The latest annual report of the Commission for Employment Equity (CEE) shows that Africans make up 76% of top management in the public sector, whereas whites constitute 66% of top management in business. According to the minister of employment and labour, Thulas Nxesi, this signals that ‘the time has now come to get hard on non-compliance’ within the private sector.

Kganki Matabane, CEO of the Black Business Council, wants the government to make more use of the penalties for which the Employment Equity Act (EE Act) of 1998 already provides. ‘If you charge 10% of turnover, that is a lot of money,’ he says.

What Mr Matabane has in mind is a penalty provision in the EE Act, under which designated employers that fail to make ‘reasonable progress’ towards demographic representivity at all levels of the workplace may be fined up to 10% of annual turnover for a fifth similar offence within three years.

What Mr Nxesi continues to demand is the adoption of the Employment Equity Amendment Bill of 2020 (the EEB). This bill has already been endorsed by Parliament and is currently before President Cyril Ramaphosa, waiting to be signed into law.

Binding racial quotas

The EEB will allow Mr Nxesi to set binding racial quotas for management and other posts for virtually all designated employers within the private sector. This, combined with the EE Act’s existing fines – and a new power to bar non-compliant businesses from obtaining state tenders – will be ‘a game-changer’, says the minister.

Underpinning the EE Act, the EEB, and the latest CEE report is the false assumption that black and white South Africans would normally – in the absence of ‘resistance’ to transformation, as CEE chair Tabea Kabinde puts it – fan out into all jobs in accordance with their share of the economically active population (EAP).

This supposed ‘norm’ is a fake, however. As Thomas Sowell of Stanford University’s Hoover Institution has written in his 1994 book on Race and Culture: ‘The even distribution or proportional representation of groups in occupations or institutions [is] an intellectual construct defied by reality in society after society.’  Moreover, the ‘imbalances’ evident between groups cannot be attributed to ‘employer discrimination’, as this ignores ‘the manifest effects of differences in educational achievement, family upbringing, cultural traditions, [and] marital patterns.’

Age is also a key variable, adds Professor Sowell, as the people appointed to senior management posts generally require both tertiary qualifications and long years of work experience. Hence, where members of a group are mostly young – and almost half of black South Africans are under the age of 25 – demographic representivity is an even more unrealistic goal.

No blank slates

The underlying reality is that people are not ‘blank slates’. Since they are not all essentially the same, they cannot simply be slotted into senior positions irrespective of age, education, aptitude, experience, entrepreneurial flair, and capacity for leadership. Notes American analyst Samuel Kronen: ‘Virtually no two ethnic groups in history have ever achieved equal outcomes on all measures, anywhere, ever. Equal outcomes and proportional representation are the exception, not the rule.’

South Africa’s bad education system – and the skills shortages it perpetuates – are further crippling obstacles to the appointment of more black managers. The government generally spends more than 6% of GDP on education (far more than most other countries), but quality and throughput have long been poor.

Recent international tests have shown, for instance, that close on 80% of South Africa’s Grade 4 children cannot read for meaning in any language. In addition, some 60% of Grade 5 pupils cannot add and subtract whole numbers. These outcomes are far worse than those obtained in many much poorer countries.

Throughput is bad as well. In 2021, for example, only some 256 000 pupils – or 23% of the more than 1.1 million pupils who had enrolled in Grade 1 in 2010 – obtained ‘bachelor’ passes enabling them to proceed to university. Worse still, only around 59 500, or a mere 5% of the Grade 1 total, passed mathematics with a mark of 50% or more.

Completion rates at universities are dismal too, averaging a mere 17% for undergraduate degrees in 2020. Completion rates in STEM subjects are particularly low: 15% for computer and information sciences in 2020 , 12% for mathematics and statistics, 17% for physical sciences, and 18% for engineering.

Often the quality of university passes is also low. As education expert Professor Jonathan Jansen has written: ‘In many of our universities getting a degree has become far too easy. [Many] universities have adapted to the poor quality of incoming students by lowering the bar for academic excellence.’ In too many instances, ‘universities push students through’, allowing them to graduate even though they lack ‘the ability to analyse or even to write coherently’.

Competitiveness

Business must maintain competitiveness and cannot afford to appoint under-qualified people to any positions, let alone its most senior ones. But this does not mean, as Ms Kabinde claims, that the private sector is resisting transformation.

From the late 1960s – when it became clear that the white population was too small to meet the needs of the economy – business repeatedly urged the National Party (NP) government to ease restrictions on black employment and advancement. In 1973 prime minister John Vorster finally yielded to this pressure, saying that his government would no longer stand in the way of blacks moving into higher jobs.

This policy shift resulted in considerable advances for black South Africans, a significant narrowing in racial inequality, and a series of additional socio-economic reforms that helped pave the way for the transition to black majority rule.

After that transition took place in 1994, business had still more reason to embrace black advancement in the workplace. By 1997, the year before the EE Act was adopted, 90% of the 150 large employers surveyed by a human resources consultancy, FSA-Contact, had affirmative action programmes in place, even though this was not required by law.

Already, moreover, the skills shortage among black people was so acute that more than 60% of companies complained about the ‘poaching’ of their black managers by firms willing to pay significant premiums to lure them away.

This level of poaching, backed by the payment of premiums well above normal salaries, testified to an enormous unmet demand for black managers in the private sector. There was thus no need for the EE Act to force the private sector to hire blacks in senior posts, as the IRR commented at the time.

Real obstacle

The real obstacle to black advancement lay rather in the major skills deficit within the black population. Hence, the key requirements were to increase black skills through excellent education, while simultaneously fostering high rates of direct investment and economic growth. The faster the economy grew, the more demand there would be for skilled people of all colours.

What was true in 1998 is no less true in 2022. What the intervening years have also shown, however, are the negative consequences of allowing unrealistic racial quotas to trump skills and experience in job appointments.

This is what has happened in the public service, where African representation in top management jobs is largely in line with the African share of the EAP – but competence and institutional memory have sharply declined.

The resulting malaise afflicts the entire country but hurts the great majority of black South Africans the worst. Since most black people cannot afford private sector provision, they have no choice but to rely on failing state schools, inefficient state hospitals, ever more unreliable state electricity, defective state housing, collapsing state sanitation, indifferent state policing, and so on.

Pervasive public service inefficiency deters direct investment too. This has helped to restrict economic growth to well below average rates in other emerging markets – and to push up unemployment rates to 35% in general and 64% among young people aged 15 to 24. These levels of joblessness are among the highest in the world.

Inefficiencies and failures

If the EEB with its ministerially set racial quotas is now enacted into law, the main effect will be to extend the inefficiencies and failures already evident in the public service into the private sector too. This will further cripple the economy and add to the crisis of joblessness and poverty.

The EEB will exacerbate the harm the EE Act has already done to the great majority of black South Africans. The ANC and its SACP allies (including Mr Nxesi) remain indifferent to this reality, as their socialist ideology requires a constant expansion in state power.

The SACP/ANC alliance also hopes to buttress its faltering electoral support by bringing many more private sector posts within the purview of its cadre deployment policy – and so expanding its already extensive patronage machine.

It is time to call a halt to what Professor Sowell has termed the ‘bait-and-switch’ strategy of using the plight of the black poor to garner well-paid posts and increased power for a narrow black political elite.

This strategy contradicts the Constitution with its founding value of non-racialism and its emphasis that race-based affirmative action is permissible solely if it ‘advances’ the poor and helps ‘achieve equality’.  

Since the EEB harms the poor and widens the gap between the 11.2 million black people now unemployed and the small black elite, President Ramaphosa has a constitutional obligation to refuse to sign it into law.  This is also what more than 23 000 signatories to an IRR petition against the EEB have urged him to do.

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Dr Anthea Jeffery holds law degrees from Wits, Cambridge and London universities, and is the Head of Policy Research at the IRR. She has authored 11 books, including People’s War: New Light on the Struggle for South Africa and BEE: Helping or Hurting? She has also written extensively on property rights, land reform, the mining sector, the proposed National Health Insurance (NHI) system, and a growth-focused alternative to BEE.