LETTER: Bankruptcy now the punishment for equity failures

The institution by Dis-Chem CEO Ivan Saltzman of a “moratorium” on the appointment or promotion of white candidates has predictably sparked controversy, and rightly so.

An effective bar on career opportunities in a company solely on racial grounds represents a fulsome rejection of nonracialism in practice if not (possibly) in principle. Anyone concerned with the normative foundations of SA’s democracy should find this deeply worrying.

Less interrogated have been Saltzman’s justifications for so doing. This is being undertaken to remain compliant with the escalating demands of the Employment Equity Act, whose latest amendment (not yet signed into law) allows the minister to set quotas and ups the fines for noncompliance.

As the memo states: “These are harsh measures [those in the memo] and necessary if we are to remain profitable and to avoid a potential fine of 10% of turnover which would cripple the business. This is a real threat at this stage.”

Here Saltzman is correct. Fines of that order are (predictably) fatal for companies. That this law has nevertheless passed through parliament communicates everything that needs to be understood about government priorities.

In the face of investment standing at a paltry 13% of GDP (the National Development Plan envisaged 30%), an unemployment rate of about a third of the workforce and sundry hard disincentives to doing business — failing power and water supplies, inadequate infrastructure, lawlessness — the government has chosen ideology above pragmatism.

Failure by SA’s stressed business community to adhere to the government’s racial preoccupations is punishable by deliberate bankruptcy. Thulas Nxesi pledged to be “very harsh” on employers — evidently to the point that some may cease to exist.

This is the “real threat” to SA’s economic future. The possibility of a turnaround will hinge on whether its people and institutions resist these policies. To this end, the Institute of Race Relations is campaigning for the president to decline to sign the amendment and is composing a petition to Dis-Chem to reverse its course. 

One wonders how the complicity of Dis-Chem in this matter — and that of corporate SA in general — will be viewed by history.

Terence Corrigan, Institute of Race Relations

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