Quotas: A new labour migration policy, which is open for comment, seeks to limit how many mainly low-skilled foreigners work in South Africa. Photo: Roberto Schmidt/AFP
Chinese technology giant Huawei Technologies South Africa this week settled out of court with the department of labour and employment for violating the Employment Equity Act by employing nearly 90% foreigners in its workforce.
The department had gone to court seeking an order to fine Huawei R1.5-million or 2% of its 2020 turnover and forcing it to draft and implement an employment plan to hire South African workers.
The company, a major player in communications and information technology in South Africa, was legally obligated to employ 60% local employees and 40% foreigners, but a 2020 audit discovered that the local hire was less than 10%.
While Huawei has not made the size of its workforce public, court papers indicated that it stands at just under 800 people.
Subsequent attempts by the department to force the company to obey the law failed — Huawei offered to employ 44 South Africans — so it went to court last month in search of an order imposing the fine and corrective measures.
On Monday the department accepted an offer from Huawei to settle out of court, which includes the company implementing a plan to employ 50% South African workers — especially from designated groups and from rural areas — within three years.
The company had not filed opposing papers to the department’s application, instead opting to make the settlement offer, averting a lengthy — and costly — legal process and a permanent souring of its relationship with the South African state.
In terms of the settlement, Huawei will also provide internships and ICT training to South Africans drawn from the department’s database as part of the agreement, which was described by both parties as a “win-win”.
Last month Labour Minister Thulas Nxesi unveiled his department’s labour migration policy, which it hopes, along with amendments to the Employment Services Act and the Small Business Act, will regulate the number of foreigners owning businesses and working in South Africa.
The policy and the amendments to the Act are out for public comment as part of a process through which the government hopes to set — and enforce — quotas for the number of foreigners eligible to work in each sector of the economy.
The government believes this legislation, combined with the creation of a border management authority and improved coordination between the departments of home affairs, labour, trade and industry and the criminal justice sector, will create more jobs and small business opportunities for South Africans.
Refugees, permanent residents and citizens would not be affected by the new regulations, the effect of which will be felt most in the agriculture, hospitality, security and tourism sectors.
SADC commitments
Sam Morotoba, the deputy director general of labour responsible for the development and implementation of policy, told the Mail & Guardian this week that it was necessary both to deal with South Africa’s jobs crisis and to ensure that the country met its commitments as a member of the Southern African Development Community to develop such a policy.
Policy would seek to cap the percentage of foreigners employed per sector, with the process being “sensitive to the needs of each sector” and taking into account issues such as the salary scale in sectors and the effect on each sector.
Morotoba said the department was not seeking a “one-size-fits-all” solution with blanket quotas imposed across economic sectors, but rather an approach that “takes into consideration special needs and circumstances”.
Morotoba declined to comment on the Huawei case because it was still before court at the time of the interview, but said the department had come across cases where companies employed 100% foreign workers, many of them undocumented and unregistered.
Presently, the compliance by foreign employers is monitored through their employment equity reports, a process that was limited by the fact that it was mainly the listed companies which complied, leaving a large number of employers outside the system.
At present, home affairs regulations allow foreign companies that are first time investors to have higher percentages of foreign workers for a five-year period, after which they are required to take on South African staff.
“The issue is about creating employment. How do you have an investment that has a staff consisting of 100% foreign nationals producing goods that are being consumed locally?” Morotoba said.
Improved coordination
Morotoba said that for the labour migration policy to work, there would have to be improved coordination between the departments of labour, home affairs, law enforcement and other roleplayers, along with additional human resources.
The plan to change the manner in which the departments worked together — ending the approach of working in isolation — would allow the policy to be implemented “with existing capacity or a slight increment of it”.
He said South Africa could not afford to continue without a proper policy in place to control labour migration. The cost of enforcing the amended legislation would be far less than the cost of leaving the situation unchecked, he said.
Thus far, the department had received more than 100 submissions from interested parties, which were being considered as part of the comment process, he said. These would determine the eventual quotas imposed by the department.
“We are still inviting submissions and we can only determine that once we have received all the submissions, but when you make a law it is applicable to all sectors of the economy. Sectors that feel that it may be problematic — or that certain aspects may be problematic — are free to make submissions and provide their reasons,” Morotoba said.
At present, there are 2.9-million documented foreigners in the country — not all of them in the labour force, he said. Current figures indicated that 7% of the labour force was made up of non-South Africans.
However, it was very difficult to provide a real figure because of the large number of undocumented foreign nationals who were being employed without any official records, Morotoba added.
He insisted that quotas would not have the unintended consequence of creating skills shortages in certain sectors, as shifts in education and training and skills development would ensure that new entrants to the job market had these skills.
Moreover, the critical skills list would continue to exist, allowing companies to import certain skills once they proved that they had attempted — and failed — to secure them locally.
Companies would also be required to invest in skills transfer in areas of scarcity as part of the skills development plan to ensure the opportunity to empower South Africans to do the work in the longer term.
Use existing laws
Cosatu parliamentary coordinator Matthew Parks said the federation had not yet made a submission on the labour policy, but would be doing so.
Cosatu was also interacting with the department of labour over labour market proposals which it had tabled at National Economic Development and Labour Council, at which the labour migration policy would also be discussed after the public comment process was completed.
Parks said that while there was a definite need to deal with a domination of certain sectors by mainly undocumented foreign national — including trucking, construction, fuel, agriculture and security — this could be done by using existing legislation.
“The real question is about the capacity of the government to make use of existing legislation, which governs the labour market, rather than the need for new legislation,” Parks said.
At the centre of the current crisis was the unwillingness of employers to obey existing labour laws and the lack of capacity — and will — by the labour department to enforce the laws that already existed, Parks said.
The department, Parks said, currently had about 1 500 labour inspectors, while there were an estimated two- to three-million workplaces countrywide.
The situation was being made more unworkable by budget cuts, which further restricted the capacity of the department to employ staff to enforce labour laws.
This failure to act to enforce existing law also “does little to encourage compliance on the part of employers,” Parks said.
Democratic Alliance spokesperson on labour Michael Cardo said the policy was flawed in that it suggested that foreign nationals were responsible for South Africa’s 46.6% unemployment rate.
“This is a textbook case of scapegoating. South Africans cannot find jobs because the ANC has run the economy into the ground, and because our labour laws and regulations are so inflexible, not because of foreign nationals,” Cardo said.
Applying quotas to the number of foreign nationals who could be employed in sectors such as tourism and agriculture was a populist, “short-sighted and xenophobic move” which would have “not a shred of impact on our unemployment crisis.”
[/membership]