Last month President Cyril Ramaphosa signed the Employment Equity Amendment Act into law, which imposes new racial quotas on employers of more than 50 people. The regulations of the act are now out for comment. Much of the focus has been on their detrimental impact on social cohesion in our already racially divided society.
But my concern is more practical. As is normally the case with ANC policies, the intended beneficiaries of this measure are precisely the people who will be hurt most when it invariably fails.
In my line of work as a communications consultant, I am often called on to bring issues into the public square in order to stimulate conversations that hopefully lead to change. The holy grail is breaking the sound barrier — that is when the issue you’ve worked to highlight starts popping up in conversation. You know people understand the issue and its import when it’s organically coming up in social settings and people are really thinking about its implications.
For all our philosophical debates about affirmative action, BEE, and other such policies, I rarely hear people spontaneously express concern about the business implications of these policies outside of a professional or political environment.
This is why I listened attentively when a black executive at a local subsidiary of a multinational company brought up this particular act at a funeral recently. That’s how I know this issue is real, and that the consequences will be too. And by consequences, I’m not talking about the increased racial antagonism which has also been stirred up by this newly signed legislation.
The most important question to ask when examining any legislative proposal is “why?” What is the legislation intended to achieve? It will surprise no one that the act has a superficially reasonable justification: “to ensure the equitable representation of suitably qualified people from designated groups”.
Notwithstanding the stated objective of the act, the “why” here is perfectly clear. The signing of this bill by the president who promised one million jobs is a clear concession of the failures of ANC economic policy. The very best this party can offer the country from here on out is a periodic reallocation of whatever jobs are left in the economy — the further slicing up of an already diminishing pie.
In the meantime, with the economy dragged down by poor education outcomes, prohibitive legislative compliance costs, and a worsening energy crisis, the poor will get poorer with many from the middle class joining them. All the while the president and his party can continue to trumpet all that they’ve achieved for black people.
What they’ve actually given us is morally and intellectually bankrupt legislative “solutions” that will fix nothing.
It is clear from the employment equity and BEE measures implemented in the past that this legislation won’t create jobs. But the problem is bigger — the legislation won’t even redistribute existing jobs more “equitably”.
In a country with our poor education outcomes, finding any suitably qualified person for a position isn’t a given. Doing this within a prohibitive quota system is even less attractive when you’re a multinational with your choice of investment destinations that have simpler labour laws, reliable energy, and an educated workforce.
The likely cost of this legislation to the South African economy is bleak, even in the best-case scenario. Let’s assume that the reaction from the commentator class and from the aforementioned executive has been overblown, and the legislation will not lead to an exodus of investment.
Even so, the legislation will now form part of the many variables that make South Africa a less attractive investment destination by increasing the difficulty of doing business here. In that case, we won’t have a quick rise in the unemployment rate, just the steady uptick we’ve come to expect.
Figuring out that the legislation presents a lose-lose proposition isn’t rocket science, so even our incomparably incompetent Cabinet must understand this. This makes one wonder why they’d push it through anyway. One can only surmise that the expected benefit exceeds the election-losing strategy of killing local jobs.
Shifting today’s blame and accountability
One option is that the ANC is counting on the same old racial tropes to convince black people that their economic success is tied to this hollow party. In making this argument, the ANC can also abdicate responsibility and shift the blame for the lack of opportunity in this country for black South Africans. This strategy only has to convince a portion of the largest demographic group to stick by the ANC despite all the evidence around us of this party’s unfitness to govern.
The other possible reason would be to court the favour of a would-be coalition partner when the ruling party inevitably fails to gain an outright majority. By passing this legislation, the ANC can simultaneously guard its left flank, and align itself to the Economic Freedom Fighters ahead of what it knows will be an historic fall in the 2024 general election.
Admittedly, putting thousands of jobs on the line for electoral purposes is lower than most of us thought the ruling party could sink, but it makes sense when you see the ANC as the party we know today rather than the virtuous movement of generations long gone.
It is deeply saddening to see the aspiration of building a non-racial society disappear. But that isn’t the only — nor, in my view, even the most important — problem with this legislation.
The continual gaslighting of black people with “progressive” legislation that always seems to leave us worse off even as we’re told how grateful we should be, is deplorable, and this strategy has passed its sell-by date.
We can only hope that the economic consequences of this act — the part that actually affects people’s lives and livelihoods — don’t materialise before the ANC can be pushed out of power in 2024. DM