South Africa’s planned ‘transformation’ laws impose targets not quotas, but then, why heavy fines?

The Deployment of Employment and Labour says that the planned Employment Equity Amendment Bill will focus on targets rather than quotas. For noncompliance he nonetheless called for fines of between 1% and 10% of turnover and to be disqualified from doing business with the government.

Cofesa calls for deregulation and abandoning excessive fines imposed on businesses –

44 firms, some of them listed on the JSE, were criminally prosecuted in 2018 under the Employment Equity Act. The majority were fined R1,5m. Companies face a daunting task of reflecting the country’s demographic profile, calculated as 77% black employees by the Department of Labour: Fines from R1 500 000, with R1 800 000 for a previous contravention and R2 100 000 for further contraventions, or 10% of turnover.

It is time for a macro-economic strategy to move from a ‘welfare’ to a ‘workforce’ perspective to abolish business unfriendly laws (called ‘cholesterol’ in India) that thwart employment creation and perpetuate poverty, Cofesa pleads.

Statutory protection for an elitist few  

An analysis by a leading economist, Mr Mike Shussler, of 2019 stats of Statistics SA found that BBBEE and affirmative action benefitted an elitist group, a maximum of between 30 000 possibly only as few as 10 000 people to the detriment of millions of under- and unemployed people. Moreover it distorts the economy. (Beeld 18 November 2019 page 12).

It is notable that before the imposition of affirmative action and black empowerment ESKOM was internationally recognised as one of the five most efficient power producers in the world. Now many large corporations have relocated to elsewhere in the world, leaving skeleton offices behind, to get away from the burdens imposed by affirmative action which made them uncompetitive internationally and to retain their highly skilled expertise.

Professor William Gumede of Wits University said by abrogating normal procurement rules, it helped pave the way for the ‘Zupta’-linked ‘state capture’, estimated to have cost between R500bn and R1.5 trillion.

Affirmative action must now be abolished to achieve a modern-economic-democracy. ‘The number of black dollar millionaires was overtaking white equivalents around 2015 according to New World Wealth’ .