Loane Sharp, Adcorp’s Labour Economist says, “This is primarily owing to a continual decline in permanent work, with 54,184 jobs lost in May.” In contrast to this, employment in non-permanent work was sharply up.
Informal employment grew by 8,591 jobs, temporary work grew by 27,250 jobs and agency work grew by 4,555 jobs during the month. Overall, the combined effect of declining permanent work and rising non-permanent work resulted in a total loss of 26,934 jobs. (more…)
Employment figures were largely flat during April, says Adcorp Labour Economist Loane Sharp in the latest Adcorp Employment Index.
The economy shed 1,163 jobs during the month with the biggest losses occurring in temporary (excluding agency) work, which lost 2,056 jobs during the month, and permanent work, which lost 1,018 jobs during the month. Only the informal sector created jobs, numbering 1,911 for the month.
The most significant job losses were observed in manufacturing (7,000) and wholesale and retail trade (4,000).
In the wake of the recent adoption of changes to the Labour Relations and Employment Equity Acts by parliament, Sharp analyses its potential impact on the labour industry.
He notes that, although new Labour Relations and Employment Equity acts have been adopted by parliament, implementation dates have not been set. There is a common expectation in the labour industry that when the acts are rolled out, this will be done in a reasonable, phased approach.
There are two notable changes to the current legislation. Firstly, under an amended Labour Relations Act (LRA), temporary employment agencies and their clients will become jointly and severally liable for unfair labour practices. Currently only agencies are liable for adverse awards in unfair labour practice cases. Secondly, under an amended Employment Equity Act (EEA), remuneration for non-permanent employees will be subject to parity with permanent employees. Currently there are no special regulations regarding pay rate differentials between any categories of employees.
In order to explore the consequences of these laws, he points out the following:
Bearing these facts in mind, he states that significant inspection and enforcement problems can be expected.
“The unintended consequence will be that large, blue-chip employers and their largely JSE-listed employment agencies representing 8.4% of national employment will face high levels of scrutiny, whereas small and mid-sized employers representing 91.6% of the national workforce will evade scrutiny altogether,” Sharp says.
“Bearing in mind that the government’s intention was to purge the small independent agencies and regularise the large and largely compliant agencies, industry statistics suggest that the exact opposite will occur.”
Adcorp calculates that the cost to equalise permanent and agency workers’ wages on a narrow interpretation of the EEA will be R78.2 billion per annum – a 69.2% increase in the current annual payroll of agency workers. Apart from the roughly 1 million agency workers in South Africa, there are 2.9 million non-agency temporary workers, i.e. temporary workers engaged by employers directly without the use of intermediaries. The cost to equalise these workers’ wages will be R154.9 billion – an increase of 47.4%. In total, the EEA as envisaged by the government will add R233.1 billion (or 13.8%) to the total national payroll.
With these sorts of costs involved, it is anticipated that employers will find innovative ways to avoid these costs. For example, it seems highly probable that all permanent workers within a particular pay-grade will be dismissed and new employees will be hired as fixed-term contractors. The employer will incur the once-off cost of severance for the dismissed permanent workers (being 1 week’s wages for each completed year of service) and a once-off cost of training for the newly hired workers (being roughly 6% of an employee’s cost-to-company remuneration for a 3-week training regimen), and the employer will in this way substantially reduce his long-term employment costs.
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