Original publish date – Fri, 20 Nov 2009 10:15:39 +0000, Keith

Business Report has published an article quoting Jimmy Manyi, the director general of the department of labour, that government will get tough on companies that do not comply with affirmative action and B-BBEE laws.

I understand his frustration – we have the same frustration with companies that refuse to make any effort, while publicly stating that they support the initiative. Our clients lose points if their suppliers do not comply.

The confusion comes when Jimmy Manyi states “His department is planning on introducing a clause into the BEE act which would allow governmen to terminate or refuse contracts of companies that do not comply with the law by June next year.”  The article further states “He said it was his job as the DG of Labour to ensure that this happened.”  The fact remains that the B-BBEE act is administered by the department of trade and industry, not labour. I need to ask “Who is running B-BBEE – dti or labour or treasury?” In the case of employment equity, the department of labout is certainly responsible, but this forms only a small part of the BEE scorecard.

Jimmy Manyi wants to allow government to terminate or refuse contracts that do not comply with the law.  The irony is that government currently does not follow the B-BBEE act. Treasury has been trying for some time to reconcile the PPPFA – the law that government does follow the the B-BBEE act, and it probably will not even be enacted by June 2010. It may well happen that the revised PPPFA makes it mandatory to follow the B-BBEE act, but this will be the responsibility of Treasury, not the DG of labour.

Another issue is that the B-BBEE act is based on a scorecard, so it is not feasible to state categorically that a company complies or does not comply. A key point of the B-BBEE scorecard is levels of compliance. Surely the new clause proposed by Mr Manyi should be based on levels of compliance? In any event it is compliance with the principles of B-BBEE, not the law. The act as is stands makes B-BBEE mandatory only for government and government enterprises, not companies. The dti believes that the cascading effect of each company asking every other company (their suppliers) for a scorecard is a good way to go about ensuring B-BBEE levels of compliance.

Ironically again the enterprises that should become compliant, and which Jimmy Manyi should be concerned about, are the many government enterprises that do not have scorecards, or have very poor scorecards. SAA is a level 8 – pretty poor for the national carrier. The PIC does not even know they need a scorecard!

While I have no problem in ministers and DGs condemning companies for not having a scorecard or not complying with any act, the message that is going out is totally confusing, and contradictory.

The problem with this approach is it encourages those who want to find an excuse to delay their implementation. They will now say they want to wait until the revised act is gazetted, or they want more information before thinking of implementing transformation. I know it is an excuse, and they should be condemned for this, but they will use confusing reports, such as the DG’s comments to justify their inactions.

I do support his call for government to refuse to do business with companies that do not have a BEE scorecard, my problem is that he is sowing confusion.