Temporary Employment Services in South Africa

Submission to the Parliamentary Portfolio Committee on Labour

26 August 2009

Business Unity’s position

Labour broking must be seen in the context of South Africa’s national priorities

4.1 million South Africans cannot find work

1.5 million South Africans have given up hope of finding work

South Africa is currently experiencing the highest rate of job losses since 1991

Labour brokers are pivotal facilitators and enablers of employment

they are a speedy means of access to properly recruited employees

they facilitate temporary and permanent employment, especially for unemployed youth

they facilitate skills development, especially for school-leavers who cannot get work experience

Some forms of labour broking can give rise to abuse, and BUSA does not support such practices

However – Do the proposed regulations strengthen what is positive,and eradicate what is negative?

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Extent of Contract Employment in OECD Countries Growth of Contract Employment in OECD Countries

South African contract employment statistics

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Contract employment by sector Contract employment vs. Sector volatility

Just plain wrong: DoL’s “model” of employment patterns

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Total formal employment: 10m

Total contract employment: 3m

92% previously disadvantaged

85% youth, aged 18 to 35 years

7,000 branch offices countrywide

Talent acquisition

Workplace readiness

Performance enhancement

Career progression

Workforce optimization

1m contract employees managed by agencies at any point in time, 3.5m contract employees introduced to the world of work since 2000

50% never previously employed

Contract employment (percent of total sector employment)

Managed by agencies: 1m

Estimated number of dependents: 4.6m

32% conversion to permanent

employment within 12 months, 47% within

3 years

Employment agencies’contribution: The path to Decent Work in South Africa

Contract employee demographics

The national importance of the labour broking industry

The national importance of the labour broking industry

No. Services Provided Outcome Reported Benefit

1 Recruitment servicesContinuous availability of large numbers of qualified candidates (i.e. competent, skilled and/or experienced) at market-related wages

Reduced recruitment lead times; training success rates; Improved fit and customer service

2 Training servicesContinuous competency development for entry-level, intermediate and experienced employees

Reduced competency gaps; Improved customer service

3 Payroll servicesOutsourced payroll and related administration (timesheets, absenteeism, etc.)

Reduced unit costs due to scale; Reduced management and administrative burden

4 Attendance management servicesControlled absenteeism; Just-in-time replacement of absent employees; Proactive planning and initiatives calendar

Reduced absenteeism; Reduced absenteeism-related customer service crunches, improved adherence, less disruption of customer service

5 Performance management servicesRetention of high achievers; Recognition of consistent performers; Improvement or exit of low achievers

Improved on-the-job performance and productivity; Reduced staff costs, and improved customer service

6 Scheduling and rostering servicesDynamic adjustment of staffing levels to match business volumes

Improved customer service during peak periods; Reduced staff costs during valley periods, maximum productivity when shifted optimally

7 Career management servicesMulti-skilled and up-skilled employees that can be cross utilised or progressed based on personalized career paths

Reduced training costs; Reduced ongoing recruitment costs; High on-the-job performance; High employee retention

8 Labour relations servicesRisk mitigation through defensibility and standardization of labour practices

Managerial support, especially related to on-the-job performance

9 Workforce optimization servicesOptimization of labour costs through advanced analytics, software, technology, and other methods

Increased performance and productivity; Reduced total staff costs; Increased employee tenure and retention

Legislative and regulatory options

Business has grave concerns about the Dept. of Labour’s “Discussion Document” tabled at NEDLAC

The proposed regulations have been hastily developed using little or no industry data

The proposed regulations have not considered international research and options

The proposed regulations have not considered unintended consequences

The proposed regulations have not considered enforcement mechanisms

The proposed regulations impose a heavy penalty on compliant operators and make it likely that underground operators and associated abuse will increase

Business Unity’s position in summary

Existing laws and regulations are sufficient to address abuses

Enforcement is lacking and specific enforcement institutions need to be bolstered

Partial or “piecemeal” regulation will give rise to unintended consequences

A co-regulatory/co-determination framework is the only workable option