Bee: Helping or Hurting?. Anthea Jeffery
(Busa), dismissed the idea that slow black advancement was ‘simply due to pure racism’ and urged the minister and others to start ‘unpacking the real reasons’ for it. Prime among these, as earlier noted, is the fact that Africans of an age (35 to 64) suitable for senior and top management posts make up 36%, not 75%, of the economically active population. In addition, only 4% of Africans have the post-school qualifications often needed for management posts, while 54% of young people between the ages of 15 and 34 have no work experience at all111 and cannot be considered eligible for management jobs.
Despite the salience of these factors, the government has pressed on with a ‘big-stick approach’, as urged by The New Age. Its recent changes to the Employment Equity Act can be traced back to 2009, when Manyi was appointed director-general of labour and began using his new post to buttress his earlier demands for stiffer fines and swifter enforcement. According to Manyi, it was virtually impossible for his department to enforce the EE Act because a company at fault could always sign a compliance order and so escape prosecution – which also explained why only three companies had been prosecuted in the past 11 years. Said Manyi: ‘We want to see a lot more prosecutions of companies that are not complying … Prosecution has been the last resort – it’s been more about persuasion. Now the tack is going to change.’112
In June 2010 Manyi was suspended as director-general of labour for misusing his position, but by then he had already been instrumental in drafting an amendment bill reflecting his views. The Employment Equity Amendment Bill of 2010 was thus approved by the Cabinet in December that year and put before Nedlac early in 2011. This bill was later superseded by another, drawn up in 2012, but the key features of the two measures are essentially the same – and it is the 2012 bill that has recently been signed into law.
Employment Equity Amendment Act of 2013
The Employment Equity Amendment Act of 2013 (the Amendment Act) was signed into law by Zuma in January 2014 and brought into force in August 2014. It makes a number of important changes to the relevant rules; and the most significant of these shifts are set out below.
Fewer defences
Under the current EE Act, the Department of Labour cannot issue a compliance order against an employer unless it first takes into account the size of ‘the pool of suitably qualified people from designated groups from which the employer may reasonably be expected to promote or appoint employees’. The department must also consider relevant economic factors in the sector, the financial circumstances of the employer, and ‘the progress made by other designated employers operating under comparable circumstances’.113
However, under the Amendment Act, the department may issue a compliance order without any prior consultation with a firm and without any need to prove that the business has failed to act reasonably in the light of all these factors. Moreover, the employer can no longer object against a compliance order to the director-general of labour, or thereafter appeal against it to the Labour Court. Instead, if he fails to comply with the compliance order within the period specified, the department may immediately apply to the Labour Court to have its order made an order of court.114
In addition, where the employer has allegedly failed to meet his racial targets, the department need not start by issuing a compliance order. Nor need it bother about the defences currently listed in the EE Act. Instead, it can go straight to the Labour Court to ask it to impose maximum fines starting at R1.5 million or 2% of annual turnover for a first such ‘offence’.
At this stage, the employer may ‘raise any reasonable ground to justify his failure to comply’, but the onus will lie on him to convince the Labour Court that his conduct is indeed justified. This puts the employer in a significantly weaker position than the earlier rules provided. In addition, the earlier defences were specific, while the new catch-all provision is vague. It may seem broader, but it will also allow the Labour Court to downplay factors (economic ones, for instance) that both it and the department were earlier obliged to take into account.115 In addition, it may not be easy for employers to discharge the onus resting on them when the Department of Labour seemingly remains convinced that the skills shortage is simply ‘an urban legend’. The government appears to think the same, for its ‘skills demand list’ for 2012-2013 states that the private sector has a shortage of only 128 managing directors and chief executives, 1 174 finance managers, 819 human resource managers, six financial services and bank managers, and 58 policy and planning managers.116
The shift in the onus of proof also suggests that the Department of Labour in fact has little wish to embark on the prosecutions earlier mooted by Manyi. Prosecutions take place in the criminal courts, with all the safeguards required by due process, and with the state having to prove all elements of an offence beyond a reasonable doubt. What the department has instead achieved via the amendments is the capacity to make accusations and thereby put the onus on employers to disprove them. Many employers will understandably be anxious to avoid the time, expense, inconvenience, and reputational damage of being brought before the Labour Court as ‘racists’ who have failed to implement the EE Act. This in itself will encourage the private sector to apply rigid racial quotas in much the same way the public service has long been doing. Yet the costs of this approach – in diminished efficiency, competitiveness, growth, and employment – are likely to be significant.
Regional or national demographics
The 1998 EE Act says that compliance with racial targets should be assessed by referring, among other things, to ‘the demographic profile of the national and regional economically active population’. This wording allows employers to take account of regional demographics where these differ significantly from national ones. This has particular salience for coloured people in the Western Cape, who make up some 52% of the economically active population in the province but only 11% of the economically active population at national level.117 Coloured people in the Western Cape could thus battle to find jobs or win promotions if the coloured quota in the province were to be set at the national level of 11%.
The amendments proposed in 2010 nevertheless seemed to require this, for they deleted all reference to ‘regional’ demographics, thereby indicating that national demographics would in future have to be applied in all parts of the country. This change was also in keeping with an earlier statement by Manyi that coloured people were ‘over-concentrated’ in the Western Cape and should move elsewhere if they wanted to find work.118
This proposed amendment evoked sharp criticism from many people, including Manuel – who accused Manyi of racism of the ‘worst order’. The furore prompted the government to rethink the matter, and retain the current clause with its reference to regional demographics. However, this gain is more apparent than real, for the Amendment Act also empowers the minister of labour to issue regulations specifying the circumstances in which either national or regional demographics are to be taken into account.119
In February 2014 Oliphant used her powers under the Amendment Act to gazette draft regulations stating that larger employers (those with 150 employees or more) should use national demographics ‘as a guide’ in setting racial targets for top and senior managers, along with professional employees. Targets for skilled, semi-skilled and unskilled workers should be based on an average of regional and national profiles, thus requiring a 31% target for coloured people in the Western Cape at these more junior levels. For designated employers with 149 employees or fewer, national demographics should be used for top and senior management, and regional demographics elsewhere.120
The draft regulations were also likely to harm Indians in KwaZulu-Natal, who make up roughly 11% of the province’s economically active population but only 3% of the national one. Indians throughout South Africa were also likely to be affected, as they already held more management and professional posts (9.5% at senior management level, for example) than their share of national demographics would allow – and could thus be seen as being ‘over-represented’ in many state entities and private firms.121
The Department of Labour initially denied that the draft regulations would prejudice coloured and Indian people, insisting that they ‘could not be discriminatory as the same yardstick is applied to all’. However, the minister later yielded to widespread condemnation, announcing in May 2014 that the proposed ‘guide’ had been withdrawn. Nonetheless, the government’s