Skills Development – connecting the dots of key legislation

One of the keys to running a successful and profitable business is having the right people, with the right skills in the right jobs. Every successful employer knows this.

Therefore, businesses need a carefully planned skills development strategy to achieve their business goals.

Of course, in South Africa, businesses operate in an environment with a high unemployment rate, especially among black youth, and an inadequately skilled workforce that is not transformed, making it difficult for companies to meet the employment equity targets. Skills development should, therefore, be seen as a way to help foster transformation in SA while ensuring the profitability of the business at a fraction of your training budget.

To do that, employers need to understand the various skills development legislation and regulations in place in order to align their training efforts with the government’s priorities in order to 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.

Key legislation includes 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 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 that employers that pay the levy are registered with the relevant SETA so that they can claim back a portion of the amount they spend on training. This is done through the mandatory grant system.

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

Importantly, the work skills plan and annual training report, along with the PIVOTAL training report are vital if you are to earn maximum points in terms of 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 on scorecard. 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 place emphasis on transferring hard skills to black employees and black non-employees. Hard skills refer to accredited training that leads to a formal qualification.

It is therefore vital that companies take skills development seriously, especially were pivotal training is concerned. According to Seta regulations, pivotal training is funded through discretionary funding, which means that implemented correctly, businesses won’t even have to fund that 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 that result in occupational qualifications or part qualifications on the National Qualifications Framework. So, basically, Pivotal learning programmes ensure that when you train your employees, you train them in a way that that the training is not wasted when they move on to new employment. You give them the building blocks to earn a full qualification, 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 is not an easy task, therefore it is wise to turn to a reputable authority on skill development in the workplace.