Warning that new business rules will push skilled people to leave South Africa

The proposed Employment Equity Amendment Bill has proved to be highly divisive with unions and business groups indicating that the proposed changes it will introduce will fundamentally shake-up business in the country.

Presenting to parliament this week, civil rights group the Institute of Race Relations (IRR) said that South Africa risks triggering a flight of scarce skills and capital if it presses ahead with the changes.

The proposed changes will enable the labour minister, in consultation with the stakeholders of a particular sector, to set numerical sector-specific employment equity targets, said the IRR’s head of policy research, Dr Anthea Jeffery,

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.

“The bill will stall economic recovery; prompt a further flight of scarce skills and capital; leave more people unemployed; add to poverty; and increase inequality between the small black elite – that may benefit – and the great majority of black people, who will be further harmed,” she said.

Jeffery warned that businesses would be reluctant to expand at all if they were forced to hire staff on a basis that did not take into account skills and experience. “We risk businesses closing doors, jobs being lost,” she said.

These concerns were largely echoed by business group Sakeliga, which said that the bill risks upending companies and hurting workers, as it would introduce onerous new requirements.

“The bill envisions a future where every organisation, at each of its workplaces, at every occupation level, and in all its teams, reflect the racial demographics of the country, the province or the sector – whichever the minister picks.

“Any deviation from this standard is considered by the bill to be an affront and subject to remedy by the state, under penalty of fines or worse,” said Sakeliga chief executive Piet le Roux.

Changes welcomed

The Congress of South African Trade Unions (Cosatu) said that the proposed Employment Equity Amendment Bill will provide badly needed interventions to strengthen the government’s ability to hold employers accountable for their role and failures to adhere to the Employment Equity Act.

Cosatu is the largest trade federation in the country with an estimated membership of 1.8 million workers.

Presenting to parliament this week, the trade federation said some of the key progressive provisions in the bill include:

  • Requiring employers in their EE annual reports to provide confirmation that they have paid all their workers at or above the national minimum wage.
  • Expanding the definition of disability to include intellectual and sensory.
  • Empowering the minister to set economic sectoral, sub-sectoral, regional, sub-regional and occupation-specific targets – enabling more precise targets for sectors, occupations and regions that are notorious for their failures to reflect South Africa’s demographics.
  • Allowing for regional and sub-regional variations.
  • Requiring employers to consult trade unions on employment equity targets, helping to foster a more inclusive approach to meeting targets and supporting collective bargaining.
  • Empowering labour inspectors to inspect and ensure compliance with the EE Act.
  • Empowering the minister to issue compliance certificates to employers in good standing with the EE Act and to require such certificates for companies applying for government contracts. This provision in particular is a welcome step forward requiring employers doing business with the state to be in compliance with labour laws and act in a way that supports good labour practices. Workers’ hard-earned taxes should not be used to reward abusive employers, said Cosatu.

“Cosatu urges parliament to retain these long-overdue provisions and ensure the speedy passage of this progressive Bill.

“It should not listen to the usual prophets of doom and snake oil salesman who believe that treating workers like glorified slaves is the way to growing the economy.

“It has been shown by countless research that workers who are treated with respect, paid a living wage and who’s rights are respected are the most motivated thus contributing to a more productive workplace and economy.”


Read: Major BEE changes are coming for some of South Africa’s biggest industries

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Warning that new business rules will push skilled people to leave South Africa