Skills development now more important than ever

Revised broad-based black economic empowerment (B-BBEE) codes demand strong partnerships in skills development, explains STEVEN HERSCOVITZ, managing director of Training Force

The revised codes of good practice for B-BBEE are now in play, with far-reaching implications for companies that do not have at least a 51-percent ratio of black ownership.

Companies seeking a more positive B-BBEE rating – in order to maintain or close new contracts that depend on their level within the framework – are going to need to place a greater focus on achieving high scores across more criteria.

One of the most impactful changes is that the codes now have three priority elements: ownership, skills development and enterprise and supplier development.

Companies not achieving 40 percent in certain indicators in these elements will drop a level on their scorecard, while companies with a black ownership level of less than ten percent will automatically be downgraded a level.

With the scores for each level also having altered (to a possible total of 118 points rather than the previous 107 points), companies are now compelled to place a greater emphasis on taking real action to empower previously disadvantaged people within their organisations and communities.

According to amendments to the B-BBEE Act and the Codes Explained published by Werksmans attorneys, the amendments to the codes increase the number of factors to be considered under skills development, with five factors now in play.

The new factors offer points for training unemployed black persons, and for the number of black people offered jobs at the end of the learnership programmes. The points required have increased from six to eight percent, while the compliance target for skills-development expenditure has increased from three to six percent.

Skills development has been allocated a potential 25 points in the new framework – up from a previous 15 points – and the focus has been moved from “soft skills” to rewarding so-called “hard skills”, which are measured through the achievement of qualifications and the completion of accredited courses.

The skills part of the scorecard is now even more important than before. It now has a larger weighting, and the percentage of turnover to be invested in skills development has doubled.

Training Force, a wholly owned subsidiary of Workforce Holdings, believes that learnerships are definitely the most economical way to achieve maximum points, because the stipends given to learners while they are studying can be included when accounting for this amount.

It can also be included as part of the allowance described in Section 12h of the Income Tax Act. The tax allowance makes it possible for a company to heavily subsidise the cost of the learnership, while, at the same time, subsidising the six percent of leviable spend required.

With the increased expenditure on education and development outlined in the codes, and greater emphasis on formal education rather than on informal skills transfer, companies seeking to achieve the maximum possible points in the skills development element of the codes will need to partner with a credible, recognised and accredited training provider.

This partnership needs to be more than just the appointment of a company that is recognised by the South African Qualifications Authority (SAQA) – offering accredited training programmes across a wide spectrum of industries and services.

The ideal training partner should offer consulting services that help identify the most effective ways to complete training in an organisation.

It should also help companies understand the requirements of the law, assist them in compliance and ensure that all training, education and development initiatives help the company to achieve the maximum possible points as outlined by the new codes.

This partner should also have skills and experience in working with a company’s specific industry and skills requirements, whether their focus is in construction, transport and logistics, engineering, hospitality or business. Being able to offer training in workplace support topics, such as adult basic education or health and welfare, is also a distinct advantage.

A hundred new welders trained

The Department of Higher Education and Training (DHET) in the North West Province has partnered with Training Force to give 100 adult learners the skills they need to join the ranks of the employed.

The learners graduated after a three-month course, during which they learned welding skills. In the final practical evaluation they had to build a gas stove. This is a particularly valuable assessment process, as most of the learners come from areas where there is no electricity, and being able to build and sell gas stoves is one way that they can earn a livelihood in the future.