Equality of Outcomes and the Pepuda Amendment Bill - IRR

Anthea Jeffery says Bill is likely to worsen the unemployment crisis and push more people into poverty

Equality of outcomes and the Pepuda Amendment Bill

Proposed amendments to the Promotion of Equality and Prevention of Unfair Discrimination Act (Pepuda) of 2000 could precipitate a banking crisis and push many companies into retrenchments or even bankruptcy, says the IRR in a new report on Equality of Outcomes and the Pepuda Amendment Bill released today.

The existing Act, which took effect on 16th June 2003, was introduced to give effect to the Constitution’s prohibition of unfair discrimination on race, gender, and other listed grounds.

But the Act also requires companies (and many other entities) to achieve “equality in terms of outcomes”.

This is an impossible goal which cannot be achieved in practice and goes far beyond what the Constitution authorises.

“The Act’s equality provisions were never brought into force, because the National Treasury warned in a Regulatory Impact Assessment that the burden on both business and the state would be too great,” notes

Dr Anthea Jeffery, author of the report and the IRR’s head of policy research.

Now, however – and despite the major blows the economy has already suffered from the lengthy Covid-19 lockdown and many damaging laws – the Department of Justice and Constitutional Development wants to expand the equality provisions and bring them into operation.

Under the equality provisions in the Pepuda Amendment Bill, companies will have to:

- “eliminate discrimination” that is “related to” race or any other prohibited ground, even if that discrimination is neither “intentional” nor “unfair”; 

- provide “equal…access to resources, opportunities, benefits and advantages”; and

- achieve “equality in terms of impact and outcomes”.

The Act lists race as a prohibited ground, along with 17 others. It also empowers equality courts to recognise poverty as an additional prohibited ground, which the Western Cape high court has already done – though this was in the context of policing, rather than business.

Says Jeffery: “The ramifications of having to eliminate all differentiation on the listed grounds – even if that differentiation is legitimate – are enormous. They will become greater still if poverty is added to the listed grounds in the business sphere as well.

“Banks making home loans, for example, would then have to achieve ‘equality in terms of impact and outcomes’ as between the poor and the better off. This could result in mortgages being extended to people unable to afford them, as happened in the global financial crisis of 2007/08. It could also precipitate a banking crisis in which millions could lose their homes and savings.

“The obligation to achieve equality of outcomes would apply in every sector and to every business, regardless of its size. However, businesses cannot survive if their earnings do not exceed their expenditure – so retrenchments and bankruptcies might soon loom large.

“Instead of helping the 11.4 million people already unemployed to find jobs and income, the Bill is likely to worsen the unemployment crisis and push more people into poverty.”

The formula for inclusive growth and rising prosperity is well-known around the world – and is the polar opposite of what the Bill demands.

The countries that are “most free” – because their governments avoid destructive statutes like the Bill – have average per capita GDP of some $44 000, whereas the equivalent figure in the “least free” countries is a mere $5 700, or roughly eight times less. Extreme poverty is also far more limited in the “most free” states, afflicting only 1.7% of the population as opposed to 31.5% of the people in the least free ones.

Adds Jeffery: “Though South Africa’s economy has been badly damaged, it still has many strengths. But the Bill will sap much of its remaining resilience – and must be roundly rejected if the government persists in trying to enact it into law.”

Statement issued by Dr Anthea Jeffery, IRR Head of Policy Research, 9 July 2021