'BEE stifles young blacks' prospects'

The percentage of young black people in skilled positions has fallen since 1994 because of fundamental flaws in the system of black economic empowerment, says the head of the South African Chamber of Commerce and Industry, Neren Rau.

And the government's response, as seen in recent revisions of the BEE scorecard, is not going to improve the situation, he says.

According to a 20-year review of skills and employment in the 25-to-34-year age group released by Statistics SA on Monday, only 17.9% of blacks have skilled jobs, which is a lower percentage than 20 years ago.

Rau concedes that the pace of transformation in corporate South Africa has been "less than desirable".

He blames a weak economy for this, rather than a lack of commitment.

But he says the government's demand for quick and easily measurable results has hampered investment in the longer, harder, less immediately rewarding but more important transformation that comes with skills development.

"For sustainable transformation to take place, what is required is a fundamental overhaul of the current system of BEE," he says.

Progress in BEE was measured in a way that attached too much importance to ownership and not enough to the longer term investment needed for training and upskilling.

"Companies were making this investment but also needed to show immediate commitment to BEE and needed to develop scorecards around the areas where you could show immediate commitment.

"Ownership was an area where you could very quickly score a substantial number of points. Whereas if you wanted to train and upskill appropriately, it took more time." This is because it cannot be divorced from experience.

Companies under pressure to produce quick results to satisfy BEE scorecards discovered to the cost of all concerned that this is not a process that can be rushed.

"Those who rushed the process found themselves with previously disadvantaged employees in positions they struggled to cope with."

The low percentage of blacks in skilled positions is not a failure of corporate leadership or willingness, he says, but a result of the way the transformation system is designed.

"The commitment has been there. The will has been there. Where it may be read to have not been there, the corporate leadership realised early on they were in a bit of a Catch 22.

"If they wanted to do this on a sustainable basis, it would take time and investment. But going this route meant their BEE scorecard would suffer in the interim.

"They had to deal with this conundrum and some poor decisions may have been made as they tried to balance these two sets of demands."

There was a conflict in the system. Companies realised that a tick-box approach was required to satisfy the scorecard.

Even if it had little to do with sustainable transformation, there were negative repercussions from licensing to securing government contracts to doing business with partners generally, even in the private sector, if they failed to tick the boxes.

"The design of the system is flawed. We need to acknowledge that and fix it."

The government's recent revision of BEE scorecards is simply compounding the problem, says Rau. "What we've done in the recent revision of scorecards is we've acknowledged the failings but tried to fix the same flawed system.

"For sustainable transformation to take place, what is required is a fundamental overhaul of that system and a longer-term perspective on transformation."

Revising the scorecards will have a demoralising effect on business and further impede the kind of sustainable transformation the country so badly needs.

"Transformation requires investment.

"And when you move the goalposts after less than a decade, firms have to, in some cases, write off their initial investment and reinvest in the new system.

"This is a huge ask in very difficult economic times and really demotivating in terms of the achievements firms want to deliver on transformation.

"It is very disheartening to find that, after making substantial investments in transformation under the original scorecard, you lose two places under the new system just because the goalposts have been moved.

"That is not the way we should go about this," he says.

Instead of questioning the commitment of business to transformation whenever another set of statistics shows how low the percentage of blacks in skilled jobs is, the government should fix the education system.

"However rapidly you try to push transformation, the structural problems will come back to bite you. The government should have spent the first six years [in power] fixing the education system.

"If they'd just done that, all the other transformation elements would have been automatically dealt with as previously disadvantaged youngsters progressed through the system and entered the workforce.

"Now we have to say, 'stop, this is what's happening, we now need to rethink the way we approach this'."

He says it is time the government accepts that business is as serious about transformation as anyone else.

There is no need for draconian penalties or threats or revised scorecards to drive home the message.

"If you don't empower the majority, then your market is the minority.

"Businesses don't have to be told this.

"Transformation is a no-brainer. They know this."