Given the global socio-economic climate, successfully conducting your business is an artform that generally requires impactful strategies and disruptive ideas to execute, with a measure of success.
South African business is faced with its own set of unique requirements in order to really thrive. BBBEE is not unfamiliar to most SA businesses. However, many companies are still getting to grips with what it means for them, without truly understanding the benefits.
What is the current state of BBBEE in 2019?
As South Africa enters an election year, the transformation landscape is still hotly debated by ambitious politicians, arguing from either side of the political fence. The Broad-Based Black Economic Empowerment (BBBEE) Strategy is entering its sixteenth year, with the first BBBEE codes having been published over a decade ago in 2007.
One of the key areas in the updated BBBEE framework relates to Skills Development and South Africa needs as many skilled workers as it can possibly support and train in order to make an impact in a challenging climate that struggles to acquire world-class skills in order to progress.
What are the five elements in a BBBEE strategy?
Enterprise & Supplier Development
- Skills Development
- Socio-economic Development
Levels of BBBEE compliance
Exempted Micro Enterprises (EMEs): annual income of less than R10 million.
- Qualifying Small Enterprises (QSEs): yearly income lies between R10 and R50 million.
- Medium to Large Enterprises (M&Ls): yearly income above R50 million.
Automatic recognition levels will now be given to 51% and 100% black-owned large entities with annual turnovers exceeding R50 million – exactly as Exempted Micro Enterprises (EME’s) and Qualifying Smaller Enterprises (QSE’s) are currently given.
Effectively, this means that if a company is 51% black-owned it will qualify for automatic level 2 BBBEE status, and if it is 100% black-owned it will qualify for automatic level 1 BBBEE status.
What does this mean for business in SA?
In the Skills Development component, companies are encouraged to invest in upskilling previously disadvantaged staff with a first qualification. The most popular is by learnerships because currently the demand for scarce skills outstrips the supply.
Historically, Skills Development tends to get the brunt of the budget when it comes to strategic planning. However, with the new amendments to the BBBEE codes, Skills Development is a sound alternative to the Ownership pillar because true transformation begins with proper human resource development – a large component being Skills Development. It’s therefore an increasingly important aspect to BBBEE compliance.
As previously mentioned, the Codes demand a far greater investment in Skills Development with an emphasis on accredited learnerships and training by transferring hard skills (accredited courses and qualifications) to black employees and black unemployed persons. Important to note is that little weight is given to soft skills (maximum of 15%).
Where does your business fit in the Skills Development component?
- Businesses that exceed R50 mil turnover, annually get 25 points to the Skills Development component and it’s therefore imperative to score well.
- SETA Workplace Skills Plan, actual training reports and pivotal skills reports need to be approved by the relevant sector SETA. Businesses can no longer afford to ignore SETA’s and need to foster partnerships with them, or consult an accredited training provider to do so on their behalf.
- BBEEE will be increased in the future to focus on Skills Development.
- Levels may be demoted in Skills Development and Enterprise/Supplier Development for non-performance.
- If anyone had to choose an excellent space to be in for the future, Skills Development would be it; the benefit for business and improving the socio-economic situation in the country is immeasurable.
With an investment in Skills Development, you can:
- Earn 8 points if you invest 6% of your payroll on the training of black people.
- Earn 4 points if you spend 0.3% of your total payroll on learning programmes for disabled black employees.
- Earn points for external training.
- By participating in learnerships, apprenticeships and internships, claim 4 points if 2.5% of your staff is enrolled on such programmes and another 4 points if 2.5% of your company’s headcount are black unemployed learners.
- Earn an additional 5 bonus points if all your unemployed learners will be gainfully employed at the end of the learnership.
It is crucial for business in South Africa to develop and submit a workplace skills plan to its applicable SETA in order to qualify for the BBBEE points in terms of the Skills Development ambit of the BBBEE framework.
Summit is qualified and experienced to advise on all BBBEE compliance requirements, including personalised training plans and staff training.
Contact our BBBEE Compliance Team to assist you with your training strategy: