by Stef Terblanche

Labour brokers

Study finds positive and important role

Searching for jobs on internet and in the paper
Labour brokers.JPG

As the debate on the role of labour brokers rages on, a new study by a respected independent policy research and advocacy organisation has found that temporary employment services play a big and positive role in helping unskilled and inexperienced young people find jobs. 

The study was conducted by the Centre for Development and Enterprise (CDE) and is entitled “Routes into formal employment – Public and private assistance to young job seekers”.
The CDE commissioned the research to identify the most common “routes to employment” and provide some analysis of how effectively these routes work. Included in the Routes study were the informal sector, the Expanded Public Works Programme (EPWP), the National Youth Development Agency’s (NYDA) Jobs and Opportunity Seekers (JOBS) programme run through the learnerships offered by Sector Education and Training Authorities (Setas), and temporary employment services (TES) firms,  commonly known as labour brokers.
Pointing out that youth unemployment is at crisis levels the study cites National Treasury figures which indicate that 50% of those under the age of 25 – 1.4 million young people –  who want to work are unemployed. They account for 30% of all unemployed. If those aged 25-29 are added, the figure rises to 2.5 million unemployed young South Africans.
While blaming this on the slow pace of job creation over the past few decades, the study also found that because of high labour costs and strict labour laws employers “tend to see the employment decision as risky, and may be reluctant to employ unskilled, inexperienced people”.
The Routes study also found that:


While the EPWP created more than a million “work opportunities” between 2004 and 2009, providing short-term, last-resort employment to relatively large numbers of people, it has done very little to increase the employability of beneficiaries;That the Setas, having completed 10,000 learnerships in their first four years, provided some people with valuable training and access to job opportunities, largely in the financial sector. But the Setas were of greatest benefit to people who were most likely to find employment anyhow, even without assistance from the Setas;Young people employed in the informal sector mostly found themselves trapped there, unable to make the transition into the formal employment sector; and

Despite a lack of data, the study found that the JOBS programme run by the NYDA “is helping some young people into jobs”.
The majority of employed people in all cases found their work without the help of employment agencies. Yet the study concludes that, although relatively small in overall terms, the number of those who found work through an agency was “still significant in terms of the numbers of people nationally who use this route to employment”.
In 2009, for example, the Confederation of Associations in the Private Employment Sector claimed that TES firms placed over 500,000 job seekers in employment every year. But “more recent estimates suggest the number of placements per year is closer to one million,” the report states.
TES firms operate on a significantly larger scale than comparable government programmes. In 2008/9, nearly 1 500 people found work through the NYDA’s JOBS programme, while one large TES, Adcorp, claims to place over 25,000 job seekers per day.
The CDE research found that 1 000 individuals were placed each month by one Adcorp branch (of which it has 34) showing that the monthly placements of this one TES branch are equivalent to two-thirds of the NYDA’s annual placements.
And while people placed by TES firms such as Adcorp worked for periods shorter than is typical of the economy as a whole, there was no evidence that they are paid lower wages, as claimed by Cosatu and others. TES-placed workers earned median wages of R2 934, a figure that is close to the median of R3 000 in the Quarterly Labour Force Survey.
“On the whole we found no evidence that either the JOBS programme or the branch of Adcorp studied by CDE researchers were placing people in jobs that were markedly less desirable than is typical of the economy as a whole,” the report states.
The research also found that some employers – especially large, capital intensive firms which employ some low and important skilled workers – rely more heavily on TES firms than others, TES services appear to help companies grow and compete globally and much of the reliance on TES firms reflects seasonality in demand for labour and broader international trends towards more flexible (and temporary) forms of work.
The research found that labour brokers were most useful to young, inexperienced workers and those whose link to the labour market was particularly tenuous. These services “may help bring excluded households and workers into the economy” making the economy more inclusive.
This, they say, must be factored into the policy debate. Banning labour brokers would reduce access to the labour market for the most excluded people and would result in costs and consequences that many currently participating in this debate may not have considered.
“Closing down vehicles that increase access to work should not be a serious option,” the study concludes.
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