Road to success

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Road transport unions in South Africa are fighting precarious work practices through their collective agreements, writes Jan Theron

In 2000, “R” started working for ITR Recruitment as a crew member on a truck. In 2007 he was employed as a driver. He is now regarded as “permanent”. As “permanent”, he is supposed to work a full week, as opposed to the temporary workers, who often do not. Yet there is nothing “permanent” about what he and the other workers do, delivering products for the local flour and maize mill. ITR does not have any other contract in the town where R is based. So all the workers depend on the mill for their livelihood.

This mill is in turn part of SASKO, a larger group that owns a variety of food manufacturing plants. Previously the group had transport divisions at its plants, distributing all its products. Then in the 1990s, it introduced owner-driver schemes. In terms of these schemes, drivers were “converted” to owners of the trucks. Instead of receiving a wage, these owner-drivers were paid per load (tonnage) delivered.

In 2000 the government proposed several amendments to labour legislation. One of these amendments created a presumption as to who was an employee. The effect of this amendment could have meant that owner-drivers would be presumed to be employees. If owner-drivers were presumed to be employees, then labour legislation would apply to them to the same extent as other employees. The group clearly wanted to avoid extending rights to these workers. So the mill engaged an outside contractor to distribute its products. This was Super Group.

ITR does not have a contract with the mill. The mill has a contract with Super Group, and Super Group has a contract with ITR. ITR is a labour broker, also known as a temporary employment agency, or labour hire agency. It supplies workers like R to Super Group, which in turn supplies workers to SASKO. A labour broker is now termed a “temporary employment service” in terms of South Africa’s Labour Relations Act (LRA). However, this is a somewhat misleading term, as the case of R illustrates. For “temporary” is not defined in the LRA. So nothing prevents R being employed on this basis indefinitely. Some of his colleagues have been employed like this for more than three years.

Labour broking: a brief history

Labour broking was not always regarded as a legitimate activity. Internationally, it was for many years regarded as illegitimate to procure or provide labour to a client for reward. “Labour is not a commodity” was the slogan invoked in defence of this position.

After World War Two, groups such as Manpower Inc in the United States and Adecco in Europe began to assert the legitimacy of labour broking and spearheaded a series of legal challenges. As a result a number of countries recognised that the broker (or agency) should be regarded as the employer of those workers they procure or provide to their clients.

A landmark in the endeavour to legitimise labour broking was the adoption of the Private Employment Agencies (PEAS) Convention in 1997. Although the concept of a private employment agency is wider than a temporary employment agency, or labour broker, it recognised for the first time agencies that provide “services consisting of employing workers with a view to making them available to a third party…which assigns their tasks and supervises the execution of these tasks.” This was perceived as recognition of the legitimacy of labour broking.

The lies behind labour broking

Labour broking is part of a business strategy, where employers aim to cut costs by outsourcing the workforce. Employers hide behind misleading language to justify this business strategy. They talk about the need to focus on their “core business”, or “core competencies”. However, what is “core” or not is somewhat arbitrary, as the case of owner-drivers illustrates. The delivery of flour and maize products is clearly core to the business of the mill. As with almost all forms of outsourcing, the object is to cut the costs of labour, especially unskilled labour. So the cost of employing a crew is for the owner-driver’s account. The owner-driver (and crew) is also not paid when their services are not required.

Owner-driver schemes are an example of employers at the highest level restructuring the employment relationship. In the case of owner-drivers, this has been done by converting drivers from the status of employee to “small business”. In much the same way former managers and supervisors, even shop stewards, have been converted to become labour brokers.

Beyond the workplace, the effect is to fragment the working class. The strategy of outsourcing, and the language used to justify it, is part of a structure created by business. In this world, restructuring is seen as inevitable. The belief that jobs are being created in small businesses and the services sector (such as with the owner-driver and the labour broker) is intended to soften the blow. Official statistics sustain this belief (disregarding that the jobs created are not really new).

Trade unions are having to deal with the disappearance of the traditional workplace. If organised labour is to respond appropriately it needs to develop its own structures with its own terminology and supported by its own data. The object of this is to hold businesses accountable for the consequences

of their restructuring of employment. Although workers employed through service providers and intermediaries are regarded as “non-core”, of course they are not. It is rather that they can be more conveniently controlled by means of the commercial contract between the core business and the service provider or intermediary.

Can collective bargaining solve the problem?

If the Labour Relations Act in South Africa has wittingly or unwittingly encouraged labour broking, then the appropriate response would seem to be to amend the law. Proposals to do just that have been before South Africa’s National Economic Development and Labour Council since at least 1995, but thus far no proposed amendments have materialised. It is now election time, and the Minister of Labour has called for the banning of labour broking. This, he says, amounts to human trafficking and is against the Constitution.

It is difficult to see how labour broking can now be seen as unconstitutional, when the legislation legitimating it preceded the adoption of the Constitution. In any event a decision to ban labour broking, however arrived at, would certainly be challenged. Such a challenge would take years to resolve. The question arises, what to do in the interim? And even if a ban was effected, what would prevent employers from achieving the same outcome they have achieved through externalisation by other means.

The case of R illustrates the point. The effect of a ban would probably be that ITR would lose its contract with Super Group, or it would have to redefine itself as a transport service provider. Either way, it would not disturb arrangements between Super Group and the mill. It would also not affect relations between the mill and other service providers, such as contract cleaners.

Regulation is generally perceived as being a function of the state. Banning labour broking would thus represent the most drastic form of regulation, from above. However, regulation also occurs from below, to the extent to which pressure can be exerted on the state and others to respond in given situations and through collective bargaining. The course adopted by R’s union suggests a form of regulation from below that may, in the long run, represent a more effective counter to the phenomenon of which labour broking is part.

First and foremost, like a handful of other unions, R’s union has begun organising workers like R that are employed by brokers. There are numerous difficulties that have to be overcome in doing so, not least because of the insecure position of the workers they are targeting. At the same time, by organising these workers the union is acknowledging their need to be involved in finding solutions to the problems labour broking is creating, without exacerbating divisions between them and “core” workers.

Secondly, the union has used collective bargaining to begin regulating labour broking more effectively. The most important demand unions can make is that the workers of labour brokers be paid the same minimum wage that applies to other workers. In R’s case, the union is able to achieve this by having its agreement extended to all employers in the industry. Further demands it has been able to secure through collective bargaining limit the scope of operation of labour brokers.

The most significant way the union has been able to do this is through a limitation imposed on employers not to engage more than 30 per cent of their workforce through labour brokers over a period of 12 months. There is a further limitation. As we have seen, labour legislation does not circumscribe the period for which a worker may be temporarily employed. But the collective agreement prevents workers being placed by brokers indefinitely, by providing that a worker who is provided “to one or more clients on a continuous basis for a period in excess of two months shall be deemed to be an ordinary employee…”

This agreement is not without its problems. However, it represents the most ambitious attempt to date to regulate labour broking through collective bargaining. It is only by holding employers to account for the consequences of their own actions, for the externalisation of employment by utilising labour brokers, that there is any prospect of checking this process.

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Issue 36 - July 2009

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