In fast-changing industries where new technologies and evolving market demands require constant upskilling, this level of control is extremely valuable.
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MANY South African organisations have long regarded skills development as a regulatory requirement rather than a real opportunity. Businesses contribute 1% of their payroll each year, but for many companies, the process of claiming funds back felt complicated and not always worth the effort.
That dynamic may now be changing. The government has announced that the mandatory training grant will increase from 20% to 40%. In practical terms, this means businesses can now claim back a much larger portion of the levies they already pay, provided they submit their Workplace Skills Plans (WSPs) and Annual Training Reports (ATRs).
More importantly, the change signals a shift in approach. It recognises that businesses themselves are best placed to identify the skills they need and develop the people who will help their organisations grow.
At the heart of this policy shift is a simple idea: Employers understand their skills needs better than anyone else. Under the previous system, companies could claim back only 20% of their levy through the mandatory grant. The rest of the funding was allocated to discretionary grant pools, where businesses had to apply and hope their projects would be approved.
With the mandatory grant now doubled to 40%, companies have far greater certainty. A business that contributes R1 million a year in skills development levies, for example, could previously reclaim R200 000.
Under the new system, that figure rises to R400 000. This additional funding enables organisations to plan their training initiatives with greater flexibility. Instead of relying on discretionary funding that may or may not be approved, businesses can invest directly in the training programmes that matter most to their operations.
In fast-changing industries where new technologies and evolving market demands require constant upskilling, this level of control is extremely valuable.
One of the biggest challenges in the skills development system is that many organisations treat reporting requirements as an annual compliance obligation. When training is approached this way, businesses often miss the bigger opportunity.
Skills development should not be something that happens only when reports are due. It should be part of everyday business operations.
Learning happens constantly within organisations. Employees gain new skills through internal workshops, mentoring, peer-to-peer learning, and on-the-job experience. However, these activities are often not recorded or recognised as formal training.
When companies start documenting these forms of skills development properly, not only do they strengthen their reporting, but they also gain a clearer view of how their workforce is developing.
Putting systems in place to track training activities helps organisations ensure they are capturing the full value of their investment in people. It also encourages a culture of continuous learning and improvement.
Many companies, especially small and medium-sized businesses, find managing SETA reporting and training plans overwhelming. Without dedicated HR or training departments, the administrative side of the process can quickly become a barrier.
This is where external expertise can play an important role. Outsourcing the function to specialists who understand the skills development system can help businesses prepare their WSPs, manage reporting requirements, and ensure that training initiatives align with company goals.
When done properly, this creates a simple and effective cycle. The WSP outlines the organisation’s training plans for the year, while the Annual Training Report records what was achieved.
The resulting grant funding then supports the next phase of skills development. With the right systems in place, training becomes a predictable and valuable part of business operations rather than a complicated administrative burden.
Aside from the direct benefits for individual organisations, the expanded grant also has important implications for the broader economy.
South Africa continues to face significant skills shortages across many industries, while unemployment remains a major national challenge. In giving companies greater access to training funding, the policy encourages businesses to play a more active role in developing the workforce.
Companies that invest in training can help close critical skills gaps within their industries, and in sectors where experienced workers are scarce, businesses can train new entrants and create pathways into employment.
This approach closely aligns training with the real needs of the workplace and helps build a stronger, more competitive economy.
The expanded mandatory grant gives South African businesses a powerful opportunity to turn an existing cost into a strategic investment. They already contribute money through the Skills Development Levy - the key is ensuring it works for the business.
Companies that plan training carefully will not only recover more of their levy but will also develop the skills needed to improve performance and remain competitive.
Over time, the benefits extend far beyond the financial return. When businesses invest in developing their people, they strengthen their own operations while helping to build a more skilled and capable national workforce.
* Daniel Orelowitz is the managing director of Training Force.
** The views expressed here do not reflect those of the Sunday Independent, Independent Media, or IOL.