New B-BBEE Codes: Bursary Incentives

Bbbee Bursary.jpg

Newly proposed B-BBEE codes to incentivise companies when they offer bursaries[1] could help alleviate some of the skills shortages experienced in South Africa.  In terms of the new proposed codes, companies that offer bursaries could get additional points on the Skills Development Scorecard.  In addition, there is an expectation that any bursary spend on the new B-BBEE codes, will be tax deductible.

The new codes plan than 2.5% of a company’s leviable expenditure must be allocate to a bursary scheme.  Thus, a company with an annual payroll of R 30 million must allocate R 750 000 towards a bursary incentive.

Employers must consider how best to implement the bursary incentive in their organisations.  The scheme is a valuable tool providing current employees with a study opportunity so that the company can have a broader base of skilled staff.  One of the big gripes from employees is that they do not get study opportunities and that they then miss out on being considered for promotions.  On the other hand, the envisioned bursary scheme will be a valuable recruitment tool to attract Matriculants with good marks and to give them opportunities to study and get practical work experience. There are many Grade 12’s who have excellent marks but who are not able to get a tertiary qualification due to financial constraints.  They will benefit from the envisioned bursary scheme, and they have the potential to add value to future employers.  In a recent drive to recruit candidates for learnership openings at clients, Growth Institute noticed that more than 25% of applications received are from Grade 12’s who have very good school marks and who could benefit from the new bursary incentive.

Unfortunately, there is another side of the coin to consider.  The main concern is that employers could use the newly proposed codes as just another checklist to score points, not caring whether beneficiaries have passed the courses for which they received the bursary or not.  Seeing the newly proposed B-BBEE codes as a means to reduce taxes and nothing else will not have the desired effect.  There are far too many cases where persons are put on learnerships or study programs, knowing full well that they are not going to pass a single subject.  Such a practice is ethically questionable because it does not improve the levels of skills so desperately needed to sustain economic growth.

Under the current learnership schemes, there is a phenomenon known as “Professional Learners”.  What it means is that some of the youth migrate from one learnership to another.  They would benefit from Learnership A but since that learnership does not automatically lead to employment, they migrate to Learnership B in the hope to land employment.  In addition, some learners migrate from learnership to learnership, never completing a single program.

Technically, there is a mechanism preventing someone to move to another learnership without completing a prior program.  How well this mechanism is enforced is debatable and requires some scrutiny.

If the new codes about bursaries come into effect it would be beneficial if checks and balances exist to catch out people that migrate from one bursary incentive to another; never completing a qualification.



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