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transcript
COSATU, FAWU, NEHAWU, NUM, NUMSA, SACCAWU; AND SATAWU SUBMISSION ON
LABOUR BROKING
Presented to the Portfolio Committee on Labour on 26 August 2009
2
TABLE OF CONTENTS
1. INTRODUCTION..........................................................................................................................1
1.1 THE NEED FOR FURTHER HEARINGS AT A LOCAL LEVEL......................................................4
1.2 OTHER FORMS OF ATYPICAL EMPLOYMENT..........................................................................5
2. DECENT WORK AND LABOUR BROKING...........................................................................5
3. EXPOSING THE MYTHS, LIES AND DECEPTION..............................................................8
4. THE RIGHTS AFFECTED........................................................................................................10
5. CONCLUSION.............................................................................................................................12
ADDENDUM 1: RATE OF EXPLOITATION OF LABOUR IN THE SOUTH AFRICAN
ECONOMY.....................................................................................................................................13
FAWU ADDENDUM 2.1: SOME OF THE PROBLEMS RELATED TO LABOUR BROKING.. .16
FAWU ADDENDUM 2.2: SAMPLE OF LABOUR BROKER CONTRACT..................................21
FAWU ADDENDUM 2.3: SAMPLE OF SEASONAL CONTRACT..............................................23
NEHAWU ADDENDUM: 3...........................................................................................................26
NUM ADDENDUM 4....................................................................................................................26
NUMSA ADDENDUM 5.1: SUBMISSION ON LABOUR BROKING..........................................26
NUMSA ADDENDUM 5.2: STATEMENT FROM METAL WORKERS.......................................26
SACCAWU ADDENDUM: 6..........................................................................................................26
SATAWU ADDENDUM: 7..........................................................................................................26
1. INTRODUCTION
COSATU, and the affiliates present here today FAWU, NEHAWU, NUM,
NUMSA, SACCAWU; SATAWU, are grateful to the Portfolio Committee on
Labour for the opportunity to participate in the oral hearings on “labour
broking”. The overall submission reflects the principled position of the
federation as a whole. However, owing to time constraints direct involvement
in the drafting of this submission was limited to the above affiliates.
The structure of this submission entails firstly the main COSATU framework
document, which is supported by various affiliate sectoral inputs that have
been appended.
We acknowledge the Department of Labour’s (DOL) discussion paper1 on this
subject that has been tabled at National Economic, Development and Labour
Council (NEDLAC), and which proposes to impose various additional
regulations against labour brokers. We are currently studying the document
and will be engaging with its detailed statutory proposals in the ongoing
NEDLAC process, the outcome of which will nevertheless have to be
considered and finalised by Parliament. Accordingly our participation in these
hearings is focused on responding more broadly to the issue of regulation of
labour brokers on a principled basis, as well as providing an insight into the
extent of the abuses that workers are subjected to at the hands of labour
brokers.
Since the handing down of the 2008 Namibian High Court decision confirming
the validity of Namibian legislation banning/prohibiting the practice of labour
broking, and the pronouncements by the South African Labour Minister
supporting the ban, organised Business has mounted an intense campaign to
discredit this approach. We note that with the DOL’s discussion paper
proposing a more watered down approach that leans towards increased
regulation (as opposed to the complete prohibition) of labour brokers, it would
suggest that the balance has at least for the time being swung in favour of
regulation. Notwithstanding this, COSATU is strongly maintaining our call for
a complete ban on labour brokers, and intends pursuing this objective in the
forthcoming engagement at NEDLAC and at a political level.
On this basis we note the following:
i. There is an urgent need to correct the erroneous notions that labour
brokers create jobs, as advanced by the Confederation of Associations in
the Private Employment Sector (CAPES) and organised Business more
broadly. On the contrary they merely act as intermediaries to access
jobs that already exist, and which in many cases would have existed
previously as permanent full time jobs.
1 See the Department of Labour’s Discussion Paper entitled “Decent Work and Non-standard
Employees: Options for Legislative Reform in South Africa”.
ii. The replacement of normal jobs through labour broking arrangements or
other equally insecure forms of atypical employment effectively displaces
and destroys decent jobs, especially taking into account the substitution
of insecure contractual relations and downgrading of wage and
employment terms.
iii. Labour broking is tantamount to slavery, as it amounts to the trading of
human beings as commodities. Generally the main commercial contract
is agreed to between the labour broker and the so-called “client”
enterprise, and which sets out the various stipulated labour services to
be supplied and the price at which these services are to be supplied.
Whereas the true suppliers of the labour (namely the workers) are
excluded from this process, thereby undermining their rights to negotiate
the wage and employment terms.
iv. We note that historically labour broking was banned in many
jurisdictions. The lifting of the ban in international and domestic laws of
many countries is rather more a reflection of how rampant free-market
capitalist principles now enjoy an illusory veil of legitimacy and have
even gained ground over those principles relating to human dignity and
decency in response to the pressures emanating from a globalised
context.2
v. Apart from undermining collective bargaining rights, labour broker
agencies are also often called upon to provide “scab labour” as
substitute workers for those on strike, with aim of undermining the rights
to embark on industrial action.
vi. Labour broking, combined with other forms of atypical work, reflects
current trends of the intensification of the rate of exploitation of labour.3
vii. Labour broking amounts to delegation or refusal of the true employer to
comply with its obligations. This often results in workers unable to
enforce their rights against any party that may be identified legally as the
employer. In other cases where this may be imposed against the labour
2 We note the recent banning of labour brokers in Namibia as a refreshing contradiction of this
trend.3 For further explanation of the concept of the “rate of exploitation of labour”, see extract from
internal COSATU Socio-economic Report in Addendum 1.
broker agency, its precarious financial standing, especially in cases of
insolvency, renders workers’ rights of enforcement as merely notional.
viii. Significant emphasis is placed on the commercial rationale of using
labour brokers to lower costs for clients, which is commonly achieved by
reducing wages and excluding employment benefits. The question that
then arises is who is really bearing the burden of this cost-cutting
exercise. In the first instance workers are the ones who involuntarily
bear this responsibility, and then who in turn as a result of their economic
vulnerability are forced to turn to the public social system for housing,
health care, social grants and other social benefits. Ultimately this
amounts to commercial entities (namely both labour brokers and their
clients) being subsidized by the public.
ix. There are a range of serious long-term and direct socio-economic
implications as described above. In relation to the labour market
specifically it is important to take note of the progressive de-skilling of
workers, especially as a result of the short-term and irregular nature of
the contracts associated with labour broking and other forms of atypical
labour.
x. The DOL’s discussion paper proposes increased regulation, without
setting out how it intends addressing its currently capacity deficiencies
that have severely constrained its ability to enforce existing legislation.
Whereas implementing a ban against labour brokers may be
administratively simpler than detailed regulation, thereby simplifying
enforcement.
1.1 The Need for Further Hearings at a Local Level
Considering the urgency of establishing the seriousness of the abuses
suffered as a result of the reliance on labour brokers, we believe that it would
be important to enable a wider input of voices especially from those at
provincial and local levels. The emphasis should also be placed on enabling
access to first hand accounts from ordinary workers from a broader range of
industrial and commercial sectors. Accordingly we are calling on the Portfolio
Committee on Labour to convene further public hearings on labour broking in
all provinces.
1.2 Other Forms of Atypical Employment
Notwithstanding our serious concerns in relation to the problems associated
with the sector, we note that the DOL’s proposals focus almost exclusively on
labour brokers. However, we believe that emphasis should also be placed on
addressing OTHER forms of atypical labour such as casual and informal
contracts, seasonal work or other work of short-term duration, part-time work,
subcontracting, outsourcing; and fixed-term contracts. Generally atypical
employment is characterised by the precarious nature of its terms, with little or
no employment and income security as associated with poor enforcement of
their labour rights.
It should be noted that many of these other forms of atypical work may be
implemented as part of a labour broker arrangement or within the context of a
normal direct employment relationship. Each form presents its own
associated problems, which would need to be addressed through legislative
intervention. Further any clamp on labour broking will likely have employers
resorting to other forms of atypical work to evade compliance with labour law
obligations.
2. DECENT WORK AND LABOUR BROKING
Within a context wrought with increased pressures from globalisation,
companies and industries whose main aim is to win a competitive edge over
their opposition, both locally and internationally are increasingly looking to the
most vulnerable to cut costs in order to subsidise their single-minded pursuit
of profit.
Accordingly we note here the relevance of the resolutions of the 2006 Ninth
COSATU National Congress on the “Jobs and Poverty Campaign”,
particularly the emphasis on the creation of “quality jobs … to ensure that
the millions of unemployed are able to work in conditions of decent work” and labour law reform to ”promote quality jobs, decent work and rights for all workers, including those at small businesses and strengthening of bargaining councils”.
“Decent work” and “quality jobs” must be emphasised as a departure from
those that would want the advancement of the principle of jobs “at any cost”.
Apart from the overall deterioration in employment terms and conditions, we
have seen how this has even contributed to the undermining of health and
safety standards. For example, in the road freight industry driver’s contracts
based on the so-called owner-driver scheme with remuneration based on
loads and distance travelled, have compelled drivers to take unnecessary
risks to ensure that they are paid.
Against this background the ANC 2009 election manifesto reflects a
progressive shift towards balancing the rights of the most vulnerable,
especially with regard to the inclusion of the “creation of decent work and
sustainable livelihoods” as one of the five priorities areas for the next five
years, and to this extent explicitly contemplates the need to “address the
problem of labour broking”.
Various strategies aimed at increasing the informalisation and externalisation
of work (often dubiously classified as “non-core”) and workers has seen to the
massive deterioration of workers’ remuneration and benefits, rights at the
workplace, employment and income security. Outsourcing and resorting to
the use of labour brokers have been amongst the more popular forms of
atypical employment contract arrangements that have replaced the more
secure traditional employment contract.
Workers with labour brokers not only often receive a lower rate of pay with no
benefits from labour brokers, but remuneration in many cases are based on
completion of tasks and/or fixed-term contracts. The lack of access to a
regular and consistent income contradicts any right that a worker may have to
income security.
In addition to the cost cutting objective, this trend has sought to advance the
escalation of the fragmentation of not only individual workplaces, but entire
industries and sectors as well. Workers effectively are dislodged from the
sectors within which they would normally bargain, acquiring notional rights to
bargain with labour brokers as the new employer despite this not being their
place of work. This in turn has had a direct impact on undermining trade
union rights to collective bargaining as well as dramatically reducing the
scope for implementation of a more centralised mode of collective bargaining.
Considering the highly unequal bargaining power that exists between
individual workers and their employers, bargaining as a part of a collective is
the only truly effective mechanism that workers have to mitigate the
consequences of this unequal relationship.
More broadly as the negotiation of labour broker agreements are treated as
purely commercial contracts between the labour broker agency and the client,
and different labour brokers compete against each other for the same
contracts, there is constant pressure to “undercut” quotations of competitors.
This in turn places a consistent downward pressure on the wages that
workers are expected to accept with agencies, further constraining the already
weakened bargaining position of the worker.
The legal substitution of the labour broker as employer, and the rights that
workers gain as a result, are notional in many other respects as well. The
client is often able to evade compliance with a worker’s rights against unfair
dismissal, by merely terminating the so-called commercial contract with the
labour broker or asking for the replacement of the worker. As the worker is
still technically in the employ of the labour broker, despite not receiving
remuneration in periods when not allocated to a client, there is no formal legal
basis to challenge what is in reality a dismissal.
The above scenarios should be contrasted with conceptualisation of “decent
work” by the International Labour Organisation (ILO) as “work which is
productive, and carried out in conditions of freedom, equity, security and
human dignity”. This it believes can be achieved by addressing the following
four objectives:
Achieving fundamental principles and rights at work;
The creation of greater employment and income opportunities for women
and men;
Extending social protection; and
Promoting social dialogue.4
3. EXPOSING THE MYTHS, LIES AND DECEPTION
Earlier we noted our serious concerns with the claims made by the labour
brokers that they “create jobs”. However, there are numerous other areas of
misinformation being advanced around this exploitative sector, which need to
be challenged and exposed. These include the following:
1. There has been a refusal by the sector to acknowledge that the abuses
complained of is reflective of the industry as a whole, instead arguing
they are generally law abiding with the exception of a few “rogue
elements”. This is in direct contrast to the first hand experiences of our
membership who indicate differently. Further little else can be
expected from a sector that has flourished around aiding employer
clients to evade compliance with labour law obligations.
2. Despite being regulated as “temporary employment services” (TES)
under section 198 of the Labour Relations Act (LRA), labour brokers
are used to supply labour services that are not temporary in nature. In
many cases the work is of an ongoing or indefinite nature with the
contractual terms being represented as temporary. Hence the
phenomenon of the worker now colloquially referred to as a
“permanent temp”. In such cases repeated consecutive renewals of
the labour broker contract is adequate to retain an experienced worker
for years on a long-term basis without having to worry about the
4 See the ILO’s Decent work in the global economy: Discussion paper no. 1, p 2.
duration increasing retrenchment pay or enabling the protection of
other rights.
3. One of the key motivations advanced for the reliance on labour broking
and other atypical forms of employment is ascribed to the need to
respond to industry, workplace and technological changes. However,
little explanation is advanced as to how exactly these changes justify
an orientation towards atypical employment. In fact in certain sectors
these changes would justify the exact opposite with an increase in the
number of permanent and full time employees. For example, in the
retail sector ordinary business operating hours have in recent years
progressively extended to the extent that many businesses are open
seven days a week and on most public holidays. However, the
increase in operating hours has in fact been accompanied by a
commensurate increase in atypical employment.
4. Labour brokers claim to contribute approximately R26 billion per
annum to GDP.5 This disregards the fact that this not a separate
sector in a true sense and that client companies would likely contribute
similar amounts if they employed workers directly.
5. Research conducted with the assistance of CAPES claims on the basis
of statements of publicly listed labour brokers that their average net
return on sales is between 3.8% and 4.5%.6 We challenge the basis of
these figures, which appear to be dubiously low and would call for
these to be backed up concretely with the requisite evidence.
6. Relevant statistics reflect that the vast majority of all current labour
broker agencies were established in the period after 1995, which
coincides with the year in which the LRA was enacted.7 It is difficult to
ignore this as the likely causal relationship, with employers seeking
alternative contractual arrangements to evade the new labour law
obligations.5 See Elias Monage, CAPES President Call for ban on Temp Employment Services/Labour
Brokers threatens 500 000 workers.6 See Loane Shaper, South Africa’s Out-of-Work Deficit: A Critical Examination of the
Country’s “Decent Work” Agenda, July 2009.7 See J Theron with S.Godfrey and P Lewis. 2005. The Rise of Labour Broking and its Policy
Implications . Development and Labour Law Monographs 1/2005, p 18.
7. Considerable emphasis is placed on the benefits labour brokers are
perceived to offer through outsourcing, whereby employers are then
allowed to focus on their “core” business. On this basis there has been
an ever-expanding definition in terms of which workers are now
deceptively classified as “non-core”. The problem is often illustrated by
the fact that many such workers are often indefinitely either located at
the premises of the client business or work exclusively for it.
8. Labour brokers would have us believe that the industry is already
adequately regulated, and would nevertheless support self-regulation
as well as co-regulation with social partners. However, our experience
has not been positive when we have opted for the co-regulation
approach in relevant bargaining councils.
4. THE RIGHTS AFFECTED
Significant debate has focused on the implications that banning of labour
brokers will have for the constitutional right to freedom of trade, occupation
and profession granted to each citizen under section 22 of the South African
Constitution.
Leaving aside the technical questions being raised as to whether an entity,
namely a labour broker, can lay claim to a right that is limited to a “citizen”, we
would prefer to focus on the clash between this right and those applicable to
workers. Taking into account our history of inequality, the continued
vulnerability of workers in the labour market as intensified in atypical
employment, rising socio-economic inequalities as well as the gendered and
racial nature of these inequalities, we would strongly contest that all rights be
mechanically treated equally without referring to our context for interpretation.
In this context we also note that section 7(1) of the Constitution affirms the
“democratic values of human dignity, equality and freedom”. The rights to
equality and human dignity are afforded additional protection during states of
emergency in terms of section 37(4). These inclusions were made based on
our political history, and surely give technical weight to the argument that not
all rights should be treated equally.
As indicated previously we view the practice of labour broking as constituting
slavery, and noting the historical international bans on this practice for this
reason, we therefore make reference to section 13 of the Constitution.
Specifically in relation to labour relations, section 23 of the Constitution sets
out various rights, including amongst others the rights to fair labour practices,
workers’ rights to join and form trade unions, participate in strikes, and the
right to engage in collective bargaining. This submission has already
illustrated in various instances how these rights continue to be undermined by
workers located in labour broker agencies.
Noting our arguments above that all rights cannot be treated equally, and
references to provisions indicating that equality enjoys additional protection,
we wish to draw the Committee’s attention to sections 9(1) and 9(2). These
respectively provide that “Everyone is equal before the law and has the right
to equal protection and benefit of the law.” and “Equality includes the full and
equal enjoyment of all rights and freedoms.”
The reality is that workers subject to labour broker arrangements do not enjoy
the same rights or legislative protection as compared with those in normal,
regular contracted situations. This picture is rendered even more stark when
you consider that workers supplied by labour brokers at the same workplace
where workers are directly employed by the client generally earn less and do
not enjoy the same benefits despite doing the same work.
Currently there are no provisions in legislation that enable protection against
the discrimination described above, despite the Constitution requiring “equal
protection and benefit of the law”. Further there clear contradictions between
section 9(2) and the undermining of rights that workers are entitled to under
section 23.
To further clarify this picture, it should be noted that section 23 provided for a
set of rights that was not at the time intended to apply exclusively to certain
categories of workers. Labour broker arrangements, as with other atypical
employment, have sought to circumvent this intention by employing disguised
commercial contracts that create a veneer of legitimacy to enable the evasion
of compliance with section 23 and labour law protections. The arguments of
Labour brokers reflect that they are actively seeking an endorsement from
Parliament to undermine its original intentions and objectives in this respect,
and are relying on the Constitution to support this.
5. CONCLUSION
Noting the time constraints within which we had to consult our membership,
our comments should be treated as illustrative rather than comprehensive.
However, we are available to provide further and more detailed insight on this
issue, especially as the process unfolds further at NEDLAC and before
Parliament.
COSATU maintains its stance that labour brokers must be banned. We
believe that sufficient opportunity has been provided for alternative
mechanisms to regulate this industry, which have proved inadequate.
Further, the extent of the problems and abuses as well as the trends reflecting
the intensification of this exploitation, call for the need for more stringent
intervention.
ADDENDUM 1: RATE OF EXPLOITATION OF LABOUR IN THE SOUTH AFRICAN ECONOMY
In 2008, the gross rate of profit in the entire South African economy stood at 23.9%. This rate of profit is the same as the one that prevailed in 1967, at the height of apartheid repression. However, these two rate of profit are radically different, even if they are quantitatively the same. In 1967 the rate of exploitation of labour at the point of production, was not as heightened as in 2008, because of the growth of modern techniques of production. The growth of the rate of profit took a phenomenal form after 1999. Between 1999 and 2008, the rate of profit rose from 18.7% to 23.9%. In the UK for example, the gross rate of profit is estimated to be 13.6% in 2008. This massive discrepancy in the rates of profit between South Africa and advanced capitalist economies lies mainly in the degree of exploitation of labour.
Figure 1 illustrates a measure of the rate of exploitation of labour, which is the ratio of profits to total remuneration of the workforce. This measure gives the social character of the path of capital accumulation since it directly relates what workers get to what employers appropriate as profits. Observe that since 2000 the rate of exploitation of labour has been increasing. This increase however started in the early 1970’s, gained momentum after the mid-1980’s, and then galloped after 2000. Figure 1 shows that as of 2000, for every R1 worth of wage earned by workers, employers appropriated on average R1.10. However by 2008, the rate of exploitation had increased to 250%, which means that for every R1 earned by a worker, employers appropriated R2.50. These numbers show that from the standpoint of the working class, the growth rate that has been experienced by the South African economy over the past 15 years has been pro-capitalist. In other words, the recovery of the rate of profit in the South African economy has been based on the attack on the share of workers in national income.
At a theoretical level these numbers under-estimate the degree of exploitation in the South African economy. They are based on statistics in the South African Reserve Bank database. This database does not make a distinction between workers employed in the productive sector, i.e. at a point of production of surplus value, and workers employed in the sphere of circulation of capital, or in areas that do not involve any form of economic activity at all, such as the army. However, despite these theoretical inaccuracies, the general trend in the rate of exploitation is unacceptable and should be an area of priority in restructuring and transforming the path of capital accumulation in South Africa.
Figure 1: The Rate of Exploitation of Labour in the South African Economy
The effect of this increase in the rate of exploitation has been the continued increase in profits even during the current economic crisis. Under normalized circumstances, that is, circumstances where there is some sort of “equilibrium” in the balance of class forces in society, the rate of exploitation is constant, and the rate of profit gets driven by the degree of capital intensity of the production process. In South Africa this has not been then case, especially since the mid-1980’s. The rise in the rate of exploitation over this period signifies that, at the level of the economy, the capitalist class remains dominant. The mechanisms through which this dominance is perpetuated includes among other things, increased casualization of labour, the use of labour brokers, the use of illegal labour, outsourcing, and the inability of the working class to consistently win over all the gains in labour productivity over and above inflation, in the wage-bargaining process.
Figure 2 illustrates what we consider to be a puzzle, but which nevertheless is explained by the increase in the rate of exploitation of labour. In this diagram, we observe that the growth rate of the economy is persistently below the growth rate of profits. How does it come to pass, that capitalists are able to appropriate profits at a rate that is faster than the growth rate of the economy? In other words, how is it possible to have profits rise at a faster rate than the economic cake is expanding? The answer lies in the continued increase in the rate of exploitation of labour, or the worsening of income distribution. Note that towards the end of 2008 the growth rate of the economy is zero, but the growth rate of profits remains positive, at 6%. This means that incomes that went to employees, which include the petit-bourgeoisie, but is mainly composed of the working class, shrunk by 6%. As long as the growth rate of profits
remains positive, whilst the economic cake is stagnant or is decreasing, it means that the income of the working class are shrinking in absolute terms.
Under these circumstances, there is no way that the economy can easily recover from the recession because the purchasing power of the working class shrinks absolutely. As profits rise in the context of a decline in aggregate demand, the incentive to invest is blunted by the difficulty of sales. As sales shrink due to the absolute fall in working class incomes, production shrinks and jobs continue to be lost. This process assumes a life of its own, and becomes self-reinforcing unless measures are put in place to arrest the decline in workers’ incomes and to pave a way for a recovery through stimulation of aggregate demand. In the process of the cumulative decline, there appears to be an increase in the liquidity of the system, because the increased profits do not find real investment outlet. Consequently, financial instruments remain the only available avenue for the accumulation of capital. Specifically, during this process, the availability of government-backed securities facilitates the investment of these increased profits, whilst government itself uses these borrowed funds to stimulate aggregate demand through its infrastructure development, social expenditure and other expenditure programmes.
Figure 1: The Growth Rate of Profits and the Growth Rate of Output
As will be shown below, the sustainability of public debt during this crisis hinges on the ability of government to raise sufficient revenues during the course of the recovery in order to repay this debt. However, this ability to raise revenues depends in turn on the extent to which the economy does not suffer from leakages through imports, or high interest rates which add a further burden on public debt.
The bottom line of the analysis in this report is that South Africa’s growth path over the past decades, especially since the mid-1980’s has been anti-worker. It has been fuelled not only by the increase in aggregate demand, it was also fuelled by a drastic increase in the rate of exploitation of labour. The current economic crisis reveals the bare social character of the celebrated past economic growth. This growth was predicated on the continued worsening of income distribution. No wonder therefore, despite the catastrophic effect that the crisis has produced in other economies, in South Africa the capitalist class congratulates itself for having had “sound and prudent policies” in place—hence the effects of the global crisis are said to have been muted. The effects have been muted for the capitalist class because its profits have been rising despite the recession. The so-called sound and prudent policies were celebrated by bourgeois ideologues precisely because they depressed the working class from having an increased share in this economy.
FAWU ADDENDUM 2.1: SOME OF THE PROBLEMS RELATED TO LABOUR BROKING
Agriculture, Forestry and Fishing Sector
Problem 1: Low Levels of Remuneration (inclusive of Benefits)
The most serious problem related to labour brokers is the low level of
remuneration inclusive of health and social security benefits such as
pensions.
Where labour broker workers are remunerated less per unit of output than
workers employed by the main company, this problem of inadequate
remuneration, can, in turn, be caused by at least two different situations:
a) outside of any collective bargaining arrangement, the main company
or client allocates as an adequate budget for remunerating labour
inclusive of benefits for a given level of output, however the labour
broker who is appointed takes a large share and thereafter pressurizes
the rates of remuneration of workers.
For example, this situation can exist because of “buddy-buddy”
relationships between current management of the client firm and
former managers of the client firm, who have formed their own labour
broking companies. There can also be problems of extra cost of
running more than one payroll system, one for ordinary employees and
another for labour broker workers.
b) outside of any collective bargaining arrangement, the main company
or client does not allocate an adequate budget for remunerating
labour inclusive of benefits for a given level of output as a result of its
own profit objectives or the profit objectives of a certain part of the
value chain, of which it forms part.
For example, we have argued that the Forestry Industry contracting
system has been managed to promote competition with a group of
larger (often white contracting companies with better contract
conditions with the client) and many smaller contractors (often black
contractors with worse contract conditions with the client) to drive down
the price of contracting and labour intensive work in the upstream
component of the industry chain (i.e. forestry planting and harvesting).
Problem 2: Unionisation and Security of Employment
Contracts of employment signed by workers with labour brokers are often
fixed term contracts with clauses that do not create any assumption of re-
employment. Control over unionization is often exercised by creating the fear
that contracts will not be renewed once a worker becomes a trade union
member.
Problem 3: Absence of Occupational Health and Safety Protections and
Systems
From comparing examples of contracts signed by workers with labour brokers
and “in-house” seasonal workers, it is possible to say that seasonal workers
employed by the main company (also on fixed term contracts) offer slightly
better non-wage conditions of employment in the sense that:
1. The occupational health and safety obligations of the employer are written into the seasonal workers’ contract.
2. There is no link between employment and the achievement of minimum output standards set by the employer, other than provisions for discipline and the absence of an obligation on the employer to re-employ the seasonal worker.
3. Neither of the contracts had provision for pension benefits.
The absence of a government verified minimum standard for task work and
pension benefits creates conditions for employers to exploit their health in the
short term, with health and social security consequences in late middle age.
For example, we can say this is true because there are companies where
company hospitals have regularly monitored the health status of such labour
intensive workers, and with even less strenuous minimum task standards than
applied by labour brokers, companies were known to be “sapping” workers’
adult lives at the expense of their longer term health.
Problem 4: Seasonal Terms of Employment Close to 12 Months
The definition of seasonal work is not clear. Workers in this sector can work
11 months out of 12 from one year to the next and be permanent seasonals.
For example, harvesting work in certain sectors such as sugar and forestry is
not really seasonal by nature and organisation, because harvesting is done by
clearing different blocks of fields throughout the year, yet work can be
deemed as seasonal.
Problem 5: Adequate Housing and Basic Services
Many workers employed on a fixed term contract basis experience problems
with reasonable housing and basic services, whether this is on-farm in a
compound or in on-farm houses on a separate stand. Where their employer is
a labour broker, the claims of an employee on an employer for improved on-
farm living conditions or any housing and living conditions improvement is
considerably weaker. One of the issues that farm employers (or clients) want
to avoid are costs of tenure security, housing, basic services and transport
and labour brokers provide the opportunity for minimizing these costs.
Problem 6: Relatively Lower Prevalence of Written Contracts, UIF
Contributions, Company Registration for Tax
From the Labour Force Survey of March 2006, in this sector:
1. few employees responded that they had written contracts (10% for labour broker / contractor employees).
2. levels of UIF contributions were much lower amongst employees of labour brokers labour broker / contractor (19%) than amongst casual seasonal and temporary workers (37%) and permanent workers (82%).
3. levels of VAT registration were also lower amongst labour broker / contractor workers (63%) as compared to casual and seasonal workers (93%) and permanent employees (96%).
Food Beverage and Tobacco Manufacturing Sector
Problem 7: Undermining of Collective Bargaining by Labour Broking
In this sector, where FAWU is well organized, the main problem is that labour
broking is used to reduce the union’s level of representation and this in turn is
linked to employers actively preventing the formation of collective bargaining
in the sector.
Problem 8: Discrimination / Inequality between Employees Performing the
Same Job
There are instances of labour broker workers working side by side on the
same production line with permanent workers, with different overall packages
and terms and conditions of employment.
Overall Problem of Benefit Sharing
In principle, we believe that an absence of collective bargaining or weak
collective bargaining by strong trade unions and employer organizations leads
to distributional problems between capital and labour, and, in turn, weaker
sectors from the point of view of strategy and tactics. Allowing labour broking
exacerbates this by skewing the power relationship in favour of employers.
Taken together in the economy as a whole, distributional problems can take
the form of:
a) reducing aggregate demand for basic goods and services
purchased by the working class; and
b) wasting scarce funds on ill-considered investments in buildings,
plant and machinery or products that have less prospect for
sustainable success; and
c) problematic work process design and production scheduling;
d) poor design of marketing and sales strategies.
FAWU ADDENDUM 2.2: SAMPLE OF LABOUR BROKER CONTRACT
FAWU ADDENDUM 2.3: SAMPLE OF SEASONAL CONTRACT
NEHAWU ADDENDUM: 3
NEHAWU
National Education Health & Allied Workers Union
PARLIAMENTARY OFFICE
604 Constitution
House
124 Adderly Street
Cape Town
8001
Ph 021 424 3670
Fax 021 424 3674
Website::WWW.NEHAWU.ORG.Z A
Email: NEIL@NEHAWU.ORG.ZA
25 August 2009
To: The Portfolio Committee on Labour
Re: COSATU SUBMISSION ON LABOUR BROKERS
This serves as notification, that NEHAWU supports COSATU’s call for the
banning of labour brokers. Here we have also raised some issues which
relate to Labour Brokers in the Public Service, for your consideration.
In the address by the Premier of Gauteng8, she stated that:
“Madame speaker, this also goes for the continued usage of labour
brokers in public institutions such as hospitals. Currently, we have an
abnormal situation in which most of the professional nurses and
8 Nomvula Mokonyane (9 June 2009) State of the Province Address
pharmacists are answerable to labour brokers because they have been
placed by them in employment instead of government.”
In the recent period since the 1970s, since the emergence of neo-liberal
globalisation, the process of reorganising the workplace has been happening
at rapid levels. One of the forms of reorganising relates to the process of
establishing greater reliance on contracting out work and the increased use of
casualised labour. One of the forms of casualisation is translated into the
creation of “employment agencies9” or more commonly known as “labour
brokers”.
The rationalisation of such restructuring processes relates mainly, to the need
to ensure maximisation of profits. It is alleged that permanent employment
means that minimum salary conditions as well as employment benefits also
have to be ensured. This, it is said, impacts on profits negatively. It, therefore
becomes clear
that employees of labour brokers do not enjoy the rights of the BCEA and the
LRA. It is alleged that labour brokers have become a mechanism to:
“…deprive vulnerable employees of labour law protections.”
This process has not escaped the public sector. Over time, the public sector
has significantly reduced the number of employees and increasingly involved
the processes of outsourcing. At the same time, the public sector has
increasingly been using employment agencies/labour brokers, both in the
public service as well as State owned Enterprises.
In the example of hospitals, many nurses are not employed by the institution,
but by an agency. Such agency then offers the services (of the nurses) to the
hospitals, who in turn requests these on an ad hoc basis. The agency then
deploys the nurses to these hospital institutions. These nurses are deployed 9 The ILO uses the term “Private Employment Agency”
to many different hospitals (anywhere form whence the requests are made),
and they are remunerated by the agency. These relationships usually exclude
rights and/or benefits like leave pay, sick leave, medical aid contributions,
housing subsidies.
Another category is the home-based care workers in communities. The
Departments of Health and Social Development, contracts the NGOs to
provide the care workers (who operate as employment agencies) who then
deploys the care workers to the home that needs such care. These workers
are then paid by the NGOs, who are in turn paid by the Departments. The
payments to the workers are much less than the payment to the NGOs for
the service.
It should be noted that the processes of labour brokers are linked to other
processes of restructuring the public service. These include the tendency
towards outsourcing, casualisation and involving the private sector in
providing services. We therefore support COSATU’s call for the banning of
labour brokers.
NUM ADDENDUM 4
NATIONAL UNION OF MINEWORKERS
2nd Floor P. O. Box 576 Number 56 Spin Street Cape TownCape Town 8000 Tel: (021) 461 7049/37 Fax: (021) 461 7051
.
PARLIAMENT AND GOVERNMENT RELATIONS PILLAR
The Hon LE YengeniChairperson: Portfolio Committee on LabourParliament of the Republic of South Africa PO Box 15Cape Town 8000
20 August 2009
Attention: Ms. Kakaza
Dear Honorable Chair
ADDENDUM TO THE COSATU MAIN SUBMISSION: LABOUR BROKERING HEARINGS: 25-26 AUGUST 2009
HISTORICAL BACKGROUND
The National Union of Mineworkers (NUM) represents workers in Mining(267 194),
Energy(12 109- Eskom) and Construction( 60 075): NUM membership as of 17
August 2009) – NUM is the largest recognized union in South Africa and the biggest
affiliate in the Congress of South African Trade Unions (COSATU). The NUM was
established in 1982 after much resistance from the apartheid government.
At the height of the gold rush, the gold mining industry employed 100 000 black
labourers, five time as many as did the diamonds mines. These men were drawn
from through-out Southern Africa, although many came from Portuguese ruled areas
of Mozambique.
The Black South African have always suffered systematic discrimination even before
the apartheid restrictions were imposed on South Africans. Their working conditions
were characterized by low wages, poor safety and health measures and poor
working environment. The black workers in South Africa were restricted from forming
their own organized labour organizations. The Industrial Conciliation Act of 1924,
which governed many aspects of labour relations redefined the term “employee” to
exclude most blacks – the definition was amended by the Native Labour Act, No. 48
of 1953 to exclude all blacks thereby depriving them of any labour law protection.
Historically black workers, in particular the mineworkers who worked in dangerous
working environment enjoyed no protection by the state and were refused
representation by a trade union who can guard again injustices directed to them.
However, the black mineworkers’ strike of 12 August 1946 marked the beginning of
a new era of an organized workforce in the South African mining industry. Although it
was met with a bloody repression from the authority – the lesson was drawn that
black mine workers were organized.
INTRODUCTION
This background is a necessary and very important history which we should draw
lessons from whenever as workers in South Africa are faced with the continued and
intensified systematic oppression from employers.
Our input will thus reflect on the key challenges that labour brokers impose on
workers, which should be frown upon by Democracy loving people, the poor and the
working class in particular. Furthermore our submission will outline the reasoning
behind the National Union of Mineworkers’ disapproval of labour broking.
- Consistent argument by South African Employers: it is almost a known
fact that Employers have been arguing that South Africa’s Labour laws are too rigid
and are an impediment to job creation. They argue that the “Standard Employment
Relationship (SER) characterised as a full time, long-term or indefinite relationship
between an employer and an employee is inflexible and costly. Their main problem
has been protections against dismissals in our Labour legislation.
- There is often a myth that Labour Brokers creates jobs, our view as
NUM is that in reality Labour Brokers are not creating jobs but they are central in
destroying quality jobs and replacing them with exploitative degraded jobs. Labour
Brokers only create jobs within their staff establishment on administration which is
minimal compared to workers that they deploy to work in their clients. We believe
that Labour Brokers only facilitate on behalf of their clients when clients need a
particular number of workers.
- Our past experience in Energy, Construction and Mining has been that
companies previously employed directly their own Labour for functions that they will
carry out. This has gradually been changing, over the past years we have
experienced a growing number of Casualisation, Externalisation, Proliferation of
Labour Brokers, Part-time employment and Temporal employment, to our
organisational surprise this has not only occurred only on New employments but in
most instances gradual replacement of the previous position that were traditionally
filled/occupied by full time company employees given to Labour Brokers or
Independent Contractors.
- In most instances employees work under similar conditions and same
work with employees of the client(main employer) but with different employment
conditions and mostly unfavourable compared to conditions of the client(main
employer).
LABOUR BROKING PRACTICE:
a. STEALING FROM WORKERS AND DEPRIVING THEM DIRECT ACCESS TO THE MAIN EMPLOYER (CLIENT)
In practice Labour brokers act as middle men between workers and the employer
and therefore effectively deprive the workers direct access to the employer. It is
therefore our firm view that the only interest the Labour Brokers have in that
arrangement is to profit out of the workers – effectively stealing from the workers
while depriving them their right to entitlements which comes with being employed
such as medical aid, provident fund etc. It will be not correct for this practice to
continue on the basis that the Labour Brokers have never and would never afford
workers the rights which they are entitled to and also enshrined in Labour law and
regulations.
Temporary Employment Agencies, as defined in section 198(2) of the Labour
Relations Act and section 82 of the Basic Condition Act, often subject workers to
work for companies for many years without being guaranteed to certain rights or
being placed on permanent basis. If anything happens, workers lives empty handed,
while Labour brokers owners laugh all the way to the bank.
The social consequences are that when workers have to retire or are retrenched
from companies, they can’t support themselves and Government has to intervene.
Under normal circumstances, when workers retire or have been retrenched they are
entitled to a package to help them cope until they secure a job or in the case of a
retiring worker, they enjoy the fruits of their labour, which unfortunately does not
happen.
b. UNMASKING CHEAP LABOUR
One of the selling points of Labour Brokers to companies is the provision of cheap
labour and the entrenchment of unsafe working conditions. Should an accident
occurs, a worker is fatally wounded or injured – the company is not legally liable and
the Labour Broker remains indemnified.
Working conditions are deteriorating at hands of Labour Brokers and that can’t be
tolerated. Gone are those days when workers were regarded as means to an end,
today they remains an integral part of a healthy working environment. Intimidation,
and divide and rule is very rife in companies where Labour Brokers are in charge of
the working conditions. Everyday we hear of gory stories, women subjected to
sexual harassment and abuse, workers intimidated and supervise behaving as if
workers are their sex objects and slaves!
Labour brokers are targeting the desperate, particularly from poor communities and
rural areas. These desperate workers are willing to work under any conditions as
long as they provide for their families at the end of the day. The companies which
these workers work for spare no effort in educating these workers about their legal
and Constitutional rights.
c. PAYMENT OF WAGES:
It is a known fact that Labour Brokers pay workers contracted to them less
compared to their counterparts employed by the (client)main employer. The notion of
same job same pay does not apply because the clients claims that there are not its
employees and the Labour Broker claims to be paying according to agreed terms
with the client.
The worse scenario in this regard is when a person previously employed by the main
employer but under certain circumstances looses his/her employment and then
recruited by the Labour Broker to perform the similar job in the same previous
employers work place but under less conditions of services compared to his/ her
previous conditions.
Parliamentarians should also imagine what would be the morale level of a Labour
Broker appointed worker when employees of the main employer(client) working
under same conditions with him/her are to receive a particular percentage increase
higher than him/her?
d. SKILLS DEVELOPMENT:
- Labour Brokers are not compelled by any legislation to register with
SETA’s in the industries where they are supplying Labour(workers). Workers
recruited by the Labour Brokers are often not receiving a focussed and co-ordinated
training because the clients take no responsibility for them.
- With the current shortage of skills, this should be the serious
concerned of the Legislators.
e. EMPLOYMENT SECURITY:
- The general problem is that employees recruited through a Labour
Broker are not protected by Law compared to their counterparts employed by Main
employers(Clients) and this is the central reason why gradually Labour Broker
employees are replacing the previously full time employment from the Clients.
- The following are manifestations in this regard:
Cancellation of fixed term contract before the initially agreed time, employment
contract cancelled purely on instructions of the Client and this happens without the
formal hearing, workers have no re-course
Non renewal of the contract- when the assignment with the client had consistently
re-newed and the worker has legitimate expectation. Both offences constitute
dismissal in terms of section 186(1) of LRA
f. RECOMMENDATIONS:
- The ANC Manifesto for the first time has qualified job creation, 2009
ANC Manifesto committed the ANC Government to create Quality Jobs and with the
implications of Labour Brokers on degrading quality jobs, NUM therefore calls for
permanent and legislative Ban of the Labour Brokers in South Africa.
- Clients be compelled to employ the current Labour Broker recruited
workers
- Insert amendments in the Labour legislation that retrenchments be
governed by both section 52 and 101 of MPRDA and 189 of LRA
Kind regards,
Madoda SambathaHEAD: NUM Parliamentary Pillar
NUMSA ADDENDUM 5.1: SUBMISSION ON LABOUR BROKING
Attention - Ms A KakazaPO Box 15 Parliament
NATIONAL UNION OF METALWORKERS OF SOUTH AFRICA __
153 Bree Street (Cnr. Becker) P. O. Box 260483Newtown EXCOM 2023Johannesburg Tel: (011) 689 – 17002001 Fax: (011) 834 – 4320
KARLC@NUMSA.ORG.ZA or DUDUZILEN@NUMSA.ORG.ZA
Office of the President
Cape Town8000
To - The Honorable Ms L E Yengeni
Chairperson of the Portfolio Committee on Labour
Parliament South Africa
Date - 18 August 2009-08-18
From - Mr. Irvin Jim
The General Secretary
National Union of Metalworkers of South Africa
Re: NUMSA SUBMISSION ON LABOUR BROKERING IN SOUTH AFRICA
Dear Ms Yengeni
The National Union of Metalworkers of South Africa (NUMSA) appreciates
and welcomes this opportunity to make a written submission on the issue of
Labour Brokering in South Africa.
For more than two decades NUMSA and the Congress of South African Trade
Unions (COSATU) have campaigned against the use of labour brokering in
South Africa. We have raised the issue on a number of occasions with the
Minister of Labour. At our congresses and workshops, office bearers, officials,
shopstewards and members of the union have cried out against the continued
presence of labour brokers in society. Some time ago, a colleague of ours in
the trade union movement remarked that “labour brokers are the Vlakplaas of
the labour market, notorious for the means and methods that they use to
coerce workers to accept work under the most stressful conditions”. For want
of a better word, I do not think that our colleague could have chosen a more
appropriate metaphor – Indeed, labour brokers represent the scourge in the
labour market and live of the sweat of workers. They have contributed nothing
to the economy of this country. They have wrecked havoc from the docks in
Durban to the mines in Gauteng, not to mention the many sweatshops that
thrive on casual and atypical forms of labour. Whenever workers hear the
word downsizing, rightsizing and outsourcing, the footprints of labour brokers
are sure to follow.
In 1994 we celebrated the dawn of our democracy and rejoiced when the
country adopted a new Labour Relations Act, a new Constitution and put in
place several other pieces of labour legislation to remedy the inequities of the
past. But we did not win in our bid to ban the use of labour brokers.
To minimize the exploitation of workers in our industries, NUMSA went so far
as to negotiate for the registration of labour brokers in the Metal and
Engineering Bargaining Council and in the Motor Industries Bargaining
Council, but our experience has shown that labour brokers and their clients
have little respect for collective agreements and easily coerce workers into
accepting employment contracts that are less favourable and without benefits.
(See Comment from NUMSA National Engineering Coordinator – Annexure 1)
To assist the Portfolio Committee on Labour further in its deliberations,
NUMSA deems it fit to append some of the views of our workers and officials
on labour brokers to this submission. (Annexure 2 / Annexure 3) In summary
these views and experiences from amongst the rank and file of our union
speak to the following:
- labour brokers sell “people” in return for gain and this is unconstitutional
- labour brokers are slave masters- labour brokers encourage scab labour and break strikes- labour brokers do not create jobs- labour brokers are “ghost employers”
There is a strong call from our workers in the automobile industry that the
Portfolio Committee on Labour should extend the deadline on submissions
and “to take parliament to the people and to go to the factories and give South Africans a fair chance of making submissions”.
In the face of mounting pressure for decent work, workers throughout the
country call on the South African Government to stop the use of labour
brokers. Simply put, nothing short of a ban on labour brokering will make
workers happy … anything less will only serve to exacerbate tensions
amongst millions of workers who anticipate that the newly elected ANC led
government will put an end to the misery caused by these unscrupulous
brokers.
In conclusion, NUMSA would like to thank the Portfolio Committee on Labour
for the opportunity to state its position on labour brokering in South Africa.
NUMSA remains committed to the principle of decent work and sustainable
employment as advanced by the International Labour Organisation and trusts
that the Minister of Labour will be in a position to enact legislation that will put
an end to the practice of labour brokering once and for all.
Yours sincerely
Irvin Jim
General Secretary
NUMSA
Annexure 1
Comment on the Registration of Labour Brokers in the Engineering Industry (as per the Engineering Main Agreement (July 1 2007 – June 30 2010) Section 20: Outwork, Tempoprary Employment Services and Limited Duration contracts.,
In the Engineering industry, in trying to minimize hardship to workers and curb maximum exploitation because the legislation as it stands is tantamount to legalized slavery, parties agreed to regulate labour brokers.
Although this regulation might be seen to be progressive it has made things worse.
This practice has led to employers who own means of production opting for labour brokers in terms of employment. Labour brokers do not have workplace; some do not even have offices except laptops in their car boots.
The worse part is if an employee is dismissed by client of the labour broker that employee becomes hopeless and helpless. Worse the issues of employment equity , skill development do not apply because these workers belong to a ghost employer, no workplace, no assets just nothing to make them liable. Some even make arrangements with their clients to utilize grants claimed by their client as form of payment for their labour brokerage services on top of moneys deducted from those poor workers
My view is that labour brokers must be outlawed because their practice is inhumane.
Yes employment seeking agencies e.g. like what was done by DEPARTMENT OF LABOUR YESTER YEARS was not bad.
Yours in solidarity with Labour Broker Workers
Vusi Mabho National Engineering Coordinator NumsaAnnexure 2
Subject: FW: LABOUR BROKERS PARLIAMENTARY SUBMISSIONS
-----Original Message-----From: Shop Stewards, Numsa [mailto:numsa@vwsa.co.za] Sent: 17 August 2009 10:39 AMTo: Shop Stewards, Numsa; Jenny GRICE; dominic@cosatu.org.za; olympia@cosatu.org.za; patrick@cosatu.org.za; akakaza@parliament.gov.za; Bheki.Zondo@bmw.co.za; tellus@thetimes.co.za; Gqabi, Andile; Majoka, Similo; morninglive@sabc.co.zaSubject: LABOUR BROKERS PARLIAMENTARY SUBMISSIONS
Hi All
We've been praised left, right and centre by the whole world saying South African Constitution
is regarded as one of the best in the world. But to have a world class constitution is one thing
and to implement it is another thing. Surely comrade as South African labour I think we've
been taken for a ride by our own constitution and the Labour Relations Act (LRA) for quit
some time.
You don't have to be a constitutional expect to know that our own constitution doesn't
promote slavery, because if it does then it means we still have a long way to go. I mention this
because I think the practice of labour brokers is promoting slavery. The reason been labour
broke employers don't have line of production. They only employ workers so that they can sell
them to companies that own production and generate profit out of this inhumane behavior.
Where is the spirit of UBUNTU surely to me if labour broker employers/companies generate
profit by selling other people this means slavery. Therefore this is unconstitutional.
As labour broker workers we have been exploited for a long time, working under unbearable
conditions, working up normal hours, unpaid over time, unsafe environment, no provident
fund or retirement benefits, where unfair labour practice is the order of the day e.t.c. This is
not what we've voted for, therefore I call all unions especially COSATU and NUMSA to make
summations on behalf of workers that they organize, all the human right organization to assist
vulnerable South African workers that are working under labour brokers by challenging this
evil practice. I call on our own ANC government that we've voted for to keep its election
promise of banning labour brokers.
The other reason why I say we've been let down by the LRA is that I went through the act
trying to find the definition of employer. To my surprise there's only a definition of an
employee (chapter IX item 200A of LRA). therefore I propose the amendments of the
definition of the employer in the LRA, and it must read as follows:
An employer is someone or a company that owns the line of production.
Lastly I want to register my dissatisfaction to the portfolio committee of labour. This issue of
labour brokers is of highly public interests and there's no enough advertisement that the
parliament is calling for public hearing, written and verbal submissions. There for I propose to
the committee to extend the deadline and to take parliament to the people and go to the
factories and give South Africans fair chance of making submissions.
Regards
Veli Tsilo
VWSA RDK shop steward @ Roodekop
Annexure 3
Commment from Booysen Mashego (NUMSA Legal) [Edited Version]
NUMSA’S SUBMISSIONS TO COSATU ON LABOUR BROKERS
INTRODUCTION
LABOUR LAW AND LABOUR BROKERS
NUMSA hereby gives its unequivocal support to COSATU’s demand that the
LRA be amended to outlaw the capitalists’ ploy to make the working class
redundant and irrelevant in their quest for gainful employment.
The Constitution of the Republic of South Africa has as one of its basic human
rights the right to employment and the right to fair labour practices. The
capitalist in their quest to squeeze the unions and all labour movements from
participating in the economic realm of the Republic of South Africa do not
cease to use ploys which have the effect of undermining organised labour.
The capitalists rid themselves of organised labour and dump them to labour
broker and/or contractors who do not in the main have the interest of the
working class at heart. These labour brokers with the full knowledge, consent
and approval of the capitalist employ our members at a clean wage which in
most instances is far below the minimum wage. These labour brokers in the
main do not comply with all the Labour Legislation of this country.
In some instances child labour is utilised. These employees have no benefits.
The nature of the employment contract is of a short duration, thus making it
difficult if not impossible for the union to recruit these workers …………..The
working conditions are in the main not safe. The usage of labour brokers in
the Republic of South Africa is in nothing but a disguised form of slavery
…….. The ease with which the employers resort to the usage of labour
brokers is resulting in a high percentage of unemployment, which in turn
increases poverty level of the working class, that in turn affects the
communities as the fabric of the family is undermined.
We support the proposal of COSATU to outlaw brokers in totality. We
believe that if the labour brokers are outlawed the employers will be
forced to treat their employees with dignity better. This will make it
difficult for employers at the drop of a hat to retrench and/or use labour
brokers.
NUMSA ADDENDUM 5.2: STATEMENT FROM METAL WORKERS
To - The Honorable Ms L E Yengeni
Chairperson of the Portfolio Committee on Labour
Parliament South Africa
Per fax: 086 694 3529
e-mail: akakaza@parliament.gov.za
Date - 21 August 2009
From: Elija Vele, boilermaker,
Venen Mashiane, machine operator,
Solly Matsimela, crane operator working at Concor
Engineering, Amalgam, Johannesburg and employed by
labour brokers since 1992.
Re: SUBMISSION ON LABOUR BROKERING IN SOUTH AFRICA FROM METALWORKERS
Dear Ms Yengeni
We work at Concor Engineering, Amalgam in Johannesburg. We welcome
this opportunity to tell you why we want labour brokers outlawed.
We started work at this company on the following dates:
Elija Vele, boilermaker – 1979
Venen Mashiane, machine operator – 1982
Solly Matsimela, crane operator – 1986
At the beginning of March 1992, the company closed the workshop. The
company is an engineering firm which manufactures boilers. It retrenched
more than 100 production workers, human resources employees, from the
manager to the sweeper. The company was left with just the clerical workers
and the directors.
They called us back at the end of March to come and work. We did not know
we would be contracted to the labour broker called PESA CC. It didn’t last a
year. The contract was terminated and we lost our jobs. When we went to try
and claim UIF and our benefits from the provident fund, we were told that the
company had not paid. But the company was making deductions of these
items from our pay.
From 1993, Macs Africa was contracted. This contract didn’t last until the end
of the year. We lost our jobs and once again when we tried to claim our
provident fund and UIF we were told the same thing – the company had made
deductions but these were not paid across to the institutions concerned.
We were then contracted by Broadmark CC. This also didn’t last for a year
and once again the contract was terminated without us receiving all our
benefits.
In 1994, De Lange and Association contracted us. Later on it changed its
name to 555 CC. We worked for them from 1995 until December 2001. When
our contracts were terminated, we found out that the company had gone into
liquidation. We then joined Numsa to try and fight these problems. Numsa,
instituted a claim on our behalf but to this day, and despite receiving an award
from the Metal and Engineering Industries Bargaining Council (MEIBC), we
have never received anything from the company in terms of benefits due to us
ie service leave, paid leave. However, by now we had learnt that we need to
check with the labour broker on an ongoing basis that the labour broker was
paying to the UIF and for our provident fund. Because of this when we lost our
contract most of us did receive some benefits.
In January 2002, the company hired another two labour brokers – JD Bester
and HBL CC.
In the same year in December, the company terminated their contract with
HBL contract. This resulted in about 40 workers losing their jobs. When the
company tried to put these 40 workers under JD Bester, HBL refused to allow
them, citing an agreement in the contract with the company which prevented
another labour broker from taking workers for 90 days. For 90 days these 40
workers had no jobs while the company and the labour broker fought about
these issues.
After the 90 days these workers were then contracted to JD Bester CC. From
2005, the employees started to investigate their benefits (UIF and provident
fund). We found that all the cheques sent to the MEIBC bounced. Some of the
employees passed away, others who left their jobs are still struggling to claim
those benefits.
Since we lodged the problem with MEIBC, there is an agreement between JD
Bester and the MEIBC to pay the outstanding amount but we are still waiting.
At this moment the total workforce is more or less 150 employees. From these
150 employees, 10 employees are permanent, all the rest are contracted to
the labour broker.
Since we started working in this company, we have never worked for other
companies. We have done the same job all these years and in the same
premises.
While being contracted through all these labour brokers we have never
received any training. We have tried to ask them but they always refuse.
Employment equity is also non-existent. Our experience is that only if you are
skilled do you become a permanent worker and because we are denied
training we can never improve our skills and become permanent.
There is another very important way in which we are disadvantaged.
Permanent workers are allowed to use their provident fund as collateral for
housing. However, because financial institutions regard us as temporary
workers they do not agree to lending us money for housing.
Neither can we get cards from institutions like Woolworths, JET etc. Just
recently a worker contracted to the labour broker with us was denied a loan
from the bank to purchase a car. The bank said that his contract was just for a
year. This despite the fact that most of us have worked in the same company,
in the same workshop, doing the same job, for more than 20 years, some of
us more than 30 years and we know that our contracts will be renewed again
at the beginning of next year.
All the times that we are contracted with these labour brokers we have tried to
find their offices, but we have failed. When we found the office (an office in the
owner’s house) of HBL CC, the owner tried to put his dogs on us. We went to
the police station and came back with the police van and only then did they
agree to talk to us and try to sort out our problems of UIF and provident fund.
The problem with many labour brokers is that they are a one-man show,
operating from their private homes. They have no assets in terms of factories,
equipment etc. If for any reason they default on payment of our UIF, provident
fund deductions, if they are liquidated, there is little chance of workers ever
receiving the money that has been deducted from them.
In the MEIBC agreement with engineering employers there is an agreement
that after four years of continuous service with the same employer, workers
will receive an extra weeks paid leave. Since being moved to the labour
broker, our service has been interrupted thus denying us this benefit. In all the
times that we have worked with all these labour brokers, we only received this
benefit when we were contracted to De Lange.
Yours sincerely
Elija Vele – 072 834 7366
Venen Mashiane – 072 773 9757
Solly Matsimela – 078 323 2615
c/o Concor Engineering, 1 Basalt Avenue, Amalgam, 2001
21 August 2009
SACCAWU ADDENDUM: 6
SACCAWU SUBMISSION ON LABOUR BROKERS
Introduction Most of our sectors are located within the services sector of the economy,
responsible to provide infrastructure and services for the distribution of goods
from suppliers to both intermediate and final consumers. This ranges from
wholesale and retail, leisure, hospitality and tourism to catering and
accommodation as well as financial services.
Employment and trading patterns are always influenced by prevalent
developments including, globalization competition patterns on trade or
economies. The new trading patterns and aggressive competition have
brought about various changes on employment forms, patterns and trends as
well as imposing extended trading hours. In the not-so-distant-past, workers in
the sector used to work from Monday to Saturday noon, which of late has
become unheard of. Globalisation and its fierce neo-liberal practices and/or
the prevailing conditions and environment led to introduction of these
extended working hours as well as rolling working week starting from Monday
to Sunday, wherein Sunday in some cases is expected to be seen as a
normal day of work, with no consideration for safe and reliable transport.
Problems Whilst during the height of globalisation boundary-less competition and
emergence of global multi-national corporations, our sectors continue to
employ various forms of atypical labour with no benefits and social security; at
all. The collective bargaining processes within these sectors are severely
decentralised, causing the unions enormously exorbitant finances and to
severely stretch their limited resources on never-ending negotiations and
strikes. In their endeavours to maximize profits, with workers who earn
meagre wages and with less due regard to customers as well, given the
exorbitant and forever-hiking consumer prices and inherent price fixing and
manipulation.
Over time the atypical work in the form of casuals, flexi-timers, part-timers and
recently Labour Broker supply escalated; premised from a variety of their ill-
gotten strategies, especially on the latter, being:
(i) To maintain a modern day slave reservoir of vulnerable workers who at any
given time can be called upon as scab or replacement labour, at occurrence
of an industrial action or protest. With clear intention to weaken unions and
undermine Labour Laws and the Constitution.
(ii) Precipitation of conflict and labour unrest and/or panic so as to maintain
vulnerability to the extent of accepting pittance on wages and benefits,
inflicting fear from joining unions, with creation of Master-Slave relationship.
(iii) Great exposure of workers to health and safety hazards as no attention is
paid by some to such areas other than being profit-driven at all costs. The
recent case in point being a young worker, supplied by a Labour Broker, who
got beheaded by a goods elevator in Cape Town, with the Employer (Shoprite
Checkers) referring onus back to the Supplier (Labour Broker).
(iv) Vulnerability and exposure to naked exploitation and victimisation with also a
recent vivid example being that of a Labour Broker supplied female worker
who was dismissed for raising a Sexual Harassment complaint against a
manager in Makro Germiston, a dismissal which resulted in further dismissals
of 60 female SACCAWU members who took the defense of such a worker
upon themselves. Whilst SACCAWU members were subsequently reinstated,
the case of the worker in question has to date not reached finalization.
(v) Labour Broker supplied workers are deliberately and constantly pitted
against actual company employees and Unions whilst also trained to behave
hostile and get involved in acts of espionage, enticing workers to compromise
themselves; under the pretext of the so-called under-cover operatives,
whose modus operandi ranges from being conveniently friendly and
inquisitive on day-to-day activities of workers, inducing some to commit
pilferage / theft whilst pretending to be accomplices; whilst in the main also
provide unguided shopfloor militancy that at times result in targeting militant
workers and Shopstewards for victimisation and dismissals. And this is
prevalent at Pick ‘n Pay with the latest case at Norwood Branch.
(vi) This pool is used as the deterrent towards realization of the commitment
towards job creation and retention, including Government’s recent
commitment to creation of decent work as well as campaigns to progressively
eliminate atypical forms of work towards job security, social security and job
retention.
(vii) Not only used during peak periods, as the unsuspecting Public is made to
believe, but regularly and at times as a stumbling block towards regular
scheduling of part-time and casual workers. At times even stifling Collective
Agreement arrived at in relation to progressive phasing out of casuals by
progression / escalation into permanent or fulltime position over agreed
phases or periods.
(viii) The Labour Brokers supplied labour force is lowly paid, with no social
security benefits at all whilst the Supplier/Labour Broker in question is paid
handsomely and expected to tame such workers from raising voices on any
ill-treatment or wrongdoing against them both (Employer & Labour Broker)
with job loss threat.
(ix) Most of the time kept in the waiting wing as a pool / reservoir, without work
for weeks or months on end. And this also become used to provide
misleading unemployment statistics, given that this pool is counted as
employed.
(x) Whilst Government is under the impression that current pieces of legislation
help regulate certain vulnerable forms of employment, such pieces of
legislation are being exploited at will, through exploitation of loopholes / flaws
and massive use of Consultants that also are not regulated, and Lawyers;
always with some Court Judges under the current phase and lack of
meaningful judiciary transformation biased in favour of employers, at times
ridiculing workers as having “frivolous” cases. This is coupled with the
capacity or lack thereof, by the Department of Labour Inspectorate; hence the
notion to regulate Labour Brokerage is a non-starter.
(xi) Labour Brokers, over and above paying pittance wages with no benefits, are
equally tax-evasive thus not positively contributing to economic growth and
development and contribute nothing towards job creation and retention; as
they only use already existing employment, giving employers a leeway of
disregarding corporate social responsibility and business patriotism.
(xii) Many employers as a result have joined the band-wagon of engineered
retrenchments, on alleged poor financial performance and/or operational
requirements, once they believe to have reached high levels of wages and
social benefits. Once such retrenchments are finalised, given the weak
protection of Unions and workers in law on retrenchments and liquidations,
such companies later enlist the services of such retrenched workers from
Labour Brokers at very low wage rates than at the time of retrenchments. The
case in point is the Metcash case within our folds, that retrenched thousands
and directed them to get entry as recall list through Labour Brokers; at half the
previous remuneration packages.
(xiii) Some employers or members of management are owners or shareholders of
some Labour Broker Companies and are actually working from within. The
case in point being Score Supermarkets or Pick ‘n Pay; that heavily
contributed into the current diminisihing process/state of the once booming
Score Supermarkets which at some point was deemed Pick ‘n Pay’s cash cow
after acquiring it . However, at the receiving end are as usual the workers.
Contribution to Job Creation & the Economy Over and above the problems stated herein, overall, this arrangement causes
more job losses, in that the workforce supply due to lack of benefits and
resultant lack of allegiance resort to other means of benefits. At times
collaborate with those responsible for pilferage that ultimately cause
shrinkage whose primary first culprits would be jobs as workers are always
held liable for any loss, and queer enough not for realized profits. In these
inside jobs, such vulnerable workers cooperate both with outsiders and some
unscrupulous managers who are conscious that they are not the first in the
firing line, once there is shrinkage or loss and consequential ramifications
thereof.
The reality also, is that workers from labour Brokers supply have no
unemployment insurance fund, no workmen’s compensation, no retirement
benefits, etc.; and would solely be a burden of the State in case of retirement
age and economic downturns that might result in no need for this regular
supply of services. This, whilst Labour Brokers have no contribution to the
State and therefore in the long term would as a result be subsidised and
handsomely benefit, indirectly so, from the kitty they never contributed to.
It is therefore our strong contention and from our practical experiences that
we submit that no amount of regulation can make Labour Brokers objective
and beneficial to economic growth and development or job creation, retention,
security and decent work; as by its very nature and design this area of
modern slavery was designed to sabotage same. At best , this practice
perpetuates the inherent disparities and the spiraled abject poverty and
inward capital intensive accumulation ; that cannot be expected to form part of
the commitment to realise creation of decent work and better life for all. No
industrial peace nor stability can ever prevail in an environment infested with
Labour Brokerage that deliberately and desperately so , create an
army/reservoir of scarvenging whilst in such process are exploiting the
prevalent high levels of unemployment ; continuously waiting in the wings to
undermining the concerted efforts of the toiling workers who are forever
striving to improve their lot and conducive working environment for
generations of the working people and their communities. Waging relentless
shopfloor struggles to ensure conducive working environment , creation of
more permanent qualitative jobs, with social benefits, jobs security and
corporate social responsibility. The Brokers’ unacceptable behavioural
conduct and practices continues to escalate unabated , in the light of the entry
in township of big multinational corporations that are also using high levels of
atypical , non standard and non permanent forms of employment largely
supplied by these brokers; despite having completely take away the market
share from the township traditional small and single traders whilst at times
having dismally failed to absorb workers who in the process lost jobs , citing a
lot of excuses once confronted by communities , ranging from the socalled
sophisticated nature of business , continuity , sensitivity , experience/ skills or
lack thereof.
We therefore argue for a complete ban of Labour Brokerage!
SATAWU ADDENDUM: 7
SATAWU SUBMISSION ON LABOUR BROKING IN THE SOUTH AFRICAN ECONOMY, AUGUST 2009
INTRODUCTIONSince judgment was handed down in the Namibian High Court in 2008,
confirming the legality of banning labour broking in the country, there has
been an increased demand for a response to the problems of labour broking
here in South Africa.
The proposed responses have ranged from business proposals for self-
regulation to the trade unions’ demands for the banning of labour broking.
This submission proposes that the only way to deal properly with the
problems which arise through labour broking is a complete ban.
It is necessary to make clear that this submission refers only to labour brokers
who supply workers, as a Temporary Employment Service, to a third party
which is the employer in terms of Section 198 of the Labour Relations Act, 66
of 1995.
It does not relate to an employment agency which places workers in
employment with a third party but which then plays no further role in the
employment relationship of employee and employer.
This submission will consider the following issues:
1 A ban and the Constitution of South Africa.
2 Trade union rights and collective bargaining in relation to labour brokers
3 The economic effect on the fiscus of labour broking.
4 The experience of SATAWU and labour broking.
5 Banning v regulation
1 BANNING AND THE CONSTITUTION OF SOUTH AFRICA
In terms of Chapter 2 section 22 of the Constitution of South Africa (The Bill of Rights), “Every citizen has the right to choose their trade, occupation, or profession freely. The practice of a trade, occupation or profession may be regulated by law”.
It is our submission, that labour broking is precisely a trade which needs legal intervention.
In essence the commodity in which labour brokers trade is people. They sell people to a client with whom they have a contractual arrangement.
The employee, legally employed by the labour broker, then works under the control and management of the client company. Whilst workers may no longer be sold on the slave hustings after being forcibly removed from their home countries, they are being sold to the highest bidder, under the force of the economic imperative to find money to support their families.
If the client company no longer employs workers directly, then the unemployed worker has no choice but to accept employment through a labour broker.
It is in essence modern slavery which is prohibited by the Constitution of South Africa.
2 TRADE UNION RIGHTS AND COLLECTIVE BARGAINING IN RELATION TO LABOUR BROKERS
Both the constitution, Chapter 2, section 23, and the Labour Relation Act guarantee workers the right to fair labour practice. This includes the right to belong to a trade union and to participate in its activities.
Labour broking makes this impossible for many reasons. Experience has shown that employees who join unions and those who try to recruit for unions are simply not given any further work.
A union which may have a majority of members at a client’s premises constantly run up against the argument that they do not represent a majority of the employees at the workplace of the employer.
Many labour brokers supply workers in several different sectors and nationally. This leads to a situation where the both the broker and the client refuse to acknowledge the union because it claims it does not have a majority or is not sufficiently representative of their total workforce.
In a strike situation, although the Labour Court has ruled that the employees of labour brokers may strike, this is very problematical. If such employees strike then the client simply cancels the contract with the labour broker because of non-performance and the workers find themselves without a job and another broker is brought in.
Workers end up being dismissed simply because a client has told the labour broker that it does not want a particular worker. Often these are union members.
Although common law sets out that if an employee offers him/herself for work, the employer is obliged to pay him/her even if there is no work. This does not happen with labour brokers. The contract of employment often links the employee’s contract with the contract with the client. However it will also state that the employee remains in the employ of the broker and may at some unspecified time be sent to a new client.
This means that on two counts retrenchment is never paid. Firstly the broker will claim that when a contract with the client ends, the worker has not been dismissed, and, secondly that if there is no alternative client company to which the worker can be sent elsewhere the broker will tell the workers that their contract simply came to an end.
Most employees of labour brokers have no protection in terms of collective agreements whether at plant level or Bargaining Council main agreements.
Even where labour broking is covered in Collective Agreements most reports indicate that the regulations do not work.
Labour brokers force down wages. They offer cheap labour which appeals to employers whose only interest is to increase profits. It is the chance to pay
workers less and evade the law which makes labour brokers attractive to their clients.
Although workers have a right to have information about their employer many employees of labour brokers have no such knowledge. Workers have reported that they believed they were employed by the client only to see a different name on their wage slip.
Many are employed by the so-called “bakkie brigade” – labour brokers who appear once a week or fortnight and pay workers in cash in envelopes and then disappear again.
3 THE ECONOMIC EFFECT ON THE FISCUS OF LABOUR BROKING.
It is estimated that some 700,000 workers are employees of labour brokers, who try to argue that they create jobs and that if they are banned these jobs will simply disappear.
Both these assertions are myths. The jobs with clients were always there and in most cases were previously filled by permanent workers by the client. All that has happened is that in order to avoid their responsibilities as employers they now fill these same positions through a labour broker.
If labour brokers were to disappear tomorrow the jobs they provide would remain. If a courier company as the client has 30 jobs through a labour broker today it will still need those employees tomorrow. The difference would be that they would not be able to evade labour legislation in the way they treat what would now be their own employees.
If these employees were directly employed by the client company they would in many cases have medical aid, some pension or provident fund provision and pay PAYE.
Government should be questioning who is going to be responsible down the line for the medical care and pension provision for a growing number of labour broker employees who have no such provision through their purported employer.
4 THE EXPERIENCE OF SATAWU AND LABOUR BROKING.
Workers in courier companies are often employed by labour brokers. One
large courier company based in Germany went through a retrenchment
exercise, including voluntary retrenchments. The company then replaced
its workers with others from a labour broker on lower wages. This
experience is not unique.
More and more in this industry, labour brokers are operating in all sectors
of the industry and decent jobs are being replaced with sham jobs. These
workers are vulnerable and are often refused the right to join or participate
in any union activities. Salaries are kept low and there are no benefits.
This is necessary if the labour broker is to make themselves financially
attractive to a client. Usually the worker is given no contract, or, if one is
signed, the worker is not given a copy. Workers often believe they are
employed on a permanent basis only to discover that they have been
employed on a short-term contract by a labour broker.
Labour Brokers are equally active within the cleaning industry. If workers,
through their struggle, achieve an increase in their paltry wages then
employers cut hours so that the worker does not benefit and the employer
makes greater profit.
If the union organises a workplace then the labour broker will, in
agreement with the client, move these workers to other contracts. They will
also target the union leadership in order to intimidate those who are left.
These changes are effected without consultation.
Labour Brokers often dismiss a worker on no more than an allegation of
misconduct by a client. Should the employee win his/her case at the
CCMA the worker is seldom reinstated as the labour broker will state that it
had no choice since the client did not want that worker.
Workers in this sector are very vulnerable and it often appears from the
salaries earned that they work for nothing more than transport money, and
should they complain about wages or conditions, they will not work again.
SATAWU now have an agreement with South African Airways to ban
labour brokers. Prior to this and during a restructuring exercise, some
2000 employees lost their jobs only to be recruited again but this time
through a labour broker. They were now paid far less than what they were
previously being paid as SAA employees.
In the Maritime sector workers are very vulnerable because of their
general working conditions. Some of them do not work every day and they
are then paid according to the days they have worked, which means very
low salaries.
If a worker was earning R5000.00 a month as a permanent employee, now
he/she will earn something like R1200.00 per month or even less while the
company he/she is giving service is pay a huge amount to the labour
broker.
The worst part is that whatever they earn is hand-to-mouth, with no
provident fund or other benefits. Often they are not given safety clothes, so
that for instance if it is raining they don’t have raincoats. Some of these
workers are ex-employees of the maritime companies and others are new
in the Industry which means they become vulnerable in safety issues.
It is not always clear who is the employer when they get injured or die on
duty because of an accident. Labour Brokers do not want to take the
responsibility for the incident. Those who are new in the industry are
trained on duty by the companies and this exposes them to dangers.
Labour brokers exist to make profit and they do this by exploiting workers
Labour Brokers, contrary to their assertions do not save the jobs of
retrenched workers they simply see such workers as a means to increase
profits.
The security industry is also riddled with abuse of workers by labour
brokers.
Often workers do not know who the employer is which results in workers
who are dismissed unfairly not referring a correct dispute to CCMA in
terms of citing the correct employer.
Workers are often paid in cash with no benefits such as UIF, Provident
Fund, funeral or death benefits. Money is often handed over to workers in
an envelope and there is no pay slip enclosed.
The use of labour brokers is growing in the security sector as clients want
to make a quick buck and not comply with any legislation. They do this by
avoiding payment of severance pay, not registering employees with the
Private Security Industry Regulatory Authority (SIRA) and charging
workers exorbitant amount at unaccredited training centre as there is no
training standards for labour brokers. These are often members of the
“bakkie brigade” who operate from cell phones without offices and become
untraceable when there are employment relation issues
Migrant labour and in particular illegal immigrants are often used as
employers regard them as not having rights and when they raise issues
they are threatened of deportation
5 BANNING v REGULATION
If we accept that labour broking is a form of modern-day slavery, it must be
unlawful under the constitution.
Labour legislation – LRA, BCEA, EEA, etc – has been enacted to end the
practices of the apartheid years when workers were simply seen as cheap
labour, with minimal rights. Despite this workers have to play catch-up, as
employers try to evade these laws. Labour broking is a perfect example of
this. We believe that whatever regulations are introduced, employers will
find ways to get round them and continue to exploit workers.
We submit that we would see an upsurge in outsourcing, the greater use
of limited duration contracts and attempts to designate employees as
independent contractors. Employers already use these methods to
destroy permanent employment and attack trade union and collective
bargaining rights.
We therefore are convinced that only banning labour broking and other
similar forms of atypical employment will be effective to end this abuse and
secure workers their rights under the constitution and labour laws.