Business

Full-time employment heads south

Chantelle Benjamin

Labour experts warn that the introduction of two new laws will tighten the noose on employers. Chantelle Benjamin reports.

Critics believe that high unemployment is exacerbated by the legislative environment. (Oupa Nkosi, M&G)

Two new labour laws are expected to come into effect next year that will introduce changes with regard to employment, and labour experts are warning that they will exacerbate the move towards temporary employment.

Both the Employment Services Bill, which makes it possible for the government to set up a public employment services agency, and the Employment Equity Amendment Bill, which gives the government the right to fine companies for not meeting employment equity targets, have been hotly contested.

The deadline for public comment is December 14 and organisations and individuals have raised a number of concerns about the Bills and the impact they will have on how companies function.

Loane Sharp, an Adcorp economist, believes the Bills, coming as they do on the heels of the Labour Relations Act and the Basic Conditions of Employment Act, as well as increased taxation, will serve to discourage the creation of permanent jobs in favour of lower-risk temporary jobs.

This view has been supported by Jonathan Goldberg, the chief executive of Global Business Solutions and a representative of the Confederation of Associations in the Private Employment Sector.

Goldberg said it was unlikely that objections submitted by business would be taken into consideration. "There was no regard to previous submissions by business with regard to other labour regulations, so it is unlikely that they would be considered now. In fact, there seems to be a growing anti-business sentiment coming from the government at the moment."

Creation of permanent jobs
Goldberg said the present legislative environment was not geared towards creating jobs. "Increased punitive action will not encourage the creation of permanent jobs. Companies will simply look to relocate or mechanise, and I am hearing discussions about these all the time – and it is happening across all sectors. The question that has to be asked is: Who in their right mind would want to create more regulations when unemployment is so high? Surely the relaxation of regulations would make more sense."

He said companies were unlikely to create permanent jobs in the present environment.

Sharp said the reduction in permanent jobs and the increase in temporary jobs were trends the Adcorp Employment Index had been picking up since 2009.

The Employment Services Bill, which puts in place a government employment services agency, requires that companies notify the department of labour about any vacancy or new position they may have within 14 working days of that position becoming vacant or being created.

"Companies then have to deal with the applications themselves, which is a big administrative burden ... particularly [for] small ones," Sharp said.

The Adcorp Employment Index for November, released on Thursday this week, found that employment had increased sharply, growing at an annualised rate of 4.4% over the three-month period from September. But this was in the temporary and informal sector, whereas permanent positions continued to decline.

Legislative burdens
Mining, manufacturing and agriculture continued to shed jobs.

Sharp said: "Mining employment has dropped from 1.4-million permanent jobs since the mid-1980s to 357000 jobs, and we expect an additional 200 000 jobs to be lost over the next decade. In the agriculture sector, employment is down from 2.5-million permanent jobs in 2001 to 647000 in 2012."

Sharp believes the job losses have a lot to do with minimum wages introduced in the mid-1990s. "If you look at the sectors hardest hit, they are agriculture, mining and domestic work."

Sectors that experienced an increase in employment were transport, wholesale and retail trade, services and construction.

A quarter of jobs created in the services sector were in the government sector, he said. In fact, the government, which employs 2.8-million people, accounts for 86% of jobs created over the past decade. "Other than the government, employment was roughly flat over the period at about 12.4-million."

A trend picked up by Adcorp was the number of small businesses moving into the informal employment sector and "flying below the radar" of the South African Revenue Service to avoid tax and legislative burdens.

Four offences
"The informal sector is not just the trader on the street corner, but small businesses employing five or less people that have disappeared from labour and tax registers to evade labour laws."

Sharp said most of these companies survived between five and seven years.

Goldberg said the fines of 2% of business turnover for first-time offending companies who failed to comply with employment equity quotas outlined in the Employment Equity Amendment Bill were "very prohibitive". The fine is 10% turnover for companies with more than four offences.

Obligations by authorities to take into consideration the economic and financial circumstances of the sector in which the employer operates, or the financial circumstances of the employer, have been removed from the Bill. This has created a lot of uncertainty, according to Goldberg.

Trade union Solidarity has also been vocal about the Employment Equity Act, arguing that it forces companies to reflect the national demographic on every level and in every workplace, which might not be feasible for many companies. It has also questioned the Act's constitutionality.

Rudi Dicks, director of the National Labour and Economic Development Institute, said present legislation did not take a hard enough line.

No clear view
"Cosatu [the Congress of South African Trade Unions] has called for the banning of temporary employment, which has not happened."

He said temporary employment and labour broking remained a serious problem in South Africa and continued to place workers at a disadvantage.

"There is no clear view about who the employer is and who has the responsibility for the worker, which leads to abuse."

The institute is working with Statistics South Africa to try to ensure that more detailed data about temporary and informal employment is included. "It is very difficult at this point to say with confidence what the situation is with regard to temporary labour and if it is increasing. All we have to go on is anecdotal information," Dicks said.

He added that there was a greater move towards mechanisation and an increased use of temporary employment in the mining sector. "We are being informed of a serious increase in temporary employees at mines."

It is difficult to assess the extent of temporary labour in the agricultural sector, because the work is seasonal.

Sharp said labour brokers were increasingly being used in this sector, because it was easier to regulate the acquisition and payment of staff.

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