Huawei Technologies South Africa and Department of Employment and Labour Reach Out of Court Settlement

After months of engagements, the Department of Employment and Labour and Huawei Technologies South Africa have reached an out of court settlement, following the department’s application to the Labour Court on 11 February 2022.

The two parties met on Monday (14 March) to conclude discussions and finalise a settlement.
On 11 February, the department announced that it filed court papers against Huawei Technologies South Africa due to non-compliance with employment equity policies.

“Due to the failure to comply with the Employment Equity Policy, the Department of Employment and Labour has commenced court proceedings today, 11 February 2022, against Huawei Technologies South Africa,” the South African government said in a statement.

South African legislation requires a maximum of 40% foreign employees for firms operating in the country and 60% . However, the local subsidiary of the Chinese technology giant did not adhere to this law and the ministry of employment has identified multiple violations of this rule at several levels of management.

According to a workforce audit conducted two years ago, 100% of the five highest ranking staff at Huawei Technologies South Africa are foreign nationals. A total of 38% of the ‘top management’ (27 out of 71 executives) are also non-nationals.

At the lowest level, the ‘skilled professionals’, that is, 378 non-nationals out of 435 employees (87% of employees), are also foreigners. Further down the scale, 76% of the 181 ‘technically skilled’ employees are from outside the country. At this level, while only one of the ‘technically semi-skilled’ employees is foreign, the government does not specify the required maximum.

“Huawei expects an increase to 11 [of these foreign employees] in the next two years,” said the government.
According to the department of labour, it was the worst case of non-compliance with equity regulation it had ever encountered. Huawei did not provide any reasons for its breach, the department said.

“The department has accepted Huawei South Africa’s employment equity plan which addresses the equitable representation of South Africans to above 50% within three years, especially from designated groups as defined in the Employment Equity Act,” read a joint statement on Tuesday.
While the Chinese tech giant faced a fine of R1.5 million or 2% of the unit’s revenue, the parties did not reveal whether paying a fine was part of the agreement.
But Huawei did commit to providing digital skills to the unemployed through a development programme that will target candidates from designated groups, especially women and people from rural areas.

The parties see this as a win-win, as it fosters a public and private partnership that facilitates the transfer of skills, while also addressing the issue of unemployment by creating jobs in the ICT sector,” says Fikiswa Bede, the chief director of statutory and advocacy services at the department.

In addition, in a joint attempt to address South Africa’s digital divide and ICT skills gap, Huawei and DoEL have agreed to collaborate on skilling the unemployed, which is an investment in youth upskilling and employment; an important pillar in achieving the country’s targets for economic growth, particularly in digital technologies.
The Development Programme, which includes internships, aligns with the duration of the employment equity plan period, and will draw on candidates from the designated groups, especially women and those from rural areas, sourced from the DoEL database.

South Africa is facing a particularly high level of endemic unemployment.
“Structural challenges and weak growth have undermined progress in reducing poverty, which has been exacerbated by the Covid-19 pandemic. Progress in household welfare is severely constrained by rising unemployment, which reached an all-time high of 34.4% in the second quarter of 2021. Unemployment is highest among young people aged 15 to 24, at about 64%,” the World Bank warned last October.

sources: HuaweiSA, Africa report, World bank

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