Employment equity: South Africa takes one more step toward black empowerment

South Africa’s National Assembly passed amendments to the Employment Equity Act on 16 November. Most significantly, the amendments would give the labour minister the power to set numerical workforce targets for employers in order to promote equitable representation of black people, women and people with disabilities (collectively referred to as designated groups). The amendments would also require the government to issue contracts only to firms that have been certified compliant with this law.

The bill originated in President Cyril Ramaphosa’s cabinet and is supported by the ruling African National Congress’ (ANC) trade and labour union allies. Therefore, the president is expected to give assent in pursuit of the party’s black economic empowerment agenda. But the bill must first be approved by the National Council of Provinces where the ANC has enough seats to ensure it is passed.

Significance – New powers

The Employment Equity Act is an established piece of legislation in South Africa having been in force for over 20 years. Companies[1] are required to develop and apply an employment equity plan and regularly report their progress on affirmative action to the Department of Labour. Compliance has been assessed by considering a number of factors, including the proportion of designated groups in a company’s workforce relative to the demography of the national and regional labour force.[2] Companies are obliged to set their own numerical targets toward equitable representation.  

Now, with the proposed changes, compliance would ultimately rest on the targets set by the labour minister on the advice of the Commission for Employment Equity. These targets may be prescribed for any sector of the economy after consultation with its stakeholders, and they may vary across occupational levels or regions within a sector based on factors determined by the minister. There is consequently broad scope for variation in application.

Outlook – Political incentives

Enactment by the second half of 2022 is probable. The National Council of Provinces (NCOP) will likely decide on the Employment Equity Amendment Bill in or around June next year. And it should favour ANC preferences, considering the ANC holds 53.7% of seats in the NCOP and a bill requires only a simple majority to pass.

The party’s key ally, Confederation of South African Trade Unions (COSATU), wants the proposed legislation enacted. This is a strong political incentive for Ramaphosa, himself a former COSATU leader, to assent to the proposals in order to advance the ruling party’s goal of ensuring a greater participation of black people in the economy, as with recent changes to competition regulation (See: South Africa demands black economic empowerment before Burger King acquisition).

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[1] Companies that have 50 or more employees, or that have fewer than 50 employees but meet an annual turnover threshold specified in the Employment Equity Act.

[2] Employment Equity Act (1998). Government of South Africa.

*Photo credit: Ja

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