Planned transformation laws will be a ‘wrecking ball’ on South Africa’s private sector: DA

The opposition Democratic Alliance has criticised the proposed Employment Equity (EE) Amendment Bill, which it says will cause further damage to the country’s ailing economy.

The bill, which was passed by the National Assembly this week, has been criticised for the wide-ranging powers it would give the Employment and Labour minister, as well as vagueries around new sector-specific targets.

“The bill empowers the minister of employment and labour to set numerical EE targets for any national economic sector after a vaguely defined process of consultation with the relevant sectors. In future, state contracts (would) mainly be issued to employers who have been certified – by the Minister – as being compliant with their obligations under the Act,” the DA said.

“These obligations include compliance with ministerially-determined sectoral targets. A designated employer’s compliance with the law may also now be measured, not only against the demographic profile of either the national or the regional economically active population, but also against the sectoral numerical targets set by the minister.”

The DA said that these changes are a recipe for ‘malicious ministerial meddling’ and are incompatible with the principles of a market-based economy.

It added that the bill will deter investors, undermine economic growth and jeopardise jobs at a time when many businesses are on their knees, with almost 12 million South Africans unemployed and a record-high unemployment rate.

“In its ideologically-blinkered and unconstitutional pursuit of ‘demographic representativity’ – the ANC has now unleashed a legislative wrecking ball on the private sector.”

The party said it will petition the president not to sign the bill into law.

Several organisations have raised concerns over the proposed bill, with the Institute of Race Relations (IRR) warning that South Africa risks triggering a flight of scarce skills and capital if it presses ahead with the changes.

Companies that fail to comply with the targets can be fined between 1% and 10% of turnover and will be disqualified from doing business with the government.

In an April 2021 presentation, Telkom’s Siyabonga Mahlangu highlighted the current tough economic climate and said it was difficult to make appointments that may be necessitated by the new numerical targets.

“The unilateral imposition of targets by the minister, which may not be practically implementable by electronic communications, operators and industry stakeholders, may have the unintended effect of threatening existing jobs in a difficult economic climate.”

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Planned transformation laws will be a ‘wrecking ball’ on South Africa’s private sector: DA