However well-intentioned BEE may have been at its initiation the path to widespread corruption and economic underperformance has been laid by this country's existing race laws. The new "Employment Equity" Amendment Act (EEAA) will fulfil the ANC's promise to make BEE "more aggressive", pushing things from bad to worse.
The EEAA allows the Minister of Employment and Labour to "set numerical targets for any national economic sector", including "targets for different occupational levels, sub-sectors or regions within a sector" in order to achieve "equitable representation" at "all occupational levels in the workforce". The scope and ambition of the new race quotas can hardly be exaggerated.
To enforce the proposed race-based social engineering businesses will be required to promise, in writing, that they aim to meet the Minister's "numerical targets" and provide plans to labour inspectors of how this will be achieved. Failure to comply will result in the inspectors denying a "compliance certificate", which will, in turn, prevent the business from trying to bid for any government contract.
That might sound like it only affects the minority of businesses that would like to bid for government tenders, but this provision will harm all South Africans by accelerating State Capture 2.0.
State Capture 2.0
The Zondo Commission's State Capture Report observed that under the current race-based laws when the government spends taxes there is 'undoubtedly' an 'inevitable tension' between the principle of seeking the best value-for-money and the notion of race-based preference. The Zondo report shows in detail how race laws were used as a mopane leaf to both hide and feed the worm of corruption.
'Ultimately' the Zondo report concluded 'in the view of the Commission the primary national interest is best served when the government derives the maximum value-for-money in the procurement process'. The IRR agrees, having long promoted this assessment.
But the EEAA will do the opposite of what would best serve 'the primary national interest'. It will take the current system, which at least insists that all companies are allowed to bid which creates some record of what the genuine market price of a tender is and which theoretically limits the BEE 'premium' to 20% extra cost, and blow this up exquisitely by blocking companies from entering the tender process from the beginning and allowing a limitless race premium over value-for-money.
Million Rand Fines
Secondly, under the EEAA employers that refuse to assume the task of racially classifying their employees (or which carry it out incorrectly) face fines of up to R1.5m, or 2% of annual turnover, whichever is the greater, for a first 'offence' of this kind. Penalties for repeat offences of this type may rise as high as R2.7m or 10% of annual turnover, again whichever is the greater.
Fines of that size will bankrupt most businesses. Every business bankrupted by the government's social engineering has a multiplier effect, knocking other businesses in the supply-chain down a peg and reducing employment, thereby reducing aggregate demand and increasing the tax burden on social care.
But the EEAA is immoral even before you look at the consequences. It is immoral on its face. To judge people as more deserving of government support or more deserving of government punishment by force, in the context South Africa finds itself in today, on the basis of race is flatly inconsistent with the basic moral tenet that each person should be judged by their deeds not their bloodlines.
This moral tenet is not merely a private opinion, it is enshrined in the Constitution of South Africa and the fundamentals of the Rule of Law. The IRR is preparing legal action, up to the Constitutional Court, to save South Africa from the EEAA and its harmful effects. Add your support to the call to let South Africans work together on the basis that we are people not just pigments.
