WeeklySA_AdminOwners: More than 500 000 workers in South Africa are part-owners of companies they were working for
By Monk Nkomo
The ANC-led government has made a concerted effort since coming into power in 1994 to address the racial and economic injustices during the apartheid era by enacting competition laws that opened doors for small and medium -sized enterprises to flourish.
This was said by President Cyril Ramaphosa during his keynote address at the Inaugural Worker Share Ownership Conference that was held in Sandton, Johannesburg this week. The conference was attended by a large number of interested organisations including labour representatives, business and industrialists.
Ramaphosa said this first conference on the state and future of worker share ownership schemes in South Africa took place at an important time when the country was also marking 30 years of freedom. The event gave South Africans an opportunity to reflect on the progress that had been made in transforming our society and economy.
‘’Worker share ownership schemes are valuable instruments to broaden ownership and, with time, to enable greater control of the economy. ‘’
A study by the Department of Trade, Industry and Competition (DTIC) revealed that more than 500 000 workers in South Africa were part-owners of the companies of the companies they worked for.
Ramaphosa said the government had enacted competition laws that opened doors for small and medium-sized enterprises to flourish. ‘’Working with our social partners, we have introduced labour legislation to foster sound labour relations and ensure decent working conditions for all.
We have pursued policies to foster entrepreneurship and empower black South Africans in the economy.’’
This year marked 20 years since the Broad-Based Black Economic Empowerment Act was promulgated as one of the most transformative pieces of legislation to come out of democratic South Africa. Yet, despite the measures successive democratic administrations had introduced to transform patterns of ownership in the economy, much more still had to be done.
‘’This is therefore a good time to collectively assess the impact of the enabling legislative environment and examine the learnings over the past two decades.
A vital measure of economic empowerment is the extent to which ownership and control of the economy is broadened, particularly among black and women South Africans.’’
Also known as Employee Share Ownership Programmes, these schemes were underpinned by the BBBEE Act, together with the Competition Act, the Companies Act and others.
Government continued to play an important role, through the DTIC, in providing guidance on the design and implementation of these programmes. The Industrial Development Corporation, the National Empowerment Fund and others provided catalytic funding.
‘’Worker share ownership schemes furthermore complement the Black Industrialist Programme, providing another means through which government can contribute towards more equitable ownership in the economy. In 2019 we enacted changes to the Competition Act that have helped to advance worker ownership’’.
The amendments, according to Ramaphosa, required government and competition authorities to specifically consider how an acquisition or merger would affect the spread of ownership in the economy, particularly for workers.
The amended legislation also called for engagement with merging companies to implement structures that could enable greater and more meaningful participation of workers, not only as owners of equity, but as stakeholders with a voice.
‘’The immense transformative potential of worker ownership schemes is often overlooked. We have come a long way from the early days of black economic empowerment, where instances of workers as shareholders in companies were rare.
The impact of these schemes were relatively limited, in part because of the finite nature of the respective arrangements’’. These investments were necessary for the sake of equal opportunity and addressing historical inequalities, but also towards increasing productivity and growth.
These investments were necessary to advance inclusive growth that benefited both workers and businesses. Employee share ownership programmes offered employees access to a share of the profits generated by the companies to which they contributed their labour.
By participating as owners, workers also developed a deeper understanding of the challenges and opportunities facing their companies, enabling more fruitful partnerships to unlock opportunities for growth, investment and job creation.
Several studies had shown that worker ownership also fostered greater innovation within companies.
Workers who felt valued and respected by their employers were more likely to contribute ideas for improving processes, products and services.
‘’It is human nature that one is more inclined to contribute one’s best efforts when one has a vested interest in the success of that particular venture’’, said Ramaphosa.
Worker ownership must transcend black economic empowerment and be a mechanism for wider economic inclusion.
South Africans should seize this opportunity to create networks and enable knowledge-sharing and improve the impact and reach of existing worker ownership structures.
‘’We all share a commitment to economic transformation.
It is vital that we harness this spirit of partnership as we chart the course for the future of these programmes and for an even better, more sustainable worker shareholder regime’’.
