by Piet Coetzer

Labour brokers: a complicated scene

Role-players from all sides oversimplify issues

Johann Redelinghuys: temporary employment is a worldwide trend
Johann Redelinghuys.jpg

Do South Africa's labour brokers exploit the most vulnerable members of the labour force, or are they champions of job creation? The answer is much more complicated than the public debate would have it. And the issues at stake are not unique to this country.

Amid the battle in the meeting rooms of parliament over legislation to regulate and/or restrict the activities of labour brokers, the country’s best-known employment agency, Adcorp – in releasing its latest Employment Index last week – claimed that, “Labour brokers are an essential part of the South African labour market. Labour broking is the fastest growing sector of the South African labour market. Labour brokers constitute a R44 billion industry, employing around 19 500 internal staff and just over one million agency workers ('temps')."

According to another source: “In South Africa in the past decade, the number of permanent full-time employees has fallen from 11 million to 9.1 million, according to 2012 figures. The stats for temps are not fully up to date, but so far the number has risen from 2.6 million to 3.9 million – a 50% increase!”

In parliament, Buti Manamela, the African National Congress whip of the Portfolio Committee on Labour, said: "We are targeting and protecting the most vulnerable of people ... mainly farmworkers, mineworkers and domestic workers. Those people are the people we are trying to protect – not just their jobs, but the quality of their jobs."

His comment came after the committee, by majority vote, agreed to change draft amendments to the Labour Relations Act (LRA), which would shorten from six to three months the period after which a temporary worker will become a full-time employee.

International trend

It is a known fact that the trend toward temporary employment is a worldwide phenomenon and, according to Johann Redelinghuys of Heidrick & Struggles, the South African statistics and trends for temporary workers are in line with those for the United States, Europe and China.

Particularly since the 2007 global financial – and subsequent economic – crisis, there has been an upward trend of businesses moving toward the employment of temporary workers.

And, the trend seems set to continue. According to one source in the US, it is expected that by 2020 more than 40% of the American workforce will be so-called "contingent workers”.

Among the reasons cited for this trend is that employers are reluctant to hire in case there is another economic downturn.

It is also a trend that is not restricted to the lower end of the jobs market. “All the way up the corporate ranks, increasing use is made of short-term consultants and contracted service providers. In the big companies, a surprising range of skills is now bought in on contract and temporary. These skills include month-end-crisis accountants, advertising and public relations specialists, supply chain consultants, tax advisers, recruitment specialists and many more,” writes Redelinghuys in his article.

In the South African context, labour brokers often act as a gateway for the unemployed to the world of fixed employment. Almost 75% of the contracts of workers with labour brokers are terminated because the workers have found permanent employment.

The other side of the coin, however, is that many employers make use of labour brokers to avoid being caught with unmanageable redundancy payments, while remaining flexible for times of peak demand and/or production. In short, it is a cost reduction mechanism that leaves these temporary workers vulnerable and largely excluded from the protection of labour legislation and institutions such as the Commission for Conciliation, Mediation and Arbitration.

It is almost impossible for labour unions to extend their protective umbrella to these workers, and the phenomenon of labour brokers is clearly seen by the unions as a threat to their power.

There is an obvious need to find a balance between the useful services that labour brokers render and the need to protect especially the more vulnerable sections of the labour force.

Namibian experience

South Africa is not the only, or first, country in southern Africa to wrestle with this problem.

The business of hiring out employees to clients by labour brokers was used in Namibia from early in the 20th century. Known as ‘contract labour’, it was characterised by inhuman and unfair labour practices.

The system was abolished in 1977, but returned as ‘labour hire’ during the 1990s and remained unregulated until it was banned in 2007. A protracted legal battle followed in the country’s constitutional court.

In late 2012, legislation finally came into being to regulate the activities of labour brokers and protect those employed by them.

While it is still too early to fully assess the impact of the Namibian experience, Anri Botes of the Law Faculty, Potchefstroom Campus at North-West University, in a paper published in April this year, wrote: “Banning labour brokers, as many South African trade unions demand, will not necessarily solve the problem, as the case of Africa Personnel Services v Government of the Republic of Namibia proves.

The possibility exists that the banning of labour brokers in South Africamight also be considered as infringing upon the right to carry on any trade or business of a South African citizen’s choice – a right protected by section 22 of the Constitution of the Republic of South Africa, 1996. Consequently the possibility also exists that such a ban could be regarded as unconstitutional,” she noted.

Botes concludes that “care should be taken to prevent a perpetuation of the indignities and inequalities inflicted on workers by the practice of labour hire, and this can be done only by promulgating proper legislation to that effect. The Namibian Government achieved this by adopting new legislation. This step, and in part the legislation itself, should serve as an example to the South African Government.

The Namibian Government has addressed the most important issues in their legislation, afact that should be commended. It is suggested that the social partners consider the Namibian Labour Amendment Act 2 of 2012 for any guidance it might be able toprovide.”

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