Black Economic Empowerment and its successor, Broad-Based Black Economic Empowerment, are aimed at uplifting large portions of the South African population that were denied equal economic opportunity during the apartheid era. Becoming BBBEE compliant should be a goal for all South African business owners and employers, not only because it shows commitment to creating positive change in this country, but also because it has certain benefits for business.
Skills development, BBBEE compliance and the BBBEE scorecard
There are definite savings and benefits associated with investing in skills development within your company, and being BBBEE compliant is certainly one of those. Along with ownership and enterprise and supplier development, skills development is one of the three most important elements of the BBBEE system. Generic entities have to comply with all three of these to be avoid being demoted one BBBEE level, and Qualifying Small Enterprises (QSEs) have to comply with two of the three to avoid being demoted one level.
On the BBBEE scorecard for generic entities and QSEs, the skills development category measures the degree to which the business concerned makes efforts to develop the skills of black, Indian and coloured people within and, to an extent, outside the company.
The benefits for current employees (and their employers) are obvious, but investing in skills development benefits entire communities, in that programmes can extend beyond the company’s workforce. People in the community can also benefit from company-led skills development, leading to skills improvements in the community. This helps uplift the community, and also boosts the social development score on the BBBEE scorecard of the company facilitating the skills development programme
Skills development programmes can be especially beneficial if they include black women, youth, people with disabilities, rural-dwellers, or unemployed people—all sectors of the population that still face widespread discrimination today.
Tax benefits, SETA grants and skills development
Investing in skills development, moreover, has tax benefits. The South African Revenue Service requires that all companies with a payroll of more than R500 000 per year pay a skills levy equal to 1% of that payroll. 80% funds gathered in this way are distributed to the Sector Education and Training Authorities (SETAs) created under the 1998 Skills Development Act, while 20% is paid into the National Skills Fund. The funds gathered by the abovementioned skills levy are used to fund training and programmes within that specific SETA.
SETA bodies guide the content taught in skills development courses, and also ensure that they fulfill quality requirements. This oversight ensures that employers and employees who complete SETA-accredited courses have a valuable, quality-assured qualification that is valid at a national level.
Employers can, by meeting various conditions to do with skills development in their workplaces, qualify for a tax break, SETA discretionary grant or SETA mandatory grant. For example, an annual learnership allowance (an amount paid to the employer of a person engaged in a work-based learning programme that leads to an NQF-registered qualification) of between R20 000 and R60 000 can be claimed back if certain conditions are met, while employers who are up to date on their skills levy payments and offer PIVOTAL (professional, vocational, technical and academic learning) programmes may qualify for a discretionary grant from their sector’s SETA.
The importance of SETA-accredited skills development courses
Choosing SETA-accredited courses for skills development is important. A non-SETA-accredited course does not give those who complete it a valued nationally-valid qualification, and may not always teach relevant material, which means that the future employee may not be fully equipped to fit into the country’s skills framework and consequently might not enrich South Africa’s employment skills base. This does not benefit current or future employers, or the employee concerned.
Partnering with an experience BBBEE consultancy and/or an accredited training agency assures your business of both a smooth path to BBBEE compliance and an upskilled, well-qualified workforce. Both of these create great value for not only your business but for your business partners, suppliers and customer, and the country as a whole.