Bokamoso | Temporary Employment can play an Important Role in Job Creation

In my home language, Setswana, Bokamoso means “The Future”. I have called my weekly newsletter Bokamoso because the DA is determined to build a better future for all South Africans. A future of freedom, fairness and opportunity.

This will only be possible if more people have the chance to participate in our economy. The current tragic reality is that our unemployment rate is so much higher than that of most other countries. This is due to a number of factors, not least of which is the far-reaching legacy of our unjust past and our poor standard of education. Today, however, I would like to focus on another factor: ill-considered policies.

Recent labour policy has to be understood in its historical context. Most labour policies are a response to our history of labour abuse in this country. During apartheid, workers were abused and exploited. They were generally under-paid, over-worked and denied any job security or rights. It is therefore both right and necessary that we remove these past injustices. But at the same time, we must be acutely aware that taken to an extreme, new policies can do more harm that good.

Ill-considered policies lead to unintended consequences

Sometimes, policies that in theory sound like they will create jobs end up destroying jobs in practice. Policies that sound good don’t always do good. This is because they have unintended consequences.

For example, the government’s new visa regulations sounded good to the ANC, but they didn’t do good. They have resulted in a big loss of tourism income and jobs. President Zuma has admitted that these were “unintended consequences”. Clearly, the ANC needs to think through the potential negative consequences of policy ideas much more thoroughly before legislating them.

The latest example of the ANC’s unintended consequences can be seen in the Temporary Employment Sector.

What is temporary employment?

Temporary employment refers to a situation where an employee is contracted to work for an employer for a set period of time. The need for this arises because some businesses are cyclical in nature and because some work is project-based, such as the construction of a building. Increasingly, these fixed term contracts are being used for permanent tasks too.

In South Africa, there are a large number of businesses providing temporary employment services and over one million people are employed through them at any given time.

There are a number of advantages of this kind of employment. In particular, for the employer, it reduces the risks and administration costs associated with employment, and increases labour flexibility, thereby encouraging business to create jobs. A positive consequence therefore is that the prevalence of temporary employment services increases work opportunities for job-seekers.

Pressure from Cosatu

Cosatu (the Congress of South African Trade Unions, one of the ANC’s alliance partners), however, would like to ban temporary employment services altogether and has put pressure on the government to do so.

What union bosses don’t like about temporary employment is that temporary workers are more difficult to unionise and therefore more difficult to secure membership fees from.

Ill-considered policy causes job losses

In April last year, bowing to this pressure from Cosatu, the government amended the Labour Relations Act to limit the amount of time that people can be in temporary employment to just three months.

The government’s intention (other than to appease Cosatu) was to force employers to convert these temporary jobs to permanent jobs. This sounded good in theory. But a recently-published survey by the University of Cape Town suggests that the policy didn’t do good in practice.

The survey found that a small portion of people with temporary jobs ended up getting permanent jobs as a result of this policy amendment. A far bigger portion ended up losing their jobs altogether.

Very often, a labour policy benefits one group of people but harms another. In order to derive maximum benefit for society, the government needs to manage that trade-off. In this case, the number of job conversions from temporary to permanent in no way compensates for the larger number of job losses.

DA’s suggestion

The DA would limit temporary employment to two years, rather than just three months. This would greatly increase job opportunities, while still protecting workers from remaining on temporary contracts forever.

Youth are especially affected

The government’s tight limits on temporary employment is especially sad because it is young people who are most reliant on the Temporary Employment Sector. Access to temporary employment opportunities gives young people a better chance of getting the work experience they so desperately need. It gives them a foot in the doorway and a chance to prove themselves to employers.

South Africa simply cannot afford to implement policies that disproportionately harm young peoples’ chances of getting work opportunities. Youth unemployment should be recognized as a national crisis. According to StatsSA, 3.6 million young people (aged 15-34) are currently unemployed and looking for work. This alarmingly high number does not include the millions who have become discouraged and given up looking altogether.

This desperate state of affairs bodes very poorly for the future, and is reason enough to expect the government to rethink its 3-month time limit on temporary employment.

Cosatu bosses – a small but powerful interest group

Unfortunately, COSATU bosses, with their keen focus on membership fee income, form a specific interest group that has disproportionate political influence over the government’s decision-making.

Deputy director-general in the Department of Labour, Thembinkosi Mkalipi, was quoted in the Business Day recently, saying of the new law: “In my own view, if there is evidence that there are serious job losses then we will have to look at it, although I’m not sure it would fly politically”.

Temporary employment internationally

Yet temporary employment service provision is an internationally accepted business model and a growing sector around the world, where providers are often known as “temporary staffing agencies”.

The growth of this sector globally is due to the increasing need for business to be flexible and adaptable. It is also a response to greater regulation (and therefore greater complexity) of labour relations. It increasingly makes sense for business to outsource staffing to companies that have specific skills in handling remuneration, work scheduling, complaints, taxes, contracts etc.

World Bank research shows that the use of fixed term contracts for permanent tasks encourages business to create jobs, particularly for young workers.

Time for a new image in SA

Unfortunately, the temporary employment sector has a very poor image here in South Africa, where it has traditionally been known as “labour broking”. This stems from the fact that initially, temporary employment agencies were able to avoid giving temporary staff the same benefits as permanent workers. But this has largely been addressed, with temporary workers enjoying the same basic rights as per the Basic Conditions of Employment Act, and with much more rigorous inspection of the industry.

Having come a long way in minimizing the potential disadvantages of temporary employment, the government now needs to do what it can to maximize the potential advantages of the sector as a creator of job opportunities. And this means extending the current 3-month time limit for temporary contracts, which is hopelessly too short. They should do it very quickly, to limit the damage as soon as possible.

Time for a new government

The main question is: what is more important to our government, placating Cosatu bosses, or creating job opportunities? South Africa needs a government that puts the needs of the country over the needs of specific groups, no matter how loud their voices are or how much political influence they wield.

We need a government that will create opportunities for people, not destroy them; a government with policies that do good, rather than just sound good; a government that is alert to unintended consequences. And we need a government that will, if necessary, admit to mistakes and move swiftly to correct them.

The DA will be that government.

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