Alan Hammond
Alan Hammond

Labour brokers face the axe

Government has threatened to ban labour brokers after the next election. The claim is made that the system lowers the wages of workers and encourages casual work.

Labour Minister Membathisi Mdladlana first made the call when he was campaigning in Langa in December last year. Mdladlana told residents that the ANC plans to ban labour brokers after the next election.

According to a report in the Sowetan, Mdladlana told a small group of residents that a vote for the ANC would mean that ban would be implemented after the next election.

“Labour brokers are not doing our workers a service. “People who are employed by labour brokers have no pensions, no benefits — in the end they are just dumped,” the Sowetan quoted Mdladlana as saying.

There was strong support for the call by labour federation Cosatu.

“Labour broking is a form of human trafficking,” Cosatu spokesperson Patrick Craven said in a statement.

“These companies ‘sell’ the labour of workers to the highest bidder and then pay them the lowest possible wage, often in cash with no deductions for tax or UIF, let alone any benefits. The broker then pockets the difference as his or her profit. It is an extreme form of free-market capitalism which reduces workers to commodities that can be traded for profit, just as if they were meat or vegetables”.

“Legislation clearly states that the ‘employer’ is whoever actually pays the workers’ wages, i.e. the broker, who thus should obliged to comply with all an employer’s statutory obligations to the workers. Often in practice, however, the broker and the company to which they supply the workers, each try to dodge their responsibility to contribute to tax, UIF, provident funds, medical aids, health and safety compliance, skills development, etc by claiming that it is the other’s responsibility”.

Opposition parties claim that if broker are banned then 500 000 jobs will be at risk. That’s the number of people who are currently working through labour brokers.

Would these jobs really fall away, or would the clients have to employ the workers directly? Are workers better off with labour brokers who can provide them with UIF, training opportunities and work experience.

Like many industries there are big differences between the top and the bottom. The larger brokers, or temporary employment services (TES) as they prefer to be called, keep things above board. But for each of those there are many hundreds of smaller operations where unemployment insurance isn’t paid and workers have no security.

What the labour brokers/TES companies provide is flexibility — the ability to hire and fire employees as needed. This is what business wants, and exactly what government and unions are trying to avoid.