Black Broad-Based Economic Empowerment (B-BBEE) is only effective in meeting its goals if the transformative ethos of the legislation is embraced.
This is according to Rajan Naidoo, the director of EduPower Skills Academy, who says: “If B-BBEE is approached with a begrudging compliance mindset, merely ticking boxes, it will fail. However, the one way a company can future-proof its economic growth and competitiveness and meet its B-BBEE compliance targets is by prioritizing skills development through learnerships.
“The cost of learnerships can either be viewed as a reluctant expenditure or as an investment in building a talent pipeline. For companies that prioritize growth and competitiveness, investing in skills development is a no-brainer.”
Prioritising growth and sustainability
Naidoo contends that a company’s perspective on skills development and compliance is closely tied to its culture and values.
“To gain value from learnerships and B-BBEE, businesses must prioritize embracing transformation and social change. Retention of key personnel is a crucial aspect of any company’s stability and growth, which requires a significant investment in developing human resources,” he comments.
“Investing in skills development may, therefore, require some introspection on the part of the executive, but it is a reciprocal relationship that creates a company culture that values all employees and aligns their development with the business’s growth.”
He adds that in socially responsible companies, training extends beyond the immediate workforce to contribute to the growth of the economy as a whole.
“Skills development is a key driver of this growth, and companies that invest in it benefit from a positive brand reputation and returns on their investment. Conversely, a grudgingly acquiescent mindset that spends the bare minimum on learnerships and skills development will not result in any significant benefits.”
“The government offers substantial tax incentives to develop skills within businesses. Section 12H and discretionary/mandatory grants are much-used legislative mechanisms that offer tax breaks of up to R80 000 per able-bodied learner and R120 000 for learners with a disability,” Naidoo asserts. “And, by submitting an annual Workplace Skills Plan and Annual Training Report (WSP/ATR), companies can also secure government subsidies that are available as grants.”
He points out that these grants lower the financial commitment of a company and a grudging compliance-only outlook, therefore, does not make sense.
“Despite there currently being no penalties for organisations who do not invest in skills development, many corporates whilst taking advantage of the legislative incentives, do not limit their financial exposure to this amount. Rather, they determine the value of the skills to the business as the return on investment,” he notes.
Employment Equity amendments
“With the recent amendments to the B-BBEE Act 2023, organisations operating in specific sectors could experience increased pressure to meet Employment Equity (EE) demographic requirements,” Naidoo says.
“This means that some companies may need to focus on building an EE talent pipeline to achieve compliance within a specific time frame which emphasizes its importance as part of companies’ compliance strategy. It would be logical, therefore, for them to invest in skills development and learnerships to cultivate this pipeline. Only time will tell, though, if this approach is effectively adopted.
“Budgets for learnerships should not only be a narrow financial consideration,” he concludes. “Companies must develop broader metrics to understand the link between investing in skills and the growth in innovation and company performance. When this purpose is attached to a learnership, it makes rands and sense for future-proofing a business.”