Employment Equity Report Doubles Down On An Unworkable Policy

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Written by: Ivo Vegter

The recently released 19th annual report of the Commission for Employment Equity (CEE), boldly embossed with the unsubstantiated words, ‘Transformation makes business sense’, reveals the Commission doubling down on a racial representation scheme that by its own account is failing.

‘At a broad level, the trends presented in this [report] continue to paint a picture of a very slow, but steady pace of transformation especially at the top four occupational levels,’ notes Commission chairperson Tabea Kabinde in her foreword. These levels are top management, senior management, professionally qualified and skilled employees.

It continues to see the failure to achieve perfect demographic representation of the economically active (working) population in each and every company as a matter for ‘drastic measures or interventions’.

This echoes the wording of the executive summary attached to the 2018 Employment Equity (EE) Amendment Bill, which was introduced ‘in response to the slow pace of transformation in the workplace’.

In 2014, the Employment Equity Act was changed to levy draconian fines of up to R2.7 million or 10% of revenue on non-compliant companies. These fines are easily sufficient to bankrupt many companies entirely, which is counterproductive not only for the employees that were supposed to benefit from EE legislation, but for employment numbers in general.

The 2018 Bill’s executive summary admits that these crippling penalties ‘did not yield positive results’, and the Bill consequently adds a new punitive provision, which would exclude non-compliant companies from government contracts.

Harsh punishment, however, cannot resolve the inherent flaws in the government’s approach to EE. Carrots and sticks only work if the horse is alive.

The CEE report devotes an entire section to the prohibition of unfair discrimination in the workplace, as if unfair discrimination is a plausible cause of the continued failure to reach demographic representivity. It isn’t.

When companies find suitably qualified and experienced candidates that also help to meet the EE targets they require to escape bureaucratic punishment, they jump at the chance to hire them, and will often compete vigorously with rival employers by offering generous remuneration packages.

The problem is, such candidates are often hard to find. One significant reason is that the country’s education system simply does not yet produce enough black candidates with suitable post-secondary qualifications to fill professional, senior and top management positions.

For all companies with over 50 employees, the CEE benchmarks targets for top and senior management against the national working population. The same is true for professionals in companies with over 150 employees, while the rest of their staff representivity must target an average of national and regional (i.e. provincial) working population. For smaller companies with over 50 employees, the rest of the staff may reflect only the regional working population.

The CEE reports that 78.8% of the national working population is African. But that is far from true for the population of Africans that have a post-secondary qualification and fall into the right age bracket for senior jobs.

Happily, this has been changing for the better, as university output of black graduates steadily grows, but benchmarking targets for top and senior management or professional jobs against diversity in the overall working population produces a huge mismatch.

A second problem is that national and regional working populations differ substantially in some parts of the country. In the Western Cape, for example, Africans represent only 37.7% of the working population. Targeting a national demographic of 78.8% African representation is not only impractical, but it marginalises coloured people, who represent 46.4% of the regional working population but only 9.6% of the national working population. The same goes for the Indian population in Kwazulu-Natal.

Ironically, this also discriminates against black Africans in every province except the Western and Northern Cape, because Africans make up over 80%, and sometimes over 90%, of the regional working population in each.

The EE Act says that it should not be interpreted as requiring policies that would create absolute barriers to the prospective or continued employment or advancement of people who are not from ‘designated groups’ (i.e. white). In practice, however, it not only creates those barriers, but those barriers extend to people who actually are from designated groups.

In Limpopo Province, for example, white, Indian and coloured women make up a grand total of 1% of the working population. In any management team of 50 people or less, the EE targets would prevent the appointment or promotion of even a single woman who isn’t a black African.

The ‘slow progress’ which the CEE laments is not a result of resistance to transformation or unfair discrimination. It is the result of an EE framework that is fundamentally unworkable and should be scrapped.

As long as the education system produces growing numbers of black, Indian and coloured graduates while the number of white graduates stagnates, the market will eagerly absorb them. While it still would be too much to expect more than regional representivity in the long run, we might at least hope for an economy that is not hobbled by unattainable and punitive racial engineering policies.

This article was commissioned by the Institute for Race Relations (IRR). Stand with the IRR by SMSing your name to 32823 or clicking here. Each SMS costs R1.’ Terms & Conditions Apply.

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