The Young and The Restless: Why Every South African Business Needs to Think About Skills Development and Enterprise Development 

Economic resilience and stability depend on how frugally we work for B-BBEE Incentives Through Skills Development, Youth Employment Service and Enterprise Development, writes BEE Novation

 

 

A business owner reading a newspaper in late February may, on the way to the financials’ section, have unknowingly flipped past the names of Matriculants who’ll intern at his business in a few years.

 

He’d be on his way to the financials for a glimpse of the markets’ future.  What he wouldn’t realise was that this future was a student picking out a residence within budgetary constraints influenced by the markets.  

 

Yet, it’s from those markets’ behaviours that this business-owner would be trying to predict his business’s future.  He’d therefore be missing a key variable in-between: the student also impacted by, and impacting, the markets.  This student would be a future intern, or employee, or customer — or a protester whose actions would lead to his business operations being shut down at a sensitive time.  

 

There is, right this moment, a call to shut universities down over the price of admissions. 

 

It bears mentioning that as inconvenient as protest may be to business operations, the Constitution in many instances protects the right to resort to them.  This right has been used (and abused, some would argue) numerous times in South Africa especially since the eruption of student protests in 2015: we’ve since seen retail stores, a bank, a racehorse stable and schools being marched upon for alleged indifference to the legacy of this country’s past.  This legacy is addressable through Broad-Based Black Economic Empowerment (B-BBEE).

 

Even if our hypothetical business isn’t directly exposed, those Matriculants would have spent more time in ideological debates on social justice (and the prevalence of food insecurity among tertiary students) than they’d have spent developing the skills they’ll need to take business forward as interns, suppliers and employees as well as customers for lack of buying power. 

 

Suppose the business owner read this newspaper in March.  He would likely have passed the story about the Wits student protests where bystander Mthokozisi Ntumba was gunned down, allegedly by police, and continue flipping to the financials to see the future of the markets.  Little would he know that this economic future and the ecosystem his business operates in would depend on his understanding of his business’s B-BBEE scorecard.  What would he do if he knew this?

 

Skills Development 

He’d know that as an employer whose total salaries exceed R500,000.00 p/a, he’s legally liable to pay a Skills Development Levy at 1% of his employees’ remuneration in terms of Pay-As-You-Earn, including 

• Overtime
• Leave
• Bonuses
• Commissions

The levies are collected by the South African Receiver of Revenue (SARS): 

• 80% is distributed among the SETAs while
• 20% is paid to the National Skills Fund.

He’d also have to realise that 20% of this contribution can be claimed back by submitting an Annual Training Report (ATR) and Workplace Skills Plan (WSP) to the Sector Education and Training Authority (SETA) that his business is registered with before every 30th of April.  These documents would have to show what his business has done towards training; the reimbursements it would get from the SETA would depend on how interventions are structured especially from a B-BBEE perspective.  SARS can also reimburse the business up to R80,000.00 per learner-ship per year.

 

Depending on the business’s B-BBEE obligations, part of this Skills Development spend can be directly spent on universities and university student accommodation and other needs.  

 

Suppose someone says, “I wouldn’t want someone who’d march and protest under one set of circumstances to work for me under another.”  But besides the fact that we can’t know what we’d do in those people’s situations, there’s the general cost of such disruptions and their impact on our lives down the line either way.  The classmate of the protesting students may have her studies disrupted, so the pool from which business draws future leaders remains impacted.  

 

The Skills Development element enables the business to reclaim its money, invest in itself and invest in the future of the country.  Its impact is more powerful when it’s overlapped with the Youth Employment Service (YES) and/or Enterprise Development (ED), both of which enhance the business’s B-BBEE scorecard.  This creates a range of options that depend on the business’s particular targets: 

 

• Does the business want to hire youth through YES?  It can claim up to a two-level increase on the scorecard, possibly more cost-effectively than if it implemented other elements including (in some instances) ownership, due to recent changes in YES and B-BBEE.

 

• If it doesn’t have capacity to absorb them directly, does the business want to place some of those hired youth in the enterprises it’s developing or among its suppliers?  This could be accompanied by other ED interventions or Skills Development implementation.  The allocation of points is structured to avoid double-counting but however points are allocated, the benefits are 

 

• B-BBEE compliance
• The recovery of levies
• Strengthened supply chains and business ecosystems
• Goodwill among a range of stakeholders
• An increase of stability in the operational and business environment.

 

If the economy is favourable, the Matriculants in our scenario will likely be interning either at our business owner’s company or at one of his suppliers’ companies.  Wherever they end up, they’re more likely to make use of their talents to grow the business if B-BBEE is implemented well.  

 

Unemployment

More urgently, these interventions would allow our economy to better address unemployment through businesses that aggressively claim benefits for participation.  Our SD, ED and YES interventions, however combined, are powerful instruments for alleviating unemployment.  If they aren’t accomplishing that, we may have numerous businesses claiming to be compliant in a country that’s still racked by protests.

 

Solutions

Contact us today on 060 000 BEE1 (2331) for assistance implementing Skills Development interventions that will benefit both your business and the ecosystem in which it operates.