Like many multinationals, Europe’s largest engineering company has had trouble finding qualified workers in South Africa, forcing it to bring in outsiders for many jobs. So, like scores of other companies, Siemens has started investing in education to help ease the shortfall.
“There are lots of students coming out of school with grades that are really not up to par,” said Rita Nkuhlu, Siemens’ South Africa head of corporate strategy and the project leader for the Mandela School of Science & Technology in Mvezo, a rural district 900 kilometers (560 miles) south of Johannesburg.
While South Africa is forecast to grow 3 percent this year, versus 1.1 percent for the euro-area, its education system was ranked the third-lowest among 148 countries in a survey by the World Economic Forum last year, ahead of only Yemen and Libya.
Multinationals are aiming to help lift South Africa off the bottom of that list. As about half of all South African students drop out of high school in the final two years, the push is often coming at the secondary school level rather than the university and apprenticeship programs they tend to fund elsewhere.
Some 36 percent of Fortune 500 companies contribute to education programs in South Africa, the fifth highest rate among 20 developing countries, according to research by the Brookings Institution. But 60 percent of such companies fund education in India and 54 percent in China, suggesting there’s considerable room for growth.
Corporate money could help ease a chronic shortage of employees who can take on complex jobs. South Africa’s unemployment rate for highly skilled workers has been about 0.4 percent over the past decade, according to employment agency Adcorp Holdings Ltd. (ADR), versus 24.7 percent for the broader workforce in the third quarter of last year.
“The one sure way to mitigate high levels of unemployment is to make sure that you take the bulk of your people through a huge educational program,” said Bonang Mohale, South Africa head at Royal Dutch Shell PLC (RDSA), which has more than 1,500 employees in the country. The oil company supports literacy and numeracy programs and has equipped 45 schools in Kwazulu-Natal province with science laboratories.
Siemens would ideally have 400 more employees in the country than its current 1,600, but the talent shortfall keeps it from making those hires, according to Nkuhlu. Unlike other countries where Siemens operates, many engineers it hires in South Africa require further training to meet its needs.
It’s an experience echoed by luxury automaker Bayerische Motoren Werke AG (BMW), which has introduced a mathematics, science and technology program at 37 schools in impoverished areas. The company has invested 10 billion rand in South African manufacturing and other operations over the past 15 years.
“We unfortunately need to employ many German engineers in our plant because we can’t always find the right skills locally,” Johannesburg-based BMW spokesman Guy Kilfoil said by e-mail.
Germany’s BASF SE (BAS), the world’s biggest chemical maker, supports several education projects in South Africa both practical and pedagogical. The Tutudesks campaign by Archbishop Desmond Tutu provides durable, plastic injection-moulded classroom desks. The “Kids’ Lab” program shows children how to get clean and safe water with hands-on chemistry experiments.
Local South African firms are also increasingly investing in education projects. Transnet SOC Ltd., the state-owned ports and rail operator, says it more than doubled its spending on education between 2010 and 2013, to 864 million rand in the 12 months through last March. Over the next seven years the Johannesburg-based company will spend 8.3 billion rand on skills development for engineers and other workers.
While education represented the biggest single item in South Africa’s 2013 budget, the efficiency of its system, measured in outcomes relative to expenditure, is lower than that in Brazil, Russia, India, or China, according to a Goldman Sachs (GS) study released in November.
“We appreciate the support from the private sector, in our quest to improve the quality of education in the country,” South Africa President Jacob Zuma said today at the opening ceremony of the Mandela School. “We still have challenges in science and technology.”
Still, the investments are starting to pay off as South Africa’s school pass rate rose for a fourth consecutive year, led by improvements in mathematics and science in the continent’s biggest economy.
The pass rate for final-year students at state schools climbed to 78.2 percent last year from 73.9 percent in 2012, the government said this month. The rate fell for six straight years through 2009 to 60.6 percent.
“Our biggest challenge is that we move from a very low base,” Basic Education Minister Angie Motshekga said today.
“There’s a direct relationship between investment in education and the long-term economic growth of a country,” said Justin van Fleet, chief of staff to former British Prime Minister Gordon Brown in his role as the UN’s special envoy for global education. “By investing in education you’re actually creating a better business environment, you’re increasing the potential income of consumers who will be able to buy products and services.”
Siemens’ South Africa unit says it spends 1 percent of its annual sales on social welfare initiatives and 95 percent of that goes into education. At Mvezo, a settlement of thatch-roofed huts in dry hills about 31 miles from the Indian Ocean coast, Siemens has pledged to help pay operating and maintenance costs for three years.
With 25 classrooms built from brownish bricks, the school will offer 700 students classes in science, information technology, engineering, and agriculture -- the latter at the request of the local chief, Mandela’s grandson Mandla, who wanted to ensure enough workers for Mvezo’s agrarian economy. It was a 2010 conversation between Nelson Mandela and then-Siemens Chief Executive Officer Peter Loescher that led to the project.
The school “is an illustration that global and local companies need to invest in the social development of the people,” Mandla Mandela said. In doing so, they can “transform society and at the same time ensure growth in revenue and profit.”
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