Professional Board will put employers in the driving seat of skills funding.

It is with great excitement that FLOORS in Africa can announce that the Master Builders Association of the North (MBA), in consultation with Dr Ivor Blumenthal, CEO of ArkKonsult, has established a Professional Board for the Master Built Environment (the PBMBE) which covers the 41 different industries within the MBA-N’s scope which include the flooring industry. These 41 industries have been grouped into ten chambers, of which flooring is one.

The sole purpose of this formation is to ensure that the industry takes responsibility for the professional development and recognition of the people who work within its 41 industries  within the sector and to grade companies participating according to five criteria, one of which is skills development and recognition of prior learning. The long-term strategy is to eventually have an agreement with the public at large which states that if you do business with a company which is being graded by the Professional Board (the PBMBE) and employs individuals who have been professionally recognised by the Board, a process referred to as “Professional Designation”, then you can rest assured that you are doing business with a company and individuals who are accountable for their competence, their morals and their ethics. Accountable to a chamber of their peers, and to a council for and of their sector.

Alternately, if you do business with a company who is not graded or individuals who are not professionally recognised through designation, you run the risk of not knowing whether even the suppliers of the raw materials and the equipment will be prepared to back anything up by way of guarantee or warranty. Suppliers want to see trained and competent professionals using their products, thereby ensuring that should something go wrong, they are more than willing to replace their products or pay for the redoing of a process.

Many companies within the industry have noted that they want those people working in their businesses to be properly trained, asessed and and further developed. Government is encouraging business structures where people are trained and then become professionally accountable for their services and the quality of those services. This is why government established SETAS in 2000. However, it’s up to industry to enforce these practices, which implies that company owners need to take charge. The Professional Board for the Master Built Environment (the PBMBE) will facilitate this type professional development, certification, continuous professional training and also for those who have not yet received formal qualifications, recognition of prior learning.

FLOORS in Africa spoke with Dr Ivor Blumenthal, acting CEO of the PBMBE, to find out more about the intended Professional Board and how it will impact the industry going forward.

Dr Blumenthal. If a company is exempt or a qualified company in-terms of BBBEE why do they need to be concerned about Skills Development and Professional Recognition and what solution does the PBMBE represent for them?

For the last 12 years, employers have been paying 1% of their payroll to government as a skills levy. Companies are then entitled to get a percentage of that money back if they invest in skills and training such as sending employees on accredited training, or enrolling new employees on learnerships. Government has subsequently changed the BBBEE regulations in codes and scorecards to the effect that companies who supply local, national and provincial Government divisions or companies deopendant on work from those divisions, have to have a BBBEE rating. It is no longer acceptable to be Exempt from BBBEE or Qualified. To achieve acceptable  ratings, there are certain things that companies have to do in terms of skills and enterprise development. The nett effect is, instead of spending 1% of payroll on skills development, and whereas the previous BBBEE legislation required a 3% of payroll spend across the 7 criteria for BBBEE, you now, as of 18 months ago, have to spend 6% of payroll across 5 (not 7) criteria. For companies just wanting to remain in business, BBBEE is never going to be a core focus, but because of this legislation needs to become a core factor of doing business. There is no way to escape BBBEE’s reach while remaining in business in SA.

The PBMBE recognises that companies do not have a focus on Skilling or Professional Recognition as their single priority. It is seldom Core Business for them. However, having fully competent staff who are able to make a productive contribution is very definitely a priority for companies where margins are very stretched.

Government would ideally like to see companies paying that 6% towards government owned initiatives, but the PBMBE wants people to know that there are alternative options. We’re encouraging member companies to rather pay the 1% skills levy, allocate an additional 3% to your company’s internal training and development for staff, and pay 2% into an industry fund. If the PBMBE is able to verify the first 4% spend, and can verify that the additional 2% has indeed been paid into the PBMBE Trust Fund earmarked for the Industry it has emmanated from, the PBMBE will be able to issue a 6% of Payroll certificate and in the process the company will qualify for maximum BBBEE points. This could increase their Qualified status and make them more competitive, or in the case of companies having to qualify fully, would certainly take the pressure off as far as Skills Development, Social Development and Enterprise Development criteria are concerned.

Will this 2% Trust be managed by the PBMBE?

No. The PBMBE Trust will have a separate Board and Fiduciary controls. It will satisfy both the Treasury requirements for the establishment of Independent Trusts as well as the PFMA requirements.

Chamber Boards make their plans for initiatives based on Bursaries, Learnerships, Skill Programmes and CPD expenditure. They can include Legacy Bursaries to be made available for children of long-term loyal employee’s of member companies. The focus is on Chamber Priorities. These plans are then submitted for ratification to the PBMBE Council and then to the Board of the Trust which will re-examine them in-terms of their fiduciary rules and responsibilities.

How this money is spent will be solely determined by the companies in your industry. There is no government involvement here whatsoever. Not only do you have more control of how you invest your skills development and training money, but you will be able to set yourself apart from your competition because if you are conducting training and your competitor isn’t, but both of you are paying into this fund, then you will be able to be cross subsidised by your competition and access more money than you initially invested.

The reason all companies should want to participate by paying money into a fund is that ultimately the Professional Board will audit you for the payment of your skills levy, audit you for the other 3% that you spent on skills development for staff and  then confirm that you paid 2% into the PBMBE Trust, which means you will be able to get a certificate for 6% compliance – which is the 6% that the BBBEE regulations now require. That 2% then gets spent on bursaries, learnerships and skill programmes and importantly, on continuous professional development for the benefit of the Industry, the Chamber Cluster and the Sector as a whole.

When will the Professional Board be launched and rolled out?

We are currently at the initiation stages of the chamber board for flooring and the other 9 Chambers. Thereafter each Chamber Board will constitute the Professional Boards Council which will start ratifying the rules of operation of the PBMBE, the rules of collection and the rules for dissemination of Trust Monies and a Brand Building campaign for the PBMBE within the Sector and to the person in the street.

What timeframe for implementation are we looking at?

The PBMBE will be launched publicly at the start of April 2016. The PBMBE Trust itself will be opened to member companies at the beginning of May 2016, and the funding will be made available by the end of September 2016.  By the end of July, companies will be able to apply for bursaries, for learnerships, for skilled programme funding etc. The funding window will probably close at the end of August, and allocations will be made by the end of September at the latest, but on a pilot basis will be made available during the month of August to see how it’s working. The second funding window will open the end of the year for bursaries, learnerships and other identified and approved programs for 2017.

What is the Professional Board’s strategic differentiator?

The money comes from industry and is ring fenced by that industry. If there is not enough money within the 41 industries collectively, there is an opportunity for cross subsidisation if that is an option that member companies want to pursue. It will be possible for the larger industries to cross subsidise the smaller industries, seeing as the system is entirely controlled by the companies. There will be no limitations set by trade union or government. The fund is protected as a formal trust and it is registered.

The board of the trust is not the same as the board of the professional council or any of the chambers; it is a separate entity. There’s a fiduciary line drawn between it and the organisation, making it an official, audited, regulated body. There’s no opportunity for government to use these funds on anything which is not related to the priorities of the employers. A prime example being the suggested funding of universities in 2015 and the Ministry simply giving itself unfettered access to the skills levy fund, even though the 1% Skills Levy comes friom and belongs to Employers and was originally agreed to only because it would be spent on Industry initiatives and programmes.

There are so many government bodies and statutory bodies in the sector. Will it not be an overlap of their responsibilities?

All of those statutory bodies and government authorities are established by government and very seldom in consultation with industry themselves. They’re funded by government contributions but are not necessarily used for the benefit of the industry or the employer’s businesses themselves. The PBMBE is a private and voluntary initiative by Employers exclusively within and for each Industry and the Sector as a whole. The goal of this initiative is to give industry the opportunity to take back control of skills development and training within their companies and their industry. Without Trade Union or Government interference.  If statutory bodies want to come to the party, they will be welcomed. We would like to engage them and be able to enter into memorandums of agreement, and for them to use the funding they have from government for the benefit of the industry and the sector as a whole, but we are want to take a more proactive stance and make things happen as Employers. Those who own the Sector and risk everything for the survival of the Sector.

This is a positive way forward and an exciting development for industry. Are there any drawbacks that we should be aware of?

The positive side to this is that industry will be taking responsibility for the training, development, professional recognition and the continuous professional development of the people who work in the sector. That’s the positive side. We want to be accountable to the public at large, for the people we recognise as professionally competent, and for the companies we grade as professionally competent.

The downside is that training providers that don’t want to participate in our initiative (the majority of whom will be public), run the risk of not having their graduates accepted into our Designation programs and therefore of their graduates being unemployable within the Master Built environment.

This means that even if they train their graduates and they become formally qualified artisans, we will not accept them for purposes of Designation unless  they are prepared to be assessed by the Professional Board and be subject to the quality control measures companies want to implement and to enforce.

What message should be communicated to those individuals who are currently in the public training system?

Put pressure on the institution and provider and make sure that your institution is involved and alligned with the Professional Board for the Master Built Environment. That your institution is, accredited by the PBMBE and that the qualifications they offer are listed and recognised towards Professional Designation, by the PBMBE. If not, then you will be outside the system. Once you have graduated you can apply for accreditation, but we would prefer the institution to work with us. We are going to make it as easy as possible for training providers to become a part of our system. Once you are a part of the system, your learners and your graduates will be able to be professionally recognised and accredited with ease.

What are some of the biggest challenges you foresee?

20% of the registered business in the construction sector do 80% of the business. This means that 80% of the businesses therefore are small or medium sized companies and there is not a high degree of legislated or ethical compliance. This is a generalisation seeing as there are some businesses that are superbly run in this regard. The second challenge is that there is not a culture of comradery or working together for the common good in the sector as a whole. I’ll give a practical example: In the Master Built environment, less than 5% of the contracting sector is organised. Out of 22 000 companies, the majority are not members of associations, their employees are not trained or professionally recognised and there is not a culture of working towards standard practices or common policies. Over time, the PBMBE will be able to change that.

There are some industries in the sector that have made great strides in this regard, for example the plumbing, flooring, and paint sectors. This process, however, will only work if economies of scale are applied, which is why we are targeting 41 industries to collectively do things that will have an impact on things like government policies or the funds that are available for bursaries, for example. It’s all about getting a critical mass of companies involved. The biggest challenge you have in this entire sector is, as is commonly known, the ‘bakkie brigade’, who are prepared to source people illegally or unofficially under the rug and pay next to nothing in wages, who don’t conform to any regulations, and who are prepared to undercut businesses simply to get the job done. The PBMBE strategy is to make it possible for this Bakkie Brigade to play within the Sectors rules and systems.

What is the solution?

Our job is to invite people to get involved and to exclude them from the benefits if they don’t want to get involved. There are two serendipitous benefits we want for our members. We want them to have an audit trail which will qualify them automatically for provincial, local and national government work. Secondly we want them to qualify for international work. When a tender goes out for a building in Dubai, we want people who are part of our system to be considered on as much of a preferential basis as possible.  Historically, many African suppliers and businesses have been overlooked for international jobs. When you take a look at what local companies have to offer, it’s surprising to note that the quality of work from our quantity surveyors and architecture firms, for example, is very high. The only place we lag behind in our applications is in the automated sides, because we are a labour intensive country. Our goal is to help our members compete internationally.