Business warns of stricter transformation laws planned for South Africa

Business Unity South Africa (BUSA) has warned that the proposed Employment Equity Bill is likely to lead to constitutional challenges and ‘endless disputes’ between government, employers and workers.

The proposed law will allow the Employment and Labour minister Thulas Nxesi to set employment equity targets for different business sectors. The minister can set targets for different occupational levels, sub-sectors or regions. It also aims to reduce the regulatory burden on small businesses and add rules for doing business with the government.

In a presentation to parliament on Tuesday (22 February), BUSA acknowledged that the pace of transformation in South Africa has been slow, and recognised the importance of ensuring that workplaces are representative.

However, it said that this process should be both rational and constitutional – noting that the proposed changes conflict with existing labour regulations.

“The effect of the proposed amendments is that the minister may impose sectoral numerical targets. These prescribed numerical targets will effectively override the targets contained in a designated employers’ employment equity plan.”

It noted that in terms of section 16 and 17 of the current Employment Equity Act, designated employers are legally required to consult with their employees on the content (targets) and implementation of their employment equity plans.

“If the Employment Equity is amended it will mean that an employer will be bound to use the sectoral targets fixed by the minister and consultation with employees would be rendered meaningless.” This is likely to have a disruptive effect on workplace harmony and labour relations, it said.

BUSA also flagged concerns that the proposed changes will effectively introduce an ‘absolute quota barrier’, stopping companies from doing business with the state, destroying revenue, and leading to further job losses and liquidations.

Consultations ongoing 

The Department of Employment and Labour has previously indicated that it plans to introduce the new sector-specific equity rules in 2022.

“The expected introduction of five-year sector targets will mark the beginning of a clean slate,” the department’s director of employment equity Ntsoaki Mamashela said in September 2021.

“All current employment equity plans will fall away on 22 September 2022, and the new plans will have to be aligned with five-year targets. Self-regulation has not worked,” she said.

Mamashela said further sector engagements on sector targets would continue. She said talks have already been held with several sectors, including mining, financial & business services, wholesale & retail, and construction.

While some firms and sectors have welcomed the proposed changes, others have warned that the new targets could negatively impact the economy.

Telkom’s Siyabonga Mahlangu told parliament in April that South Africa was facing a tough economic climate. He said it was already difficult to make the appointments that the new numerical targets may necessitate.

“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.”

These concerns were echoed by AgriSA’s Christo van der Rheede, who acknowledged a lack of transformation in the agricultural sector. However, he said the employment and labour minister was being given too much power and 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.

Read: Parliament to look at race definitions for businesses in South Africa

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Business warns of stricter transformation laws planned for South Africa