Skills Development – connecting the dots of key legislation

Every successful employer knows this: the key to running a successful and profitable business is to ensure the right people have the right skills for the right jobs.

To achieve this, businesses need a carefully planned skills development strategy to accomplish their business’ goals.

Of course, South Africa has a high unemployment rate (27.1 % in the fourth quarter of 2018, according to Trading Economics) which largely consists of the black youth – an inadequately skilled workforce that is not transformed makes it difficult for companies to meet the employment equity targets. Skills development should, therefore, be a way to help foster transformation in SA, while ensuring the profitability of the business at a fraction of its training budget.

To do that, employers must understand the various skills development legislation and regulations that are in place in order to align their training efforts with the government’s priorities. This will optimise their training budgets – after all, these budgets are not finite, but a good skills development strategy will make use of the various tax rebates and allowances to maximise its use.

A legislation we highly regard is the Skills Development Act which provides the institutional framework to developing a skilled workforce by devising and implementing national, sector and workplace skills development strategies. The act aims to, among other things, encourage employers to promote skills development and encourage workers to participate in learnerships and other training programmes.

The act also provides for the payment of a skills development levy, which amounts to 1% of an employer’s salary bill. However, companies with a wage bill of less than R500, 000 do not have to pay this levy. The levy is paid to SARS but is distributed via the sector education and training authorities (Setas).

It is, therefore, important for employers who pay the levy to be registered with the relevant SETA so that they may claim back a portion of the amount they spend on training. This is done through the mandatory grant system.

To qualify for the mandatory grant, the Skills Development Levies Act requires an employer to be registered, up-to-date with levy payments and employ a Skills Development Facilitator. A work skills plan and annual training report must also be submitted by the Seta-imposed deadline that is usually around the end of April. Please note that the work skills plan for the previous reporting period must have been implemented according to the prescriptions of the relevant Seta.

More importantly, the work skills plan and annual training report, along with the PIVOTAL training report are vital to earn maximum points for the skills development element of the BBBEE scorecard in the new codes.

In terms of the Codes, businesses can achieve a maximum of 25 points towards the skills development element of a score card. The minimum they need to achieve for that element is eight points, or 40% excluding the 5 bonus points. The BBBEE Codes only recognise the development of black staff and puts emphasis on transferring hard skills to black employees and black non-employees. Hard skills refer to accredited training which leads to a formal qualification.

It is, therefore, vital for companies to take skills development seriously, especially where pivotal training is concerned. According to Seta regulations, pivotal training is funded through discretionary funding. This means that if implemented correctly, businesses won’t need to fund the training through their training budget. Setas have ring-fenced 10% of their funds towards discretionary funding which companies can apply for.

Pivotal learning programmes are professional, vocational, technical and academic learning programmes which result in occupational or part qualifications on the National Qualifications Framework. Essentially, Pivotal learning programmes ensure that when you train your employees, you train them in a way that it does not go wasted when they move on to new employment. You provide them with the building blocks they require to earn a full qualification, thus, turning your workplace into a place of learning.

They comprise the following:

• Learnerships
• Work Integrated Learning
• Internships
• Bursaries
• Skills programmes

These form part of the learning programme matrix, which we can unpack for you in the context of your objectives and priorities.  In particular, we need to factor in the priority, scarce and critical skills identified in the relevant Seta sector skills plans.

We know that navigating through the various legislation and regulations are not easy, hence, it is wise to turn to a reputable authority on skills development in the workplace.

Through ProudAfrique Human Capital, we help you formulate and implement a comprehensive skills development strategy for only a fraction of your training budget, while ensuring that you achieve maximum BEE compliance status through the learning programme matrix.