South Africa’s newly launched Youth Employment Service (YES) comes with a promise to generate significant broad based black economic empowerment (B-BBEE) points for participating companies.
A company will be able to realise a two level B-BBEE recognition lift through YES if the proposed amendments of the B-BBEE Act go through as they currently stand. But it won’t be easy. Here’s how it will work.
YES is a business led initiative delivered in partnership with government, labour and civil society. It targets to benefit black youth between the ages of 18 and 35 by creating quality work experience for them via three options: Corporate work experience, SME host placement and contribution towards SME development.
Companies that meet YES targets will be able to claim considerable B-BBEE points under Skills Development and Enterprise & Supplier Development elements (ESD). But YES can only generate empowerment points if a company has already achieved B-BBEE sub-minimum targets.
The key guiding principle is: YES is an additive, therefore companies must maintain or improve prior years’ B-BBEE Status level before they can generate points out of YES.
B-BBEE Recognition Level Impact
- Qualifying companies that achieve YES target and 2.5% absorption rate will realise a one level upward movement in their B-BBEE recognition level. For example: If a company is a Level Five B-BBEE contributor, achieving the latter YES target will promote it into a Level Four.
- Qualifying companies that achieve 1.5 x YES target and 2.5% absorption rate will realise a one level upward movement in their B-BBEE recognition level plus three bonus points in their overall empowerment scorecard.
- Qualifying companies that double the YES target and achieve 5% absorption rate will realise a two level upward movement in their B-BBEE recognition level plus three bonus points in the overall empowerment scorecard.
Minimum qualifications to generate B-BBEE point from YES
- 40% sub-minimum in each of the B-BBEE priority elements of the scorecard (Ownership, Skills and ESD) or alternatively
- 50% average across the three priority elements
- Entities must score full YES points on 126.96.36.199 which relates to Bursaries for Black Students attending Higher Education Institutions. This target which is ring-fenced for scholarships and bursaries constitutes 2.5% of company payroll.
Skills Development Spend for YES
Entities will be able to claim up to 50% of skills spend on YES Youth in the Category F and G on the Learning matrix. These categories refer to Informal Training (industry led, non-accredited programmes). The previous spend recognised was up to 15% on Informal non-accredited training.
Calculating YES headcount
The YES target for companies with over R50 million annual turnover is determined as the greater of:
- 5% NPAT/R55 000
- 5% of headcount
- The value in the company turnover band in Table 1 below
The YES target for companies with under R50 million turnover (QSEs) is determined by the headcount band in Table 2 below.