Through centuries of racism a huge imbalance in resources and skills in families and communities arose. By the end of apartheid, management positions were mostly occupied by White people, property was also largely in white hands. There are measures that can fight the exisiting inequality in the distribution of resources, and opportunities, and historically disadvantaged individuals can be offered better opportunities.
‘African’ or ‘Colored’ people were categorized as‘historically disadvantaged individuals’ under the apartheid system. These catagorizations of people did not even hold citizenship before 1993. Today they all fall under the category ‘Black’. In addition, incentives are given for employing and promoting multi-disadvantaged people.
People can voluntarily classify themselves according to the South African legislation. If they refuse their employers will rely on existing information, and grant the concerned person the right to approve the choice. If the person is considered ‘mixed race’, they can freely choose one of the relevant categories. If the employer takes over this decision, it is recommended to choose the category ‘Black’. Disability shall also be recognized by voluntary self-asssessment.
Categorization is however, still criticized. This is perpetrated on one hand by people against continued classification, and preferential treatment, as well asdiscrimination of people due to group membership. On the other hand, opposition also comes from White people fearing disadvantage, and who would indirectly be advantaged if these classifications did not exist. Since categorization can have great consequences, but is based on self assessment, ‘People Against Race Discrimination’ call out to be registered as ‘Black African’ when applying for a job in the public sector.
Requirements in the labour market, which also use data on categorisation, include Employment Equity. Thisobliges employers to put members of historically disadvantaged groups preferentially in higher positions. These directives fall within the category of positive action. Companies with more than 50 employees or turnovers with a profit margin superior to 5 millions mustsubmit personnel statistics broken down by census categories. In addition, private business enterprises including NGOs, trade unions, foundations, cooperatives and churches must adhere to this.
A related but separate concept is that of Black Economic Empowerment (BEE). Guidelines are set in the ‘Codes of Good Practice’ of 2007. Whether a company shall participate depends on their sales and business partners. The participants shall be measured on a ‘score card’ with up to seven criteria, after which they will be assigned a BEE certificate indicating a participation level that is important for trade and cooperation. The seven columns of BEE include ownership, management, positive action in personnel, training, prefereed sources and suppliers , corporate development of smaller companies (mainly owned by Black people), and support of socio-economic (charity) projects. In each category a company can collect 5 to 25 points. Companies with high scores reach high levels – level 8 is the lowest and level 1 is the highest, and those with higher levels can then enjoy certain advantages. Companies with a majority of Black employees can only collect points if some of them work in management. Black driving staff or cleaning staff do not grant more points to the company on the BEE score card.
To determine the obligations of each company, companies are divided into three categories based on. ‘Exempted Micro Enterprise ' are smaller companies with a profit margin up to 5 millions (EUR 1 ≈ 17 border, April 2016). They shall not undergo verification, and automatically reach level 4 if more than 50 % of the company is in White possession. They can reach Level 3 when the compay is owned by Black owners. The companies participate voluntarily, and only with the application for a public contract. ‘Qualifying Small Enterprises' are companies with a profit margin from 5 to 35 million. This must be measured with 4 of the 7 criteria. The category they belong to can be specified by the company. Under ‘Generic Enterprises' falls companies with a profit margin superior to 35 millions, and they must earn points for each of the seven pillars.
In 2012 the Codes of Good Practice were revised, and the Broad-Based Black Economic Empowerment Amendment Act was adopted. The seven pillars were reduced to five by merging positive measures in with management and personnel, as well as preferred sources and suppliers, and corporate development of small firms. This raised the threshold for qualifying participation. Exempted Micro Enterprises were now considered to have a turnover inferior to 10 million, Qualifying Small enterprises were then considered companies with a turnover between 10 to 50 million, and Generic enterprises began with a turnover of 50 million. Small businesses make up 95 % of all enterprises, 3 % are medium sized, while only 2 % are large enterprises.
In the public sector, participation in BEE is a duty. Thereafter, the supplier is selected, licenses are given, and State sales of possessions from public-private partnerships are decided. With the assignement of public orders, general criteria - like price, time, and quality – are all considered on the one hand, but on the other hand the BEE score of an enterprise is also considered.
Some small businesses feel compelled to hire black employees in order to not be excluded from potential customers, business partners, donors, and supply services.Since the BEE’s core valuesalso affect business partners, many opt for a voluntary verification and participation.