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South Africa pushes Chinese Giant Huawei to hire locals

Despite negotiations between the parties, there has not been a compromise reached about the Huawei workforce’s foreign employee share (around 90% according to the South African government). This matter is currently before the courts.

The South African government released a statement saying that “Due to failure to comply with Employment Equity Policy, Department of Employment and Labour have commenced court proceedings against Huawei Technologies South Africa today, 11 February 2022.”

South African law requires that foreign employees cannot exceed 40% for companies operating in South Africa. The law was not followed by the Chinese technology giant’s local subsidiary. Numerous violations were also found at various levels of management by the ministry of Employment.

Majority of non-nationals are from the top to bottom

Two years ago, Huawei Technologies South Africa conducted a workforce audit that found that 100% of the five highest-ranking staff are foreigners. The total number of non-nationals who make up 38% of the “top management” (27 of 71 executives) is also staggering.

The lowest level of the “skilled professionals”, that is 378 non-nationals of 435 employees (87%), are foreigners. 76% of the 181 “technically skilled” employees are also from outside the country. The government doesn’t specify the maximum number of ‘technically skilled’ employees at this level. However, only one is from outside the country. The government stated that Huawei expected an increase of 11 foreign employees in the next two-years.

The government’s current non-compliance with the Chinese group is made worse by plans to increase foreign workers in the next few months. According to South Africa’s Department of Home Affairs Huawei intends to increase its non-local workforce of “qualified professionals” from 378 to 405, with no increase in designated groups.

Looking for an amicable solution

The government stated that after the 2020 audit, “Huawei’s legal department contacted [relevant] department in an effort to find an amicable resolution.”

According to the Chinese giant, the subsidiary claimed that it had received 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 said it collaborated with the Department of Home Affairs, Huawei had “achieved a permit in compliance with the Immigration Regulations” which required it to hire 60% South Africans and 40% from abroad. The department decided to proceed with the case without delay.

Huawei’s South African subsidiary said in a statement that they are “committed” to continuing engagement with the Department regarding their equity plan. Huawei is committed to respecting local laws and regulations.

According to the Chinese giant, the subsidiary claimed that it had received 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 said it collaborated with the Department of Home Affairs, Huawei had “achieved a permit in compliance with the Immigration Regulations” which required it to hire 60% South Africans and 40% from abroad. The department decided to proceed with the case without delay

Huawei’s South African subsidiary stated in a statement that they are “committed” to continuing engagement with the Department regarding their equity plan. Huawei is committed to complying local laws and regulations.

The highest rate of unemployment is among those aged between 15 and 24 years, at 64%.

South Africa has a high rate of endemic unemployment. The International Labour Organisation data shows that the unemployment rate has never been lower than 20% since 1994, when apartheid ended. Between 2008 and 2020, Africa’s most industrialized economy saw its unemployment rate rise from 22.4% up to 28.74%. This is compounded by the country’s deep economic and racial inequalities.

“Structural problems and weak growth have hampered progress in reducing poverty. This has been further exacerbated by Covid-19. Rising unemployment has hampered household welfare’s progress to an all-time high 34.4% in quarter two of 2021. The World Bank last October warned that youth aged 15-24 are at the highest risk of unemployment, with 64%.