Reduce the racial regulatory burden for all employers – IRR

Why are companies with fewer than 50 employees exempt from developing employment equity (EE) plans and submitting EE reports when the former Minister of Employment and Labour, Thulas Nxesi, was so eager for the state to “get hard on non-compliance”?

The reason for this exemption, according to the Department of Employment and Labour, is to “reduce the regulatory burden” for small employers. The Department implies that larger employers (defined as “designated employers”) can afford to hire compliance officers and extra administrative staff to comply with additional regulations, developing plans and writing reports to satisfy the ANC’s goal of demographic representivity.

Businesses already need to deal with major barriers to trade, such as poor and decaying infrastructure, crime, an unfocused public administration, high unemployment, and other issues, as noted in the IRR’s recent Blueprint for Growth series.

Furthermore, companies may now decide not to expand or hire more staff so as to keep the number of their employees below the limit.

Says IRR researcher Chris Patterson: “We should be encouraging companies to expand and hire more people, not placing more barriers in the way of growing companies, or incentivising them to remain small.”

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 actually defines race groups.

Black Economic Empowerment and Employment Equity policies have not improved equality among South Africans, nor have they created employment, or reduced poverty. Instead, inequality has worsened among the black population, and nearly 25 million South Africans are either unemployed or not economically active, with unemployment rates being highest among black people. The only way to break this cycle is through rapid economic growth, which will not be possible if companies are constrained by racial straitjackets.

Says Patterson: “Race-based rules and regulations will not help South Africa reach its goal of rapid economic growth. Instead, it will continue to drag businesses and South Africans down.”

There is no acceptable reason why the Department should not relieve all businesses, including medium- and larger-sized ones, of the burdens that race policy imposes. Failing to do so will only further hobble the economy.

Read the IRR’s Blueprint for Growth reports here.

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