LEON SCHREIBER: Employment equity amendments extend cadre deployment into private sector

Hidden away in the reams of court papers filed by the ANC in its frantic response to the DA’s court application to outlaw the corrupt practice of cadre deployment, there is a line that may reveal more than the ANC bargained for.

In paragraph 65.4 of the affidavit submitted by President Cyril Ramaphosa in July 2022 in his capacity as president of the republic to defend a policy of his party, Ramaphosa explained that the ANC’s cadre deployment policy “applies to senior positions in government such as directors-general and deputy directors-general, as well as leadership in critical institutions including the private sector.”  

“Including the private sector”: with those four words Ramaphosa confirmed, under oath and for the first time publicly, that the aspiration of ANC cadre deployment has never been limited to ensuring the ANC captures “all levers of power” in the state — an ambition it has lived up to with deadly focus. As confirmed by the president himself, this instinct has always been aimed at equally subverting the private sector to the demands, needs and ideology of the ANC. 

Thus far, black economic empowerment (BEE) has been the ANC’s preferred vehicle to extend its hold over the private sector. Ramaphosa’s own story of becoming a billionaire — despite making no discernible commercial contribution — embodies this approach. But it appears that the ANC is now ready to go beyond BEE and ramp up its efforts to do to the private sector what it has already done to the public sector.  

Ramaphosa’s recent assent to the Employment Equity Amendment Act must be read in the context of his admission under oath that the ANC wishes to extend cadre deployment into critical private sector institutions. The newly signed act empowers the state to set racial quotas for every level of employment in every economic sector for every business with more than 50 employees throughout the country. Companies must continuously report to the state on their compliance with these quotas. Those that fail will be denied a certificate of compliance and be punished by being prohibited from doing business with the state.  

In this way the ANC gains direct influence over hiring decisions in the private sector. It is not only able punish companies for violating what amounts to hard racial quotas. History teaches us that it will also use race quotas as a fig leaf to ensure connected ANC cadres are the ones to actually benefit from hiring decisions that will not be based on merit and skill. It is in this way that the amendments are an expression of Ramaphosa’s wish for cadre deployment to also capture the private sector. 

For a foretaste of how this will play out look no further than the procurement mafias that have already sprung up in a range of industries. The existence of these mafias is the direct result of procurement quotas nominally designed to allocate 30% of contracts to “local communities”. But who exactly is the “local community”? The spoils inevitably flow to violent gangs mobilised by those connected to the ANC, often directly involving local elected councillors. Subjecting decisions over money flows to factors other than efficiency has proven to terminate in the dead-end street of extortion.  

The same is true when subjecting decisions over recruitment and promotion to factors outside of merit and skill. What do we think will happen after the state announces a list of companies that do not comply? The same procurement mafias that are currently terrorising construction sites across the country will morph into employment mafias, demanding that companies employ the “right” candidates to meet their race quotas. But, just as in the case of preferential procurement or BEE, it will not be needy or deserving black South Africans who benefit. Instead, it will be those connected to the ANC who will use racial quotas as a fig leaf to ensure that jobs are awarded to the “right” people. 

Why now? The ANC has always been acutely aware of what it calls “the balance of forces in society”. The signing into law of a brazen piece of social engineering signals that the party is satisfied that the current climate allows it to further ramp up its war against institutions that dare to operate outside the ambit of the ANC. It is up to all freedom-loving South Africans who want not only an uncaptured state but also an uncaptured, efficient and job-creating private sector, to prove them wrong. That is why the DA is already preparing for a major legal battle to defeat these amendments. 

It is easy enough to forecast the consequences if we allow cadre quotas to stand. We need only look at the effects cadre deployment has had on the public sector. First will come the corruption as local ANC structures and rejigged procurement mafias strongarm companies into compliance by hiring employees amenable to their interests. And always with the expectation that the “favour” of being employed will cause “beneficiaries” to loyally promote the interests of their patrons. 

Next will come the incompetence, because any form of cadre deployment definitionally forces the appointment of persons on factors other than merit. The failure that follows is on display in every ANC-run municipality, government department and state-owned entity.  

The same will happen in the private sector as skills flee along with the principle of merit-based recruitment. What incentive will there be for workers to upskill when recruitment and promotion is determined by political extortion disguised as race quotas, rather than actual skill? What incentive will there be for employers to hire skilled workers when their survival is not determined by their ability to deliver, but by compliance with cadre quotas? 

Finally will come the financial crisis, as we have seen at virtually all state-owned companies. A private sector dominated by the same ANC cronies who have already run the state into the ground will meet the same fate. Some businesses will simply pack up and emigrate. The same will be true for skilled workers from the “wrong” race groups, as well as skilled black workers without ANC connections. 

Those who cannot emigrate or decide to try and play the rigged game will lose. Some will be bankrupted when they are cut off from access to state contracts for failing to comply with cadre quotas. Tech firms will not have enough coders and engineering companies will be without skilled engineers. As unemployment rises, so will the political pressure on remaining companies to employ evermore of the “right” candidates. Ultimately, SA’s private companies will become virtually indistinguishable from their public sector counterparts. 

There will, however, be one difference. In the case of the public sector entities such as SAA, Transnet and the Post Office nominally continued to exist, albeit as mere glorified mass employment agencies for otherwise unemployable cadres, because taxes generated by the private sector could be abused for unending bailouts.  

But for private airlines, or private transport companies, or private logistics companies subjected to the cadre quotas imposed by Ramaphosa’s Employment Equity Amendment Act, there will be no bailouts. 

• Dr Schreiber is an MP and DA shadow public service & administration minister.