Call for empowerment act to trump sector codes

Posted by Transcend
Monday, 11 March 2013  |  Comments

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THE Commission for Employment Equity and the Black Business Council have made a strong call for the law on broad-based black economic empowerment to trump all sectoral charters and codes of good practice to ensure that government objectives are achieved uniformly across the economy.

Their comments were made during public hearings in Parliament on Friday on proposed amendments to the Broad-Based Black Economic Empowerment Act. One of the proposed amendments would make fronting -the misrepresentation of a company’s BEE status -a criminal offence. The bill also proposes that a broad-based black economic empowerment commission be established.

Commission for Employment Equity chairman Loyiso Mbabane told MPs there had been a lot of noise and heat generated about sectoral charters and codes but little progress had been achieved with them. He proposed that the system be scrapped.

Implementation of empowerment should not be voluntary and left to the discretion of industries. Instead, all companies should be subject to the same legal requirements and the act should trump all other empowerment instruments. This would encourage synergy and alignment between all the role-players in the economy.

The sectoral approach, Mr Mbabane said, was "very clumsy and it turns a very important transformational and empowerment project — a constitutional imperative — into a discretionary, almost voluntaristic compliance matter subject to the whims of each sector".

Black Business Council CEO Xolani Qubeka also supported the inclusion of a "trumping clause" in the bill as imperative. He described sector codes as analogous to a "gentlemen’s agreement" with ministerial endorsement and said they created confusion and uncertainty.

"By their very nature the sector codes are reformational and amount to window-dressing in that they seek to legitimise current untransformed practices by simply providing new ‘BEE’ labels to such practices.

"All the sectors with gazetted sector codes are today no better transformed than the sectors without sector codes — in certain instances transformation is actually reversed," Mr Qubeka said.

"Sector charters and codes lower standards in that for an industry standard to be agreed it becomes natural to opt for the lowest common denominator."

Both the Commission for Employment Equity and the Black Business Council opposed the proposal that organs of state be given the discretion to implement the codes of good practice "as far as is reasonably possible", saying their compliance should be mandatory, even for small companies, and they should not be given an escape clause.

Mr Mbabane said the commission also opposed the proposed collapsing of the employment equity element of the scorecards with the management element. In addition, the employment equity element should be increased by another five percentage points, from the current 15% to 20%.

"Let us not bury employment equity in the altar of creating managers," he said.

Mr Qubeka said there had been a "frontal" attack on empowerment, which should be resisted.

Manufacturing Circle executive director Coenraad Bezuidenhout believed that a review of the sectoral codes should be considered.

"Sectoral codes lead to complications for companies with activities that span sectors. Investigating a simplification of the current system may therefore be warranted," he said.

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