THE Employment Equity Act has been in force for 15 years, having been promulgated to great fanfare two years after South Africa’s constitution was adopted.
It was written with the express purpose of fulfilling the state’s constitutional mandate of undoing the damage done to black people by hundreds of years of racial oppression. However, apart from one bungled prosecution and two minor judgments, has the act achieved anything near what it was meant to?
The popular narrative in government, labour and black business circles would indicate not.
As Commission for Employment Equity (CEE) chairman Loyiso Mbabane said in his 2012-13 annual report to Parliament, the slow pace of workplace transformation "is an indictment on the part of past and current leadership in all sectors, including government".
The paradox, as Dr Mbabane puts it, "is that as we tend towards more and more ‘empowerment’ according to ‘scorecards’, we are getting less and less transformed in terms of substantive behaviours and practices", and that this is leading to a new phenomenon of organisations that are empowered but not transformed.
But is this a fair assessment?
Not really. At best, as the CEE’s own data show, it is incomplete.
According to the data made available by the Department of Labour and the CEE, Africans make up 74.9% of the economically active population in South Africa, coloureds 10.8%, Indians 3% and whites 11.3%.
Looking at the past 10 years of CEE data, African representation in top management positions rose from 10% of the total to 12.3% between 2002 and 2012, while white occupation of corner offices dropped from 81.5% to 72.6%.
This seemingly minor increase makes for easy headlines and gives the antibusiness lobby an excuse to shout from the rooftops about the fact that transformation is not happening.
But while it is clear that the number of Africans in top jobs in no way reflects the population as a whole, and it cannot be argued that the slow pace of change is anything less than an indictment, as Dr Mbabane says, on business and the government, it is important not to lose sight of the context in which this performance — or nonperformance if you prefer — has been delivered.
The CEE does not always give out the raw data that it uses to compile its reports, rather choosing to give the relative numbers, in percentage terms, of the different racial groups per organisational level. On top of this, not all firms that fall under the Employment Equity Act report, as they are required to only if they have more than 50 employees or turnovers greater than those stipulated in the act.
This makes it impossible to determine the absolute number of people involved in each organisational level, let alone assess accurately the number of Africans, coloureds and Indians employed by designated firms.
But one can use other data as a proxy. Over the past decade, according to the South African Revenue Service’s tax statistics, the number of companies registered to hand over pay-as-you-earn tax on behalf of their employees increased from 252,589 in the 2002-3 tax year to 384,883 in the 2011-12 tax year.
While many of these companies fall out of the employment equity laws net (there were only 23,312 employment equity reports filed during last year ) due to employee number and turnover thresholds, the changes to the tax base over the period can be used as a proxy for what was happening in the corporate world.
Thus t hey can give a rough guide to changes in the number of firms that fall under the employment equity legislation.
The 52% increase in the number of companies that are required to pay tax on behalf of their employees shows that the formal business sector grew substantially over the decade.
If, in 2002, 10% of top management was African and then, in 2012, 12% of the larger number of companies was, this implies that the number of Africans in top management, in absolute as opposed to relative terms, increased by well over 20% over the past 10 years. This is not a brilliant performance, but it is not zero either.
Bear in mind, too, that unless the economy grows extremely quickly with a concomitant increase in the number of companies needing senior executives, it will be impossible to increase the number of Africans in top management to the point where they fully reflect South Africa’s overall economically active population without axing the vast majority white top executives. The jobs simply do not exist in the current climate.
If, as we are told, the idea is not to chase people away, this implies that the most powerful driver of workplace transformation must be rapid economic growth and not punitive legislation. If the economy — and the number of firms in it — grows, the opportunity base for black executives will grow, too. A failure to husband in significant growth will see transformation simply become a hollow excuse for replacing white with black.
Looking at senior management — one rung lower on the organisational ladder — the situation improves somewhat although whites still occupy 62.4% of the reported positions, from 77.9% in 2002, compared to Africans’ 18.4%, up from 10.8% a decade ago.
This is slightly more representative than top management but remains far from full demographic representation. But again, progress has been made in absolute terms with the number of black senior managers increasing by more than 70% over the decade. In the ranks of professionals and middle management, the percentage of Africans more than doubled, from 16.2% to 34% of the total, while the number of whites dropped by one-third, from 65.1% to 45.1% of the total.
Looking at skilled technical workers, the lowest organisational level reported on in detail by the CEE, the number of Africans has risen by nearly two-thirds (from 35.8% to 55.3%) while the number of whites has plummeted 40% in absolute terms, from 43.1% of the reported total to 25.6%.
It is true that employment equity legislation has had a muted impact on the composition of South Africa’s boardrooms, but is this the only measure that should be considered? According to the CEE’s annual report for 2011 (it failed to provide this data in its 2012-13 report), this level of employees makes up less than half of 1% of the workforce.
Surely progress at lower levels, even where full demographic representivity is not reached, would be a better measure of success or failure of the government’s efforts to move black people, and Africans in particular, up the socioeconomic ladder?
At these lower levels the numbers of Africans, and other designated groups, are increasing dramatically, even in a slow-growth environment where new management or manufacturing jobs are not being created at any great rate.
Clearly, more needs to be done but it is clear that South Africa has made far more progress with employment equity than it gives itself credit for.
The answer does not lie in punishing business, as envisaged by the tabled amendments to the Employment Equity Act, for not doing the impossible, but rather in fixing education and training and removing barriers to economic growth. This will lead to new management positions being created rather than just the same jobs being churned.
SA Inc should take a break from its regular routine of self-flagellation and rather, for once, pat itself on the back.
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