Over 50% of South Africans to become unemployed – R1.5m to R2.7mil fines for hiring foreigners

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The Employment Equity Amendment Bill, if implemented, will damage any chances of the country attaining meaningful growth and more people will lose their jobs in South Africa as unemployment will rise from more than 46% on the expanded definition to above 50% on the expanded definition, says Institute of Race Relations (IRR) head of policy research Dr Anthea Jeffery and head of campaigns Gabriel Crouse.

They note that the two core provisions of the Bill aim to allow the Minister of Employment and Labour to set racial quotas for job appointments by businesses with 50 employees or more in specified sectors of the economy and to bar such businesses from contracting with the government unless they have complied with the Minister’s quotas or justified their failure to do so on reasonable grounds.

“The Bill contains heavy fines for any failure to comply with the Minister’s racial quotas, or numerical targets, as current Minister Thulas Nxesi prefers to call them. Penalties begin at R1.5 million or 2% of yearly turnover for a first offense and may rise to R2.7 million or 10% of turnover, whichever is larger, for a fifth similar offense within three years. Fines of this magnitude could bankrupt many firms,” Jeffery and Crouse state.

Businesses that fail to fulfil the Minister’s unrealistic quotas, or to justify these failures on terms that bureaucrats are willing to accept, will be denied compliance certificates and so be excluded from contracting with the State.

“Employment equity racial quotas have already crippled the capacity of the public sector, filling it with a host of unqualified and unaccountable people, many of them intent on self-enrichment. The resulting malaise is everywhere apparent,” Jeffery and Crouse state.

The Bill will produce the same results in the private sector, because it will further entrench patronage economics – it is a matter of who you know, and the political power you have, and not whether you are the best man or woman for the job, they argue.

“The Bill is in conflict with many provisions in the Constitution. President Cyril Ramaphosa has a constitutional duty not to sign the Bill into law if he has reservations about its constitutionality.

“Instead, he must refer it back to the National Assembly for reconsideration,” says Jeffery.

“Should the Bill become law, South Africa will breach the 50% unemployment mark on the expanded definition, because it will deter further domestic and foreign direct investment and erode service delivery even further while driving State Capture 2.0,” the IRR says.

Further, the draft law would not help those for whom it was intended, and IRR polling shows most South Africans do not place faith in appointing people to jobs based on their ethnicity or race. More than 60% of people polled believe that people should be appointed based on merit, Crouse says.

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