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.