It is significant that Business Unity South Africa (BUSA), a lobby group for large corporations invested in South Africa, is taking the government to court to oppose racial targets forced on their members by the Department of Employment and Labour. For anyone who has followed business and government engagements for the past 30 years, it is remarkable that business is confronting the government at all, and more so that they are doing it on an issue of race and transformation.

In September, the labour department brought into effect racial employment quotas that companies invested in South Africa would be forced to comply with. Failing to comply would lead to all manner of (sometimes severe) penalties. The government maintains that the targets, in practice quotas, are required because large corporations refuse to employ the requisite numbers of black people (and to a lesser extent women and people with disabilities). The inference is that the companies in question are racist, that this is holding job creation and economic growth back, and that the state can force them out of that racism and thereby get the economy to grow faster.

It is all absurd. BUSA’s members range from Sasol, Deloitte, MTN, Sanlam, PwC, and Aspen to the Minerals Council, Sugar Association, and Hospital Association. These are firms and organisations that have (sometimes to too far an extent) entertained every government edict they have been subjected to, including where the edicts have harmed their industries and the broader economy.

Now, they seem to have had enough.

Courts

In explaining why it had turned to the courts, BUSA said that it had: “consistently engaged with the Department of Employment and Labour in good faith. These engagements included formal meetings, data submissions, and a detailed presentation to the Minister raising urgent concerns with the consultation and methodology process…[however]…What took place was not meaningful consultation; it was a presentation. As social partners, we cannot allow performative engagement to substitute for genuine collaboration.”

BUSA goes on to set out how the quotas make no sense and appear to have been conjured up without any logical basis or sense of the practical implications of their application – all of which is in practice to say that the demands of the state and the reality of the economy (and the skills base) are now so fundamentally at odds with each other that something had to give.

It is very good that South Africa has reached this point, and several good things may come from this.

Align thinking

One is that BUSA’s move starts to align corporate South Africa’s thinking with public opinion. Polls show time and again that South Africans are not strongly attached to early formulations of empowerment policy. In the public mind, if a company creates jobs and pays taxes, it deserves a 100% empowerment score.

Another is that BUSA’s move is a step to perhaps getting effective empowerment measures in place, which South Africa sorely needs. BUSA says it does not oppose transformation (which is of course correct) but that transformation efforts must be grounded in economic reality and be conducted with a view to whether they harm the economy or not. That is the right line for business to take and, taken to its deeper conclusion, is a line that may lead to a point where corporate empowerment and transformation scores come to be measured in fixed investment contributions, job creation numbers, tax payments, and export earnings.

These are the building blocks of real empowerment and transformation – as this newspaper has maintained since day one.

Pressure and reform

Lastly, the pressure BUSA is applying will do the Cabinet a lot of good too. There is nothing more destructive to a country than when powerful actors entertain the poor ideas of its politicians. What would cause a less than inspiring government to reform if investors themselves appease policies that are ruinous? That’s how you end up with a decade of low growth and a 30% unemployment rate.

Pressure is the friend of reform, indulgence and appeasement the enemy. There are open-minded ministers of all political hues. Their efforts at reform become easier when external pressure for sensible policies is applied, as they can use this to break the statist mindsets of their peers and instead think creatively and sensibly on how economic success might be achieved.