BEE Partner, South Africa Economy Watch

Calculations of BEE Skills Development

The calculations of skills development spend includes expenditure on learning programmes and in-service training programmes. The following calculation assumes the indicator is subject to adjusted recognition for gender.

Measurement of the skills development spend indicator

The calculation of the adjusted recognition for gender is as follows:

A = B/C + C

A = the adjusted recognition for gender

B = the skills development spend on Black employees divided by the leviable amount

C = the skills development spend on Black women employees divided by the leviable amount

Calculating skills development spend contributions for learning programme indicators is done as follows:

A = B/C x D

A = the score for the measured skills development indicator

B = the adjusted recognition for gender calculated above

C = the compliance target for that measurement

D = the weighting points for measured indicator

Calculation of the contribution

Step 1 Calculate the skills development spend on Black people meeting the definition of the indicator.

Step 2 Calculate the leviable amount.

Step 3 Divide the skills development spend by the leviable amount.

Calculation of the adjusted recognition for gender where applicable

Step 4 Divide the result of Step 3 by two.

Step 5 Add the result of Step 4 to the skills development spend for Black women divided by the leviable amount.

Step 6 The result equals the adjusted recognition for gender.

Calculation of points

Step 7 Divide the result of the adjusted recognition for gender by the target for that measurement category.

Step 8 Multiply the result by the allocated points for the measurement category.

Step 9 The result is the points added to the scorecard, limited to a maximum of points as allocated by the scorecard, to two decimal places.

The Practical Application of BEE Skills Development

Why would a company want to chase skills development points? On a purely compliance basis, if a business has to obtain a reasonable BEE score, 2% of the annual taxable payroll is minimal. Assume an annual taxable payroll of R300 000; 2% of this is R6 000.

Assuming there is no return on skills development that is unrealistic, a R6 000 cost equates to 25 points. Skills development represents an opportunity for a QSE to achieve easy points while investing in the productive capacity of the business. The QSE scorecard allows businesses to choose which elements to contribute to. Skills development looks like an element capable of providing “cheap” points that count the same to the end score.

Traditionally, skills development for Black people has been limited to non-core areas. Government maintains that sustained development of Black people will only occur if companies promote skills development for Black people in priority areas, that is, core and critical activities. Developing a Black person’s ability to be a receptionist or clerk is not going to generate Black participation in the core skills of the enterprise. The result is that Black people remain sidelined and are not included in the core of business development and growth.

Businesses wishing to contribute to robust Black empowerment should try to provide skills training in key areas of the business by providing Black people the opportunity to engage in the daily running and management of the business.

Businesses should approach skills development like any investment. Capital expenditure is initiated to generate return on that capital. A business buys a machine to make more widgets so it can make more money. Equally, a business should invest in the skills development of its employees so the employees can produce more widgets to make more money for the business. Successful businesses do not buy machinery that will not contribute to productivity, nor should they invest in skills development that does not result in additional profit.

Invest the money where it is wanted

There is no commercial sense in training a person when they do not want training or they are uninterested in the direction that training takes them. It is important to engage with employees regarding their goals and ambitions before investing money in developing skills that will translate into a poor investment.

The statement does not specify that a business must share the skills development spend equally among all Black employees. Invest in skills development where the employee is likely to use the opportunity to grow.

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