Why Telkom and other businesses are worried about South Africa’s new BEE laws

Several organisations have raised concerns over the proposed Employment Equity Amendment Bill which will allow Labour minister Thulas Nxesi to set numerical BEE targets for different business sectors.

A number of business groups made submissions on the Amendment Bill to parliament this week, with the groups suggesting that transformation targets be determined sectorally.

Business Unity South Africa’s Kaizer Moyane told the committee that the bill has omitted the requirement for the minister to consult sectors before setting the targets, as agreed at National Economic Development and Labour Council (Nedlac).

“It was agreed that the minister will consult with the relevant sectors when determining what the numerical targets should be. It also concerns Busa that the legislation does not cover what should happen in an event where there are disagreements after consultations,” he said.

Moyane said Busa was not trying to stand in the way of transformation; instead, it wants transformation to be achieved in a rational manner that could not be constitutionally challenged.

These concerns were echoed by AgriSA’s Christo van de Rheede, who acknowledged that there was a lack of transformation in the agricultural sector. However, he said the power of the minister should be curbed and that there needed to be sector-based consultations.

“The imposition of one-size-fits-all approach for targets would unlikely achieve the results we all yearn for. The agricultural sector is faced with a skills gap, and this remains a challenge in filling critical posts in the sector,” he said.

He said careers in agriculture required good foundational education in mathematics and agricultural science subjects.

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.”

Committee chairperson, Lindelwa Dunjwa, allayed fears that the bill seemed to have changed from what was agreed at Nedlac, saying that the bill was not yet final.

“There is still a long way for parties and stakeholders to influence the final product of the bill. The public participation processes that the committee enters into will also be undertaken from the ministry and department’s side,” she said.

Skills exodus 

Other concerns raised by business groups this week included the possible loss of skills internationally.

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.


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

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Why Telkom and other businesses are worried about South Africa’s new BEE laws