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Eyewitness News
7 days ago
- Business
- Eyewitness News
Systemic govt failures, not BEE to blame rising unemployment in SA, says economist
JOHANNESBURG - The debate over the effects of broad-based black economic empowerment (B-BBEE) continues, as some push back against claims that affirmative action is to blame for rising unemployment. This follows a report by the Free Market Foundation and trade union Solidarity, which links the country's high unemployment rate to B-BBEE policies. However, numbers from Statistics South Africa (Stats SA) tell a different story, showing that employment has grown from 8.9 million in 1994 to 16.7 million in the first quarter of 2025. Of these, more than 12 million jobs are held by black South Africans. According to Stats SA, the number of employed black people has increased from 5 million in 1994 to 12 million in the first quarter of 2025. While more black people are employed now than three decades ago, they still experience the highest rate of unemployment compared to other racial groups. Solidarity argued that B-BBEE had contributed to rising unemployment among black South Africans. However, political economist Dale McKinley disputed the claim that B-BBEE was responsible, instead attributing the issue to systemic government failures. "What I don't agree with is that you can blame BEE [black economic empowerment] for the lack of growth in the economy as a whole. Those are structural problems in our economy that go way beyond a particular BEE policy, that go through apartheid legacy and racial and class divisions that are very deep." In his presidential newsletter, President Cyril Ramaphosa also refuted claims that B-BBEE had failed to address unemployment.
IOL News
13-06-2025
- Business
- IOL News
Cosatu defends B-BBEE policy amid criticism from Solidarity and FMF
The Free Market Foundation and Solidarity held a media briefing on Thursday to discuss the impact of Black Economic Empowerment legislation on the economy. Image: Supplied Banele Ginidza The battle for the scrapping of "race laws" in South Africa went a notch up on Thursday as the Congress of South African Trade Unions (COSATU) shot down a call to review and drop South Africa's Broad-Based Black Economic Empowerment (B-BBEE) policy. This comes as trade union Solidarity and the Free Market Foundation (FMF) on Thursday released a report claiming that B-BBEE has caused serious damage to the country's economy and to its population while only enriching a small, politically-connected elite. The report draws on data from the B-BBEE Commission, Stats SA, the JSE, and international comparisons to assess the real costs of compliance across the key BEE scorecard elements: ownership, skills development, enterprise and supplier development, management control, and socio-economic development. According to the report, the annual cost of BEE compliance is between R145 billion and R290bn per year. It claimed that this has resulted in an annual reduction of 1.5% to 3% in economic growth, and to an annual loss of between 96 000 and 192 000 jobs. 'Our findings show that BEE, as currently designed, is enriching a small elite while throttling economic dynamism and deepening unemployment,' said Dr Morné Malan, FMF senior associate and co-author of the report, speaking at the joint press conference. The study compares South Africa's model with global 'affirmative action' policies in Malaysia, India, Brazil, the US, and Namibia, showing that South Africa's version is the most intrusive and economically damaging. At the media briefing, the organisations claimed that B-BBEE benefits largely captured by politically-connected elites as South Africa now ranks 139th in GDP per capita, down from 87th in 1994. Executives of both organisations said the people most affected by the current economic programme are people that work poor people and those that are beneficiaries are the elite. "That is why we will engage with Cosatu trade unions Numsa and others to find alternatives to the current racial legislation," said Theuns du Buisson, economic researcher at the Solidarity Research Institute, and co-author of the report. "In the second place we will continue to litigate and in the third place we will also put pressure on SA via the international world and continue to put pressure on South Africa with the outside world especially the G20 that comes." However, Cosatu's Parliamentary spokesperson Matthew Parks said the report provided no breakdown backed up by actual research as to any financial burden to the state nor how B-BBEE has been an obstacle to growing the economy and reducing unemployment. Parks said the report strangely cited statistics related to real and potential growth overall, but no evidence of the relationship between those and B-BBEE. He said it may as well have blamed constitutional democracy for South Africa's economic challenges. "No reference is made to the need to overcome our still prevalent racial divides as evidenced by countless employment equity studies confirming that most senior positions in the private sector are held by White males or that economic ownership, including shares on the JSE remain largely White-held," Parks said. Johann Rossouw, an economist at Altitude Wealth, said a more sensible empowerment model as an alternative to B-BBEE policies was Black Economic Skills Transfer (BEST), which would help with job creation and carry the economy into the future. "At the moment all the arguments are about how many ways to cut the existing pie instead of growing the pie that we have for the future. Black empowerment is not a policy of the government of national unity," Rossouw said, commending that the study was evidence based and drew comparison with other countries. "It is important that the GNU makes its own policies that will benefit the average poor." However, independent economist Duma Gqubule said the study and the report was fake news on steroids, which lacked the fundamental understanding of the objectives of transformation. Gqubule said the report lacked empirical evidence and was premised on companies counting upskilling workers for an example as a transformation contribution when both the worker and the company benefited from the exercise. "I would call on black business to come up with a coherent response to this. It is a dangerous agenda. We need another citizen dialogue on black empowerment for the new circumstances as the situation in the 1990s when the policies were crafted were critical," Gqubule said. BUSINESS REPORT
Eyewitness News
12-06-2025
- Business
- Eyewitness News
Job creation has been minimal in SA since democracy, claims Solidarity
JOHANNESBURG - Minority lobby group, Solidarity, claims that job creation since 1994 has been minimal, largely due to Broad-Based Black Economic Empowerment (BBBEE) policies. Solidarity, in collaboration with the Free Market Foundation (FMF), has released a new study outlining the costs associated with BBBEE compliance. Their findings indicate that these policies have contributed to rising unemployment and have hindered significant economic growth since 1994. Solidarity CEO Dirk Hermann argues that a complete overhaul of the BBBEE policy would be more beneficial for the country. 'Black Economic Empowerment does not address inequality. It increases as a result of the policy. The paradox is that inequality increases particularly in the black community as a result of a small group of elites, who are being radically enriched.' Speaking to 702 , prominent businessman Saki Macozoma said BBBEE remains necessary for transformation. 'Empowering people who are previously disadvantaged is the right kind of thing. It may be that the terminology of Black Economic Empowerment is the one that creates the emotion. The fact of the matter is that we need to have the redress, and we have not done it to the extent that we should have.' ALSO READ:
The Citizen
12-06-2025
- Business
- The Citizen
BEE is bringing South Africa's economy to its knees
BEE is bringing South Africa's economy to its knees – new report A report released on June 12 by the Solidarity Research Institute (SRI) and the Free Market Foundation (FMF) has sent shockwaves through South Africa's political and economic landscape. The report delivers a scathing critique of the country's Broad-Based Black Economic Empowerment (BEE) policy, asserting that it is causing substantial damage to the South African economy while enriching only a small, politically connected elite. BEE was initially introduced as a transformative policy aimed at redressing the economic imbalances of apartheid by promoting greater inclusion of black South Africans in the economy. However, the latest findings paint a different picture, highlighting a policy that is now burdening economic growth, exacerbating inequality, and stalling job creation. According to the report, the annual compliance costs for BEE range from R145-billion to R290-billion, which represents between 2% and 4% of South Africa's Gross Domestic Product (GDP). This enormous economic burden has resulted in an annual reduction of GDP growth by between 1.5% and 3%, with a concomitant loss of between 96 000 and 192 000 jobs each year. Over the years, this has accumulated to about 3.8 million lost job opportunities for South Africans. 'This huge economic cost is not simply the result of negligence or the mere poor implementation of a plan. It is a deliberate government policy that causes it,' said Theuns du Buisson, economic researcher at the SRI and co-author of the report. 'It is irrelevant when someone then says the policy was introduced with good intentions. Today it serves as a mechanism to enrich the elite at the expense of our country's economy and especially at the expense of its poorest citizens.' The report further outlines that while there has been some progress in terms of black ownership and skills development, these gains are heavily overshadowed by the adverse effects of BEE. Among these are increased inequality, elite capture of policy benefits, and widespread economic stagnation. 'The policy places a particularly heavy burden on critical sectors such as mining and finance,' the report reads, 'and it deters foreign investment, encourages capital flight, and stifles technological progress.' South Africa's economic position on the global stage has deteriorated markedly, falling behind other middle-income countries with which it was once comparable. The report critiques the lack of focus and effectiveness in the implementation of BEE policies, which contrasts with more successful affirmative action or empowerment programmes abroad. Du Buisson pointed to countries such as Brazil and the United States, which have begun to phase out similar race-based economic policies. 'Moreover, in other countries, affirmative action policies are precisely there to prevent discrimination, while in South Africa, they in fact make discrimination compulsory,' he noted. 'South Africa must now follow the path of other countries and get rid of it. BEE has become an instrument that benefits a small, politically connected elite and has long ago stopped being a policy that could empower a disadvantaged society.' Connie Mulder, head of the SRI, emphasised the urgency of the situation: 'South Africa cannot afford to continue down this path. The data is clear. BEE, in its current form, is damaging the economy and hurting those it was meant to help. We need policies that promote real economic participation and growth without racial quotas that cripple progress.' The call to action from the writers of the report is for policymakers to immediately abolish the current BEE framework and replace it with a policy that fosters inclusive growth without impeding the economy. 'We need an economic environment where all South Africans, regardless of race, have the opportunity to contribute and prosper,' Du Buisson said. – Access the full report here: Do you have more information about the story? Please send us an email to bennittb@ or phone us on 083 625 4114. For free breaking and community news, visit Rekord's websites: Rekord East For more news and interesting articles, like Rekord on Facebook, follow us on Twitter or Instagram or TikTok. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading! Stay in the know. Download the Caxton Local News Network App Stay in the know. Download the Caxton Local News Network App here
Eyewitness News
12-06-2025
- Business
- Eyewitness News
New study by FMF, Solidarity claims BEE has benefitted 'small group of elite black people'
JOHANNESBURG - Debate continues around the effectiveness of Broad-Based Black Economic Empowerment (BBBEE), with some minority groups arguing the policy has failed to deliver its intended outcomes. A new study released by the think tank, Free Market Foundation, and minority lobby group, Solidarity, outlined the costs associated with BBBEE compliance. The report claims that the policy has primarily benefited a small group of elite black individuals while neglecting broader objectives. The findings were shared during a media briefing held in Johannesburg earlier on Thursday. Previous studies estimate that South Africa's black middle class comprises between four to six million individuals, with an annual spending power of more than R400 billion. Although this represents only a small portion of the overall black population, the growth of this segment is largely credited to inclusion efforts driven by BBBEE policies. Head of policy at the Free Market Foundation, Martin van Staden, argued that race had been used to benefit a specific group within society rather than promoting a more inclusive approach. "Should people be appointed based on race or meritocratic experience? Race should not be the primary criterion or probably a criterion at all. People should be appointed based on merit." Solidarity's report states that the growth of the black middle class is clear but asserts that BBBEE has led to greater inequality within the white population. ALSO READ:
