South Africa

Interview: UCT Vice-Chancellor Max Price on outsourcing

By Marelise Van Der Merwe 19 November 2015

Last week, Daily Maverick met with UCT Vice-Chancellor Max Price for a series of interviews on the student protests. After a notable disruption of the Senate Meeting and increasing tensions on other campuses regarding the desire for outsourcing agreements, Price gave Daily Maverick his views on the current challenges facing UCT and the issues that would still need to be ironed out moving forward. By MARELISE VAN DER MERWE.

* This is an edited transcript of the interview. Part I, which deals with more general issues, can be read here.

When Daily Maverick met with Max Price, it was following allegations from the Student-Worker alliance that the agreement between UCT and Nehawu was deliberately vague in a bid to deceive workers. Daily Maverick attempted to bed down exactly what the agreement was, what would be different for workers, and why there was continuing discontent on campus.

DM: One of the things that has been puzzling me is the point you raised in the press briefing last month in Cape Town, where you noted that some of the benefits that were currently extended to outsourced workers would not necessarily be extended once they were insourced, for example the residence discount. Can you clarify that?

MP: I think that with that comment I may have created more confusion. It was a caveat, a minor qualification. When our workers were outsourced in 1999 they lost a lot of benefits they had had at UCT. There are three key benefits of concern. They lost access to the university provident fund, but most of them had access to provident funds; that said, not all of them did. Some companies offered that and others didn’t.

There is a medical aid here but one that most don’t want, because it’s quite expensive and it’s deducted from your salary. It was a bit of a struggle, because many want to be exempted from it, so that they can take home more money. So we are trying to work that out.

When you are in a lower income bracket, you may find that you would rather have your total package in cash than in benefits. So they will have access to medical aid, but my guess is that many of them will choose not to take it.

Then there was the right to a discounted fee. All university employees have the right to a 75% discount. Almost all of the university employees have wages that place them above the NSFAS threshold. So our employees cannot access NFSAS, but many of the outsourced employees are below the NSFAS threshold, so they are eligible for NSFAS for the things that are not covered, like for instance books. So they would receive an extra benefit. So it’s not because they are outsourced or insourced, but because they are eligible for NSFAS. So that will come on top of their discount.

How would job grading affect outsourced workers? And would there for example be outsourced workers who, because they were casuals in the outsourcing companies, did not qualify for UCT benefits?

There are above 900 employees who spend all their working lives at UCT and are not just passing through. There are very few who come in as casual workers. In certain peak seasons or for certain specialised activities, such as pruning trees, that might be the case, but otherwise not. In future, we would contract that as a specialised service. We can’t cover that with our normal staff. Otherwise, there wouldn’t be a situation where some staff are getting the benefits and others aren’t. We were live to the sense of unfairness that staff once had those benefits and had lost those benefits, and were working cheek by jowl with others who had those benefits.

So when you switched to outsourcing, did you retain the same staff?

In many cases. I understand that in many cases the new companies did employ them. It might be that some of the companies may have needed 150 staff and there were 200. I can’t tell you how many didn’t get employed. But there are a lot of people who work here today who used to work here before the outsourcing.

All the employees I’ve spoken to are very clear on the fact that they experience outsourcing as exploitative. Some are ambivalent about protesting and the consequences for them. But I can’t get a clear answer on why, or even whether, insourcing will definitely be better for them. Can you clarify that?

Yes, I think so. The grievances that our workers have articulated, along with others, are around outsourcing in general. UCT, as the first place that is going to reverse outsourcing, can say these are grievances that we have long identified and tried to deal with to some extent.

Firstly, we are told that through outsourcing unions are weakened. If all the workers at UCT are on strike, we face a real problem. But if only the catering workers are on strike and all the others are working normally, we don’t really feel that. We may feel pressure if all the catering workers in the country are on strike. Even to organise a strike across 150 workplaces is much more difficult. That fragmentation is a key reason.

Secondly there is much more room for intimidation. For example, if we have a guard and there’s some sort of scuffle, and we get a whole lot of complaints, all we can do is report it to the company. What the company does is say, ‘We don’t want trouble, we don’t want to risk our contract.’ What they can do is move the guard around. What the guards often feel is that they don’t have the room to challenge that. Or if the worker participates in a protests the same may occur. They may be disciplined. The opportunities for victimisation or harsh treatment are much greater.

The third, which is much more a human emotion issue, is about how workers feel in their workplace. Especially for the workers who have been here twenty or more years, this is the only workplace they know. They develop relationships and the relationship is hopefully a warm relationship. They are part of a community. When you have outsourced workers, though they are still here and you try to foster that, they wear a different uniform, a different badge, and when you say, ‘Where do you work?’ they would like to say UCT – but they feel they are made to feel like outsiders, and as though they could be made to work somewhere else tomorrow. This is articulated often.

The fourth factor is job security. In the normal outsourcing environment, the contract finishes in five years or so, they leave with their workers and the new company comes in, and in the grand scheme of things hopefully they get a new contract, so there shouldn’t be job loss. But if they don’t get a new contract, those workers can lose their jobs. Workers are continuously insecure. It’s very unsettling.

Those are all the things that are problematic from the workers’ point of view. What’s good about outsourcing is of course to do with the core business and economies of scale. When we are catering and providing the food for a residence, which we will now have to do, we don’t have procurement chains, depots and warehouses where we can store it, and if we did have that we would have to do that just for UCT, whereas if you’re a company doing it for hotels and universities you can buy in bulk and get better prices. So it’s more efficient and you get better value.

Did you take steps to ensure that outsourcing was less exploitative?

We’ve been alive to what’s wrong with it from workers’ point of view and have taken a number of steps to counteract that. We implemented what we called a code of conduct and all companies had to agree to the code of conduct. And we had to take them over at conditions of service that were no worse than the conditions before.

We’ve had consultants who have been the go-between. They are there to meet with workers every few months and meet with our HR committee and workers must sign off that things have been done, as well as any complaints of victimisation. We now have someone called a code compliance manager who checks the compliance of the code – of course now that job will go.

The first element of the code was that you have to take over all the workers and that was to do with job security. The second was to set our own minimum wage. We had economists tell us what it should be, which was often nearly double the minimum wage in the country for that same job. That was done through the sectoral determination. Then we were worried about victimisation. And the workers were allowed to come to us to say ‘I believe I’ve been victimised’ and we would conduct an investigation. We had a case with a shop steward who believed he was being moved to a station because he had raised an objection to something. The company said they had a new plant and they needed someone experienced. We looked at it and said he was someone who often speaks out and there was a plausible argument that that this wasn’t genuinely the motive, and asked if there were no other experienced people. In the end he was sent back here.

No doubt the workers still feel that there is some victimisation and still feel it would be better to be insourced and that’s why they argue for insourcing and they believe they will have higher wages and have access to medical aid and pension funds. Shop stewards understand this and it will be their job to explain it. There’s a risk of unrealistic and raised expectations which we are still going to have to deal with. There may well be disappointments. But this all still needs to be worked out.

You previously estimated that insourcing would cost the university an additional R68 million. Is this still the case?

R68 million is the best estimate we’ve got. We’ve had to do it in a hurry. We’ve got no idea, to tell you the truth, what each job will translate to when we do our own grading, and those assumptions are the best we could make.

The jobs will be secure partly because the law says that. You are required to take all the jobs at conditions that are no worse. We certainly expect to do that in part also because nothing really changes. We’ve still got to clean the same square metres of floor and feed as many people. If it turns out we don’t need all that staff it would be a slow process of attrition, for instance if people retire we won’t replace them or if we expand our plant we won’t hire more staff.

I don’t believe people will be retrenched or dismissed unless there was illegal activity or they were not at their posts when they were meant to be, and even then we would say to the companies this was a very unusual time and there was intimidation. I don’t think it serves any purpose to dismiss people.

What can you say about the package that will be offered to newly insourced workers?

At this stage nothing. All we can say is that it’s likely to be better than their current package. All jobs still have to be graded. We have our own grading system, which is an international process system. Based on that grade, the job is linked to a pay and we have a policy on that. We use a company called Remchannel to survey the market. We want to pay our workers above the market at the 60th percentile rather than the 50th percentile. It would be quite a mechanical thing. We hope that it would translate into a raise. If it turned out that was lower than they are earning now we would certainly not allow that. We would expect it to go up.

What is your response to the concerns about the vagueness of the agreement?

We may be naïve but our view is that Nehawu does not have any concerns about the agreement or the vagueness. They understand that the agreement has very few conditions: that we would insource everyone who works here full-time, that the timing would be linked to the end of each contract, and that everyone who was currently outsourced, their jobs would currently be secure. And that we would then set up teams that would for each company work through the process and that would include worker representatives. Nehawu doesn’t want us to bypass them and start talking to workers directly. That would undermine them and give mixed messages. They are the recognised union and we are obliged by law to deal with them. We cannot deal with other groups that come up.

But where I say we may be naïve is that we are working in the belief that Nehawu does represent the vast majority of workers and that they can maintain discipline and support. Here have been splits in the unions; lots of workers say Nehawu doesn’t represent us, Nehawu hasn’t consulted with us, and they want the shop stewards to negotiate with them directly. If that group were really large and formed itself either within Nehawu, electing new representatives, then we would negotiate with those representatives. But we can’t get involved in sorting out that problem in Nehawu. If people resign form Nehawu and join a new union and then the new union came to us and said We are the majority union, we want recognition agreement, we would follow that process. It’s really dangerous for management to get involved in sorting out conflicts in the worker community and between unions. We have to rely on normal labour relations processes. But sometimes those processes fail. Some would say they failed in Marikana.

I think part of the challenge is that it’s only in the last while that Nehawu has recruited aggressively and displaced other unions. So inter-union politics is some of this. Western Cape Nehawu has got its own issues and some of the students have been aggravating this with some incorrect messages. There is a sense that Nehawu has sold them out which may come from student groups.

So when you negotiate with Nehawu have any students been present?

Nehawu is absolutely adamant that students do not represent them. We tell students what we are negotiating but the agreement with Nehawu.

How much communication is there between management at different universities?

We talk a lot. We have contact in different situations. It’s only really at UCT that Nehawu leads those negotiations and has been the leader around outsourcing and insourcing. Students have formed an alliance with them and it has been successful. But at many other universities it is led by the student movement. At the moment our issue is about the split in Nehawu, not about not meeting Nehawu. The reason we haven’t got peace and support across the board is because of this conflict and the desire of one group of workers to have us take sides.

Other campuses have big conflicts between their SRC and other leadership groups.

Insourcing at UCT will probably be more affordable than at other universities. Because we’ve had this minimum wage in place for years, we’ve already been paying through these outsource contracts much more for these services than other universities and the gap that will exist may be quite small relatively.

I wouldn’t presume to say that because we can do it other universities should. It could bankrupt them.

So how will you fund it? Salary cuts?

Yes. It’s less increases. We had almost signed our wage increases for 2016. The average wage increase was somewhere between 6 and 7 percent. If we want to make over a few years a saving of 4 or 5 percent of the salary bill we won’t do it in one lump sum but maybe 1.5 percent per year. No one’s going to go from 500,000 a year in 2015 to 460,000 in 2016. The burden isn’t going to be carried equally by everyone, but most by the highest-paid workers.

Is there anything you’d like to add?

I’d like to clear up some rumours. There was an anxiety that workers without a matric wouldn’t be insourced. That’s not true. There was a rumour that we would encourage companies to downsize between now and the time or insourcing. That’s also false. We have told companies we expect them to maintain their workforce and we will take over all the people who are there and that includes not firing people for protesting. There’s a concern that people quite high up in the hierarchy that supervise multiple places won’t be insourced and that is true. We can’t insource people who insource multiple places, only people who spend all of their time at UCT.

Then there’s been a lot of confusion about the timing. We agreed with Nehawu that we would only insource when each contract ends, not before, so that we don’t have additional costs. If we can get out of a contract without additional costs, we will.

Then there’s this thing about six months. In the case where a contract ends very soon and we need a whole lot of additional resources to put the service in place, we have asked to extend the contract for six months so as to be able to put the necessary human resources, procurement or whatever other sources up and running. DM

Photo: UCT Vice-Chancellor of the University of Cape Town Max Price at Glenara residence. Photo: Michael Hammond.

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