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Amendments to laws governing black empowerment will lead to job losses

Thursday, July 12th, 2012

Amendments to laws governing black empowerment will lead to job losses

The government’s proposed draconic amendment to the Broad-Based Black Economic Empowerment (BBBEE) Act, which will criminalise misrepresentations, contravenes its resolution of creating jobs, since the amendment is likely to result in job losses, said the trade union Solidarity today. Although Solidarity censures the misrepresentation of a company’s black empowerment (BEE) status, the trade union believes that this is symptomatic of a larger problem to be addressed.

This comes after President Jacob Zuma recently confirmed that the government plans to fine companies that misrepresent their own or another company’s BEE status with up to 10% of their yearly turnover. Any person, not necessarily only the owners or management of the companies, who misrepresents any company’s BEE status could face up to ten years in jail.

According to Johan Kruger, Head of the Solidarity Research Institute, the proposed amendments to the BBBEE act will result in prospective business owners having to adhere to stricter requirements in order to legally run a business and create wealth. “Companies that misrepresent their BEE status might have made a bona fide mistake since the requirements are already very complicated. Those who do so deliberately may do so, among other reasons, as a result of a shortage of skills under black South Africans. The amendments to the Act will further increase the compliance and administrative burden on companies and the government. Companies will be placed under undue pressure not to make mistakes as they can be prosecuted.”

Kruger said the proposed amendment to the BBBEE Act would have a negative effect on the creation of new, sustainable job opportunities; bring entrepreneurship to a halt; and could even lead to the closing of existing businesses and subsequent job losses. “BEE only benefits a small group of people and actually enriches those who have already benefited from BEE while welfare does not filter through to those who really need to be empowered. The government labours under a misconception if they think stricter legislation will promote job creation and the growth of the economy as the proposed amendments will further hamper the growth engine of the South African economy, namely private enterprises and entrepreneurs. Broad-based empowerment will only become a reality when the focus shifts to skill development.”

Solidarity believes that the best way to give people hope for the future and to implement real transformation is to empower them with knowledge so that they can take their place in society.

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