The Effectiveness of Affirmative Action Policies in South Africa

Affirmative action policies in South Africa are best described as cumulative and becoming increasingly complex over time. The first national affirmative action policy, the Employment Equity Act, was implemented in 1999. This policy was followed by the Broad-Based Black Economic Empowerment Act in 2003, which had a broader focus and stronger compliance incentives. In 2007, the Codes of Good Practice were introduced to support the B-BBEE legislation by prescribing explicit and measurable benchmarks to South African firms and the establishment of institutional structures that monitored its implementation. Since 2009, several industry-specific Sectoral Charters and Codes have also been adopted. A comparison of racial and gender earnings gaps over this period indicates that it was only after the introduction of the Codes of Good Practice that racial and gender earnings gaps started narrowing. This suggests that the details of AA legislation matter: policies that lack clear and quantifiable goals that are poorly monitored, or that offer weak incentives to comply, are unlikely to be effective. Strengthened monitoring and implementation has, in this case, been achieved by clearer General Sector Codes that support the legal framework. This has decentralized implementation to specific economic sectors, moving legal requirements higher up the priorities of business decision-making. Although such legislation was partially successful in reducing between-group earnings gaps, this only occurred at the top of earnings distribution and remained substantial.