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 Read the rest of this entry »

The skills development levy was designed to force entities to invest in skills development by paying money to a SETA. This money is recoverable from that SETA when the company invests in skills development. A large majority interpreted the skills development levy as a pure tax, paid the money to the SETA and never reclaimed it. This approach results in zero return and becomes, as mentioned, a straight tax.

The objective of BEE is to stimulate growth, not to invoke taxes. If the skills development initiative is not going to result in a return for the business then it is likely to result in unsubstantial skills training. If it is unsubstantial, then the trainee is not going to be any closer to participating in the mainstream economy and the exercise lacks substance. Strictly speaking, BEE contributions that lack substance are not measurable.

An investment implies that the employee will return from training with the ability to make more money for the company than prior to the training. Whether that training entails operating a computer programme more efficiently or part-time study for a university degree is particular to each business. But it must result in a return for the company greater than the initial investment. Read the rest of this entry »

About a decade and a half ago, Anthony Zwi and Antonio Jorge Cabral argued that we needed a new term - they suggested ‘high-risk situation’ - to describe the range of social, economic and political forces that place groups at particularly high risk of HIV infection (1991). They culled a number of features from a variety of settings in order to characterise these high-risk situations: impoverishment and disenfranchisement, rapid urbanisation, the anonymity of urban life, labour migration, Read the rest of this entry »

Targets

As mentioned above, the target is calculated on the same basis as that of enterprise development. The calculation is not clearly articulated in the Codes and is a technical computation. To avoid repetition, the following constitutes a brief summary of what was communicated under enterprise development.

The target for socio-economic development is 1% of net profit after tax (NPAT). NPAT is easily manipulated through accounting entries, so the Codes use an anti-circumvention approach, outlined below. Read the rest of this entry »

The socio-economic development element is a request to business to play an active role in social upliftment. It is BEE‘S conduit for Black people living below the poverty line by providing a lifeline to people without any access to the mainstream economy. Socio-economic development may take a variety of forms, including rural development, contributions to traditionally non-economic activities such as the arts and medical facilities for the poor. Read the rest of this entry »

A crucial error in socio-economic development is not asking the communities what they need. One-sided decisions on contributions to beneficiaries are often counterproductive because the people may, for example, want a bridge over the stream to get to town more easily, whereas the company instead builds a school that the community cannot service with teachers. Read the rest of this entry »

The endogenous determination of the interest rate

In a boom, banks will lend more and will seek to create new deposits or issue additional notes. To support these activities, they will have to attract additional reserves. This will lead them to bid up interest rates, as they seek to attract idle reserves from one another and from hoards. In a slump, they will issue less and lend less, and will seek to shed reserves, lowering interest rates. In other words, while long-term average rates are determined by costs and competition, current interest rates reflect the balance of supply and demand in the market. They move pro-cyclically.

This is illustrated by a simple model. On the one hand, the rate of interest (in relation to the rate of profit), is likely to affect investment inversely, and investment, in turn, will have an impact on prices and employment. Changes in prices and employment will call for changes in reserves. Read the rest of this entry »

In its earliest and simplest forms, the gold standard meant that the money in circulation, including the money the government minted, consisted of gold coins. When the US officially joined the gold standard in 1879, the value of the dollar was set as equal to the value of 23.22 fine grains of gold, where 480 fine grains made a fine troy ounce. This was equivalent to $20.67 per ounce.

Under the gold standard, the constraint on the creation of bank money posed by reserves is critical. Bank money consists of notes issued as claims to real money, that is, to gold or silver coins, money with intrinsic value. But at any time, most of the public would prefer to use the more convenient paper money, provided they are confident that they can convert the (intrinsically worthless) paper to gold at a moment’s notice. For this purpose, reserves are kept in proportion to the note issue. Read the rest of this entry »

A ‘transformational growth’ perspective (Nell, 1998a) would suggest that these principles are connected in an evolutionary pattern: as technology developed, production and employment took on new forms, and came to require different kinds of financing (Nell, 1998b). To keep pace, the monetary system also had to adapt and develop in new ways.

This took place in several stages. In the first instance, as transactions became more complex, metallic money proved inconvenient. Paper claims to gold could be used more easily, and came to replace gold. But bankers noticed very early that a given supply of gold could support a larger amount of circulating paper, since only a fraction would be presented for conversion at any given time. Convertible paper based on a fractional reserve, however, is fiduciary money. It is based on the trust the public has in the banks. Read the rest of this entry »

Now let us look at modern money, which is not anchored in gold or precious metals, and consider how money that is purely a matter of convention or fiat obtains and keeps its value. In the older economy, money was anchored to metal that had ‘intrinsic value.’ Such money is an asset to its possessor, but it is no one’s liability. This connection is broken in modern systems in which money has no intrinsic value. It is an asset to its possessor, and a liability to its issuer. Between these, we have a system in which paper money and bank deposits are loosely tied to intrinsic value by being convertible into bullion, plate or coins. Such money is also a liability to its issuer. The implications of the change from money of intrinsic value to modern money are striking. Read the rest of this entry »

The government budget tends to move counter-cyclically. In a slump, incomes will be reduced and spending curtailed, so tax collections will fall, but welfare and related spending to support the unemployed will tend to rise. Other government budget items are likely to be unaffected. Hence, the overall effect will be to throw the budget into deficit. By contrast, in a boom, tax collections will rise and welfare spending will tend to decline, so a surplus will tend to emerge. In short, in an economy with demand-based cyclical fluctuations, the central government budget will tend to move in a counter-cyclical fashion.

Now consider the monetary implications of deficits and surpluses. A deficit arises when the government spends more than it receives in taxes; this means a net increase in money in the system. Such money will appear as excess reserves in the banking system. If allowed to remain, it will drive down interest rates. Looked at another way, it will drive up security prices. A surplus is just the opposite; it arises when the government spends less than it takes in, and it creates a reserve deficiency, tending to force interest rates up. Read the rest of this entry »

In the older economy, the monetary system did provide a constraint, and this constraint helped stabilize the economy; changes in the value of reserves worked in conjunction with the price mechanism. By contrast, the modern monetary system offers no constraint, and, in fact, inflations and asset price booms are self-financing, since price rises increase the value of collateral, on the one hand, and raise the value of bank capital on the other. The modern monetary system also allows for a creative use of the central government’s budget. The shift in money from real to nominal, following the changes in technology, has brought a new role for the government. The government budget is both much larger and plays a stabilizing role in the way it affects the economy. Read the rest of this entry »

The idea behind the Phillips Curve is that higher inflation is associated with lower unemployment, and vice versa. Intuitively, this seems plausible enough. The stronger the economy, the more business is booming, the more jobs there will be. So we can expect the rate of unemployment to be lower. Indeed, it may fall to a point where shortages of various labor skills begin to emerge. In general, the more the economy is booming, the more likely there are to be shortages and inflationary pressures. By the same token, in a slump, excess labor and excess capacity will reduce inflationary pressures, and may even lead in some areas to price cutting. Read the rest of this entry »

Sasol petrochemical group sold 20 percent of its Sasol Mining share to Ixia Coal in a deal worth R1.9 billion. Sasol petrochemical group total market value worth R212 billion. The total transaction cost is R9.3 billion which only accounts for 4 percentage of total value. It means Sasol makes 16% discount of its share price. The question is does the sasol loose its money, or does the Ixia Coal make a profit? In other way, whose money has been sacrificed during the deal? By BEEPartner.com editor opinion, If sasol share price going to a downturn, their both loose.