By Anton Visser, Chief Operations Officer of SA Business School
The Skills Development component of B-BBEE scorecards has created a large and robust training industry. However, while many organisations deliver quality learnerships and skills programmes, an alarming number are exploiting the system and the corporate sponsors of learnerships. The consequences extend far beyond financial loss.
In a country grappling with a staggeringly high youth unemployment rate, this kind of exploitation constitutes cruel treatment for vulnerable young people who enter learnership programmes expecting genuine training, work experience, and fair compensation.
Instead, they receive inadequate training while unscrupulous providers claim fees from sponsors under the guise of learnership training costs. At SA Business School, we’re aware of unethical entities pocketing millions of Rands, while providing substandard learnerships.
We believe that this phenomenon undermines the fundamental purpose of learnerships: providing new workforce entrants with meaningful experience and training in formal working environments, to facilitate their path to sustainable employment and career growth.
Sponsor beware!
The foremost problem occurs when learners are hosted at the training providers' facilities, with little to no oversight or involvement from sponsors. Many learners hosted by unethical training companies receive no meaningful work experience. Despite loud claims of thousands graduating annually, the lack of proper oversight means learners obtain qualifications they never truly completed, leaving them no better positioned than when they started.
Substandard programmes also defraud SARS, sponsor companies, taxpayers and the learners themselves.
For the corporate sponsors of learnerships, it’s critical to conduct thorough due diligence, maintain ongoing oversight of training providers, and remain involved with learners, to avoid inadvertently funding exploitative, subpar learnership programmes.
SA Business School highlights the warning signs that sponsors should look out for:
1. Employee Tax Incentive (ETI) Fraud
The ETI aims to encourage youth employment by reducing employers' PAYE obligations while maintaining employee wages. But unscrupulous learnership providers may advise sponsors to register learners as 'employees', to claim ETI allowances against monthly payroll PAYE. Essentially, this constitutes creating false employment to claim incentives for trainees, rather than genuine employees.
With SARS intensifying its crackdown on abusive ETI schemes, businesses face severe financial and reputational consequences, including repaying illegitimate claims (with interest) and losing tax compliance status. In this case, the sponsoring company bears all risks, facing additional SARS assessments, penalties, and potential labour law violations.
2. Excessively Low Learnership Costs
If your company is paying well below market-related rates per learner annually, consider it an alarm bell. Quality learnerships require substantial infrastructure and resources from classrooms, workplace experience facilities, learning materials, qualified facilitators, assessors, and full-time lecturers/trainers.
Have you personally visited your training provider's facilities? Can they demonstrate legitimate, quality workplace experience environments and training facilities where learners complete their practical hours in real work settings? Legitimate costs cannot be significantly discounted without compromising quality and deliverables. Don’t ignore this major warning sign.
3. Learnerships of Less Than 12 Months
Learnerships require learners to complete specific notional hours at 10 hours per credit, with most programmes ranging from 120-150 credits. This necessitates a minimum of 1,200 work experience hours, typically achieved over 12 months of full-time engagement. Any provider claiming completion in less time should raise immediate concerns.
Also, SA Business School suggests that you verify your training provider's completion rates: How many learners successfully finish programmes? What percentage secure employment post-completion? SETAs mandate 100% project completion, 90% learner retention, 80% national certification achievement, and 70% permanent placement with host employers.
4. Restricted Access to Learners/Facilities
As the sponsor and employer, you should be able to meet and engage with your sponsored learners at training facilities during working hours - without restriction. If an unexpected visit results in unavailable learners or evasive responses from your training provider, this may indicate potential fraud.
There is, unfortunately, a growing trend of illegitimate providers exploiting system gaps in disparate SETA databases, registering identical learners for multiple simultaneous learnership programmes across different SETAs, and claiming fees for undelivered training.
5. Inability to Facilitate Learner Absorption
The B-BBEE scorecard emphasises absorption, encouraging sponsors to employ learners post-programme. But companies outsourcing learnerships for unemployed individuals or people with disabilities often cannot provide suitable employment environments, typically relying on training companies for absorption. Providers unable to facilitate learner absorption, particularly for disabled participants, present another warning salvo. Absorption is crucial. Without progression to gainful employment, learnership programmes merely perpetuate cycles of unfulfilled expectations and demoralisation among young people.
Success Story: Meaningful Impact Through Proper Implementation
In the last six months, SA Business School has successfully placed 250 South African learners into permanent positions, following completion of Contact Centre (NQF 2 and 4) and Business Administration (NQF 2) learnerships. Companies in manufacturing, engineering, financial services, food and beverage, and healthcare sectors provided full sponsorship, including covering training costs and monthly stipends for disabled youth aged 18-27.
The majority of these positions were created within SA Business School's BPO partner network, which specialises in debt collection, sales, and customer service, with additional placements in sponsor organisations.
Get involved in the learnership journey
It’s important to work with ethical, credible training and education partners that have the best interests of your business, employees and learners at heart. Get involved with your training provider and your sponsored learners, to ensure that your investment in skills development and youth employment delivers for our country, our economy and your bottom line.