Compliance with Employment Equity Act: briefing by Commission on Employment Equity

LABOUR PORTFOLIO COMMITTEE
22 May 2007
COMPLIANCE WITH EMPLOYMENT EQUITY ACT: BRIEFING BY COMMISSION ON EMPLOYMENT EQUITY

Chairperson: Ms O Kasienyane (ANC)

Documents handed out:
Commission on Employment Equity (CEE) presentation
7^th Commission on Employment Equity (CEE) Annual Report 2006/07
All CEE Annual Reports available on the Department of Labour (DOL) website

SUMMARY
The Commission on Employment Equity briefed the Committee on its Annual Report on Compliance with the Employment Equity Act. The Report highlights the poor progress that has been made in terms of employment equity. The report indicates that white women had been the main beneficiaries of employment equity yet they only make 5,5 % of the economically active population. Their representation was disproportionately high and begs the question whether they should continue being a designated group. Representation of African workers had actually decreased in the professionally qualified and middle management. The management of the economy was clearly in White hands and Black people were largely in support functions. The Commission reported that there was poor compliance with reporting requirements on employment equity and the pace of transformation was painfully slow.

The Committee sought clarity on the trends identified in the report and presentation, in particular the reasons behind the non-compliance by companies. The CEE delegation noted that the non-compliance was largely due to the poor reporting by companies and ineffective sanctions placed on the companies. Lack of information on wage differentials was noted. Recommendations were made on better enforcement measures. The Committee noted that it needed to analyse the CEE report more thoroughly, and then have a follow-up meeting.

MINUTES
Commission on Employment Equity (CEE) Annual Report
Mr Jimmy Manyi (CEE Chairperson) briefed the Committee on the progress and problems associated with achieving compliance with the Employment Equity Act. His delegation included: Mr Lebogang Montjane (CEE Business Representative), Ms Nonvula Masango-Makgotho (CEE State Representative) Ms Nimla Pillay (CEE Labour Representative), Mr Thembinkosi Mkalipi Department Labour (Senior Executive Manager: Labour Relations: DOL) and Ms Ntsoaki Mamashela (Executive Manager: Employment Equity Directorate, DOL).

Mr Manyi's briefing on the Annual CEE Report outlined the purpose of the Act and the amended regulations as well as the Act's reporting requirements. He provided statistics for the Economically Active Population distribution in terms of race and gender and then looked at employment equity trends between 2000 and 2006. The percentage changes were provided for race, gender and people with disabilities (PWD) between 2000 and 2006 in terms of top management, senior management and the professionally qualified. He analysed trends in recruitment, promotions and training. His conclusion was that the pace of transformation was painfully slow and he drew some conclusions about enforcement mechanisms and whether white women should be included as a designated group.

He made the following additional remarks to certain parts of the presentation.
- The most important aims of the EEA were to implement Affirmative Action measures and to ensure equitable representation in the Workplace.
- The EE regulations had been amended to improve data collection which had shown improvement. Of importance, was that the amended regulations aimed to clarify that only designated groups who became citizens prior to 27 April 1994, and their descendants, were beneficiaries. This clarification means that if persons were not citizens prior to the mentioned date, they do not count as previously disadvantaged. This aim was supplemented by the ongoing tracking of where designated people were employed.
- The EE awards scheduled to take place in August 2007 had been cancelled due to the poor level of compliance. The top 100 JSE listed companies have faired very poorly.
- The Economically Active population (EAP) by race was 87, 2 % previously disadvantaged blacks and 12, 8 % Whites. When we talk about equitability in the workplace, we therefore mean that a company has to reflect these trends.
- Most companies submitted reports in 2000, 2002, 2004 and 2006, hence the statistics focus on these years. The most stark trend was that reports have dropped from 12 000 in 2000 to only 7 000 in 2006. This was an indication that compliance by companies has dropped, though there were some mitigating factors to this trend. Slide 11 provides the reasons for excluding some 2000 reports from the statistics.  
- Slide 12 refers to the Director-General (DG) Review which established that the majority of companies did not have proper EE plans, nor did they not have EE forums that included employees. The Director General was currently engaging in talks over the problems identified in the Review.
- Slide 14 shows top management percentage change in terms of race from 2000 to 2006. Though blacks increased by 9, 5%, the change was still insufficient and particularly needs to increase by six times for Africans. White women have increased the most in top management. The changes at senior management level indicate that white women have increased to 19%, whereas Africans have increased to only 13%.
- White women were now more than three times their EAP percentage, which begs the question whether they should still be included under the designated groups. Furthermore, Senior Management change for women also indicates that whilst white women have increased to 19%, African women have only increased to 3, 6%.
- The Professionally Qualified and Middle Management total percentage changes for race from 2000 to 2006 showed that Blacks have decreased by 7,6% to 36,5%, whilst Whites have increased by 6,1% to 62,2%. Of this, a disturbing trend was that Africans had decreased by 12,6% to 20,2%. On the other hand White males had increased by 26,2% and were almost 12 times their EAP percentage.
- The trends clearly indicate that transformation was not taking place, and that white women have been the biggest beneficiaries amongst the designated groups.
- The profile of People with Disabilities indicated that there was a serious issue over the absorption of people with disabilities. People with disabilities workforce representation had decreased from 0.9% in 2000 to 0.7% in 2006. 
- Recruitment trends indicate that recruitment of white people was actually on the increase. White people were still being recruited despite EE requirements.
- Promotion trends show that 65% of all promotions in Top Management in 2006 where of White people. Most promotions were still skewed towards whites and foreign nationals.

The concluding observations and remarks were that the involvement of black people in the economy was only ceremonial. Black people were mainly serving in support functions. The trends highlight that there was a lot of window dressing in the economy. There was generally no purposeful training offered to black people. Those blacks who receive training appeared to be on perpetual training with no graduation into meaningful career paths.

The enforcement mechanisms needed to be reviewed. There was a need to review the fines as they were meaningless and too low. The inspectorate has been advised to focus on the top 100 JSE companies.

Mr Mkalipi said that it needed to be asked whether White women should continue to be designated. The EAP percentage of White women was 5, 5%, yet they had 14,7% of Top Management positions, 19% of Senior management positions and 22,1% of Professionally Qualified and Middle Management positions.

Mr Mkalipi added that nothing has been done since the 2003/04 CEE Report. There was absolutely no change in terms of the Act. Challenges involved the capacity to enforce the Act. The inspectors had been told to focus on non-compliance and two companies had appeared in Labour Court. The Director General review process has only started to come into place now due to technical issues. There were six companies that have been subjected to the Director General Review process. These companies have been providing petty excuses for why they had not complied and they were not justified. The Director General could only do so much in terms of enforcing the Act. He first has to provide recommendations to a company, following which he can act only after the recommendations have been ignored. He closed by saying that black people were forever being trained yet no graduation follows such training.

Discussion
The Chairperson noted apologies for not being able to attend the meeting from Ms H Weber (DA) who was out of the country, as well as Mr C Lowe (DA), Mr Mkongi (ANC) and Prince Zulu (IFP) who were ill.
 
The Chairperson aired her concern about women’s low remuneration, yet their educational attainments had improved. Why was there still a wage gap between men and women? The CEE Report did not seem to give any explanation on the wage gap neither did it touch on discrimination and HIV/AIDS related issues. She noted that the Committee had not had an opportunity to go through the Report, so it was important to bear in mind that the questions to follow would relate to the presentation only.

Mr Mkalipi replied that there was other legislation that specifically addressed the issues of HIV/AIDS. The Employment Equity Act addressed these issues only on a general level. Employers did not have to give any information on HIV/AIDS as there were other acts with confidentiality provisions. They have avoided requesting information on HIV/AIDS as they were likely to get inaccurate information due to the confidential nature of issues.

He said that the CEE did have the responsibility to report on wage differentials. It was however unfortunate that the CEE could not do so, as they were unable to get such information as employers were submitting incomplete reports. The employers were leaving out information in the EE2 and EE4 sections of the forms they submitted. They were currently developing an online system that would reject forms that were incomplete. However, the system will only be functional in December 2007. Presently they had sent back 4 000 reports to employers asking for more information on wage differentials.

Mr S Siboza (ANC) asked for further elaboration on the issues of compliance highlighted in the presentation. What was the department doing to ensure that blacks were employed, especially after the trends noted in the presentation? What was being done about white women being the biggest beneficiaries of EE, and the fact that they were disproportionately represented in top management positions?

Mr Mkalipi replied that the DoL inspectorate was facing problems in retaining its staff and this impacted on the capacity to monitor and enforce compliance. The Department had been forced to continually train new staff due to the high turnover of inspectors. The Department was nonetheless working on doubling its inspectorate and improving the entire system.

Mr Manyi said that the reason behind white women taking up so many top management positions when they had the smallest EAP percentage, was purely racial. It was clear from the trends that companies certainly see one race as being superior to another. Companies had chosen white women as a preferred race in the designated groups. Black people were simply viewed as incompetent.

Ms Masango-Makgotho added that the issue went beyond white employers preferring white women. Apartheid had left very negative views about the competency of black people. Employers were choosing to employ one race from the targeted groups. The small amount of compliance taking place was biased towards white women. The lack of employment equity compliance was partly a result of employers spending time on filling in the Employment Equity reports, rather than actually complying. A lot of companies were fraudulently claiming that they were complying, whilst they were not. Some employers were not even aware that Employment Equity reporting needed to take place.

Mr E Mtshali (ANC) asked about workers on the shop floor.

Mr Manyi replied that the focus had been on Top and Senior Management levels as this was where there was poor representation of black people. The current situation was that blacks were disproportionately located at the bottom of the corporate ladder, whilst whites were at the top. There was also research they were currently conducting that was showing that there was under utilisation of skills as opposed to skills shortage. There were a lot of people with skills who had not been given any opportunities.

Mr M Mzondeki (ANC) aired his concern about the absence of the Democratic Alliance members. It was a shame that today the Committee was not a multi-party committee as the issues raised in the presentation were political in nature. It would had been more constructive if members from other parties had been present. They had to work together towards transformation, and perhaps the CEE should return when they had all parties represented.

He noted that the issue raised was about the attitude of companies towards transformation. They had the Skills Development Act and the Employment Equity Act in place, yet the management of companies was choosing to ignore them. Further, it seemed that unions as stakeholders were not involved in the process. Workers need to be involved in seeking solutions. Companies that are not complying, need to be exposed.

Mr Mogale asked why representation of people with disabilities (PWD) had dropped. He asked what other measures could be taken against non-complying companies, as they seemed to prefer and actually budgeted for non-compliance fines.

Mr Manyi replied that there was a need to educate employers on the contribution that people with disabilities can make. Woolworths was one of the few companies that had done a commendable job in giving opportunities to people with disabilities. Companies certainly needed to follow the example that had been set by Woolworths and realise the immense potential people with disabilities have.

Mr Mkalipi responded to the question on the non-compliance of companies. The fines did not have much effect. Companies can always budget for the fines, regardless of how big the fine is. A lot of companies were deciding not to comply and pay the fine instead. It was thus better to target the image of these companies rather than simply fine them.

Ms Mamashela also responded to the question of non-compliance of companies. She indicated that the Department was going to have two road shows that address the issues of compliance. The road shows would aim at informing employers how they can comply with Employment Equity requirements. The road shows would for example inform employers that it was imperative to conduct a workforce analysis before drawing up a report on Employment Equity. The road shows would also include National Economic Development Council (NEDLAC) stakeholders. They would also inform companies on the new online reporting system that was currently in operation.

Ms S Rajbally (MF) commended the quality of the report, although more time was needed to assess some of its contents. The report clearly indicated that there was a lack of sufficient progressive training in the workplace, which then forced some of the companies to employ foreign nationals. There was also a need to address the trend towards casualisation, as this resulted in the exploitation of workers. The report was a wake-up call for something to be done about ongoing discrimination in the workplace.

Mr L Montjane responded that there was a need for broad based black empowerment. There was clearly not enough employment equity and companies would rather not train their workers. It was also very clear that companies had not changed their mentality towards training. There was a clear need to align broad based black empowerment with employment equity.

Ms N Pillay pointed out that the issue of casualisation had not been covered by the CEE Report. This was a broad issue that needed to be addressed by labour as well as the community.

Mr Mogale remarked that the Department of Labour needed to urgently employ other sanctions on the companies found not to be complying.

Ms L Moss (ANC) remarked that there was very little progress made in terms of employment equity since the CEE 2004 Report. There was need to have a follow-up meeting to discuss the report and the lack of progress on employment equity.

Mr Montjane commented that though small progress had been made, the Woolworths programme involving people with disabilities was continuing and it was pleasing to note that there was an increase in the number of employees from 101 to 106.

Mr Mkalipi remarked that the progress made by Woolworths was commendable. However one need to know whether there was any progress made at the top level in terms of employment equity. The Skills Development Act was also specific in its alignment with the Employment Equity Act. There was a need to ensure that such alignment takes place in companies.

Mr Manyi remarked that recommendations needed to be made as a follow-up to the report. The Department needs to ensure that reporting takes place consistently and timeously.

The Chairperson remarked that there was an urgent need to do something about the trends highlighted in the Report. These trends need to be addressed taking into cognisance the high number of unemployed graduates in the country.

The meeting was adjourned.