Initiative boosts youth, BEE level

2018-11-14 06:00
Marc Naudé

Marc Naudé

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Question:

I have taken note of the new Youth Employment Service initiative issued by government and am very excited about the opportunities it offers to improve the BEE level of my business.

I am however struggling to understand what I need to do. Can you explain?

Answer:

On 28 August 2018 the Youth Employment Service Initiative (“YES Initiative”) within Code Series 000, Statement 000 of the Amended BEE Codes of Good Practice was published in the Government Gazette and became effective immediately.

The YES Initiative is an initiative by government, organised labour, civil society and young persons with the aim of creating jobs for youth. There is an estimated six million young persons in our country who are unemployed and the initiative aims to create at least one million new jobs.

Youth is defined as persons aged 18 to 35 and the initiative is aimed at creating opportunities for them by setting targets for entities for the creation of one-year paid positions with a minimum paid stipend of R3 500 per month.

Targets are set for the creation of new jobs for youth, as well as their absorption (i.e. appointment). The jobs can be created within an entity itself or an entity may sponsor new jobs to be placed in Exempted Micro Enterprises (EMEs) or Qualifying Small Enterprises (QSEs).

The targets for job creation are linked to the turnover of the business with different requirements set for EMEs, QSEs and generic entities, as well as different methods for determining their targets.

EMEs have no sub-minimum requirements and need only meet their targets based on headcount as set out in the YES Initiative.

QSEs must however meet the 40% sub-minimum requirements for ownership element and one of the other two priority elements, or have an average of 40% for the ownership element and another priority element. They must also meet specific headcount targets based on the same table as for EMEs.

Generic entities must meet the 40% sub-minimum for all three priority elements, or alternatively average 50% across the three priority elements. They then also have to meet the higher of the following targets:

  • 1,5% of their headcount;
  • 1,5% of their average Net Profit After Tax (“NPAT”) for the last three years after their NPAT has been divided by R55 000; or
  • a headcount target determined by a table in the YES Initiative.

All entities will have to ensure that they maintain or improve their BEE level in order to benefit from the YES Initiative. If entities meet the requirements, as well as their targets, they will be enhanced by a level on their BEE scorecard – and if they meet the requirements and double their targets, they will be enhanced by two levels.

There is still some uncertainty regarding the implementation of the YES Initiative, but according to www.yes4youth.co.za, a practice note (which should contain the verification details necessary to implement it) will be released within the next few weeks.

The initiative can make a difference not only to the BEE levels an entity can achieve, but also be impactful on the lives of youth who can be provided an opportunity to obtain workplace experience as a vital element to starting their careers.

Seek the assistance of a BEE or skills development specialist to help you plan and identify the targets your business will need to meet to contribute and benefit from the YES Initiative.

Marc Naudé, senior associate, Phatshoane Henney Attorneys

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