1. Element 3 – Skills Development
Total Weighting Points: 20
Total Bonus Points: 5
Total Possible Points: 25
Core Pillar: Yes
Sub-Minimum Points: 8 (excluding Bonus Points)
1.1. The Detailed Skills Development Scorecard (Generic)
1.2. The Background
1.2.1. Skills Development is a Priority Element or Core Pillar of the Revised Codes. This means that if the sub-minimum of 8 points out of 20 (which must be achieved, excluding the 5 possible bonus points) is not achieved, the Measured Entity will be discounted one B-BBEE Recognition Level.
1.2.2. Like Management Control, Skills Development is subject to the Economically Active Population (EAP) targets. EAP applies to Skills Development Expenditure; Bursaries for Black Students and Learnerships. It does not apply to Skills Development Expenditure on People with Disabilities or Absorption.
1.2.3. The overlay of EAP targets makes it difficult for all, but the largest companies to score full points in this element.
1.2.4. As with Management Control, where more than 50% of its employees are based in a single Province, the Measured Entity may choose whether to use National or applicable Provincial EAP targets. However, the same choice must apply to both Management Control and Skills Development.
1.3. Understanding the Skills Development Scorecard
1.3.1. The sub-elements of Skills Development vary hugely in the cost per point that they provide.
1.3.2. Skills Development expenditure is a function of Leviable Amount and number of employees.
1.3.3. Cost of payroll is not the most accurate indication of Leviable Amount as it contains additional cost components that are not applicable in this context. The following formula should be used:
Total Employee Cost = Skills Development Levy (SDL) found in the EMP201 (Financial Year) × 100
1.3.4. Skills Development Expenditure on Black People: 6 points for 3.5% of the Leviable Amount. This equates to a cost per point of 0.583% of the Leviable Amount per point.
1.3.5. Bursaries for Black Students: 4 points for 2.5% of the Leviable Amount. This equates to a cost per point of 0.625% of the Leviable Amount per point. This element was introduced in December 2019 and is likely a response to the “Fees Must Fall” campaign.
1.3.6. Skills Development Expenditure for Black Employees with a Disability: 4 points for 0.3% of the Leviable Amount. This equates to a cost per point of 0.075% of the Leviable Amount per point.
1.3.7. In addition, Skills Development spend on disabled employees also counts for Skills Development spend on Black People. This adds just over half a point, dropping the cost per point to 0.066% of the Leviable Amount per point. These are some of the cheapest points on the scorecard.
1.3.8. Learnerships, Apprenticeships and Internships: 6 points for 1 per 20 employees.
Learnerships are made up of three components being: formal education (Seta accredited); on the job training and mentorship. They can be administratively burdensome but the cost of formal education and a stipend may be offset against tax rebate as well as the cost of the course itself is tax-deductible. Incentives of up to R60,000 per year per Learnership are available. This increases to R100,000 per year if the learner is disabled.
The Youth Wage Subsidy may also apply.
1.3.9. Up to 5 bonus points can be earned for “Absorption” or employment of black people who have completed Learnerships. Since the amendments implemented from December 2019 Absorption requires that people who were on Learnerships become permanent employees on the payroll.
These points relate to the percent of people on Learnerships employed rather than the gross number. The percentage is not subject to EAP targets.
Consider a company that employs 80 people (and excluding EAP targets.
a. If the company has four learners and employs one of them, it will earn 6+ 1.25 = 7.25 points
b. If the same company has just one learner who it employs after the Learnership, it will earn 1.5 + 5 = 6.5 points
1.3.10. Given the high relative representation of black African people in the National EAP targets, the application of EAP targets represents a strong bias in favour of black Africans and against black Coloureds and black Indians.
1.3.11. “Skills Development Expenditure includes any legitimate expenses incurred for any Learning programme offered by the Measured Entity” (Government Gazette, 11 October 2013, page 52). In addition, up to 15% of the targeted 3.5% of Leviable Amount may be spent on salaries for people on Learnerships and a further 15% may be included for accommodation, transport, catering etc. related to Learning Expenditure.