Proposed changes to the Employment Equity Act will severely penalise companies that lag behind on transformation if they come into effect, including hefty fines for noncompliance.
But companies still have a long way to go to achieve greater representation of black people, women and people with disabilities in the workplace. The Commission for Employment Equity released its 12th annual report this week, which shows that white men remain dominant in almost all top management levels in the workplace. They make up 65.4% of top management positions, six times the part of the economically active population they represent.
Last week the Cabinet approved the Employment Equity Amendment Bill for submission to Parliament, where it joins several other hotly contested amendments to labour laws, including the Labour Relations Act and the Basic Conditions of Employment Act.
The proposed Bill stipulates tough penalties for companies that meet the turnover thresholds that qualify them as designated employers but that are found guilty of contravening the Act.
Fines start at 2% of a business's turnover for a first-time offence. They progress to 10% of turnover if a qualifying company is found to have committed four contraventions of the same provision in three years.
Jonathan Goldberg, chief executive of Global Business Solutions and a representative of the Confederation of Associations in the Private Employment Sector, said the penalties were extremely severe and even a fine of 2% of turnover could put many companies out of business.
Another concern was amendments to provisions in the Act that obliged the authorities to consider certain factors when assessing a company's compliance with the law, he said.
These included the pool of suitably qualified people an employer could be expected to choose from, the economic and financial circumstances of the sector in which the employer operated and the economic and financial circumstances of the employer.
In the Bill, these factors have been removed and the obligation on the authorities to consider them is no longer clear.
"These two areas will have a major impact on business. It will be very significant," Goldberg said.
A regulatory impact assessment of the Bill and the other amendments to labour legislation had to be done to understand the economic consequences of the proposed changes, he said.
But the commission stated in its annual report that the longer the amendments to the Act were delayed, "the greater the prejudice" would be in achieving employment equity.
Business Unity South Africa acknowledged that more had to be done to improve private sector compliance with the Act. But its chief executive, Nomaxabiso Majokweni, said there were "impediments in our system and economy that have hindered rapid transformation, particularly the continued failure of the education system and colleges to produce candidates that are qualified and suitable to the needs of business".
She said the feeling in business was that amendments to the Act, such as "removing undertakings, objections and appeals to compliance orders, and linking fines [to] turnover" would not necessarily address the challenge.
But Labour Minister Mildred Oliphant said in a statement that the "gross underrepresentation" of black people, women and people with disabilities in key areas of the labour market, such as in management, science and technology-based occupations, had to be addressed.
It is clear from the report that males and white people are more likely to be recruited and promoted compared with any other group and progress on the employment of people with disabilities remains dismal.
But there are some signs of improvement. Progress in terms of race at the professionally qualified level has seen good progress.
Population distribution trends show that African representation at the professionally qualified level has risen from 24.4% in 2007 to 36.35% in 2011.
Coloured and Indian representation has grown from 8.5% to 10.2% and from 8.7% to 9.1%, respectively. White representation has shrunk from 57.2% in 2007 to 42.3% in 2011.
The picture for women at this level is bleaker. Their representation has only risen from 33.8% in 2007 to 42.5% in 2011.
"The Commission for Employment Equity is concerned that, if women are struggling to break through the glass ceiling at this level, how much more difficult it will be at the top management and senior management levels," it states in the report.
The workforce profile at the skilled level has also shown some improvement in terms of race. African representation at that level is 57%, white 24%, coloured 11.5% and Indian 6.2%.
But white people still from double the number of economically active people.
At the skilled level, males are still dominant, making up 53.5% of the workforce profile, whereas women make up 46.5%.