Finance and Economic Opportunities

(a)(c)

The Western Cape Government (WCG) is extremely concerned about the impact that the imposition of sectoral numerical targets (“sector targets”) will have on investment and business confidence, particularly in terms of any additional burdens they will place on businesses and employers from an ease of doing business and red tape perspective. The imposition of such measures will serve to deter large companies from our region and discourage growing companies from employing more staff. The country can ill-afford these consequences in the current economic climate. And in addition, I am concerned about what it will mean for women in employment. Workforce statistics demonstrate that women are more acutely affected by unemployment than men. Yet, the Draft Regulations set higher quotas for men than for women across almost all population groups, sectors and occupational levels.

The Draft Regulations are poorly compiled and largely incoherent, with very little information provided to guide an understanding of the various numerical targets for each sector and occupational level and how they will be applied. As such they provide insufficient information and clarification for stakeholders to comment. The Draft Regulations appear, on the face of it, to be irrational and it can be questioned whether they will, in their application, advance equality - notwithstanding that this may be the intention.

In addition, the procedure followed in enacting the Amendment Bill was incorrect insofar as the Amendment Bill was tagged as a section 75 Bill. The Western Cape Government provided substantiation for the view that the Bill ought to have been tagged as a section 76 Bill. Despite our objections, the Bill was finalized as a section 75 Bill.

The Draft Regulations should accordingly be withdrawn, the Amendment Act repealed, and consideration given to addressing the root causes of the problem. All spheres of government must be adequately consulted as part of an evidence-based SEIA process prior to any future legislation in this regard being published for comment.

(b)

I am informed that according to the Employment Equity Act (EEA), implications for not meeting targets will be only effective for businesses that have 50 or more employees. Section 37 of the EEA (as amended in 2022) provides that employers who fail to comply with employment equity targets are liable to compliance orders issued by a labour inspector, which may include an order for the payment of the maximum fine (in terms of Schedule 1 of the Act). Non-compliance by employers will also result in the non-issuing of the compliance certificate required to successfully tender for government contracts.

For a first-time offence, an employer will be subject to a fine of the greater of R1.5 million or 2% of the employer’s turnover. If the employer has contravened the provision once before, the fine will be the greater of R1.8 million or 4% of the employer’s turnover. Prior to imposing a fine, the employer will be given an opportunity to provide valid justifications for non-compliance.

The Western Cape Government’s position:

The WCG proposes an alternative approach to redress unequitable labour market dynamics  - and we do not support setting sector-based employment equity targets. Development lessons show that addressing the root causes of underrepresentation of vulnerable groups is the most effective approach to achieving a fairer society.

A post-secondary school qualification and, generally, at least five years’ job experience is often the requirement to be eligible for skilled positions. Consequently, the cornerstone of policies to transform representation in the labour market is (a) high-quality education from Grade-R for all, (b) closer alignment between the curriculum (especially higher education) and marketable skills, (c) and fostering networking opportunities between potential employees and recruiters (i.e. helping people build networks that connect them to jobs).

Furthermore, the policies and strategies of the WCG are developed to address the root causes of underrepresentation of vulnerable groups in the skilled labour market while supporting the economy’s growth, because structural transformation cannot be achieved unless the economy creates jobs. 

Fundamentally, we believe in creating equality of opportunity, through a state that facilitates economic opportunity for citizens, expands choice as well as the independence of its residents, without limiting individual freedom.

The Western Cape Government’s policies are accordingly designed to achieve equitable representation of vulnerable population groups in the workforce over time, through improving productivity, attracting investment, creating an enabling environment for business, and reducing unemployment - an approach which is aligned with the Constitution and the achievement of substantive equality.

(c)

We are concerned that no socio-economic impact assessment has been conducted on the draft regulations and which we have raised in our comments to the national government.