Opinionista Johann Redelinghuys 18 June 2013

Labour Brokers are here to stay

Cosatu (and the ANC) want to ban labour brokers, or curtail their use. But they clearly do not understand the dynamics of the employment market. The trend toward temporary employment is a worldwide phenomenon and, despite their best efforts, unstoppable.

It is not only happening at the lower levels of the corporate pyramid where the labour brokers traditionally operate: short-term is becoming a fact of life all the way to the top.

Despite all the hue and cry, labour brokers are not themselves the villains in this situation. They are simply the intermediaries responding to the requirements of an increasingly volatile employment market. Employers, now particularly mindful of being caught with unmanageable redundancy payments in the event of a downturn, want to keep their costs as low as possible and stay flexible. Isn’t this sound business judgement for the times we are in?

Cosatu, on the other hand, wants to restrict the employment on a temporary basis to three months, by which time an employee’s term, they say, must become permanent with all the benefits of permanent tenure. Surely they realise it’s not going to happen? And surely they know that, trying to legislate for it, they are on a hiding to nothing? If the ANC should succeed, against all odds, in banning or curtailing the labour brokers in the present format, the beast will simply reinvent itself by another name and still do the business.

Companies need labour and although they could, in most circumstances, disintermediate and fetch it themselves, when working through the labour brokers they get more flexibility and better control. It is a right service-product-offering for a particular economic time.

To be a lot more practical than simply thumping the table about this, we can only hope that the powers that be will understand that the shape of the market is changing. The number of permanent jobs is dropping and the number of temporary contract jobs is growing; not just here but all over the world.

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! These numbers and the overall trends are in line with those for the US, Europe and China.

It’s obvious that everybody wants to see more jobs. We want to sustain the economy and we want more permanent employment. Job creation is the mantra of politicians everywhere. Permanence and stability are what builds nations. But what we have is not that. The contract employment and temporary work facilitated by the labour brokers is insecure, unpredictable and is said to exploit vulnerable people. The employee has no leverage. It’s natural that they want the protection and the benefits of permanent full-time employment and that they don’t want the prospect of being laid off at short notice with no recourse.

Employers, on the other side of the table, are running companies, committing themselves to profits for their businesses and are under increasing pressure. They are responding to escalating demands from shareholders who want nothing but best performance. CEOs are pressed to control costs and prefer the flexibility they get from contract labour. The critical difference is that with contract labour they can react to short-term demands and can save the cost of benefits required by permanent employees.

This is not only trending on the labour broker’s playing field. 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 are now bought in on contract and are temporary. These include month-end-crisis accountants, advertising and public relations specialists, supply chain consultants, tax advisors, recruitment specialists and many more.

They are all people who used to be employed within the organisational architecture of the business. Even CEOs are increasingly employed on a contract basis and commissioned to achieve particular profit objectives. Those that don’t deliver can be disposed of within a very short timespan.

The private equity sector is even more specific. It wants to turn around a business in three or five years and will employ a turnaround specialist for that purpose and for that time-frame.

Old style “jobs-for-life” are fast disappearing. Not only does such a new reality suit employers who want to stay loose to respond to their markets, it is becoming more appealing to an expanding group of the employee population. These are people who are embracing the new deal and who like the idea of a portfolio life. They want to spread their wings and it can give them the opportunity of several simultaneous contracts or temping positions. It represents more variety and often more money.

Those who are having the most difficulty with the temporary work being offered by the labour brokers are mostly people who yearn for the long-gone certainty of life. That was when things used to be on a firm earth and people could plan into the future. We now have the ground under our feet changing constantly. It doesn’t suit everyone.

Instead of trying to cut off the symptom of the problem, the labour brokers, as the ANC and Cosatu are feverishly trying to do, would it not be more productive if we addressed the cause? That is not the volatility and uncertainty of the labour market which is here to stay, but the firmly held expectation of the workers for permanence and stability.

We need to stop our people from searching only for the haven of a permanent job and from launching misguided protest marches when they cannot be given one. Would it not be better to set up post-school training centres that will teach them to develop the skills to make a living, even in these trying times by whatever means are at hand?

Sustainability for many in the future will be about self-employment; selling whatever skills they have as a “temp” and managing short-term contracts.

Can we make peace with that? DM

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