Entrepreneurs understand that you are born with some skills and the rest you have to learn. When building your business, you have to hire employees that fill certain roles. However, to move the business forward, these individuals need to grow with the enterprise and it is the business owner’s responsibility to assist with this. Here’s what every boss should know about skills development for employees.
The Skills Development Act 97 of 1998 was developed to create an institutional framework that promotes strategies to develop and improve the skills of the South African workforce. Furthermore, the act aimed to integrate those strategies within the National Qualifications Framework (NQF) that was set out in the South African Qualifications Authority Act in 1995.
It also aimed to provide Iearnerships that lead to recognised occupational qualifications, the financing of skills development by means of a levy-grant scheme (SDL) and a National Skills Fund, and regulate employment services.
This means that South Africans are empowered with skills or access to opportunities for skill development. With this, the government aims to create space for new entrants to the labour market and introduce transformative tools through training and education. For this there also needed to be regulations put in place. Enter, the Skills Development Levies Act 9 of 1999.
The Skills Development Levy (SDL) Act regulates the compulsory levy scheme to fund education and training in businesses across various sectors in South Africa. The fund is used to grow the knowledge and skills of the workforce to better citizen’s employability and businesses.
The fund is called the Skills Development Levy-Grant Scheme.
The contributions that employers are expected to make towards the skills development levies are mandatory. However, some businesses are exempt.
The amount that an employer needs to pay monthly is determined by their wage bill. Where payroll exceeds R 500 000 annually, 1% of the monthly wage bill needs to be paid towards skills development levies.
Where the annual wage bill doesn’t exceed R 500 000, these employers don’t need to register for SDL. Should your business be a public benefit organisation (PBO) exempt from paying Income Tax, or a branch of the government, then you are also exempt from paying the SDL.
Monthly levies are paid to the South African Revenue Services (SARS) with the UIF and PAYE. Employers from various industries pay the levy to help fund learning.
Any employer who pays the skills development levy can claim back money to help fund the training and development of their workers. Approximately half of the already paid fees can be claimed back.
Submitting these documents as proof before receiving the grant encourages employers to follow through with the training and skills development the staff members were indicated to receive according to the Workplace Skills Plan.
If employers submit a Work Skills Plan and an Annual Training report, they can receive 20% of the levies paid. Compliant employers can be reimbursed for internal and external training expenses
Employers can receive 15% of the levy when they appoint and register a skills development facilitator. This person will be responsible for the organisation’s Workplace Skills Plan or Implementation Report and providing the company with information and resources about skills development. They will also be the contact person between the organisation and the SETA.
In the case where a workplace skills plan is prepared, submitted and approved by the relevant SETA, businesses can receive 10% of the levy paid.
The first step a business needs to take before they can claim back from the SDL is to register at a relevant SETA. If you don’t know which SETA, SARS will be able to identify which is best for you.
When levies are paid, SARS transfers it to the SETA you are registered with. This is important because SETA will, in turn, pay the accredited training providers.
Next, businesses need to submit their Annual Training Report and Workplace Skills Plan before the end of April every year. The business’ qualified Skills Development Facilitator will need to submit this online.
The application for a mandatory grant needs to be submitted within six months after the registration date.
Lastly, the funds will be paid in cash to the business’s bank account.
Skills development in the workplace is vital. The many advantages it holds are beneficial to both employers and employees. Here are a few advantages.
Competitiveness of a business
Investing in your workforce leads to a more competitive business since the organisation is now able to compete with other companies thanks to the newly developed skills of staff members. A continuous learning mindset means that employees are constantly kept up to date with the latest developments.
Productivity in the workplace
Productivity in the workplace is improved when workers have the skills to effectively do their work. Similarly, workers who see that employers are investing in their staff also inspire productivity as they feel more confident in their jobs and employers, directly improving job satisfaction.
Time
Time is often one of the constraints that keep businesses from upskilling workers. An entrepreneur might argue that there is too much work to be done in too little time, not to mention time for training! In the short term, this can be true, however, in the long run, time can be lost if workers become inefficient due to a lack of skills.
Costs
Costs are another reason many companies might not develop the skills of their workforce. Depending on the type of upskilling required, access to training and days of work lost at work to receive training, this can be a costly endeavour.
By paying skills development levies, and claiming fees back, a fair amount of the cost can be covered to ensure a business doesn’t incur a loss in attempting to improve the business.
In South Africa, the country’s history of unequal education has led to a large number of citizens lacking skills that can help them progress in their careers. Even now, more than three decades later, the landscape still shows a lack of skills even though the education system has changed. On top of that, the country sees a great loss in skilled workers immigrating to other countries.
The need for upskilling workers is evident: without investing in employees’ growth, it means that businesses employ individuals whose skills are stagnant and they risk retaining an incompetent workforce that fails to advance the business.
Furthermore, the lack of leadership identifying opportunities for development or growth can also be detrimental. Where businesses fail to identify gaps and support development, they cause their own decrease in productivity, failure to innovate and decline in competitiveness.
To prevent this, the onus is on management to identify gaps that need to be addressed through skills development.
The first step in addressing the skills gap that might exist within a business is to make a thorough assessment.
Skills gaps can be technical, knowledge-based, digital, soft-skills, or industry-specific. The assessment will start by looking at the skills needed for a specific job profile or position. Next, the individual holding the position will be assessed to see if they possess the skills needed.
Whichever skills the person lacks, that is the gap that needs to be filled.
Setting goals will be the next step. The goals will relate to identifying where and when training based on the specific skills can be obtained. It will also include the expected outcome of the training. For example, that an individual’s productivity improves once training on a particular software is received.
During this step, the training occurs. Depending on the nature of the training, it might take a few hours or a few days.
Ensure that the training is provided by an accredited provider.
Once the training has been completed, and employees return to their daily tasks, measuring the success of the training will be vital. This can be measured by looking at how much productivity increases, as well as talking to the individual staff members to find out how they experience completing their duties after the training.
In the case of training courses that rely on practical assessments or examinations, the success of an individual can also be measured by the results of these assessments.
Skills development is vital in any business, but this is especially true for South African organisations. Seeing as the country has a high unemployment rate and a large number of unskilled workers, any business that strives towards growth needs to invest in the skills and knowledge of its employees. As the business owner or managing director, you are the person responsible for leading the charge or skills development in your organisation. Yet, this does not mean that the tasks rest on your shoulders alone. By assigning a skills development facilitator, your business can ensure that skills gaps are addressed by a qualified person.