Capping pay and bonuses for senior managers and executives earning more than R550 000 a year, restraining wage settlements for workers earning between R3 000 and R20 000 a month, a major rethink of black economic empowerment (BEE) and a “red-tape elimination campaign”.
As summed up by Ann Crotty in today's Business Report. Engineering News blared - "Patel’s growth plan calls for ‘major’ BEE overhaul" .
This is what Ebrahim had to say about BEE, you can download the whole document here (fast-forward to page 21)
Government has adopted the position that black economic empowerment (BEE) should seek to empower all historically disadvantaged people rather than only a small group of black investors. To this end, it adopted the Broad-Based BEE Act, which calls for expanded opportunities for workers and smaller enterprise as well as more representative ownership and management.
Current BEE provisions have, however, in many instances failed to ensure a broad-based approach, instead imposing significant costs on the economy without supporting employment creation or growth. The present BEE model remains excessively focused on transactions that involve existing assets and benefit a relatively small number of individuals. The New Growth Path requires a much stronger focus on the broad-based elements of the BEE regulations – ownership by communities and workers, increased skills development and career pathing for all working people, and support for small enterprise and co-ops – as well as a new emphasis on procurement from local producers in order to support employment creation.
The following shortcomings have emerged in the implementation of BEE.
- First, ownership and senior management issues receive disproportionate emphasis. The unintended consequences of this trend include “fronting”, speculation and tender abuse.
- Second, the regulations do not adequately incentivise employment creation, support for small enterprises and local procurement. The preferential procurement regulations aggravate this situation by privileging ownership over local production. (I think the issue is a little deeper than this Ebrahim, we have ridiculous labour laws and unions getting in the way here.)
- Finally, the broad-based BEE regulations penalise public entities as suppliers. The democratic state owns public entities on behalf of our people yet the regulations do not count them as “black empowered”. (Don't know what Ebrahim is on about here, these entities are owned by the people and should be ignored. Mind you, Ebrahim is a commie so it makes sense that he would push for more state entities.)
A major re-think is needed of the BEE framework and policy to achieve South Africa’s developmental and growth goals. The dti and EDD will work with the relevant government departments and the BBBEE Advisory Council to ensure:
- A substantial revision of the BBBEE Codes to do more to incentivise employment creation; investment in new productive capacity by black entrepreneurs, including small businesses and co-ops (using among others stronger local procurement); skills development and employment equity; collective and other forms of broad-based ownership; and sector strategies to create jobs.
- Consistent implementation of broad-based (instead of narrow) BEE in all sectors, with a systematic assessment of the effects on the cost of capital and investment.
This is a dramatic (I mean DRAMATIC) noise coming from a minister. Something that Rob should be talking about - not fronting. There have been utterings from the DTI and other black commentators that this is where we need to be heading. By focusing on the lower elements of the scorecard you reduce the possibility of fronting and offer a much better measure of success, like creating 5million jobs by 2020.
For a critical view of the New Growth Path you would do well to follow the links at the bottom of this report.
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