WARNING ABOUT TECH INDUSTRY RACE AND GENDER EMPLOYMENT QUOTAS IN SOUTH AFRICA
- BEE NEWS
- 2 days ago
- 3 min read
Jan Vermeulen | 19 August 2025
The Information and Communications Technology sector faces unique challenges that may impact companies’ ability to comply with the Department of Labour’s newly introduced employment equity targets.
That is the warning from Capital Appreciation chairman Michael Pimstein in the company’s integrated annual report regarding employment quotas, which the department published on 15 April 2025.
“South Africa’s tech industry is grappling with a critical talent shortage, particularly in specialised roles such as software engineering, cybersecurity, data science and machine learning,” Pimstein said.
Adding to the shortage is that South African skills have become a prime target for international organisations looking for quality software engineering at a competitive cost.
“The availability of qualified candidates from designated groups remains limited, necessitating more strategic planning and workforce development,” said Pimstein
While the regulations assure that affected employers will not incur penalties or any form of disadvantage if there are reasonable grounds for not complying with the targets, it is unclear what “reasonable grounds” means.
The labour department also stated that reasonable grounds will be determined based on the assessment of affirmative action compliance in a workplace.
“We believe that workable solutions can be found through collaboration between the government, industry stakeholders and educational institutions to expand skills development programmes,” said Pimstein.
“A phased implementation of the EE targets with periodic reviews, along with incentivising compliance through tax incentives, grants and subsidised training programmes, will encourage sustainable transformation.”
“Designated groups” is a collective term and euphemism that the labour department uses to refer to black people, women, and people with disabilities. In this context, “black” means African, Coloured, and Indian.
Curiously, the regulations do not mention people of Chinese descent. According to the B-BBEE Commission, Chinese people born before 1994 are considered black for the purposes of B-BBEE.
To be considered part of a designated group, a person must also be a South African citizen by birth, descent, or naturalisation.
People who naturalised must have done so before 27 April 1994. Those who naturalised after 26 April 1994 can qualify if they would have been entitled to naturalise before then but were precluded by apartheid policies.
ICT sector employment quotas
Although the regulations do not give the non-designated group a formal name, the department expressly states who is considered designated and who is not.
“The 5-year sectoral numerical targets are not intended to add up to 100% as they exclude white males with no disabilities and foreign nationals as part of the workforce profile,” it explained.
The regulations state that within five years, no more than 8.3% of skilled technical workers in information and communications technology (ICT) may be white South African men or foreigners.
Similarly, the proportion of white men and foreigners permitted to be in middle management and professional qualified roles is restricted to 23.2%.
The regulations set out specific racial and gender-based quotas for businesses across 18 industries in South Africa to achieve over the next five years. The ICT sector targets are summarised below.
R2.7 million fines and job cuts
The Department of Employment and Labour said its goal was to ensure the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce.
However, analysts, civil society groups, and the Democratic Alliance have warned that the quotas will cause widespread job losses rather than achieving the department’s goals.
Since the quotas only apply to “designated employers”, which are companies with 50 or more employees, they argued that many will consider cutting staff to fall below the thresholds.
Larger businesses might consider restructuring and laying off people in certain demographics where they are over-represented.
Law firm Wright Rose-Innes has warned that companies face stiff fines if they do not start complying from 1 September 2025.
Failure to comply with the requirements could result in fines of up to R2.7 million, or 10% of their annual turnover.
Wright Rose-Innes explained that companies must have updated Employment Equity Plans in place that span from 1 September 2025 to 31 August 2030.
Designated employers must also submit annual reports on their progress to the Director-General. Compliance is not optional, especially for businesses hoping to work with the government.
“All employers intending on conducting business with an organ of state will be required to, amongst other things, comply with the targets and implement their Employment Equity Plan,” Wright Rose-Innes said.
“They must also obtain a compliance certificate, valid for 12 months, to avoid termination of their agreement with the state.”
Sakeliga, the National Employers Association of South Africa, and the Democratic Alliance have launched legal challenges to the Employment Equity Amendment Act, saying it is flawed and unconstitutional.
‘Disclaimer - The views and opinions expressed in this article are those of the author(s) and not necessarily those of the BEE CHAMBER’.