Dis-Chem sticks to moratorium on hiring of whites

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  • Dis-Chem stands by internal memo calling for moratorium on hiring of white people.
  • Union Solidarity says it has sent Dis-Chem a legal letter over matter.
  • The Black Business Council supports the move in principle.
  • For more financial news, go to the News24 Business front page.

JSE-listed pharmaceutical retailer Dis-Chem has issued a moratorium on hiring white people to improve its employment equity profile.

In a letter to senior management dated September 19, founder and CEO Ivan Saltzman announced the moratorium, which includes external appointments and internal promotions.

"It’s the ratio between white and black that counts. So, 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," said Saltzman.

He referred to employment equity targets, and said that as Dis-Chem is a listed group, 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."

Fines for noncompliance with the Employment Equity Act have been increased to a maximum of R2.7 million or 10% of annual turnover, whichever is the greater, for repeat offenders, according to law firm Cliffe Dekker Hofmeyr.

Saltzman said the achievement of set employment equity targets would be incorporated into the bonus structures of management and the "allocation will be issued in due course".

"This will form a large part of your KPAs, probably a third. This is for real, each region has a base from which to work and a target."

Saltzman said no managerial appointments (including senior, middle and junior) were to be made without his "direct approval as CEO".

On Friday trade union Solidarity shared the internal memo in a tweet written in Afrikaans, with its CEO Dirk Hermann saying it had sent Dis-Chem a legal letter about the "harsh" racial stance in it, asking "how on earth a letter like this could ever have been written in the first place".

Hermann claimed that Dis-Chem retracted the memo.

However, Dis-Chem told News24 Business that the "memo still stands, and Dis-Chem reiterates its commitment to the transformation journey". 

READ | Black ownership of South African businesses falls below 30%

"Equality and diversity are important to Dis-Chem, and the group continues to make great strides in ensuring that it maintains progress in this area," the company said in a statement.

It said it was a "proudly South African business, which promotes inclusivity and representation of all South Africans, in their capacity as key stakeholders".

Top executives still mostly white

"If you look at the customers of Dis-Chem they would be more than 70% black people so our issue is that ultimately the management, the ownership of companies and control of the economy should reflect the demographics of the country," said Kganki Matabane, CEO of the Black Business Council, in reaction.

While the organisation had not seen the full internal memo by Saltzman, "from a principle point of view" it agreed with the moves to improve the company’s employment equity profile.

Matabane said companies in general were not meeting their own employment equity targets and that "when we look at the JSE-listed companies, the CEOs are still almost 70% white males so something needs to be done to change this".

"Remember, we are 28 years into the democracy."

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