Strict new BEE laws could result in 600,000 job losses: DA

The Democratic Alliance (DA) estimates that if the newly proposed employment equity legislation goes ahead, it could result in roughly 600,000 South Africans losing their jobs over the next five years.

The president signed the new employment equity laws in April, with the Department of Employment and Labour planning to promulgate the regulations later this year. In the meantime, the department has published the sectoral targets under the new laws for public comment.

The targets have already drawn wide criticism from labour unions and business groups for being difficult to understand and riddled with numerical errors. Legal experts, meanwhile, have warned that the regulations could face challenges in court due to administrative, procedural and other issues involved.

The new laws give the employment minister the authority to establish specific numerical goals for the racial and gender diversity of designated businesses (businesses with more than 50 employees).

At its core, the new sectoral targets push businesses in South Africa to transform their workforce to be more demographically representative – especially in top and senior management positions.

To accomplish this, it sets a target for companies to make their employee composition reflect the racial and gender profile of each province or nationally. These goals must be met within a period of five years, and failure to comply results in fines.

The targets are expressed as a percentage of either the national or provincial population, and businesses can choose which one to follow when implementing their plans for change.

However, the DA argues that this amounts to setting up quotas, as the laws require businesses to effectively terminate jobs based on race. Quotas are unconstitutional in South Africa and have been repeatedly shot down in the country’s apex court.

According to the opposition party, if the new “quotas” are followed strictly, this would result in 220,000 white people, 85,000 coloured people and 50,000 Indians losing their jobs in Gauteng alone.

If the guidelines are fully adhered to, a total estimated 404,608 white individuals, 116,934 Indians, and 71,518 coloured people could lose their livelihoods within the next five years, the party said.

Despite making broad changes, the department did not provide any explanation of how the targets should be interpreted in the official publication.

However, some have argued that when setting a target of 0% for some racial groups, it cannot be interpreted as anything other than terminating all positions in that role based on race.

According to JJ van der Walt, a senior associate at Cliffe Dekker Hofmeyr (CDH), the new proposals are technically “numerical targets” – an approach which is acceptable in South African law; however, there is a risk that companies will cross into using quotas in trying to implement the laws.

The primary distinction between numerical goals/targets and quotas lies in the flexibility of the standard, said Van Der Walt.

Quotas amount to prohibited job reservations, and this was jettisoned with apartheid. Numerical targets, however, are intended to serve as flexible employment guidelines.

The government has reiterated its stance that the new targets are not quotas.

Responding to criticism over the new laws, the Chairperson of the Commission for Employment Equity, Tabea Kabinde, stressed that the targets are not quotas.

“These are not quotas. People often accuse us of putting in quotas. The difference between quotas and targets is that quotas are rigid and prescriptive, while targets are flexible,” she said.

“We have built in flexibility. First, organisations have five years to reach the sector target, and within those five years, they have the flexibility to decide how to do that. Over and above that, there are also justifiable reasons that have been tabled in the regulations that employers can use as reasons why they have not been able to achieve the targets,” she said.

Ultimately, the new guidelines lack the clarity and explanation necessary for businesses to make the right adjustments.

The DA said that the incoherence of the Act’s quotas “betrays the hasty and clumsy manner in which they were formulated”.

“This demonstrates a knee-jerk, electioneering ploy, devoid of any thoughtful consideration of the far-reaching implications,” said the opposition party.

The DA has subsequently called for the minister to detail the methodology used to determine the targets.

Seeking clarity on the situation, the DA submitted parliamentary questions to break down the labour department’s modelling on how the new targets were ascertained.

The party asked the minister of labour to:

• Outline the specific statistical models and techniques used to determine the targets
• Provide the specific demographic and labour market data that was used as inputs
• Show how potential confounding factors, such as sectoral differences, rural vs urban divides and small business challenges were taken into account
• Provide the specific steps taken to validate the methodology used

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