Labour Broking Has No Impact on Unemployment Rate

By Staff Writer    12-Jun-2013 10:41 UTC+02:00 3

South Africa is facing a high rate of unemployment. Recent reports indicate that 25.2% (4.6 million) of South Africans are unemployed. The Congress of South African Trade Unions (COSATU) believes that the existence of labour brokers is among factors exacerbating this problem and has called for their banning. Labour brokers hire people on behalf of companies, typically on a short-term basis, and take care of all the human resource services.

So far there is no proof that labour broking has any significant impact on the overall unemployment rate in South Africa. Labour brokers do not create or destroy jobs. Their main task is to facilitate the employment process. They may determine who gets a particular job and who doesn’t but that does not necessarily affect the number of jobs offered by companies. Those in favour of labour broking argue that banning it would result in the loss of thousands of jobs.

According to reports, one million employed South Africans found jobs through labour brokers. However, there is no evidence that they would not have found jobs if there were no labour brokers. Perhaps those individuals would have been employed by companies directly. Labour brokers cannot be credited for creating those jobs. Therefore, it is unclear how or whether they affect the rate of unemployment positively or negatively. Since no research has been conducted, we can assume that labour broking has no impact on the rate of unemployment, although it may have its pros and cons.

The ANC initially had plans to ban labour broking. However, after discussions, they decided not to. Instead, they reduced the time a worker can be employed by a labour broker from six months to three months. After three months, companies will have to treat the worker as a “full-time employee with equal pay and equal benefits”. According to analysts, this is a bad move that will result in more people losing their jobs.

Trying to force companies to employ temporary staff on a full-time basis after three months may backfire. Temporary employment will become less secure. Companies sometimes don’t have the budget to hire someone full-time. If they are not allowed to keep a temporary employee for more than three months, their only option may be to retrench them, even if the employee is still willing to work casually. It is better for companies to ‘exploit’ individuals than to not employ them at all because during that period of exploitation they give them valuable work experience that every permanent job requires.

With many companies having limited budgets, most temporary employees will now be sure that companies will get rid of them after three months and find someone else so that they don’t break labour laws. This is bad news. It will negatively affect those who don’t mind being temporarily employed for a long time while looking for permanent employment. It is easier for one to find a permanent job if they are currently employed temporarily than if they are jobless. Some people are willing to work as temporary staff for years, until they find a permanent job. Therefore, people should be allowed to work on a temporary basis for as long as they want. This will give them a chance to earn income while looking for greener pastures somewhere else.

Nonetheless, restrictions on labour broking will most likely have no significant impact on the overall rate of unemployment in South Africa. It will only inconvenience some individuals and companies. Companies will have to retrench and employ staff more frequently than before, which won’t increase or reduce the number of unemployed people. As citizens of South Africa, we need to come up with better ideas to create job opportunities. Only the creation of new businesses, services and products has the potential to curb unemployment.


  1. Bruce Bayer says:

    For a small business to go through the process of interviewing and contracting a labour unit already half way through the day, and for a unit that may not even pitch up the next day – is a serious consideration. Add to that a very poor work ethic where jobs and wages are not equated to production and results, means that no one wants to risk employing anyone. Labour brokers relieve prospective employers from some of that and increase employment possibilities rather than threaten them.

  2. Marius says:

    Companies use labour brokers because they are not prepared to employ staff in this complex labour environment. The writer assumes that these companies will have to employ staff themselves if labour brokers are banned. These companies can however opt to move their operations outside SA and they can have their products manufactured in China. Be careful what you ask for, you might just get it…

  3. takalani mathidi says:

    i have a problem i worked for labour broker for about 4years now i even make so many credit that i cant afford to pay them now because they just retrech me am blacklisted and am steel going to be blacklisted wich means the labour broker has ruine my life what cn i do to solve this matter am still young and i need to work and clean my name,i have about 10years exprience of driving forklift is any1 can out there,what can i do

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