Minister of employment and labour Thulas Nxesi has threatened executive action to make South Africa’s workplaces more ‘racially representative’. His department wants to use the currently dormant Section 53 of the Employment Equity Act which requires that companies which want to do business with the State apply for a certificate from the minister confirming their compliance with the Employment Equity Act.
Yet this heavy-handed executive power grab is based on a crude understanding, not only of the dynamics of recruitment and promotion in business, but of the role of the private sector more generally and especially its power to dissolve racial barriers.
The 2019 Employment Equity Report does indeed show that different ‘race groups’ enjoy varying career success in private business. According to the report, ‘whites’ (male and female) make up 66.5 percent of top management, while ‘Africans’ comprise only 15.1 percent. As the report moves down through the skills categories, so the proportion of ‘whites’ shrinks’ and the proportion of ‘Africans’ rises. At the bottom, in the unskilled category, only 1.1 percent of the workforce is ‘white’ while 83.7 percent are ‘African’.
These figures for business compare poorly with the numbers for government. In government, 76 percent of top management is ‘African’ while only 8.9 percent is white. Yet government is notorious for its inefficiency and while it would be inappropriate to attribute this to its racial composition rather than its inherent bureaucratic nature, the contrast with a struggling yet still world-class South African corporate sector is marked.
The problem is that racial number-counting is no sort of proxy for ‘fairness’ in the workplace. The Employment Equity Act allows the department of employment and labour to act only against ‘unfair discrimination’. Section 6 of the Act prohibits ‘unfair discrimination’ against an employee on 20 grounds including race, gender, age and disability.
The minister appears to assume that the outcome of his racial headcount reflects ‘unfair discrimination’. Yet there is no law in South Africa which says that employment and promotion have to be offered solely on the grounds of race, gender or disability. The Employment Equity Act promotes only ‘equal opportunity’. What the Employment Equity Report illustrates is nothing to do with opportunity but rather outcomes.
Outcome might appear racially skewed but for a very simple and obvious reason. Many ‘whites’ still enjoy significant educational and work experience advantages. But this is fading as the Employment Equity Commission’s own figures demonstrate. 87 percent of top management were ‘white’ when its first report came out in 1999. The best way to speed up the process is to encourage economic growth and improve the public education system.
This leads to the biggest problem with Nxesi’s interpretation of the Employment Equity Report’s numbers. The minister appears to hold the view that the racial composition of South Africa’s workforce is appropriate ground for social engineering. But most of what is done by his race commissars is an obstacle to private sector growth, from the compliance costs of compiling the reports in the first place, to restraints on company growth posed by red tape to fears of hiring in within a restrictive labour framework.
Nxesi is now minister of employment as well as labour. The change to his department’s title was announced by President Cyril Ramaphosa in May. However, the minister has yet to say anything implying a shift in focus from enforcing compliance to facilitating growth.
In a rapidly growing economy, many race issues in employment would be swept aside by the buoyancy of a thriving private sector. This is the point made by the late Anglo-American director Michael O’Dowd 40 years ago. Capitalism is non-racial, he argued, and a successful capitalist system benefits all, irrespective of colour. Indeed, it dissolves the barriers between race groups. By contrast, Nxesi’s heavy-handedness will only reinforce them.
David Christianson was commissioned to write this article by the Institute of Race Relations, a liberal think tank that promotes political and economic freedom. Go to https://irr.org.za/