SA’s updated employment equity (EE) framework, which took effect in January, is the most significant shift in workplace transformation policy since democracy. It signals the government’s renewed determination to tackle structural inequalities that still define the labour market three decades after the first Employment Equity Act.
However, while its ambitions are bold, introducing sector-specific targets, annual compliance reporting and linking state procurement to transformation, its success will depend on how effectively it’s implemented and whether it drives real structural change or simply ushers in a new era of compliance theatre.
At the heart of the reforms are designated employers — companies with 50 or more staff — which are now legally required to submit five-year EE plans aligned with sector targets and secure an annual compliance certificate to qualify for government contracts. This will directly affect more than 17,000 businesses and the 5.5-million people they employ.
Yet small firms with fewer than 50 employees remain exempt, regardless of turnover, raising concerns that transformation will bypass the SME sector. Considering SMEs contribute more than 40% of GDP and employ roughly 60% of the workforce, their exclusion risks leaving a significant part of the labour market untouched.
Inequality persists in leadership roles
The most affected remain historically disadvantaged groups, black South Africans, coloured and Indian professionals, women, and persons with disabilities, who are still underrepresented in leadership roles. Statistics SA’s 2024 Quarterly Labour Force Survey shows that black Africans, nearly 80% of the economically active population, hold less than 15% of top executive positions and only 23% of senior management posts.
White South Africans, just 8% of the population, still dominate more than 60% of C-suite and board roles. Women, especially black women, remain the most marginalised, representing 51% of the population but just 10% of CEOs among the JSE top 40 companies. Persons with disabilities are almost invisible, accounting for under 2% of workforce participation against a 7% national target.
These disparities carry serious economic costs. SA’s gender pay gap is among the highest in the OECD and Brics, with women earning 78c for every rand earned by men, and black women just 65c. Wage gaps widen in executive roles, where women earn up to 35% less than men. Racial disparities persist too, with white employees earning on average 3.5 times more than black employees in management and over four times more in executive positions. This entrenched inequality fuels SA’s broader socioeconomic crisis, with unemployment at 32.9%, youth joblessness above 44%, and nearly 55% of black South Africans living below the upper-bound poverty line.
Without parallel investment in skills development, meeting EE targets risks becoming a box-ticking exercise, leading to rushed appointments and tokenism.
Yet the new framework faces real-world challenges. Companies argue that strict targets ignore sector-specific skills shortages, particularly in engineering, finance, ICT and healthcare. A 2024 PwC survey found 68% of SA CEOs see talent scarcity as their biggest barrier to transformation. Without parallel investment in skills development, meeting EE targets risks becoming a box-ticking exercise, leading to rushed appointments and tokenism. Linking compliance to procurement could also disadvantage capable SMEs and black-owned start-ups that lack the resources to meet reporting requirements, inadvertently stifling competition and innovation.
There’s also a danger that transformation remains a numbers game rather than a cultural shift. Two decades of diversity workshops and bias training have done little to change entrenched workplace cultures, still shaped by Eurocentric leadership models, informal power networks, and stereotypes around competence and authority. Without addressing these deeper biases, employment equity risks becoming an exercise in optics.
Beyond compliance.
To make the 2025 framework transformative, SA must go beyond compliance.
• First, employment equity must be embedded in business strategy, not treated as an HR function. Executive bonuses and promotions should be tied to diversity outcomes, and organisations should publish disaggregated data on recruitment, promotion, retention and pay. Annual scorecards benchmarking representation against economically active population demographics would enhance transparency and accountability.
• Second, government and business must jointly tackle the skills bottleneck by investing in Stem education, bursaries, mentorship, and partnerships with TVET colleges and universities to build talent pipelines. Mining and manufacturing, for example, where black professionals hold less than 20% of senior technical roles, could create sector-specific academies.
• Third, gender equity demands systemic reform. Policies such as flexible work, paid parental leave, childcare support, and leadership development programmes must become standard. Informal barriers, from exclusion in succession planning to limited access to networks, need dismantling through structured mentorship and board readiness initiatives. Existing pay equity laws must be enforced, with mandatory pay band disclosures and regular gender pay audits to close persistent wage gaps.
• Fourth, leadership accountability is non-negotiable. Boards and executives must lead transformation from the front. Inclusion training should form part of leadership development, and reverse mentoring, pairing senior leaders with junior employees from under-represented groups, can challenge unconscious bias. Public recognition, such as transformation leaderboards and awards, can further incentivise change.
• Finally, the state must strengthen enforcement. The department of employment & labour needs more capacity to audit companies, investigate non-compliance, and impose sanctions. At the same time, the government should support SMEs and black-owned businesses through training, digital tools and phased compliance pathways to prevent their exclusion from procurement opportunities.
The new EE framework is no silver bullet, but it can drive systemic change if implemented with rigour and supported by skills development, cultural transformation, leadership accountability, and transparent data. Employers that treat the law as a ceiling will remain stuck in compliance mode. Those who see it as a foundation will use it to build inclusive, innovative, and competitive workplaces.
EE is more than redress; it’s an economic imperative. A workforce that reflects SA’s demographics is not only fairer but also more productive, creative and resilient. Research shows companies with diverse leadership teams outperform less diverse peers by up to 36% on profitability, and inclusive organisations are 1.7 times more likely to be innovation leaders.
In other words, transformation isn’t just a moral obligation; it’s a competitive advantage SA can no longer afford to ignore.
• Prof Singh is CEO of Sustainability Consult, and Dr Malapane is CEO of the Market Intelligence Barometer Research Entity.
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