South Africa is battling to force China’s Huawei to employ locals

Despite discussions between the two parties, no compromise has been reached regarding the share of foreign employees in the Huawei workforce (around 90%, according to the South African government). The matter is now before the courts.

“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% of foreign employees for firms operating in the country. 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.

Indeed, for the government, the Chinese group’s current non-compliance is compounded by various plans to increase the number of foreign employees in the coming months. For example, according to the South African Department of Home Affairs, Huawei plans to increase the number of non-local “qualified professionals” in its workforce from 378 to 405 “over the next two years with no projected increase for designated groups”.

Following the 2020 audit, the government said: “Huawei’s legal department contacted the [relevant] department to try to find an amicable solution.”

The subsidiary of the Chinese giant argued that it had obtained a “permit from the Department of Home Affairs” in order “to employ the number of foreign nationals it does”. According to the Department of Labour, which says it worked with the Department of Home Affairs on the matter, Huawei “had obtained a permit in accordance with the provisions of the Immigration Regulations, which required it to employ 60% South Africans and 40% foreign nationals”. As a result, the department ‘decided to take the matter to court without further delay’.

For its part, Huawei’s South African subsidiary said in a statement that it is “committed to continue engaging further with the Department on our equity plan. Huawei is committed to complying with local laws and regulations”.

Unemployment is highest among young people aged 15 to 24, at about 64%.

South Africa is facing a particularly high level of endemic unemployment. According to data from the International Labour Organisation, the rate has never been below 20% of the working population since the end of apartheid in 1994. Between 2008 and 2020, the unemployment rate in Africa’s most industrialised economy rose from 22.4% to 28.74% of the population. The situation is made more difficult by the deep economic and racial inequalities that plague the country.

“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.