Companies face stiff fines if Manyi bill is passed

2011-03-03 09:13

Companies in the Western Cape faced fines as high as 10% of turnover should they not comply with proposed labour equity laws drafted under the then labour department director-general Jimmy Manyi, the SA Institute of Race Relations (SAIRR) said today.

Companies in the Western Cape would faced “enormous challenges” if the proposed changes to the Employment Equity Act (EEA) were signed into law, the SAIRR said.

“Companies in the Western Cape wanting to avoid fines that could go as high as 10% of turnover will face enormous challenges in complying with a bill drafted by the department of labour when Jimmy Manyi was its director-general,” it said.

Manyi has been under fire since a video clip was broadcast on the YouTube website last week of him saying that there was an “oversupply” of coloureds in the Western Cape.

Yesterday, further remarks attributed to Manyi about Indians were published by the Democratic Alliance.

“Indians, we should be having only 3% [of positions on management]. They are sitting at 5.9%. I call it the power of bargaining. Indians have bargained their way to the top,” Manyi said in an address delivered to the Durban Chamber of Commerce last year.

National Planning Minister Trevor Manuel called Manyi a “worst-order racist” over his comments.

Cosatu said Manyi’s utterances cast serious aspersions on his suitability for senior public office and that his attitude and comments, made while he was director-general for the department of labour, may have impacted on the changes to the act.

Government Communication and Information Services deputy CEO Vusi Mona has since apologised for the statements on Manyi’s behalf.

The ANC and the Labour Minister Mildred Oliphant have also repudiated the comments.

“Ironically, though Manyi’s comments about coloured ‘overconcentration’ in the Western Cape have been repudiated by both the ANC and Minister Manuel, the bill has been approved by the Cabinet and is in line with Manyi’s thinking,” the SAIRR said.

The institute pointed out that an employer of 1 000 people in a factory in the Western Cape who had succeeded in fulfilling regional demographics would have a workforce that was 29.1% African, 54.8% coloured, 0.5% Indian and 15.6% white.

“In actual numbers, his workforce would comprise 291 Africans, 548 coloured people, five Indians and 156 whites.

“But because the goal posts are to be shifted from regional to national demographics, his workforce will have to become 73.7% African, 10.9% coloured, 3.2% Indian and 12.2% white.”

Anthea Jeffery, the head of special research at the institute, said employers seeking to meet the new targets in Manyi’s bill had four options.

“Option one, the employer can keep his workforce at 1 000 people. However, to attain the right racial proportions, he would have to reduce his coloured staff from 548 to 109 and his white staff from 156 to 122, while increasing his African employees from 291 to 737 and his Indian workers from five to 32,” Jeffrey said.

“He would thus have to lay off 439 coloured people and 34 whites.”

The employer’s second option would be to reduce his overall workforce by 60% so that his existing 291 African employees made up 73.7% of his reduced workforce of 395 people.

“He would then retain all his 291 African employees, but would have to bring down his coloured employees to 43 and his white staff to 48. His Indian employees would need to go up to 13. He would then have to lay off 505 coloured and 108 white employees.”

An employer’s third option, should he not want to retrench any of his coloured staff, would be to increase the staff complement more than fivefold to 5 032.

“His existing coloured staff of 548 people would then make up 10.9% of this expanded workforce.

“To acquire the correct racial proportions, he would then need 3 709 Africans, 161 Indians and 614 whites.

“He will have to quintuple his staff not because of increased demand for his products but because this offers a way of avoiding either costly retrenchments or new fines ranging from 2% to 10% of turnover.”

The fourth option for an employer was to ignore the new racial targets envisaged by the bill and run the risk of the new fines, which would also be more difficult to avoid because the bill removed “key defences” based on skills shortages and financial constraints.

“These illustrative figures show how difficult compliance will be. They also show that coloured people in the Western Cape will either lose jobs or find it virtually impossible to obtain employment.

“The bill is thus calculated to encourage coloured people who want work to move elsewhere, exactly as Manyi has urged.”
Jeffery said it appeared as though Manyi’s “racism” had infiltrated “the highest echelons of government”.

She said, however, that Manuel’s comments were also “bizarre”.

“For though he has branded as racist remarks about ending coloured ‘overconcentration’ in the Western Cape, he is also part of a Cabinet that has approved a bill that will help achieve what Manyi wants.”

Trade union Solidarity said research it conducted found that a million coloureds in the Western Cape and 500 000 Indians in KwaZulu-Natal could lose their jobs if the bill was signed into law.

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