Paul Janisch

Very few companies consider skills development as an area that can generate BEE points within a very short period of time

And so begins my posting of useful information.  I am unfortunately not an expert on Skills Development but I know a lot of people who are.  Also I am not an expert on inserting tables into the blog and I can't seem to get Word to upload the posts.  I'll have to figure this out - hence the scrunched up tables.  And BEE is all about tables.

A BEE score is based on the measurement of a set of elements actually initiated over a year.  Whilst the codes aren’t specific about what that period should be, most companies are measured over a financial year.  With the current March to February financial year rapidly coming to an end most companies should have the necessary BEE processes in place to achieve a better BEE score than the previous year.  Our experience has shown that this often isn’t the case – there is always a mad scramble to do something to attract points in the last few months of the financial year. 

Most companies will have regarded it too late to do much more than make desperate enterprise development or socio-economic development donations and attract those 20 points, hoping that these will be enough to favourably stack up against their competitors.  There is another way to earn at least a further six points under skills development in a very short period of time.

The skills development is concerned with two measurements

1              Spend on skills development

a.    3% of payroll under the generic scorecard spent on the training of black people with a strong emphasis on black women

b.    0.3% of payroll spent on black disabled people

2              Learnerships

5% of staff should be black people on learnerships.

Learnerships amount to 6 points on the BEE scorecard.  To comply with the learnership requirement 5% of all staff should be black people registered on learnerships.  This measurement is based on the number of people registered on learnership during the measurement period.  It makes little difference to this score whether the learnerships exist at the beginning of the period or on the last day.

The added bonus with learnerships is that the salaries paid to the learner whilst they are on the learnership are considered skills development spend.  This would then make a sizable dent in the skills development spend target of 3% of payroll.  From a points’ perspective it would be beneficial to register a learnership as early as possible within the measurement period.  Nevertheless even if the learner begins late in the measurement period you can claim their salaries as skills development spend for the balance on the year which will generate a few points.  And this same learner will earn you points in the next measurement period.  Adding black disabled learners to this programme can attract a further three points.

The table below summarises the requirements for skills development, the potential points’ value for each requirement and offers a few tips for attracting those points.  Don’t forget the four primary requirements that need to be adhered to before any points can be had under Skills Development

• compliance both with the Skills Development and Skills Development Levies Acts.
• registered with the applicable SETA
• developed a Workplace Skills Plan (WSP)
• have implemented programmes targeted at developing priority skills  generally, and specifically for black people. (this is derived from the Workplace Skills Plan)

 I have italicised the word developed above because it doesn't mean that the plan has to be submitted.  The (interminably dodgy) veification manual states that the WSP has to have been submitted, which is not a requirement under the code.

Description	Points	Target
Spend on skills development spend on black people ·         About 40% of the target must be spent on black women ·         Skills development spend includes salaries of people on learnerships ·         Overseas travel for business purposes can be regarded as legitimate skills development spend ·         If the money is claimed back through the Workplace Skills Plan it can still be used for points under this element	6	3% of payroll (equivalent to 3% of annual SDL contribution)
Spend on skills development spend on black disabled people About 40% of the target must be spent on black women   Skills development spend includes salaries of people on learnerships Siyakha has a database of suitable disabled people	3	0.3% of payroll (equivalent to 0.3% of annual SDL contribution)
Number of black employees participating in learnerships, ·About 40% of the target must be spent on black women ·   Consider cross-sectoral learnerships, not just those that your SETA offers ·         These points can be obtained in a very short period of time	6	5% of staff (this follows the definition of an employee – it usually is 5% of the number of people listed in your EEA2 submission)

 

Nedbank Small Business Seminars 2007

I went around the country with Nedbank this time last year delivering the BEE leg of the Nedbank Small Business Seminars.  It was a great experience and I got to work with the inimitable Bill Gibson.  I'm not involved in this round but I'm getting a lot of queries about the seminars.  So I've decided to update my blog with the venues, dates and times.  The first day is today.

1. GAUTENG, 4 Jun, 13:30 to 18:00, Nedbank Sandton Auditorium 135 Rivonia Road Sandton
2. GAUTENG, 5 Jun, 08:00 to 13:00, Ridgeway Hotel 158 Hendrik Verwoerd Drive Randburg
3. GAUTENG, 6 Jun, 08:00 to 13:00, Emperors Palace 64 Jones Road Kempton Park
4. PRETORIA, 6 Jun, 08:00 to 13:00 Bytes Conference Centre Block C 241 Third Road Midrand
5. GAUTENG, 8 Jun, 13:30 to 18:00, Nedbank Park 1 Press Avenue Selby
6. KZN, 11 Jun, 08:00 to 13:00, International Convention Centre 45 Ordinance Road Durban
7. WC,13 Jun, 08:00 to 13:00, The Presentation Room West Camp Old Mutual Jan Smuts Drive Pinelands CT
8. WC, 14 Jun, 08:00 to 13:00, Nedbank Clocktower (BoE bldg ) Clock Tower Precinct V & A Waterfront CT
9. EC, 18 Jun, 08:00 to 13:00, Nelson Mandela Metropolitan University University Way Summerstrand PE

I got this off the Nedbank website I can claim no responsibility for the accuracy of this information.

Fearing an omitted C

This post refers to what the dti has termed "SCARE" skills.  If you don't believe me, take a look at page 91 of the codes, under priority skills.   Louise was right when she said there are at least 172 different mistakes in the codes.  "Louise, I think we should make that 173, but who's counting."

Now onto something a little more serious.  The requirements for skills development are somewhat onerous.  Code 400 clearly states that entities may only receive points if they:

1. are in compliance with both the Skills Development and Skills Development Levies Acts.
2. have registered with the applicable SETA
3. have implemented programmes targeted at developing priority skills  generally, and specifically for black people
4. have developed a workplace skills plan  (notice the word "developed" , it doesn't expressly say "submitted")

The easiest way to earn the points for skills development is to actually spend money on the requisite training.  I was debating this concept with Todd Kaplan, an old Rhodes friend.  Todd runs an online training company called Wildlife Campus.  The virtual campus has in the region of 5000 students who are happy to take wildlife courses online, many of them do not reside in South Africa.  Todd has modified this concept to corporate learning and can provide almost any course in an online environment.   

The beauty of this type of learning is that the student can take the course at their desktop and operate at their own pace.

Todd got really excited when I told him about the skills development element.  I waxed on about how some companies might find that all their black staff on  courses and not in the workplace.  Todd has numerous success stories about online learning that he is more than willing to share with anyone.

I think it's a brilliant idea and we'll be working with Todd to take these courses to those companies that need them.

If you like the idea send me an email, and I'll set-up a meeting with Todd.

Teaching an old dog

Yesterday's Business Day carried a headline article on Mbeki's view on the job situation. Right at the end of the article Iraj Abedian suggested that the halving of unemployment by 2014 would depend on how fast South African workers became skilled. 

“The economy has moved through a higher level of job creation capacity.  At some time jobs became more skilled and technical because of the way the economy has moved, so older South Africans have found themselves out of jobs. The unemployment rate will not drop if people do not re-skill.”

The underlined quote is important.  I cannot count the number of times clients have told me that they want to train their older staff members and that these people show no interest in the training.  Here we have it from the experts that these people are engineering their own redundancy.

Then there is the question about skills development and the new codes.  The 3% payroll target remains, and there doesn't seem to be any incentive for results.  In other words, if you spend the money you get the points.  I don't think this is the best idea for a few reasons:

1. You could spend money on wasted causes.
2. How much time will this training take from the staff member's productive office time. 
3. What are the business benefits (other than scorecard points) of spending this money.

Admittedly I haven't seen the new codes yet.  But if this code is going to succeed then there has to be a qualitative aspect to it.

If you have any thoughts, ideas or experience in this matter please comment.  We've all got to get a better understanding of this issue.

 

Yesterday's Business Day carried a headline article on Mbeki's view on the job situation. Right at the end of the article Iraj Abedian suggested that the halving of unemployment by 2014 would depend on how fast South African workers became skilled. 

“The economy has moved through a higher level of job creation capacity.  At some time jobs became more skilled and technical because of the way the economy has moved, so older South Africans have found themselves out of jobs. The unemployment rate will not drop if people do not re-skill.”

The underlined quote is important.  I cannot count the number of times clients have told me that they want to train their older staff members and that these people show no interest in the training.  Here we have it from the experts that these people are engineering their own redundancy.

Then there is the question about skills development and the new codes.  The 3% payroll target remains, and there doesn't seem to be any incentive for results.  In other words, if you spend the money you get the points.  I don't think this is the best idea for a few reasons:

The purpose of skills development

• I have met Sarah Babb from the Skills Framework once before and I was very impressed with her insight into skills development.  I think I am actually more impressed with her ability to be recognised as an expert in the features pages of all the important national and weekly news publication.

Sarah wrote a column for the Skills Portal last week on the reasons why skills development exists and why the current framework is perhaps not working out.

A national qualifications framework (NQF) exists to "facilitate access to and to be able to award nationally registered qualifications, and unit standards."  However, Babb notes that "11 years down the line, we see a perception of little demand for the registered national qualifications and in some instances, a dramatic decline in uptake of certain qualifications."

Some of the reasons for this perception and low uptake are:

• Outdated and/ or poorly written standards and qualifications,
• On-the-job training is providing ample skills development and there is no demand for a national qualification
• Constraints in acquiring national qualifications – ie. the assessment process, lack of registered assessors, lack of accredited training providers
• Lack of status of the qualification

She explains each reason in more detail in the article. 

It does highlight the challenge that many companies face when it comes to measuring the skills development element in their own scorecard.   There is little doubt that the targets (and the new scorecard is not going to lower that target of 3% of payroll - we've seen it), are high.  If the 3% was to be spent on formal training then you'd never have employees in the office, they'd be out training all day, every day.  I think that the only way you will make up these points is to quantify and continuously assess the on-the-job training that happens in your company.  We are working on a tool that helps in this assessment.  We'll post it on our website when it's done.

Unemployed graduates

What's wrong with this picture.  South Africa is so short of skills that they have to launch a whole new initiative (JIPSA) to address this problem.  Yet 200,000 tertiary-qualified individuals are unemployed.  A FinWeek report from 16 November, 2006 explains this anomaly.

A study from UCT's School of Economics found that 82% of these people hold diplomas and the balance degrees.  It also observed that the majority were black graduates.  The reason behind this is not as sinister as it may appear.  The report noted:

"African students or students studying at historically black institutions tend to graduate in fields of study with lower employment prospects, often because they don't meet the minimum requirements for enrolling in mathematics, science and engineering courses."   

FinWeek did however conclude that the study shows that very little seems to being done to improve mathematics and science education in SA. 

It's just occurred to me - the Reunert BEE deal is trying to do something about this. Boel told the Business Day, "Reunert realises how critical quality education in mathematics and science is for our own future and that of SA."   

All you need is learning

The Reserve Bank published its Labour Market Frontiers report this week.  The Business Day reported today that the report found that "the higher the level of skills, the higher the monthly wages received by a worker".  The report also noted that "the earnings of unskilled and semi-skilled workers remained flat".       

The Global Entrepreneurship Monitor Download GEM2005.pdf came to a similar conclusion.  A summary of the report was published by Bizcommunity on the 23rd of April, 2006.  In effect the report found that:

Job creation potential is greatest in those with further education; individuals with tertiary education are 2.5 times more likely to start a business that their counterparts with secondary studies under their belt, and 11 times more likely than those without secondary schooling.

I think this must be a consideration when you devise your enterprise development strategy.Download the_caird_group_bee_code_600_entdev_analysis_october_061.pdf

Blumenthal responds and we find out where the NSF may fit into the QSE scorecard.

Ivor Blumenthal (Services SETA CEO) wrote a scathing response  to this article in the Business Day -Skills training funds missing the target.  Blumenthal argues that the Labour and Finance departments did not discuss the removal of the 1% skills development levy (SDL) for companies whose annual payroll was less the R500k, I have heard that SARS will not accept the payment even if it is voluntary.  In fact he suggests that there is a huge rift between the two departments. 

And I quote. "Now, one year after the exemption, this chicken is home roosting.  SMEs are now far worse off than they were when they were paying levies. No training and development of any meaningful consequence is occurring among this 600000-strong group of registered businesses, and worse, these SMEs have resorted to activities engaged in during the days of industry training boards, where they wait for medium-size and large businesses to train staff, then simply poach the good ones."

The Labour Minister, Membathisi Mdladlana, has woken up to this fact and he's looking for cash to solve this problem.  Mdladlana does not consider the National Skills Fund as an option to fund SMMEs (the NSF gets approximately R1billion of the total R5billion collected annually from the SDL; it uses that money towards skills programmes that target the poor and unemployed).  And he's a little shy on what the solution is.

We were all a little confused as to why the QSE skills development scorecard provided 5 points for making an application to the NSF.  It seems clearer now that this requirement is some sort of a typo.  They might be referring to a voluntary SDL payment, I reckon this is a better solution.