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Shortage of skilled employees and South African immigration laws

Shortage of skilled employees and South African immigration laws

Sibusiso Gule
Deneys Reitz Inc Attorneys


# Introduction

South Africa made a smooth political transition from the apartheid regime to the present government, which has been hailed internationally as a success bordering on a miracle.

The challenge that is presently facing the South African government is an economic one. After the transition, the trade barriers that existed during the apartheid era were broken down and the South African economy was exposed to globalisation and the accompanying challenges.

The manufacturing sector that provided a lot of employment to South African citizens faced challenges in terms of cheaper products that were brought into the country. Most of the sectors had to look at cost-cutting measures and many of them looked at retrenchments as a means of cutting costs in order to remain competitive.

The changes in the trend in the international community, such as the dominance of technology and telecommunications and ownership and trading in intellectual property, meant that the traditional sources of employment were becoming insignificant. A demand for specialised skills, which were needed to cope with the changes in the economy, was created and the South African economy had such skills in short supply.

There are various measures that were introduced by the government in order to address the question of skills shortage, inter alia, the Employment Equity Act which seeks to address the shortage of skills amongst previously disadvantaged groups (blacks, women and disabled persons) as well as the enactment of the Skills Development and Skills Levies Acts. Whilst these measures are commendable, they do not seem to be adequate to address skills shortage particularly in the short term.

Another trend that has come with globalisation is that capital movement between countries is easier. This has caused entrepreneurs in other countries to look beyond the borders of their countries to invest their funds. There are quite a number of companies that are overseas-based that have operations in South Africa. Most of these companies need to export human capital in order to set up operations that are extensions of these companies, whether it is separate companies or branches.

The acquisition of skilled labourers from outside the country and the secondment of employees from overseas operations to local operations, has been encumbered by the immigration laws that apply in South Africa, and this in turn has had a negative effect on investment in the country.

# Immigration law, work permits, and permanent residence

The statute that deals with control of admission of person to their residence in and their departure from the Republic of South Africa is the Aliens Control Act 96 of 1991 ("the Act"). Section 23 of the Act provides as follows :

"Subject to the provisions of sections 28 and 29, no alien shall :

a) enter or sojourn in the Republic with a view to permanent residence therein unless he or she is in possession of an immigrant permit issued to him or her in terms of section 25 or

b) enter or sojourn in the Republic with a view to temporary residence therein, unless he or she is in possession of a permit for temporary residence issued to him or her in terms of section 26."

It is clear from the provisions of section 23 that a foreigner needs an immigration permit in order to be a permanent resident in the country, and a person who requires to sojourn inside the country for a temporary period, requires a temporary residence permit.

# Temporary residence permits

There are different categories of temporary residence permits which are set out in section 26(1) of the Act, these being:

> A visitor’s permit

> A work permit, which may be issued to any alien who applies for permission:

a) To be temporarily employed in the Republic with or without any reward; or
b) To temporarily manage or conduct any business in the Republic whether for his or her own account or not;
c) A business permit;
d) A study permit;
e) A work seeker's permit;
f) A medical permit.

# The negative impact of immigration laws on attracting skilled employees

Attracting skilled employees into the country would benefit South Africa in that the country will have skilled employees to fill those positions where numbers in the country are insufficient to cater for that particular job category, and it makes it easier for investors to invest in the country if they know that the operation that they are setting up is going to be in the hands of their employee.

The Republic can benefit from creating easy access to our labour market in that it can retain highly skilled individuals who can then transfer such skills to local individuals, thereby addressing the question of skills shortage and may also encourage investment. The present immigration system militates against such an easy access for the following reasons:

1. The process is regulated by the Department of Home Affairs which does not seem to be organized to handle the applications in a uniform and consistent fashion;

2. The system is inflexible and rigid;

3. The method of application is cumbersome and it takes a long period of time to process applications for work permits, which may range from a period of 8 weeks up to 12 months, depending on the complexity of the application;

4. The present system is insensitive to the economic needs of the country.

# Proposed changes to legislation

The criticism of the present immigration system has led to the drafting of the Immigration Bill which has to go through various stages in Parliament before becoming law. Categories of permits that may be issued in respect of individuals that seek to enter the Republic of South Africa for the purposes of working are the following:

1. Work permit, which is the permit that may be issued to a foreigner intending to conduct work, and his prospective employer has satisfied the following requirements:

a) Certification from a chartered accountant that the terms and conditions under which the employer will be employed will not be inferior to those prevailing in the relevant market segment for citizens and residents;

b) Pay an amount prescribed by the Department from time to time as a ratio of such foreigner's remuneration, which amount should be shown in the training fund;

c) The Department may waive payment of the amount referred to above after consultation with the Departments of Labour and Trade and Industry, if it is verified that the employer concerned has in place an adequate training programme for citizens and residents; or when requested by the Department of Trade and Industry in respect of foreign investments.

d) A work permit shall lapse within six months after issue and within a year thereafter, if its holder fails to submit to the Department certification that he is still employed.

2. Intra-company transfer permits which are permits issued to a foreigner who is employed abroad by a business operating in the Republic in a branch, subsidiary or affiliate and who is required by that company to conduct business in the Republic for a period not exceeding two years, provided that:


a) A chartered account certifies that the employer needs to employ such foreigner;

b) The holder of an intra-company transfer may only conduct work for the employer who seconded him to the South African company.

3. Corporate permit. The Department may issue a corporate permit to a corporate Applicant to employ foreigners who may conduct work for such corporate Applicant. The Department of Labour may, after consultation with the Departments of Labour and of Trade and Industry, determine the maximum number of foreigners to be employed in terms of a corporate permit, by a corporate Applicant, after having considered:

a) The training programme, provided by the corporate employer for the citizens and residents of the Republic and/or the financial contribution offered by the corporate Applicant, to be shown in the training fund;

b) Certification by a chartered accountant that the foreigners will be employed on terms and conditions not inferior to those enjoyed by citizens and residents of the Republic.

4. Permanent residence. The Department of Home Affairs may issue a permanent residence permit to a foreigner of good and sound character who:

a) Has been a holder of a work permit for five years and has received a permanent offer of employment provided that the prospective employer certifies that a position exists and is intended to be filled by such a foreigner;

b) Has received an offer for permanent employment provided that the prospective employer certifies the position was advertised but no suitably qualified citizen or resident was available to fill it;

c) Has demonstrated to the satisfaction of the Department, extraordinary skills or qualifications, and

d) Intends to establish a business in the Republic.

It will be seen that the changes that are contemplated in legislation are geared to deal with the shortage of skills and the role that can be played by foreigners in training citizens and residents to acquire skills they do not have and to attract much needed foreign investment.

# Effects of the proposed changes on skills and investment

1. A levy is paid in respect of an employee that is issued with a work permit and such levy is reflected in the training fund of such employer. However, the Department may waive the levy provided that the employer concerned has in place an adequate training programme for the citizens and residents of the Republic of South Africa and when requested by the Department of Trade and Industry in respect of foreign investment.

2. It is clear that the intention of the government in imposing a levy to be paid by an employer who intends to bring a foreigner into the country is to ensure that there is a premium paid by such employer for bringing a foreigner. However, the Bill is sensitive to the training and the investment needs of the country as the levy may be waived provided an adequate training programme is in place and the Department of Trade and Industry is satisfied that foreign investment is being brought into the country.

3. Although previously an employer could make an application to obtain a certain number of foreigners to come and work for it in the country, the only thing the department could do was to agree in principle that it would grant the foreigners concerned permission to work in the country, provided that the relevant applications are made. The proposed system for corporate permits is available to employers, subject to a limitation in terms of numbers that can be brought into the country.

4. The number of foreigners allowed into the country will be dictated by the business and investment needs of the country.

5. The rules relating to the application for residence and other work permits are simplified and liberalized.

6. The audi alteram partem rule is extended to the adverse decisions affecting individuals that may be made by the Department and review procedures are clearly set out, and immigration courts have been established to review decisions of the Department.

# Conclusion

There can be no doubt that the new Immigration Bill is long overdue having regard to the changes that have taken place in the international labour market. The fact that the proposed Bill is sensitive to transfer of skills and investment is commendable.

The Bill has not been without criticism, particularly with regard to the question of who shall have the power to administer the statute.

Criticism has also been that the Bill is going to result in an influx of foreigners into the country. It is submitted that such fears are unfounded as the Act is clearly worded and will be backed by clearly worded regulations.

The interests of the country with regard to transfer of skills as well as foreign investment are taken into account in the Act. Staying with a rigid and inflexible immigration system would not augur well for the country.

It remains to be seen whether the introduction of the new immigration laws will have the desired effect, but the intention of the government and the legislature is quite clear.

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Gary Watkins

Gary Watkins

Managing Director


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