Reforming Labour Broking: A Joint Policy Paper

Reforming Labour Broking

A Joint Position Paper by

the Democratic Alliance

and
the Congress of the People

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Reforming Labour Broking: A Joint Policy Paper

Introduction
Labour brokers or Temporary Employment Services have become prominent role-players in the South African economy where they facilitate employment creation, train workers and assist business to optimise their operational design. If there was no need for the services they offer, they would not have evolved or survived in the marketplace. The stated purpose of brokers is to: Facilitate cross-utilisation of temporary workers between multiple organisations and sectors (individual workers will not be able to find multiple opportunities in a short space of time themselves); Provide administrative services in respect of companies that are unable to provide it for staff (or more cost effectively) such as payroll admin, leave, UIF, Workmens compensation, which allows organisations to focus on core business; Provide evaluation, training and relocation of unskilled, semi-skilled and skilled workers; and Provide a ready workforce to fill critical short-term vacancies in the various industries.

The industry generates turnover of in excess of R23 billion per annum and places more than 500 000 temporary assignees in jobs every day in South Africa. Concerns have been raised about exploitative practices in the industry. These require urgent evaluation and attention. The question of labour brokers, and how this industry is going to be handled, will have a far-reaching impact on how South Africa tackles its problems in the future. It is for this reason that the Democratic Alliance and the Congress of the People have decided to publish our own joint policy paper on the matter.

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Reforming Labour Broking: A Joint Policy Paper

I. The labour broking market

The increase in temporary employment services is an international phenomenon, indicative of the needs of a rapidly changing global village, where industries expand and contract at increasing speed and modify their product offerings to match prevailing global demand. Temporary workers are often needed to assist in times of rapid change and retooling. Industries in the throws of this rapid change may not have the recruitment skills to locate temporary workers within the required time frame. This function is often filled by brokers and temporary employment services. Many industries, including agriculture, are cyclical and therefore need more staff at particular times. The employment of full staff compliments during off-peak times is not efficient or affordable. Labour brokers help workers during off-peak periods to find work. Labour brokers operate across the entire economy, including the professional and manual labour markets. Brokers provide temporary staff for government and state owned enterprises (SOEs), the IT industry, the financial sector, production industries, construction and mining. Labour brokers are, therefore, a key component of economic activity, and provide a vital service to the workers they place and the companies they staff. The concerns that have been raised regarding the exploitation of individuals employed by labour brokers are real and need urgent attention. It is likely, however, that an outright ban or excessive regulation will deepen exploitation by driving the industry underground. The Namibian Model is instructive in this arena. Having introduced legislation in November 2007, aimed at an outright ban on labour brokers or temporary employment services, many of Namibias temporary workers are now

unemployed. (Figures quoted range between 10% and 40%). If a similar approach to labour broking is introduced in South Africa, many hundreds of thousands of jobs could be lost. This will be devastating to the many currently employed people who will be forced to join the ranks of the unemployed. An outright ban on labour brokers will result in: 1. Immediate job-losses for temporary workers who will not have the resources to locate temporary work opportunities in many dispersed locations. Vacancies in some industries going unfilled due to an inability to locate staff with the correct skill-set. A rise in costs due to employers needing to employ larger in-house Human Resources and recruitment staff to fill the gaps left by the exit of temporary employment services. A switch to the use of small sub-contractors instead of temporary workers (thereby defeating the objective). Fewer people being employed in the long term. The industry continuing to operate, illegally, with an increase in exploitation.

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II. The proposal

Self-regulation, with industry peers and government monitoring the process, is required and will involve: 1. Mandatory registration for all practitioners. 2. The establishment of an Institute or selfregulatory Board of Labour Brokers that will enforce a set of standards for the industry. 3. A code of conduct, enforced by the industry board itself. (Legitimate players in the industry have an incentive to stamp out those labour brokers who exploit workers they place the industry at risk and take away business).

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Reforming Labour Broking: A Joint Policy Paper 4. Annual consideration of profit margins attained. 5. Initiatives to promote job creation. 6. A redesigned, resourced and better managed labour inspectorate with a computerized database of registered brokers, transport to all remote corners of the Republic, powers to search premises and issue notices, and the support of the SAPS to gain access under certain conditions. This would include access to the records of the Institute/Board to be established. These measures would help government to enforce existing labour laws the labour brokers themselves would have to identify those parties not meeting the code of conduct and minimum standards, and then notify the authorities. The better resourced inspectorate would be able to investigate illegal operators and issue compliance notices, followed by legal action. The measures would also be able to enforce legislation such as the Basic Conditions of Employment Act and the existing legislation supporting UIF, Workmens Compensation, annual leave and the pension and medical benefits due to any temporary workers in the Republic. Self-regulation is an effective mechanism, as demonstrated in actions to address exploitive practices in the micro-lending industry In this instance new legislation neutralized undesirable practices in that industry. The Estate Agency Affairs Board continues to regulate an industry, which, similarly, has many small operators in remote locations.

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Conclusion
Our proposals result in a win-win situation. The corrective to worker exploitation is not necessarily more heavy-handed regulation, but smart regulation and appropriate enforcement, which is sorely lacking in South Africa. Government everywhere has a poor performance record when compared to the private sector. The less we have to rely on government to regulate, the more effective an industry will be. This policy demonstrates our principled approach to policy making. Government must facilitate, rather than control, economic activity and efficiently provide those essential services that the private sector is not willing or able to deliver. Labour brokers perform a useful service within the economy and must be permitted to operate, provided that they do not transgress industry self-regulated norms and standards designed to prevent exploitation.

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