§ Background
§ This note answers points which have been raised jointly by the Confederation of British Industry (CBI) and the United Kingdom-South Africa Trade Association on the Government's request for the publication by British com-panies of information on the employment practices of their affiliated companies in South Africa. This request originated in the White Paper (Cmnd. 5845) giving the Government's observations on the Fifth Report of the Select Committee on Expenditure 1973–74.
§ 2. Paragraph 4 of Cmnd. 5845 states: "The Government agree with the Select Committee that publication of information on companies' progress towards the objectives of the Code of Practice is an important means of encouraging and persuading others, and that companies should expect continuing publicity for their performance in this field. The Government also believe that Parliament and the public should have access to information allowing judgments to be made on the progress achieved by companies. Parent companies in this country will accordingly be invited to publish regularly in their annual reports to shareholders, chairman's statement or in any other convenient form, the information specified in Annex 2 to demonstrate progress in raising non-white wages above Poverty Datum Line (PDL) rates and towards the Minimum Effective Level (MEL)".
§ South Africa Legislation on Disclosure
§ 3. The CBI asked for clarification of the effect of the South African Second General Law Amendment Act, which imposes certain restrictions on the disclosure of information by South African registered companies.
§ 4. The South African Government have now indicated that the legislation requires a South African registered company to obtain the per-mission of the Minister of Economic Affairs before it transmits information on wages and conditions of employment to a principal or associated company in the United Kingdom and in other countries generally. They have old us that they intend granting permission if the British company holds 50 per cent. or more of the equity of the South African company, and if a copy of the information to be transmitted by the South African company has been 419W filed with the Department of Commerce before its despatch. But they would refuse permission where the British company holds less than a 50 per cent. equity in the South African associate.
§ 5. As a consequence of the South African Government's legislation, publication of the information specified in detail in Annex 2 of the White Paper will be looked for only where a British company holds 50 per cent. or more of the equity in the South African company. (The White Paper contemplated publication where a British company held more than 10 per cent. of the equity of the South African affiliate: Annex 2 (Note (a).)
§ 6. The Government nevertheless continue to encourage British companies with minority holdings (especially where the nature of these holdings gives an important influence on policies) to make public to the best of their ability the steps they have taken to promote the adoption by their South African affiliates of the policy and practices recommended in the Code of Practice and to report as fully as possible on the progress made.
§ Form of Publication
§ 7. It has been suggested that inclusion of this information might in some cases upset the balance of annual report of chairman's statements.
§ 8. The White Paper also contemplates publication "in any other convenient form", consistent with the objective that Parliament and the public should be adequately informed of progress. An acceptable alternative would be a separate note available on request, with a reference in the annual report or chairman's statement to the availability of this. The Department of Trade would like to receive a copy of the information in its published form.
§ Poverty datum lines (PDL) and minimum effective levels (MEL)
§ 9. The CBI have said that in some cases, for example in mining areas, existing PDLs are unsatisfactory yardsticks of the minimum subsistence requirements of African workers; that in other cases there is no PDL; and that the MEL, defined as 150 per cent. of the PDLs, is unsatisfactory as a target for a minimum level of wages. They are concerned that a simple tabulation of this data could be misleading.
§ 10. It is recognised that PDLs have been calculated mainly in respect of workers in urban areas and also that in some cases PDLs and MELs have been superseded by other forms of poverty data calculations. Where South African affiliates of British firms are using a PDL or equivalent which relates to the area in which they operate, or where they are using a PDL for a different but comparable area or situation, then this should be indicated in the published information, together with any reservations which the company has on its relevance. If, however, there is no PDL or equivalent for the location, then companies should consider following the guidance (in paragraph 8 of the Code of Practice) that experts should be commissioned 420W to produce appropriate estimates. Where a company considers that the wages of the lowest paid African workers cannot be related to an appropriate PDL, it should explain how the wages and other benefits in kind received by these workers relate to the minimum subsistence requirements of these workers and their families. In such cases companies may also wish to include figures showing the percentage increase in wages from year to year to illustrate the extent of improvement.
§ 11. As regards the arbitrary nature of the MEL, the Code of Practice (paragraph 9) states:—"The estimators of the PDL regard it as a measure of the barest minimum required to support a family in African living conditions, assuming the wisest allocation of expenditure. A wage equal to the PDL cannot therefore be thought of as a fair one. Companies are urged to accept the MEL as the target for the minimum wages and to establish a timetable for achieving it". Companies will no doubt publish fuller comments if they feel any danger of misinterpretation of the level of wages paid in relation to the MEL.
§ Position of Companies with few African workers
§ 12. The CBI suggested that the details requested in Annex 2 of the White Paper would be excessive for companies whose subsidiaries or branches employ very small numbers in South Africa.
§ 13. The Government accept this point and companies whose subsidiaries (or branches) in South Africa employ less than 20 Africans will not now be asked to publish information in the full detail proposed. But such companies are asked wherever possible at least to state publicly how many Africans they employ and whether their pay and conditions of employment are in line with the Code of Practice.