GABRIEL CROUSE | Nxesi’s race strategy only puts more black people in the unemployment line

Minister of employment and labour Thulas Nxesi offered an opinion piece titled “Employment Equity status of the South African labour market: 24 years later”, which made an extremely important point by way of omission. Not once did the minister mention the un-employment figures.

Over the past decade, the Institute of Race Relations has commissioned numerous public opinion surveys, conducted by different independent, industry experts, using different methodologies but always coming to the same conclusion: to the vast majority, unemployment is South Africa’s number one problem.

Looking at the facts shows why this is no surprise. In my five years of high school, the black unemployment rate dropped 7 percentage points to 24% by 2007. That took place under the fiscal and monetary discipline of the Manuel-Mboweni era, which is one reason why as a teenager I used to sing the praises of the only political party I ever loved, the ANC.

Then the tide turned. Black official unemployment had climbed 8 percentage points to 32% before the pandemic. At the latest official tally, black unemployment was up a further 5 percentage points to 37.2%, and the post-lockdown trend is worsening.

The picture is starker if you look at the expanded definition of unemployment, which includes those who have given up seeking work. On that measure, the black unemployment rate is 47.3%. This hideous development occurred in the BEE era, where BEE is understood in its vernacular sense to refer to all race law.

This is a serious problem, and it needs to be engaged with in good faith. Minister Nxesi’s opinion piece on the Employment Equity Act (EEA) focused on the uber-rich part of the economy. Still, he must seriously consider whether that focus contributes to the increase in black unemployment.

I want to assume that the minister acts in good faith and so has an open mind to the possibility that his policy unwittingly harms poor black people. I know that Nxesi told parliament that race-law strategy needs to be “more aggressive” when he called for the latest EEA amendments, so he might be more interested in fighting than solutions, which is Julius Malema’s style of politics. Our door, however, is always open to reason. We will continue to reach out to the minister with workable solutions to address mass, and rising, unemployment in the BEE era.

So let me start by saying it would be misleading to say that BEE, in the broad sense, is the only reason that black unemployment is now so much worse than in the 2000s. Many factors impact employment, starting with lethal mismanagement of the dollar system, foreign wars and commodity cycles. There are also local factors such as the self-dealing of former president Jacob Zuma and his keepers.

But the state capture commission report clearly articulated the nexus between race law in procurement and state capture. By failing to resolve what should matter more, making a few rich black people even richer (with many rich whites milking the cow too), or getting the best value for money, the system makes it hard to tell when someone is being corrupt. That makes corruption easier to pull off.

As every person who buys groceries knows, “value for money” is not about race. South Koreans, Japanese and Chinese people provide many of the best deals, as do many legitimate black businesses. Individuals buying toilet paper look for a good deal. It is only when government departments buy toilet paper with a racial motive trumping “value for money” that corrupt elements can charge hundreds, or thousands, per roll. Race law incentivises rent-seeking and hurts buying power, which destroys jobs.

Second, race law in employment specifically chases away investment. When the money runs away,  job opportunities run after it into other countries, which means fewer jobs in South Africa. Poor black people evidently get hit the hardest by this.

Third, the “more aggressive” EEA is the old EEA in the public sector lifted, twisted and then forced onto the private sector. In the public sector, the EEA has literally meant preferring an empty chair to qualified people. Now Nxesi is about to force that on the private sector too.

In the notorious Barnard case, a police post was kept vacant rather than promote a white woman. In the more recent Nadesan case, the eThekwini municipality kept a fire equipment oversight position empty rather than promote an Indian man. According to Nxesi’s spiteful policy, it is better if no one does the job. That directly promotes unemployment.

In a recent interview, Nxesi advised any Indian people who could not find work because companies were already at “target” on the relevant position “must look for the jobs at other companies”. The “target” for Indians or coloured people is set at “0.0%” in 136 instances at provincial level. At national level Indian men are at, or above, “target” in 89% of the 72 listed “targets”. Indian women are at, or above, “target, in 96% of the listed “targets”. Hundreds of thousands of Indians may have to take Nxesi’s advice. There are even more cases where coloured people are subject to “0.0%” targets.

This shows Nxesi’s policy really is “more aggressive” on race in the private sector, but in the public sector “0.0%” targets have already been used against Indians. In the Naidoo case, an Indian woman was denied promotion in the police force in Gauteng, because the target was “0.0%”. The Labour Appeal Court upheld the racial rejection saying one day the target might change and, in the meantime, Indian women were still getting promotions in KZN, so the complainant could just move.

Imposing this kind of humiliation in the private sector is not just bad for the people directly cut down by Nxesi’s “targets”, it hurts investor confidence too, which again hurts black unemployment.

Beyond that, black men are above “target” in six national instances, and black women are above “target” in nine instances, meaning black people can also be told to “look for the jobs at other companies” due to Nxesi’s targets.

On the other end of the black-inequality spectrum, Discovery Bank chairperson Reuel Khoza complained that the government had not conjured enough black billionaires. “To produce something like two, three or four, but less than 10 billionaires in close to 30 years, it cannot be justified.”

This matches Nxesi’s complaints about an “Irish coffee economy” where the “creamy layer” on top is too white, which his “aggressive” new “0.0%” EEA is aimed at redressing by adding black people to the richest positions.

This is a mistake on two fronts. First, replacing BEE would actually help black entrepreneurs do better in a growing economy, a point Herman Mashaba makes with inimitable force. But Nxesi is a communist and unlikely to be persuaded by a self-made businessman like Mashaba.

So let us suppose, just for the sake of argument, that Nxesi’s “0.0%” EEA would somehow add six more black billionaires to the window. Very good. Would that compensate for adding a million poor black people to the unemployment line in a shrinking skunk-of-the-world economy? No.

We have a better plan, Economic Empowerment for the Disadvantaged, to put value-for-money and need first, and pigment politics where it belongs, in the ashes of history.

Crouse is a fellow at the Institute of Race Relations