Home PodcastJulie Alli SA businesses halt expansions due to Employment Equity Act regulations

SA businesses halt expansions due to Employment Equity Act regulations

by Luqmaan Rawat
Michael Bagraim believes the Employment Equity Act has done more harm than good Photo Goldberg & de Villiers Inc.

South Africa – John Steenhuisen, DA leader, has criticised proposed “racial quotas” in South Africa’s draft Employment Equity Amendment Act (EEA) regulations, describing them as “absurd” and “perverse”. While the act is supposed to promote diversity and equality in the workplace, the DA believes it will do the opposite.

The act was signed into law by President Cyril Ramaphosa last month. It empowers the Department of Labour to set new transformation targets for industries and requires the department to prescribe sectoral employment demographic targets in each province for companies with more than 50 employees.

According to Michael Bagraim, DA MP and labour law expert, the act has been a complete failure. Failing to make the workplace reflective of the demographics of South Africa.

“The problem that you’ve got is that over these past 25 years it hasn’t been effective at all. One of the outcomes has been enormous unemployment. We’re now at almost 40% unemployment in South Africa. It has been a destruction of our productivity, the second worst productivity in the world. South Africans are productive people. We are Innovative people, fast forward people looking into the future.”


ANC copying the National Party

During the days of Apartheid, the National Party brought about social engineering in favour of white people and to subjugate the people in South Africa. Bagraim argues that the ANC, wanting to restore the order of things, did exactly what the National Party did and looked at social engineering.

“They looked at social engineering and they then implemented the Employment Equity legislation, BEE, and we all know what’s happened. Yes, there are some people that benefited. A very few at the top level of politicians and business people. they’ve benefited enormously from masses of wealth but it hasn’t spread to the people at all. In answer to the failure of social engineering, what does the ANC do, they just tighten the screws.”

Instead of the amendment being signed, the ANC should have gone back and figured out a different option, said Bagraim. These regulations are “unbelievably bad” and dictate to companies who they can and can’t employ. He believes this act and its regulations will leave many Indians and Coloureds unable to work in various industries.

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The Employment Equity Act is a detrimental to the country

Private industries as well as government entities are subjugated to these new regulations. However, smaller businesses are not. While this may seem like a good thing, the regulations are so bad it has made small businesses take a rain check on expanding their businesses.

“There is one tiny glimmer of hope. The government has recognised businesses with under 50 employees. They are saying you can have an exemption from the Employment Equity legislation …  It’s saying small businesses don’t grow to 51 people. Keep your staff under 50 people, rather outsource and bring in goods from elsewhere and that’s what’s happening. I’ve got clients who are saying, ‘I’ve now got 45 people. I am thinking of investing and expanding my business, but I won’t do that now. I can’t do it because now I have to fall under the 50 threshold’. So that backfired as well.”

If businesses are unwilling to expand to be exempt from the regulations, it speaks to how “broken” the act is. The DA is planning to challenge the act in the Constitutional Court. The DA has called on the public to commit on the legislation within the 30 days they have to do so.


Michael Bagraim discussed the devastating impacts this bill could have with Julie Alli. Listen to that discussion here:

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