Employment Equity Amendment Bill: public hearings day 3

Meeting report

Agri SA presentation

Mr Christo van der Rheede, Executive Director, Agri SA, said Agri SA agreed on the need for transformation in the agricultural sector. However, it believed that it was necessary for sectoral employment equity targets to be developed in consultation with the sector itself. Giving the Minister of Employment and Labour unlimited discretion to set the targets was highly problematic and would be challenged in court.

The agricultural sector was very complex, and there were significant differences among sub-sectors. The proposed additions to section 15 of the Employment Equity Act (EEA) should create a legislative obligation for the Minister to consult with the sector. A long-term approach to employment equity was required, involving improved training and career pathing, and there should also be a mechanism for resolving disputes between the Ministry and the agricultural sector.

[see presentation attached for further details]

Discussion

Ms C Mkhonto (EFF) asked whether Agri SA had a database of relevantly-qualified graduates who were either unemployed or employed in sectors other than agriculture, and whether it had a plan of action to address the skills gap and career pathing problems it had identified.

Mr M Bagraim (DA) reported that this kind of legislation was forcing farmers to mechanise and outsource their labour. Did Agri SA think that the EEA Bill would inhibit job creation? He observed that consensus-seeking was a golden thread running through labour legislation, and invited Agri SA to comment on the effect that allowing the Minister to set targets unilaterally would have on the agricultural sector.

Mr S Mdabe (ANC) asked what skills in particular were lacking, and whether Agri SA had any skills development programmes.

Mr M Nontsele (ANC) said that the intent of the amendments to section 15 was to enable the Minister to help a sector achieve specific employment equity targets. He also asked about Agri SA’s own investment into skills development in the sector. He asked whether the benefits of the recent boom in the agricultural sector had translated into benefits at all levels of employment.

Mr S Ngcobo (IFP) commented that employment equity was not a new policy. It had been discussed for a very long time and some organisations had been addressing it for many years.

Ms H Denner (FF+) asked whether Agri SA had been able to find the socio-economic impact study that was supposed to accompany every amendment Bill.

Agri SA's response

Mr Van der Rheede explained that Agri SA was a federal structure representing regional, commodity and corporate organisations. It employed eight specialists, four of whom were people of colour. This was part of a long-term strategy of career development. Agri SA was part of various councils dealing with skills development. The agricultural sector collectively contributed R500m in skills development levies annually and training programmes were run with the Department of Agriculture and related departments. The main problem was fragmentation. Rather than employment targets, transformation in the agricultural sector should be pursued by growing the economy and increasing the number of black farmers. He drew attention to the risky nature of agriculture and its sensitivity to increases in input costs, such as fuel. He was not aware of the socio-economic impact study of the Bill.

Ms Lebogang Sethusha, Labour Specialist: Centre of Excellence on Labour, Agri SA, said that the mechanisation of the agricultural sector was an ongoing debate which highlighted the importance of skills development. She said that many Agri SA member organisations were involved in transformation initiatives, and she could share Agri SA’s transformation report with the Committee.

Mr Johan Wege, Chairperson: Centre of Excellence on labour, Agri SA, said that the sector faced many serious challenges and there was a lot of work to be done. Provinces had unique challenges too. Agri SA would keep the door open for ongoing cooperation with government.

Mr Van der Rheede stressed that the best outcomes would be achieved through consensus-seeking and proper strategic planning, rather than using a blunt instrument just to achieve numerical sectoral targets that did not contribute to real change.

Follow-up discussion

The Chairperson observed that the issue of skills had come up repeatedly. There was a need to go down to the secondary school level to find people who were interested in agriculture at a younger age. One reason that this was necessary was that there were still imbalances in the education system, which had been developed to benefit one section of society. What did Agri SA know about students who were interested in agricultural science? The presentation had been a bit too general, but there were specific historical issues that needed to be addressed.

Mr Van der Rheede emphasised that transformation started at the primary school level, where children should get the education they deserved, and continued through to tertiary level where they obtained the skills they needed. He understood the need to address the historical imbalances in the education system. The presentation had, however, focused on the specific provisions of the EEA Bill. He stressed that Agri SA was committed to the ideal of an egalitarian society.

The Chairperson appreciated Mr Van der Rheede’s viewpoint. She agreed that education in the sector would have to be addressed on another occasion, but explained that the discussion of skills had triggered her thoughts about education.

Business Unity South Africa (BUSA) presentation

Mr Kaizer Moyane, Chairperson: Social Policy Committee, BUSA, said BUSA acknowledged that the pace of transformation had been slow. It supported transformation that was rational and constitutional. This was the reason it had supported the resolution of the National Economic Development and Labour Council (NEDLAC) in 2017-18, that sectoral employment equity targets should be consulted on with the relevant sector. He recalled that all social partners, including government, had agreed to this approach in 2017-18. However, the Bill in its current form differed from the Bill that had been engaged on at NEDLAC at that time. Most importantly, the current amendments to section 15 would allow the Minister to set numerical employment equity targets for whole sectors of the economy without consulting the sector in question. Consultation was necessary because the sector itself was in the best position to understand its specific challenges.

BUSA was also concerned that the amendment to section 42 would give labour inspectors the power to effectively decide the fate of a business. This amendment was vulnerable to abuse and amounted to an employment equity quota, which was prohibited by the Act. It suggested alternative wording for this amendment.

BUSA agreed with the intention of section 53 of the Act, which was finally beginning to be put into effect. This section required any business bidding for work from the state to have an employment equity compliance certificate. However, it was concerned that the proposed amendments, which allowed the Minister to set targets on the basis of unspecified factors and to refuse to issue a certificate if the target was not met, would bring the section into conflict with section 217(3) of the Constitution, as well as the prohibition against employment quotas in the Act. It would also interfere with companies’ internal labour negotiation processes.

[see presentation attached for further details]

Discussion

The Chairperson commented that the current version of the Bill was not final. The current round of public hearings was intended to gauge the public’s reaction to the changes proposed by the Department.

Mr Bagraim asked BUSA to clarify that their objection was that it did not know what the Minister’s criteria for setting equity targets were, and that the Minister was not required to consult with a sector when setting the targets. He was also bothered by the fact that the agreement on consultation reached at NEDLAC in 2017-18 seemed to have been ignored. There should be a strong push to maintain the joint consensus-seeking approach, the golden thread running through labour legislation.

He asked BUSA to clarify its argument that the amendments to section 53 would make it unconstitutional, and to expand on the effect that withholding a compliance certificate could have on a business.

Ms Mkhonto asked BUSA to clarify whether it was satisfied with the pace of transformation under the current legislation. What powers should labour inspectors have to enforce compliance, if not those in section 42? It seemed that BUSA was very comfortable with a situation where businesses regulated themselves.

Mr Mdabe asked Mr Moyane if he considered himself to be a product of a transformational agenda. He asked whether the intention of the amendments that BUSA objected to had been presented at NEDLAC in 2017-18, and what action it had taken with respect to these intentions.

Mr Nontsele noted that BUSA acknowledged the slow pace of transformation. In its view, if a particular sector was not complying with equity targets, should government first bring this fact to NEDLAC or should it empower itself to deal with non-compliant sectors? He said that there was no intention to undermine NEDLAC, but what should be done if agreed equity targets were not met?

BUSA's response

Mr Moyane recognised that there were various stages and steps in the development of legislation, but ignoring an agreement reached by all social partners at NEDLAC undermined that process. He pointed out that NEDLAC was a statutory body, and was not involved in setting equity targets but dealt with policy. It had been agreed that these targets would be set by the Minister, but that the sector in question should be consulted with. There were mechanisms such as the Director-General’s review to enforce compliance with targets, and BUSA had no issue with these mechanisms.

He explained that whether or not he was personally a product of a transformational agenda, the views he was presenting were those of BUSA, which he shared, and he supported a transformational agenda.

With respect to the intention of the amendments, a number of sectors had willingly engaged with government on transformation. Setting targets without consultation was unlikely to succeed in advancing a transformational agenda and would have massive negative consequences.

Adv Jonathan Goldberg, Joint Chief Executive Officer, Global Business Solutions, said that there seemed to be an error in the text of the Bill. It referred to the National Minimum Wage Commission where it should refer to the Employment Equity Commission.

The current legislation, which could impose a fine based on a percentage of a company’s turnover, had sufficient bite. BUSA accepted the need for sectoral targets -- it was just calling for joint consultation with the sector to ensure that everyone bought into the target and the target was sensitive to sector-specific factors such as scarce skills. The current legislation, properly enforced, would go a long way to advancing a transformational agenda.

Follow-up discussion

The Chairperson observed that BUSA acknowledged the slow pace of transformation. Did it have a system to monitor businesses that were not advancing transformation, deliberately or accidentally?

Mr Moyane replied that BUSA encouraged its members to cooperate with government in the administration of the Act, and to pro-actively discuss sector-specific challenges.

Mr Nontsele did not think his main question had been adequately answered. What should the executive authority do if the targets it set were not met? Was BUSA promoting a laissez-faire approach?

Mr Moyane felt that the presentation had answered this question. The question actually minimised the underlying problems, such as skills shortages. If targets were set in consultation with a certain sector, a target that all parties agreed to could be set which would minimise the need for punitive action by government. The punitive measures already in the Act were sufficient, and the focus of efforts should not be on punishing non-compliance but on improving compliance.

Mr Bagraim asked for confirmation that the draft Bill contained textual errors. Had the drafters intended to include the substance of the NEDLAC agreement, but excluded it by mistake?

The Chairperson understood that the public participation process was for stakeholders to put forward their views on the Bill in front of them.

Mr Goldberg confirmed that his view was that the references to the National Minimum Wage Commission were a textual error.

The Chairperson observed that advancing transformation could not be the responsibility of either the government or the private sector alone. This was why she was interested in whether BUSA had systems to monitor the progress of its members.

Telkom presentation

Mr Siyabonga Mahlangu, Group Executive: Regulation, Policy and Government Relations, Telkom, commented that the Bill was being discussed in the context of a deteriorating macro-economic environment exacerbated by COVID-19.

He said Telkom supported the objectives of the Bill and was aligned with other transformation-related policies and legislation. Its own employment equity targets took the specific context of the sector into account. For example, it needed to balance the efficiencies obtainable through automation in the information technology sector against its adverse effects on employment. Employment equity targets needed to take sector-specific factors like these into account. Telkom was concerned that the unilateral imposition of employment equity targets by the Minister, without consultation with the sector, might not be practically implementable in the information technology sector.

There should be clear guidelines as to what constituted compliance with numerical sectoral targets and what constituted a reasonable justification for non-compliance, and employers should be given an opportunity to apply for a formal exemption from equity targets. A study should be undertaken to determine practical and plausible equity targets for the information technology sector. Alternatives to numerical targets, such as accelerated training for designated groups, should also be considered.

[see presentation attached for further details]

Discussion

Mr Bagraim observed that Telkom was asking for a system of formal exemption from equity targets. Would it not be better if the targets were consulted on and agreed to by all parties in advance?

Ms Mkhonto noted that Telkom used progressive language in its presentation, but described the amendments to section 15 as an “imposition,” which was quite a strong word. She also did not understand the points being made about the current macro-economic environment and automation -- the Bill was not attempting to force any company to employ more people than it could afford to, but was attempting to ensure that employment reflected the demographics of the country.

Mr Nontsele said that the presentation was not clear on exactly what factors Telkom wanted to be considered in the information technology sector. He agreed with Ms Mkhonto that the Bill did not say anything about how many people should be employed. He suggested that Telkom should be given a chance to elaborate further on its concerns about skills.

Telkom's response

Mr Mahlangu said that the word “imposition” had been used without any special meaning. The point was just that the Minister should set an equity target after or in consultation with the affected sector. He recognised that the intention of setting numerical equity targets was to transform the workplace on a forward-looking basis. Telkom was simply calling for an evidence-based approach to prevent unintended consequences arising from sector-specific factors.

South African Forum of Civil Engineering Contractors (SAFCEC) presentation

Ms Ingrid Campbell, transformation committee member, SAFCEC, said that the construction industry in South Africa had been in a downturn since 2014. It was a large, complex and strategic industry, and between 64% and 80% of its income came from state contracts. It employed large numbers of young people and unskilled labour.

SAFCEC’s view was that sectoral employment equity targets should not amount to quotas, should be realistic, achievable and fair, and that the process of setting the targets should be transparent, rational, evidence-based and include joint consensus-seeking with the affected sector. In the construction sector, targets should also be regionally-based.

SAFCEC also felt that the approach of requiring a company to have an employment equity compliance certificate in order to bid for state work was incorrect, and would be counter-productive to economic growth and employment in the country. It would disproportionately affect the construction industry. The existing legislation would be sufficient if it was enforced. SAFCEC was also concerned about the wide powers of labour inspectors, which could promote bribery and corruption.

Adv Robert Stelzner, on behalf of SAFCEC, argued that section 53 of the Act had not been put into effect because it did not actually belong in an employment act, but should rather be included in a procurement act. This had led to confusion about which court should hear matters arising from it. This section could be considered with the Public Procurement Bill.

Requiring a company to have an employment equity certificate before it could even bid for state contracts was in direct conflict with section 217 of the Constitution. The Act itself prohibited employment quotas.

[see presentation attached for further details]

Discussion
Ms Mkhonto said it was well-known that the construction industry employed large numbers of young and unskilled workers. She asked whether SAFCEC had a database of graduates with construction-related qualifications who were unemployed or employed in other sectors. There was a need for hard data about skills shortages. She noted SAFCEC’s comments about bribery and corruption in the labour inspectorate and asked what it thought should be done differently. She also asked whether the existing Act had, in SAFCEC’s view, achieved the desired results.

Mr Bagraim asked whether a constitutional challenge of section 53 would be likely to succeed, and therefore whether Parliament should go back to the drawing board to ensure that the Bill was compliant with all existing legislation. It was well-known that the construction industry was struggling, in large part because government business was drying up. He asked for SAFCEC to comment on the lack of consultation with the industry in setting sectoral employment equity targets.

Mr Nontsele asked SAFCEC to clarify its comments on the burdensomeness of compliance certificates and poorly conceived equity targets.

The Chairperson agreed with Ms Mkhonto that the construction industry employed large numbers of young and unskilled workers. It also had a history of using black people as a front. A breakdown of what was being done to empower young people in the engineering sector would have been welcome. Were there any programmes at the basic level? She noted that there had been significant skills flight in engineering after 1994. She recalled that she had experienced skills flight first-hand in the health sector, where she had worked previously. It was well-known that some parts of the construction industry, such as plumbing, were dominated by old, white males. She asked SAFCEC to clarify its comments about bribery and corruption among labour inspectors.

SAFCEC's response

Ms Campbell explained that the country as a whole was facing corruption problems. For this reason, the power to withhold a compliance certificate, which determined whether a company could do business with the state, should be embedded in legislation or regulations which had been developed in consultation with the industry, and should not be left to the discretion of a single person.

She said SAFCEC did engage with universities and did provide bursaries. The main problem, however, was the declining market, which meant that companies were contracting, rather than expanding. This made it difficult to retain skills. She provided statistics showing an improvement in employment equity in the construction industry since 2010, relative to the private sector as a whole, while admitting that there was still work to be done at the upper management level.

She explained that poorly conceived targets were those that were set without proper consultation and consensus-seeking, and that compliance certificates as currently conceived would effectively short-circuit procurement law. A comprehensive legal review was required, and the industry was ready to cooperate.

The Chairperson said that she hoped SAFCEC was also discouraging its members from engaging in bribery and corruption. It was a two-way street, she commented.

Adv Stelzner agreed that fronting was a scourge that undermined the very purpose of employment equity legislation. It should, however, be dealt with as part of procurement legislation, where it was explicitly prohibited. He said SAFCEC did not want to bring a constitutional challenge to the Bill. The purpose of the public participation process was precisely to avoid litigation.

Payroll Authors Group of South Africa (PAGSA) presentation

Mr Robert Cooper, Chairperson, PAGSA, said that his comments would be confined to issues of implementation. He explained that PAGSA represented the computerised payroll industry in South Africa. It welcomed the exclusion of companies with fewer than 50 employees from the definition of a ‘designated employer.’ However, it was concerned that the implementation of numerical employment equity targets would add administrative complexity, leading to reduced compliance. As a general rule, the simpler the legislation, the higher the level of compliance. A comprehensive guide should be made available, once the legislation came into effect, to help employers comply.

[see presentation attached for further details]

Discussion

The Chairperson asked whether PAGSA had access to the personal information of employees who were included in the payroll.

Mr Cooper explained that the payroll contained a wealth of personal information, adding that it was protected by the Protection of Personal Information Act. PAGSA, however, represented only the providers of computerised payroll systems, not the employees or employers who used the systems.

The Chairperson noted that there were still companies where women were unacceptably paid less than men. She understood that this might be outside of PAGSA’s scope, but perhaps Mr Cooper could share some insight on the problem.

Mr Cooper agreed that the gender pay gap was unacceptable. He observed that the demographic information contained in an employer’s payroll was the data that formed the basis of its employment equity report. He stressed that the simpler this basis, the higher the level of compliance would be.

The meeting was adjourned.