It seems to have started with this article, although I would like to believe that my play in one act really clinched the deal. Bruce Whitfield wrote
The Department of Trade and Industry (DTI) has added an unexpected new financial requirement to companies that participate in the Youth Employment Service (YES). It threatens to undermine its ambitious goal of getting one million young people to gain workplace experience within three years.
The DTI will require companies wanting BEE recognition for their participation to contribute 2.5% of their company’s payroll to bursaries before they can qualify for benefits under its codes.
About 100 companies have signed up for the initiative but YES CEO Tashmia Ismael says some are concerned that the new financial requirement places an unreasonable burden on firms. “The word deal-breaker was used by some companies,” Ismael said, “They are telling us this will influence the decisions they make.”
The YES campaign had anticipated the funds it raised in the early stages of the project would provide it with a kickstart to encourage smaller and medium enterprises also to open their doors to interns on short term work experience contracts. The 60 day DTI consultation process means a delay for the implementation of the project until June. “It’s not going to fly,” one CEO told me on condition of anonymity. Large companies are expected to engage actively with the DTI over the changes.
Not that such journalism has ever swayed our esteemed Stalin disciple from straying off the path of completely destroying the economy. But this time it might just have. Last night I got an email from my friend Thinus with this article attached.
The Department of Trade and Industry (DTI) has agreed to remove an onerous bursary target previously set as a precondition for any firm seeking to receive empowerment credit for their participation in the newly launched Youth Employment Service (YES) initiative. In an unusual step, the department made the adjustment in the middle of a 60-day public-comment period.
I don't trust bolshie bob at all. So I had to check - and it's true!
Preliminary comments received since the Gazette on 29 March 2018, are indicat-ing concerns regarding the proposed qualification criteria “11.2.1.2” which re-quires entities to score full points on the 2.5% target for “Skills Development Ex-penditure on Bursaries” in order to qualify for the Y.E.S BEE recognition.
the dti views the participation in Y.E.S to be in line with the objectives of B-BBEE policy and has keen interest that there be maximum impact resulting in empowerment of young South Africans. In order to create certainty and ensure rapid take up in Y.E.S, the dti has agreed to delink the Y.E.S and the Bursary target of 2.5%. This means that the Bursary contributions will not be a precondition to obtain BEE recognition as a Y.E.S participating entity.
This is a significant victory for business. I think it suggests that the presidency is listening to the challenges faced by business in South Africa. bolshie bob lives in a red bubble, he seems to think that business has all the money in the world to subsidise his fantasies, perhaps Cyril has reminded him that he can't rule by decree.
However the underlying message here is that this 2.5% of payroll target is too high. If the comments suggested that this was a dealbreaker then what these comments are saying is that the 2.5% of payroll is too much money. And it is too much money. This kind of money doesn't exist in the economy at the moment. It might have been a better idea to set targets as a percentage of staff. If you want an idea of how much money we are talking about take a look at this post from 2014. These figures are from about 2012. Standard Bank would need to spend about R400m on bursaries. Even a mid size company would have to spend well into the millions. And don't forget that black business doesn't have to contribute to this at all.
Comments are due by the 28th of May this year. My comments will be posted on this blog by next week.
|
Company |
Salary bill |
Target spend (6%) |
Target bursary spend (2.5%) |
|
Standard Bank |
14 796 000 000 |
887 760 000 |
369,900,000 |
|
MTN |
6 709 000 000 |
402 540 000 |
167,725,000 |
|
NASPERS |
8 738 000 000 |
524 280 000 |
218,450,000 |
|
AECI |
2 976 000 000 |
178 560 000 |
74,400,000 |
|
FirstRand |
10 620 000 000 |
637 200 000 |
265,500,000 |
|
Telkom |
9 861 000 000 |
591 660 000 |
246,525,000 |
|
Nampak |
3 535 000 000 |
212 100 000 |
88,375,000 |
|
JSE |
405 000 000 |
24 300 000 |
10,125,000 |
|
Nedbank |
9 349 000 000 |
560 940 000 |
233,725,000 |
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