An outright ban on labour broking would harm the ICT services sector, as it would push up operating costs, hamper bottom line profits, and could worsen the sector's current skills shortage.
Government is proposing changing the labour laws, which would either effectively abolish labour broking, or increase regulation of all temporary employment services. Among the amendments is a bid to stop recruitment agencies providing temporary staff.
The proposed changes to the law have been the topic of discussion between business, government and labour, and were recently debated at a National Economic Development and Labour Council meeting.
Business Unity SA president Futhi Mtoba, speaking at a presidential business summit held earlier this month, said the proposed labour law changes will make employers think very hard about hiring staff and would be a “full frontal assault on competitiveness”.
Mtoba pointed out that the economic crisis of 2009 forced many companies to lay off staff, but the current labour laws are inflexible and made it difficult for firms to retrench.
“This inflexibility was manifested by protracted and costly negotiations with the labour unions. Now, with recovery in sight, these employers think much more carefully before expanding their workforce again,” says Mtoba.
Costs up
Werner Guse, business unit executive of human capital management at Gijima, says “the need for temporary labour is an inherent requirement of the industry”. He points out that flexible staff are only needed when limited duration projects are on the go.
About 25% of Gijima's staff members are on contract, and an outright ban would severely impact its professional services business unit, which can account for as much as 50% of its overall business, says Guse.
Guse explains the ICT industry has always put a high demand on labour flexibility. He says technology is advancing at a rapid pace, and there are skills shortages. As a result, the sector “cannot afford individual employers to hoard scarce IT skills in any inefficient or underutilised fashion”.
Access to a temporary staff force also allows companies to mitigate the skills shortage, as specialised skills can be shared among the sector, he notes.
Untenable
Marius Schafer, Business Connexion's group executive for commercial services, says a general ban on labour broking “will have a major impact on the ICT industry”.
Schafer says the ban will push up operating costs as companies may have to hire specialised skills on a permanent basis, which is not a sustainable measure as such skills are only needed for certain periods. “This will mean that we will be paying for skills that are not used on a daily basis, but merely needed for service delivery on specific periods or projects,” he says.
About 0.5% of Business Connexion's 4 000 staff are on contracts, notes Schafer. “But this percentage does not take away how important it is for the business to have these employees on a temporary basis.”
Schafer explains contract workers are most needed in the company's professional services division, based on clients' needs. “We hire as and when we need specialist skills and for a pre-determined period.
“Banning labour broking completely will have a negative impact on the country's unemployment rate as it will increase the current levels of people that are left without jobs.” Schafer says legislation should consider industry-specific requirements, and not be a “one size fits all approach”.
Dire straits
Frost & Sullivan ICT industry analyst Protea Hirschel says banning labour broking will worsen SA's ICT skills shortage, as specialists who won't be able to work on a flexible basis could look outside the country for job opportunities.
Hirschel says much of the work in the ICT services sector is done on a temporary basis because it is project-focused. A total ban on labour broking would “shut down” the opportunity for skilled professionals to get work, she adds.
If companies are forced to hire permanent staff, their operating costs would increase, which could spill over into lower profits, according to Hirschel.
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