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IOL News
3 days ago
- Business
- IOL News
Will South Africa's 2025 Employment Equity targets disrupt international trade?
Minister of Employment and Labour, Nomakhosazana Meth. Image: GCIS South Africa's newly gazetted sectoral employment equity targets could place the country in breach of several international trade agreements – including the World Trade Organization's General Agreement on Trade in Services (GATS), as well as regional protocols under the African Continental Free Trade Area (AfCFTA). This is according to Clive Vinti, Head of Research at XA Global Trade Advisors, who says the targets – set to come into effect from September 1 – appear to impose discriminatory limitations on who can be employed in specific sectors, without taking account of the realities of those sectors or the international obligations South Africa has signed up to. The potential trade implications formed part of the legal challenge launched by the National Employers' Association of South Africa (NEASA) and Sakeliga NPC against the Minister of Employment and Labour. The challenge, announced on July 9, was aimed at halting the implementation of the '2025 Targets' and the underlying regulations. Vinti argued that numerical quotas based on national race and gender demographics, if enforced without sector-specific capacity considerations, risk breaching international agreements that explicitly prohibit employment caps in service sectors. Under GATS, for example, member states are barred from placing quantitative limits on the number of people that can be employed in any given service sector. The same provisions are mirrored in AfCFTA and Southern African Development Community protocols, where the focus is on promoting access and non-discrimination in trade in services. In South Africa's case, these equity targets apply to both local and foreign-owned firms operating in the domestic economy. If implemented without regard for the availability of suitably qualified individuals in designated groups, they could act as a barrier to market access, especially for foreign service providers and investors, potentially triggering trade disputes or retaliatory measures. At the heart of the court application filed by NEASA and Sakeliga is the argument that the 2025 targets, which flow from the insertion of section 15A into the Employment Equity Act (EEA), were adopted in breach of procedural and constitutional requirements. The amendment, which came into effect on 1 January 2025, grants the Minister of Employment and Labour, Nomakhosazana Meth, the power to set sector-specific numerical employment targets in order to ensure equitable representation at all occupational levels. But the law also requires that such targets be preceded by a public consultation process and that affected sectors be properly identified and engaged. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading According to the applicants, this did not occur. They allege that instead of the minimum 30-day comment period stipulated in the Act, they were given just over a week to respond. Furthermore, while draft targets had been published for public input in 2023 and 2024, this step was skipped entirely for the 2025 targets. NEASA and Sakeliga also argued that the consultation process was neither meaningful nor inclusive. Some sessions were limited to 1 000 virtual attendees and held with little to no advance notice. Employers were allegedly only given access to the proposed targets during or shortly before these meetings. Compounding the procedural issues, the applicants say the Minister used a 'one-size-fits-all' approach in determining the targets – applying blanket increases of 6% to 9% across occupational levels, without regard for each sector's structure, skills availability, growth trajectory, or economic context. This, they argue, rendered the targets arbitrary, irrational and potentially unachievable. The challenge also raised concerns around the impact on women. While women are themselves a designated group under the EEA, the structure of the targets could, paradoxically, disadvantage them by failing to account for intra-group disparities. Crucially, the plaintiffs said that no socio-economic impact assessment had been conducted before gazetting the targets. In their view, this omission made the regulations irrational and placed the policy in conflict with section 9 of the Constitution, which deals with the right to equality and non-discrimination. Beyond constitutional and procedural issues, the applicants highlighted the direct risk to businesses. Companies that fail to meet the new equity targets face penalties of up to R1.5 million or 2% of annual turnover on first offence. Section 53 of the EEA, which is not yet in force, could eventually see non-compliant firms excluded from government procurement processes entirely, with existing state contracts cancelled. 'Since the government is the largest procurer of goods and services in the market, being blocked from trading with it could be fatal to a business,' said Vinti. The equity targets could also affect access to key trade instruments. Duty rebate, increase and reduction applications, often used to support or protect domestic industries, require compliance with labour legislation. Non-compliance may disqualify firms from benefiting from these instruments, weakening their competitiveness both locally and abroad. According to Vinti, these developments have the potential to upend South Africa's trade credibility. The matter is now before the courts, with NEASA and Sakeliga seeking an urgent interim interdict to halt the targets' implementation while the High Court considers the lawfulness and constitutionality of the regulations. 'The ball is now in the court of the Minister,' said Vinti. IOL
IOL News
18-07-2025
- Business
- IOL News
Exploring mixed reactions to the Freedom From Poverty Bill: A new approach to replacing BEE and employment equity
The Institute of Race Relations has introduced a new Bill that seeks to replace the Black Economic Empowerment and Employment Equity. Pictured is Minister of Employment and Labour, Nomakhosazana Meth. Image: GCIS The Freedom From Poverty Bill, introduced by the Institution of Race Relations (IRR) as a replacement for the Black Economic Empowerment (BEE) and the Employment Equity Act (EEA), has been met with mixed views. Under the bill, there is Economic Empowerment for the Disadvantaged (EED), which is codified as an alternative to BEE and a proposal for true transformation, as it will be based on need, not race. It was launched this week as part of the #WhatSACanBe campaign in a webinar discussion between IRR Head of Policy, Dr Anthea Jeffery, and IRR Strategic Engagements Manager, Makone Maja. The BEE aims to correct past inequalities and is governed by the Broad-Based Black Economic Empowerment Act. Its application is limited to people who are black, of mixed race, and Indian, and excludes white people, including those with disabilities. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Explaining the difference between the two policies, Jeffery said the BEE uses race as a proxy for disadvantage, EED targets the poor, and identifies disadvantage based on a means test. 'This would enable poor whites to benefit too, but 99% of its benefits would in practice go to poor black people. Its non-racial focus would reduce racial divisions, put an end to race classification, and comply with the Constitution's founding value of non-racialism. 'The EED is voluntary, which means companies would no longer be required to keep the current BEE scorecard to aid them in state procurement contracts, or race-based ownership deals, management posts, and procurement contracts. EED's scorecard incentivises companies for their key contributions to the economy by rewarding them with EED points for these actions. With EED, the points cannot be redeemed to gain from preferential procurement,' Jeffery said. She added that EED introduces education and health voucher-based support for poor people to be used at schools or health facilities of their choice. This, she said, will redirect much of the revenue now spent on dysfunctional schools, hospitals, and housing developments into tax-funded vouchers for low-income families. The bill states that a system of tax-funded vouchers must be created and administered by provincial administrations, with the help of public-private partnerships where necessary, and it will go hand in hand with social grants. An emphasis was made that this will not take away social grants. 'In the instance of schools, the voucher will go with the child to the school of the family's choice. The vouchers will fund teachers' salaries, study materials, maintaining the school grounds, and more. Parents can remove their children from poor-performing schools and take the vouchers with them. This will engender competition and incentivise excellence at all levels of the supply-side of education and raise due diligence on the demand-side. The health vouchers will operate the same way,' Jeffery said. Maja said ending fake transformation, which only enriches those at the very top, is critical to truly changing South Africa's economy. 'True transformation would move the needle on the numbers of unemployment, economic growth, and the rates of poverty and decline of state services and infrastructure. All of which have either stagnated or, in some instances, worsened since the advent of fake transformation,' said Maja. Dr Rowena Bernard, a senior lecturer at the University of KwaZulu-Natal's School of Law, said the proposed EED excludes racial criteria and any form of racial classification as a basis for empowerment. She added that it emphasises merit, skills, objective criteria, and measurable socio-economic disadvantage, and no EED measure may rely on demographic representativity, racial criteria, racial targets or quotas, or any form of classification by race. The focus of the BEE is on redistribution instead of growth. It is based on racial classification and preference, which goes against the founding principles of the Constitution. The BEE tends to benefit only a small elite of South Africans; unfortunately, the vast majority of black South Africans still receive limited benefits from the policy. South Africa's progress in reducing poverty and inequality, and improving socio-economic rights has been relatively slow, Bernard said. 'The BEE overlooks contributions made by the private sector in terms of upward mobility by investing, employing, innovating, and paying taxes. According to the BEE policy, businesses are to be measured according to a scorecard to determine their compliance level. The elements in the generic scorecard relate to ownership, which measures the economic interest, voting rights, and net value of shares held by black people. 'Management control assesses the number of executive boards, senior, middle, and junior management positions held by black members in a business. Skills development focuses on skills development initiatives and training for black employees.' Under the EED, existing race-based contracts or empowerment schemes will be reviewed within 18 months and may also be terminated by a court or tribunal if they are tainted by inflated pricing, corruption, undue influence, or other damaging or unlawful conduct. She added that the EED proposes the introduction of a voucher system in the three critical areas of education, housing, and health, affecting the lives of the vast majority of South Africans. 'This proposed voucher system will be available to all South Africans and will not be based on any racial criteria. A means test will be used to determine an individual's eligibility for the voucher. 'This means that people earning below the threshold would be granted education vouchers, up to a certain amount; this voucher would then be used at the school of their choice. This would be done by redirecting the education budget. This system would give children from lower-income families the right to make their own educational choice. This would also have an effect on failing state schools, which many children have to attend because they have little other choice. This allows for better choices and better education opportunities,' she said. Bernard added that the vouchers would work similarly for housing and healthcare, as people would no longer have to solely rely on government services. 'Access to the vouchers would enable people to improve their living conditions, not rely on the inferior, low-cost houses built and provided by the South African government. They will be able to use the voucher to either build better quality homes or rent proper homes. It is envisioned that it will reduce homelessness, housing instability, and overcrowding. Health vouchers will increase access to healthcare. People will no longer have to rely on free public health care treatment, which will increase access to better quality health care,' she said. The EED, she said, brings in a new perspective to address the real challenges all South Africans experience regardless of their race. It provides realistic options to empower and uplift those who are disadvantaged. Bernard said the bill may have serious consequences for employment laws. 'Affirmative action measures and policies will also be affected as employers will not be able to introduce preferential policies that result in racial preferencing. All employees will have equal opportunities in relation to promotions and fair labour practices. All employees will have equal opportunities to receive training and skills development,' she said. She added that it may result in financial strain and capacity issues as employers will be expected to review and change existing employment policies and practices. There may be an increase in employee grievances concerning unfair discrimination claims, which will lead to a strain on the resources of the employer and the court system. 'The EED Bill will certainly benefit the majority of black employees, but the proposed non-racial approach would reaffirm the Constitution's founding values of equality and human dignity,' she said. However, Professor Ntsikelelo Breakfast said the IRR is using non-racialism to block transformation. 'The issue of transformation is not debatable, because it comes from the Constitution. The preamble of the Constitution talks about the transformation, which is a historical appreciation. So, we can't have nation-building and social cohesion without transformation. 'We can't be united when the rugby national team is playing, but when it comes to other issues, we don't want to talk about them. It looks like some people want to preserve their privileges. In my opinion, people are not being honest, because if you look at poverty and unemployment, those social cleavages have a colour,' Breakfast said. He added that the BEE has not achieved its intended objective, but that doesn't mean that transformation must take a back seat. 'We need to call out people who are pushing back from transformation, while at the same time talking about social cohesion and nation-building. Unemployment, inequality, and poverty still indicate that race is an issue. How do you transcend racial categorisation but still have these issues along racial lines? If this bill goes to Parliament, it won't be adopted by the majority. I don't think this policy is proposed in good faith. I find it very suspicious,' he said.
The Citizen
11-07-2025
- Business
- The Citizen
IRR survey: Growing number of South Africans oppose race-based laws
The Institute of Race Relations (IRR) has reported growing public support for its call to repeal South Africa's remaining race-based laws, following the momentum of its #WhatSACanBe campaign. Launched four months ago, the campaign promotes evidence-based policies aimed at driving economic growth and social progress. One of its key proposals is the No More Race Laws Bill. This draft legislation is designed to repeal race-based laws and end mandatory racial classification in South African law. The campaign emerges in response to the Employment Equity Amendment Act, introduced by Minister of Employment and Labour, Nomakhosazana Meth. The Act enforces race-based targets for businesses and requires individuals and companies to report on racial and gender classifications to demonstrate compliance. Makone Maja, strategic engagements manager at the IRR, criticised the legislation. 'This makes Minister Meth the perfect recipient of the No More Race Laws petition,' said Maja. 'The petition is anchored in the tenets of the No More Race Laws Bill and has so far received 12 373 signatures from ordinary South Africans who have had enough of race laws that rob the people they claim to benefit, while enabling the political elite to amass enormous wealth.' Maja argued that such laws support what the IRR describes as a system of 'fake transformation' that fails to uplift the nearly half of the population still living in poverty. According to the IRR, the Ministry of Employment and Labour has failed to deliver on job creation and continues to back legislation that undermines economic growth. The organisation noted that South Africa continues to face some of the highest unemployment rates since the dawn of democracy, particularly among the youth. 'Blame for the last 10 years of little to no growth can be laid squarely at the door of laws that favour patronage over merit and value-for-money procurement,' Maja added. 'We can no longer afford to insist that race is relevant at the expense of true development and economic growth.' The IRR intends to deliver both the draft bill and the petition signatures to Minister Meth, urging her to take the first step toward inclusive, merit-based job creation by removing race-based policies. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
The Citizen
11-07-2025
- Business
- The Citizen
South Africans call for an end to race-based laws, says IRR
South Africans call for an end to race-based laws, says IRR The Institute of Race Relations (IRR) has reported growing public support for its call to repeal South Africa's remaining race-based laws, following the momentum of its #WhatSACanBe campaign. Launched four months ago, the campaign promotes evidence-based policies aimed at driving economic growth and social progress. One of its key proposals is the No More Race Laws Bill. This draft legislation is designed to repeal race-based laws and end mandatory racial classification in South African law. ALSO READ: Institute of Race Relations slams unclear expropriation law The campaign emerges in response to the Employment Equity Amendment Act, introduced by Minister of Employment and Labour, Nomakhosazana Meth. The Act enforces race-based targets for businesses and requires individuals and companies to report on racial and gender classifications to demonstrate compliance. Makone Maja, strategic engagements manager at the IRR, criticised the legislation. 'This makes Minister Meth the perfect recipient of the No More Race Laws petition,' said Maja. 'The petition is anchored in the tenets of the No More Race Laws Bill and has so far received 12 373 signatures from ordinary South Africans who have had enough of race laws that rob the people they claim to benefit, while enabling the political elite to amass enormous wealth.' Maja argued that such laws support what the IRR describes as a system of 'fake transformation' that fails to uplift the nearly half of the population still living in poverty. ALSO READ: Law enforcement agencies embark on mission to combat Gauteng crime According to the IRR, the Ministry of Employment and Labour has failed to deliver on job creation and continues to back legislation that undermines economic growth. The organisation noted that South Africa continues to face some of the highest unemployment rates since the dawn of democracy, particularly among the youth. 'Blame for the last 10 years of little to no growth can be laid squarely at the door of laws that favour patronage over merit and value-for-money procurement,' Maja added. 'We can no longer afford to insist that race is relevant at the expense of true development and economic growth.' The IRR intends to deliver both the draft bill and the petition signatures to Minister Meth, urging her to take the first step toward inclusive, merit-based job creation by removing race-based policies. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
The Citizen
11-07-2025
- Business
- The Citizen
IRR challenges racial classification laws with new draft bill and petition
The Institute of Race Relations (IRR) has reported growing public support for its call to repeal South Africa's remaining race-based laws, following the momentum of its #WhatSACanBe campaign. Launched four months ago, the campaign promotes evidence-based policies aimed at driving economic growth and social progress. One of its key proposals is the No More Race Laws Bill. This draft legislation is designed to repeal race-based laws and end mandatory racial classification in South African law. ALSO READ: Institute of Race Relations demands list of expropriating authorities from government The campaign emerges in response to the Employment Equity Amendment Act, introduced by Minister of Employment and Labour, Nomakhosazana Meth. The Act enforces race-based targets for businesses and requires individuals and companies to report on racial and gender classifications to demonstrate compliance. Makone Maja, strategic engagements manager at the IRR, criticised the legislation. 'This makes Minister Meth the perfect recipient of the No More Race Laws petition,' said Maja. 'The petition is anchored in the tenets of the No More Race Laws Bill and has so far received 12 373 signatures from ordinary South Africans who have had enough of race laws that rob the people they claim to benefit, while enabling the political elite to amass enormous wealth.' Maja argued that such laws support what the IRR describes as a system of 'fake transformation' that fails to uplift the nearly half of the population still living in poverty. ALSO READ: Germiston leads SA's fight against plastic waste According to the IRR, the Ministry of Employment and Labour has failed to deliver on job creation and continues to back legislation that undermines economic growth. The organisation noted that South Africa continues to face some of the highest unemployment rates since the dawn of democracy, particularly among the youth. 'Blame for the last 10 years of little to no growth can be laid squarely at the door of laws that favour patronage over merit and value-for-money procurement,' Maja added. 'We can no longer afford to insist that race is relevant at the expense of true development and economic growth.' The IRR intends to deliver both the draft bill and the petition signatures to Minister Meth, urging her to take the first step toward inclusive, merit-based job creation by removing race-based policies. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
