Company payroll levy for vocational education proposed

The Mozambique government has proposed that companies in the public and private sector should be obliged to contribute 1% of their payrolls to finance vocational education institutions in the country.

The reason is that Mozambique companies and public bodies are struggling to recruit quality Mozambican graduates, forcing managers in ongoing major projects on gas and mining to hire ex-pats from the foreign labour market. This is an expensive solution that does not deliver opportunities to Mozambique graduates, and hence, something the government wants to change.

So, the government wants to change Law No: 6/2016 on professional technical education, with amendments – including the 1% rule now being reviewed by the Mozambique parliament.

The proposed amended law says companies in both the private and public sectors must contribute to the training of students, either in-house or through third-party organisations to help create a workforce of quality and with skills that are benchmarked at regional level.

The proposed law, in consultation phase, encourages partnerships between the public and private sectors on vocational education, so that companies may join and help manage a vocational education institution, in a partnership that may enjoy priority in accessing public funds, as well as other government-provided facilities.

Financial resources

These proposals would also grant more financial autonomy to vocational technical education institutions, as well as scientific and pedagogical autonomy to define teaching areas, programme plans, scientific and technological research projects, and propose qualifications, among others.

As regards the compulsory levy, the proposed law says: “Companies operating in the country must contribute to the National Vocational Education Fund (FNEP – Fundo Nacional de Educação Profissional) with a monthly instalment of up to 1% of the total amount of the payroll”.

The proposed amended law also says that a failure to pay the 1% levy would trigger “sanctions under the terms of the regulation of settlement and collection mechanisms”, although exactly what these punishments will entail has yet to be agreed on.

The reforms follow proposals within a Strategic Plan for Vocational, Technical Education (2018-24) which accepted that neither the national government nor international development agencies had the financing to “guarantee support in medium and long term, for the development of a modern professional education, oriented to respond to the demands of the labour market”.

According to the strategy, other sources of income should be established and leveraged to create a network of instruments and financial opportunities at national and local level supporting vocational training.

Will there be enough money levied? A lot is needed. A survey carried out, in 2020-21 by the ministry of science and technology higher and technical and professional education (MCTESTP) concluded: “The cost of investment in infrastructure and equipment for 27 institutions to be built, rehabilitated and equipped by 2024 is estimated at US$480 million, making the continuous mobilisation of financial resources for this purpose important.”

The new bill also follows research released by the Maputo-based Universidade Eduardo Mondlane (University of Eduardo Mondlane) which assessed Mozambique agrarian institutes’ operations, concluding that the average student per year cost was US$1,860.

Concern in education sector

Despite the clear need for additional vocational education funding, the proposed reforms have raised some concerns in Mozambique’s higher education sector.

A spokesperson from the Association of Private Higher Education Institutions (AIESP – Associação das Instituições do Ensino Superior Privadas), a body linked to the Confederation of Economic Associations, (CTA – Confederação das Associações Económicas de Moçambique), told the Inter Press Service (a global south-focused news agency) that companies cannot function as cooperatives or be forced to contribute to the FNEP, because they already have financial obligations to the state, through payment of taxes such as VAT sales tax, Corporate Income Tax and National Social Security Institute contributions, among others.

Therefore, the requirement to contribute value to other public and financially autonomous institutions whose source is the state budget is overly onerous, said the AIESP.

“The law is very diffuse; it deals with public and private and mixed institutions, this does not solve the problem, but rather creates a conflict of interest between the institutions so there is no consensus for it to be approved in this way,” added the spokesperson.

A member of parliament, and Vice-Rector of the São Tomás University of Mozambique, Professor Silvério Ronguane, said: “This bill is a challenge, because the reason for a company to contribute with 1% of its payroll or not should be when it understands that this brings an added value for itself.”

Ronguane told University World News that companies paying the levy would want to know “how this fund will be managed afterwards”, including which businesses would benefit from the resulting increase in vocational education. Whether the law is a success or a failure will “depend a lot on how it is going to be operationalised”, he said.

Ronguane, a member of the Mozambique Democratic Movement opposition party, stressed that efforts have been made in recent years across Mozambique to produce more technicians, engineers and other professionals via vocational education. However, the gap between training facilities and day-to-day work demands remains huge.

“Let’s wait and see is a set of theses and theories whether it will produce quality technicians or not – let’s wait and see,” he said.

Quality professionals needed

That said, Arnaldo Chalawa, also an MP and lawyer, however, argued that the proposal is rational, because Mozambique can only develop with professionally trained people: “If there is an internal mechanism for a fee for companies to finance institutions that are training professionals in various areas, it is an added value, an incentive and we welcome it,” he said.

The MP, a member of RENAMO, another opposition party, said the government cannot own and operate all higher education; the private and voluntary sector must also contribute to education policy: “If the law comes along these lines with inconsistencies, it will be a matter of debate in plenary [parliament],” he said.

According to Chalawa, the key is improving the quality of professionals in Mozambique: “Nowadays, bridges collapse because of poor quality, and the question is, where were these engineers trained, [at] which schools?” he said.

Chalawa said: “If there is an innovative thought to bring a special fix in vocational technician education, it is welcome.”

Arsénio Cuco, an academic manager for Rovuma University, Nampula, northern Mozambique, is also optimistic: “As long as there is a commitment on the part of companies to finance vocational technical education, it will work.”

Cuco predicted: “The measure will allow resources to be available to equip the workshops and laboratories, which will also allow for an improvement in the quality of training that was already suffering from the lack of resources and equipment.”

A senior member of the Mozambique lecturers’ association Organizaçao Nacional dos Professores, said: “If there is an opening and contribution from companies, it would be a revolution in professional technical education.”

And Américo Cumbe, a chemistry professor at Licungo University, in Beira, central Mozambique, told University World News: “The law makes room for graduates to have the skills required in the currently demanding and competitive job market.”