Chapter 8

Employment Equity

  1. The terms of reference of the Commission require an investigation into "mechanisms aimed at redressing discrimination in the labour market". The Commission's primary recommendation in this regard is that employment equity legislation be promulgated as soon as possible, and that such legislation should contain inter alia the requirement that employers formulate comprehensive affirmative action plans as described below. Before discussing and defending this recommendation, however, it is necessary to put the issues into context, and to clarify the definitions of several interrelated concepts.

  2. It is common cause that the linchpin of the apartheid political, economic and social regime was the purposive control and manipulation of the labour market in a manner which privileged the white minority while disadvantaging and discriminating against the black majority. The history of the development of the apartheid system and the legal framework that it imposed on the labour market have been extensively documented elsewhere and will not be discussed in great detail here. Suffice it to say that the legacy of apartheid is one of extreme racial inequality in the labour market; some of the statistical measures of this inequality are presented below. As is stressed in the ILO Review, however, it is important for policy makers to distinguish between the various sources of this labour market inequality in order to design effective remedial programmes. This requires that one distinguish between labour market discrimination and extra-market discrimination, and between the effects of discrimination versus disadvantage. It is also helpful to clarify the definitions of the terms equal opportunity, affirmative action, and employment equity.

  3. Discrimination in the labour market can be said to occur when non-productivity-related criteria are relied upon in the allocation and utilisation of labour such as in recruitment, remuneration, firing and retrenchment. These non-productivity criteria may relate to factors such as race, gender, age, ethnicity, disability, sexual orientation, and others. Apartheid government policies such as reserving certain categories of jobs for white workers and enforcing race-based wage systems were legal manifestations of this form of discrimination. For example, as recently as 1989 skilled jobs in the mining industry were reserved for whites by law.

  4. The Labour Relations Act (LRA) incorporates and makes explicit the legal boundaries of discrimination as set out in the Bill of Rights and the Constitution. Section 3, article 186 of the LRA reads as follows:

  5. It is clear that discrimination can operate even when it is not bolstered by discriminatory laws. Discrimination can take the form of attitudinal and behavioural aspects related to the demand for labour, whereby individual and group preferences result in discriminatory allocation and utilisation of labour such that some groups of labour are preferred over others. This narrow definition restricts itself to the phenomenon as it is manifested in the labour market, and thus implicitly ignores extra-market discrimination.

  6. Extra-market discrimination, especially in South Africa where the interaction (and rules governing that interaction) between the ruling white population and the black majority were discriminatory, was important as it underpinned and reinforced discrimination in the labour market. Extra-market discrimination refers to structural and systemic factors that exist prior to the labour market which condition the supply of and demand for labour. These include the differential access to human capital formation (i.e. education and training, social welfare), differential access to employment resulting from spatial constraints, differential access to household wealth and income endowments which in turn determine access to education and training, and various institutional barriers to labour mobility such as influx control.

  7. Employment equity is a broad term that is intended to convey a picture of a labour market that is both non-discriminatory and socially equitable. The term "equal opportunity" is synonymous with "non-discrimination". Social equity in the labour market is a stronger requirement: it implies that the benefits of employment are broadly and equitably distributed. It is clear that a labour market that is non-discriminatory according to the above definition will still be socially inequitable if certain demographic groups are systematically under-represented in the better-paying occupations and sectors, and over-represented in low-paid occupations and amongst the unemployed. This may occur for several reasons, including:

  8. The disadvantaged status of the majority is itself in large measure a reflection of the legacy of discriminatory policies both within and outside of the labour market. The differential spending on white versus black education is an example of extra-market discrimination that has resulted in the black majority being at a severe disadvantage in competing for employment. Past policies of job reservation for whites and the low or non-existent levels of on-the-job training offered to employed blacks are examples of labour-market discrimination that have also put blacks and women at a skills-based disadvantage. The ILO Review provides a thorough discussion of the various forms of disadvantage that shape labour market outcomes.

  9. It is clear that past discrimination outside of the labour market, notably in the provision of education, contributes in large measure to the current lack of equity in employment. Such disadvantage also tends to be self-reproducing, as those with poor education are often unable to secure sufficient income to provide for the education of their children. While the Commission recognises the centrality of extra-market discrimination and disadvantage, these matters fall outside the Commission's terms of reference and will not be extensively discussed. The establishment of a democratic order in South Africa has dismantled legal and institutionalised discrimination. Non-labour market measures designed to improve the educational and socio-economic status of the majority include the reform of the educational system, land reform, RDP-related infrastructure investment, support measures to small, medium, and micro-enterprises, and many others. Without significant improvements in these various areas, even a fully non-discriminatory labour market will remain socially inequitable for decades to come.

  10. The overall consequences of the legacy of apartheid are deeply embedded in the polity, society and economy of the country and will not be resolved overnight, even in the face of the political transformation that has occurred and the elimination of overtly discriminatory laws and regulations. The legacy of apartheid can be said to be structural in the sense that it tends to be self-reproducing and self-reinforcing in the absence of concerted policy interventions to reverse this legacy. In particular, non-discrimination, or equal opportunity, cannot by itself produce equity in employment in a reasonable time frame. This observation provides the fundamental justification for corrective measures or affirmative action. Following the Interim Constitution, the Commission defines affirmative action as a policy and programme applied by an employer that is aimed at redressing the inequalities that exist within the workplace as a result of unfair discrimination. Such a policy or programme shall have the objective of increasing the rate of progress towards equity in employment. Employer-provided training and skills upgrading, designed to compensate for both extra-market discrimination in the provision of education and past discrimination in training by employers, occupy a central position in the Commission's recommended affirmative action strategy. This programme is not intended to promote cosmetic changes resulting from the hiring of a few members of disadvantaged groups into key positions, nor is it designed to promote black and women employees into positions for which they are not qualified. Rather, it involves a systematic move towards promoting the employment and improving the labour market security of groups previously discriminated against, bolstered by the necessary education and training, and in co-ordination with extra-market reforms designed to reduce the degree of socio-economic disadvantage of the majority.

  11. The LRA and the Interim Constitution are explicit in sanctioning such corrective policies and in distinguishing them from unfair discrimination. Section 186, cited above, continues with:

Evidence of Various Forms of Discrimination and Disadvantage

  1. The evidence that blacks and women fare poorly in the labour market is overwhelming and has been extensively analysed elsewhere, including the ILO Review and earlier chapters of this Report. A few summary measures of the scale of the problem are presented below. Following this is a brief discussion of the various mechanisms by which discrimination operates in the workplace. We also examine the difficult but important policy question: to what degree is overt labour-market discrimination, as opposed to extra-market forms of disadvantage, to blame for the current lack of equity in employment?

  2. The most compelling evidence of the lack of equity in the labour market is the differential incidence of unemployment by race. The African unemployment rate in 1994 (41%) was more than six times the unemployment rate for whites (6.4%). The rates for coloureds (23%) and Asians (17%) fell between these two extremes. These differences remain large and statistically significant even if one controls for the effects of education and age. Within each race group, unemployment rates are higher for women than for men. Unemployment rates among African women are particularly alarming: fully 50% of those who want jobs cannot find them.

  3. Next there is the matter of sectoral segregation by race. Blacks are disproportionately represented in sectors that pay poorly and offer few benefits and poor job security. Chief among these are agriculture and domestic service. In 1993, 16.7% of regularly employed Africans and 13.4% of coloureds were working in agriculture compared to just 3.1% of whites. Another 13.4% of Africans and 3.6% of coloured workers were employed as domestics, compared to just 0.6% of whites. Blacks are correspondingly under-represented in the better paying sectors such as finance. Just 1.2% of employed Africans, 2.7% of coloureds, and 4.6% of Asians were found in this sector, compared to 11.8% of whites.

  4. The same pattern is evident when employment figures are broken down by occupation and race; 27.7% of regularly employed Africans and 28.8% of coloureds were working as labourers in 1993, compared to just 0.4% of whites. By contrast, just 10.4% of Africans, 11.7% of coloureds and 29.5% of Asians were employed as managers or professionals, compared to 48.5% of whites.

  5. Occupational and sectoral segregation are also stark when the data is analysed by gender. Women are considerably disadvantaged by conventions that ensure that "women's work" is paid less than comparably demanding work that is performed largely by men. Roughly 19% of regularly employed women were working in the extremely low-paid domestic service sector, compared to just 1.4% of men. Women are also disproportionately represented among poorly-paid clerical workers. For African women the problem is again particularly severe. Thirty-one percent of all regularly employed African women were working as domestics in 1993. Only 15% were employed in a professional or managerial capacity, compared to 44% for white women.

  6. The foregoing data raises the question: to what degree are these labour market outcomes determined by disadvantage (e.g. lack of education, poor quality of education, lack of job experience, etc.) versus the effects of current discriminatory practices in the labour market? Some light may be shed on this question by means of statistical analyses of the data which attempt to measure discrimination in compensation. One such analysis yields the result that even if one holds constant such factors as education, age, language, province, settlement type, sector, occupation, type of employer and union membership, the effects of race and gender are still very strong. Whites are estimated to enjoy a 104% wage premium over Africans, and men to receive 43% higher wages than similarly qualified women in similar sectors, occupations and so forth. These numbers should not be taken to imply that blacks and whites working side by side in identical jobs in the same establishment are paid differently. Rather, the numbers likely reflect differences between jobs that fall within the same broad occupational categories of the survey, differences between establishments, and other factors. They reflect a combination of the effects of disadvantage and of discrimination in compensation and in hiring.

  7. Further evidence submitted to the Commission also supported the claim that even where women are in the same jobs as men, or in jobs formally accorded similar value, discrimination in pay occurs, with women workers paid less than their male counterparts. One submission compared workers holding C grade jobs of the Paterson grading and evaluation system. Setting the white male wage to an index value of 100, the analysis found that white women earned between 98 and 100, Indian women 84, coloured women 73, and African women 70.

  8. Another measure of race and gender discrimination is obtained by comparing the income of men and women, black and white, of similar educational levels. Analyses of the SALDRU data have shown that black women with a standard 5 to 6 education receive 10% as much income as their white male counterparts with similar educational credentials. Black men at this level of education have incomes that average just 25% of white male incomes for the same level of education. Black women with diplomas receive 35 cents to every rand of income received by white men with diplomas; for white women the gap is only slightly smaller: they take home 55 cents for each rand of income accruing to similarly educated white men.

  9. Other statistical analyses of the data have concluded that discrimination effects are smaller than the above figures suggest, and have also found that discrimination has declined over time. Some have argued, for instance, that because of the poor quality of education provided to blacks, black and white matriculants are not in fact equally qualified and that this goes a long way towards explaining the earnings differentials shown above. Others argue that the occupational categories used in the household surveys are insufficiently detailed to allow for the proper comparison of identically demanding jobs. The Commission recognises that existing estimates of the magnitude of discrimination are imperfect and that different researchers and methodologies yield different interpretations of the data. However, no credible studies of which the Commission is aware have been able to show that discrimination has been eliminated from the South African labour market. Furthermore, numerous submissions to the Commission attest to the fact that discriminatory attitudes and behavioural tendencies are still dominant. For this reason, the Commission holds that both discriminatory and non-discriminatory (skills-based) processes are at work in the current labour market, and thus recommends a multi-pronged strategy for creating equity in employment, as outlined above, of which equal opportunity and affirmative action in the labour market are crucial components.

  10. Discrimination manifests itself in a variety of forms, some more subtle than others. The ILO Review provides a useful list of the various kinds of discrimination, including so-called pure discrimination; statistical discrimination (the exclusion of particular groups based on the claim that "past experience" shows that members of this group perform poorly on average); workforce induced discrimination (when employers exclude certain groups on the grounds that other employees would refuse to work with them); and many other variants. The Review also notes that discriminatory attitudes can persist on the shop floor long after senior management has stated a commitment to equal opportunity. A report cited by the ILO concludes:

    11. What happens in the departments and on the factory floor on a day-to-day basis has a powerful impact on who learns and who gets ahead, so that the attitudes of managers and employees, and their behaviour, overshadow what is planned and decided in the boardroom or in the personnel department.

  11. The statistics on enrolment in training programmes also shows a continued and indeed increasing bias against women and Africans. The ILO cites evidence that there were no female apprentices in the food processing sector, that women made up just 2.4% of apprentices in paper and printing, and just 3.5% of apprentices in metals and engineering. Furthermore, women made up just 23% of enrolees in non-apprenticeship job training programs, far less than their share in employment. The ILO also argues that access to apprenticeships is still a racially segregating mechanism. One study notes that:

  12. In the light of these figures, and in consideration of the various submissions received, the Commission asserts that there is a need for more deliberate policy intervention directed at dealing with discrimination and rectifying the effects of past disadvantage, in the labour market. The Commission's recommendations in this regard are presented in the pages that follow. Before discussing these however, we address the important question as to the relation between employment equity and economic efficiency.

Employment Equity and Economic Efficiency

  1. The following principles motivate the policy interventions suggested in this chapter:

  2. The complementarity of the goals of equity and efficiency arises from the fact that distributive (equity-related) inefficiencies in the allocation of resources such as land, human capital, finance, jobs and incomes necessarily reduce microeconomic efficiency at the firm level (even if not for all firms in the short to medium term) and macroeconomic efficiency at the aggregate level in the long term. Thus the interaction of distributive, microeconomic and macroeconomic inefficiencies in and outside the labour market constrains the ability of the economy to perform at its most efficient level, both in terms of static allocative efficiency and with respect to the dynamics of growth and development. For instance, the ILO argues that the artificial upgrading of under-qualified white workers to artisanal status reduced dynamic efficiency. It is also clear that the denial of education and training to the black majority has imposed a significant skills constraint upon the economy. Better and more equitably distributed training, including affirmative programmes to redress past training biases, can thus be expected to increase the productivity of the workforce.

  3. The Commission believes that because the groups discriminated against in South Africa represent the majority, the lack of an equitable distribution of employment and earnings has also generated deficiencies in domestic aggregate demand, thereby stifling the rate at which the economy can diversify and grow.

  4. Therefore, the Commission contends that the elimination of discriminatory practices in South Africa will result in net social benefits, especially in the long term. These net social benefits will arise from the more efficient utilisation of the innate and potential capabilities of all groups and from the elimination of existing inefficiencies.

  5. In summary, the Commission believes that we need to reverse the current situation where the talents of the majority remain unrecognised, under-developed and often unrewarded. This will result in:

Enforcement of Constitutional Equal Opportunity Provisions

  1. The evidence and arguments above point to the urgent need for better enforcement of existing equal opportunity provisions, as a first step towards employment equity. The Commission recognises that drafts of employment equity legislation are already in progress, and that such legislation must cover a broad range of issues, some of which will not be addressed here. This legislation must provide the necessary formalisation of the powerful rights provided by the Constitution, and relate these rights to the evolving industrial relations system. In particular there should be mechanisms for responding to complaints of unfair discrimination in the labour market, powers of investigation and adjudication, and means of redressing demonstrated legal violations. Consideration should also be given to provisions that specify the requirements of equal opportunity in more detail for particular groups. An example would be legislation designed to ensure equal access to places of employment for the physically disabled, or to protect the rights of people with AIDS or HIV. The Commission also wishes to point out that the reporting requirements that constitute the heart of the proposed affirmative action programme will provide a valuable source of data for determining whether firms are complying with the equal opportunity requirements of the Constitution and the LRA. There are, however, several questions that remain to be resolved around which the Commission does not wish to express specific recommendations, including what will be the precise mechanisms of adjudication, mediation or arbitration, and what forms of redress will be available to victims of unfair discrimination.

Specific Proposals Concerning Affirmative Action

  1. Amongst those making submissions to the Commission there was widespread acceptance ­ albeit some of it grudging ­ that legislation designed to promote employment equity should be tabled, and that such legislation should include an affirmative action requirement. Even amongst those least supportive of government intervention in the labour market and employment relations, there is acknowledgement that the promotion of employment equity requires a legislative kick-start in the form of an affirmative action provision.

  2. The international experience as a far as equal opportunity and affirmative action are concerned differs substantially from that of South Africa. Nearly all previous experiences in this arena had to do with addressing discrimination against a minority. The situation in South Africa is the reverse. International experience, while valuable, will be of limited direct applicability to our situation. One possible exception is the experience of Malaysia, where bold steps were taken to reorganise public employment in favour of the majority Malays.

  3. Where international experience has proved more valuable is with regard to affirmative action as it relates to gender and disability. The Commission has drawn on such experience as well as on the submissions received during its investigations.

  4. The Commission believes that affirmative action policies should be directed at blacks (i.e. Africans, Asians and coloureds), women, and people with disabilities. Consideration should also be given to means by which other types of legislation could be used to rectify the effects of other forms of discrimination in employment, including on basis of age, language, ethnicity, sexual orientation, and marital status. As described below, the Commission recommends a mixture of affirmative action and equal opportunity/equal access provisions, with the emphasis depending upon the nature of the current barriers to employment. For example, the barriers to employment faced by the disabled may be best addressed through requirements around the physical accessibility of the workplace.

  5. Aspects of this topic are very widely traversed both inside and outside of government, in business circles, in the unions and in society in general. The Commission does not intend revisiting in any detail the extensive debates around the management of the affirmative action process except insofar as it has reference to the main lines of our enquiry which are:

  6. Submissions received by the Commission indicate that it is often very difficult for firms to embark on substantial restructuring aimed at promoting equity or affirmative action in employment in the face of declining or stagnant employment growth. The evidence suggests that those companies that most successfully pursued employment equity and affirmative action have done so when employment has been growing or, at least, when the company in question has been confident of its long-term future and, accordingly, has been willing to devote resources to programmes that are not necessarily validated by immediate economic gains. One submission argued that:

  7. Despite the consensus that exists around the need for affirmative action, there was considerable divergence among the parties to the debate concerning the optimal character of affirmative action legislation. We were accordingly surprised to discover agreement around the question of quotas versus targets. None of the submissions to the Commission argued for legislated quotas. One argument presented was that strict legal quotas would "be counterproductive because they would introduce an inflexibility into the implementation process which is undesirable".

  8. In summary, no institution submitting to the Commission favoured the immediate introduction of legislated quotas, although all corporations have, as a matter of course, employed closely specified and monitored targets in their internal programmes. Certain of the constituency organisations also favoured the introduction of quotas in the event that "softer" options failed to deliver significant change.

  9. The Commission thus recommends that legislated quotas be avoided in favour of a target-based approach. In general, the legislation should be enabling in character rather than prescriptive.

  10. However, the Commission did witness some disagreement as to how targets should be set, with some arguing that the legislation should only require companies to set their own targets and timeframes within a broadly agreed government framework and others arguing for legislated targets.

  11. The Commission recommends that legislation should not specify exact targets but should rather require employers to draw up their own plans ­ of which specified targets and timeframes are a required component. The legislation should, however, incorporate suggested targets and timeframes, in the form of a model employment equity plan appended to the legislation.

  12. The suggested targets and timeframes contained in the legislation should be flexible to the extent that they are capable of accommodating different firm-specific and sectoral employment situations, differing economic and commercial circumstances, and differing starting points. Ideally the targets would be specified as departures from a current starting point, rather than as specified absolute outcomes. Firms which are starting at the lowest base would be expected to make the fastest progress.

  13. This legislation should require each employer, including corporations, non-governmental organisations and the public sector, to draw up a plan for the affirmative promotion of employment equity with reference to (at a minimum) race, gender, and the employment of disabled persons. The legislation should give the Department of Labour the right to examine these plans at its discretion, and to require regular reports on the progress towards implementation of the plan. These reports would be lodged with the Department of Labour's Directorate of Equal Opportunities, which would be tasked with guiding and advising employers in the drawing up of affirmative action programmes and in the implementation of such programmes. It is strongly recommended, therefore, that plans are standardised where possible to enable the Directorate to evaluate and compare submissions in a consistent fashion.

  14. The Commission concurs with submissions which argued that such targets and time frames should be set after the firm has undertaken an inclusive and participatory process of internal consultation.

  15. Although the Commission believes that affirmative action legislation must apply to all employers, consideration was given to exempting employers below a certain size. While we are confident that an employment equity plan represents a wise investment in the future success of the employer, a successful programme ­ that is, one that substantively shifts the racial and gender composition of employment as opposed to merely making token appointments ­ is, in its initial stages, resource-intensive. In particular it demands investment in training and other mechanisms of human resource development. The required resources may not be available to smaller and newer firms and we believe that the simplest and least costly way of dealing with this reality is for firms below a stipulated number of employees and a specified turnover to be exempted from the requirements of the legislation.

  16. Affirmative action plans must present a breakdown of the current status of the relevant demographic groups, a listing of objectives for change including quantitative and qualitative targets, and a clear indication of how this will be achieved. Plans should cover a period of several years, with annual progress reporting. The Commission recommends that the plans should emphasise the rate of change rather than the absolute level of achievements to date.

  17. The method of reporting will need to be thought out very carefully. Given the enormity of the task, the Commission believes that the Directorate should adopt an incremental approach in its data collection requirements. It should commence with the collection of basic data and develop more complex requirements over time. As regards coverage, the Directorate should start with larger employers and expand its scope to include smaller companies as time and resources permit. The Directorate should seek to co-operate with private institutions which have been monitoring progress in employment equity and have developed valuable expertise.

  18. An incremental approach to data collection and analysis is necessitated by the current lack of employment equity information and the weakness of our general labour market information system. The Commission recommends that such data collection should start with basic core data, i.e. permanent staff complement; recruitment, promotion and exit patterns; training investment indicators; and remuneration indicators ­ all by occupational level, race, gender, and disability.

  19. The Commission recognises that the collection of this information, and of the other data required to extend employment equity monitoring to other groups, is a delicate task. Most of the relevant information cannot legally be requested on job applications and will have to be gathered by other means. Some have argued that the monitoring of the racial composition of employment requires a return to formalised systems of racial classification and is thus simply apartheid by another name. This argument, however, is firmly rejected by the Commission. The Commission holds that affirmative action must be specifically directed at coloureds, Asians, and Africans, and must take into account the demographics of the region in question. This does raise important questions about the design and administration of affirmative action programmes. These difficulties do not warrant scrapping affirmative action, but do require that firms, unions, and the Directorate give careful thought as to how best to go about this task, drawing on existing models of successful programmes. Where applicable, the Commission recommends that the twin principles of employee self-classification of race (and other characteristics) with the option to refuse, and the right to strict confidentiality of individual responses be respected.

  20. Affirmative action plans often focus on the demographic proportions of the employed, and devote less attention to the question of discrimination and disadvantage in wages and other conditions of employment. The Commission is mindful that discrimination in remuneration persists and needs to be addressed in ways that are both conceptually and practically demanding. When, for example, are wage differentials justified between different categories of workers, what is the legitimate extent of these differentials, and what are the best methods for identifying and rectifying inequitable differentials? In the discussion below, we stress the importance of job regrading and evaluation schemes. Such schemes are important across the economy and represent an important aspect of employment equity, one that firms should be encouraged to address in their plans.

Employment Equity and Affirmative Action Programmes for Women

  1. While lip-service is often paid to promoting gender equity in employment, there is little focus on this issue in concrete programmes at the corporate level. It seems fair to characterise the corporate approach as one that argues for an initial focus on race and that would resist a proliferation of "target groups" in the foreseeable future. The gender profile of unions and many other NGO groupings indicates that, while they may not be inclined to express so politically incorrect a viewpoint, they have effectively paid as little concrete attention to the question of gender equity as their corporate counterparts.

  2. The Commission does not accept this lack of concern with gender equity. We believe that the legislative, institutional and other proposals outlined here are as applicable to the promotion of gender equity as to racial equity. We would wish to underline that the returns filed in the proposed employment equity progress reports should specifically distinguish employment by gender, cross-tabulated by race, and that gender equity should be weighted in the decisions made on the basis of these reports, such as decisions pertaining to access to state resources.

  3. Social conditions that impose a disproportionate burden of household labour upon women limit the progress of increasing equity in employment. The ILO Review cites estimates that non-market work consumes 20 to 25% of the time of the potential female workforce. The lack of access to affordable child care also has a limiting effect on the ability of women to participate in the labour market. The Commission was, however, unable to explore this issue to any extent and would therefore recommend that more work be done in order to determine policy interventions.

  4. The data presented above demonstrates that so-called "women's work" is underpaid relative to men's. Although the issue of equal pay for work of equal value has been addressed legally in South Africa since 1991 under the Labour Relations Act and the Wage Act, the evidence submitted to the Commission indicates that the impact of these acts has been anything but effective in dealing with gender discrimination in pay. The Commission thus recommends that a fuller investigation be undertaken with the view of instituting more effective mechanisms to deal with this problem. The Commission also commends the public sector for recent changes in job grading that increase remuneration for predominantly female occupations, and recommends that such regrading be pursued further and that private employers also be encouraged to consider job regrading as part of their employment equity planning.

Employment Equity and Affirmative Action Programmes for the Disabled

  1. The Commission heard arguments, echoed in the ILO Review, that the optimal means of promoting the employment of the disabled is not via employment targets but via provisions that require employers to make workplaces accessible to the physically handicapped, and which establish the legal right to access. The ILO further argues that employment subsidy schemes targeted at the disabled are less effective than the right-to-access approach. The Commission heard evidence that South Africa's employment subsidy for the disabled has been relatively ineffectual, although this may be because the subsidy was too small to make a difference to employers.

  2. The Commission is unable to make more specific recommendations in this area. Data on disability is far more difficult to come by than data on race and gender (although a submission by the Affirmative Action Alliance did provide evidence that the disabled in fact have better work attendance rates than their able-bodied counterparts, contrary to many presuppositions about the relation between disability, illness, and absence from work). We therefore recommend that further research be undertaken in this area so that effective anti-discrimination and affirmative action provisions for the disabled can be included in the proposed employment equity legislation. In particular, the issue of requiring employers to make workplaces accessible to the physically handicapped warrants careful consideration.

Enforcement & Incentives: Will Legislation along these Lines be Effective?

  1. As indicated earlier, the Commission believes that, on balance, equity legislation should not be overly prescriptive or punitive. Given this it will be important for the Directorate to develop a partnership and a sense of common purpose with companies and other institutions. This implies a degree of public involvement throughout the process of developing mechanisms to implement the legislative requirements. An important consideration for building mutually beneficial relationships is to ensure that the data collected is analysed and reported back to organisations in a format useful for decision making (national, regional and by economic sector). These reports should allow firms easily to compare their own performance against averages for their sector and region. The Commission feels that the timely turnaround of useful comparative data will increase compliance with the reporting requirements. Automation of the data-gathering process can greatly increase the ease with which data are analysed and reports are generated.

  2. The employment equity plans and subsequent progress reports should be made available for public scrutiny and, hence, subject to a degree of public accountability. As part of promoting this accountability, the Commission recommends that companies should be required to publish a synopsis (key indicators) of employment equity status as part of their annual financial reports.

  3. Public accountability can also be ensured by the legislation requiring the Directorate of Equal Opportunities to audit a small random sample of the returns and to file a report on the audit, through the responsible Minister, to Parliament.

  4. The issue of whether incentives are necessary to encourage compliance was debated. The Commission proposes that the requirement to file an employment equity plan and to report progress in relation to this plan are the key legislative requirements. The "carrots and sticks" should ­ for the most part ­ be organised around these requirements. Hence companies will be required to file employment equity plans and report progress and failure to do so must be subject to legal sanction.

  5. Unquestionably, however, the major sanctions and incentives should centre around the extent to which access to government resources is facilitated by the filing of a serious employment equity plan. The Commission recommends that all applications for access to state resources, for example state contracts, loans from the Industrial Development Corporation or other funding agencies, technical assistance from the CSIR or the National Productivity Institute, state grants to NGOs, training subsidies, or grants from the Social Plan Fund, should be conditional upon the submission of an acceptable employment equity plan and the most recent progress report. Where necessary, the Directorate should use its powers of audit to ensure that applicants' affirmative action progress reports are truthful. This would constitute the major incentive to comply with the legislation.

  6. Various other incentives have been suggested, including:

Institutions to Oversee Employment Equity Programmes

  1. Wide-ranging support has been expressed for the establishment of an institution specifically charged with oversight of employment equity programmes. In general, the Commission has, in its various recommendations, sought to limit the proliferation of new institutions. In the area of employment equity three potentially powerful, newly established institutions will play key roles ­ these are the Directorate of Equal Opportunities, and, as shall be elaborated below, the Workplace Forums and the Commission for Conciliation, Mediation and Arbitration (CCMA). Under these circumstances we do not recommend the establishment of an additional institution tasked with responsibility for employment equity.

The Directorate of Equal Opportunities

  1. As is clear from the discussion above, the Commission's view is that the Directorate of Equal Opportunities should be the front-line agency responsible for administering employment equity legislation and for driving the programmes associated with that legislation. The Directorate should be instrumental in giving direction to the process of policy formulation and its subsequent implementation. It should also be responsible for the compilation and analysis of data that permits inter-employer benchmarking and that tracks national progress in the area of affirmative action and employment equity.

  2. In summary, the Directorate of Equal Opportunities should be responsible for:

  3. In the Commission's view the Directorate of Equal Opportunities should be concerned with driving the core aspects of the legislation, in particular by carrying out the range of tasks that centre around the filing of employment equity plans. The Directorate should not be tasked with pursuing individual grievances or resolving disputes around failures to secure consensus on the terms of an employment equity plan. These tasks should be the province of the Commission for Conciliation and Arbitration (CCMA). The Directorate of Equal Opportunities should be staffed with effective advocates of employment equity, capable of partnering and assisting employers and unions in the drawing up of appropriate programmes. It should possess the requisite capacity to audit these programmes and analyse the data and, in co-operation with relevant agencies in the private and public sectors, to monitor national progress towards the attainment of employment equity.

Workplace Forums and the CCMA

  1. The Labour Relations Act is responsible for two major institutional innovations: the Workplace Forums and the Commission for Conciliation, Mediation and Arbitration. Each of these has the potential to play a major role in the area of employment equity. Section 79 of the LRA outlines the functions of the Workplace Forums:

      2. A Workplace Forum established in terms of this chapter:

    1. must seek to promote the interests of all employees in the workplace, whether or not they are trade union members;

    2. must seek to enhance efficiency in the workplace;

    3. is entitled to be consulted by the employer, with a view to reaching consensus, about the matters referred to in section 84;

    4. is entitled to participate in joint decision-making about the matters referred to in section 86.

  2. Section 86 of the LRA requires that employers not only consult with their Workplace Forums in designing affirmative action plans, but that the two parties reach consensus:

    3. 1) Unless the matters for joint decision making are regulated by a collective agreement with the representative trade union, an employer must consult and reach consensus with a Workplace Forum before implementing any proposal concerning: ...

  3. The significance of this requirement is the elevated role accorded to employees below managerial level ­ and, by extension, their unions ­ in the design and implementation of affirmative action programmes.

  4. The Commission views the engagement of shop-floor workers and unions in employment equity as a positive development. This requirement does not necessarily diminish managerial authority over individual management appointments, a major fear among some employers. It simply requires that employees and their senior management agree on the mechanisms designed to promote employment equity. This would have to include mechanisms to implement and monitor an agreed-upon affirmative action plan.

  5. The Commission supports this approach for several reasons, including the following:

  6. This latter point requires amplification. Several submissions to the Commission have stressed the importance of providing a supportive environment for new management appointments. The reality is that many corporations provide a hostile and unproductive environment for black and female managers. Furthermore, the numerical reality is that black managers will remain a minority in most corporations for the foreseeable future. This environment increases the likelihood of failure on the part of new black managerial appointments which discredits employment equity programmes, hence our emphasis on providing a supportive environment.

  7. The most effective short-term mechanism for confronting this reality is one that locates the employment equity programme in an environment in which black managers are not a racial minority and where racist practices intended or unintended, on the part of their managerial colleagues are checked. Exposing the employment equity programme to the whole workforce through an institution like a Workplace Forum has been an effective mechanism for bolstering black managers in one very large corporation. Moreover, the "payback" to black workers and their unions is a management grouping that may be expected to perform a similar function within the Workplace Forum with respect to the extension of the affirmative action programme beyond management ranks.

  8. In short, the full attainment of employment equity requires the overturning of racist structures and other discriminatory practices many of which persist despite formal adherence to equal opportunity. These can be challenged by institutions that help promote a degree of solidarity between black managers and workers and, in so doing, assist in furthering a principal objective of the Workplace Forums: the promotion of consensus and solidarity between managers and workers around non-distributive, productivity-enhancing workplace issues.

  9. The role of Workplace Forums in employment equity effectively draws another powerful institution into this area, namely the CCMA. Failure to achieve consensus in an area designated for joint decision making will lead the parties to the CCMA.

  10. In the Commission's view the CCMA should be required to establish a division dedicated to assisting parties ­ whether in the context of officially established Workplace Forums or not ­ in resolving conflicts around employment equity programmes. Given that inequity in the workplace is a major source of industrial conflict, this is consistent with the CCMA's general role in preventing and resolving industrial disputes. It will also enable the CCMA to encourage the formation of Workplace Forums given that it is only in the context of a Workplace Forum that unions are able to oblige employers to reach agreement with them on the formulation and implementation of employment equity programmes, a vital area of shop-floor relations.

  11. Firms which have not yet formed Workplace Forums should nonetheless be expected to consult with their respective unions in the formulation of employment equity plans. Existing mechanisms of collective bargaining can serve as valuable channels of information and negotiation around questions of programme design.

Promoting Employment Equity through Internal Labour Markets

  1. The Commission strongly supports forging a link between programmes designed to strengthen internal labour markets, on the one hand, and employment equity, on the other. Employment equity legislation should stress the importance of this link and encourage companies to include internal labour market programmes in their employment equity plans. This would have the effect of generalising the impact of employment equity by drawing in those strata of the workforce below management level. It would further highlight the centrality of training and skills development, and it is, in general, consistent with modern methods of human resource and industrial relations management. Lastly, by increasing the pool of potential managerial candidates, it will ultimately reduce the incidence of poaching of black managers and the supply price for managerial and skilled labour in general.

  2. For many of the reasons outlined above, an emphasis on strengthening internal labour markets generally enjoys the support of the unions. This emphasis promotes training opportunities for workers in lower occupational levels and increases the likelihood of "career pathing" and upward mobility. It also provides space for greater union and worker involvement in employment equity programmes that, in the past, because of the management focus of the programmes, have not attracted much interest from union members and low level workers.

  3. However, submissions by the unions argued that this has already weakened union capacity as shopfloor leadership is promoted out of the bargaining unit. Union leaders and shop stewards tend to be amongst the most energetic and confident and, increasingly, educated, representatives of the workforce. They are, accordingly, obvious candidates for promotion to supervisory and managerial ranks. This has weakened union cohesiveness, not least of all because it challenges long-held union organising strategies that rely upon distance and division between union membership and management. They further argued that union attempts to revise their own strategies and approaches on this score have run into management opposition to extending bargaining units and, in general, management misgivings regarding members of their rank participating in union organisation. The Commission believes, however, that is not possible to design specific national policy interventions that can resolve this issue, and that it must rather be resolved in the unions and in the Workplace Forums on a case by case basis. It is clear that the deracialisation of bargaining units and the promotion of equity in employment will have profound implications for the ways in which these units are defined, as well as for the way the line between labour and management is drawn. This poses challenges to both unions and management that must be confronted and resolved if employment equity is to be achieved.

  4. A more substantive qualification to employment equity strategies directed at the internal labour market concerns the existence of a race and gender-based "glass ceiling" between the shop floor and management ranks. While we have reason to believe ­ and will elaborate below ­ that the impenetrability of this ceiling is somewhat exaggerated, it clearly exists and should discourage overly romantic notions of "career pathing" and other mechanisms designed to promote upward mobility. The challenge is to increase the likelihood of shattering this ceiling and here the Commission proposes the following:

Public Sector Employment and the Promotion of Employment Equity

  1. We have proposed that the provisions of the employment equity legislation will apply to the public sector. It is the Commission's view that, ideally, the state as employer should be catalysing and encouraging the progress of employment equity by its own performance in this field. The public sector should, in other words, be establishing internal targets with respect to employment and training, and establishing supportive internal structures and programmes that act as benchmarks for the private sector.

  2. Evidence submitted suggests that some of the key public corporations and parastatal organisations are playing this role. However, it was argued that they are sheltered by their relatively "soft" budgetary environment, which enables them to pursue costly training programmes and countenance a significant degree of overstaffing, and that, accordingly, their performance cannot set a realistic standard for the private sector.

  3. The claim that these employers are paying what, by private sector standards, amounts to an unaffordable price for the pursuit of employment equity can only be assessed on a case-by-case basis. Suffice it to say that the one large public corporation that made a submission to the Commission identified strong efficiency gains in consequence of the commitment to employment equity, although some level of overstaffing was acknowledged. While the overstaffing certainly did not occur simply in consequence of the pursuit of employment equity the fact that it is permitted to occur unquestionably eases the ability of the corporations in question to introduce strong employment equity programmes.

  4. In the absence of a rigorous case-by-case examination we are unable to take a view on the additional short-term cost, if any, imposed upon these corporations by their employment equity programmes. The Commission does however recommend that decisions regarding the future ownership of these corporations factor in the likely negative effects of privatisation on employment equity. Exposure to market forces may reduce employment in state-owned enterprises, but it will also reduce the capacity of these enterprises to lead the employment equity thrust and may decrease their commitment to this goal as well.

  5. The Commission notes that some central government departments such as the Department of Water Affairs and Forestry have developed comprehensive employment equity programmes, and recommends that these programmes be studied for possible inclusion as models in subsequent legislation.

Dissenting Opinion on Affirmative Action by Commissioner Nattrass

I agree that affirmative action can be an important means of addressing labour market discrimination and disadvantage in South Africa. I object, however, to the Commission's failure to problematize race, or to appreciate that the over-lap between race and labour market disadvantage is not exact. I argue that affirmative action should ultimately be guided by socio-economic considerations.

Affirmative action must be located in an equity framework which recognises and addresses the complex network of power differentials within South African society. Racial cleavages are cross-cut with rural-urban, gender, class, regional and cultural divides which complicate the nature of disadvantage and discrimination. The purpose of affirmative action ought to be to create a more equitable society, where all disadvantaged individuals who have been prevented from achieving their full potential are eligible for support and affirmation. While race can serve as an imperfect initial marker in the analysis of discrimination and disadvantage, this should be supplemented, and ultimately superseded, by socio-economic considerations.

It is worth quoting Dr. Mamphela Ramphele in this regard:

Affirmative action is a strategy which has no inherent moral or ethical basis. Such a basis has to be created by locating affirmative action within a well-thought-out and articulated equity framework.... If we maintain a focus on equity, socio-economic disadvantage will become the greatest marker of eligibility for affirmative action interventions. To the extent that such measures overtake race-based criteria, to that extent will geographic and socio-economic variables become more reliable measures of disadvantage, and thus a more rational basis for public policy intervention. Such an approach should replace the current tendency towards colour-coded affirmative action interventions, which breed a "blacker-than-thou" mentality with all its divisive dangers.

Rectifying discrimination and disadvantage requires a multi-faceted and flexible approach which is sensitive to regional variations. Where affirmative action policies are colour-coded, they must have clear goals and a specified time horizon. This will help reduce anxiety and resentment, whilst avoiding creating permanent cleavages between citizens. A society without any form of discrimination must be the clearly stated end goal. Great care must be taken to ensure that affirmative action policies promote dynamic efficiency and do not entrench new forms of discrimination.

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