Another experiment doomed to failure?

Another experiment doomed to failure?

As proposed amendments to South African labour law, aimed at curtailing the practice of temporary staffing, seem to go against both domestic and international trends, it begs the question: Is labour regulation in the country heading for the kind of failed experiment that was implemented with outcomes-based education?

The just-published Adcorp Employment Index, based on employment figures for February, indicates that “despite a broadening pattern of growth in economic activity in South Africa … employment remained generally weak with only temporary employment showing a more substantial increase of 6.1%.”

An international white paper published by M Squared Consulting, released on the same day as the Adcorp-index, describes how the top-tier of the flexible workforce is increasingly becoming the driving force behind many companies’ quest for growth.

The Adcorp index reports that work in the formal sector remained in the doldrums, rising negligibly at an annual rate of just 1.4%, while permanent employment declined by 1.3%.

The temporary employment segment in the market delivered most of what growth there was in employment during February.

There was some growth in government jobs, by 5.5%, mainly in local and provincial government.

“Conversely, manufacturing and financial services experienced the steepest declines, of -3.4% and -3.0% respectively,” according to an Adcorp media release at the time.

Disbelief or uncertainty cost jobs

There is also an indication that there is disbelief within the private sector that the proposed amendments will ever make it to the statute book. But there is also an indication that uncertainties are presently costing the country job opportunities.

The media statement  also quotes Richard Pike, Adcorp’s Chief Executive Officer as saying: “Much of the growth in temporary work can be attributed to the agency-work sector which grew by 3.2%. This suggests that employers do not envisage the proposed labour law amendments progressing to legislation.

“It also insinuates that employers may well be reluctant to employ new staff on a permanent basis until there is clarity on the legislation.”

Referring to the technological developments it believes are driving the growth in temporary staffing, the report itself foresees that temporary staffing will “continue to grow at a rapid pace in future, despite the South African government’s regulatory attempts to curtail the practice.”

Analysis

In the analysis of the findings of the report, it states that many South African companies make extensive use of temporary staff, which are known by various names: contract staff, flexible staff, contingency staff, temps, and so on.

Temporary staff collectively represent 29.6% of South Africa’s workforce, and agency workers (i.e. temps provided by employment agencies or labour brokers) represent 7.6% of the total formal sector workforce.

Historically, the management of  temporary workforces has been subject to various challenges. Temporary workers, who are typically paid per hour and not per month, do not easily fit into companies’ standard payroll systems. They require extensive  system configuration and re-design related to monitoring temps’ working hours through elaborate time- and-attendance systems.

Temporary workers tend to have variable reporting lines, since they are often moved from one area, shift or assignment to another, with the result that specialised performance-management systems are usually required.

As a result of these challenges, many companies did not know such simple facts  as the number of temps employed, the average temp pay-rate, the average agency charge-rate, and so on. These challenges limited the potential growth of temporary work. Technological advances in the management of temporary workforces have played a significant role in facilitating the rapid growth of temporary work around the  world.

Since 2000, South Africa’s temporary/part-time workforce has grown by 11.9% per annum, compared to an average annual decline of 1.5% in the permanent/full-time workforce.

For example, Europe’s most advanced vendor-management system for temporary workers, Skillstream, allows  companies to track, monitor and report on progress of temporary employees throughout the entire hiring  cycle, allowing companies to track in real time the cost per hire. In a typical environment, Skillstream is able to reduce administration and other costs by 11% of the total payroll, or roughly a cost saving of R11.38 million per annum for every 1,000 entry-level white-collar workers employed.

Permanent staff and technology

The report states that “by contrast, technological innovation in permanent staffing has not kept pace. Permanent staff are managed in much the same way as 75 years ago when adoption of mass-production techniques became  widespread. As a result, we expect temporary staffing to continue to grow at a rapid pace in future, despite the South African government’s regulatory attempts to curtail the practice.”