• Posted on: 31 August 2018
  • By: Hilton Johnson

This week, the DTI published the Youth Employment Service (YES) Initiative as Notice 502 under Gazette #41866. This is a significant piece of B-BBEE Legislation that will change the B-BBEE landscape.  It enables any organization, EME, QSE or Generic to enhance its B-BBEE level by one or two levels by providing jobs for young black people under the Youth Employment Service Initiative.

The following points are summarised:
It amends Code 000 (General Principles and the Generic Scorecard) of the DTI Codes of Good Practice with immediate effect. We presume that in this format it can easily be extended to the Sector Codes.

.    To qualify for registration under the YES Initiative:

  • A Generic entity must meet the 40% Sub-minimum requirements of the three Priority Elements or achieve an average of 50% across these Priority Elements instead.
  • A QSE can achieve an average 40% performance across two Priority Elements instead of achieving a minimum 40% under the ownership and one of the other two elements.
  • The Measured Entity must ensure that they maintain or improve on the BEE status level achieved in the previous year.
  • An EME does not have to meet any specific requirement.

.    YES, Targets for Generic entities are the higher of: 

  • 1.5% of the entity's headcount or
  • 1.5% of the entity's average NPAT in the last 3 years
  • The targets provided in a table based on revenue range from R50m = 6 youths to R500m = 15 youths.

.    Targets for QSEs & EMEs are according to a Table based on headcount ranging from 1-19 = 1 youth to 799 = 40 youths
.    Eligible individuals to be hired under the YES Initiative are black people between the ages of 18 and 35.
.    They must benefit from 12 months full-time quality work experience and these jobs must be created in addition to existing headcount.
.    Where the measured Entity is unable to create sufficient new jobs, they may sponsor qualifying new jobs in EMEs or QSEs.
.    The benefit of utilizing these YES provisions is that the B-BBEE Recognition Level of the Measured Entity can be enhanced as follows: 

  • Achieve YES target + 2.5% absorption of the youth: 1 Level
  • Achieve 1.5 x YES target + 5% absorption of the youth: 1 Level + 3 bonus points
  • Achieve 2 x YES target + 5% absorption of the youth: 2 Levels 

It should be noted that this Gazette does not change Priority Element compliance requirements whereby missing a 40% sub-minimum requirement results in the loss of a B-BBEE Level. However, an entity can now regain that level under the YES initiative and indeed, achieve a further level by greater YES performance. 50% of Informal Skills Development expenditure for YES employees can be included under Cat F & G in the Skills Development scorecard.
Therefore, the loss of a B-BBEE Level through not meeting black ownership requirements can be overcome through the use of the YES initiative.  However, the black ownership emphasis remains due to the number of associated points in the various Preferential Procurement scorecards.

This new development will create a significant opportunity for B-BBEE consultants to assist their clients to maximize the opportunity to improve their B-BBEE level and to assist them in sponsoring new jobs in external organizations. This activity can be wedded to Enterprise Development initiatives although in itself it cannot be counted as Enterprise or Supplier Development. 

This initiative flows from the President's call in the State of the Nation address to create a million new jobs and we truly hope it will be received positively and will have the intended result. 

Source information provided by Mantis Networks