Draft regulations a threat to jobs - Post

Mlondi Mdluli

THE Department of Employment and Labour's Draft Employment Equity Regulations for the private sector are unconstitutional and threaten jobs if implemented.

This is the thrust of the argument made by the Institute of Race Relations IRR in our submission to the department on its proposed regulations. The regulations make a mockery of the Constitution's proviso for nonracialism and reflect severe overreach by the state, which thinks it can dictate to private companies what the demographics of their workforce must be.

This cannot be allowed, and the IRR will oppose the measures with all the resources at its disposal. The draft regulations are inconsistent with Section 1 of the Constitution, which expressly identifies "nonracialism" as a core value on which the democratic state is founded.

The draft regulations require employers to identify their employees by race and then to apply "preferential treatment" to those identified as "black", that is, as African, coloured or Indian.

Under apartheid, the Population Registration Act of 1950 earned justified and widespread public outrage for requiring all South Africans to be classified into the similar broad categories of "African", "coloured", "Indian" and "white".

Second, the draft regulations are inconsistent with Section 9 of the Constitution the equality clause , which states that "everyone is equal before the law and has the right to equal protection and benefit of the law". Section 9 also prohibits unfair discrimination, whether by the state or private persons on racial and other listed grounds.

Third, the draft regulations are inconsistent with Section 195 of the Constitution, which sets out the "basic values and principles governing public administration" in South Africa. This section calls, among other things, for a public administration that is "broadly representative of the South African people". However, it also makes it clear that the objective cannot trump a host of other important needs.

Section 195 provides that employment and personnel management prac tices in state entities must be "based on ability, objectivity, and fairness", as well as "the need to redress the imbalances of the past". In addition, public administration must "promote the efficient, economic, and effective use of resources", encourage "accountability" and "transparency", and ensure that "people's needs are responded to" by a public service that is "development-oriented".

Contrary to what Section 195 requires, the public service is increasingly dysfunctional. It is largely unable to meet people's needs or maintain a "developmentoriented" focus. The Employment Equity Amendment Act, and the draft regulations formulated to achieve its objectives, will worsen this situation because they centralise the setting of future racial targets in the office of the minister.

This will impose a topdown process on all state entities, including SOEs, in which significant skills shortages and other relevant factors will continue to be brushed aside. The draft regulations will thus result in a further erosion of state delivery. This will exacerbate what is a clear conflict between "equity" requirements and outcomes and what Section 195 demands.

Fourth, the draft regulations are inconsistent with Section 217 of the Constitution because businesses that fail to comply with the minister's racial targets or to justify their failure to do so on reasonable grounds will be barred from concluding agreements for the supply of goods and services with all organs of state. In addition, companies which have contracts with state entities risk having those agreements cancelled for noncompliance with the amendment act and the draft regulations.

The amendment act and the draft regulations will significantly alter the procurement rules applicable to state entities. It is evident that South Africa needs a new model of economic empowerment. It has been 29 years since the ANC government took power in 1994, yet high levels of poverty and socioeconomic inequality persist.

The government has failed to overcome many key barriers to upward mobility. For example, the country continues to experience stubbornly high unemployment rates 32.9% under the official rate and 42.4% under the expanded definition , made worse by labour laws that encourage violent strikes, deter job creation, and price the unskilled out of work.

Race-based employment equity and BEE policies are failing their intended beneficiaries. They have benefited only a relatively few credentialled and often politically connected individuals while harming most South Africans.

In 2018, the IRR published a paper titled "Economic Empowerment for the Disadvantaged: A Better Way to Empower South Africa's Poor". The paper outlined an alternative approach to addressing the country's poverty and inequality.

In contrast to race-based policies, the IRR's economic empowerment for the disadvantaged EED model focused on rapid economic growth, excellent education, more employment, and the promotion of vibrant and successful entrepreneurship. Under this policy, an economic empowerment for the disadvantaged scorecard would replace the current BEE scorecard.

This revised scorecard would see businesses earning points for contributions of different kinds: the investments they make, the profits they generate, the jobs they sustain or create, the goods and services they buy from other suppliers, the innovations they help foster, and the contributions they make to tax revenues, export earnings and foreign currency inflows.

The EED approach would encourage investment which, in turn, would increase employment and stimulate growth. It would create opportunities for all South Africans, rather than a politically connected few.

A system of tax-funded vouchers would also be introduced under the EED approach. Such government-funded vouchers would be available to means-tested South Africans earning below a certain amount to use in accessing education, health care and housing. The vouchers would be funded by redirecting not increasing the budgets of the affected departments.

Tax-funded education vouchers, for example, would give all parents a choice of schools for their children, rather than having to rely on government services. Schools would then have to compete for the custom of voucher-bearing parents, which would give them a real incentive to improve the quality of the education they provide. A similar approach would also be applied to health care and housing.

Minister Thulas Nxesi's draft employment equity regulations are unconstitutional. They are part of the government's campaign to socially engineer society as the IRR has warned for many years . South Africans must reject this today just as they did in the dark days of apartheid.

The IRR will oppose this policy and legislation as it has opposed all policies based on race since its founding in 1929.

Mdluli is the campaign manager at the South African Institute of Race Relations.