South Africa’s skills development system is funded through a mechanism known as the Skills Development Levy (SDL). While many people are familiar with SETA funded learnerships, skills programmes, and workplace training opportunities, fewer understand where the funding for these initiatives comes from.
The Skills Development Levy forms the financial foundation of South Africa’s skills development ecosystem. It enables Sector Education and Training Authorities (SETAs) to support training initiatives, workplace learning programmes, occupational qualifications, and youth development opportunities across various industries.
Understanding how the Skills Development Levy works provides valuable insight into the broader skills development framework and explains how employers, learners, and industries benefit from ongoing investment in workforce development.
What Is the Skills Development Levy?
The Skills Development Levy (SDL) is a statutory levy imposed on qualifying employers in South Africa.
The levy was introduced through the Skills Development Levies Act to create a sustainable funding model for skills development and workforce training.
Employers that meet the prescribed requirements contribute a percentage of their payroll towards the national skills development system.
The funds collected through the levy are used to support training and skills development initiatives across multiple sectors of the economy.
Why Was the Skills Development Levy Introduced?
The Skills Development Levy was introduced to address several long standing challenges within the South African labour market.
These challenges include:
- Skills shortages
- High unemployment
- Limited workplace training opportunities
- Low workforce productivity
- Skills mismatches between education and industry requirements
The levy creates a dedicated funding stream that supports the development of a skilled and competitive workforce.
How Does the Skills Development Levy Work?
Qualifying employers are required to contribute a percentage of their payroll towards the Skills Development Levy.
The levy is collected through the South African Revenue Service (SARS) as part of the country’s tax administration system.
Once collected, the funds are distributed throughout South Africa’s skills development framework to support training initiatives and workforce development programmes.
This system ensures that skills development receives consistent financial support across various sectors.
Who Pays the Skills Development Levy?
Not all employers are required to pay the Skills Development Levy.
Generally, the levy applies to employers that exceed the prescribed payroll threshold established under South African legislation.
Employers that fall below the applicable threshold may be exempt from paying the levy.
Because legislation and thresholds can change over time, employers should always consult current SARS guidance for the latest requirements.
How Are Skills Development Levy Funds Used?
Funds collected through the Skills Development Levy support a wide range of skills development initiatives.
These include:
- Learnerships
- Skills Programmes
- Occupational Qualifications
- Workplace Based Learning
- Youth Development Initiatives
- Training Provider Support
- Industry Skills Development Projects
The goal is to strengthen workforce capabilities and address skills shortages within various economic sectors.
The Relationship Between SDL and SETAs
One of the most important functions of the Skills Development Levy is supporting the work of Sector Education and Training Authorities (SETAs).
SETAs rely on levy-funded resources to:
- Support workplace training
- Fund learnerships
- Develop sector specific skills initiatives
- Address critical and scarce skills
- Promote youth employment opportunities
Without the Skills Development Levy, many of South Africa’s skills development programmes would not be possible at their current scale.
What Are Mandatory Grants?
Mandatory Grants are designed to encourage employers to actively participate in skills planning and workforce development.
Employers that meet the relevant requirements may qualify to receive a portion of their contributions back through grant mechanisms administered by the relevant SETA.
The purpose of Mandatory Grants is to encourage ongoing investment in employee development and workplace training.
What Are Discretionary Grants?
Discretionary Grants allow SETAs to fund strategic skills development initiatives that align with sector priorities.
These grants often support:
- Learnerships
- Skills Programmes
- Occupational Training
- Youth Development Projects
- Workplace Learning Opportunities
Funding priorities vary depending on the specific needs of each sector.
How Learners Benefit from SDL Funding
Many South Africans benefit from the Skills Development Levy without directly contributing to it.
Learners may gain access to:
- Funded learnership opportunities
- Skills development programmes
- Occupational qualifications
- Workplace experience opportunities
- Career development pathways
These initiatives help improve employability and support workforce participation.
How Employers Benefit from SDL Funding
Employers also benefit from the skills development system.
Benefits may include:
- Access to training support
- Skills development funding opportunities
- Improved workforce competency
- Better productivity
- Assistance with workforce planning
The system encourages organisations to invest in employee development while supporting broader economic growth.
The Importance of SDL in South Africa’s Skills Development System
The Skills Development Levy plays a central role in maintaining South Africa’s skills development infrastructure.
It helps ensure that:
- Training opportunities remain available
- Skills shortages are addressed
- Workforce development continues
- Young people gain access to learning opportunities
- Industries remain competitive
By creating a dedicated funding mechanism, the levy supports both economic growth and social development objectives.
Common Misconceptions About the Skills Development Levy
The SDL Is Not a Learnership Fund
While learnerships benefit from SDL-funded resources, the levy supports many different forms of training and workforce development.
Learners Do Not Pay the Levy
The levy is generally paid by qualifying employers, not individual learners.
Every SETA Does Not Use Funding in the Same Way
Funding priorities vary depending on industry needs and sector specific challenges.
Different SETAs may allocate resources towards different skills development priorities.
How SDL Supports Youth Development
One of the most significant outcomes of the Skills Development Levy is its contribution to youth development.
Through SETAs and funded initiatives, SDL resources help support:
- Workplace readiness
- Skills acquisition
- Learnership opportunities
- Occupational training
- Employability enhancement
These interventions contribute to broader efforts aimed at reducing youth unemployment and improving labour market participation.
Thabang Maimela’s Conclusion
The Skills Development Levy is one of the most important components of South Africa’s skills development system.
By creating a sustainable source of funding for training and workforce development, the levy enables SETAs, employers, training providers, and learners to participate in initiatives that strengthen skills, improve employability, and support economic growth.
Understanding how the Skills Development Levy works provides valuable context for anyone interested in learnerships, skills programmes, SETA funding, and South Africa’s broader workforce development strategy.
I am Thabang Maimela, Founder and Editor of CareersPursuit and YouthSETA, two South African platforms dedicated to helping individuals access employment opportunities, skills development programmes, and career growth resources. Through CareersPursuit, I focus on jobs, internships, apprenticeships, graduate programmes, learnerships, and career advice, while YouthSETA specialises in SETA learnerships, skills programmes, youth development initiatives, and workplace readiness resources. My mission is to make reliable, up to date information more accessible, helping South Africans build skills, improve employability, and navigate their career journeys with confidence. Read more about the author on the About US page.