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The Skills Development Act was passed in 1998, to develop the skills of the South African workforce, increase their productivity and improve the quality of their lives. The Act set a framework for skills development strategies, integrated these strategies into the National Qualifications Framework (NQF), provided for learnerships that would lead to recognised occupational qualifications and stipulated how skills development would be financed.

The government then introduced the Skills Development Levies Act of 1999, where levies collected from qualifying employers were used to develop employees’ skills. These levies were paid to SARS, with 80% being distributed to Sector Training and Education Authority (SETA) systems. The SETAs were responsible for monitoring skills development and making funds available within their specific sector for education and training.

The government also introduced learnerships, managed by the SETAs, to help learners prepare for the workplace. These structured programmes deliver learning opportunities and practical workplace experience, which provide the learner with better employment opportunities.

There are primarily two types of learnerships: unfunded and funded. With an unfunded learnership, all training costs are for the employer’s expense and there is no stipend for the learner. With funded learnerships, an employer can apply to their relevant SETA for bursary funds for both employed and unemployed learners.

  • An employed learnership is where an existing staff member can obtain a formal qualification, with funds paid out by the SETA to cover training costs.
  • An unemployed learnership is where the SETA pays a stipend to supplement the salary of the learner during their learnership and they may also cover training costs.

The National Minimum Wage Bill

On 17 November 2017, the National Minimum Wage Bill (NMW Bill) was published in the Government Gazette, and it was adopted on 29 May 2018 by the National Assembly. Before it can be signed into law by South Africa’s president, it must pass through the National Council of Provinces.

Its purpose is to rectify income inequalities in the labour market. While Treasury has revealed that 750 000 job losses may occur, President Ramaphosa has argued that the income of 6.6 million workers will increase. The NMW Bill stipulates minimum pay and does not prevent people from earning more.

All employers have to pay their employees a minimum wage of R20 per ordinary hour worked, however, a different hourly rate applies to farm workers, domestic workers and workers on expanded public works programmes.

Schedule 2 of the Bill sets out allowances for learnership agreements, concluded in terms of the Skills Development Act. These vary from R301.01 to R 1755.84 per week, depending on the NQF level and the number of credits obtained, and for the most part they are below R20 per hour.

The impact of the NMW Bill

The Bill stipulates that no employer can pay wages below the minimum wage, which equates to R3 500 per month for a full-time employee. Currently, the SETAs fund R1 500 towards a learner’s stipend, which raises the question of who is responsible for the shortfall in order to comply with the new minimum wage? Does this responsibility lie with the relevant SETA, to sponsor a larger amount, or will this fall on the company? There is a misalignment between the minimum stipend and the NMW Bill, which is why legislation must be clearer in order to guide the industry.