Jonathan Goldberg is the chairman of Global Business Solutions. Photo: Supplied
By Jonathan Goldberg
The recent publication of new employment equity targets by the Department of Labour has stirred up debates and concerns among businesses in South Africa. The new rules, which impose equity targets on employers and potential financial penalties for non-compliance, have arrived at a challenging time.
With the country grappling with issues such as load shedding and economic pressures, the implementation of these targets needs careful consideration and necessary amendments before the expected start date of 1st September this year.
One of the most contentious aspects of the new act is the sectorial targets set across 18 sectors. The minister will have the authority to establish these targets over the next five years, leading to concerns and objections raised by businesses, trade unions, and even legal challenges against the constitutionality of the act. This particular aspect has become the crux of the matter.
Another significant concern is the fines of up to 10% imposed on non-compliant employers. While this provision has been in place for some time, the current circumstances of load shedding and increasing costs add additional stress to the business environment in South Africa.
Prior to the legislation, organisations were responsible for setting their own targets by analysing regional and national demographics and identifying under-represented areas within a three to five-year timeframe. Now, these targets will be predetermined, which raises objections about the basis on which the minister sets the targets across the 18 sectors. The diverse nature of certain sectors, such as manufacturing, makes it challenging to establish targets without considering sub-sectors, potentially leading to contention.
However, fines remain the most contentious issue, although they have existed for a while. If the targets are set properly in consultation with sectors, as envisioned by the legislation, it may not be a bad thing if they are agreed upon collectively.
The 18 sectors are likely to face set targets for black representation in top management positions (top and senior, professional management), of 15% to be achieved by 2028.
Nevertheless, some sectors may find it impossible to reach these targets due to skills shortages and economic circumstances. The upcoming regulations, which are yet to be published, will consider these factors. If an organisation cannot meet its targets by 2028, as determined by the minister, evidence of economic downturn, skills shortages, and low staff turnover may be taken into account to obtain a certificate of compliance.
One notable driver of compliance is the government’s stance that businesses must obtain a certificate of compliance to engage in any business with the state. This will shift the current focus on fines and court prosecutions, a direction that has been proposed since the inception of the act but has yet to be fully enacted.
However, small businesses and entrepreneurs have achieved a significant win with the recent amendments. Businesses with fewer than 15 employees are exempted from compliance with the Affirmative Action, Chapter 3, although discrimination legislation still applies, which is inherent in the constitutional prohibition of discrimination.
The positives resulting from these amendments deserve greater recognition and celebration. However, there are areas that require attention.
The Department of Labour needs to engage in proper consultation sessions with each sector to establish realistic targets for the next five years. Different sectors possess unique skill sets, and a comprehensive debate is necessary to understand why there is an insufficient representation of individuals entering the labour market.
By addressing the inefficiencies in education and skill training systems and fostering collaboration between the government, businesses, and educational institutions, we can create a sustainable framework that enables individuals from all backgrounds to thrive in senior positions. It is only through this holistic approach that we can truly achieve equitable representation and build a stronger, more inclusive economy for all South Africans.
Jonathan Goldberg is the chairman of Global Business Solutions.
BUSINESS REPORT