Kerrin Badham 2025-04-17 11:50:48

Apart from the obvious, literal answer, in the South African landscape, Skills Development is a loaded term and means a lot. 

Let me break it down for you.

Historically, South Africa entered our new democracy in 1994 with some major skills deficits, and these affected previously disadvantaged population groups such as black, coloured and Indian people, who together make up a substantial segment of the population.  There was an urgent need to assist and upskill people to enter the job market, as unemployment levels were very high, and inequality was a major socio-economic problem.

There was a need to update our qualifications landscape to allow people the flexibility to move from one education institution to another and have their learning credits recognised, and to allow for people to keep moving upwards in their careers.  Hence the National Qualifications Framework - a laddered system where every level of education, from schooling to tertiary or crafts and trades, is represented on a level. 

https://www.saqa.org.za/wp-content/uploads/2023/02/National-Qualifications-Framework.pdf

All accredited courses or qualifications need to be registered on a level. 

To ensure that employers in South Africa were incentivised to develop the skills of their employees, key Skills Development legislation was implemented that forced certain-sized companies to fund skills development, with incentives to get money back if they complied.  This set in place a structure for skills development in South Africa with key players and reporting obligations. It is summarised below.

What are the elements of Skills Development?

Skills development in South Africa refers to structured initiatives, policies, and programmes aimed at improving the knowledge, capabilities, and employability of individuals, particularly in the context of the country's broader economic and social transformation goals.

Here’s a concise breakdown of what it involves:

Purpose

To address:

• Unemployment, especially among youth

• Skills shortages in key sectors

• Inequality in education and workplace opportunities

• Workplace transformation, as part of B-BBEE (Broad-Based Black Economic Empowerment)

Key Components

1. Legislation & Frameworks

   • Skills Development Act (1998): Promotes training in the workplace and establishes the institutional framework.

   • Skills Development Levies Act (1999): Requires certain employers to pay a skills levy to fund training.

   • National Skills Development Plan (NSDP): Replaces the NSDS and guides strategic skills interventions.

   • Sector Education and Training Authorities (SETAs): Manage sector-specific skills planning, funding, and accreditation.

2. Training and Education Initiatives

   • Learnerships: Structured programmes combining theoretical and workplace learning, linked to qualifications.

   • Internships and Apprenticeships: Provide practical experience in various industries.

   • Short Skills Programmes: Targeted training to close specific skills gaps.

   • Adult Education and Training (AET): Focused on foundational skills.

3. Funding Mechanisms

   • Skills Development Levy (SDL): Employers (payroll > R500,000/year) pay 1% of their wage bill to SARS.

     • 80% goes to the relevant SETA

     • 20% goes to the National Skills Fund (NSF) for strategic projects

   • Mandatory and Discretionary Grants: Employers can claim grants by submitting Workplace Skills Plans (WSPs) and Annual Training Reports (ATRs).

Benefits for Employers

• Claim back up to 69.5% of the SDL paid through grants.

• Enhance B-BBEE scores (Skills Development is a priority element).

• Build internal talent pipelines.

• Improve productivity and competitiveness.

Impact Goals

• Reduce poverty and unemployment

• Support economic growth by developing a skilled workforce

• Promote lifelong learning and development

If you are a company with a payroll of more than R500,000 per annum, you are obliged to pay 1% of your salary bill monthly to SARS which then distributes that to various players to fund skills development. Your industry will automatically allocate you to a SETA (Sector Education and Training Authority) to whom your levy will be paid.

Example: Implementing a Skills Development Strategy in a Medium-Sized Company

Company Profile

• Industry: Manufacturing

• Staff: 150 employees

• Annual payroll: R30 million

• SDL (Skills Development Levy): R300,000/year (1% of payroll)

• B-BBEE Level Target: Level 2

🎯 Step-by-Step Strategy

1. Appoint a Skills Development Facilitator (SDF)

• The SDF coordinates all training initiatives and liaises with the relevant SETA.

• Ensures that the Workplace Skills Plan (WSP) and Annual Training Report (ATR) are submitted on time to claim mandatory grants (20% of SDL).

2. Conduct a Skills Audit and Needs Analysis

• Identify:

  • Critical and scarce skills

  • Internal talent development opportunities

  • Employees eligible for upskilling

  • Possible Learnerships, Internships, or Skills Programmes

3. Submit WSP and ATR to the SETA

• Typically due by 30 April each year.

• Allows the company to claim a mandatory grant (20% of SDL = R60,000 in this example).

4. Implement Training Interventions

Choose from the following:

5. Track and Record Spend for B-BBEE

Under the B-BBEE Skills Development Scorecard (Element 5), the target is:

• 3.5% of annual payroll to be spent on training black people

  • In this case: R1,050,000

• Bonus points for:

  • Absorption of learners

  • Disabled learners

  • Training unemployed youth

💡 Note: Training spend includes course fees, learner stipends, and reasonable associated costs (e.g., travel, materials).

6. Claim Discretionary Grants from SETA

• Apply for additional project-based funding for learnerships or internships.

• These are awarded based on the SETA’s priorities and budget.

7. Monitor, Evaluate, and Improve

• Track learning outcomes and employee progression.

• Align future skills plans with business growth and succession planning.

• Conduct internal surveys to assess impact and readiness.

🌟 Outcomes

• Recover up to R208,500 (69.5% of SDL) via grants.

• Improve B-BBEE level through meeting or exceeding skills targets.

• Enhance staff morale and retention through career development.

• Build a future-fit workforce and reduce dependency on external hiring.