Transforming the labour market fast is vital for SA’s economic growth

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The outrage of some South Africans after President Ramaphosa’s endorsement of passing the Employment Equity Amendment Bill of 2020 into law on 12 April 2023 is misguided. The new measures aim to further promote diversity and equality in the workplace, particularly for designated groups such as Africans, coloureds, Indians, white females and people living with disabilities. 

As employment inequality and discrimination persist in South Africa, the bill seeks to advance transformation and promote equal opportunities for all genders by setting equity targets for economic sectors and geographical regions. 

South Africa has the highest level of unemployment among its peers, with almost four out of five people without work, even though they are actively looking for employment and are available to work, according to Statistics South Africa. These higher levels of unemployment mostly affect women, in particular black and people with lower levels of education. 

In South Africa, women remain vulnerable in the labour market, relative to their male counterparts, with almost half of working-age women finding it tougher to obtain work than men. In fact, women are more likely to remain unemployed for longer periods which further distorts their ability to be employed in the future. This means that the productive potential of women in the labour market remains underutilised. 

Of course, the effects of long-term unemployment are the byproduct of historical structural deficiencies in the labour market driven by the mismatch between supply and demand. The mismatch is further complicated by the skills required for specific jobs in different sectors, levels of education and the willingness of companies to train and develop the available labour force with the necessary skills. 

While transformation in the labour market through self-regulation by employers in the private sector has been positive, it has moved at a snail’s pace. Women remain marginalised in the workplace. The Employment Equity Commission identified that small businesses face a burden when it comes to meeting employment equity goals and targets as set by the department of labour. Although this is a positive gain for small business owners with less than 50 employees, the challenge on inclusion and diversity still remains. 

The sector-specific and regional employment equity numerical targets should encourage businesses to realise their economic active population targets more comprehensively. Furthermore, the issuing of annual employment equity compliance certificates should act as an incentive for employers to pay workers equitably and increase their chance to do business with the state, as per Section 53 of the Employment Equity Act. 

To ensure successful implementation of what the Bill requires over a five-year period, the department of labour is now compelled to assign labour inspectors to regularly police workplaces and to issue employers with compliance orders, if necessary. Whether this will yield the desired results remains to be seen.

More than 60% of companies in South Africa are owned by white males, despite the fact that they account for a small percentage of the overall economically active population. There needs to be a drive to give designated people more access to opportunities. The recent changes to the Employment Equity Amendment Bill in the sectoral codes promise to improve the participation and representation of women in male-dominated industries and areas that typically have gender bias, such as construction and finance. 

The adoption of these stringent regulations has the potential to increase much-needed representation of women in decision-making positions across all sectors, bridge the wage parity gap and provide females with more opportunities to advance their careers. Overall, the benefits of promoting women in the workplace far outweigh the potential challenges that employers might face in ensuring compliance with the Employment Equity Amendment Bill.

Khanyisa Phika is a macro-economist.