The DA’s shift on BEE

Unfortunately, the DA has spent the better half of the past decade either in support of a race-based policy, confused, or mounting a rather weak offensive. In the latest DA manifesto, the party recommends the further use of race and supports BEE (just not the ANC version, which ironically is just like the DA version).

The DA manifesto is silent on employment equity, as are all its other policy documents.

After the national elections, however, the ink on its manifesto barely dry, Maimane stood up in Parliament and in an epiphanic moment announced that BEE should be scrapped. A fuller account of the history of race-based policy in the DA can be found here. Discussion on redress has now been tabled at the Federal Council in late October — discussion which was “shut up” prior to the elections.

Why this article then, surely this reflects that the DA has recognised it erred and is finally at the tipping point to dropping race in policy? It is precisely at the tipping point that one should push so that the ball may roll far enough to reach its logical conclusion. That logical conclusion is to remove race from all economic policy – as it is all based on the same, underlying and illiberal position.

Scrapping race is more important than scrapping BEE

There has never been much of an appetite among the current leadership to drop race from policy. It is far more likely that “scrapping” BEE means replacing it with a race-based programme that will confuse on the details of how exactly it differs from BEE.

Because most people do not care about policy until the consequences spill out in other areas — it has gone fairly unnoticed how the DA leadership now punts ANC policy as its own, with no observable difference other than they say it is different. In Parliament, the DA fought astutely against free higher education, but in its manifesto it supports it (“the bursaries would not have to be repaid upon the successful completion of studies”). In Parliament, the DA opposed the national minimum wage, but in its manifesto it supports it (“the relevant sectoral minimum wage which would have a new minimum of no less than the old age grant”).

On BEE the DA’s version recommends retaining race as well:

a) employee share ownership;

b) skills development; and

c) entrepreneurial support.

These categories already form part of the BEE scorecard. The only variation the manifesto proposes is to “reward companies for growing their workforce” as this would “mitigate against the incentives to mechanise”. Therefore, in addition to the existing BEE scorecard categories, the DA would add points for Luddites. The single, unique contribution to empowerment happens to be a poorly conceptualised idea.

What is needed is a real break from race-based policy, not to advocate a position that has a distinction without a difference.

Race-based policy in South Africa finds expression primarily in BEE and Affirmative Action as contained in the Employment Equity Act (EEA).

While BEE is concerned with addressing the skewed patterns of wealth in the economy, Affirmative Action measures as defined in the EEA are “designed to ensure that suitably qualified people from designated groups have equal employment opportunities and are equitably represented in all occupational categories and levels in the workforce of a designated employer”.

BEE

In order to identify the problem with BEE as a means for broad-based wealth creation, it is necessary to consider how wealth is accumulated.

Wealth requires a positive return from investments and savings. Most South Africans will need an income in order to make investments, and to have an income they need a job that covers more than their basic necessities. A series of interlocking policies are required which focus on getting more businesses (regardless of colour) to scale, to create jobs and make it easier for people to save and build intergenerational wealth.

There is no reliable evidence BEE is making a dent in any stage of wealth creation. Or that what has been achieved could not have been achieved without replicating apartheid racial classifications.

In addition, the race-based nature of BEE enables a narrow elite to feed off the trough in perpetuity because one never stops being black.

Race-based Affirmative Action

The EEA makes it easy to hire someone who does not meet the qualifications for a job (s20 (4)), and makes it possible to hire those who demonstrate only “potential” (s20 (3d)).

This type of preferential selection does nothing at all to address the disadvantage that hindered the individual from competing without the assistance of AA policy in the first place.

A hypothetical illustration is that of a technician who is hired by Eskom but doesn’t quite meet the qualifications — she is black and it is felt that she can be brought up to speed. Note that selecting her preferentially does not address her disadvantage, much less those of her group. She is still less prepared than those who met the requirements.

Furthermore, she may have performed poorly because the TVET college she attended does not adequately prepare its students. Still, her preferential selection does not change the TVET system; the next crop of learners at that TVET will continue to be ill-prepared by their teachers.

Preferential selection on the basis of race does not affect the relevant disadvantage. All the measure achieves is to have a person selected, it does not improve their ability to compete. In fact, it significantly by-passes the need to compete.

Instead of ensuring, to the extent possible, that everyone jumps over hurdles of the same height — AA policies leave the differential hurdles in place but invent a rule which allows the eighth person in the race to be awarded the second prize. In athletics this would be a mad proposal; surely it is better to ensure the hurdles are of the same height than to engineer the results?

As for the notion of potential: hiring based on potential should be at the discretion of the employer, not a formal entitlement through policy. Not unlike investing in a business with potential, hiring an employee on the basis of promise when there are more suitably qualified candidates incurs risk.

The employee may have the capacity to acquire the ability to do the job, but there is no guarantee they will live up to their potential. Risks should be voluntarily entered into, and it is unnecessarily onerous to force institutions to take a risk, which the government has no intention to underwrite. It would certainly be less onerous if the government undertook to compensate institutions which incurred losses on the basis of government policy prescriptions. But as we know, no such guarantees exist.

It becomes clear that AA policy is not concerned with creating an equal footing, it is concerned with the flawed notion of equitable representation in the workplace. Except there is no reason to imagine that had it not been for apartheid that every racial group would be represented in every workplace, at every managerial level, and in every industry according to a particular ratio; whether it is a national or provincial demographic ratio. The idea is absolutely nonsensical — there is no theory to explain why such symmetry would organically arise.

And there is no running away from this point, as some have tried to do, by saying that a workplace must be “broadly” representative. The point is that even if there had been no apartheid, individuals exercising their own preferences when it comes to their careers would not conform to a specific ratio — broad or narrow.

There is a place for affirmative action policies that seek to address discrimination in the workplace — discrimination based on race, gender, sex, nationality and so on. But these policies need not amount to preferential selection. A country, or workplace, may have a policy to ensure that those who identify as LGBTQ+ are not discriminated against in hiring practices and within the workplace. This does not lead them to setting targets for the number of LGBTQ+ people to have in the workplace (let this not give officials any ideas). The idea that there needs to be preferential or targeted selection in order to tackle discrimination is flawed.

What is required?

Race-based BEE has facilitated corruption and elite enrichment, and race-based AA policy has facilitated unskilled cadre deployment; the same case made about Eskom here, could be made about countless other entities.

Nobody is denying that apartheid built an economy based on racial exclusion, the question now is how to build an inclusive economy. These policies meant to “fast track” inclusion have done little of the sort, and have been damaging to excellence and the entrepreneurial spirit. It may be an easy shortcut to create entry routes into jobs for those who show potential and to award equity shares of existing businesses, but the shortcuts show; the pudding tastes like the baker cut corners.

There is no space here to go into the unique features of each policy, and some might even say it is unnecessary as sound policies on these areas abound, if not within government but within the various institutions capable of producing them in this country. Briefly, we need policies that will:

• Provide young South Africans with the technical and cognitive abilities to compete in an increasingly global skills force;

• Crowd in investment and make it easier to start and scale a business in South Africa;

• Make more room for the private sector to be a partner in delivering public services e.g. education, healthcare, transport, security and so on; and

• Enforce merit-based appointments in all spheres of government, in particular, municipalities where delivery affects the poor most. The idea of merit may be contested, but it is not meaningless — generally, it is possible to identify what constitutes good preparedness and performance for a specific job.

It has proved futile to attempt to short circuit these interventions through race-based BEE and AA. In many ways doing so has undermined the progress which could otherwise have been made. Over and above these policies we can and should have interventions to address immediate disadvantage.

It is sometimes argued that equal opportunity liberalism is like inviting someone to a fancy dinner who does not have the wherewithal to accept your invitation. However, there can be positive, that is, affirmative measures, which are non-racial.

Fair equality of opportunity in the Rawlsian sense would hold that positions should be open to all people and their socioeconomic background should not stand in the way. Therefore, active state interventions such as education loans for low-income families, school nutritional programmes, efficient publicly subsidised transport are all possible policy options.

These measures would necessarily require realisation in line with fiscal constraints. But at their core, these interventions are inputs which ensure that poverty, hunger or distance do not stand in the way of opportunity and learning. It is not a passive equality of opportunity. Importantly, they leave standards uncompromised, but make it possible for people of varied backgrounds to compete.

This is the course which a non-racial (now, not in the future) stance necessitates. It will require resoluteness to chart it. DM

Gwen Ngwenya is the CEO of Techpol, and former head of policy of the Democratic Alliance.