On 21 July 2020, the Employment Equity Amendment Bill was tabled in Parliament. The Bill seeks to amend a number of provisions in the Employment Equity Act 55 of 1998 (EEA). The most notable amongst the proposed amendments is the introduction of a provision which confer jurisdiction to the Employment and Labour Minister, in consultation with sector stakeholders, “to determine sectoral numerical targets for the purpose of ensuring the equitable representation of suitably qualified people from designated groups (blacks, women and persons with disabilities) at all occupational levels in the workforce”. The targets would differ across occupational levels, sub-sectors, regions or based on other relevant factors. The EEA Bill that a labour inspector will now be assessing compliance with sectoral targets for designated groups in its employment equity plan, and will also be able to issue a compliance order to a designated employer who has a non-compliant Employment Equity Plan.
This informative measures will apply to designated employers only, which are large scale employers who employ more than 50 employees, or which have a high annual turnover. The Bill excepts the employers with less than 50 employees from reporting on their employment equity targets, irrespective of their turnover.
Further, the Bill will implement section 53 of the EEA for the first time. The section requires any company wanting to qualify for state contracts to be issued with a certificate by the Minister confirming its compliance with the relevant Chapters II and III of the Act, which deals respectively with nondiscrimination and affirmative action. The provision intends to ensure that an employment equity certificate of compliance becomes a precondition for access to state contracts. Where an employer makes an offer to conclude an agreement with any organ of state to provide services or supplies will have to requests a certificate from the Minister that it has complied with its obligations under the Act, and the Minister may issue such a certificate only if the employer has complied with the new numerical targets that the Minister can now set or has raised a reasonable ground for his failure to do so.
In addition to that, the Bill extend the scope of a labour inspector’s power to request and obtain a written undertaking from a designated employer requiring it to prepare an employment equity plan. It is also the requirement of the proposed amendments that if a workplace has a representative trade union representing its employees, the employer must consult with the trade union only and not its employees or their nominated representatives, in relation to inter alia the preparation and implementation of its employment equity report.
Other notable amendments include the removal of the requirement that physiological testing and similar assessments of employees be certified by the Health Professions Council of South Africa. Bill relieves the Council of its certification obligation in recognition of its lack of capacity and procedures to discharge this obligation. Likewise, the Bill provide for the amendment of the definition of ‘people with disabilities’ to align it with the UN Convention on the Rights of Persons with Disabilities, 2007.
Why the amendment of the EEA?
The EEA was enacted to give effect to equality in terms of the Bill of Rights of the Constitution to achieve equity in the workplace. The EEA which was introduced twenty-one years ago is considered to bring limited transformation in the county. The law then moved from the premise that there should be no involvement of government enforcing transformation in terms of target setting. It left to companies to set their own targets and goals. Perhaps it was because of the euphoria of the transformation of the then President Nelson Mandela which anticipated that everybody would embrace transformation. Therefore companies will come to the corporate and accede that transformation and equity make business sense. The task of the government was only to monitor these targets. To date, designated employers when determining numerical goals frequently have regard to the demographic profile of the economically active population. The amendment if effected, will require that an employer, in setting its numerical goals, comply with any sector target which the Minister may have determined and which applies to the employer.
It is asserted that since two decades ago no real significant change has taken place, and that, if South Africa carry on at the rate of those slight changes it will take a century to achieve really transform. The government aim to ultimately establish a “National Democratic Society” in which jobs, land and wealth will be redistributed in line with the racial percentages of the economically active population (EAP). According to the Commission for Employment Equity (CEE) these percentages now stand at 78,8% for blacks; 9,6% for coloureds; 2,6% for Indians and 9% for whites. The CEE is hugely disenchanted with the private sector’s failure to transform. It has established that while 76% of top management in the public sector is black, 69,6% of top management in the private sector is still white. In senior management, the figures are 71% and 60% respectively.
Further, It has been the yarning objective of the ruling party ANC to reshape society and the economy according to demographic representivity (DR). The ANC aims to ensure that DR is achieved in the private sector to the same degree that it is already a reality in the public sector. As it was well put by Rob Davis in 2012 that they need to make sure that “the country’s economy, control, ownership and leadership are reflective of the demographics of the society in the same way that the political space does.” This is the primary outcome which the Bill intend to promote. ANC ideologists believe sincerely that DR is necessary, just and in the long-term interest of all South Africans.
EEA Bill and Political Implications for Economic Transformation
The Bill promotes equal opportunity and fair treatment in employment through the elimination of unfair discrimination by introducing state control using unwarranted state intervention in the labour market. The Break given to small business in terms of regulations would also make separate development. This may help to lessen racial separation and discrimination. People of quite diverse social position and perspective have turned to economic growth as a source of political change in South Africa. As it was stated by industrialist Harry Appenheimer that “there is at least one major factor which direction of unity and that is the growth of an enterprise economy in which black and white would necessarily have to share.” White South Africans had benefitted from job reservation under apartheid which is a gap that needed to be bridged.
Historically the country’s economy has grown through black peasants from the subsistence sector into the cash economy, first to do unskilled repetitive jobs at very low wages in a relatively small and undeveloped, and more recently to take growing part in a developed sophisticated system. The apartheid policy was meant to limit this growing black participation in the modern economy and white cities and only became plausible to the extent that a shortage of investment capital makes it impossible to provide jobs in the advanced sectors. Economic growth in limited white manpower must increasely in the central economy, allowing less dependence requiring increased black upward job mobility. By bringing in these amendments, South Africa Government intend to take the next logical step of supporting actions, that foster economic growth and, presumably, political change in the country. It is indeed argued that the growth undermines the foundations of the racial state. As it is suggested by the dual economy perspective that rising welfare and declining economic inequality would follow on development and the exhaustion of labour surpluses in the ‘traditional’ economy.
Will the sector targets stifle business?
Department’s Chief Director of Labour Relations, Thembinkosi Mkhaliphi ascertain that the principle of setting targets will not affect business as it is not a new principle. The present legislation provides for employers to set their own targets. It is just now that the government comes into the picture in setting the target for the employer. From this perspective, he considers the amendments to be not a drastic change that will affect business.
However, the proposed amendments are not applauded by citizens. Most criticisms are related to the approval of DR race as the principal determinant of economic outcomes instead of merit, competitiveness or contribution to the economy. Mainly, because of the remote relationship between the racial shares of the EAP, the country’s pool of qualified people and the contribution that individuals of whatever race make to the economy. Currently, under the EEA, it is acceptable for lack of skills and qualifications to act as an explanatory for the inability to have equal representation in the workforce. Referring to this Dave Steward, Chairman of the FW de Klerk Foundation is of the view that the best way to promote employment equity would be to improve the education and training levels of previously disadvantaged groups and to ensure rapid and sustained economic growth.
Steward refute the fact that there is over-representation of the white South Africans as they only comprise 18% of the population and at least 60% of the graduates and post-graduates in the 50-65 age group from whom top management could be expected to be drawn. Also, many of them established and developed the companies in which they hold top positions. In comparison, black South Africans represent 63,3% of the “skilled, technical and academically qualified/junior management/supervisors/foremen/ superintendents” group. He establishes that it is certain that whilst this group progresses through, the ranks the percentage of black South Africans in senior and top management posts will inevitably and naturally increase.
Other reasons as to why DR should not be applied to the private sector in the same manner in which it has been imposed on the public sector pinpointed by other stakeholders include the following:
That, It is not a constitutional requirement for DR to be applicable outside the public sector and if Constitution’s authors intended otherwise, they could certainly have included a specific provision to that effect.
It is also alleged that the functionality in government departments have been caused by the application of the DR. Thus, The public sector is surviving because it does not have to satisfy customers or produce a profit. But, for the companies, inefficient and unprofitable will kick them out of business. The recruitment and promotion of the key personnel on the basis of merit is essential for company success. It is mandatory for the private entities to procure supplies and services according to price, quality and time of delivery and not a race.
Furthermore, the implementation of the DR may badly affect whites and Indians minorities below the age of 5 constitute only 4% and 1,6% respectively of their age group. This is because, in a society where everything is distributed according to racial percentages, prospects are very unpromising for those who belong to diminishing minorities.
Further, the DR constitutes social engineering on a scale that would have made Hendrik Verwoerd gasp in admiration. Where apartheid sought to confine people in Bantustans, DR wants to confine them in demographic pens in virtually every area of their lives.
And that, the DR may increasingly difficult for the private sector to produce the wealth, tax and jobs on which the future of the country depends.
The Bill indicates a strong attempt on the part of the government to address the slow pace of transformation within many South African workplaces. While it is strengthening enforcement in terms of targets set, it also makes it easy for the business to operate by lessening the regulatory burden on small employers. There is a big hope that It would eliminate unfair discrimination in employment and ensuring equitable access to the economy for all South Africans. However, the amendments do not propose any consequences for an employer which sets out targets but fail to achieve them for justifiable reasons. This raises doughty on the enforceability of the Bill.
Dr Norah Hashim Msuya is an academician and researcher. She writes in her personal capacity.