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DID YOU KNOW?

Forecasting demand for supply of skills: developing better tools to inform decision making in the education sector

Siphelo Ngcwangu

The creation of a credible institutional mechanism for skills planning is a key goal of the National Skills Development Strategy III. This goal is being addressed in Theme 2 of the Labour Market Intelligence Project (LMIP) project for which Wits Education Policy Unit (Wits EPU) is responsible in partnership with Applied Development Research Solutions (ADRS). They have developed a linked macro-education model, based on an econometric modeling system which is used to produce benchmark medium and long term projections of demand and supply of skills from the education sector.

The methodology involves six steps:

(1) producing projections of future demand for labour (45 sub-sectors in the economy have been identified)  using the ADRS forecasting multi-sector macroeconomic model of South Africa;

(2)  researching the historical and statistical links between demand for labour and demand for occupations and skills, and constructing computer modules that properly translate the macro model’s annual projection of future sector demand for labour into corresponding demand  for occupations and skills;

(3) researching replacement  demand  and building a computer module for the model to produce projections of replacement demand annually;

(4) researching  the supply of skills from the education and training sector as a whole and building new computer modules for projecting the supply of skills from the education and training sector;

(5) building a computer module for comparing the model’s skills demand and supply projections in order to provide predictions and estimates of possible labour market imbalances and mismatches;

 (6) establishing a fully tested and validated macro-education model that captures the dynamic interaction between its detailed macro-economic model and its education components to produce current and future projections of demand and supply for occupations and skills.

There are five key outputs:

 (1) A ready-to-use comprehensive linked macro-education model that  the Department (including SETAs) and others in government, academics, researchers and the NGO sector can employ in the future to produce impact analyses and projections of future demand and supply for occupations, skills and education attainments;

(2) A benchmark projection of demand and supply of skills, occupations, and education for the period 2012-2020, taking into account the most probable path for the economy;

(3) Alternative projections under three ‘what if’ scenarios related to the evolution of the economy, the labour market, key external drivers, and key policy changes and reforms that might be implemented;

(4) Six technical training workshops to facilitate capacity building and skills transfer, that will (a) provide participants greater insight into the dynamic interactions between the evolution of the South African economy and the demand and supply of skills from the education sector, and (b) train participants how to use the linked macro-education model to produce future projections of demand and supply of skills;

(5) Eight reports designed to provide the Department with full information about the approach, the linked macro-education model, and findings of different aspects of the project.

At this stage there is no public link to the research but the analysis and data sources used have been made available to the DHET as the sponsors of the project. The system will only be made public on the advice of the DHET.  The researchers will consider journal article publication after the findings have been accepted by the DHET.

Siphelo Ngcwangu is a Research Associate at Wits University Education Policy Unit, email: Siphelo.Ngcwangu@wits.ac.za

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Enquiries or contributions may be directed to: Nomakholwa Makaluza Tel: 012 312 5243 Email: makaluza.n@dhet.gov.za Department of Higher Education and Training, 123 Francis Baard Street, Pretoria 0001