China’s Huawei in troubled waters in South Africa over Employment Equity Policy

The Department of Employment and Labour of South Africa last month filed court papers against Huawei Technologies South Africa for not complying with the Employment Equity Policy of the country.

In their 2020 audit of Huawei, the South African authorities found that the company has not complied with the law of the land.

According to reports, the company employed approximately 90 per cent foreign nationals, violating the Employment Equity Policy of South Africa.

South Africa has asked a court to impose a fine of 1.5 million rand (USD 99,151) or 2 per cent of Huawei’s annual 2020 turnover for the alleged rule breaches, while advising Huawei to comply with law of the land, a statement said.

This is the first time when the South African government has made a legal challenge against the Chinese tech giant, which is already facing US sanctions over allegations that the company’s equipment could be used by the Chinese government for espionage.

In the case of South Africa, the law of the land, that is, the Immigration Regulations provided that Huawei should employ 60 per cent local South African labour and only 40 per cent foreign nationals in the projects.

Further, an investigation by the department also revealed that, at the top management level, Huawei had five employees, and all five (100 per cent) were foreign nationals.

While Huawei intends to keep this number for the next two years, the company also intends to increase the number of foreigners at senior management level. At present, out of a total of 71 employees at senior management positions, 27 (38 per cent) are foreign nationals.

This is not an isolated case, Chinese firms operating in Africa are often accused of violating international labour standards and not adhering to national labour laws. China by virtue of being the fund provider, maintains control over development projects throughout the entire implementation phase, using Chinese contractors and labours. This is causing lot of consternation and discontent in the African countries, which are hosting China aided projects.

Apart from the above, the labour department of South Africa had also cracked down on a smaller Chinese firm over charges of poor working conditions and human trafficking at its factory in Johannesburg. That case is still in court. Although working conditions at Chinese companies in Africa differ across sectors, there are some common trends such as tense labour relations, hostile attitudes by Chinese employers towards trade unions, violations of workers’ rights, compulsory overtime working without pay, lack of toilet facilities at work sites and poor working conditions and unfair labour practices.

In Malawi, for example, a number of workers at Chinese manufacturing companies had to work long periods without protective gear. Similar labour breaches, including no sick leave, and no maternity pay, are observed in South Africa, Nigeria, Angola and Kenya. A study conducted by Human Rights Watch (HRW) also informed human rights abuses at four Chinese-run mining companies in Zambia.

Studies suggest that Chinese development projects unlike the projects of other major development partners discourage trade union involvement in the local area. It was also found that Chinese firms’ labour practices engender abuse via casualisation of labour, low remuneration, and a general lack of adherence to occupational safety. African countries are getting disenchanted fast with Chinese way of project implementation. If there are alternative sources of funding available, the present mood in Africa seems to be in favour of going for such options.