Construction sector employment equity battle brews

A battle is brewing between the construction industry and the Department of Employment and Labour (DEL) over recently published regulations under the Employment Equity Amendment Act.

The regulations, published earlier this month despite a lack of consensus between construction industry associations, contain some controversial provisions.

These include:

• The imposition of employment equity targets on various sectors of the economy;
  
• Preventing a company that is issued with a non-compliance certificate (by employment equity inspectors) from bidding for public sector work; and
  
• The alleged “double jeopardy” that will result if a company is excluded from bidding for public sector work if, during the previous 12 months, the Commission for Conciliation, Mediation and Arbitration (CCMA), or the Labour Court has found it guilty of unfair discrimination.

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Formal objection filed

Stefanutti Stocks CEO Russell Crawford said last week that the construction industry is preparing a submission to be sent to Minister of Employment and Labour Thulas Nxesi, objecting to the Employment Equity Amendment Act “and the fact the targets set for the construction sector were set without any meaningful consultation or supported by scientific data”.

The amended act forces employers who employ more than 50 people to adopt more aggressive employment equity targets in their employment equity plan.

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Prior to the amendment, employers were able to choose their own targets based on race, gender and disability provided the plan would result in reasonable progress to correct the effects of past and ongoing discrimination in the work place.

The draft regulations identify various economic sectors and proposes percentage equity targets for each, as envisaged by Section 15A of the act, with the progress of designated employees assessed on these set targets.

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Challenges outlined

Consulting Engineers South Africa (Cesa) CEO Chris Campbell, who is also a board member of Construction Alliance South Africa (Casa), an umbrella body of more than 36 industry associations, highlighted several challenges regarding the regulations.

Campbell, who led the Casa team in its engagements with the DEL on the act when it was still a bill, said they tried to have meaningful engagements with the DEL on the bill but believe the department largely had “absolutely no intention of listening to what we thought was going to be a more sustainable way of embarking on this process”.

He said Casa tirelessly tried to convince the department to work together with the alliance, which is not arguing against the motive behind the setting of targets for the industry, but rather what targets can realistically, reasonably, and rationally be enforced on companies.

“We outlined to them, some of the constitutional flaws that exist in that legislation as it stands, and the need for a more detailed exercise and research to look at what the numbers look like if the targets they are considering are implemented,” Campbell said.

“They [DEL] went through the motions of the consultation with very little appetite to absorb, or take in [suggestions], or even collaborate.”

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Divided on targets

Campbell said Casa members are divided regarding their views on the regulations, as some entities are quite happy with the proposed targets while others believe they are not achievable, even within the next five years.

He said the proposed targets are out for public comment but are “laughable because some of the targets that have been set don’t add up to 100%”.

“They [DEL] can say it’s just an error but for me it’s just symptomatic of people who just don’t care about the impact of what they are hoping to achieve,” he said.

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An ‘incoherent mess’

This led to constitutional expert Professor Pierre de Vos recently describing the targets in the draft regulations as “an incoherent mess”.

Campbell said the figures used by the department to set the targets are drawn from exactly the same figures that were used in the broad-based black economic empowerment (BBBEE) codes – but that the Employment Equity Amendment Act and the BBBEE codes are not aligned.

Campbell said the problem with this is that there was negotiation on the sector codes to look at the ratios, and points were not allocated equally because in some instances it would have been difficult to fulfil the conditions.

In addition, the codes had four dimensions, and if an employer did not score high enough in terms of the sector scorecard in respect of ownership and management, for instance, there were other elements they could focus on to achieve a decent score.

Campbell said the DEL also claimed it looked at the economically active population in setting the targets but this presupposes that every profession or industry is almost the same in respect of its ratio and breakdown in the economically active population.

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Compliance inspectors

He further questioned what controls there would be over compliance inspectors. He said they would have enormous powers because they could issue a non-compliance certificate that renders a company ineligible to tender for state work.

“There must be a stringent governance process around these inspectors. What controls are there for these inspectors … [and] who do they answer to, or is this just not another avenue for corruption?” he said.

Roy Mnisi, executive director of Master Builders South Africa (MBSA), a member of Casa, confirmed that consensus could not be reached among Casa member organisations about the approach to the employment equity targets.

Mnisi said it was agreed each member organisation should make their own submission to the DEL, which MBSA did.

He said MBSA is still consulting with its members about the published targets and cannot comment on whether it will be supporting or opposing them at this stage.

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No need for further data

However, Mnisi said MBSA does not believe there was any need for further research or scientific data to support the targets – the Employment Equity Amendment Act is not a new act and companies are expected to be reporting on their employment equity plans, which means the necessary information is available.

But he said there may be some misalignment between the act and the BBBEE codes, which “is something that needs to be looked at”.

Mnisi is unsure if the construction industry targets will be achievable but believes the government will be reasonable in engagements with the industry “and we should be able to meet each other half way”.

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Genuine concerns

South African Forum of Civil Engineering Contractors (Safcec) CEO Webster Mfebe said the Employment Equity Act is a historic act and amendments should be a joyous occasion rather than one to be protested against.

However, Mfebe said some genuine issues have been raised about the implementation of the act that seem to be causing ructions.

One of these issues is the “double jeopardy” that employers might experience if in the past 12 months either the CCMA or the Labour Court has found them guilty of unfair discrimination in the workplace. This ruling will result in employers receiving a non-compliance certificate that prevents them from having access to public procurement contracts, he said.

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Mfebe said the administrative burden on the resources of the state also must be addressed because many inspectors will be required to police the targets to ensure compliance, “otherwise it will not even be worth the paper it is written on”.

The DEL had not responded to request for comment at the time of publication.

This article originally appeared on Moneyweb and was republished with permission.
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