Busa Also Drops the Ball on Employment Equity
Business Unity South Africa (Busa) is misleading its constituency in claiming that the Employment Equity Bill of 2012 (the Bill) does not require ‘rigid racial quotas' and is not ‘draconian' (as Business Day has recently reported).
The Bill - which was approved by the National Council of Provinces on 21st November 2013 and now requires only President Jacob Zuma's assent for its enactment into law - does nothing to amend some of the key clauses in the Employment Equity Act of 1998 (the Act). In these clauses, the Act is careful to say that employers are expected to meet ‘numerical goals', but are not required to fulfil ‘quotas'.
The key difference between a numerical goal and a quota is that the former is voluntary and carries no penalties for non-compliance. A quota differs in both respects. Hence, when the State requires, as it does under the Act, that business must overcome the ‘under-representation' of black people and match the ‘demographic profile' of the economically active population (EAP) at management and every other level - or face major fines in punishment - it is imposing a racial quota, irrespective of the language used.
Moreover, though business may have some leeway under the Act as to how fast it proceeds towards the goal of demographic representivity, the Government has made it clear that it expects firms to increase African representation to 75% at management levels. This is because Africans aged 15 to 64, who work or wish to work, make up 75% of the EAP at national level. Yet this ignores the fact that economically active Africans with the requisite age profile for management posts (those between the ages of 35 and 64) make up only 36% of the national EAP. In addition, a mere 4.1% of Africans have the tertiary training generally also advisable for management jobs.
Busa also says that it matters little that the Bill strips away current defences for employers, because firms will still be able to raise ‘any reasonable ground' for any failure to meet racial quotas which skills shortages and the age profile of Africans make virtually impossible to fulfil.
However, the current defences are 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 DoL are currently obliged to take into account.
In addition, Busa overlooks the key shift in onus ushered in by the Bill. Under the present Act, the onus lies on the DoL, before it issues a compliance order, to take into account the skills available to the employer, his financial circumstances, his staff turnover, and the extent to which other employers have been able to meet racial quotas in comparable circumstances.
Under the Bill, however, the DoL 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 specified period, the DoL may immediately apply to the Labour Court to have its order made an order of court.
In addition, where the employer has allegedly failed to meet his racial quotas, the DoL need not even start by issuing a compliance order. Nor need it bother about the defences currently listed in the Act. Instead, it can go straight to the Labour Court to ask it to impose maximum fines starting at R1.5m or 2% of annual turnover (for a first ‘offence') and rising to R2.7m or 10% of annual turnover (for a fifth ‘offence' within three years).
At this stage, the employer may argue that he had reasonable grounds for non-compliance, but the onus will lie on him to convince the Labour Court of this. This puts him in a significantly weaker position than the current rules provide.
Moreover, it may not be easy for an employer to discharge the onus resting on him when the DoL seemingly remains convinced that the skills shortage is ‘an urban legend' and claims (in its ‘skills demand list' for 2012-2013) 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.
Despite all these damaging shifts, Busa claims that ‘the Bill doesn't go any further than the previous Act'. In thus downplaying the harm likely to result from the Bill, Busa does less to defend the interests of business than did the DoL's own regulatory impact analysis. This warned that the proposed new fines were big enough to close down companies, as many had profit margins well below 10%. Closing down companies - whether big or small - will, of course, hobble growth and worsen the crisis of unemployment.
Helen Zille has admitted that the Democratic Alliance (DA) dropped the ball in its initial support for the Bill. It is obvious that Busa has done so too. However, whereas the DA has acknowledged its mistake and highlighted the damaging consequences of the Bill, Busa has yet to admit how badly it has erred.
Dr Anthea Jeffery
Head of Special Research and Gawith Fellow
Institute of Race Relations (IRR)
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