MICHAEL CARDO: Employment equity regulations make minorities second-class citizens

Envision the SA labour market as a timepiece, a complex blend of gears and springs, each playing a crucial role in maintaining the harmony of the ensemble. To function smoothly there needs to be a seamless integration of disparate elements and the deft touch of an invisible hand.

Unfortunately, employment & labour minister Thulas Nxesi is all thumbs: he is like a bumbling mechanic fiddling with the cogs of a clock, threatening to smash everything to pieces.

Armed with a blunt tool in the form of the Employment Equity (EE) Amendment Act, the minister now possesses the power to set numerical targets for different population groups working in various sectors of the economy.

He recently exercised that capability in a swingeing and arbitrary fashion: the draft EE regulations gazetted on May 12 bear testimony to that. Bizarrely, the minister’s proposed sectoral targets are not accompanied by an explanatory memorandum, a scientifically rigorous methodology or any clues as to how they were determined.

The upshot is a pickaxe in the hands of a machine operator. Far from constituting a finely calibrated instrument designed to oil the wheels of SA’s economic machinery, the EE Amendment Act and its regulations simply throw sand in its gears. And the minister’s madcap mathematics, which paves the way for the introduction of racial quotas in the workplace, reveals him to be rolling in the sandpit.

As with every previous instance of race-based social engineering inspired by the narrow pursuit of “demographic representivity”, the ANC’s transformation measures are geared towards manipulating outcomes. They completely disregard labour market dynamics and reduce the intricate interplay of skills, qualifications, experience and economic realities to a crude dichotomy of race and demographics.

The enforcement of sectoral targets will disincentivise job creation, deepen social divisions and foster resentment. If employers comply with the de facto quotas — for that is what numerical targets are when backed by fines for noncompliance — it is estimated that some 592,060 jobs could be lost to the economy over the next five years. In a country with an unemployment rate approaching 45% (on the expanded definition), that is something we can ill afford.

The newfangled numbers are plucked from thin air and pay no heed to the pool of available skills. They make career advancement particularly challenging for employees who fall into the category of “coloured males”, “coloured females”, “Indian males” and “Indian females”.

For example, in sectors such as agriculture, forestry & fisheries; mining and quarrying; manufacturing and finance, the numerical goals for coloured professionals in Limpopo, Mpumalanga and North West are set at 0%. Even in Gauteng, the country’s economic heartland, senior management positions for coloured males and coloured females in “financial and insurance activities” are enumerated at 0.8% and 0.7% respectively.

If the targets for the financial services industry are strictly adhered to, it would seem only African males can be appointed or promoted to junior management positions over the next five years. In the case of professionally qualified and skilled Indian workers, the targets are often set well below 0.5% across economic sectors.

The message to minorities is clear: you are fractions, not humans, second-class citizens and temporary sojourners in the workplace. Indeed, it is difficult to reconcile the ANC’s myopic racial bean-counting with its professed commitment to nonracialism. At heart, the governing party has always been an African nationalist organisation; the publication of the EE regulations reveals that it has dropped all pretence of nurturing racially inclusivist aspirations.

Economically, the whole hare-brained scheme will have major repercussions. First, it will deter investment and sacrifice jobs. Few investors are inclined to put their money into an economy or create new jobs when a politician gets to decide what the labour force looks like or how the labour market operates. Many business owners will simply choose to go offshore, where they can employ whomever they like.

Second, it will stifle innovation and lead to a loss of human capital. Highly-skilled teams of individuals, the source of creative solutions and new ideas, will be harder to knit together when an employer has to keep an eye on quotas. Skilled professionals will seek their fortune elsewhere.

Third, economic growth and productivity will decline due to inevitable skill mismatches. The labour market will become more rigid, and decreased competition will lead to complacency and inefficiency in the marketplace.

In sum, the new EE regime is absurd and impracticable. Compliance, which can only ever be measured by a snapshot in time, will be all but impossible since employees come and go continually. Legally flawed and economically ruinous, the amendment act and its associated regulations are a wrecking ball aimed at our labour market apparatus, and Nxesi’s fingerprints are all over it.

That is why the DA will leave no stone unturned in challenging the matter in court.

• Cardo is DA shadow employment & labour minister.