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A Huawei shop in South Africa. Photo: Reuters

Huawei under pressure for more local jobs in South African court action

  • Government case claims Chinese telecoms giant has breached employment laws, with 90 per cent of its work force from overseas
  • The revelations have fuelled critics who say China business interests in Africa are failing to create local employment
Huawei
A court action by the South African government against telecommunications giant Huawei has thrown a spotlight on one of the many accusations levelled at Chinese companies in the continent – their failure to give jobs to local people.

In a legal first, South Africa’s labour department is suing Huawei’s South African operation for failing to meet the country’s employment laws, with foreign workers making up 90 per cent of its staff, instead of the stipulated maximum of 40 per cent.

The revelation has caused uproar from locals and politicians in a country with a 34.9 per cent unemployment rate, and fuelled critics who say many Chinese companies bring workers with them from China instead of using locally sourced labour on construction and manufacturing sites.

The South African labour department said its case against Huawei, which opened in court on Friday last week, would “send a strong message to other employers” that “the department is on their tail and consequences will be incurred if non-compliance is discovered”.

The department is seeking 1.5 million rand (US$100,000) – 2 per cent of the Huawei South Africa unit’s 2020 turnover – for the alleged breaches. It also wants the company to implement an employment equity plan to redress the status quo.

The case was prompted by an audit of the company carried out by the department in 2020 which established nine out of 10 of its workers were foreign nationals.

According to a labour department statement, a Huawei legal representative said in 2020 it had been given permission by the Department of Home Affairs (DHA) for its levels of foreign employment.

Further investigation found the company had a permit requiring it to employ 60 per cent South Africans and 40 per cent foreign nationals, the department said.

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According to the 2020 audit, all five of Huawei’s top management team were foreign nationals, with no company plans to change that number in the next two years, or to employ anyone from South Africa’s designated groups of black people, women, and people with disabilities.

At senior management level, there were 27 foreign nationals out of 71, with the company projecting this number to increase, the audit found.

The department said 378 – 87 per cent – of Huawei’s 435 professionally qualified staff were foreign nationals, with a projected increase to 405 over the next two years and no plans to employ anyone from the designated groups.

At the skilled technical level, 138 of the company’s 181 employees were foreign nationals, with an expected increase to 168. The audit found one semi-skilled employee, a foreign national, with a projected increase t0 11, none from designated groups.

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The findings drew a protest from Economic Freedom Fighters, the South African left-to-far left political party, which said Huawei was in direct violation of the country’s immigration laws and employment regulations.

“Such irregular employment practices contribute to a volatile relationship between Africans, and they must immediately resolve the situation,” the party said.

A statement from Huawei Technologies said the company was “committed to complying with local laws and regulations” and would “continue engaging further with the department on our equity plan”, without giving further details.

Critics have long argued that Chinese companies in Africa prefer to hire their own nationals, depriving locals of jobs and giving little training or promotion prospects to those they do hire.

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But a 2020 study by Beijing-based international consultancy Development Reimagined found no real difference in the rates of local employment between Chinese and non-Chinese firms in Africa.

“Country-specific research conducted by SOAS in 2019 and McKinsey in 2017 (Dance of the Lions and Dragons) has highlighted that Chinese companies do employ just as many local workers as non-Chinese companies, pay them more or less the same and train them to similar standards, though often through less formal channels,” it said.

Deborah Brautigam, a professor of international political economy at Johns Hopkins University and founding director of the China Africa Research Initiative, said the Huawei case in South Africa was not representative of the broader situation.

Most studies had focused on construction, manufacturing and mining, while Huawei was a hi-tech company, she said. “But they’ve been in South Africa for years and should have trained enough South African staff by now.”

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Zhou Yuyuan, a fellow at the Centre for West Asian and African Studies at the Shanghai Institutes for International Studies, said Huawei was a leading transnational company with a good record on following laws and respecting the environmental, social and governance doctrine.

“I believe Huawei’s employment policy is based on the market principle which aims to run the business well and is in conformity with the local law. I believe the truth will be revealed one day,” he said, about the South Africa case.

According to Yun Sun, director of the Stimson Centre’s China programme in Washington, Huawei’s employment issues in Africa were neither new nor surprising, given the higher education and training requirements for engineers and management.

African labour resources were not abundant in the high-end, white-collar skills needed by a hi-tech company like Huawei, she said.

“Huawei could say there are not enough qualified local applicants to fill the positions and to keep the operation [going, so] Huawei has to bring in foreign nationals.”

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Sun said local hire quotas should be easier to fill in factories and labour-intensive projects that did not require sophisticated education and training skills.

“For this specific market (information and communication technology), I suspect South Africa is quite representative. For if we look more broadly at a diverse group of Chinese companies, especially the labour-intensive ones, the picture should be better,” Sun noted.

The South African court action also adds to controversy over the presence of Huawei Technologies Co Ltd in the continent, where it is a leading supplier of consumer, enterprise and cloud services.

Huawei is powering 4G and 5G technologies in many African countries, despite pressure from the US and some of its allies over allegations its equipment could be used for spying.

In 2019, the US added Huawei to its “entity list”, restricting its access to US networks and to US-developed technologies. Beijing and the company have repeatedly denied the claims.

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