Government race-based regulations a costly obstacle to growth – IRR

The Department of Employment & Labour plans to roll out updated race-based regulations that force businesses to comply with new “targets”.

In January, the Institute of Race Relations (IRR) questioned the logic of the Department’s “reducing the regulatory burden” for small businesses while retaining race-based requirements for larger employers.

The government is yet again raising the hurdle of race-based employment equity policy for larger employers, which will further complicate compliance.

A presentation by the Department reads: “[The key objectives of EE amendments are] to promulgate S53 of the EEA for the issuing of the EE Compliance Certificate as a prerequisite for access to state contracts – doing business with any organ of state.”

Notably, the Commission on Employment Equity last year failed to answer IRR questions on employment equity targets, and − as there are no longer any legally defined racial categories in post-apartheid South Africa − how the Commission defines race groups.

How does the government expect businesses to classify their employees in the absence of any legal definitions?

“The South African Government relies on businesses to comply with their illogical race-based requirements that add no value whatsoever − no value to businesses, their supply chains, and their customers, or to the most vulnerable South Africans,” says IRR researcher Chris Patterson.

Employment equity has not addressed black unemployment, which remains higher than the national average, according to the latest employment data from Statistics South Africa. The unemployment rate for black people has also remained consistently higher than the rates for other race groups over the last 10 years.

According to the IRR’s latest polling, two thirds of South Africans want government to remove the barriers to economic growth and job creation. In addition, South Africans would strongly prefer the government to buy goods and services on a purely value-for-money basis, without regard for skin colour – allowing for fair competition for state contracts, and not excluding companies from government contracts based on race.

The IRR’s latest Blueprint for Growth report, Cut VAT and BEE, details the costly divide between value for money and the BEE premiums created by preferential procurement.

“The government is endangering its own commitment to economic growth and job creation by doubling down on race-based policies, making it more difficult for businesses to operate and retaining race-based procurement that increases the costs for all taxpayers,” concludes Patterson.

Media contact:  Chris Patterson, IRR Researcher Tel: 063 682 5035 Email: chrisp@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za