There is broad agreement across society that the upper- management echelons of corporate SA remain in white hands, with no consensus on how to address the problem.
The figures speak for themselves. The 2024 figures on employment equity show that while whites represented 61% of top management in the public and private sectors combined, they only constituted 7.5% of the economically active population (EAP). Africans represented 18% of top management compared with to their 81% share of the EAP. Whites accounted for 47.3% of senior management and Africans 28.8%. Women of all races were underrepresented in all upper levels of management.
This is despite the employment equity regime that existed before the promulgation of the Employment Equity Amendment Act and its regulations. This allowed companies to set their own employment equity targets. It seems that this regime has not achieved employment equity objectives and the government obviously believes more stick is required. It also has to satisfy the ANC’s constituency by showing that it is doing something about the situation. The belief in ANC circles is that the private sector is resistant to employment equity and has to be forced to implement it.
The government’s approach is to impose regulations and establish bureaucratic processes to implement them, which only serves to strangle business, discourage investment and act as a brake on the economic growth that would increase the demand for top management.
The new act and regulations now require companies to reach laid-down targets for 18 economic sectors within five years. They will have to set annual targets which will (theoretically) be assessed by the department’s phalanx of inspectors, with court and penalties in the pipeline in the event of noncompliance.
In addition to employment equity regulations, business also has to comply with the scorecard requirements under the BBBEE Act in terms of ownership, management control, enterprise and supplier development, skills development and socioeconomic development, if they want to win government contracts and even enjoy the required status to do business in the private sector. This has spawned a thriving sector of verification agencies that measure company performance against the scorecard.
Compliance with all these regulations is burdensome and costly.
And now trade, industry & competition minister Parks Tau has come up with the proposal of a Transformation Fund, which he hopes will gather R100bn over five years that can be used to promote black businesses.
The DA notes that the government’s employment equity programme has failed dismally, a point endorsed by the ANC and opposition parties the EFF and MK party, but whereas the latter push for more regulation and oversight to force business to transform, the DA believes the opposite.
Adding to the problem is SA’s poor education system, which is not generating the right graduates in sufficient quantities to take over the economy.
The DA is challenging the act and its regulations in court on the grounds that the rigid quotas that are introduced violate the constitution, and fail to take into account the specific labour market dynamics facing employers in a particular locality. It argues that tightening the very laws that have resulted in the dismal employment equity result will not have a different outcome. It places its reliance on enhanced economic growth to bring about the desired transformation on the assumption that there would not be a sufficient number of whites to meet the demand.
It is true that the ease of doing business and of employing people would be considerably enhanced if bureaucratic regulations were removed, as the IMF has noted. But this is only part of the problem. There are other factors such as a high crime rate, dysfunctional municipalities and a lack of service delivery that inhibit investment and the growth of SA’s economy from the pitiful level on which it seems to remain trapped.
Removing regulations and simply relying on economic growth alone could delay transformation indefinitely. Its an intractable problem with no obvious solutions but with one approach having patently failed to produce results, it is perhaps worth giving the other a try.
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