GABRIEL CROUSE: This is how BEE has worsened joblessness - Business Day

Gabriel Crouse

Does BEE hurt employment? In a recent article Christopher Rutledge effectively said “no”, and called those who disagree with him “dishonest” protectors of “privilege” (“DA’s assault on employment equity masks the real threat”, May 12) . 

It is worth taking a sober look at the situation. The number of unemployed black people increased by 359,000 in the latest quarter Stats SA reports. Since the dawn of BEE’s major era in 2008, black unemployment has increased from about 5.5-million to 11.5-million. Are the two related? 

Any honest supporter, or critic, of BEE must face the question with an open and precise frame of mind — did BEE contribute to the doubling of black unemployment over a generation, or not? Rutledge says no, because “on the ground, racialised poverty remains entrenched”. 

As such, he writes that the “claim that [BEE] employment equity is the source of economic hardship while ignoring these structural realities is dishonest. It protects privilege by scapegoating transformation.” 

This needs to be checked on multiple levels. It would be helpful for public intellectuals to stop calling people who disagree with them “dishonest”. A new dialogue is taking place on BEE; best to wake up and get serious about it. 

For clarity, no-one ever seriously claimed that BEE is the source of economic hardship. There are many sources, the question is, is BEE one of them? 

Rutledge is right to notice that “racialised poverty remains entrenched”. The etiology of almost all poor black people’s poverty is bound to include the evil system of apartheid. 

However, that does not actually settle whether BEE subsequently made the odds of getting a job better, or worse, for the 11.5-million black people recorded as unemployed in the first quarter of 2025. 

The reasons to believe that BEE contributed to black unemployment are the following:

It facilitates corruption in procurement;
It distorts labour markets;
It alienates investment;
Combined, these three factors inhibit economic growth; and
Inhibiting growth worsens unemployment. 

All of those points have been backed by the highest possible standards of evidence. The first point is made by volume one of the Zondo report on “problems in the legislative design”, as well as by the IMF, World Bank and Harvard Inclusive Growth Lab analyses of our public procurement system. 

That BEE distorts labour markets, pops out of the recent annals of race labour law. A decade ago our courts endorsed the “Barnard principle” in the public sector under which an employer can refuse to hire someone based on race and gender, electing to instead keep the post empty for years. 

This “principle” has been openly used in government offices against Indian women, coloured women, black women, white women and men of all races, and has been approved by courts. The case that this distorts labour markets practically proves itself. And that system is now coming to the private sector, thanks to labour minister Nomakhosazana Meth’s new “targets”.

Investment discouraged

That BEE alienates investment is also undeniable. Consider the Starlink saga. 

That BEE slows growth was agreed on by a plurality in News24/Ipsos’s stunning series of polls exposing BEE’s illegitimacy. It is also undeniable given the truth of the first three. 

The fifth point — that limiting economic growth harms employment — is probably the most solidly known fact in all the social sciences.

All this points to the irresistible, sickening conclusion that BEE has contributed to the doubling of black unemployment since 2008. 

As a BEE apologist, to what does Rutledge object? It is hard to say. He agrees that BEE facilitated corruption: “it became a looting platform” in his words. But whereas the Zondo report advised reverting to a “maximum value-for-money” system to make corruption-busting easier, Rutledge advises keeping BEE without making it clear what he thinks the Zondo report got wrong. 

Nor does he get to BEE’s past distortion of labour markets in the public sector, its alienation of investment, its limitation of economic growth, or even an explicit mention of the doubling of black unemployment during the BEE era.

This suggests, not for the first time, that the argument laid out above is solid and inexorable in its conclusion that BEE worsened black unemployment — and that the last and only way to rebut it is to try to ignore it. 

Gabriel Crouse is executive director of IRR Legal and a fellow at the Institute of Race Relations.

https://www.businesslive.co.za/bd/opinion/2025-05-27-gabriel-crouse-this-is-how-bee-has-worsened-joblessness/