Business groups in South Africa are starting to organise opposition to South Africa’s newly enacted employment equity laws – while opposition party, the DA, gears up to launch a High Court challenge to the laws.

Trade union Solidarity and business interest group Sagelika announced on Tuesday (6 June) that over 30 organisations have come together to fight the laws, aiming to stamp out any prospect of successful implementation.

The groups in question have signed a resolution to fight the proposed Employment Equity Act (EEA) amendments. The participants involved have undertaken to reject the government’s social manipulation system and protest against the law.

Under the new Act, the employment minister is empowered to set sector-specific numerical targets for the racial and gender makeup of designated businesses, which must be achieved over five years.

The targets are expressed as a percentage of the population, either nationally or provincially, and it is up to designated businesses to choose one or the other in executing their transformation plans, the department said.

Designated businesses are all businesses in South Africa that employ more than 50 people. The laws apply to all designated businesses – even those with no intention of doing business with the state.

Organisations at the workshop included civil society organisations and political parties, with more than half being business-focused and spanning industry organisations, chambers of commerce, and employer organisations.

The new laws, which were signed by President Cyril Ramaphosa in April, are not yet in effect, with the Department of Employment and Labour anticipating promulgation in September 2023.

Despite this, the laws were met with immediate backlash, and the department has already published the sectoral targets for public comment – drawing criticism from legal experts who warned that the targets may have jumped the gun.

Experts also poked holes in other aspects of the targets, pointing out that they are not clear in intention, contain numerical and counting errors, and may prove to be unimplementable given the reality of South Africa’s employment landscape.

Legal challenges

One of the participants of the workshop, the Democratic Alliance (DA), said it will approach the Gauteng High Court in Pretoria this week to declare various sections of the EEAA unconstitutional and invalid.

According to the DA, the draft form of the black economic empowerment laws and proposed racial targets for various sectors issued in terms of section 15A last month will, as a result, also fall.

At heart of the issue with the laws is that, while they are being touted as targets, they could be interpreted or positioned as racial quotas. The department has denied this, saying the targets are flexible.

The DA and other opponents are challenging this.

“In our submission, the DA will demonstrate that the term ‘numerical targets’ used by the Act is a misnomer and that, in reality, the Act sets rigid racial quotas for four different job levels across 18 economic sectors,” the party said in a statement on Tuesday (6 June).

The DA argues that these new laws will come with crippling penalties, including the inability to do business with the state, the cancellation of existing state contracts, compelling orders, and fines.

“It will not only directly lead to mass job losses but also accelerate capital and skills flight out of the country at a time when our economy is already in a deep crisis brought about by load shedding and economic ills,” added the DA.

The opposition party noted that these laws violate the constitutional rights to equality, freedom of trade, occupation and profession, as well as the original Employment Equity Act’s own prohibition on quotas.

Solidarity is also working on a legal challenge, with the union noting that the only way the targets could ever be reached is though strict application, which would amount to quotas.

A report by the Solidarity Research Institute (SRI) noted that there are only two ways that the sectoral targets could be reached – either the economy has to grow so more jobs can be created to absorb the requisite people to hit the targets, or – more likely – the current composition of workers needs to be replaced to represent the targeted spread.

“The government’s new laws will cause a bloodbath in the labour market. It threatens the country’s economy and the well-being of South African citizens,” said the union.