Government stands to lose R10 billion in tax revenue should it decide to ban labour broking, says the Democratic Alliance (DA).
This was revealed in replies to parliamentary questions posed by the DA. In the responses, the National Treasury revealed labour brokers generated R10 billion in tax revenue in the 2008/9 financial year, and R15 billion in 2007/8.
”This is yet another clear case for why the banning of labour brokers would negatively impact the economy in a huge way. With SA already facing a budget deficit well into the billions of rands, it would only create an additional burden on the fiscus, and the taxpayer would have to fill this widened gap,” says Pierre Rabie, DA shadow minister of economic development.
The Department of Labour is proposing amendments to several Acts, which all fall under the Labour Relations Act. The new amendments would either effectively abolish labour broking, or increase regulation of all temporary employment services.
Nedlac has held negotiations on various proposals and heated public hearings have also been held in Parliament. While labour brokers' submissions noted the practice is an essential part of several key industries in the country, union groups countered this by saying it should be banned across the board.
The Information Technology Association and Busa have indicated the IT industry would be negatively impacted by proposed amendments. The bodies point out the amendments would result in the end of skills-based services and spell the end of the outsourcing industry.
While the department's proposed amendments indicate a move towards greater regulation, only the draft amendments will reveal the fate of temporary employment services. The changes are expected within the next two months, with the minister pushing to have the Bills passed by April 2010.
Rabie says Cosatu, which has made repeated calls for the end of labour broking, needs to consider the implications of banning labour broking, as its salaried members could pay more tax if the industry is banned. Rabie adds that calls by labour minister Membathisi Mdladlana, to ban the practice, would restrict government expenditure on job creation programmes.
Nedlac previously stated the first phase of negotiations is complete, but no decisions on the direction government will take on labour broking have been made. The council said the amendments would reflect submissions made by government, employers and organised labour.
“The debate on labour brokers needs to progress - it has been made clear their banning is completely unworkable, possibly unconstitutional and disastrous for the delivery of public services. The regulation of labour brokers is the next step in the debate - it is a topic that needs to be discussed in a clear and level-headed manner,” says Rabie.
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