Bitter battle over labour brokers threatens South Africa's fragile social order

Foundation essay: This article is part of a series marking the launch of The Conversation in Africa. Our foundation essays are longer than usual and take a wider look at key issues affecting society.

South Africa’s 21-year old democracy is under strain with different axes of social conflict contributing to the country’s increasingly fragile stability.

Post-apartheid governments have faced enormous challenges in attempting to wrestle with a racially-divided nation, vast inequalities, mass unemployment, HIV/Aids, rapid urbanisation, corruption and enormous expectations.

As part of the country’s transformation and in a bid to level the playing field between employers and employees the industrial relations system was revamped. A pillar of the new system was the Labour Relations Act passed in 1995.

The law created institutions for managing and mediating workplace conflict. Workers organised into unions would conduct orderly negotiations with employers. For those unable to engage in collective bargaining, sectoral arrangements would set minimum terms and conditions of employment.

But as the case study of the South African Post Office workers illustrates, loopholes in the post-apartheid labour legislation permitted the re-creation of a cheap labour regime and a class of workers outside South Africa’s industrial relations framework. In effect, they are second class citizens.

Efforts by Post Office employees to change their status was frustrated by the very post-apartheid industrial relations system put in place to protect workers. They finally gave up on the legal system and resorted to illegal means.

A triangular employment relationship

The new industrial relations framework, essentially hammered out between the ruling African National Congress and its trade union alliance partner the Congress of South African Trade Unions (COSATU), is often criticised by business for its rigidity. Despite these denunciations, business and state owned companies were able to hire labour much more cheaply by using labour brokers.

Labour broking created a triangular employment relationship. The labour broking company employed the individual, who was then placed with the broker’s client. The worker did the work of the client, but was employed by the labour broker.

Working alongside permanent employees of the client company, employees of the labour broker did the same work, but for a fraction of the salary.

The dramatic increase in use of labour brokers since 1994 was made possible by the absence in the Labour Relations Act of joint and several liability for unfair dismissal.

This loophole meant that dismissal, based on the client’s instructions, was all but impossible to challenge. This was because the worker was not legally employed by the broker’s client. And since the broker was dismissing the worker in terms of a contract with the client such firing was legal.

Poverty associated with very high levels of unemployment also acts as a powerful disincentive against workers rocking the boat at work. South Africa’s unemployment rate is almost 35% using the expanded definition. And there are over 3 million precarious employees in the formal economy, almost equal to the number of unionised, permanent workers.

In a country with mass unemployment, the creation of long-term casuals provided cheap labour to employers without the hassle of having to manage people. This was possible because labour broking ensured that workers’ bargaining power could no longer be mobilised against the labour broker’s client.

Attempts by labour broker employees to organise themselves were thwarted by a range of practices. These included maintaining workers’ hopes of permanent appointment, confusion over the real employer, and the use of multiple labour brokers. Other tactics were bouncing worker representatives between the labour broker and its client.

This grey zone of practice prevented challenges to the contractual arrangements of labour broking.

Unintended consequences

The post-apartheid government has sought to use state owned enterprises like the Post Office to promote development without burdening state finances. Under pressure to deliver, their response has often resulted in unintended, sometimes disastrous, consequences.

The Post Office’s key role in development was to provide postal and communication services to all South Africans at affordable prices. This involved establishing retail post office facilities and physical addresses to which mail could be delivered, important for accessing a range of services and technologies.

There were massive increases in addresses, delivery and other services. In addition, the Post Office was able to turn annual losses of R1bn to operating surpluses between 2005 and 2012.

Three workers for the price of one

What remained hidden was the foundation of this financial turnaround. Much rested on the use of labour brokers. From 2000 the filling of permanent posts within the organisation was frozen. Instead vacancies were filled with casual workers placed in the Post Office by labour brokers.

These casuals did the same work as permanent employees, in some cases for more than a decade, but were paid a quarter of the salary of permanent employees. By 2011, 8 000 out of a total workforce of some 23 000 were filled by casuals. Even with the labour brokers’ fees, the organisation was making big savings. It was effectively paying three workers for the price of one.

The dominant union, the COSATU-affiliated Communications Workers Union, failed to mount any effective opposition. This was ironic since the union was prominent in the federation’s campaign to ban labour broking.

From 2005 casual workers in Gauteng, the country’s economic powerhouse, started to establish independent workers' committees. With limited resources, they attempted to address their situation through every possible avenue: management, the labour brokers, the trade union federation, various unions, the Department of Labour, the Commission for Conciliation, Mediation and Arbitration, even the Labour Court.

They were sent from pillar to post and rebuffed again and again. In the end they concluded that they had to fight their own battles.

The Berets go hunting

In mid 2011 the first major strike of casual workers took place. It was an unprotected or wildcat strike that was eventually crushed by a Labour Court interdict.

Hard lessons were learnt by the workers' committees. A number of critical decisions were taken. To stay away from the courts, the leadership would in future remain hidden. They also realised that to achieve their objectives they needed to focus on the Post Office and not the labour brokers. So they adopted techniques and strategies to prevent the delivery of mail, particularly in townships.

Drawing on the lessons they had learnt, the next strike, between December 2011 and April 2012, was led by the Mabarete (The Berets) grouping of casual workers.

The Mabarete began to ho tsoma (hunt) in the townships, urban residential areas where black people were forced to live under apartheid. This involved groups of varying size patrolling townships to confront anybody delivering mail. These confrontations ranged from warnings, to forced stripping and beatings, depending on circumstances.

This was particularly effective in Gauteng’s townships where the delivery of accounts and statements for companies and municipalities is big business. Deliveries ground to a halt and the Post Office reluctantly agreed to convert casuals into permanent employees.

The workers' new approach paid off. The strike brought about the end of labour broking at the Post Office.

Changes to the law after 16-year wait

Other casual workers have challenged labour broking, though few with the determination or success of the Mabarete. The obvious lesson is that for all its good intentions, the Labour Relations Act was subverted.

Instead of advancing economic development, social justice, labour peace and the democratisation of the workplace, the law became an instrument for the marginalisation of workers. Similarly, Labour Courts also served to reinforce the marginalisation of casual workers instead of ensuring fair labour practices.

At the beginning of 2015, amendments to the Labour Relations Act were promulgated. Key among the changes was the regulation of labour broking.

This change has been a long time coming. In 1998 the late Professor Guy Mhone, then Chief Director of Labour Market Policy at the Department of Labour, outlined how atypical forms of employment raised policy concerns.

It took 16 years of stop-go initiatives for the amendments to be enacted. This raises questions about the priorities of the ruling party and its affiliate trade union federation notwithstanding its high-profile campaign to ban labour broking.

More than sound laws required to protect vulnerable workers

Whether labour broking ends, or cheap labour is sourced via another gap in the legislation, remains to be seen. Enforcement of any labour regulation depends on a number of agencies: companies regulating their own activity, inspections by the Department of Labour, the watchdog function of trade unions, and access to the law.

The Post Office case shows failure by all these agencies. The limited capacity of the Department of Labour to enforce legislation is widely acknowledged. The response of unions to labour broking has amounted to high-profile calls for its banning accompanied by accommodation on the ground.

The lesson from the Post Office case study is that simply changing legislation is not enough when powerful economic interests are at stake. Also, when agencies that are meant to enforce labour laws are deaf to cries from the margins of the labour force, the result is that marginalised groups will explore alternative means of prosecuting disputes. These, along with other axes of conflict, threaten South Africa’s fragile social order.

David Dickinson does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.