Youth unemployment continues to be a thorn in South Africa’s side. At 38.2% in the second quarter of 2018 according to Stats SA – higher if other sources are taken into consideration – young people find it hard to make inroads into the world of work and become active members of the South African economy.
Business Unit Manager of Innovative BEE Solutions, Hansie de Waal, says government is continually trying to find ways to make a dent in the unemployment challenge, with nominal success. “The Youth Employment Services (YES) initiative, which was gazetted on 28 August this year, could have a more significant impact than previous initiatives if corporate South Africa embraces it in a meaningful way.
“This is because YES is aimed at harnessing the collective power of business to address a common national imperative, offering an alternative to investing in individual campaigns that lack scale to make a significant dent in youth unemployment,” he adds.
Not only will companies be helping address one of the country’s most acute issues, they will be able to boost their own Broad-Based Black Economic Empowerment (B-BBEE) credentials in the process, which will, in turn, allow them to participate in the economy more meaningfully.
De Waal says President Cyril Ramaphosa announced in his State of the Nation address that YES aims to create a million jobs. “The Government Gazette states YES also aims to ‘provide for and institute B-BBEE recognition for YES measured entities and qualification criteria applicable to the B-BBEE recognition of job creation’.”
To take part in the initiative, companies are expected to create jobs for youth, defined as black (African, Coloured and Indian) South African citizens between the ages of 18 and 35 years, and employ them for a year.
Importantly, notes De Waal, companies cannot just place a young person into an existing job. “Key to this initiative is the creation of new jobs, which means companies need to come up with new roles that they can fill with young people. So, if the company employs drivers, it cannot just appoint another driver. It can, however, create a new role, such as ‘driver supervisor’ (if it doesn’t already exist), and appoint a young person in the role.”
One of Innovative BEE Solutions’ clients has a draughting department, amongst many other departments. “The department is full of draughtsmen, assistant draughtsmen and people doing internships. To align with the YES initiative, they created an admin assistant role in the department,” adds De Waal.
“Companies who employ youth can boost their BEE level. Companies that absorb the young people after they have completed their one year with the organisation can boost their B-BBEE points further,” explains De Waal.
According to the Government Gazette, examples of the B-BBEE recognition that can be achieved through the YES initiative (provided various preconditions are met) include:
- Achieve YES target and 2.5% absorption – move one B-BBEE recognition level up on the scorecard.
- Achieve 1.5 x YES target and 5% absorption – move one B-BBEE recognition level up on the scorecard and add three bonus points to the overall scorecard.
- Double YES target and 5% absorption – move two B-BBEE recognition levels up on the scorecard.
Government also specifies employment conditions for YES measured entities such as ensuring they sign fixed term or temporary employment contracts with all eligible employees in new positions and provide them with quality work experiences. New positions are subject to South African legislation governing basic conditions of employment and working conditions.
“Companies also get recognition for informal skills development expenditure for YES employees. This means there are several ways companies can boost their B-BBEE levels by instituting YES,” says De Waal.
Large companies that are unable to create new roles in the organisation can partner with their suppliers to place young people in new roles. So, a large insurance company can place eligible people at a software supplier and still achieve points on its scorecard, as will the supplier.
De Waal says the number of young people that need to be appointed to achieve B-BBEE points is determined by a company’s turnover or Net Profit After Tax (NPAT), whichever is highest.
“The Government Gazette provides the following example: If company A has an average NPAT of R500 million over the past three financial years, then its YES target will be set by converting R7.5 million (1.5% of a R500 million NPAT) to a headcount number of 137 employees.”
He acknowledges that the process can be complicated, especially when it comes to compliance with the five elements of the B-BBEE scorecard under the revised codes and complying with YES. “It can be particularly complicated for organisations with a greater than R50m turnover because they also have to comply with Economically Active Population (EAP) targets.
“That’s where we can play a role. We have the necessary expertise to help organisations make sense of the various requirements and boost their B-BBEE status. We also allow executives to focus on their core business while we deal with the compliance issues on their behalf,” concludes De Waal.