President Cyril Ramaphosa: Inaugural Worker Share Ownership Conference
Programme Director,
Minister of Trade, Industry and Competition, Mr Ebrahim Patel,
Ministers and Deputy Ministers,
Chairpersons of the Industrial Development Corporation and the National Empowerment Fund,
Leadership of the competition authorities,
Representatives of labour, business and industry bodies,
Guests,
Ladies and gentlemen,
Good morning. It is a great pleasure to be here.
This first conference on the state and future of worker share ownership schemes in South Africa is taking place at an important time.
Firstly, we are marking 30 years of freedom, giving us an opportunity to reflect on progress in transforming our society and economy.
Since 1994 we have made a concerted effort to address the racial and economic injustices of the past.
We have enacted competition laws that opened doors for small and medium-sized enterprises to flourish.
Working with our social partners, we have introduced labour legislation to foster sound labour relations and ensure decent working conditions for all.
We have pursued policies to foster entrepreneurship and empower black South Africans in the economy.
This year marks 20 years since the Broad-Based Black Economic Empowerment Act was promulgated as one of the most transformative pieces of legislation to come out of democratic South Africa.
Yet, despite the measures successive democratic administrations have introduced to transform patterns of ownership in the economy, we still have much more to do.
This is therefore a good time to collectively assess the impact of the enabling legislative environment and examine the learnings over the past two decades.
A vital measure of economic empowerment is the extent to which ownership and control of the economy is broadened, particularly among black and women South Africans.
Worker share ownership schemes are valuable instruments to broaden ownership and, with time, to enable greater control of the economy.
Also known as Employee Share Ownership Programmes, these schemes are underpinned by the BBBEE Act, together with the Competition Act, the Companies Act and others.
Government continues to play an important role, through the Department of Trade, Industry and Competition, in providing guidance on the design and implementation of these programmes.
The Industrial Development Corporation, the National Empowerment Fund and others provide catalytic funding.
Worker share ownership schemes furthermore complement the Black Industrialist Programme, providing another means through which government can contribute towards more equitable ownership in the economy.
In 2019 we enacted changes to the Competition Act that have helped to advance worker ownership.
The amendments require government and competition authorities to specifically consider how an acquisition or merger will affect the spread of ownership in the economy, particularly for workers.
The amended legislation also calls for engagement with merging companies to implement structures that can enable greater and more meaningful participation of workers, not only as owners of equity, but as stakeholders with a voice.
The immense transformative potential of worker ownership schemes is often overlooked.
We have come a long way from the early days of black economic empowerment, where instances of workers as shareholders in companies were rare.
The impact of these schemes were relatively limited, in part because of the finite nature of the respective arrangements.
In the intervening years, these efforts have picked up pace considerably.
According to a study done by the DTIC, in South Africa today, more than 500,000 workers are part-owners of the companies they work for.
This equates to one in every 20 workers in the formal private sector.
We are creating a new class of worker-owners across the country.
And these are not just managers.
They are mineworkers, who are now amongst the owners of our country’s vast mineral wealth.
They are workers in garment and auto manufacturing industries, who are now amongst the owners of factories.
They are workers in the agricultural sector, who are part-owners of the land they farm.
They are workers in food and beverage, hospitality, energy, transportation and logistics, IT, financial services, telecoms, and many other sectors.
These are the Tintswalos, the children of democracy, who are striving to give effect to the words of the Freedom Charter that ‘the People shall share in the country’s wealth’.
That is why this conference is so important.
It is an opportunity to acknowledge the successes of existing employee share ownership programmes, raise awareness about their potential, and explore strategies to promote more of them within and across more sectors.
In 2018, I had the privilege of co-chairing the International Labour Organisation’s Global Commission on the Future of Work, alongside the then Prime Minister of Sweden, Mr Stefan Löfven.
The commission’s report reflected not only on what choices countries need to make to adapt to a rapidly changing world, but also on the critical issue of achieving social justice in the world of work.
In a number of respects, worker share ownership schemes are just such an investment towards the achievement of greater social justice.
These investments are necessary for the sake of equal opportunity and addressing historical inequalities, but also towards increasing productivity and growth.
These investments are necessary to advance inclusive growth that benefits both workers and businesses.
Employee share ownership programmes offer employees access to a share of the profits generated by the companies to which they contribute their labour.
Moreover, they give workers a seat at the table where strategic corporate decisions are made.
By participating as owners, workers also develop a deeper understanding of the challenges and opportunities facing their companies, enabling more fruitful partnerships to unlock opportunities for growth, investment and job creation.
This is a paradigm shift, which aims to empower workers not only as wage earners but also as stakeholders with ownership in capital.
Beyond the principle of social justice, worker ownership initiatives make sound business and economic sense.
They are key to building a more resilient economy whose benefits flow equitably through society.
Worker share ownership initiatives boost morale and productivity.
Several studies have shown that worker ownership also fosters greater innovation within companies.
Workers who feel valued and respected by their employers are more likely to contribute ideas for improving processes, products and services.
It is human nature that one is more inclined to contribute one’s best efforts when one has a vested interest in the success of that particular venture.
This conference is an opportunity for meaningful dialogue among a diverse array of participants, including trustees, CEOs, labour and business representatives, and company chairs.
It is an opportunity to develop a model of worker ownership that can serve the needs of our economy.
While there has been a focus on expanding the number of worker share ownership programmes, insufficient attention has been given to enhancing the impact of many of these schemes and unlocking their full potential.
Moving forward, we will need to address key issues such as developing best practice funding and dividend policies, and enhancing governance structures.
Worker ownership must transcend black economic empowerment. It must be a mechanism for wider economic inclusion.
We need to expand the reach and impact of employee share ownership programmes, strengthen legislative and regulatory frameworks, and foster greater collaboration with stakeholders.
We should seize this opportunity to create networks and enable knowledge-sharing, and improve the impact and reach of existing worker ownership structures.
I wish to thank Minister Patel, the DTIC and its agencies for all the work that has gone into creating an enabling environment for employee share ownership programmes to flourish in South Africa.
The progress that has been made would not have been possible without collaboration between the state, labour, the private sector and other stakeholders in the economy.
I congratulate the companies, many of which are represented here today, who continue to work to implement such structures in collaboration with their employees.
We all share a commitment to economic transformation.
It is vital that we harness this spirit of partnership as we chart the course for the future of these programmes and for an even better, more sustainable worker shareholder regime.
By championing worker ownership, we are building a future where every employee has a stake in the success of their company, where innovation flourishes, and where prosperity is shared by all.
Together, we are paving the way for a more equitable and prosperous society in which no-one is left behind.
I thank you , President Cyril Ramaphosa