Huawei in Talks With South Africa on Labor Lawsuit

South Africa’s labor ministry says Chinese tech firm Huawei is non-compliant with the country’s employment policies.

Huawei is in talks with the ministry over infringements of the country’s employment policies that require 60% of staff to be local hires. It’s still unclear what a settlement could mean for Huawei and other foreign businesses operating in the country.

The ministry’s employment equity act sets requirements for the number of local hires, including those of disadvantaged backgrounds, at various levels within a corporate structure. And it does regular checks across industries for compliance.

“There is room to employ foreign nationals, especially on companies or employers that come to the country to invest… and also to transfer skills to South Africans. We do allow them to bring 40% of their employees…. We realized that 90% of its workforce, that Huawai is foreign nationals, which is against our employment policies,” says Fikiswa Mncanca-Bede, a lawyer for South Africa’s Department of Employment and Labor.

The labor department launched legal proceedings against Huawei earlier this month.

On Friday, the ministry confirmed it was in settlement negotiations with the tech firm on how to correct the discrepancies.

Huawei did not respond to requests for comment.

Mncanca-Bede says the government’s action should send a signal to all companies that non-compliance will not be tolerated.

“We’re not targeting Huawei, but we’re also coming for the big companies in South Africa, … because we want to ensure that transformation does not just become a talk, but it must be seen as a reality…. Transformation means even if you employ South Africans, who are the South Africans that were employing? Are they addressing the imbalances of the past?” Mncanca-Bede asked.

The employment equity act aims to correct historic inequalities in the country, including racial preferences from the apartheid era that benefited white workers.

But those regulations are still not playing out as planned in the workforce.

“There’s rampant violation of regulations by big companies and small company, and South African companies, not just, you know, these international companies. I would definitely say in relation to all of our labor laws, there’s enforcement problems. I think that the Department of Labor is under resourced,” said Kgomotso Musanabi, a law lecturer at the University of Johannesburg.

In addition to inequities, South Africa is experiencing rampant unemployment, with upwards of 35% of people being jobless.

Musanabi says it’s even worse among the country’s youth.

“I think that government is trying to make an attempt to ensure that all South Africans are employed. But not only that South Africans are employed, but that they acquire sort of globally relevant skills that they need to compete in international markets, particularly tech skills,” Musanabi said.

Companies that are non-compliant face fines.

But labor lawyer Johanette Rheeder says for companies as big as Huawei, those fines are a drop in the bucket and unlikely to have a broader chilling effect.

“In South Africa there’s in many businesses also an attitude of we’ll fix it when we’re caught out. Bigger businesses that’s got a better a better social conscience, if I can call it that, do comply…. The middle size and the smaller businesses who just can’t afford to comply with all of these legislations, so they basically fix it when they offered when they caught out,” Rheeder said.

Instead, she says bridging education and skills gaps in the country — rather than going after foreign workers — is the best way to address unemployment and inequity.

“The biggest, biggest thing that we can do in my view in this country is to upskill people…  there are some strategies that [are] in place, but it’s always the struggle between upskilling our local people and not giving jobs to foreigners,” Rheeder said.

The labor department said talks with Huawei are expected to conclude Friday.

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