Black economic empowerment and job creation

In South Africa, participation by blacks in BBBEE schemes has grown from 35 percentage points prior to the introduction of the codes to just under 70 percentage points (EMPOWERDEX 2008). The participation by women’s groups has grown from 40 percentage points to just under 60 percentage points since the introduction of the codes. By 2006, black directors held 25 per cent of the 558 board positions on the JSE with approximately 50 per cent of all JSE companies having entered into a BEE transaction. However, less than 30 per cent of black owners held more than 25 per cent ownership (Khuzwayo, 2006). According to Moleke (2006), the government, as an employer, has made the greatest shift in racial representation and advancement of black people in the labour market, although there are disparities in the distribution at different skills levels.

Despite the improvements evidenced above, unemployment continues to increase at an alarming rate, especially for black South Africans. This means that the implementation of these various government interventions in the labour market has had a negative impact on employment. Many businesses have not expanded because the owners do not want to be bound by the provisions of BEE. Others refrain from increasing their capital and financial transactions to avoid falling within the ambit of the BBBEE Act.

In South Africa, 90 per cent of jobs are created by the private sector. Government must start thinking of ways to allow the private sector to grow and operate more freely, and thus create more jobs. Government must also find innovative ways to encourage more entrepreneurs to enter the business arena and grow the demand for labour. Government needs to reduce its role in the labour market if it is ever to absorb the millions of individuals who, today, are jobless and giving up on ever finding work as a source of income to support themselves and their families.

AUTHOR Vivian Atud is an economist with the Free Market Foundation. This article is an excerpt from the book Jobs Jobs Jobs published by the Free Market Foundation and may be published without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

FMF Policy Bulletin / 5 June 2012