Affirmative action 'takes a back seat' in SA

For years it was a relentless drum beat: the South African government pushed Black Economic Empowerment (BEE) in order to redress the inequalities inherited from the apartheid era. In financial services as well as any other sector the so-called 'previously disadvantaged' became the favoured candidates for jobs. Targets were set, legislation passed, hefty penalties threatened.

Things have changed, but not as quickly as Government would have liked. Progress has been made at junior level but at senior level it has been hampered by a lack of available candidates, due to the skewed legacy of apartheid. The Employment Equity Commission says that in the past ten years there has been an improvement of only 1% in black representation at senior level. The divide is borne out by official SA Banking Association figures, which show that the percentage of black junior managers is 54%, well above the required level of 40%, while senior black managers still only represent 25% of the total.

"Empowerment is taking place, but at a much slower pace than anticipated," says Martin Westcott, managing director of PE Corporate Services. The Financial Services Sector Charter, which was supposed to monitor banks' empowerment progress, has been pretty ineffectual and, under pressure from the Government, is now reviewing its targets "with a view to have a valid financial sector code by March 2011."

Transformation remains a key issue and getting a job can be a lengthy process, says one (white) investment banker: "Banks have to prove they really tried to find a BEE candidate before they give you a job so the whole thing is drawn out and can take months."

But there are signs that the authorities are being more realistic and allowing BEE to take a back seat, says Westcott: "Banks are willing to pay a 10-20% premium for BEE candidates. But it has become evident that it is extremely difficult to find suitable people, especially at senior level, and there is a great deal of poaching of black executives. So even the Government has adopted a more pragmatic attitude towards empowerment and has been policing the issue a lot more leniently. Despite the threats, no company has ever been fined."

The good news is that demand is such that good candidates of any skin colour will always find a job. "There continues to be a shortage of supply and big demand for black South African financial services professionals, and there is a premium paid for well regarded black executives due to the demand," says Veronique Parkin, partner at Heidrick & Struggles in Johannesburg. "But this does not mean that there are limited opportunities for white professionals, as there is a general skills shortage in financial services, and big demand, and hence experienced and well regarded professionals of any nationality and colour are sought after and being hired."