Analysis
The most striking characteristic of the South Africa workforce over the past decade is its increasing temporary nature. Since 2000, permanent employment has fallen from 11.0 million to 9.1 million workers, a decline of 1.9 million workers or 18.7% of the workforce. As indicated in the figure, permanent employment has barely recovered from the global financial crisis. For example, since the 2009 recession, permanent employment has increased by just 2%, whereas over the same period total employment - comprising permanent and temporary workers - has increased by 12.2%.
Permanent Employment in South Africa, 2000-2012
Source: Adcorp Analytics (2012)
Many companies face variable and unpredictable sales volumes, faced with which In marked contrast, there are now 3.9 million temporary workers in South Africa accounting for 30.2% of total employment. As indicated in the figure, since 2000, the number of temporary workers has increased by 2.6 million workers or 187.5%.
The ratio of temporary to permanent workers has increased from 1 : 0.12 to 1 : 0.43 over the past decade. Included in temporary workers is agency workers (so-called "labour broker" workers), numbering 1 million workers - 25.5% of all temporary workers and 7.7% of the total national workforce. Since 2000, temporary work has been growing at an annual average rate of 8.5%, permanent work at a rate of -1.3% p.a., and agency work at a rate of 11.9% p.a.
Reasons for the growth in agency work include:
- Globally there is a trend to outsource non-core activities, and management of production workers is increasingly being viewed as a non-core activity.
- they need to add flexibility to their labour cost base by continuously re-matching business conditions with labour demand.
- Many companies face recurring cycles such as seasonality (e.g. agriculture, retail trade, tourism and catering), for which there is no permanent need for workers.
- Many companies have fixed-duration projects (e.g. construction, government infrastructure, mining, manufacturing, transport and logistics), for which there is no permanent need for workers.
- Modern businesses no longer keep office hours (e.g. retail, wholesale, transport and logistics, communications, manufacturing), with the result that shift workers have become increasingly common.
Temporary Employment in South Africa, 2000-2012
Source: Adcorp Analytics (2012)
Furthermore, restrictive labour legislation has undoubtedly played a role in the rapid emergence of non-standard employment contracts, not only in South Africa but around the world. According to CIETT, the international private employment industry association, there is a strong positive correlation between the rigidity of local labour laws and the use of outsourced staff.
Ironically, the current round of tightening of South African labour laws - initially affecting only "labour brokers", but now also affecting labour relations, basic conditions of employment, employment equity, and government-operated recruitment agencies - might have the unintended consequence of expanding, rather than reducing, the role of temporary and agency work in South Africa.
This is an extract from the May 2012 Adcorp Employment Index, June 10 2012
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