NATIONAL NEWS - The Institute of Race Relations (IRR) has reiterated its warning against the negative effects of what it calls ‘bankrupting race law fines’, saying it will continue to campaign against the Employment Equity Amendment Bill that is currently on President Cyril Ramaphosa’s desk, waiting to be signed into law.
The IRR’s reaction comes in the wake of the furore that erupted following a leaked internal memo from Dis-Chem chief executive Ivan Saltzman, stating that as of 19 September 2022, the company had placed a moratorium on the appointment of white managers in an effort to improve its employment equity and transformation objectives.
In the memo, Saltzman wrote: “It is evident that our organisation’s efforts to effect transformation in terms of our employee profile remain inadequate… Remember, we are growing at a fast rate and a few appointments other than white don’t cut it.
It’s the ratio between white and black that counts… when no suitable black candidate is found and a white is appointed, we need several blacks just to maintain the status quo, never mind moving forward.”
The Dis-Chem board has subsequently issued a statement, stating the company will continue with its transformation journey.
“We have always been cognisant of the imperative to comply with all legislation, including employment equity on our journey to meet transformation targets, and with a priority of employment on merit, based on our view of giving employment preference to previously disadvantaged communities.”
IRR campaign manager Mlondi Mdluli says despite the Dis-Chem board’s statement regretting ‘the wording and tone’ of the leaked document and that ‘it did not reflect our values’, clarity on the issue is needed.
“The ‘tone’ is not of any lasting significance, but the ‘values’ in question are. It is unclear which of Dis-Chem’s values the leaked document misrepresented.
“It is better to face this fact with clear eyes than to attempt to turn away from it. It is in this spirit of transparent, evidence-based discourse that the IRR requests to meet with Dis-Chem to examine the constitutional resources for unambiguously putting merit first, which is exactly where most South Africans want it to be.”
The Employment Equity Amendment Bill was passed by Parliament in May this year and President Ramaphosa is expected to sign it in the coming months, with the implementation date set for September 2023. It will empower Minister of Employment and Labour Thulas Nxesi who, in July 2021, advocated for ‘more aggressive race laws’, to regulate employment equity targets for any economic sector.
Dis-Chem is the second-largest retail pharmacy chain in South Africa, with more than 250 stores and around 20 000 employees, consisting of 69.3% black Africans and 15.5% white people.
Last year, the company’s Broad-based Black Economic Empowerment score went from non-compliant to level 8, the lowest B-BBEE level, when just over 10% of the shareholding from the Saltzman family, who founded Dis-Chem, was sold to an empowerment group.
In the leaked Dis-Chem memo, Saltzman also wrote: “With Dis-Chem being a JSE-listed company, these are harsh measures and necessary if we are to remain profitable and to avoid a potential fine of 10% of turnover, which would cripple the business. This is a real threat at this stage.”
A fine of 10% of Dis-Chem’s turnover would amount to R3.04b, given the company’s R30.4b turnover in the previous financial year.
The IRR’s stance over the racial employment policy at Dis-Chem has been echoed by civil rights organisation AfriForum and trade union Solidarity.
AfriForum campaign officer for strategy Ernst van Zyl described the policy as ‘racial discrimination’ and said: “We encourage our members to stop supporting Dis-Chem if they continue with their racially discriminatory practices and rather support local pharmacies.”
According to Solidarity chief executive Dirk Hermann, if Dis-Chem continues with the policy of placing a moratorium on the appointment of white people, it will continue to take legal action.
A labour law alert published on law firm Cliffe Dekker Hofmeyr’s website earlier this year, titled Paying the penalty for non-compliance with the EEA, states that employers are increasingly being challenged to meet the targets set in their employment equity plans and are facing penalties for failing to do so. It says employers must therefore be vigilant when it comes to compliance with their employment equity plans.
