Government plans to introduce significant amendments to B-BBEE rules in 2022. The Department of Employment and Labour says it envisions the new Employment Equity act to be implemented and enforced by March next year.
On paper, the amendments may seem like a mixed bag for business. On the one hand, the government says the amendments will make it easier for small businesses to comply with the B-BBEE codes. At the same time, more stringent rules are on the cards. The Labour Minister will have more leeway in dictating sectorial B-BBEE requirements. And the requirements for doing business with the government will be significantly tightened.
These are important regulatory developments, and businesses, of course, need to keep ahead of changing rules. But I’m also going to suggest that simply analysing the amendments in dry legalist terms doesn’t reveal the full range of possibilities. The ultimate impact of the amendments will depend, in part, on how they’re implemented. And that, in turn, depends on how much genuine, productive engagement takes place between interested parties.
To explain why I should first briefly sketch out what upcoming changes involve.
Three substantial changes
According to the Department of Employment and Labour, the amendments have three principal aims. Firstly, the Department says the amendments will reduce the regulatory burden on small businesses.
Second, the Employment and Labour Minister will have the power to set sector-specific Employment Equity targets.
And finally, the amendment enacts section 53 of the Act, which regulates the conditions for doing business with the state. In terms of Section 53, government contracts will only be awarded to employers that are certified to be in compliance with the Act.
What does that mean in practical terms? The Act sets various conditions for compliance. In addition to meeting specific Employment Equity targets, employers also need to demonstrate fair conduct. Specifically, an employer cannot have breached the rules on unfair discrimination or have paid employees below the minimum wage within the previous three years.
Let’s consider the second point: the Department of Employment and Labour is granting itself more leeway to determine sector-specific targets.
On paper, that risks sounding like creeping centralisation and bureaucracy for its own sake. But at the same time, the Department says that it is rolling out extensive engagement with stakeholders in various sectors. In theory, at least, the engagement drive aims to enhance the sectoral rules to the benefit of everyone. Indeed, the Department’s online workshops are being conducted under the title “Real transformation makes business sense”.
But what does it mean to say that ‘real transformation makes business sense’? And how does consultation facilitate ‘real transformation’, anyway?
I’m going to suggest that to get the most out of ongoing B-BBEE consultation, we need to conceptualise the process more positively. That is, we need to stop thinking of consultation and negotiation as simply a process of mitigating negative outcomes. Yes, close consultation will help avoid onerous regulations and counterproductive bureaucratic requirements.
And indeed, sector-specific compliance isn’t new. Sector Charters already exist, and hopefully ongoing consultation will refine the regulations affecting different sectors of the economy in a positive direction.
Focus on the positive
But we should also start conceptualising sector input more positively. Stakeholder engagement, at its best, is about seeking strategies that enhance the overall business conditions within a sector. If that sounds grandiose, we can analyse the situation in more concrete terms.
For instance, which initiatives can best help alleviate sector-specific skills shortages? And what are the particular challenges suppliers face within an industry (and where and why does demand lag)?
Some of the most exciting social development initiatives have come about precisely because business, government and other stakeholders have worked together to identify social needs and to develop targeted programmes to address those needs.
Of course, we should not be naive. Some business owners have already expressed concerns that empowering the Minister of Labour to make unilateral changes to sectoral targets could have negative consequences. And of course, there’s substance to these concerns.
But if we also bear in mind that B-BBEE targets present an opportunity, not just a challenge, then business and other stakeholders can focus on driving a B-BBEE framework that is truly inclusive and helps drive economic growth.