Sunday, May 28, 2023 | New EE targets may force 600 000 people out of... | New EE targets may force 600 000 people out of jobs, DA claims – but govt says 'nothing changed'




Thulas Nxesi Minister of Employment and Labour. Photo: Daily Sun

Thulas Nxesi Minister of Employment and Labour. Photo: Daily Sun

  • Government has set proposed racial and gender targets for specific industries to be achieved within five years. 
  • These targets are now open for public comment.
  • The DA insists that this could potentially force 600 000 people out of the workplace.
  • For more financial news, go to the News24 Business front page.

As the DA claims that more than almost 405 000 white, 117 000 Indian, and 72 000 coloured people could lose their jobs in the next five years due to the new sector employment equity targets, government says there is “no empirical evidence” that it will discourage employment or accelerate the mechanisation of jobs.

Last month, President Cyril Ramaphosa signed the Employment Equity Amendment Bill of 2020 into law, which empowers the Department of Labour to set new transformation targets for different industries.

Minister of Employment and Labour Thulas Nxesi recently released the targets for 11 sectors, that have to be achieved in five years.

Targets for African, Indian, white and coloured employees in top and senior management, as well as for skilled and professionally qualified positions, were put forward. There are different targets for men and women, and there are also targets for people with disabilities.

There are also two sets of targets – nationally and provincially. Companies that operate throughout the country must comply with the national targets.

So, for example, the top management of a national manufacturing company has to be 35% African (22% male, 13% female), 4% coloured (2.5% male, 1.5% female), 1% Indian (0.7% male, 0.4% female) and 8% white (4.5% male, 3.5% female).

Click herefor the full set of national and provincial targets.

Companies that employ fewer than 50 employees, irrespective of their annual turnover, don’t have to comply with the targets.

But for larger companies, the new amendments to the law compel labour inspectors to inspect workplaces and issue employers with compliance orders. Employers will have to justify their non-compliance. 

Sandile July and Sandile Tom, both directors at Werksmans Attorneys, previously noted that while justifications for non-compliance are not outlined in the Act, justifiable grounds proposed in draft regulations included:

  • insufficient recruitment or promotion opportunities;
  • the pool of designated target individuals who possess the desired qualifications, skills and expertise is insufficient;
  • non-compliance is occasioned by court orders, transfer of business, mergers/acquisitions and/or economic/financial feasibility. 

READ | OPINION | Worried about the New EE Amendments? Progressive implementation is possible

If a justification is not accepted, companies may be fined for not complying with sectoral targets:

 ee targets

Source: Cliffe Dekker Hofmeyr

Companies that do not comply with sectoral targets will also be excluded from being awarded state contracts – unless there is a reasonable ground for non-compliance, and that company has not had any adverse labour findings against it.

Government insists that the new targets are not quotas, which amounts to job reservation and would be unconstitutional.

Stakeholders have until early next month to submit objections to the new targets.

July and Tom noted that if companies can contend that the minister has either failed to consider or has not adequately considered their comments, the final notice on the targets may be subject to review. 

But Solidarity and the DA already plan to launch a legal challenge to the amendments, with the DA estimating that just in Gauteng, at least 220 000 white people, 85 000 coloured people, and 50 000 Indians stand to lose their jobs.

On Monday, DA MP Michael Cardo called the targets an “electioneering ploy”:

The targets proposed by government are not faceless numbers; they represent an impending social and economic catastrophe which will slam the brakes on an already slowing machine and risk grinding our economic gears to a complete halt.

In a series of parliamentary questions, the DA demanded that Nxesi outline the specific statistical models and techniques, demographic and labour market data along with other factors used to calculate the targets.

How were these data validated and processed to ensure they accurately represent the current state of our labour market?” asked Cardo.

Nxesi previously said that there was no empirical evidence to indicate that the employment equity targets for sectors might have “unintended consequences on employment or in encouraging employers to change their operations to pursue restructuring or computerise and /or mechanise operations”.

In a separate statement, the Department of Labour slammed the DA’s criticism, insisting that:

In fact, nothing has changed, these EE amendments are not introducing any new legal obligation on employers, because for over 24 years of the EE act, employers have been legally required to set their own EE targets, taking into account both the national and provincial (…) demographics. The only change with these amendments is that the Minister of Employment and Labour, after consultation with the relevant sector stakeholders, and on the advice of the Commission for Employment Equity, has now regulated sector EE targets in the form of five-year milestones towards achieving the equitable representation of the various groups in respective economic sectors.

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