Enforcing employment equity race quotas sabotages SA's economic growth

Daily Maverick

16-05-2025

The ANC-led government has made it official: companies with more than 50 employees must now align their hiring practices to strict racial and gender targets, quotas in all but name.
These requirements are set out in the amended Employment Equity Act and its new job-killing regulations. They cover every major sector of the economy, detailing what percentage of employees must fall into each demographic category at four employment levels, based on national or regional population profiles.
Failure to comply may cost businesses access to government contracts – or worse, as the state has empowered itself to impose penalties sufficient to drive companies into bankruptcy.
The rationale behind this policy is familiar. The state wants to speed up transformation in the workplace at any cost and sees quotas as the quickest route. But this approach is not just flawed; it is dangerous.
First, these regulations will make unemployment worse. By forcing businesses to meet staffing targets unrelated to their actual needs, the state is discouraging them from hiring, investing or expanding. Firms will be rendered less competitive because they will have to reject otherwise desirable candidates to achieve the government's race and gender targets.
Some firms will baulk at the compliance burden. Others may decide that the risk isn't worth it and look to offshore, automate or scale back to below 50 employees. With more than 40% of South Africans unemployed (broadly defined) and the economy growing at a paltry 0.6%, the country cannot afford policies that strangle job creation.
Second, the regulations harden racial divisions in society. When government treats people first and foremost as members of racial groups, it encourages everyone else to do the same. That kind of thinking is corrosive. It promotes resentment, fuels identity politics and keeps South Africa trapped in the past. Instead of building a society where individuals are judged on their contributions, we are doubling down on race as the central organising principle of public life.
Third, this policy carries real diplomatic and trade risks. The United States – one of South Africa's top trading partners – has made it clear that it is moving away from race-based policy at home. It is also increasingly critical of countries that promote such frameworks abroad.
As South Africa seeks to remain part of preferential trade deals like Agoa, it cannot afford to alienate its partners. Domestic policies that clash with shared democratic values come at a cost.
Finally, these measures won't deliver what the ANC hopes for: an electoral boost. The policy is not popular. Worse, it will not grow the economy. It will not create jobs. It will not improve service delivery. In fact, it is likely to do the opposite. Voters are already frustrated with rising costs, poor governance and high unemployment. More bureaucracy and fewer jobs will only increase the disillusionment.
In survey after survey, voters are clear on what they want. In recent Institute of Race Relations (IRR) polling, 10 times as many respondents identified jobs as a top priority for government (29.4%) than Black Economic Empowerment (3.1%).
When asked on what basis people should be appointed to jobs, 84% said this should be done based on merit. Just 6.1% agreed with the statement 'Only black people should be appointed until those in employment are demographically representative of the entire population', a formulation that reflects the intention of the Employment Equity Act, while 9% went further and agreed that 'Only black people should be appointed to jobs for a very long time ahead'.
Surveys like this show that the government's racial obsessions enjoy little public support. South Africans need to see more investment, more jobs and more opportunity – not less. Race-based hiring targets may serve a short-term ideological goal, but the long-term damage is real and measurable.
The country is already battling economic stagnation, weakening institutions and political fragmentation. Forcing race quotas in the labour market is not a solution. It is another step in the wrong direction.
Voters will have a chance to respond to this in 2026. Those local government elections won't just be about who governs; they will be about what kind of country South Africa wants to become. More division, more red tape and fewer jobs is a path to decline.
There is still time to choose differently: to focus on growth, competence and equal opportunity, as the IRR advocates with its #WhatSACanBe and #NoMoreRaceLaws campaigns as well as its Blueprint for Growth policy proposals.
Making South Africa free and prosperous will require rejecting approaches that impose a policy risk premium and holding to account those who keep pushing them. DM