The talent drain: the effects of employment equity on the South African talent pool

January 12, 2017

Andrew Rosenbaum

This post-apartheid South African legislation aimed to bring more people of colour into top-level corporate jobs. But statistics from the ILO show that’s not happening. Commentators complain of a system in need of reform, but there are plenty of companies that do manage to navigate it – and ultimately recruit top talent.

There is a growing body of opinion in South Africa that affirmative action legislation has not only failed to achieve its objectives, but has also had a punishing effect on employment quality in certain professions, and at certain levels.

South Africa’s affirmative action regulation consists of two pieces of legislation: The Employment Equity Act of 1998 (updated in 2013) was first passed in an effort to redress the disadvantages in employment experienced by designated groups. Broad-Based Black Economic Empowerment (B-BBEE), passed in 2007, is a set of policies from the South African government that intended to bring about the involvement or participation of people of colour, and the disabled, into the mainstream economy.

But neither has succeeded as planned. According to International Labour Organization statistics, after nearly 20 years, less than 15% of high-level jobs in the country have gone to black men, and the percentage of black women in such jobs is tiny.

Conversely, an increasing number of top-flight South African lawyers have headed to London, as well as to Dubai and Australia. “There’s no doubt that it has contributed to a so-called ‘white flight’ from South Africa,” says Ben Cockram, Associate Director – Legal, Compliance & Policy/Government Affairs Search – Middle East, Africa, Turkey at Taylor Root.

“The affirmative action legislation has not achieved its objectives,” complains Azar Jammine, head of the Johannesburg research and consulting firm Econometrix. “The empowerment is not going to a broad-based group of disadvantaged individuals; instead, the benefit is going to a small educated minority who have been able to land high-level corporate jobs only thanks to the legislation.”

“The legislation looks good on paper,” Cockram points out. “But it just isn’t applied in ways that might enhance its reputation, and can at times do a disservice to the people it is trying to benefit.”

The result, Jammine adds, is a flight abroad for those talented professionals who don’t fit on to a specific scorecard and who are looking for a rewarding career path.Changing history

One thing is for sure, the gross inequalities in South African employment have to be addressed. As International Labour Organization Pretoria Director Joni Musabayana told us in an interview:

“The affirmative action legislation is an attempt to change history, after centuries in which people of colour have suffered economic disadvantage,” Musabayana said. “8.3% of the population here is white, yet white men hold more than 75% of the top corporate jobs. Surely this effort to reduce inequality is only fair?”

After white men, white women have a substantial share of the top jobs, followed by black men. But only very few black women even have a chance at such positions.

Musubayana notes that progress has been slow. “But you cannot expect to change an entire culture in less than 20 years,” he adds. “When the legislation was first passed, top corporate jobs, along with most wealth, were exclusively white. Bear in mind that we are trying to correct a deeply ingrained injustice.”

Jammine disagrees. “The current system needs to be reformed,” he says. “Given the state of the South African economy, and the challenges that businesses face in operating here, the affirmative action legislation has simply added a terrible layer of additional complexity.”

Shrinking talent pool

But experts are concerned about the effect of making the best jobs available to those who may not be qualified to undertake them.

“The result is that our clients are drawing from a limited talent pool, and so companies that move to South Africa must expect a recruitment challenge,” Cockram says. “One the one hand, South Africa is losing talented individuals to international markets because they don’t fit into the BEE [Black Economic Empowerment] bracket. On the other, those individuals who do ‘tick the box’ haven’t always been afforded the type of professional development required to undertake the top roles. They are thrust into positions they are not ready for and business, as a consequence, suffers.”

This isn’t to say, he continues, that it’s impossible to navigate the system and build up a roster of viable candidates. “There are a number of excellent BEE candidates. We just can’t keep moving them once a year to new roles. It’s not sustainable.”

Under the terms of the legislation, it’s a matter, literally, of building up a compliance “scorecard”. This measures the initiatives that the business is taking to increase participation from the disadvantaged.

Businesses need to be clear about how to increase their scores when they are planning a recruitment search. This is critical if they intend to do more business with government entities in particular. That means it’s going to be a key issue for multinationals and local banks.

“For most businesses, it’s a question of optimising their recruitment programmes around the requirements of the legislation. The key task is getting a complete picture using market maps that will show you how best to address your compliance with the legislation in the round. In many cases, you’re going to find excellent candidates within the terms of compliance – often as a result of their gaining experience through previous supported employment,” Cockram says.

“A generation from now, I suspect we’ll look at B-BBEE as having done an important job. The future prospects for the South African economy as a whole do undoubtedly rest on a widening of the talent pool – bringing in, and developing, talent from previously disenfranchised groups is a must. But it needs to start at a grassroots level, not in the boardroom.”

So the outlook is not entirely grim for businesses seeking to recruit talent in South Africa. “It’s a challenge, because the system can interfere with the career path of top-level executives and professionals like lawyers,” Cockram adds.

“It’s too complicated, too expensive and too much of a challenge,” Jammine says. “But the pipeline of qualifying candidates, even for jobs at the very top, is gradually building up. Let’s hope the system will evolve and become less of a challenge to companies, while at the same time coming closer to achieving its social goals.”

The answer in the short-term to sourcing the right talent within the confines of legislation? “Find a recruitment partner who knows the market, and can show you, unequivocally, what your options are, right across the board” says Cockram. Until such a time that the legislation is tweaked in a way that benefits everyone, the best option is to go in with eyes wide open.

Andrew Rosenbaum is a journalist and corporate writer who has worked in Europe, Eastern Europe, the Middle East and Africa for the past 15 years. He has written for the New York Times, the Telegraph, Time magazine, Euromoney, as well as for more specialised publications like CGMA magazine (Chartered Institute of Management Accountants). He’s also been a thought leadership writer at KPMG, FreshMinds, and for ZS Consultants. He has written extensively about Emerging Markets, macroeconomics, international affairs, finance and technology. He’s at work on a book about Fintech for a major publisher.

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