Importance of Skills Development
Important Amendment Proposals Regarding the Skills Development Element
The Department of Trade and Industry has proposed changes to the current B-BBEE codes. Such changes pertain mainly to the priority elements of Skills Development and Ownership. One of the proposed amendments entails the introduction of another Skills Development indicator that will give companies even more reason to improve their BEE scores.
The previous amendments were made in 2015, with most of the amendments at the time focussing on black ownership and the changing from seven to five elements. At the time, stricter requirements were introduced, which meant that many businesses had to drop one or more levels in their BEE status. The businesses that embraced the changes have since then been able to reap the benefits, such as government incentives, tax deductions, and grants.
The proposed amendments include the introduction of scholarships and bursaries as a way to earn points. The scholarships and bursaries will, accordingly, have a weight of four points. To earn the points, the business must allocate 2,5% of its payroll to an individual that has been enrolled in a registered educational institution. The institution must be a Department of Higher Education or Department of Basic Education registered facility.
The proposed amendments to the Skills Development element include the removal of the 15% cap for supplementary training expenditures and earnings. According to the proposed amendments, informal training can make up 25% of the company’s total spend on skills development.
The weight of Skills Development is proposed to be 20 points of the overall score and five additional bonus points, which can certainly make a difference to the company’s BEE score. What is important about the amendments is that businesses can considerably improve their BEE scores by investing more money in skills development.
As it currently stands, companies benefit from various incentives, rebates, and grants with regards to their spend on skills development, yet, many businesses have failed to fully embrace the potential of focusing on Skills Development as one of the priority elements, along with Ownership.
Compliance, apart from the points that can be earned, holds benefits such as improving the skills and educational levels of current employees, whilst also ensuring that new employees at entry level already have important skills. With improvements in the skills levels of the workforce, the company benefits from higher productivity.
The company furthermore gains a competitive edge when it comes to tendering because of its improved BEE score. What is often overlooked, however, is that the training costs are significantly reduced simply because the company can benefit from reduced tax exposure, various grants, and government incentives. The government subsidises many of the costs, and the companies that comply are able to earn more points as related to preferential procurement.
Where to Get Professional Assistance
In order to reap the maximum benefits from compliance with the requirements of the element, it is essential to make use of accredited training providers. Structuring the skills development spend is also important. We provide your company with guidance on the above through our consultation services. We also offer the LFP Training Academy, an off-site training simulator model, and sourcing of learners in accordance with the requirements of the new BEE Codes in order to e