The Revised Codes of Good Practice for Broad-Based Black Economic Empowerment (B-BBEE) are now in play, with far reaching implications for companies that do not have at least a 51% 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 than they did before.
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% in certain indicators in these elements will drop a level on their scorecard, while companies with a black ownership level of less than 10% 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 focus on taking real action to empower previously disadvantaged people within their organisations and communities.
According to Amendments to the BBEEE 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 number of points and the compliance target for skills development expenditure have increased from 6 to 8, and from 3% to 6% respectively.
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 with its larger weighting, and with the percentage of turnover to be invested in skills development having doubled.
Training Force, one of South Africa’s largest learnership providers, 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 subsidize the cost of the learnership, while at the same time subsidizing 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, recognized and accredited training provider.
This partnership needs to be more than just the appointment of a company that is recognized by SAQA – offering accredited training programmes across a wide spectrum of industries and services.
The ideal training partner should offer consulting services that helps identify the most effective ways to complete training in an organisation, helping companies understand the requirements of the law, assist them in compliance, and ensuring that all training, education and development initiatives help them 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.
Training Force (a Workforce Holdings Limited company), has partnered with seasoned B-BBEE consultants to help our clients navigate the skills development element of the new Codes. Our services include skills development preparation for B-BBEE audits, and we encourage client progress in all areas of the scorecard.
We’ve done this because we believe the revised Codes are in place to drive advancement in South Africa’s people through much needed education, skills development and training. There is no doubt that the new Codes are more onerous and demanding than the old ones – but this makes it all the more important for companies to partner with the right service provider to ensure they receive good value for the money they are required to spend in this regard.