DTI dismisses labour broking concerns

Johannesburg, 25 Aug 2009

As the Department of Labour accelerates its campaign against labour broking, the Department of Trade and Industry (DTI) remains unconcerned, saying its billion-rand business process outsourcing (BPO) investments are not at stake.

While the DTI has identified the call centre industry as one of the high-potential sectors and targeted it in its employment drive - comments and proposals made by the labour minister indicate the industry could soon become illegal.

As part of its agenda to create decent work and work conditions, the Department of Labour is pushing amendments to the Labour Relations Act. If labour minister Membathisi Mdladlana gets his way, skills-based services, such as consulting, outsourcing and sub-contracting, would be termed illegal under the proposed amendments.

Mdladlana has called for the banning of labour brokers, saying he had grown impatient with protracted discussions on the amendments, and demanding a faster adoption process. The minister has also dismissed any notions that banning labour broking would be unconstitutional, saying he would go ahead with his proposal, and inviting court action.

The Information Technology Association and Business Unity SA 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.

The DTI has chosen to ignore industry concerns and Mdladlana's statements, saying it supports the proposed amendments and discussions on the matter would continue.

“The DTI is aware the Department of Labour has initiated a process through which the role and impact of labour brokers on the conditions of employment of certain classes of workers are being reviewed with a view to improving the employment conditions of those workers. This process is largely at an early stage and, therefore, various options are still being discussed,” says Alfred Tau, acting COO, empowerment and enterprise development at the DTI.

The amendments are being tabled at National Economic Development and Labour Council for consideration. The Department of Labour will hold public comment sessions today and tomorrow in Parliament.

Workers' conditions

While proposed amendments to legislation could put an end to the DTI's BPO initiatives, the department says it's confident the changes would only regulate the practice of labour broking.

In 2006, Cabinet approved a plan to adopt BPO as a key industry for national development and to accelerate local economic growth. Plans included the creation of a state incentive scheme for BPO - with a particular focus on the development of call centres. The DTI was expected to spend R2 billion over a period of three years on this scheme and aimed to make SA the world's third-biggest BPO destination, after India and Philippines, by 2008.

Tau notes the DTI recognises the importance of the amendments, saying: “All stakeholders agree that the current conditions in which labour brokers operate have resulted in instances of unacceptable abuse and exploitation of workers.”

He adds: “It is important to note that the intention of this exercise is to improve the employment conditions of workers who are contracted through third parties. This move should thus assist in removing uncertainties with respect to acceptable labour standards and, therefore, clarify the acceptable conditions for doing business in SA.”

Another battle

While the BPO sector is being hampered by high telecommunications costs, it will now also have to contend with increased labour costs, if proposed amendments regulate the industry. Tau notes this is another concern the industry will have to deal with.

“In the short-term, there is likely to be an increase in the cost of labour for all sectors in which workers are largely contracted via third-party agencies. However, in the medium to long term, this should assist in stabilising the overall labour market conditions in the country.”

The DTI previously announced it would work with Telkom to lower the cost of telecommunications in SA and promote the BPO sector with the hope of creating up to 100 000 jobs over the next five years.

Tau says the DTI's goals are unchanged and the two departments “have engaged and this engagement will continue until the deliberations on this process are finalised”.