The year 2023 stands as a testament to the trials and tribulations private business owners have endured. Besieged by the dual nightmares of incessant load-shedding and a less-than-stellar economy, further aggravated by a contentious National Minimum Wage adjustment, the resilience of South African Small, Medium, and Micro Enterprises (SMMEs) is being sorely tested.
Stirring further unease are the newly drafted sector employment equity targets. These have been greeted with an uproar, not merely for their practical implications, but primarily for the perceived intrusion of the government into the private sector’s domain.
To be clear, the goal of these targets is not new. They aim to rectify long-standing workforce inequalities and mirror the country’s demographic diversity. Large employers have, for some time, been required to provide plans to achieve such transformation in their workplaces. The recent agitation stems from the amendments to the Employment Equity Act, granting the Minister of Employment and Labour singular authority to set and enforce these targets.
Many see this as a bridge too far, a breach of the free market principles by the State, meddling in the internal functions of private businesses. Critics argue that the overreach of Section 15A of the Employment Equity Amendment Act — giving the Minister the sweeping powers to dictate business operations — goes against the spirit of a free market economy.
Concerns also lie in the legal domain, particularly in the interpretation and practicality of the proposed targets. Some target percentages don’t add up to 100%, creating confusion and potential legal pitfalls. The targets’ practicality is also questioned when fractions of a person are implied.
Moreover, employers are left anxious about the repercussions of failing to meet these targets after the five-year period. Would this lead to forced retrenchment of certain demographics to meet new targets? Or would the businesses face penalties and fines?
These queries point to Section 42 of the Employment Equity Amendment Act, outlining potential justifications for falling short of the targets. Yet, how these justifications are viewed and enforced by the Department of Employment and Labour and the Labour Court remains a source of concern.
Additionally, employers face a risk of being barred from doing business with the State if they receive an adverse award at the Commission for Conciliation, Mediation and Arbitration (CCMA). This could occur due to unfair discrimination or failure to pay the National Minimum Wage, raising questions about employers’ rights of recourse.
Predictably, legal challenges have emerged due to the contentious nature of these proposed targets and potential infringements of Constitutionally enshrined rights. Questions about the Minister’s power to publish the targets before the Amendment Act’s promulgation add another layer to the debate.
There are also reports of employers considering splitting their businesses into smaller entities to bypass these obligations. The practicality and legality of such an approach, and the Department of Employment and Labour’s stance on it, are still unclear.
The issue of consultation, or lack thereof, with the relevant sectors is another critical concern. CEO, a leading employer organisation, reports being left out of the Commission for Employment Equity’s consultations, sparking questions about the legitimacy and inclusiveness of the consultation process.
In an economy grappling with survival, the government’s focus should arguably be on fostering growth, creating jobs, and tackling the crippling unemployment crisis. While transformation remains an imperative, it shouldn’t come at the expense of growth and business morale. The government needs to consider whether its interference might be exacerbating the very problems it seeks to solve.