A Quick Overview of Funding for the B-BBEE Skills Development Requirement

By Stefan Lauber

With the introduction of the Broad-Based Black Economic Empowerment (BB-BEE) codes, companies have little choice but to implement learnerships. The question is no longer “should you implement learnerships?” but rather “how do you actually get started?”

According to the B-BBEE codes, companies will have to spend 6% of their payroll on the accredited training of previously disadvantaged individuals and need to enrol 5% of the total number of employees on a learnership. Compared to the old codes, the bar has certainly been raised—6% is a large sum. Companies are asking themselves, “How we can get the best Return on Investment if we spend such a huge amount of money?”

In our experience, many of i-Fundi’s clients are no longer just concerned about how to tick the boxes on their compliance checklist. Even though South Africa has over five million unemployed people, companies struggle to find the talent they need to succeed. BB-BEE skills development programmes are increasingly becoming part of an organisation’s talent management strategies. Companies are tired of the recruit, train and poaching cycle. They have decided that they need to grow their own talent because not only is it much cheaper, it also produces a much better calibre of people. We have clients who have made learnerships the main entry point into their organisations.

Funding these programmes has been a major challenge. Typically, organisations have relied on grant funding, be that through the SETA they belong to or other government-sponsored programmes, such as Monyetla. However, given the success of these programmes, there is simply much more demand than that there is money available. Employers do need to find more creative ways to fund such programmes.

Fortunately, South Africa has a very supportive policy environment. A recent i-Fundi workshop showed that companies could hire and train learners at virtually no extra cost if they were to take advantage of the available Learnership Tax Break, the Employment Tax Incentive and the lower salaries paid on learnerships. These savings are virtually equal to the cost of hosting a learner, including training and allowances. In essence, you are getting free labour. Who would not like that?