coffee production, not on paying UK tax. Accountancy Age (AA) waded into the debate, pointing out that tax is paid on profits, not turnover, and that the Starbucks story has been a result of skewed figures. Perhaps the guys over at AA just like their Pumpkin Spice Latte’s a little too much.

One thing this glut of tax avoidance stories has shown is that there is a strong ethical conundrum facing those who work in finance. AAT Ethics, a new website which looks at a host of ethical dilemmas including tax avoidance, was launched this week.

3. Retail: Argos vs Amazon (17 years too late)

Whisper it quietly, but the festive season is nearly upon us. And that means one thing: shopping.

Apple fired the starting pistol this week with the launch of the iPad Mini – an obvious attempt to fight off Google and Amazon from the tablet market it holds a 70% share in. The reception was tepid – with some finding the price point wrong for the product; others rightly pointing out that the late Steve Jobs’s thoughts on smaller tablets were hardly complimentary.

All in all it’s not been a good week for Amazon. Hot on the heels of the Apple launch is news it has been wiping some of its customers’ Kindle accounts without letting them know. Not wanting to be outdone by Starbucks, Facebook or eBay, the online retailer has also hit the tax headlines for forcing British publishers to cover the 20% VAT costs on ebook sales, despite the Luxembourg-registered company paying just 3% to the tax regime there.

One piece of news that shouldn’t bring out too many cold sweats at Amazon HQ is news that UK catalogue retailer Argos is shifting towards an online business.

The retailer announced this week that laminated catalogues, pens and paper will be banished from its shops and replaced by technology such as web browsers, with the prime purpose of the stores to be collection points for products already ordered online. It’s a move that will disappoint Michael McIntyre, who has a segment of his stand-up routine dedicated to the catalogue-based madness of buying anything in its stores.

And don’t tell the retailer’s new Managing Director, John Walden, that another company beginning with ‘A’ has been doing what he’s proposing since 1995. It’s also interesting to note that Amazon’s name was chosen so it would always appear high in an alphabetical list. Time to drop the ‘r’ from the company name, John?

And finally: Goldman Sachs banker’s expose bombs

Remember Greg Smith, the man who resigned from his job at Goldman Sachs not by handing in his notice, but by writing a scathing editorial for the New York Times? He’s back and, unsurprisingly, cashing in on his notoriety.

He has released a book of his experience at the bank – imaginatively titled Why I Left Goldman Sachs – and with it has received an advance of $1.5m from his publisher. It’s already looking like money badly spent. Reviews of the book have been damning across the board with, ironically, the New York Times among the most vociferous. Who’s the ‘muppet’ now, Greg?

Steven Perryman is AAT’s Editorial Manager

Starbucks taking the tax heat off of Facebook, the vagaries of unemployment statistics and what happens when Darth Vader cuts loose with his lightsabre all hit the headlines this week. Steven Perryman guides you through the news galaxy

1. Tax: Starbucks in a whole latte trouble

The tax avoidance gravy train continues to roll, and this week it spread its wings outside the UK to foreign companies that are ‘doing a Carr’.

Starbucks has been making headlines – and for once it’s not because there’s a Pumpkin Spice Latte shortage or those silly red Christmas cups are in store. Far from it. This week it was reported to have paid no tax on £1.2bn of sales in the UK since 2009.

MP’s have started circling, perhaps spotting a new political hot potato (© Alan Partridge) to start throwing around. Two parliamentary committees are due to question tax officials over the American chain’s tax avoidance masterclass, while others have called for a customer boycott. The story also led to some rather inevitable Photoshop work. The chain also probably bemoans its choice of celebrity for its launch of stronger coffee earlier this year.

How Facebook must love Starbucks right now. Only last week it was suggested the company had depressed its sales figures to avoid tax, and that the website’s average UK employee earned more last year than the whole social media network paid the exchequer. Following a disastrous company flotation and the on-going furore over the privacy of users, Starbucks have offered it some much-needed rest bite.

2. Careers: the good, the bad and Rebekah Brooks

Jobs, redundancy, payoffs and bonuses – it sounds like a tagline from the film Wall Street. In fact, it is an accurate description of this week’s business pages.

Unemployment statistics are a political subject that get tossed around by leading politicians on an almost weekly basis. This week offered them some fresh ammunition.

The Office of National Statistics (ONS) reported that unemployment has fallen to a 15-month low. Hurrah! Meanwhile, the Trades Union Congress found that long-term youth unemployment in England has increased by almost a quarter since the coalition government took power. Boo! Watch out for both of those stats in a Prime Minister’s Question Time near you soon.

AAT reported that research it has carried out showed that mums who quit their chosen profession to have a baby face a pay cut of up to £20,000 a year when they return to work. It is a report Mitt Romney could do with reading, especially in light of his ‘Binders’ gaffe during this week’s American Presidential debate.

Not everyone is worse off in the recession, of course. The Evening Standard reported this week that more than 80% of London bankers and other City workers expect a bonus this year, and almost half reckon it will be higher than last year. Upmarket City bars and clubs can rejoice.

Perhaps the most gob-smacking story of the week was the news of Rebekah Brooks’s News International pay-off. Originally touted as £1.7m, it is now widely believed to be ‘between £6m and £8m’. Phone hacking pays well, clearly.

3. Celebrity: Jamie Oliver, the pukka citizen

Now, the usually publicity-shy Jamie Oliver wouldn’t normally grace the pages of Media Monitor, but he certainly caught our eye this week. And, no, it wasn’t because we were wondering how the hell you cook anything in 15 minutes.

It’s because he chose to be refreshingly upfront about his income tax in a Radio Times interview this week. “I’m not one of those people who fart around outside the UK to avoid paying tax. I’m actually proud to pay my whack,’ he said. Pukka!

How it must annoy him, then, that his own customers choose to steal napkins and toilet handles from his restaurants. He loses 30,000 napkins a month, apparently, and Thomas Crapper toilet flushes also have a tendency to go walkies. The answer? Weld them to the toilet, obviously.

4. And finally: space jumps and Star Wars

There really is not a better ‘and finally’ story than that of Felix Baumgartner, who became the first skydiver to go faster than the speed of sound, reaching a maximum velocity of 833.9mph (1,342km/h). The feat also managed to secure the largest audience – eight million people – for a live stream of an event.

As admirable as Felix’s feat was, a similarly intergalactic story surrounding a nightclub bouncer trumped it for comedy gold. Star Wars fan Mark Noakes – who changed his name to Darth Vader by Deed Poll – was assaulted by a fellow doorman who accused him of sleeping with his girlfriend.

The ensuing news story included the type of Star Wars punnage you would expect from a tabloid newspaper. Sterling work, yes, but nothing on the quote offered up by ‘a neighbour’:

‘Let’s just say Ikbal reckoned Darth had been impressing Kerry with his lightsaber,’ he/she lamented. ‘Who knows the truth, but it’s not every day the Dark Lord has a punch up in the street over a woman.’

Indeed.

Steven Perryman is AAT’s Editorial Manager

The five best titbits from the last week of news – including tax avoidance, the Conservative Party Conference, exemptions on Real Time Information (RTI) and proof that eating insects isn’t good for you. AAT‘s Steven Perryman sifts the headlines

1. Tax: A taxing time for celebrities. And Bear Grylls.

Just when you thought you had seen the back of the Jimmy Carr-inspired tax avoidance headlines, The Times have been at it again. This time no stone was left unturned or, indeed, no sea beds either.

TV adventurer Bear Grylls was among those getting ‘the Carr treatment’ with reports of him and a host of proper celebrities investing £110m in under water treasure hunts, allowing them to avoid tax on millions of pounds. Sleeping in camels and drinking the water from their waste clearly pays better than you think.

Even Gary Barlow (AKA the Queen’s best mate) stood accused. No, not of throwing a stage-managed hissy fit on the X Factor, but of being among 2,000 people who tried to shelter a total of £1.2bn from the taxman between 2004 and 2008.

This very subject – and other tax-related wonder – will form the subject of the next issue of Accounting Technician, which comes out at the beginning of November.

2. HMRC: Right time for Real Time Information (RTI)?

RTI – HMRC’s new online system to lodge details of employees’ income at or before the point when wages are paid – rolls out from next April. It was therefore worrying to learn that according to KPMG 66% of businesses have yet to start planning for the change.

What of those who have? Accountancy Age reported this week that employers with religious objections to electronic communications are to be exempt from the online filing. As a result, those groups will continue to file their returns on paper via the simplified PAYE deduction scheme.

Watch out for a blog right here next week on RTI.

3. Politics: Conservative Party Conference closes silly season

Party conference season is always a slog. Summer has ended, the Olympics are over, and the nights are drawing in. Three weeks of rhetoric, hyperbole and sycophancy is just what we need! This week it was the Conservative’s turn.

All eyes were on the two big guns (Boris doesn’t count): George Osborne and David Cameron. Osborne, in his usual ‘nervous Best Man’ style, did his obligatory fire-fighting act. Most notable was the introduction of his shares-for-rights scheme – a baffling notion that seems ripe for The Thick of It treatment.

Then it was Cameron’s turn. His speech ticked all the boxes you would expect and came loaded in the inevitable ‘good news, bad news’ form. First we had the Olympics, Paralympics, Games Makers, Military (forgot the Police, Dave, but never mind). Then we got to the deficit.

Despite the International Monetary Fund’s rather ill-timed judgement that the UK economy will shrink by 0.4% this year, Cameron, as expected, came out fighting. ‘The truth is this we are in a global race today and that means an hour of reckoning for a country like ours – sink or swim, do or die,’ he argued. He’s not wrong. Only this week right here on AAT Comment, Public Finance’s Mike Thatcher argued that the coalition could be on borrowed time as a result of its deficit reduction mantra.

As for Boris? He called David Cameron a broom.

4. Technology: 4G – so last month

An ‘iPad mini’ that will resemble Google’s Nexus 7 tablet? A Samsung Galaxy S3 Mini that will resemble the iPhone 5? The only person winning in these battles are the IP lawyers. One result of the proliferation in smartphone and tablet use, of course, is a 3G network that is creaking.

We can be thankful then that 4G is coming to the UK from the end of this month, and looks set to revolutionise our mobile data experience. Users can expect an internet speed akin to what they get at home.

Now, although these technologies only come along every decade or so, it was interesting to read this week that academics at Surrey University have won a £35m investment from mobile operators to research 5G. Who said modern technology moved too fast?

5. And finally: eating insects isn’t good for you

There were a few contenders for the ‘and finally’ story this week. The Bedford couple who thought they had bought an innocuous shrub from a car boot sale, only to discover the plant blooming in their garden was in fact cannabis, was a worthy contender.

But the man who died shortly after winning a cockroach-eating contest in Florida took some beating. With I’m a Celebrity merely weeks away, minor celebrities across the land will have read the story in a cold sweat. And Bear Grylls, obviously.

Steven Perryman is AAT’s Editorial Manager.

With David Cameron taking the stage at the Conservative Party Conference today, Public Finance‘s Mike Thatcher assesses how the UK’s coalition government has done on its stated aim of deficit reduction. It’s not looking good at half-time, he argues

As we approach the halfway point in the coalition government’s five-year term, it’s a good moment to analyse whether this rare form of UK governance has been a success.

Programme for Government

Any assessment of the coalition at halftime needs to revisit the Programme for Government published on 20 May 2010. This set out 31 measures, each with bullet point commitments for the term.

They were listed alphabetically, implying equal importance. Yet one measure was clearly more equal than the others: deficit reduction. David Cameron and Nick Clegg said in their foreword that ‘the most urgent task facing this coalition is to tackle our record debts’.

This was reinforced by a proviso at the end saying ‘the deficit reduction programme takes precedence over any of the other measures in this agreement’.

Getting the UK economy under control

In the end, the coalition will be judged by if and when it gets the UK economy back under control. So how is it doing here? In his Emergency Budget of 22 June 2010, George Osborne set out his overall objective for the public finances – also known as the ‘fiscal mandate’. This was to eliminate the structural deficit – the portion of the deficit that is not the result of the economic cycle – by 2015-16.

The chancellor, however, said he was taking a ‘cautious approach’ and aiming to meet the mandate a year early, in 2014-15. Of course, reducing the deficit was dependent on significant economic growth.

This did not transpire, and in the 2011 Autumn Statement Osborne admitted there would be at least two more years of spending cuts and that the mandate would not be achieved until 2016-17.

Double-dip recession

Since then things have gone from bad to worse. Growth has moved from stagnant to negative, pushing the UK into its first double-dip recession since 1975. UK net debt now exceeds £1tn, with borrowing simply not being reduced at the rate the coalition expected.

Borrowing was £127.6bn in 2011-12 despite the chancellor suggesting in the 2012 Budget that it would be £126bn. There is now doubt that the £120bn borrowing estimate for 2012-13 can be achieved.

The 2012 Budget has been a disaster for the chancellor. He’s been forced to backtrack on five tax announcements – pasties, caravans, charitable giving, church improvements and fuel duty. An occasional u-turn can be seen as misfortune; five in one Budget smacks of carelessness.

All in all, the coalition’s deficit-reduction programme has not been a roaring success. The timetable looks ambitious, the economy remains anaemic and the chancellor is far from surefooted.

Is it that bad?

However, what would the outcome have been if deficit reduction had not been the priority? Could things have been worse? Even Christine Lagarde, head of the International Monetary Fund, said ‘I shiver’ when she looked back at the UK’s deficit in May 2010 and imagined there being no plan to reduce it. In fact, only this week the IMF has cut its growth forecasts for Britain and warned in its annual fiscal monitor that Britain will miss deficit reduction targets this year.

But perhaps there could be a middle way. With the Eurozone in crisis, many commentators are calling on the chancellor to increase growth-friendly policies, particularly by boosting infrastructure spending and easing up on the fiscal pain.

Osborne did soften his stance in his June Mansion House speech, announcing a stimulus plan including an £80bn ‘funding for lending’ scheme. It wasn’t quite Plan B, but was described by the chancellor’s aides as a ‘maxing out of Plan A’. A full reversal to Plan B is highly unlikely, however. It seems the chancellor and his coalition colleagues will sink or swim by their austerity agenda.

Why the next spending review is the ultimate test

An important test will be the next spending review, expected in 2013. But there are political as well as economic risks here. It will be tough for the Conservatives and Liberal Democrats to agree another three-year spending plan just as they need to emphasise policy differentiation ahead of the 7 May 2015 general election.

How this circle is squared will partly determine the character of the second half of the term and the future electoral performance of the two governing parties.

Mike Thatcher is editor of Public Finance magazine

In his Labour Party conference speech today, Ed Miliband laid out his plans to give equal billing to vocational education. AAT’s Chief Executive, Jane Scott Paul, offers her take on the announcement

I really welcome the announcement in Ed Miliband’s conference speech that the Labour Party will give equal attention to vocational education and his commitment to work with industry and professional bodies to develop ‘gold standard’ vocational opportunities.

AAT has always believed that vocational training can provide an equally valid route to success, and is proud of our members working at all levels of the accountancy profession who provide tangible proof of that every day.

AAT is always willing to share our experience, and to work with policy makers who share our aspiration to place vocational learning at the heart of the education landscape.

Watch the highlights of Ed Miliband’s speech: