As we go beyond the budget season, it is now up to Parliament to ensure that the various instruments are put into place in order to ensure that our economy starts to pick up and that job creation is at the forefront of every single department and province.
The World Bank has just put out a report entitled “Driving Inclusive Growth in South Africa”. The Institute for Race Relations (IRR) has welcomed this report and has followed up with an enormous amount of research on what can be done. We are told that although BEE had good intentions in trying to unpack our constitution and to right the things of the past, in essence BEE has had almost thirty years of bad luck and destructive consequences to employment in South Africa. Even state capture and Judge Zondo in his report has found that BEE was just another instrument to enable the well connected and wealthy to become wealthier.
The Race Quotas Act (another name for BEE) has indeed reaped havoc on our economy. The previous Minister of Employment and Labour, Thulas Nxesi, had initially brought out draft regulations for the Race Quotas Act which was initially signed into law in 2024. After much debate and threatening court cases our previous Minister of Employment and Labour revised the draft regulations. Even this revision is not enough.
In essence, all the revision has done is to take the social engineering, very similar to what the National Party had done with apartheid, and made it even more harsh. At least the Minister has done away with provincial race quotas which has been a victory for the opposition, and which would have introduced apartheid era in group areas. However, the challenge in court has not gone away and the Race Quotas Act should be scrapped in its entirety. It has been alleged by experts, intellectuals and economists that this Race Quotas Act (BEE) is indeed unconstitutional and unlawful in its entirety.
In my daily business as a labour lawyer, I regularly engage with small and medium enterprises who all tell me how destructive these race quotas have been. Not one business has ever come forward and told me that they refused to employ people who were previously disadvantaged. Every business tells me the same story: the want people that are productive, effective and qualified. The country has to engage in the “hard yards” We need to improve our education system and our training. Most of the old system of industrial qualifications has been scrapped. Trying to slot an individual into a position is madness if that individual is going to be “thrown into the deep end.” It is no good taking a highly qualified engineer into Eskom for example and then stepping back and not giving that individual the opportunity of learning from the “old hands”.
To have regulations which direct businesses to hire workers on the basis of race across eighteen different economic sectors is madness. On top of that, the legislation wants to impose severe penalties on any business that dares to have too many employees with the wrong skin colour. Mr Gabriel Crouse tells us “Put another way, as South Africa has not grown in real terms since 2007, a singular failure among open democracies around the world, most people would like to shift from race preferences to a bet on economic growth”. The World Bank has urged South Africa to ease BEE and labour policies.
It is now imperative for us to have a relook at our regulations and to try and match these to market realities. Even our Finance Minister, Enoch Godongwana has mentioned on no less than two occasions that we should be easing up our regulations to make it easier for foreign businesses to invest in the country. Even our President, in a lucid moment, has called for his ministries to investigate ways and means of easing up the regulations to enable job creation. Regulatory hurdles need to be removed and not just overcome.
Our Finance Minister did say that government had a hundred active labour market instruments. This is preposterous in the sense that these instruments are handbrakes to job creation. It is interesting for us to see how Elon Musk who is the head of the US Governments Department of Efficiency (DOGE) has looked at his government and has moved in with a very sharp scalpel removing regulatory hurdles. Over and above that, he is also looking at regulatory hurdles around the world. He has set his sights on South Africa. Jokingly, Enoch Godongwana mentioned that we should set up a DOGE in South Africa. Never a truer word said in jest.
Cape Argus