January 2013

We hope that everyone had a good break in December and that they have returned safely. This promises to be another very interesting year, but we hope a successful year for all our clients. The 15th January 2013 was D-day for the submission of Employment Equity Reports for all designated Companies. Hopefully the next submission will be in 2014; however we need to be prepared for all the legislative changes that are expected this year.

SKILLS DEVELOPMENT

Our next challenge is to meet the deadline for submission of our Workplace Skills Plans (WSP) and our Annual Training Reports (ATR). Although the deadline is 30 June 2013, we are targeting submission by 30 April 2013 this year. There is a very good reason for this. Much to everyone’s surprise and without any prior warning, new Skills Regulations were passed on the 3rd December 2012. The purpose of the new regulations is to:

1. Regulate the proportion of funds available for skills development that is spent on administration:
   The regulation limits this to 10,5%. This is good news as it was previously 12,5%. To put this into context, the Skills Levy brought in R10 Billion rand in 2011. 10,5% means that the SETAs can use R1.1 Billion rand for their internal administration costs. That is R48 Million per SETA. Not a bad expense budget.
   
2. Provide for SETAs to contribute to the cost of the work of the Quality Council for Trade and Occupations (QCTO).
   This contribution will come out of the administration cost of the SETA. They will contribute 0,5% of the administration cost to the QCTO, i.e. R5.5 Million per annum.
3. Discourage the accumulation of surpluses and the carry-over of unspent funds at the end of each financial year.
   Should a SETA have unclaimed mandatory funds or administrative funds (and the interest earned on these funds) then these must be transferred to discretionary funding. 95% of this funding must be allocated or spent within that year. Should they fail to do this, unused funds must go to the National Skills Fund.
   80% of discretionary funding must be allocated to PIVOTAL programmes that address scarce and critical skills in the applicable industries. PIVOTAL means Professional, Vocational, Technical and Academic Learning Programmes that result in qualifications or part qualifications on the National Qualifications Framework. The SETAs are currently interpreting this requirement. It is indicated by some SETAs that if a Company submits a PIVOTAL Report they will be eligible for a further grant of 10% of their levy. This is not made clear in the regulations.
   
4. Improve the quantity and quality of labour market information received by SETAs in the form of WSP and ATR and PIVOTAL training reports to inform planning.

Rather disappointingly, the regulations have this as an aim, but they have drastically reduced the incentive for Companies to submit this information by dropping the Mandatory Grant from 50% of the skills levy to 20%. This takes away the incentive to submit this information, particularly for small companies who may find it difficult to access the discretionary funding. However, Companies will not be eligible for discretionary funding if they do not submit the WSP or ATR. It may also affect their BBBEE score.

The regulations also change the timing of the submission of reports after 2013 from 30 June to 30 April of each year.

We understand that the SETAs are registering their unhappiness with this regulation and we are awaiting their guidelines.

A review of the Department of Higher Education and Training’s Annual Report supports Minister Blade Nizmande’s commitment to develop the Further Education Training (FET) Colleges. Considerable funding from the National Skills Fund has been set aside for this and it is evident that the SETAs will be encouraged to support the studies of staff through the “Public Education Training Providers” by encouraging the SETAs to allocate discretionary funding to them rather than to Private Training Providers.

SALARY INCREASES

As we near the end of the Tax year, which many companies also see as the end of their Financial Year, we are frequently asked what we expect the average salary increases for the year to be. P-E Corporate, who are responsible for producing an annual salary survey which is available to participant companies, have provided information which they have said we can publish in our newsletter.

In the article they state that the South African labour market has been characterised by severe skills shortages for a considerable amount of time although increases have been above inflation, particularly at Executive and Professional levels. Their research indicates that the majority of organisations are budgeting increases between 6% and 8% depending on staff category and skills shortages. This is based on the above market trends as well as on wage settlements, public sector increases and general economic data, i.e., growth expectations, inflation, etc. Our predicted salary increases are reflected in the table below:

For more information you can access the full report you can contact Tessa at our offices on 011-452 1707 or Maria Romo at 011 442 4334 P-E Corporate

SECTORAL AGREEMENTS

The Sectoral Agreements are amended annually to define new minimum salaries and increases in those industries. There are currently 11 Determinations, the largest of which are for the Wholesale and Retail Industry, Hospitality Industry, Contract Cleaning and Security Sector. The Farm Workers agreement is drawing a great deal of attention currently.

An amendment to the Domestic Workers Agreement was passed in December 2012 indicating that the minimum salary for a Domestic Worker has been increased to:

The rate is for Urban Areas (Area A)

EMPLOYMENT EQUITY

We will be running a public Employment Equity Committee Training course at our offices on Thursday the 7th February 2013 from 08h30 to 13h30 at a cost of R550-00 (excl VAT) per delegate which includes the venue, training material, refreshments and a light lunch.

This is a 5 hour programme which is applicable to any person who will be responsible for the implementation of Employment Equity processes or will be a committee member on the Employment Equity and Skills Development Committee. Please contact Tessa at our offices on 011-452 1707 for more information.

THE MONEY SKILLS GAME

As part of our Life Skills Training programme and Leadership Courses we have been asking our delegates to play the “Money Game”. The game is a South African simplification of the game “Cashflow” designed by Robert Kiyosaki who wrote the book “Rich Dad, Poor Dad”. The delegates have all indicated that the game teaches the lessons that it is designed to teach, i.e. that debt on liabilities is unwise and that investments which lead to the generation of passive income, whether through personal development, shares, investment in property or business opportunities should be part of everyone’s financial planning. We are using the game to encourage our delegates to become aware of the pitfalls of being indebted and to think about planning for retirement.

The debt trap is a growing problem in South Africa. Many people I speak to are not aware that a micro loan from any of our leading banks could attract an interest rate of more than 30%. The Banks do not disclose the interest rates on loans on their websites. We have seen garnishees that cost 60% of the loan amount per annum once legal and collection fees are added.

The game can be played by anyone who has the ability to add, subtract and workout a percentage, but is recommended to be played by anyone over the age of 14. We suggest that every teenager should be exposed to the game. The game is available for less than R100-00 and can be bought from Educational Toys. Their website is www.educationaltoycentre.com.

We wish you a successful year in 2013.
Desrae & staff