The South African economy, it could be said, is both transformed and functional. But the part that has transformed is not functional, and the part that is functional has not transformed. [1]  

Figure 1: Employment in the public and private sectors: 2020

Source: EE Commission data, 2020. Note: Public sector includes national, provincial and municipal government as well as state owned entities

The outcome we sit with is thus a double failure. Transformation of the private sector has been slow. But transformation in the state, while a skin-deep success, has undermined the broader transformation agenda by exemplifying its risks. The capacity of the state has been hollowed out by corruption and contemporaneous transformation. How did a well-intentioned policy result in such a tragic lose-lose? More importantly, how do we move forward?

The first step is to look closely at the data so that we debate the future of South Africa’s economy productively. Some fairly uncontroversial points can be made:

• The economy needs more than transformation to create the kind of environment that offers South Africans citizens (and those who choose to make South Africa their home) an opportunity to thrive and achieve their potential. If we increase the number of black top managers in South Africa so that there was a modicum of representativeness (or representativity), we would have roughly 30 000 additional black top managers. At the same time, there are roughly 33 million black adults in South Africa[2], 31% of whom are unemployed (broad definition). A narrow focus on transformation would be tantamount to rearranging deck chairs.
• Transformation at the top is slow in part because stability matters. According to the EE data, there are only around 4 000 appointments of top managers per year in private companies that report to the Employment Equity Commission. Assuming 50% of these appointments were black (in line with the proportion of mature university graduates in South Africa who are black), we would need another 15 years before the private sector was transformed, holding everything else constant.

Figure 2: Racial composition of the workforce

Source: QLFS 3rd Quarter 2022. Totals may not add to 100% because of rounding

• Talent of all colours is highly mobile. But black talent is more so. According to the EE data, the percentage of black top managers in the private sector who move on in a year (14%) is almost double that of whites (8%)
• The talent pipeline remains blocked by a poorly performing education sector. Efforts to improve schools in South Africa appear to have little to show for themselves. Arguably, corporates should shift their focus from fixing the system to spotting talent as early on as possible, and providing more bursaries at top schools to rescue individuals from the dysfunctional system within which they are trapped.

FUN FACT: In 2020, of the big five banks, Standard Bank has the highest percentage of top managers who are black (16 out of 36). Capitec (1 out of 6) and FirstRand (2 out of 12) have the lowest.

71point4 has liberated employment equity (EE) data and developed the software to transform the raw data into a format suitable for analytics. The EE dataset can offer insights on employment trends, racial and gender transformation, recruitment, promotions, and dismissals, all at a firm-level. This firm-level perspective can, in turn, provide insights on the structure of different transformation strategies and how successful they are. No other publicly available dataset allows for such perspectives.

71point4’s EE dataset is updated on an annual basis and at present, consists of 195 000 observations covering a total of 42 000 employers from 2013 to 2020, with 2021 data in process. Parties interested in using this dataset should get in touch with the team [info@71point4.com] to arrange for a showcase presentation.

[1] To paraphrase a somewhat similar comment made in a totally different context attributed (possibly erroneously) to Samuel Johnson. See https://quoteinvestigator.com/2013/06/17/good-original/

[2] Aged 15 – 65