Now that the Broad-Based Black Economic Empowerment Codes have taken over the job of encouraging companies to implement affirmative action, the Employment Equity Act should be scrapped.
With it should go the Commission for Employment Equity (CEE).
The commission’s task of monitoring affirmative action should be replaced with well thought-out, streamlined surveying. As Stats SA has enough on its plate, the outsourcing of the survey should be considered.
The commission’s annual reports have little credibility. Damaging that credibility even further is an innumeracy inexcusable in those whose task it is to measure politically important statistics.
In its report for 2006, the CEE has misunderstood a fairly basic arithmetical principle: going from 1% to 2% is not a 1% increase but a 50% increase.
Bemoaning the pace of affirmative action in South African companies as “woefully slow”, the report goes on to say that black representation at top management level rose “by a meagre 9,5%, from 12,7% in 2000 to 22,2% in 2006. This averages out over a six-year period to nearly 1,6% per year.”
That should be “9,5 percentage points”, the equivalent of 75%.
It is true that, at that rate of change, 1,6 percentage points a year, it will take more than four decades to get anywhere near the government target of demographic “representivity” derided by the DA. But that assumption is only true if all else in the economy remains static — and this is unlikely.
It could also be that the report’s picture of the state of black participation in companies is too rosy. The reality could be bleaker.
Dare we trust the data when the number of reports submitted to the department of labour has fallen so steeply? The number of reports submitted has almost halved to about 7Â 000 in 2006 from 13Â 000 in 2000.
The answer to the problem, according to the commission, is higher fines for non-compliance. But this is supposed to be “soft law”, shepherding companies on to the path of transformation, not a punitive measure.
Other than his argument that the skills shortage is a myth, commission chairperson Jimmy Manyi appears to have no evidence for his belief that racist intransigence is the reason companies fail to submit reports. Is this what the business representatives on the commission board believe? Has the commission seriously tried to establish the reasons?
It could be that the design of the legislation is flawed. It could be that companies are doing little to advance black people. And it could be, yes, that apartheid and the siege economy damaged this country as severely as progressive voices warned at the time, crucially in the area of education.
Survey fatigue could also be contributing to the failure to report.
My own experience is that companies are tired of constant surveying. Interviewing companies on behalf of a multilateral organisation some years ago, I encountered many refusals to participate. “We’ve filled in so many of these sorts of things already this year,” they said. Many CEOs simply refused to be interviewed, without giving reasons. And sometimes companies devolved the responsibility as far down the executive chain as possible, making one doubt the validity of the responses.
So, as a contribution to decreasing over-regulation, perhaps one annual overall business survey could be conducted which would include affirmative action questions. The first priority should be to get an accurate picture of racial participation in the formal economy — and the reasons for that state of affairs.
As reported in this newspaper, the quality of information submitted in the CEE process is questionable. Is there, for example, any verification of whether the claimed number of black top managers really includes top managers or simply black people with titles?
These sorts of doubts need to be dispelled. We need to know where we are to know where we ought to be and how fast we can get there. If the reason for the slow pace of black advancement is the slow absorption of black people into the formal sector, what can be done about that? Is anyone suggesting firing white employees to bring in black ones?
In the meanwhile, businesses are gratefully scanning the BBBEE codes. Although they have many flaws, the codes have introduced a degree of certainty. But that certainty, as I have tried to show, is not absolute. When the politics behind their very existence rears its head, you can forget about codes and charters.
Yet the confidence brought about by the codes is better than the kind of permanent ambiguity that accompanies ministerial or departmental discretion.
Most of all, the codes should be shifting emphasis away from the big deal, the million or billion rand equity transfer that grabs headlines. Originally, there was much hope that these deals would contribute in some way to the racial transformation of the white businesses that entered into them.
If Manyi is correct, and racism still reigns within the corporate sector, one conclusion that can be drawn is that these deals, whatever else they have done, have not done much to speed up racial transformation.