IRR seeks clarity on Dis-Chem’s position on BEE

If company hires one white senior manager it needs to hire roughly ten black senior managers to reach “target” ratio

IRR seeks clarity on Dis-Chem’s position on BEE

18 October 2022

Dis-Chem’s racial employment policy has been the subject of intense national controversy since the leaking of a document last week indicating that the company had imposed a “moratorium” on hiring white candidates. Clarity is needed.

Yesterday (17 October), Dis-Chem’s board issued a statement which began by saying that “(we) regret the wording and tone” of the leaked document, adding that “it did not reflect our values”. The “tone” is not of any lasting significance, but the “values” in question are.

It is unclear which of Dis-Chem’s values the leaked document misrepresented. One headline neatly summarises a widely held interpretation of the board’s letter, stating “Dis-Chem board sorry for tone of leaked memo – but says no white managers’ policy to stay”. []

This reading is plausible for the following reasons. The original leaked document described a ban on hiring white people as “harsh” but “necessary…to avoid a potential fine of 10% of turnover which would cripple the business”. As if to dispel any doubt the letter concluded that “[t]his is a real threat at this stage”.

Although the “real threat” looms over many successful South African businesses, few of them, even in internal letters not intended for public consideration, admit it to be a motivating factor. The board may have found that admitting the “real threat’s” existence was inconsistent with its “values”.

Alternatively the board may have found that the admission that Dis-Chem’s hiring policy was implemented under duress, specifically the fear of bankruptcy, rather than by enthusiastic volition, was inconsistent with its “values”. This would clearly be the case if the board would prefer to hit racial targets, even if that meant avoiding new hires, in the absence of a legal compulsion to do so.

On either interpretation the board may approve of the “no [new] white managers” policy, but disapprove of its being characterised as a response to the government’s coercive powers.

Secondly, the leaked letter’s description of why it is “necessary” for Dis-Chem to stop hiring white managers is not dispelled or even addressed by the board’s later statement. The leaked letter said “a few appointments other than white don’t cut it. It’s the ratio between white and black that counts” for racial targets.

Mathematically, if Dis-Chem hires one white senior manager it needs to hire roughly ten black senior managers to come closer to its “target” ratio. The letter avers that this is impossible. A choice is then logically forced between either hiring no whites or hiring some whites and moving even further away from targets. The board’s statement sheds no light on what choice reflects its “values”.

In its letter to the board the IRR has asked:
1.         Is it your policy to hire only non-white people until racially demographic representation has been achieved?
2.         Is it your policy to hire a specific number of black people at any particular level before hiring the next white person?
3.         Is Dis-Chem committed to hiring people on the basis of merit, regardless of whether that brings the company closer to the racial targets that it set for itself?
4.         Is Dis-Chem committed to a hiring policy as described in 1. or 2. above regardless of whether this is required by regulation or statute?

Dis-Chem CEO Ivan Saltzman must be acknowledged for getting something right. He was correct to say that failing to meet racial targets may soon trigger “a potential fine of 10% of turnover which would cripple the business. This is a real threat at this stage”.

It is better to face this fact with clear eyes than to attempt to turn away from it. It is in this spirit of transparent, evidence-based discourse that the IRR requests to meet with Dis-Chem to examine the constitutional resources for unambiguously putting merit first, which is exactly where most South Africans want it to be.

Since Minister of Employment and Labour Thulas Nxesi called for “more aggressive” race law, the IRR has tracked over a dozen practical steps that the government has taken to bring bankrupting race-law fines closer to bear. The IRR has repeatedly warned against the negative effect this will have on employment. It continues to campaign against the Employment Equity Amendment Bill (EEB), which lies on President Cyril Ramaphosa’s desk.

Said IRR Campaign Manager Mlondi Mdluli: “We would like to request a meeting with the Dis-Chem board in order to present the case for putting merit first and, if need be, resisting government coercion in accordance with both the constitution and the proud tradition of the capitalist resilience that undermined and ultimately destroyed the apartheid regime.”

Issued by Gabriel Crouse, IRR Head of Campaigns, 19 October 2022